<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
X Annual Report Pursuant to Section 13 or 15(d)
----
of the Securities Exchange Act of 1934 (Fee required)
For the fiscal year ended March 31, 1995
or Transition Report Pursuant to Section 13 or 15(d)
--- of the Securities Exchange Act of 1934
Commission File No. 0-5734
Pioneer-Standard Electronics, Inc.
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(Exact name of Registrant as specified in its charter)
Ohio 34-0907152
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. employer iden-
incorporation or organization) tification no.)
4800 East 131st Street, Cleveland, Ohio 44105
- --------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (216) 587-3600
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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None None
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, without par value
--------------------------------
(Title of class)
Common Share Purchase Rights
----------------------------
(Title of class)
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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. X
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The aggregate market value of voting shares of the Registrant held by
non-affiliates (which excludes voting shares held by officers and Directors of
the Registrant) was $314,199,517 as of June 1, 1995, computed on the basis of
the last reported sale price per share ($22.875) of such shares on The Nasdaq
Stock Market.
The number of Common Shares outstanding as of June 1, 1995 was 14,933,771.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement to be used in
connection with its Annual Meeting of Shareholders to be held on July 25, 1995
are incorporated by reference into Part III of this Form 10-K.
Except as otherwise stated, the information contained in this Annual Report on
Form 10-K is as of March 31, 1995.
The Common Share information contained in this Form 10-K reflects a
three-for-two share split effected in the form of a 50% share dividend declared
on June 23, 1994 paid on August 1, 1994 to shareholders of record on July 6,
1994.
PART I
Item 1. Business
(a) Pioneer-Standard Electronics, Inc. was organized as an Ohio
corporation in 1963 and maintains its principal office at 4800 East 131st
Street, Cleveland, Ohio 44105 (telephone number (216) 587-3600). The Company
first offered its securities to the public in 1971. In November, 1982, the
Company purchased substantially all of the assets of the Electronics and
Military divisions of The Harvey Group, Inc., a New York corporation. On
December 28, 1990, the Company purchased from Lex Electronics, Inc., a New York
corporation, certain assets of Lex's Computer Systems Division. On June 1,
1994, Pioneer-Standard Canada Inc., a newly-formed Canadian subsidiary of the
Company, purchased from United Westburne Inc., a Canadian corporation, certain
of the assets and assumed certain liabilities of Westburne's Zentronics
Division, which the Company believes is one of the largest distributors of
electronic components and computer products in Canada. There have not been any
material changes in the nature of the business done by the Company since April
1, 1994. Except as otherwise stated, the term "Company" as used herein shall
mean Pioneer-Standard Electronics, Inc. and Pioneer-Standard Canada Inc.
(b) The Company is engaged in the distribution of industrial and
end-user electronic products, which business comprises only one basic industry
segment.
(c) The following is a description of various aspects of the
Company's business:
Industrial and End-User Distribution - The Company distributes a
broad range of electronics components and computer products manufactured by
others. These products are sold to original equipment manufacturers,
value-added resellers, research laboratories, government agencies, and
end-users, including manufacturing
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companies, and service and other non-manufacturing organizations. These
products are classified into three broad categories: semiconductors, computer
products, and passive and electromechanical components. During fiscal 1995,
semiconductor products accounted for 37% of the Company's sales compared with
41% in 1994 and 37% in 1993. These products include microprocessors, memory
devices, programmable logic devices, analog and digital integrated circuits and
other semiconductor devices. During fiscal 1995, computer products accounted
for 38% of the Company's sales compared with 33% in 1994 and 39% in 1993.
These products include computers (primarily mini and personal), display
terminals, disk drives, development systems and networking products. During
fiscal 1995, passive and electromechanical products accounted for 22% of the
Company's sales, compared with 24% in 1994 and 21% in 1993. These products
include capacitors, connectors, resistors, potentiometers, switches and power
conditioning equipment.
As a part of its distributor operations, the Company provides
value-added services including point of use inventory management, systems
integration, just-in-time kitting operations, memory and logic device
programming and connector assemblies to customer specifications. Sales amounts
for these services are included among the three broad categories discussed
above.
Miscellaneous products accounted for 3% of sales in 1995, 2% of sales
in 1994 and for 3% of sales in 1993.
Pioneer Technologies Group, Inc. - The Company owns 50% of the
outstanding common stock of Pioneer Technologies Group, Inc. ("Pioneer
Technologies"), a Maryland corporation headquartered in Gaithersburg, Maryland.
The business of Pioneer Technologies is substantially the same as that of the
Company. The companies have an agreement which provides, among other things,
that they have the right to buy each other's products at cost of the product
plus handling. In addition, Pioneer Technologies utilizes the Company's data
processing system for processing order, warehousing, accounting and
administrative information, for which it is charged a monthly fee. For further
information as to transactions between the companies, including certain first
right of refusal agreements concerning the Company's 50% ownership of Pioneer
Technologies, see Note 9 (Pioneer Technologies Group, Inc.) of Notes to
Financial Statements of the Company.
Products Distributed and Sources of Supply - The Company (together
with Pioneer Technologies) is the third largest of the approximately 1,500
electronics distributors serving North American markets in terms of combined
sales. The Company markets electronic components supplied by over 100
manufacturers. A majority of the Company's revenues comes from products
sourced by relatively few suppliers. During the 1995 fiscal year, products
purchased from the Company's five largest suppliers accounted for 73% of total
sales volume, with Digital Equipment Corporation and Intel Corporation being
the largest two suppliers. The loss of any one
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of the top five suppliers and/or a combination of certain other suppliers could
have a material adverse effect on the Company's sales and earnings unless
alternative products manufactured by others are available to the Company. The
majority of the products sold by the Company are purchased pursuant to
distributor agreements which generally provide for inventory return privileges
by the Company upon cancellation of a distributor agreement. The distributor
agreements also typically provide protection to the Company for product
obsolescence and price erosion. The Company believes it has good relationships
with its suppliers.
Customers - The Company serves over 19,000 customers in many major
markets of North America. No single customer accounted for more than five
percent of the Company's total sales for the fiscal year ended March 31, 1995.
Backlog - The Company historically has not had a significant backlog
of orders, although some shipments may be scheduled for delivery over an
extended period of time. There was not a significant backlog during the last
fiscal year.
Competition - The sale and distribution of industrial electronic
components and computer products are highly competitive, primarily with respect
to price and product availability, but also with respect to service, variety and
availability of products carried, number of locations and promptness of service.
Many of the distributors with whom the Company competes are regional or local
distributors. However, several of the Company's strongest competitors have
national and international distribution businesses. The Company also
experiences competition from manufacturers, including some of the Company's
suppliers, who may sell directly to the industrial and end-user account base.
Employees - The Company currently has 1,399 employees, with
approximately 1,376 of these persons employed on a full-time basis and the
balance on a part-time basis. The Company is not a party to any collective
bargaining agreement, has had no strikes or work stoppages and considers its
employee relations to be excellent.
(d) Prior to fiscal 1995, the distribution of the Company's
products has been primarily in the United States. The Company gained a West
Coast presence through its March, 1989 acquisition of the assets of Compumech
Electronics, Inc. and its December, 1990 acquisition of certain assets of the
Lex Computer Systems Division of Lex Electronics, Inc. The Company entered the
Canadian market through its June, 1994 acquisition of certain assets of the
Zentronics division of United Westburne Inc. Export sales are not a
significant portion of the Company's sales.
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Item 2. Properties
The Company's major distribution facilities used in the business are set forth
below:
<TABLE>
<CAPTION>
Owned or Expiration Date
Location Sq. Ft. Leased of Lease (1)
-------- ------- -------- --------------
<S> <C> <C> <C>
Chicago, Illinois 11,300 Leased April 14, 1998
Cleveland, Ohio (2) 87,000 Owned
Dallas, Texas 13,500 Leased October 31, 1999
Dayton, Ohio 60,800 Owned
Eden Prairie, Minnesota 12,800 Leased August 31, 1997
Freemont, California 12,000 Leased March 15, 1999
Irvine, California 14,700 Leased February 1, 1997
Lexington, Massachusetts 26,400 Owned
Montreal, Canada 12,100 Leased February 28, 1999
Solon, Ohio 86,300 Leased March 31, 1996
Solon, Ohio 30,000 Leased June 30, 1995
Solon, Ohio 41,000 Leased March 31, 1999
Solon, Ohio 44,700 Leased May 31, 1999
Toronto, Canada 32,700 Leased May 31, 1997
Twinsburg, Ohio (3) 106,000 Owned
Woodbury, New York 35,600 Leased September 30, 1997
</TABLE>
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(1) The major leases contain renewal options for periods ranging
from one to twenty years.
(2) Corporate headquarters.
(3) Corporate Distribution Center.
The Company also has entered into various leases for distribution
facilities of 10,000 square feet or less.
Item 3. Legal Proceedings
As of March 31, 1995, the Company was not a party to any material
pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's security holders
during the last quarter of its fiscal year ended March 31, 1995.
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Executive Officers of the Company(1)
The name, age and positions of each executive officer of the Company
as of June 1, 1995 are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
James L. Bayman 58 Chief Executive Officer of the
Company since April 3, 1995,
and President of the Company
since June, 1984. Chief
Operating Officer of the
Company from June, 1984 to
April 3, 1995.
Preston B. Heller, Jr. 65 Chairman of the Board of the
Company since June, 1984. Chief
Executive Officer of the Company
from June, 1984 to April 3, 1995.
Arthur Rhein 49 Senior Vice President of the
Company since April, 1993 and
Vice President - Marketing of the
Company from 1986 to April, 1993.
Prior thereto, Vice President -
Northeast Division of the Company
from 1984 to 1986.
John V. Goodger 59 Vice President, Treasurer, and
Assistant Secretary of the
Company since February, 1990.
Prior thereto, Vice President,
Treasurer and Assistant Secretary
of Ferro Corporation from 1987 to
1990 and Vice President and
Treasurer of Ferro Corporation
from 1984 to 1990.
Janice M. Margheret 40 Senior Vice President of the
Company since April, 1993 and
Vice President and Controller of
the Company from July, 1987 to
April, 1993. Prior thereto,
Group Controller of the Company
from 1983 to 1987.
</TABLE>
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<TABLE>
<S> <C> <C>
William A. Papenbrock 56 Secretary of the Company since
1986. Mr. Papenbrock is a
partner of the law firm of
Calfee, Halter & Griswold(2).
</TABLE>
__________________________
(1) The description of Executive Officers called for in this Item
is included pursuant to Instruction 3 to Section (b) of Item
401 of Regulation S-K.
(2) The law firm of Calfee, Halter & Griswold serves as counsel to
the Company.
There is no relationship by blood, marriage or adoption among the
above-listed officers. Messrs. Heller, Bayman, Rhein, and Goodger and Ms.
Margheret have entered into Amended and Restated Employment Agreements with the
Company, all of which are included as Exhibits hereto. Messrs. Heller, Bayman,
Rhein, and Goodger and Ms. Margheret hold office until terminated as set forth
in their Amended and Restated Employment Agreements. Mr. Papenbrock holds
office until his successor is elected by the Board of Directors.
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PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters
The Company's Common Shares, without par value, are traded on The
Nasdaq Stock Market. Common Share prices are quoted daily under the symbol
PIOS. The high and low sales prices for the Common Shares, and the cash
dividends paid on the Common Shares, for each quarter of the two most recent
fiscal years and additional information required by this Item is included under
Exhibit 99(c) to this Form 10-K Annual Report.
Cash dividends are payable quarterly, upon authorization of the Board
of Directors. Regular payment dates are the 1st day of August, November,
February and May. The Company maintains a Dividend Reinvestment Plan whereby
cash dividends, and a maximum of an additional $5,000 per month, may be
invested in the Company's Common Shares at no commission cost.
On April 25, 1989, the Company adopted a Common Share Purchase Rights
Plan. For further information about the Common Share Purchase Rights Plan, see
Note 6 (Common Share Purchase Rights Plan) of Notes to Financial Statements of
the Company.
Item 6. Selected Financial Data
The information required by this Item, is included under Exhibit 99(d)
to this Form 10-K Annual Report.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required by this Item is included under Exhibit 99(e)
to this Form 10-K Annual Report.
Item 8. Financial Statements and Supplementary Data
The information required by this Item is included under Exhibit 99(f)
to this Form 10-K Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
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PART III
Item 10. Directors and Executive Officers of the Registrant
Information required by this item as to the Directors of the Company
appearing under the caption "Election of Directors" in the Company's Proxy
Statement to be used in connection with the Annual Meeting of Shareholders to
be held on July 25, 1995 (the "1995 Proxy Statement") is incorporated herein by
reference. Information required by this item as to the executive officers of
the Company is included in Part I of this Annual Report on Form 10-K.
Item 11. Executive Compensation
The information required by this item is incorporated herein by
reference to "Compensation of Executive Officers" in the 1995 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this item is incorporated herein by
reference to "Share Ownership" in the 1995 Proxy Statement.
Item 13. Certain Relationships and Related Transactions
The information required by this item is incorporated herein by
reference to "Election of Directors - Certain Transactions" in the 1995 Proxy
Statement.
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following financial statements and schedules are filed as part of
this report on Exhibit 99(f) as indicated:
(1) Financial Statements and Schedules
Pioneer-Standard Electronics, Inc.
Report of independent auditors
Balance sheet as of March 31, 1995 and 1994
For the years ended March 31, 1995, 1994
and 1993:
Statements of income
Statements of shareholders' equity
Statements of cash flows
Notes to financial statements
Report of independent auditors
Schedules for years ended March 31, 1995,
1994 and 1993:
VIII - Valuation and qualifying
accounts
Quarterly Financial Data
Pioneer Technologies Group, Inc.
Report of independent auditors
Balance sheet as of March 31, 1995 and 1994
For the years ended March 31, 1995, 1994
and 1993:
Statements of income and
retained earnings
Statements of cash flows
Notes to financial statements
Schedules for years ended March 31, 1995,
1994 and 1993:
VIII - Valuation and qualifying
accounts
All other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements or the notes thereto.
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(2) Exhibits
See the Index to Exhibits at page E-1 of this Form 10-K.
(b) Reports on Form 8-K
No Current Reports on Form 8-K were filed during the quarter ended March 31,
1995.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
PIONEER-STANDARD ELECTRONICS, INC.
Date: June 20, 1995 By: /s/ James L. Bayman
-------------------
James L. Bayman,
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
Signature and Title Date
- ------------------- ----
/s/ Preston B. Heller, Jr. Chairman of the )
- ---------------------------- Board )
Preston B. Heller, Jr. )
)
)
/s/ John V. Goodger Vice President, )
- ---------------------------- Treasurer and )
John V. Goodger Assistant Secretary )
)
)
/s/ Janice M. Margheret Senior Vice )
- ---------------------------- President )
Janice M. Margheret )
)
/s/ James L. Bayman Director )
- ---------------------------- )
James L. Bayman )
)
/s/ Frederick A. Downey Director ) June 20, 1995
- ---------------------------- )
Frederick A. Downey )
)
/s/ Victor Gelb Director )
- ---------------------------- )
Victor Gelb )
)
/s/ Gordon E. Heffern Director )
- ---------------------------- )
Gordon E. Heffern )
)
/s/ Arthur Rhein Director )
- ---------------------------- )
Arthur Rhein )
)
Director )
- ---------------------------- )
Edwin Z. Singer )
)
/s/ Thomas C. Sullivan Director )
- ---------------------------- )
Thomas C. Sullivan )
)
/s/ Karl E. Ware Director )
- ---------------------------- )
Karl E. Ware
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Pioneer-Standard Electronics, Inc.
Exhibit Index
<TABLE>
<CAPTION>
Sequential
Exhibit No. Description Page No.
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<S> <C> <C>
3.(a) Amended Articles of Incorporation of
Pioneer-Standard Electronics, Inc., which
is incorporated herein by reference from
the Company's Annual Report on Form 10-K
for the year ended March 31, 1982. N/A
(b) Amended Code of Regulations, as amended,
which is incorporated herein by reference
from the Company's Annual Report on
Form 10-K for the year ended March 31,
1988. N/A
4.(a) Credit Agreement dated as of January 23,
1992 by and among the Company and three
banks, which is incorporated herein by
reference from the Company's Annual
Report on Form 10-K for the year ended
March 31, 1992. N/A
(b) Amendment Agreement dated as of June 30, 1993
by and among the Company, National City Bank,
Society National Bank (successor in interest
to Ameritrust Company National Association)
and Star Bank, N.A., which is incorporated
herein by reference from the Company's Annual
Report on Form 10-K for the year ended
March 31, 1994. N/A
(c) Second Amendment Agreement dated as of
May 27, 1994 by and among the Company,
National City Bank, Society National Bank
(successor in interest to Ameritrust Company
National Association) and Star Bank, N.A. and
National City Bank, as Agent, which is
incorporated herein by reference from the
Company's Annual Report on Form 10-K for the
year ended March 31, 1994. N/A
(d) Consolidated Amendment No. 1 to Credit Agreement
dated as of October 28, 1994 by and among the
Company, National City Bank and Star Bank,
N.A. and National City Bank, as Agent. 16
(e) Consolidated Amendment No. 2 to Credit Agreement
dated as of February 28, 1995 by and among the
Company, National City Bank and Star Bank,
N.A. and National City Bank, as Agent. 22
(f) Rights Agreement dated as of April 25, 1989
by and between the Company and AmeriTrust
Company National Association, which is
incorporated herein by reference from the
Company's Annual Report on Form 10-K for
the year ended March 31, 1989. N/A
</TABLE>
E-1
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<TABLE>
<CAPTION>
Sequential
Exhibit No. Description Page No.
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<S> <C> <C>
(g) Note Purchase Agreement dated as of October
31, 1990 by and between the Company and
Teachers Insurance and Annuity Association
of America, which is incorporated herein
by reference from the Company's Quarterly
Report on Form 10-Q for the quarter ended
December 31, 1990. N/A
(h) Amendment No. 1 to Note Purchase Agreement
dated as of November 1, 1991 by and between
the Company and Teachers Insurance and
Annuity Association of America, which is
incorporated herein by reference from the
Company's Annual Report on Form 10-K for
the year ended March 31, 1993. N/A
10.(a) Amended and Restated Employment Agreement
effective as of April 3, 1995 by and between
the Company and Preston B. Heller, Jr. 33
(b) Amended and Restated Employment Agreement
effective as of April 3, 1995 by and between
the Company and James L. Bayman. 46
(c) Amended and Restated Employment Agreement
effective as of April 3, 1995 by and
between the Company and Janice M. Margheret. 61
(d) Amended and Restated Employment Agreement
effective as of April 3, 1995 by and between
the Company and Arthur Rhein. 76
(e) Amended and Restated Employment Agreement
effective as of April 3, 1995 by and between
the Company and John V. Goodger. 91
(f) Stock Purchase Agreement dated July 24, 1986
among Pioneer-Standard Electronics, Inc.
and the other shareholders of Pioneer
Technologies Group, Inc., which is
incorporated herein by reference from
the Company's Current Report on Form 8-K
dated July 24, 1986. N/A
(g) 1982 Incentive Stock Option Plan, as amended,
which is incorporated by reference from the
Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1988. N/A
(h) Amended and Restated 1991 Stock Option Plan,
which is incorporated by reference from the
Company's Form S-8 Registration Statement
dated April 28, 1994. N/A
(i) Asset Purchase Agreement dated April 22, 1994
between Pioneer-Standard Electronics, Inc. and
Westburne Industrial Enterprises Ltd., which
is incorporated herein by reference from the
Company's Current Report on Form 8-K dated
June 1, 1994. N/A
</TABLE>
E-2
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<TABLE>
<CAPTION>
Sequential
Exhibit No. Description Page No.
- ----------- ----------- ----------
<S> <C> <C>
11. Statement regarding computation of per share
earnings. 106
21. Subsidiaries of the Registrant, which is
incorporated herein by reference from the
Company's Annual Report on Form 10-K for the
year ended March 31, 1994. N/A
24. Consents of Ernst & Young LLP, Independent
Auditors. 107
27. Financial Data Schedule 109
99.(a) Certificate of Insurance Policy effective
November 1, 1995 between Chubb Group of
Insurance Companies and Pioneer-Standard
Electronics, Inc. 110
99.(b) Forms of Amended and Restated Indemnification
Agreement entered into by and between the
Company and each of its Directors and
Executive Officers, which is incorporated
herein by reference from the Company's
Annual Report on Form 10-K for the year
ended March 31, 1994. N/A
99.(c) Dividend Information and Price Range of
Common Shares 111
99.(d) Selected Financial Data 112
99.(e) Management's Discussion and Analysis of
Financial Condition and Results of Operations. 113
99.(f) Financial Statements and Schedules listed
under Items 14(a). 116
</TABLE>
E-3
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Exhibit 4(d)
CONSOLIDATED AMENDMENT NO. 1
TO
CREDIT AGREEMENT
This Consolidated Amendment No. 1 to Credit Agreement (this "Amendment"),
dated as of October 28, 1994, is entered into by and among Pioneer-Standard
Electronics, Inc. (Borrower), National City Bank, Society National Bank
(successor in interest to Ameritrust Company National Association) and Star
Bank, N.A. (together "banks") and National City Bank in its capacity as agent
of the banks ("NCB-Agent") for the purposes of the Credit Agreement referred to
below and the related writings.
WITNESSETH:
WHEREAS, the parties have entered into a Credit Agreement dated January
23, 1992, as amended by a certain Amendment Agreement dated as of June 30, 1993
(the "First Amendment") and a certain Second Amendment Agreement dated as of
May 27, 1994 (the "Second Amendment") (as amended, the "Credit Agreement" all
terms used in the Credit Agreement being used herein with the same meaning),
which sets forth the terms and conditions upon which Borrower may obtain (a)
"subject loans" on a revolving basis until the "conversion date" (originally
January 1, 1995 but previously extended until January 1, 1997), as that term is
defined in the Credit Agreement, and on an amortizing basis thereafter and (b)
"subject BAs"; and
WHEREAS, the parties desire to amend certain provisions of the Credit
Agreement to (a) increase the aggregate amount of the subject commitments from
thirty-five million dollars ($35,000,000) to forty-five million dollars
($45,000,000) and (b) extend the term of the subject commitments from January
1, 1997 until January 1, 1998; and
WHEREAS, in light of the fact that certain previous amendments set forth
in the First Amendment and/or the Second Amendment have been affected by later
amendments and/or will be affected by this Amendment and for ease of reference,
the parties also desire to restate and consolidate in this Amendment all
amendments to the Credit Agreement that are effective on and as of the date
hereof;
NOW, THEREFORE, in consideration of the premises above and the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
SECTION I - AMENDMENTS TO CREDIT AGREEMENT
A. Subsections 2A.01 and 2A.02 of the Credit Agreement are hereby amended in
their entirety to read as follows:
2A.01 AMOUNTS - The aggregate amount of the subject commitments shall be
forty-five million dollars ($45,000,000), but that amount may be reduced
from time to time pursuant to subsection 2A.03 or 2A.04 and the subject
commitments may be terminated pursuant to section 5B. The amount of each
bank's subject commitment (subject to such reduction or termination), and
the proportion (expressed as a percentage) that it bears to all of the
subject commitments, is set forth opposite the bank's name below, to-wit:
$22,500,000 50% National City Bank
<PAGE> 2
13,500,000 30% Society National Bank
9,000,000 20% Star Bank, N.A.
----------- ----
$45,000,000 100%
2A.02 TERM - Each subject commitment shall commence as of the date of
this Agreement and shall remain in effect on a revolving basis until
January 1, 1998 (the "conversion date") and thereafter on an amortizing
basis until its expiration on the last amortizing date, EXCEPT that a
later conversion date may be established from time to time pursuant to
subsection 2A.06 and EXCEPT that the subject commitments shall end in any
event upon any earlier reduction thereof to zero pursuant to subsection
2A.03 or 2A.04 or any earlier termination pursuant to section 5B.
B. Subsection 3B.01, 3B.02, 3B.03, 3B.04 and 3B.05 of the Credit Agreement
are hereby amended their entirety to read as follows:
3B.01 NET WORTH - Borrower will not suffer or permit the sum of the
consolidated net worth of the companies at any time to be less than the
then required minimum amount. The required minimum amount shall be eighty-
nine million dollars ($89,000,000) EXCEPT that the required minimum
amount shall be permanently increased
(a) on June 30, 1994 and on each quarterly date thereafter by an
amount equal to the sum of fifty percent (50%) of the consolidated
net income of the companies, if any, for the quarter-annual period
then ending plus
(b) upon each issuance or other sale by Borrower of any of its equity
securities by an amount equal to the net proceeds (after costs and
expenses) thereof.
3B.02 LEVERAGE - Borrower will not suffer or permit the total liabilities
of the companies at any time to exceed an amount equal to two hundred
twenty-five percent (225%) of the sum of the net worth of the companies,
all as determined on a consolidated basis.
3B.03 WORKING CAPITAL - Borrower will not suffer or permit the companies'
aggregate working capital at any time to fall below sixty million
dollars ($60,000,000).
3B.04 CURRENT RATIO - Borrower will not suffer or permit the current
assets of the companies at any time to fall below an amount equal to one
and seven-tenths (1.7) times the amounts of their current liabilities, all
as determined on a consolidated basis.
3B.05 FIXED CHARGE COVERAGE - Borrower will not suffer or permit the
aggregate of
(a) the aggregate net income of the companies (EXCEPT Borrower's
equity in any income or loss of PTGI) plus
(b) the aggregate interest expense of the companies plus
(c) the aggregate federal, state and local income taxes of the
companies plus
(d) the aggregate operating lease expense of the companies
<PAGE> 3
for any four-quarter period to be less than an amount equal to one hundred
eighty percent (180%) of the sum of
(a) the aggregate interest expense of the companies plus
(b) The aggregate operating lease expense of the companies
for that four-quarter period, all as determined on a consolidated basis.
C. Subsection 3D.01 of the Credit Agreement is hereby amended by replacing
the period at the end thereof with the word "or" and by adding to the end
thereof the following new clause (iii):
(iii) Borrower's investment in Pioneer-Standard Canada Inc. (exclusive of
retained earnings of Pioneer-Standard Canada Inc.) so long as the
aggregate amount of such investments does not exceed ten million eight
hundred thousand dollars ($10,800,000).
D. Subsection 3D.02 of the Credit Agreement is hereby amended by replacing
the period at the end thereof with the word "or" and by adding to the end
thereof the following new clause (v):
(v) any advance or loan to, or guaranty of the obligations of,
Pioneer-Standard Canada Inc., so long as the aggregate amount of all such
advances, loans and guaranties does not exceed eighteen million five
hundred thousand dollars ($18,500,000) at any one time.
E. Subsection 3D.03(ii)(A) of the Credit Agreement is hereby amended by
deleting the reference to "fifteen million dollars ($15,000,000)" and
substituting in lieu thereof a reference to "twenty million dollars
($20,000,000)".
F. The following new definition is hereby added to section 9 of the Credit
Agreement:
company refers to Borrower or to a subsidiary of Borrower, as the case
may be;
SECTION II - CONDITIONS PRECEDENT
It is a condition precedent to the effectiveness of this Amendment that,
prior to or on the date hereof, the following items shall have been delivered
to NCB-Agent (in form and substance acceptable to NCB-Agent):
(A) an Amended and Restated Promissory Note ("Amended Note") in favor of
each bank, in the form of EXHIBIT A to this Amendment, with all blanks
appropriately completed, duly executed by Borrower;
(B) an Acknowledgment of Receipt of a copy of, and Consent and Agreement
to the terms of, this Amendment and the Amended Notes by Pioneer-Standard
Canada Inc. with respect to a certain Continuing Guaranty of Payment
executed and delivered to NCB-Agent by such entity and dated May 27, 1994;
(C) a Certificate, dated as of the date hereof, of the secretary of
Borrower certifying (1) that Borrower's Articles of Incorporation and Code
of Regulations have not been amended since the execution of the Credit
Agreement (or certifying that true, correct and complete copies of any
<PAGE> 4
amendments are attached., (2) that copies of resolutions of the Board of
Directors of Borrower are attached with respect to the approval of this
Amendment and of the matters contemplated hereby and authorizing the
execution, delivery and performance by Borrower of this Amendment and
each other document to be delivered pursuant hereto and (3) as to the
incumbency and signatures of the officers of Borrower signing this
Amendment and each other document to be delivered pursuant hereto; and
(D) Such other documents as NCB-Agent may request to implement this
Amendment and the transactions contemplated hereby.
If NCB-Agent or banks shall consummate the transactions contemplated hereby
prior to the fulfillment of any of the conditions precedent set forth above,
the consummation of such transactions shall constitute only an extension of the
time for the fulfillment of such conditions and not a waiver thereof. Upon
receipt of the properly completed and executed Amended Notes, banks agree to
return to Borrower the previously executed notes respecting the subject loans
and the same be marked "Replaced or "Substituted" or with words of like import.
SECTION III - AGREEMENTS CONCERNING PIONEER-STANDARD CANADA INC.
Borrower agrees to cause it s subsidiary, Pioneer-Standard Canada Inc.,
to comply with all the provisions of sections 3A, 3B, 3C and 3D of the Credit
Agreement and agrees that all references to financial information in section 3A
shall be deemed to be references to financial information of Borrower and its
subsidiaries on a consolidated basis; provided, that Pioneer-Standard Canada
Inc, shall not be required to comply with the provisions of subsection 3D.06
(captioned "DIVIDENDS").
SECTION IV - REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to each of the other parties to
this Amendment that
(A) none of the representations and warranties made in subsections 4B.01
through 4B.08 of the Credit Agreement has ceased to be true and complete
in any material respect as of the date hereof; and
(B) as of the date hereof no "default under this Agreement" has occurred
that is continuing.
SECTION V - ACKNOWLEDGMENTS CONCERNING OUTSTANDING LOANS
Borrower acknowledges and agrees that, as of the date hereof, all of
Borrower's outstanding loan obligations to banks are owed without any
offset, deduction, defense or counterclaim of any nature whatsoever.
SECTION VI - REFERENCES
On and after the effective date of this Amendment, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof", or words of
like import referring to the Credit Agreement, and in the subject notes
of other related writings to the "Credit Agreement" "thereof", or words
of like import referring to the Credit Agreement shall mean and refer to
the Credit Agreement as amended hereby. The Credit Agreement, as
amended by this Amendment, is and shall be in full force and effect and
is hereby ratified and confirmed in all respects. To the extent any
amendment set forth in the First
<PAGE> 5
Amendment or the Second Amendment is omitted from this Amendment, the same
shall be deemed eliminated as between Borrower and the other parties hereto as
of the date hereof. The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of
NCB-Agent or banks under the Credit Agreement or constitute a waiver of any
provisions of the Credit Agreement except as specifically set forth herein.
From and after the date of this Amendment references in the Credit Agreement to
Exhibit B shall be deemed to the references to the form of the Amended Note
attached hereto as Exhibit A.
SECTION VII - COUNTERPARTS AND GOVERNING LAW
This Amendment may be executed in any number of counterparts, each
counterpart to be executed by one or more of the parties but, when taken
together, all counterparts shall constitute one agreement. This Amendment, and
the respective rights and obligations of the parties hereto shall be construed
in accordance with and governed by Ohio Law.
IN WITNESS WHEREOF, the Borrower, NCB-Agent and the banks have caused
this Amendment to be executed by their authorized officers as of the date and
year first above written.
National City Bank, Agent Pioneer-Standard Electronics, Inc.
By: /s/ JANICE E. FOCKE By: /s/ JOHN V. GOODGER
----------------------------- ------------------------------
Printed Name: Janice E. Focke Printed Name: John V. Goodger
------------------- --------------------
Title: Vice President Title: Vice President, Treasurer
-------------------------- ---------------------------
National City Bank Star Bank, N.A.
By: /s/ JANICE E. FOCKE By: /s/ JOHN D. BARRETT
----------------------------- ------------------------------
Printed Name: Janice E. Focke Printed Name: John D. Barrett
------------------- --------------------
Title: Vice President Title: Vice President
-------------------------- ---------------------------
Society National Bank
By: /s/ MICHAEL J. THOMPSON
------------------------------
Printed Name: Michael J. Thompson
-------------------
Title: Vice President
--------------------------
<PAGE> 6
AMENDED AND RESTATED PROMISSORY NOTE
$ Cleveland, Ohio 1994
------------------ ------------------
FOR VALUE RECEIVED, the undersigned, Pioneer-Standard Electronics, Inc.
(Borrower), an Ohio corporation, promises to pay to the order of _____________,
at the main office of National City Bank (NCB), Cleveland, Ohio, the principal
sum of
DOLLARS
-----------------------------
(or, if less, the aggregate unpaid principal balance form time to time shown on
the reverse side), together with interest computed in the manner provided in the
Credit Agreement referred to below, which principal and interest is payable in
accordance with provisions in the Credit Agreement.
This note is issued to an Agreement dated January 23, 1992, as amended from time
to time (as amended, the "Credit Agreement") by and among Borrower, three banks
and NCB (as agent of the banks for the purposes of the Credit Agreement) which
establishes "subject commitments" (one by each bank) aggregating forty-five
million dollars ($45,000,000) pursuant to which Borrower may obtain subject
loans from the banks upon certain terms and conditions. This note is issued in
substitution for that certain $______________ Note dated ______________ 19
________ (the "Old Note"). This Note is not intended as a novation of the
obligations of Borrower under the Old Note but rather is merely a restatement of
the obligations thereunder after giving effect to the recent amendment to the
Credit Agreement.
Reference is made to the Credit Agreement for the definitions of certain terms,
for provisions governing the making of subject loans, the acceleration of the
maturity thereof, rights of prepayment, and for other provisions to which this
note is subject. Any endorsement by the payee on the reverse side of this note
(or any allonge thereto) shall be presumptive evidence of the data so endorsed.
Address: Pioneer-Standard Electronics, Inc.
4800 East 131st Street
Cleveland, Ohio 44105 By:_______________________________
Printed:__________________________
Title:____________________________
EXHIBIT A
<PAGE> 1
Exhibit 4(e)
CONSOLIDATED AMENDMENT NO. 2
TO
CREDIT AGREEMENT
This Consolidated Amendment No. 2 to Credit Agreement (this "Amendment"),
dated as of February 28, 1995, is entered into by and among Pioneer-Standard
Electronics, Inc. (Borrower), National City Bank, Society National Bank
(Successor in interest to Ameritrust Company National Association) and Star
Bank, N.A. (together "banks") and National City Bank in its capacity as agent of
the banks ("NCB-Agent") for the purposes of the Credit Agreement referred to
below and the related writings.
WITNESSETH:
WHEREAS, the parties have entered into a Credit Agreement dated January 23,
1992, as amended by Amendment Agreement dated as of June 30, 1993 (the "First
Amendment"), Second Amendment Agreement dated as of May 27, 1994 (the "Second
Amendment") and Consolidated Amendment No. 1 dated as October 28, 1994 (as
amended, the "Credit Agreement"; all terms used in the Credit Agreement being
used herein with the same meaning), which sets forth the terms and conditions
upon which Borrower may obtain (a) "subject loans" on a revolving basis until
the "conversion date" (originally January 1, 1995 but previously extended until
January 1, 1998), as that term is defined in the Credit Agreement, and on an
amortizing basis thereafter and (b) "subject BAs"; and
WHEREAS, the parties desire to amend certain provisions of the Credit
Agreement to (a) increase the aggregate amount of the subject commitments from
forty-five million dollars ($45,000,000) to sixty-five million dollars
($65,000,000) and (b) amend certain covenants; and
WHEREAS, in light of the fact that certain previous amendments set forth in
the First Amendment, the Second Amendment and/or Consolidated Amendment No. 1
have been affected by later amendments and/or will be affected by this Amendment
and for ease of reference, the parties also desire to restate and consolidate
in this Amendment all amendments to the Credit Agreement that are effective on
and as of the date hereof;
NOW, THEREFORE, in consideration of the premises above and the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
SECTION I - AMENDMENTS TO CREDIT AGREEMENT
A. Subsections 2A.01 and 2A.02 of the Credit Agreement are hereby amended in
their entirety to read as follows:
2A.01 AMOUNTS - The aggregate amount of the subject commitments shall be
sixty-five million dollars ($65,000,000), but that amount may be reduced
from time to time pursuant to subsection 2A.03 or 2A.04 and the subject
commitments may be terminated pursuant to section 5B. The amount of each
bank's subject commitment (subject to such reduction or termination), and
the proportion (expressed as a percentage) that it bears to all of the
subject commitments, is set forth opposite the bank's name below, to-wit:
<PAGE> 2
<TABLE>
<CAPTION>
<S> <C> <C>
$32,500,000 50% National City Bank
19,500,000 30% Society National Bank
13,000,000 20% Star Bank, N.A.
-----------
$65,000,000 100% Total
</TABLE>
2A.02 TERM - Each subject commitment shall commence as of the date of this
Agreement and shall remain in effect on a revolving basis until January 1,
1998 (the "conversion date") and thereafter on an amortizing basis until
its expiration on the last amortizing date, EXCEPT that a later conversion
date may be established from time to time pursuant to subsection 2A.06 and
EXCEPT that the subject commitments shall end in any event upon any earlier
reduction thereof to zero pursuant to subsection 2A.03 or 2A.04 or any
earlier termination pursuant to section 5B.
B. Subsection 2C.02 of the Credit Agreement is hereby amended in its entirety
to read as follows:
2C.02 MAXIMUM -- NCB-Agent shall not issue any subject BA
(a) prior to the conversion date if, after giving effect thereto, the
aggregate credit exposure of all the banks would exceed the aggregate
of the subject commitments as then in effect;
(b) after the conversion date unless concurrently therewith Borrower
shall make a principal payment in respect of the subject loans in an
aggregate principal amount equal to the face amount of the subject BA
in question, which payment shall be subject to subsections 2B.10 and
8.10 if and to the extent at all relevant; and
(c) at any time if the aggregate face amounts of the subject BA's
would exceed forty-five million dollars ($45,000,000).
C. Subsections 3B.01, 3B.02, 3B.03, 3B.04 and 3B.05 of the Credit Agreement
are hereby amended in their entirety to read as follows:
3B.02 NET WORTH -- Borrower will not suffer or permit the consolidated net
worth of the companies at any time to be less than the then required
minimum amount. The required minimum amount shall be ninety-eight million
four hundred forty-eight thousand dollars ($98,448,000) EXCEPT that the
required minimum amount shall be permanently increased
(a) on March 31, 1995 and on each quarterly date thereafter by an
amount equal to the sum of fifty percent (50%) of the consolidated
net income of the companies, if any, for the quarter-annual period
then ending plus
(b) upon each issuance or other sale by Borrower of any of its equity
securities by an amount equal to the net proceeds (after costs and
expenses) thereof.
3B.02 LEVERAGE -- Borrower will not suffer or permit the total liabilities
of the companies at any time to exceed an amount equal to two hundred
twenty-five percent (225%) of the sum of the net worth of the companies,
all as determined on a consolidated basis.
-2-
<PAGE> 3
3B.02 WORKING CAPITAL -- Borrower will not suffer or permit the companies'
consolidated working capital at any time to fall below one hundred million
dollars ($100,000,000).
3B.04 CURRENT RATION -- Borrower will not suffer or permit the current
assets of the companies at any time to fall below an amount equal to one
and seven-tenths (1.7) times the amount of their current liabilities, all
as determined on a consolidated basis.
3B.05 FIXED CHARGE COVERAGE -- Borrower will not suffer or permit the
aggregate of
(a) the consolidated net income of the companies (EXCEPT Borrower's
equity in any income or loss of PTGI) plus
(b) the consolidated interest expense of the companies plus
(c) the consolidated federal, state and local income taxes of the
companies plus
(d) the consolidated operating lease expense of the companies
for any four-quarter period to be less than an amount equal to one hundred
eighty percent (180%) of the sum of
(a) the consolidated interest expense of the companies plus
(b) the consolidated operating lease expense of the companies
for the four-quarter period, all as determined on a fully consolidated
basis.
D. Subsection 3D.01 of the Credit Agreement is hereby amended by replacing the
period at the end thereof with the word "or" and by adding to the end thereof
the following new clauses (iii) and (iv):
(iii) Borrower's investment in Pioneer-Standard Canada Inc. (exclusive of
retained earnings of Pioneer-Standard Canada Inc.) so long as the aggregate
amount of such investments does not exceed ten million eight hundred
thousand dollars ($10,800,000) or
(iv) any acquisition of the assets or stock of any corporation if the
aggregate of the consideration paid by Borrower for such acquisition does
not exceed twelve million dollars ($12,000,000).
E. Subsection 3D.02 of the Credit Agreement is hereby amended by replacing the
period at the end thereof with the word "or" and by adding to the end thereof
the following new clause (v):
(v) any advance or loan to, or guaranty of the obligations of,
Pioneer-Standard Canada Inc., so long as the aggregate amount of all such
advances, loans and guaranties does not exceed twenty million dollars
($20,000,000) at any one time.
F. Subsection3D.03(ii)(A) of the Credit Agreement is hereby amended by
deleting the reference to "fifteen million dollars ($15,000,000)" and
substituting in lieu thereof a reference to "twenty million dollars
($20,000,000)".
-3-
<PAGE> 4
G. Subsection 3D.05 of the Credit Agreement is hereby amended in its entirety
to read as follows:
3D.05 FIXED ASSETS -- Borrower will not invest (net after trade-ins, if
any) in fixed assets and leasehold improvements during any fiscal year
(commencing with the present year) more than the sum of
(a) an amount equal to thirty-five percent (35%) of Borrower's net
income, if any, for the fiscal year next preceding the fiscal year in
question plus
(b) its allowable obsolescence, amortization and depreciation charges
for the fiscal year next preceding the fiscal year in question.
H. The following new definition is hereby added to section 9 of the Credit
Agreement:
company refers to Borrower or to a subsidiary of Borrower, as the case may
be;
SECTION II - CONDITIONS PRECEDENT
It is a condition precedent to the effectiveness of this Amendment that,
prior to or on the date hereof, the following items shall have been
delivered to NCB-Agent (in form and substance acceptable to NCB-Agent):
(A) an Amended and Restated Promissory Note ("Amended Note") in favor of
each bank, in the form of Exhibit A to this Amendment, with all blanks
appropriately completed, duly executed by Borrower;
(B) an Acknowledgment of Receipt of a copy of, and Consent and Agreement to
the terms of, this Amendment and the Amended Notes by Pioneer-Standard
Canada Inc. with respect to a certain Continuing Guaranty of Payment
executed and delivered to NCB-Agent by such entity and dated May 27, 1994;
(C) a Certificate, dated as of the date hereof, of the secretary of
Borrower certifying (1) that Borrower's Articles of Incorporation and Code
of Regulations have not been amended since the execution of the Credit
Agreement (or certifying that true, correct and complete copies of any
amendments are attached), (2) that copies of resolutions of the Board of
Directors of Borrower are attached with respect to the approval of this
Amendment and of the matters contemplated hereby and authorizing the
execution, delivery and performance by Borrower of this Amendment and each
other document to be delivered pursuant hereto and (3) as to the
incumbency and signatures of the officers of Borrower signing this
Amendment and each other document to be delivered pursuant hereto;
(D) a non-refundable documentation fee in the amount of $7,500; and
(E) Such other documents as NCB-Agent may request to implement this
Amendment and the transactions contemplated hereby.
-4-
<PAGE> 5
If NCB-Agent or banks shall consummate the transactions contemplated hereby
prior to the fulfillment of any of the conditions precedent set forth above, the
consummation of such transactions shall constitute only an extension of time for
the fulfillment of such conditions and not a waiver thereof. Upon receipt of
the properly completed and executed Amended Notes, banks agree to return to
Borrower the previously executed notes respecting the subject loans and the same
shall be marked "Replaced" or "Substituted" or with words of like import.
SECTION III - AGREEMENTS CONCERNING PIONEER-STANDARD CANADA INC.
Borrower agrees to cause its subsidiary, Pioneer-Standard Canada Inc.,
to comply with all the provisions of sections 3A, 3B, 3C and 3D of the Credit
Agreement and agrees that all references to financial information in section 3A
shall be deemed to be references to financial information of Borrower and its
subsidiaries on a consolidating and consolidated basis; provided, that
Pioneer-Standard Canada Inc. shall not be required to comply with the provisions
of subsection 3D.06 (captioned "DIVIDENDS").
SECTION IV - REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to each of the other parties to
this Amendment that
(A) none of the representations and warranties made in subsections
4B.01 through 4B.08 of the Credit Agreement has ceased to be true and
complete in any material respect as of the date hereof; and
(B) as of the date hereof no "default under this Agreement" has
occurred that is continuing.
SECTION V - ACKNOWLEDGMENTS CONCERNING OUTSTANDING LOANS
Borrower acknowledges and agrees that, as of the date hereof, all of
Borrower's outstanding loan obligations to banks are owed without any offset,
deduction, defense or counterclaim of any nature whatsoever.
SECTION VI - REFERENCES
On an after the effective date of this Amendment, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof", or words of like
import referring to the Credit Agreement, and in the subject notes or other
related writings to the "Credit Agreement", "thereof", or words of like import
referring to the Credit Agreement shall mean and refer to the Credit Agreement
as amended hereby. The Credit Agreement, as amended by this Amendment, is and
shall continue to be in full force and effect and is hereby ratified and
confirmed in all respects. To the extent any amendment set forth in the First
Amendment, the Second Amendment or Consolidated Amendment No. 1 is omitted from
this Amendment, the same shall be deemed eliminated as between Borrower and the
other parties hereto as of the date hereof. The execution, delivery and
effectiveness of this Amendment shall not operate as a waiver of any right,
power or remedy of NCB-Agent or banks under the Credit Agreement or constitute a
waiver of any provision of the Credit Agreement except as specifically set forth
herein. From and after the date of this Amendment references in the Credit
Agreement to Exhibit B shall be deemed to be references to the form of the
Amended Note attached hereto as Exhibit A.
-5-
<PAGE> 6
SECTION VII - COUNTERPARTS AND GOVERNING LAW
This Amendment may be executed in any number of counterparts, each
counterpart to be executed one or more of the parties but, when taken together,
all counterparts shall constitute one agreement. This Amendment, and the
respective rights and obligations of the parties hereto shall be construed in
accordance with and governed by Ohio Law.
IN WITNESS WHEREOF, the Borrower, NCB-Agent and the banks have caused
this Amendment to be executed by their authorized officers as of the date and
year first above written.
National City Bank, Agent Pioneer-Standard Electronics, Inc.
By: /s/ JANICE E. FOCKE By: /s/ JOHN V. GOODGER
----------------------------- --------------------------------
Printed Name: Janice E. Focke Printed Name: John V. Goodger
------------------- ----------------------
Title: Vice President Title: Vice President
-------------------------- -----------------------------
National City Bank Star Bank, N.A.
By: /s/ JANICE E. FOCKE By: /s/ JOHN D. BARRETT
----------------------------- ---------------------------------
Printed Name: Janice E. Focke Printed Name: John D. Barrett
------------------- -----------------------
Title: Vice President Title: Vice President
-------------------------- ------------------------------
Society National Bank
By: /s/ RICHARD A. POHLE
-----------------------------
Printed Name: Richard A. Pohle
-------------------
Title: Vice President
--------------------------
<PAGE> 7
AMENDED AND RESTATED PROMISSORY NOTE
$____________________ Cleveland, Ohio February _____, 1995
FOR VALUE RECEIVED, the undersigned, Pioneer-Standard Electronics, Inc
(Borrower), an Ohio corporation, promises to pay to the order of _____________,
at the main office of National City Bank (NCB), Cleveland, Ohio, the principal
sum of
_________________________________DOLLARS
(or, if less, the aggregate unpaid principal balance form time to time shown on
the reverse side), together with interest computed in the manner provided in
the Credit Agreement referred to below, which principal and interest is payable
in accordance with provisions in the Credit Agreement.
This note is issued pursuant to an Agreement dated January 23, 1992, as amended
form time to time (as amended, the "Credit Agreement") by and among Borrower,
three banks and NCB (as agent of the banks for the purposes of the Credit
Agreement) which establishes "subject commitments" (one by each bank)
aggregating sixty-five million dollars ($65,000,000) pursuant to which Borrower
may obtain subject loans form the banks upon certain terms and conditions. This
note is issued in substitution for that certain $____________ Note dated
October 28, 1994 (the "Old Note"). This Note is not intended as a novation of
the obligations of Borrower under the Old Note but rather is merely a
restatement of the obligations thereunder after giving effect to the most recent
amendment to the Credit Agreements.
Reference is made to the Credit Agreement for the definitions of certain terms,
for provisions governing the making of subject loans, the acceleration of the
maturity thereof, rights of prepayment, and for other provisions to which this
note is subject. Any endorsement by the payee on the reverse side of this note
(or any along thereto) shall be presumptive evidence of the data so endorsed.
Address: Pioneer-Standard Electronics, Inc.
4800 East 131st Street
Cleveland, Ohio 44105
By:_______________________________
Printed Name:_____________________
Title:____________________________
EXHIBIT A
<PAGE> 8
ACKNOWLEDGMENT, CONSENT AND AGREEMENT
WITH RESPECT TO GUARANTY
The undersigned hereby acknowledge receipt of a copy of a certain
Consolidated Amendment No.2 to Credit Agreement (the "Agreement"), dated as of
February 28, 1995 and entered into by and among Pioneer-Standard Electronic,
Inc.("Borrower"), National City Bank, Society National Bank (successor in
interest to Amentrust Company National Association) and Star Bank, N.A.
(collectively the "banks") and National City Bank in its capacity as agent of
the banks ("NCB-Agent"). By executing this Acknowledgment, Consent and
Agreement the undersigned agrees to remain bound by the terms and conditions
of that certain Continuing Guaranty of Payment executed and delivered to
NCB-Agent by the undersigned and dated as of May 27, 1994 (the "Guaranty").
The Guaranty was executed in connection with the second amendment to a
certain Credit Agreement between Borrower, banks and NCB-Agent, which Credit
Agreement has been herefore amended and is now being amended by the Amendment.
The undersigned further acknowledges that the liability of the undersigned
pursuant to the Gauranty shall continue and be unaffected by the Amendment and
shall extend, without limitation, to any and all obligations of Borrower in
connection with the Amended Notes referred to in the Amendment. The
undersigned expressly consents to Borrower's execution of the Amended Notes and
the Amendment and agrees that banks and NCB-Agent may rely on this
Acknowledgment, Consent and Agreement in increasing and extending the financial
accommodations to Borrower as contemplated and evidenced by such documents.
PIONEER-STANDARD CANADA, INC.
Dated: February 28, 1995 By: /s/ JOHN V. GOODGER
-------------------------------
Printed Name: JOHN V. GOODGER
---------------------
Title: Vice President
----------------------------
<PAGE> 9
AMENDED AND RESTATED PROMISSORY NOTE
$13,000,000 Cleveland, Ohio February 28, 1995
FOR VALUE RECEIVED, the undersigned, Pioneer-Standard Electronics, Inc.
(Borrower), an Ohio corporation, promises to pay to the order of STAR BANK,
N.A., at the main office of National City Bank (NCB), Cleveland, Ohio, the
principal sum of
THIRTEEN MILLION DOLLARS
(or, if less, the aggregate unpaid principal balance from time to time shown on
the reverse side), together with interest computed in the manner provided in the
Credit Agreement referred to below, which principal and interest is payable in
accordance with provisions in the Credit Agreement.
This note is issued pursuant to an Agreement dated January 23, 1992, as amended
from time to time (as amended, the "Credit Agreement") by and among Borrower,
three banks and NCB (as agent of the banks for the purposes of the Credit
Agreement) which establishes "subject commitments" (one by each bank)
aggregating sixty-five million dollars ($65,000,000) pursuant to which Borrower
may obtain subject loans from the banks upon certain terms and conditions. This
note is issued in substitution for that certain $9,000,000 Note dated October
28, 1994 (the "Old Note"). This Note is not intended as a novation of the
obligations of Borrower under the Old Note but rather is merely a restatement of
the obligations thereunder after giving effect to the most recent amendment to
the Credit Agreement.
Reference is made to the Credit Agreement for the definitions of certain terms,
for provisions governing the making of subject loans, the acceleration of the
maturity thereof, rights of prepayment, and for other provisions to which this
note is subject. Any endorsement by the payee on the reverse side of this note
(or any allonge thereto) shall be presumptive evidence of the data so endorsed.
Address: Pioneer-Standard Electronics, Inc.
4800 East 131st Street
Cleveland, Ohio 44105 By: /s/ John V. Godger
-------------------------------------
Printed Name: John V. Godger
---------------------------
Title: Vice President Treasurer
----------------------------------
<PAGE> 10
AMENDED AND RESTATED PROMISSORY NOTE
$19,500,000 Cleveland, Ohio February 28, 1995
FOR VALUE RECEIVED, the undersigned, Pioneer-Standard Electronics, Inc.
(Borrower), an Ohio corporation, promises to pay to the order of SOCIETY
NATIONAL BANK, at the main office of National City Bank (NCB), Cleveland, Ohio,
the principal sum of
NINETEEN MILLION FIVE HUNDRED THOUSAND DOLLARS
(or, if less, the aggregate unpaid principal balance from time to time shown on
the reverse side), together with interest computed in the manner provided in the
Credit Agreement referred to below, which principal and interest is payable in
accordance with provisions in the Credit Agreement.
This note is issued pursuant to an Agreement dated January 23, 1992, as amended
from time to time (as amended, the "Credit Agreement") by and among Borrower,
three banks and NCB (as agent of the banks for the purposes of the Credit
Agreement) which establishes "subject commitments" (one by each bank)
aggregating sixty-five million dollars ($65,000,000) pursuant to which Borrower
may obtain subject loans from the banks upon certain terms and conditions. This
note is issued in substitution for that certain $13,500,000 Note dated October
28, 1994 (the "Old Note"). This Note is not intended as a novation of the
obligations of Borrower under the Old Note but rather is merely a restatement of
the obligations thereunder after giving effect to the most recent amendment to
the Credit Agreement.
Reference is made to the Credit Agreement for the definitions of certain terms,
for provisions governing the making of subject loans, the acceleration of the
maturity thereof, rights of prepayment, and for other provisions to which this
note is subject. Any endorsement by the payee on the reverse side of this note
(or any allonge thereto) shall be presumptive evidence of the data so endorsed.
Address: Pioneer-Standard Electronics, Inc.
4800 East 131st Street
Cleveland, Ohio 44105 By: /s/ John V. Godger
-------------------------------------
Printed Name: John V. Godger
---------------------------
Title: Vice President Treasurer
----------------------------------
<PAGE> 11
AMENDED AND RESTATED PROMISSORY NOTE
$32,000,000 Cleveland, Ohio February 28, 1995
FOR VALUE RECEIVED, the undersigned, Pioneer-Standard Electronics, Inc.
(Borrower), an Ohio corporation, promises to pay to the order of NATIONAL CITY
BANK, at the main office of National City Bank (NCB), Cleveland, Ohio, the
principal sum of
THIRTY-TWO MILLION FIVE HUNDRED THOUSAND DOLLARS
(or, if less, the aggregate unpaid principal balance from time to time shown on
the reverse side), together with interest computed in the manner provided in the
Credit Agreement referred to below, which principal and interest is payable in
accordance with provisions in the Credit Agreement.
This note is issued pursuant to an Agreement dated January 23, 1992, as amended
from time to time (as amended, the "Credit Agreement") by and among Borrower,
three banks and NCB (as agent of the banks for the purposes of the Credit
Agreement) which establishes "subject commitments" (one by each bank)
aggregating sixty-five million dollars ($65,000,000) pursuant to which Borrower
may obtain subject loans from the banks upon certain terms and conditions. This
note is issued in substitution for that certain $22,500,000 Note dated October
28, 1994 (the "Old Note"). This Note is not intended as a novation of the
obligations of Borrower under the Old Note but rather is merely a restatement of
the obligations thereunder after giving effect to the most recent amendment to
the Credit Agreement.
Reference is made to the Credit Agreement for the definitions of certain terms,
for provisions governing the making of subject loans, the acceleration of the
maturity thereof, rights of prepayment, and for other provisions to which this
note is subject. Any endorsement by the payee on the reverse side of this note
(or any allonge thereto) shall be presumptive evidence of the data so endorsed.
Address: Pioneer-Standard Electronics, Inc.
4800 East 131st Street
Cleveland, Ohio 44105 By: /s/ John V. Godger
-------------------------------------
Printed Name: John V. Godger
---------------------------
Title: Vice President Treasurer
----------------------------------
<PAGE> 1
Exhibit 10(a)
EXECUTION COPY
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT BETWEEN PIONEER-STANDARD ELECTRONICS, INC.
AND
PRESTON B. HELLER, JR.
June 12, 1995
<PAGE> 2
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Employment . . . . . . . . . . . . . . . . . . . . . . . 1
2. Period of Employment . . . . . . . . . . . . . . . . . . 1
3. Position, Duties, Responsibilities . . . . . . . . . . . 1
4. Compensation, Compensation Plans, Perquisites . . . . . 2
5. Employee Benefit Plans . . . . . . . . . . . . . . . . . 2
6. Effect of Death or Disability . . . . . . . . . . . . . 3
7. Termination . . . . . . . . . . . . . . . . . . . . . . 4
8. Competition . . . . . . . . . . . . . . . . . . . . . . 6
9. Confidential Information . . . . . . . . . . . . . . . . 6
10. Noninterference . . . . . . . . . . . . . . . . . . . . 7
11. Remedy . . . . . . . . . . . . . . . . . . . . . . . . 7
12. Withholding . . . . . . . . . . . . . . . . . . . . . . 7
13. Notices . . . . . . . . . . . . . . . . . . . . . . . . 8
14. General Provisions . . . . . . . . . . . . . . . . . . . 8
15. Amendment or Modification; Waiver . . . . . . . . . . . 9
16. Severability . . . . . . . . . . . . . . . . . . . . . . 9
17. Successors to the Company . . . . . . . . . . . . . . . 9
18. Operation of Agreement . . . . . . . . . . . . . . . . . 10
19. Enforcement Costs . . . . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE> 3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT between
PIONEER-STANDARD ELECTRONICS, INC., an Ohio corporation (the "Company"), and
PRESTON B. HELLER ("Heller"), dated June ___, 1995, to be effective April 3,
1995.
W I T N E S S E T H:
WHEREAS: The Company and Heller have given consideration to an
employment agreement providing for the services of Heller as Chairman of the
Board; and
WHEREAS: This agreement is deemed necessary at the present time
to meet the need for a continued strong management without substantial change;
and
WHEREAS: Together with other officers of the Company, Heller
has been responsible for the success of the business of the Company;
NOW, THEREFORE, it is hereby agreed by and between the Company
and Heller as follows:
1 . Employment
The Company hereby agrees to continue to employ Heller, and
Heller hereby agrees to remain in the employ of the Company, for the period set
forth in Section 2 below (the "Period of Employment"), in the position and with
the duties and responsibilities set forth in Section 3 below, and upon the other
terms and conditions hereinafter stated.
2 . Period of Employment
For the purposes of this Agreement, the Period of Employment,
subject only to the provisions of Section 6 below (relating to Death or
Disability), shall continue until termination of employment as set forth in
Section 7 (relating to Termination).
3 . Position, Duties, Responsibilities
3.01 During the Period of Employment, Heller shall serve as
Chairman of the Board and shall have the authority, power and duties with regard
to his position as may from time to time be assigned by the Board of Directors
or Chief Executive Officer of the Company.
3.02. At all times during the Period of Employment Heller shall
serve and continue to serve as Chairman of the Board of the Company.
3.03. Throughout the Period of Employment Heller shall not be
required to devote more than ten (10) days per month during normal business
hours to the business and affairs of the Company,
<PAGE> 4
but nothing in this Agreement shall preclude Heller from devoting reasonable
time required for serving as a director or member of an advisory committee of
any organization involving no conflict of interest with the interests of the
Company, from engaging in charitable and community activities, and from managing
his personal investments, provided that such activities do not materially
interfere with the regular performance of his duties and responsibilities under
this Agreement.
3.04. Heller's office shall be located at the corporate offices
of the Company in the Greater Cleveland Area, State of Ohio, and Heller shall
not be required to locate his office elsewhere without his prior written
consent, nor shall be required to be absent therefrom on travel status or
otherwise more than a total of sixty (60) days in any calendar year nor more
than five (5) consecutive days at any one time.
4 . Compensation, Compensation Plans, Perquisites
4.01 (a) For all services rendered by Heller in any capacity
during the Period of Employment, including without limitation, services as an
executive officer, director or member of any committee of the Company or of any
subsidiary, division or affiliate thereof, Heller shall be paid as compensation
a base salary, payable not less often than monthly, at the rate of no less than
$25,000 per month.
(b) Any increase in salary or other compensation shall
in no way diminish any other obligation of the Company under this Agreement,
unless specifically agreed to in writing by Heller.
4.02. During the Period of Employment Heller shall be and
continue to be a full participant in the Company's Employees' Profit Sharing
Plan or any equivalent successor plan that may be adopted by the Company.
4.03. During the Period of Employment Heller shall be entitled
to perquisites, including without limitation, an office, secretarial and
clerical staff, and to fringe benefits comparable to those enjoyed by the other
executive officers of the Company, but in each case at least equal to those
attached to his office on the date of this Agreement, as well as to
reimbursement, upon proper accounting, of reasonable expenses and disbursements
incurred by him in the course of his duties.
5 . Employee Benefit Plans
5.01. The compensation, together with other matters provided
for in Section 4 above, is in addition to the benefits provided for in this
Section 5.
5.02. Heller, his dependents, beneficiaries and estate shall be
entitled to all payments and benefits and service credit for benefits during the
Period of Employment to which executive
-2-
<PAGE> 5
officers of the Company, their dependents and beneficiaries are entitled as the
result of the employment of such executive officers during the Period of
Employment under the terms of employee plans and practices of the Company,
including, without limitation, the Company's retirement program consisting of
its Employees' Profit Sharing Plan, its group life insurance plan, its
accidental death and dismemberment insurance, disability, medical and health and
welfare plans, any key person individual life and disability policies,
automobile expense reimbursement, club membership fees and dues, and other
present or equivalent successor plans and practices of the Company, its
subsidiaries and divisions, for which officers, their dependents and
beneficiaries are eligible, and to all payments or other benefits under any such
plan or practice after the Period of Employment as a result of participation in
such plan or practice during the Period of Employment.
6 . Effect of Death or Disability
6.01. In the event of the death of Heller during the Period of
Employment, the Period of Employment shall be deemed to have ended as of the
close of business on the last day of the month in which death shall have
occurred, and his legal representative shall be entitled to (i) the compensation
provided for in paragraph 4.01(a) above for the month in which death shall take
place at the rate being paid at the time of death, and (ii) any benefits
provided pursuant to paragraph 5.02 hereof which are payable pursuant to the
terms of the applicable plan or practice.
6.02 (a) The term "Disability," as used in this Agreement,
shall mean an illness or accident which prevents Heller from performing his
duties under this Agreement for a period of six (6) consecutive months. The
Period of Employment shall be deemed to have ended as of the close of business
on the last day of such six (6) months' period but without prejudice to any
payments due Heller in respect of disability.
(b) In the event of the Disability of Heller during the
Period of Employment, Heller shall be entitled to (i) the compensation provided
for in paragraph 4.01(a) above, at the rate being paid at the time of the
commencement of Disability, for the period of such Disability but not in excess
of six (6) months, and (ii) any benefits provided pursuant to paragraph 5.02
hereof which are payable pursuant to the terms of the applicable plan or
practice.
(c) The amount of any payments due under this paragraph
6.02 shall be reduced by any payments to which Heller may be paid for the same
period under any disability plan of the Company or of any subsidiary or
affiliate thereof.
-3-
<PAGE> 6
7. Termination
7.01. GENERAL. The Company may terminate Heller with or without
cause at any time during the Period of Employment, subject to the provisions of
this Section 7.
7.02. CHANGE OF CONTROL. Within one (1) year of a Change of
Control of the Company, as defined in paragraph 18.02, Heller shall have the
right to terminate his employment with the Company and there shall be paid or
provided to Heller, his dependents, beneficiaries and estate, as liquidated
damages or severance pay, or both, the following:
(a) The compensation provided for in paragraph 4.01(a)
above for the month in which Termination shall have occurred at the rate being
paid at the time of Termination; and an amount equal to his previous twenty four
(24) months of base salary plus an amount equal to any cash incentive bonus paid
for the two (2) previously completed fiscal years. Such amount shall be paid to
Heller in one payment, immediately upon Termination.
(b) For two (2) years following the date of
Termination, Heller, his dependents, beneficiaries and estate, shall continue to
be entitled to all benefits provided pursuant to paragraph 5.02 hereof which are
payable pursuant to the terms of the applicable plan or practice, and service
credit for benefits under all employee benefit plans of the Company, including,
without limitation, the Company's profit sharing plan referred to in paragraph
5.02 above, upon the same basis as immediately prior to Termination and, to the
extent that such benefits or service credit for benefits shall not be payable or
provided under any such plans to Heller, his dependents, beneficiaries and
estate, by reason of his no longer being an employee of the Company as the
result of Termination, or any such plan, program or arrangement is discontinued
or the benefits thereunder are materially reduced, the Company shall itself
arrange to provide benefits substantially similar to those which Heller, his
dependents and beneficiaries were entitled to receive under such plans, programs
and arrangements immediately prior to termination to Heller, his dependents,
beneficiaries and estate.
Any termination by the Company within the period of ninety (90)
days prior to the execution of a letter of intent or a definitive agreement
which could lead to a Change of Control and the closing of the transaction
actually resulting in the Change of Control, as defined in paragraph 18.02,
shall be deemed to be a termination under this paragraph 7.02. An election by
Heller to terminate his employment under the provisions of this paragraph 7.02
shall not be deemed a Voluntary Termination of employment by Heller under
paragraph 7.03 of this Agreement or any plan or practice of the Company.
-4-
<PAGE> 7
7.03. FOR CAUSE OR VOLUNTARY TERMINATION. For the purpose of
any provision of this Agreement, the termination of Heller's employment shall be
deemed to have been For Cause only if:
(a) termination of his employment shall have been the
result of Heller's conviction of any of the following: (i) embezzlement; (ii)
misappropriation of money or other property of the Company; or (iii) any felony;
or
(b) there has been a breach by Heller during the
Period of Employment of the provisions of paragraph 3.02 above, relating to his
position and duties, Section 8 relating to Competition, Section 9 relating to
Confidential Information, or Section 10 relating to Noninterference, and such
breach results in demonstrably material injury to the Company, and with respect
to any alleged breach of paragraph 3.02 hereof, Heller shall have failed to
remedy such proven breach within thirty (30) days from his receipt of written
notice from the Company.
If Heller's employment is terminated by the Company For Cause,
or if Heller shall Voluntarily Terminate his employment with the Company, Heller
shall be entitled to the compensation provided for in paragraph 4.01(a) through
the date of such termination. Heller shall not be entitled to any additional
compensation or benefits (except for any vested benefits), and shall continue to
be bound by the provisions of Section 8 of this Agreement (relating to
Competition), the provisions of Section 9 of this Agreement (relating to
Confidential Information), and the provisions of Section 10 (relating to
Noninterference).
7.04. WITHOUT CAUSE. Subject to compliance by Heller
with the provisions of Section 8 of this Agreement (relating to Competition),
the provisions of Section 9 of this Agreement (relating to Confidential
Information), and the provisions of Section 10 of this Agreement (relating to
Noninterference), if the Company shall terminate Heller's employment, Without
Cause, there shall be paid or provided to Heller, his dependents, beneficiaries
and estate, as liquidated damages or severance pay, or both, the compensation
provided for in paragraph 4.01(a) above for the month in which termination shall
have occurred at the rate being paid at the time of such termination, and the
amount (the "Payment Amount") per month, which shall consist of 1/24th of the
total of an amount equal to his previous twenty-four (24) months of base salary
plus an amount equal to any cash incentive. Such Payment Amount shall be paid to
Heller or, in case of his prior death, to his legal representative, in monthly
installments at the end of each month commencing with the month next following
that in which such termination shall have occurred, and continuing for a period
of twenty-four (24) months. Heller shall also receive any benefits provided
pursuant to paragraph 5.02 hereof which are payable pursuant to the terms of the
applicable plan or practice. In the event the Company fails to make such
payments when due, then the remaining payments shall become due and payable
immediately.
-5-
<PAGE> 8
7.05. ARBITRATION. In the event that Heller's
employment shall be terminated by the Company during the Period of Employment or
the Company shall withhold payments or provision of benefits because Heller is
alleged to be engaged in activities prohibited by Sections 8, 9 or 10 of this
Agreement or for any other reason, Heller shall have the right, in addition to
all other rights and remedies provided by law, at his election either to seek
arbitration in the metropolitan area of Cleveland, Ohio, under the rules of the
American Arbitration Association by serving a notice to arbitrate upon the
Company or to institute a judicial proceeding, in either case within one hundred
and twenty (120) days after having received notice of termination of his
employment or within such longer period as may reasonably be necessary for
Heller to take action in the event that his illness or incapacity should
preclude his taking such action within such one hundred and twenty (120) day
period.
8. Competition
There shall be no obligation on the part of the Company to make
any further payments provided for in paragraph 7.04 above if Heller shall,
during the two (2) years following termination of Heller's employment for any
reason except Change of Control as described in paragraph 7.02, engage in
Competition with the Company as hereinafter defined. The word "Competition" for
purposes of this Section 8 and any other provision of this Agreement shall mean
taking any employment or consulting position with or control of one of the
Company's top twenty-five (25) competitors as listed in the most current issue
at the date of termination of Electronic Buyer's News and/or
Electronic News; provided, however, that in no event shall ownership of
less than 5% of the outstanding capital stock entitled to vote for the election
of directors of a corporation with a class of equity securities held of record
by more than 500 persons be deemed Competition with the Company within the
meaning of this Section 8.
9 . Confidential Information
9.01. Except for information which is already in the public
domain, or which is publicly disclosed by persons other than Heller, or which is
required by law or court order to be disclosed, or information given to Heller
by a third party not bound by any obligation of confidentiality, Heller shall at
all times during and after his employment with the Company hold in strictest
confidence any and all confidential information within his knowledge and which
is material to the business of the Company (whether acquired prior to or during
his employment with the Company) concerning the inventions, products, processes,
methods of distribution, customers, services, business, suppliers or trade
secrets of the Company, except that Heller may, in connection with the
performance of his duties to the Company, divulge confidential information to
the directors, officers, employees and shareholders of the Company and to the
advisors, accountants, attorneys or lenders of the Company or such other
individuals as deemed prudent in the course
-6-
<PAGE> 9
of business to carry out the responsibilities and duties of his position. Such
confidential information includes, without limitation, financial information,
sales information, price lists, marketing data, the identity and lists of actual
and potential customers and technical information, all to the extent that such
information is not intended by the Company for public dissemination.
9.02. Heller also agrees that upon leaving the Company's employ
he will not take with him, without the prior written consent of an officer
authorized to act in the matter by the Board of Directors of the Company, any
Company document, contract, internal financial or management reports, customers
list, product list, price list, catalog, employee list, procedures, software,
MIS data, drawing, blueprint, specification or other document of the Company,
its subsidiaries, affiliates and divisions, which is of a confidential nature
relating to the Company, its subsidiaries, affiliates and divisions, or, without
limitation, relating to its or their methods of purchase or distribution, or any
description of any trade secret, formulae or secret processes.
10. Noninterference
Except for Change of Control as described in paragraph 7.02,
Heller shall not, at any time during or within two (2) years after his
employment is terminated with the Company, without the prior written consent of
the Company, directly or indirectly, induce or attempt to induce any key
employee, key agent or other key representative or associate of the Company to
terminate his or her relationship with the Company, or in any way directly or
indirectly interfere with such a relationship or any relationship between the
Company and any of its top fifty (50) suppliers or top two hundred fifty (250)
customers, both in terms of the Company's sales volume, provided that purchasing
goods from a supplier to the Company or making a sale to any of the Company's
customers shall not be deemed to be interference.
11. Remedy
Heller acknowledges that Sections 8, 9 and 10 hereof were
negotiated at arms length and are required for the fair and reasonable
protection of the Company. Heller and the Company further acknowledge and agree
that a breach of those obligations and agreements will result in irreparable and
continuing damage to the Company for which there will be no adequate remedy at
law and, therefore, Heller and the Company agree that in the event of any breach
of said obligations and agreements the Company, and its successors and assigns,
shall be entitled to injunctive relief and such other and further relief,
including monetary damages, as is proper in the circumstances. It is further
agreed that the running of the periods provided above in Sections 8 and 10,
shall be tolled during any period which Heller shall be adjudged to have been in
violation of any of his obligations under such Sections.
-7-
<PAGE> 10
12. Withholding
Anything to the contrary notwithstanding, all payments required
to be made by the Company hereunder to Heller or his estate or beneficiaries,
shall be subject to the withholding of such amounts, if any, relating to tax and
other payroll deductions as the Company may reasonably determine it should
withhold pursuant to any applicable law or regulation. In lieu of withholding
such amounts, the Company may accept other provisions to the end that it has
sufficient funds to pay all taxes required by law to be withheld in respect of
such payments or any of them.
13. Notices
All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be sufficiently
given if and when mailed in the continental United States by registered or
certified mail or personally delivered to the party entitled thereto at the
address stated below or to such changed address as the addressee may have given
by a similar notice:
To the Company: Pioneer-Standard Electronics, Inc.
4800 East 131st Street
Cleveland, Ohio 44105
Attention: Secretary or
Assistant Secretary
To Heller: Preston B. Heller, Jr.
13599 County Line Road
Chagrin Falls, Ohio 44022
14. General Provisions
14.01. There shall be no right of set-off or counter claim, in
respect any claim, debt or obligation, against payments to Heller, his
dependents, beneficiaries or estate provided for in this Agreement.
14.02. No right or interest to or in any payments shall be
assignable by Heller; provided, however, that this provision shall not preclude
him from designating one or more beneficiaries to receive any amount that may be
payable after his death and shall not preclude the legal representative of his
estate from assigning any right hereunder to the person or persons entitled
thereto under his will or, in the case of intestacy, to the person or persons
entitled thereto under the laws of intestacy applicable to his estate. The term
"beneficiaries" as used in this Agreement shall mean a beneficiary or
beneficiaries so designated to receive any such amount or, if no beneficiary has
been so designated, the legal representative of Heller's estate.
-8-
<PAGE> 11
14.03. No right, benefit or interest hereunder, shall be
subject to anticipation, alienation, sale, assignment, encumbrance, charge,
pledge, hypothecation, or set-off in respect of any claim, debt or obligation,
or to execution, attachment, levy or similar process, or assignment by operation
of law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
14.04. In the event of Heller's death or a judicial
determination of his incompetence, reference in this Agreement to Heller shall
be deemed, where appropriate, to refer to his legal representative or, where
appropriate, to his beneficiary or beneficiaries.
14.05. The titles to sections in this Agreement are intended
solely for convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
14.06. This Agreement shall be binding upon and shall inure to
the benefit of (a) Heller and, subject to the provisions of paragraphs 14.02 and
14.03, his heirs and legal representatives, and (b) the Company and its
successors as provided in Section 17 hereof.
15. Amendment or Modification; Waiver
No provision of this Agreement may be amended or waived unless
such amendment or waiver is authorized by the Board of Directors of the Company
or any authorized committee of the Board of Directors and is agreed to in
writing, signed by Heller and by an officer of the Company thereunto duly
authorized by either the Board of Directors or the Compensation Committee.
Except as otherwise specifically provided in this Agreement, no waiver by either
party hereto of any breach by the other party hereto of any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of a subsequent breach of such condition or provision or a waiver of a
similar or dissimilar provision or condition at the same or at any prior or
subsequent time.
16. Severability
In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
-9-
<PAGE> 12
17. Successors to the Company
Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the Company and any successor of the
Company, including, without limitation, any corporation which acquires directly
or indirectly all or substantially all of the assets of the Company whether by
merger, consolidation, sale or otherwise (and such successor shall thereafter be
deemed "the Company" for the purposes of this Agreement), but shall not
otherwise be assignable by the Company.
18. Operation of Agreement
18.01. This Agreement shall be effective April 3, 1995, and
shall supersede the Amended and Restated Employment Agreement effective April 1,
1993 between Heller and the Company.
18.02. For the purpose of this Agreement, the term "Change in
Control" of the Company shall mean a change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934 as in effect on the
date of this Agreement; provided that, without limitation, such a change in
control shall be deemed to have occurred if and when (a) any "person" (as such
term is used in Sections 13(d) and 14(d) (2) of the Securities Exchange Act of
1934) is or becomes a beneficial owner, directly or indirectly, of securities of
the Company representing 20% or more of the combined voting power of the
Company's then outstanding securities or (b) during any period of twelve (12)
consecutive months, commencing before or after the date of this Agreement,
individuals who, at the beginning of such twelve (12) month period were
directors of the Company for whom Heller, as a shareholder, shall have voted,
cease for any reason to constitute at least a majority of the Board of Directors
of the Company.
19. Enforcement Costs
The Company is aware that upon the occurrence of a Change in
Control the Board of Directors or a shareholder of the Company may then cause or
attempt to cause the Company to refuse to comply with its obligations under this
Agreement, or may cause or attempt to cause the Company to institute, or may
institute, litigation seeking to have this Agreement declared unenforceable, or
may take, or attempt to take, other action to deny Heller the benefits intended
under this Agreement. In these circumstances, the purpose of this Agreement
could be frustrated. It is the intent of the Company that Heller not be required
to incur the expenses associated with the enforcement of his rights under this
Agreement by litigation or other legal action because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
Heller hereunder, nor be bound to negotiate any settlement of his rights
hereunder under threat of incurring such
-10-
<PAGE> 13
expenses. Accordingly, if following a Change in Control it should appear to
Heller that the Company has failed to comply with any of its obligations under
this Agreement or in the event that the Company or any other person takes any
action to declare this Agreement void or unenforceable, or institutes any
litigation or other legal action designed to deny, diminish or to recover from,
Heller, or in the event the Company fails or refuses to comply with the
obligations under this Agreement, the benefits intended to be provided to Heller
hereunder, and that Heller has complied with all of his obligations under this
Agreement, the Company irrevocably authorizes Heller from time to time to retain
counsel of his choice at the expense of the Company as provided in this Section
19, to represent Heller in connection with the initiation or defense of any
litigation or other legal action, whether by or against the Company or any
Director, officer, shareholder or other person affiliated with the Company, in
any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to Heller entering into an attorney-client relationship with such
counsel, and in that connection the Company and Heller agree that a confidential
relationship shall exist between Heller and such counsel. The reasonable fees
and expenses of counsel selected from time to time by Heller as hereinabove
provided shall be paid or reimbursed to Heller by the Company on a regular,
periodic basis upon presentation by Heller of a statement or statements prepared
by such counsel in accordance with its customary practices, up to a maximum
aggregate amount of $500,000.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
ATTEST: PIONEER-STANDARD ELECTRONICS, INC.
/s/ Colleen M. Simon By/s/ James L Bayman
- ----------------------- ----------------------------------
James L. Bayman, Chief Executive
Officer and President
ATTEST:
/s/ Beverly M Fisher /s/ Preston B. Heller
- ----------------------- ----------------------------------
Preston B. Heller, Jr.
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<PAGE> 1
Exhibit 10(b)
EXECUTION COPY
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT BETWEEN PIONEER-STANDARD ELECTRONICS, INC.
AND
JAMES L. BAYMAN
June 12, 1995
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Period of Employment . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Position, Duties, Responsibilities . . . . . . . . . . . . . . . . . 1
4. Compensation, Compensation Plans, Perquisites . . . . . . . . . . . 2
5. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 4
6. Effect of Death or Disability . . . . . . . . . . . . . . . . . . . 4
7. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
8. Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9. Confidential Information . . . . . . . . . . . . . . . . . . . . . . 8
10. Noninterference . . . . . . . . . . . . . . . . . . . . . . . . . . 8
11. Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
12. Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
13. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
14. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 10
15. Amendment or Modification; Waiver . . . . . . . . . . . . . . . . . 11
16. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
17. Successors to the Company . . . . . . . . . . . . . . . . . . . . . 11
18. Operation of Agreement . . . . . . . . . . . . . . . . . . . . . . . 11
19. Enforcement Costs . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE> 3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT between PIONEER-STANDARD
ELECTRONICS, INC., an Ohio corporation (the "Company"), and JAMES L. BAYMAN
("Bayman"), dated June ___, 1995, to be effective April 3, 1995.
W I T N E S S E T H:
WHEREAS: The Company and Bayman have given consideration to an
employment agreement providing for the services of Bayman as President and Chief
Executive Officer; and
WHEREAS: This agreement is deemed necessary at the present time to meet
the need for a continued strong management without substantial change; and
WHEREAS: Together with other officers of the Company, Bayman has been
responsible for the success of the business of the Company;
NOW, THEREFORE, it is hereby agreed by and between the Company and
Bayman as follows:
1. Employment
The Company hereby agrees to continue to employ Bayman, and Bayman
hereby agrees to remain in the employ of the Company, for the period set forth
in Section 2 below (the "Period of Employment"), in the position and with the
duties and responsibilities set forth in Section 3 below, and upon the other
terms and conditions hereinafter stated.
2. Period of Employment
For the purposes of this Agreement, the Period of Employment, subject
only to the provisions of Section 6 below (relating to Death or Disability),
shall continue until termination of employment as set forth in Section 7
(relating to Termination).
3. Position, Duties, Responsibilities
3.01 (a) During the Period of Employment, Bayman shall serve as
President and Chief Executive Officer of the Company and shall have the
responsibility for all of the operations of the Company including the authority,
power and duties with regard to his position as may from time to time be
assigned by the Board of Directors of the Company. Bayman's duties will include
the supervision and direction of the corporate professional staff assigned to
him for supervision, the strategic direction of the Company's operations, and
liaison with the Company's affiliate, Pioneer/Technologies Group, Inc.
("Technologies"). He shall at all times during such period have the authority,
power and duties of the person charged with the general management of the
business and affairs of the areas assigned to him with authority to manage and
<PAGE> 4
direct all operations and affairs of those areas and to employ and discharge all
employees thereof, reporting and being responsible only to the Board of
Directors of the Company.
3.01 (b) At all times during the Period of Employment, Bayman shall
hold a position of responsibility and importance and a position of scope, with
the functions, duties and responsibilities attached thereto, at least equal in
responsibility and importance and in scope to and commensurate with his position
on the date of this Agreement described in general terms in Section 3.01(a)
above.
3.02. It is further contemplated that at all times during the Period of
Employment Bayman shall serve and continue to serve as President and Chief
Executive Officer of the Company and, if and when reelected, as a member of its
Board of Directors. In the event that Bayman's employment is terminated for any
reason as provided in paragraph 7 below, Bayman agrees that he shall immediately
submit his written resignation as a member of the Board of Directors of the
Company.
3.03. Throughout the Period of Employment Bayman shall devote his full
time and undivided attention during normal business hours to the business and
affairs of the Company, except for reasonable vacations afforded the Company's
executive officers consistent with past practices and except for illness or
incapacity, but nothing in this Agreement shall preclude Bayman from devoting
reasonable time required for serving as a director or member of an advisory
committee of any organization involving no conflict of interest with the
interests of the Company, from engaging in charitable and community activities,
and from managing his personal investments, provided that such activities do not
materially interfere with the regular performance of his duties and
responsibilities under this Agreement.
3.04. Bayman's office shall be located at the corporate offices of the
Company in the Greater Cleveland Area, State of Ohio, and Bayman shall not be
required to locate his office elsewhere without his prior written consent, nor
shall he be required to be absent therefrom on travel status or otherwise more
than a total of sixty (60) days in any calendar year nor more than fifteen (15)
consecutive days at any one time.
4. Compensation, Compensation Plans, Perquisites
4.01 (a) For all services rendered by Bayman in any capacity during the
Period of Employment, including without limitation, services as an executive
officer, director or member of any committee of the Company or of any
subsidiary, division or affiliate thereof, Bayman shall be paid as compensation:
(i) A base salary, payable not less often than monthly, at the
rate of no less than $20,833 per month, with such increases in such rate as
shall be awarded from time to time in
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<PAGE> 5
accordance with the Company's regular administrative practices of salary
increases applicable to executives of the Company in effect on the date of this
Agreement; and
(ii) A cash incentive bonus equal to the product of 8/10 of 1%
of the sum of the "actual operating income" of the Company plus its equity
earnings in profits/losses from Technologies, multiplied by the ratio of the
Company's "actual return on capital" to 22.0%, or such equivalent successor
bonus plan as may be adopted by the Company with Bayman's written consent. The
term "actual operating income" shall be defined as the income before income tax
(state and federal income tax), interest, and the Company's equity earnings in
profits/losses from Technologies. The term "actual return on capital" shall be
defined as the Company's "actual operating income" divided by the sum of its
interest-bearing debt, plus equity, less the Company's equity investment in
Technologies (the denominator shall be calculated for each fiscal year as the
average of such amounts as at the end of each of the Company's four (4) fiscal
quarters). The Company shall calculate and pay 75% of such bonus to Bayman at
the end of each of the first three (3) fiscal quarters. After April 1 and before
June 16 of the next fiscal year, and after audited financial statements are
available to the Company, the Company shall pay Bayman the balance of any bonus
due Bayman based on the full year calculation less payments made for the first
three (3) fiscal quarters, which payment shall be vested in the event of
termination by reason of Death or Disability (Section 6), Change of Control,
(Section 7.02), or Without Cause (Section 7.04), but shall be forfeited in the
event of termination For Cause or Voluntary Termination (Section 7.03).
(b) Any increase in salary or bonus or other compensation shall in
no way diminish any other obligation of the Company under this Agreement, unless
specifically agreed to in writing by Bayman.
4.02. During the Period of Employment Bayman shall be and continue to
be a full participant in the Company's Employees' Profit Sharing Plan or any
equivalent successor plan that may be adopted by the Company.
4.03. During the Period of Employment Bayman shall be entitled to
perquisites, including without limitation, an office, secretarial and clerical
staff, and to fringe benefits comparable to those enjoyed by the other executive
officers of the Company, but in each case at least equal to those attached to
his office on the date of this Agreement, as well as to reimbursement, upon
proper accounting, of reasonable expenses and disbursements incurred by him in
the course of his duties.
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<PAGE> 6
5. Employee Benefit Plans
5.01. The compensation, together with other matters provided for in
Section 4 above, is in addition to the benefits provided for in this Section 5.
5.02. Bayman, his dependents, beneficiaries and estate shall be
entitled to all payments and benefits and service credit for benefits during the
Period of Employment to which executive officers of the Company, their
dependents and beneficiaries are entitled as the result of the employment of
such executive officers during the Period of Employment under the terms of
employee plans and practices of the Company, including, without limitation, the
Company's retirement program consisting of its Employees' Profit Sharing Plan,
its group life insurance plan, its accidental death and dismemberment insurance,
disability, medical and health and welfare plans, any key person individual life
and disability policies, automobile expense reimbursement, club membership fees
and dues, and other present or equivalent successor plans and practices of the
Company, its subsidiaries and divisions, for which officers, their dependents
and beneficiaries are eligible, and to all payments or other benefits under any
such plan or practice after the Period of Employment as a result of
participation in such plan or practice during the Period of Employment.
5.03. Bayman shall be eligible to participate in the Company's 1991
Stock Option Plan (which, together with any successor stock option plan or plans
that may be adopted by the Company, is referred to herein as the "Option Plan").
The Company has granted Bayman stock options ("Options") at an option price
equal to the fair market value of the Company's Common Shares at the date of
grant. The terms and conditions of exercise of Bayman's Options shall be as is
set forth in Bayman's Stock Option Agreements (the "Option Agreements") with the
Company; provided, however, that in the event of a Change in Control, as defined
in paragraph 18.02 below, then notwithstanding the provisions of said Option
Agreements, all options (including those granted to his under the 1982 Incentive
Stock Option Plan) shall immediately be 100% vested and Bayman shall have the
immediate right of exercise with respect to all Options and their underlying
Common Shares covered by said Option Agreements. In the event that Bayman's
employment is terminated as a result of a Change in Control, as defined in
paragraph 18.02 below, Bayman shall have the period of one (1) year after the
date of such termination to exercise his Options or the remainder of the term of
such Options, whichever is shorter, and any such exercise shall be irrevocable.
6. Effect of Death or Disability
6.01. In the event of the death of Bayman during the Period of
Employment, the Period of Employment shall be deemed to have ended as of the
close of business on the last day of the month in which death shall have
occurred, and his legal representative shall be entitled to (i) the compensation
provided for in paragraph
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<PAGE> 7
4.01(a)(i) above for the month in which death shall take place at the rate being
paid at the time of death, (ii) any cash bonus payable for the fiscal quarter in
which the Period of Employment shall be deemed to have terminated due to death,
plus the balance of any bonus due Bayman for any prior fiscal quarters in
accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii)
above, and (iii) any benefits provided pursuant to paragraph 5.02 hereof which
are payable pursuant to the terms of the applicable plan or practice.
6.02 (a) The term "Disability," as used in this Agreement, shall mean
an illness or accident which prevents Bayman from performing his duties under
this Agreement for a period of six (6) consecutive months. The Period of
Employment shall be deemed to have ended as of the close of business on the last
day of such six (6) months' period but without prejudice to any payments due
Bayman in respect of disability.
(b) In the event of the Disability of Bayman during the Period of
Employment, Bayman shall be entitled to (i) the compensation provided for in
paragraph 4.01(a)(i) above, at the rate being paid at the time of the
commencement of Disability, for the period of such Disability but not in excess
of six (6) months, (ii) any cash bonus payable for the fiscal quarter in which
the Period of Employment shall be deemed to have terminated due to Disability,
plus the balance of any bonus due Bayman for any prior fiscal quarters in
accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii)
above, and (iii) any benefits provided pursuant to paragraph 5.02 hereof which
are payable pursuant to the terms of the applicable plan or practice.
(c) The amount of any payments due under this paragraph 6.02 shall
be reduced by any payments to which Bayman may be paid for the same period under
any disability plan of the Company or of any subsidiary or affiliate thereof.
7. Termination
7.01. GENERAL. The Company may terminate Bayman with or without cause
at any time during the Period of Employment, subject to the provisions of this
Section 7.
7.02. CHANGE OF CONTROL. Within one (1) year of a Change of Control of
the Company, as defined in paragraph 18.02, Bayman shall have the right to
terminate his employment with the Company and there shall be paid or provided to
Bayman, his dependents, beneficiaries and estate, as liquidated damages or
severance pay, or both, the following:
(a) The compensation provided for in paragraph 4.01(a)(i) above
for the month in which Termination shall have occurred at the rate being paid at
the time of Termination; and an amount equal to his previous twenty four (24)
months of base salary plus an amount equal to the earned incentive cash bonus
referred to
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<PAGE> 8
in paragraph 4.01(a)(ii) above for the two (2) previously completed fiscal
years. Such amount shall be paid to Bayman in one payment, immediately upon
Termination. Bayman shall also receive any cash bonus payable for the fiscal
quarter in which the Period of Employment shall be deemed to have terminated due
to Change of Control, plus the balance of any bonus due Bayman for any prior
fiscal quarters in accordance with, and payable at the times set forth in,
paragraph 4.01(a)(ii) above.
(b) For two (2) years following the date of Termination, Bayman,
his dependents, beneficiaries and estate, shall continue to be entitled to all
benefits provided pursuant to paragraph 5.02 hereof which are payable pursuant
to the terms of the applicable plan or practice, and service credit for benefits
under all employee benefit plans of the Company, including, without limitation,
the Company's profit sharing plan referred to in paragraph 5.02 above, upon the
same basis as immediately prior to Termination and, to the extent that such
benefits or service credit for benefits shall not be payable or provided under
any such plans to Bayman, his dependents, beneficiaries and estate, by reason of
his no longer being an employee of the Company as the result of Termination, or
any such plan, program or arrangement is discontinued or the benefits thereunder
are materially reduced, the Company shall itself arrange to provide benefits
substantially similar to those which Bayman, his dependents and beneficiaries
were entitled to receive under such plans, programs and arrangements immediately
prior to termination to Bayman, his dependents, beneficiaries and estate.
Any termination by the Company within the period of ninety (90) days
prior to the execution of a letter of intent or a definitive agreement which
could lead to a Change of Control and the closing of the transaction actually
resulting in the Change of Control, as defined in paragraph 18.02, shall be
deemed to be a termination under this paragraph 7.02. An election by Bayman to
terminate his employment under the provisions of this paragraph 7.02 shall not
be deemed a Voluntary Termination of employment by Bayman under paragraph 7.03
of this Agreement or any plan or practice of the Company.
7.03. FOR CAUSE OR VOLUNTARY TERMINATION. For the purpose of any
provision of this Agreement, the termination of Bayman's employment shall be
deemed to have been For Cause only if:
(a) termination of his employment shall have been the result of
Bayman's conviction of any of the following: (i) embezzlement; (ii)
misappropriation of money or other property of the Company; or (iii) any felony;
or
(b) there has been a breach by Bayman during the Period of
Employment of the provisions of paragraph 3.02 above, relating to devotion of
full time to the affairs of the Company, Section 8 relating to Competition,
Section 9 relating to Confidential Information, or Section 10 relating to
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<PAGE> 9
Noninterference, and such breach results in demonstrably material injury to the
Company, and with respect to any alleged breach of paragraph 3.02 hereof, Bayman
shall have failed to remedy such proven breach within thirty (30) days from his
receipt of written notice from the Company.
If Bayman's employment is terminated by the Company For Cause, or if
Bayman shall Voluntarily Terminate his employment with the Company, Bayman shall
be entitled to the compensation provided for in paragraph 4.01(a)(i) through the
date of such termination. Bayman shall not be entitled to any additional
compensation or benefits (except for any vested benefits), and shall continue to
be bound by the provisions of Section 8 of this Agreement (relating to
Competition), the provisions of Section 9 of this Agreement (relating to
Confidential Information), and the provisions of Section 10 (relating to
Noninterference).
7.04. WITHOUT CAUSE. Subject to compliance by Bayman with the
provisions of Section 8 of this Agreement (relating to Competition), the
provisions of Section 9 of this Agreement (relating to Confidential
Information), and the provisions of Section 10 of this Agreement (relating to
Noninterference), if the Company shall terminate Bayman's employment, Without
Cause, there shall be paid or provided to Bayman, his dependents, beneficiaries
and estate, as liquidated damages or severance pay, or both, the compensation
provided for in paragraph 4.01(a)(i) above for the month in which termination
shall have occurred at the rate being paid at the time of such termination, and
the amount (the "Payment Amount") per month, which shall consist of 1/24th of
the total of an amount equal to his previous twenty-four (24) months of base
salary plus an amount equal to the earned incentive cash bonus referred to in
paragraph 4.01(a)(ii) above for the two (2) previously completed fiscal years.
Such Payment Amount shall be paid to Bayman or, in case of his prior death, to
his legal representative, in monthly installments at the end of each month
commencing with the month next following that in which such termination shall
have occurred, and continuing for a period of twenty-four (24) months. Bayman
shall also receive any cash bonus payable for the fiscal quarter in which the
Period of Employment shall be deemed to have terminated due to termination
Without Cause, plus the balance of any bonus due Bayman for any prior fiscal
quarters in accordance with, and payable at the times set forth in, paragraph
4.01(a)(ii) above, plus any benefits provided pursuant to paragraph 5.02 hereof
which are payable pursuant to the terms of the applicable plan or practice. In
the event the Company fails to make such payments when due, then the remaining
monthly payments shall become due and payable immediately.
7.05. ARBITRATION. In the event that Bayman's employment shall be
terminated by the Company during the Period of Employment or the Company shall
withhold payments or provision of benefits because Bayman is alleged to be
engaged in activities prohibited by Sections 8, 9 or 10 of this Agreement or for
any other reason, Bayman shall have the right, in addition to all other
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<PAGE> 10
rights and remedies provided by law, at his election either to seek arbitration
in the metropolitan area of Cleveland, Ohio, under the rules of the American
Arbitration Association by serving a notice to arbitrate upon the Company or to
institute a judicial proceeding, in either case within one hundred and twenty
(120) days after having received notice of termination of his employment or
within such longer period as may reasonably be necessary for Bayman to take
action in the event that his illness or incapacity should preclude his taking
such action within such one hundred and twenty (120) day period.
8. Competition
There shall be no obligation on the part of the Company to make any
further payments provided for in paragraph 7.04 above if Bayman shall, during
the two (2) years following termination of Bayman's employment for any reason
except Change of Control as described in paragraph 7.02, engage in Competition
with the Company as hereinafter defined. The word "Competition" for purposes of
this Section 8 and any other provision of this Agreement shall mean taking any
employment or consulting position with or control of one of the Company's top
twenty-five (25) competitors as listed in the most current issue at the date of
termination of Electronic Buyer's News and/or Electronic News; provided,
however, that in no event shall ownership of less than 5% of the outstanding
capital stock entitled to vote for the election of directors of a corporation
with a class of equity securities held of record by more than 500 persons be
deemed Competition with the Company within the meaning of this Section 8.
9 . Confidential Information
9.01. Except for information which is already in the public domain, or
which is publicly disclosed by persons other than Bayman, or which is required
by law or court order to be disclosed, or information given to Bayman by a third
party not bound by any obligation of confidentiality, Bayman shall at all times
during and after his employment with the Company hold in strictest confidence
any and all confidential information within his knowledge and which is material
to the business of the Company (whether acquired prior to or during his
employment with the Company) concerning the inventions, products, processes,
methods of distribution, customers, services, business, suppliers or trade
secrets of the Company, except that Bayman may, in connection with the
performance of his duties to the Company, divulge confidential information to
the directors, officers, employees and shareholders of the Company and to the
advisors, accountants, attorneys or lenders of the Company or such other
individuals as deemed prudent in the course of business to carry out the
responsibilities and duties of his position. Such confidential information
includes, without limitation, financial information, sales information, price
lists, marketing data, the identity and lists of actual and potential customers
and technical information, all to the extent that such
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<PAGE> 11
information is not intended by the Company for public dissemination.
9.02. Bayman also agrees that upon leaving the Company's employ he will
not take with him, without the prior written consent of an officer authorized to
act in the matter by the Board of Directors of the Company, any Company
document, contract, internal financial or management reports, customers list,
product list, price list, catalog, employee list, procedures, software, MIS
data, drawing, blueprint, specification or other document of the Company, its
subsidiaries, affiliates and divisions, which is of a confidential nature
relating to the Company, its subsidiaries, affiliates and divisions, or, without
limitation, relating to its or their methods of purchase or distribution, or any
description of any trade secret, formulae or secret processes.
10. Noninterference
Except for Change of Control as described in paragraph 7.02, Bayman
shall not, at any time during or within two (2) years after his employment is
terminated with the Company, without the prior written consent of the Company,
directly or indirectly, induce or attempt to induce any key employee, key agent
or other key representative or associate of the Company to terminate his or her
relationship with the Company, or in any way directly or indirectly interfere
with such a relationship or any relationship between the Company and any of its
top fifty (50) suppliers or top two hundred fifty (250) customers, both in terms
of the Company's sales volume, provided that purchasing goods from a supplier to
the Company or making a sale to any of the Company's customers shall not be
deemed to be interference.
11. Remedy
Bayman acknowledges that Sections 8, 9 and 10 hereof were negotiated at
arms length and are required for the fair and reasonable protection of the
Company. Bayman and the Company further acknowledge and agree that a breach of
those obligations and agreements will result in irreparable and continuing
damage to the Company for which there will be no adequate remedy at law and,
therefore, Bayman and the Company agree that in the event of any breach of said
obligations and agreements the Company, and its successors and assigns, shall be
entitled to injunctive relief and such other and further relief, including
monetary damages, as is proper in the circumstances. It is further agreed that
the running of the periods provided above in Sections 8 and 10, shall be tolled
during any period which Bayman shall be adjudged to have been in violation of
any of his obligations under such Sections.
12. Withholding
Anything to the contrary notwithstanding, all payments required to be
made by the Company hereunder to Bayman or his estate or beneficiaries, shall be
subject to the withholding of
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<PAGE> 12
such amounts, if any, relating to tax and other payroll deductions as the
Company may reasonably determine it should withhold pursuant to any applicable
law or regulation. In lieu of withholding such amounts, the Company may accept
other provisions to the end that it has sufficient funds to pay all taxes
required by law to be withheld in respect of such payments or any of them.
13. Notices
All notices, requests, demands and other communications provided for by
this Agreement shall be in writing and shall be sufficiently given if and when
mailed in the continental United States by registered or certified mail or
personally delivered to the party entitled thereto at the address stated below
or to such changed address as the addressee may have given by a similar notice:
To the Company: Pioneer-Standard Electronics, Inc.
4800 East 131st Street
Cleveland, Ohio 44105
Attention: Secretary or
Assistant Secretary
To Bayman: James L. Bayman
2749 Cranlyn Road
Shaker Heights, Ohio 44122
14. General Provisions
14.01. There shall be no right of set-off or counter claim, in respect
any claim, debt or obligation, against payments to Bayman, his dependents,
beneficiaries or estate provided for in this Agreement.
14.02. No right or interest to or in any payments shall be assignable
by Bayman; provided, however, that this provision shall not preclude him from
designating one or more beneficiaries to receive any amount that may be payable
after his death and shall not preclude the legal representative of his estate
from assigning any right hereunder to the person or persons entitled thereto
under his will or, in the case of intestacy, to the person or persons entitled
thereto under the laws of intestacy applicable to his estate. The term
"beneficiaries" as used in this Agreement shall mean a beneficiary or
beneficiaries so designated to receive any such amount or, if no beneficiary has
been so designated, the legal representative of Bayman's estate.
14.03. No right, benefit or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary
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<PAGE> 13
or involuntary, to effect any action specified in the immediately preceding
sentence shall, to the full extent permitted by law, be null, void and of no
effect.
14.04. In the event of Bayman's death or a judicial determination of
his incompetence, reference in this Agreement to Bayman shall be deemed, where
appropriate, to refer to his legal representative or, where appropriate, to his
beneficiary or beneficiaries.
14.05. The titles to sections in this Agreement are intended solely for
convenience and no provision of this Agreement is to be construed by reference
to the title of any section.
14.06. This Agreement shall be binding upon and shall inure to the
benefit of (a) Bayman and, subject to the provisions of paragraphs 14.02 and
14.03, his heirs and legal representatives, and (b) the Company and its
successors as provided in Section 17 hereof.
15. Amendment or Modification; Waiver
No provision of this Agreement may be amended or waived unless such
amendment or waiver is authorized by the Board of Directors of the Company or
any authorized committee of the Board of Directors and is agreed to in writing,
signed by Bayman and by an officer of the Company thereunto duly authorized by
either the Board of Directors or the Compensation Committee. Except as otherwise
specifically provided in this Agreement, no waiver by either party hereto of any
breach by the other party hereto of any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of a subsequent
breach of such condition or provision or a waiver of a similar or dissimilar
provision or condition at the same or at any prior or subsequent time.
16. Severability
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
17. Successors to the Company
Except as otherwise provided herein, this Agreement shall be binding
upon and inure to the benefit of the Company and any successor of the Company,
including, without limitation, any corporation which acquires directly or
indirectly all or substantially all of the assets of the Company whether by
merger, consolidation, sale or otherwise (and such successor shall
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<PAGE> 14
thereafter be deemed "the Company" for the purposes of this Agreement), but
shall not otherwise be assignable by the Company.
18. Operation of Agreement
18.01. This Agreement shall be effective April 3, 1995, and shall
supersede the Amended and Restated Employment Agreement effective April 1, 1993
between Bayman and the Company.
18.02. For the purpose of this Agreement, the term "Change in Control"
of the Company shall mean a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934 as in effect on the date
of this Agreement; provided that, without limitation, such a change in control
shall be deemed to have occurred if and when (a) any "person" (as such term is
used in Sections 13(d) and 14(d) (2) of the Securities Exchange Act of 1934) is
or becomes a beneficial owner, directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the Company's
then outstanding securities or (b) during any period of twelve (12) consecutive
months, commencing before or after the date of this Agreement, individuals who,
at the beginning of such twelve (12) month period were directors of the Company
for whom Bayman, as a shareholder, shall have voted, cease for any reason to
constitute at least a majority of the Board of Directors of the Company.
19. Enforcement Costs
The Company is aware that upon the occurrence of a Change in Control
the Board of Directors or a shareholder of the Company may then cause or attempt
to cause the Company to refuse to comply with its obligations under this
Agreement, or may cause or attempt to cause the Company to institute, or may
institute, litigation seeking to have this Agreement declared unenforceable, or
may take, or attempt to take, other action to deny Bayman the benefits intended
under this Agreement. In these circumstances, the purpose of this Agreement
could be frustrated. It is the intent of the Company that Bayman not be required
to incur the expenses associated with the enforcement of his rights under this
Agreement by litigation or other legal action because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
Bayman hereunder, nor be bound to negotiate any settlement of his rights
hereunder under threat of incurring such expenses. Accordingly, if following a
Change in Control it should appear to Bayman that the Company has failed to
comply with any of its obligations under this Agreement or in the event that the
Company or any other person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation or other legal action designed to
deny, diminish or to recover from, Bayman, or in the event the Company fails or
refuses to comply with the obligations under this Agreement, the benefits
intended to be
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<PAGE> 15
provided to Bayman hereunder, and that Bayman has complied with all of his
obligations under this Agreement, the Company irrevocably authorizes Bayman from
time to time to retain counsel of his choice at the expense of the Company as
provided in this Section 19, to represent Bayman in connection with the
initiation or defense of any litigation or other legal action, whether by or
against the Company or any Director, officer, shareholder or other person
affiliated with the Company, in any jurisdiction. Notwithstanding any existing
or prior attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to Bayman entering into an attorney-client
relationship with such counsel, and in that connection the Company and Bayman
agree that a confidential relationship shall exist between Bayman and such
counsel. The reasonable fees and expenses of counsel selected from time to time
by Bayman as hereinabove provided shall be paid or reimbursed to Bayman by the
Company on a regular, periodic basis upon presentation by Bayman of a statement
or statements prepared by such counsel in accordance with its customary
practices, up to a maximum aggregate amount of $500,000.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ATTEST: PIONEER-STANDARD ELECTRONICS, INC.
/s/ Beverly M. Fisher By/s/ Preston B. Heller
- ------------------------- --------------------------------
Preston B. Heller, Jr.,
Chairman of the Board
ATTEST:
/s/ Colleen M. Simon /s/ James L. Bayman
- ------------------------- --------------------------------
James L. Bayman
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<PAGE> 1
Exhibit 10(c)
EXECUTION COPY
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT BETWEEN PIONEER-STANDARD ELECTRONICS, INC.
AND
JANICE M. MARGHERET
June 12, 1995
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Period of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Position, Duties, Responsibilities . . . . . . . . . . . . . . . . . . . . . . 1
4. Compensation, Compensation Plans, Perquisites . . . . . . . . . . . . . . . . 2
5. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. Effect of Death or Disability . . . . . . . . . . . . . . . . . . . . . . . . 4
7. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
8. Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9. Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
10. Noninterference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
11. Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
12. Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
13. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
14. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
15. Amendment or Modification; Waiver . . . . . . . . . . . . . . . . . . . . . . 11
16. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
17. Successors to the Company . . . . . . . . . . . . . . . . . . . . . . . . . . 11
18. Operation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
19. Enforcement Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE> 3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT between PIONEER-STANDARD
ELECTRONICS, INC., an Ohio corporation (the "Company"), and JANICE M. MARGHERET
("Margheret"), dated June ___, 1995, to be effective April 3, 1995.
W I T N E S S E T H:
WHEREAS: The Company and Margheret have given consideration to an
employment agreement providing for the services of Margheret as Senior Vice
President; and
WHEREAS: This agreement is deemed necessary at the present time to meet
the need for a continued strong management without substantial change; and
WHEREAS: Together with other officers of the Company, Margheret has
been responsible for the success of the business of the Company;
NOW, THEREFORE, it is hereby agreed by and between the Company and
Margheret as follows:
1. Employment
The Company hereby agrees to continue to employ Margheret, and
Margheret hereby agrees to remain in the employ of the Company, for the period
set forth in Section 2 below (the "Period of Employment"), in the position and
with the duties and responsibilities set forth in Section 3 below, and upon the
other terms and conditions hereinafter stated.
2. Period of Employment
For the purposes of this Agreement, the Period of Employment, subject
only to the provisions of Section 6 below (relating to Death or Disability),
shall continue until termination of employment as set forth in Section 7
(relating to Termination).
3. Position, Duties, Responsibilities
3.01 (a) During the Period of Employment, Margheret shall serve as
Senior Vice President of the Company reporting to the President and Chief
Executive Officer of the Company and shall have the authority, power, and duties
with regard to her position as may from time to time be assigned by the
President and Chief Executive Officer or the Board of Directors of the Company.
Her duties shall exclude the Company's affiliate, Pioneer/Technologies Group,
Inc. ("Technologies").
3.01 (b) At all times during the Period of Employment, Margheret shall
hold a position of responsibility and importance and a position of scope, with
the functions, duties and responsibilities attached thereto, at least equal in
responsibility
<PAGE> 4
and importance and in scope to and commensurate with her position on the date of
this Agreement described in general terms in paragraph 3.01(a) above.
3.02. Throughout the Period of Employment Margheret shall devote her
full time and undivided attention during normal business hours to the business
and affairs of the Company, except for reasonable vacations afforded the
Company's executive officers consistent with past practices and except for
illness or incapacity, but nothing in this Agreement shall preclude Margheret
from devoting reasonable time required for serving as a director or member of an
advisory committee of any organization involving no conflict of interest with
the interests of the Company, from engaging in charitable and community
activities, and from managing her personal investments, provided that such
activities do not materially interfere with the regular performance of her
duties and responsibilities under this Agreement.
3.03. Margheret's office shall be located at the corporate offices of
the Company in the Greater Cleveland Area, State of Ohio, and Margheret shall
not be required to locate her office elsewhere without her prior written
consent, nor shall she be required to be absent therefrom on travel status or
otherwise more than a total of sixty (60) days in any calendar year nor more
than fifteen (15) consecutive days at any one time.
4. Compensation, Compensation Plans, Perquisites
4.01 (a) For all services rendered by Margheret in any capacity during
the Period of Employment, Margheret shall be paid as compensation:
(i) A base salary, payable not less often than monthly, at the
rate of no less than $15,416 per month, with such increases in such rate as
shall be awarded from time to time in accordance with the Company's regular
administrative practices of salary increases applicable to executives of the
Company in effect on the date of this Agreement; and
(ii) A cash incentive bonus equal to the product of 5/10 of 1%
of the sum of the "actual operating income" of the Company plus its equity
earnings in profits/losses from Technologies, multiplied by the ratio of the
Company's "actual return on capital" to 22.0%, or such equivalent successor
bonus plan as may be adopted by the Company with Margheret's written consent.
The term "actual operating income" shall be defined as the income before income
tax (state and federal income tax), interest, and the Company's equity earnings
in profits/losses from Technologies. The term "actual return on capital" shall
be defined as the Company's "actual operating income" divided by the sum of its
interest-bearing debt, plus equity, less the Company's equity investment in
Technologies (the denominator shall be calculated for each fiscal year as the
average of such amounts as at the end of each of the Company's four (4) fiscal
quarters). The Company shall
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<PAGE> 5
calculate and pay 75% of such bonus to Margheret at the end of each of the first
three (3) fiscal quarters. After April 1 and before June 16 of the next fiscal
year, and after audited financial statements are available to the Company, the
Company shall pay Margheret the balance of any bonus due Margheret based on the
full year calculation less payments made for the first three (3) fiscal
quarters, which payment shall be vested in the event of termination by reason of
Death or Disability (Section 6), Change of Control, (Section 7.02), or Without
Cause (Section 7.04), but shall be forfeited in the event of termination For
Cause or Voluntary Termination (Section 7.03).
(b) Any increase in salary or bonus or other compensation shall
in no way diminish any other obligation of the Company under this Agreement,
unless specifically agreed to in writing by Margheret.
4.02. During the Period of Employment Margheret shall be and continue
to be a full participant in the Company's Employees' Profit Sharing Plan or any
equivalent successor plan that may be adopted by the Company.
4.03. During the Period of Employment Margheret shall be entitled to
perquisites, including without limitation, an office, secretarial and clerical
staff, and to fringe benefits comparable to those enjoyed by the other executive
officers of the Company, but in each case at least equal to those attached to
her office on the date of this Agreement, as well as to reimbursement, upon
proper accounting, of reasonable expenses and disbursements incurred by her in
the course of her duties.
5. Employee Benefit Plans
5.01. The compensation, together with other matters provided for in
Section 4 above, is in addition to the benefits provided for in this Section 5.
5.02. Margheret, her dependents, beneficiaries and estate shall be
entitled to all payments and benefits and service credit for benefits during the
Period of Employment to which executive officers of the Company, their
dependents and beneficiaries are entitled as the result of the employment of
such executive officers during the Period of Employment under the terms of
employee plans and practices of the Company, including, without limitation, the
Company's retirement program consisting of its Employees' Profit Sharing Plan,
its group life insurance plan, its accidental death and dismemberment insurance,
disability, medical and health and welfare plans, any key person individual life
and disability policies, automobile expense reimbursement, club membership fees
and dues, and other present or equivalent successor plans and practices of the
Company, its subsidiaries and divisions, for which officers, their dependents
and beneficiaries are eligible, and to all payments or other benefits under any
such plan or practice after the Period of Employment as a result of
-3-
<PAGE> 6
participation in such plan or practice during the Period of Employment.
5.03. Margheret shall be eligible to participate in the Company's 1991
Stock Option Plan (which, together with any successor stock option plan or plans
that may be adopted by the Company, is referred to herein as the "Option Plan").
The Company has granted Margheret stock options ("Options") at an option price
equal to the fair market value of the Company's Common Shares at the date of
grant. The terms and conditions of exercise of Margheret's Options shall be as
is set forth in Margheret's Stock Option Agreements (the "Option Agreements")
with the Company; provided, however, that in the event of a Change in Control,
as defined in paragraph 18.02 below, then notwithstanding the provisions of said
Option Agreements, all options (including those granted to her under the 1982
Incentive Stock Option Plan) shall immediately be 100% vested and Margheret
shall have the immediate right of exercise with respect to all Options and their
underlying Common Shares covered by said Option Agreements. In the event that
Margheret's employment is terminated as a result of a Change in Control, as
defined in paragraph 18.02 below, Margheret shall have the period of one (1)
year after the date of such termination to exercise her Options or the remainder
of the term of such Options, whichever is shorter, and any such exercise shall
be irrevocable.
6. Effect of Death or Disability
6.01. In the event of the death of Margheret during the Period of
Employment, the Period of Employment shall be deemed to have ended as of the
close of business on the last day of the month in which death shall have
occurred, and her legal representative shall be entitled to (i) the compensation
provided for in paragraph 4.01(a)(i) above for the month in which death shall
take place at the rate being paid at the time of death, (ii) any cash bonus
payable for the fiscal quarter in which the Period of Employment shall be deemed
to have terminated due to death, plus the balance of any bonus due Margheret for
any prior fiscal quarters in accordance with, and payable at the times set forth
in, paragraph 4.01(a)(ii) above, and (iii) any benefits provided pursuant to
paragraph 5.02 hereof which are payable pursuant to the terms of the applicable
plan or practice.
6.02 (a) The term "Disability," as used in this Agreement, shall mean
an illness or accident which prevents Margheret from performing her duties under
this Agreement for a period of three (3) consecutive months. The Period of
Employment shall be deemed to have ended as of the close of business on the last
day of such three (3) months' period but without prejudice to any payments due
Margheret in respect of disability.
(b) In the event of the Disability of Margheret during the Period
of Employment, Margheret shall be entitled to (i) the compensation provided for
in paragraph 4.01(a)(i) above, at the rate being paid at the time of the
commencement of Disability,
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<PAGE> 7
for the period of such Disability but not in excess of three (3) months, (ii)
any cash bonus payable for the fiscal quarter in which the Period of Employment
shall be deemed to have terminated due to Disability, plus the balance of any
bonus due Margheret for any prior fiscal quarters in accordance with, and
payable at the times set forth in, paragraph 4.01(a)(ii) above, and (iii) any
benefits provided pursuant to paragraph 5.02 hereof which are payable pursuant
to the terms of the applicable plan or practice.
(c) The amount of any payments due under this paragraph 6.02 shall
be reduced by any payments to which Margheret may be paid for the same period
under any disability plan of the Company or of any subsidiary or affiliate
thereof.
7. Termination
7.01. GENERAL. The Company may terminate Margheret with or without
cause at any time during the Period of Employment, subject to the provisions of
this Section 7.
7.02. CHANGE OF CONTROL. Within one (1) year of a Change of Control of
the Company, as defined in paragraph 18.02, Margheret shall have the right to
terminate her employment with the Company and there shall be paid or provided to
Margheret, her dependents, beneficiaries and estate, as liquidated damages or
severance pay, or both, the following:
(a) The compensation provided for in paragraph 4.01(a)(i) above
for the month in which Termination shall have occurred at the rate being paid at
the time of Termination; and an amount equal to her previous twenty four (24)
months of base salary plus an amount equal to the earned incentive cash bonus
referred to in paragraph 4.01(a)(ii) above for the two (2) previously completed
fiscal years. Such amount shall be paid to Margheret in one payment, immediately
upon Termination. Margheret shall also receive any cash bonus payable for the
fiscal quarter in which the Period of Employment shall be deemed to have
terminated due to Change of Control, plus the balance of any bonus due Margheret
for any prior fiscal quarters in accordance with, and payable at the times set
forth in, paragraph 4.01(a)(ii) above.
(b) For two (2) years following the date of Termination,
Margheret, her dependents, beneficiaries and estate, shall continue to be
entitled to all benefits provided pursuant to paragraph 5.02 hereof which are
payable pursuant to the terms of the applicable plan or practice, and service
credit for benefits under all employee benefit plans of the Company, including,
without limitation, the Company's profit sharing plan referred to in paragraph
5.02 above, upon the same basis as immediately prior to Termination and, to the
extent that such benefits or service credit for benefits shall not be payable or
provided under any such plans to Margheret, her dependents, beneficiaries and
estate, by reason of her no longer being an employee of the Company as the
result of Termination, or any such plan, program or arrangement is
-5-
<PAGE> 8
discontinued or the benefits thereunder are materially reduced, the Company
shall itself arrange to provide benefits substantially similar to those which
Margheret, her dependents and beneficiaries were entitled to receive under such
plans, programs and arrangements immediately prior to termination to Margheret,
her dependents, beneficiaries and estate.
Any termination by the Company within the period of ninety (90) days
prior to the execution of a letter of intent or a definitive agreement which
could lead to a Change of Control and the closing of the transaction actually
resulting in the Change of Control, as defined in paragraph 18.02, shall be
deemed to be a termination under this paragraph 7.02. An election by Margheret
to terminate her employment under the provisions of this paragraph 7.02 shall
not be deemed a Voluntary Termination of employment by Margheret under paragraph
7.03 of this Agreement or any plan or practice of the Company.
7.03. FOR CAUSE OR VOLUNTARY TERMINATION. For the purpose of any
provision of this Agreement, the termination of Margheret's employment shall be
deemed to have been For Cause only if:
(a) termination of her employment shall have been the result of
Margheret's conviction of any of the following: (i) embezzlement; (ii)
misappropriation of money or other property of the Company; or (iii) any felony;
or
(b) there has been a breach by Margheret during the Period of
Employment of the provisions of paragraph 3.02 above, relating to devotion of
full time to the affairs of the Company, Section 8 relating to Competition,
Section 9 relating to Confidential Information, or Section 10 relating to
Noninterference, and such breach results in demonstrably material injury to the
Company, and with respect to any alleged breach of paragraph 3.02 hereof,
Margheret shall have failed to remedy such proven breach within thirty (30) days
from her receipt of written notice from the Company.
If Margheret's employment is terminated by the Company For Cause, or if
Margheret shall Voluntarily Terminate her employment with the Company, Margheret
shall be entitled to the compensation provided for in paragraph 4.01(a)(i)
through the date of such termination. Margheret shall not be entitled to any
additional compensation or benefits (except for any vested benefits), and shall
continue to be bound by the provisions of Section 8 of this Agreement (relating
to Competition), the provisions of Section 9 of this Agreement (relating to
Confidential Information), and the provisions of Section 10 (relating to
Noninterference).
7.04. WITHOUT CAUSE. Subject to compliance by Margheret with the
provisions of Section 8 of this Agreement (relating to Competition), the
provisions of Section 9 of this Agreement
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<PAGE> 9
(relating to Confidential Information), and the provisions of Section 10 of this
Agreement (relating to Noninterference), if the Company shall terminate
Margheret's employment, Without Cause, there shall be paid or provided to
Margheret, her dependents, beneficiaries and estate, as liquidated damages or
severance pay, or both, the compensation provided for in paragraph 4.01(a)(i)
above for the month in which termination shall have occurred at the rate being
paid at the time of such termination, and the amount (the "Payment Amount") per
month, which shall consist of 1/24th of the total of an amount equal to her
previous twenty-four (24) months of base salary plus an amount equal to the
earned incentive cash bonus referred to in paragraph 4.01(a)(ii) above for the
two (2) previously completed fiscal years. Such Payment Amount shall be paid to
Margheret or, in case of her prior death, to her legal representative, in
monthly installments at the end of each month commencing with the month next
following that in which such termination shall have occurred, and continuing for
a period of twelve (12) months. Margheret shall also receive any cash bonus
payable for the fiscal quarter in which the Period of Employment shall be deemed
to have terminated due to termination Without Cause, plus the balance of any
bonus due Margheret for any prior fiscal quarters in accordance with, and
payable at the times set forth in, paragraph 4.01(a)(ii) above, plus any
benefits provided pursuant to paragraph 5.02 hereof which are payable pursuant
to the terms of the applicable plan or practice. In the event the Company fails
to make such payments when due, then the remaining payments shall become due and
payable immediately.
7.05. ARBITRATION. In the event that Margheret's employment shall be
terminated by the Company during the Period of Employment or the Company shall
withhold payments or provision of benefits because Margheret is alleged to be
engaged in activities prohibited by Sections 8, 9 or 10 of this Agreement or for
any other reason, Margheret shall have the right, in addition to all other
rights and remedies provided by law, at her election either to seek arbitration
in the metropolitan area of Cleveland, Ohio, under the rules of the American
Arbitration Association by serving a notice to arbitrate upon the Company or to
institute a judicial proceeding, in either case within one hundred and twenty
(120) days after having received notice of termination of her employment or
within such longer period as may reasonably be necessary for Margheret to take
action in the event that her illness or incapacity should preclude her taking
such action within such one hundred and twenty (120) day period.
8. Competition
There shall be no obligation on the part of the Company to make any
further payments provided for in paragraph 7.04 above if Margheret shall, during
the one (1) year following termination of Margheret's employment for any reason
except Change of Control as described in paragraph 7.02, engage in Competition
with the Company as hereinafter defined. The word "Competition" for purposes of
this Section 8 and any other provision of this
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<PAGE> 10
Agreement shall mean taking any employment or consulting position with or
control of one of the Company's top twenty-five (25) competitors as listed in
the most current issue at the date of termination of Electronic Buyer's
News and/or Electronic News; provided, however, that in no event
shall ownership of less than 5% of the outstanding capital stock entitled to
vote for the election of directors of a corporation with a class of equity
securities held of record by more than 500 persons be deemed Competition with
the Company within the meaning of this Section 8.
9. Confidential Information
9.01. Except for information which is already in the public domain, or
which is publicly disclosed by persons other than Margheret, or which is
required by law or court order to be disclosed, or information given to
Margheret by a third party not bound by any obligation of confidentiality,
Margheret shall at all times during and after her employment with the Company
hold in strictest confidence any and all confidential information within her
knowledge and which is material to the business of the Company (whether acquired
prior to or during her employment with the Company) concerning the inventions,
products, processes, methods of distribution, customers, services, business,
suppliers or trade secrets of the Company, except that Margheret may, in
connection with the performance of her duties to the Company, divulge
confidential information to the directors, officers, employees and shareholders
of the Company and to the advisors, accountants, attorneys or lenders of the
Company or such other individuals as deemed prudent in the course of business to
carry out the responsibilities and duties of her position. Such confidential
information includes, without limitation, financial information, sales
information, price lists, marketing data, the identity and lists of actual and
potential customers and technical information, all to the extent that such
information is not intended by the Company for public dissemination.
9.02. Margheret also agrees that upon leaving the Company's employ she
will not take with her, without the prior written consent of an officer
authorized to act in the matter by the Board of Directors of the Company, any
Company document, contract, internal financial or management reports, customers
list, product list, price list, catalog, employee list, procedures, software,
MIS data, drawing, blueprint, specification or other document of the Company,
its subsidiaries, affiliates and divisions, which is of a confidential nature
relating to the Company, its subsidiaries, affiliates and divisions, or, without
limitation, relating to its or their methods of purchase or distribution, or any
description of any trade secret, formulae or secret processes.
10. Noninterference
Except for Change of Control as described in paragraph 7.02, Margheret
shall not, at any time during or within one (1)
-8-
<PAGE> 11
year after her employment is terminated with the Company, without the prior
written consent of the Company, directly or indirectly, induce or attempt to
induce any key employee, key agent or other key representative or associate of
the Company to terminate his or her relationship with the Company, or in any way
directly or indirectly interfere with such a relationship or any relationship
between the Company and any of its top fifty (50) suppliers or top two hundred
fifty (250) customers, both in terms of the Company's sales volume, provided
that purchasing goods from a supplier to the Company or making a sale to any of
the Company's customers shall not be deemed to be interference.
11. Remedy
Margheret acknowledges that Sections 8, 9 and 10 hereof were negotiated
at arms length and are required for the fair and reasonable protection of the
Company. Margheret and the Company further acknowledge and agree that a breach
of those obligations and agreements will result in irreparable and continuing
damage to the Company for which there will be no adequate remedy at law and,
therefore, Margheret and the Company agree that in the event of any breach of
said obligations and agreements the Company, and its successors and assigns,
shall be entitled to injunctive relief and such other and further relief,
including monetary damages, as is proper in the circumstances. It is further
agreed that the running of the periods provided above in Sections 8 and 10,
shall be tolled during any period which Margheret shall be adjudged to have been
in violation of any of her obligations under such Sections.
12. Withholding
Anything to the contrary notwithstanding, all payments required to be
made by the Company hereunder to Margheret or her estate or beneficiaries, shall
be subject to the withholding of such amounts, if any, relating to tax and other
payroll deductions as the Company may reasonably determine it should withhold
pursuant to any applicable law or regulation. In lieu of withholding such
amounts, the Company may accept other provisions to the end that it has
sufficient funds to pay all taxes required by law to be withheld in respect of
such payments or any of them.
13. Notices
All notices, requests, demands and other communications provided for by
this Agreement shall be in writing and shall be sufficiently given if and when
mailed in the continental United States by registered or certified mail or
personally delivered to the party entitled thereto at the address stated below
or to such changed address as the addressee may have given by a similar notice:
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<PAGE> 12
To the Company: Pioneer-Standard Electronics, Inc.
4800 East 131st Street
Cleveland, Ohio 44105
Attention: Secretary or
Assistant Secretary
To Margheret: Janice M. Margheret
5633 Spring Grove Drive
Solon, OH 44139
14. General Provisions
14.01. There shall be no right of set-off or counter claim, in respect
any claim, debt or obligation, against payments to Margheret, her dependents,
beneficiaries or estate provided for in this Agreement.
14.02. No right or interest to or in any payments shall be assignable
by Margheret; provided, however, that this provision shall not preclude her from
designating one or more beneficiaries to receive any amount that may be payable
after her death and shall not preclude the legal representative of her estate
from assigning any right hereunder to the person or persons entitled thereto
under her will or, in the case of intestacy, to the person or persons entitled
thereto under the laws of intestacy applicable to her estate. The term
"beneficiaries" as used in this Agreement shall mean a beneficiary or
beneficiaries so designated to receive any such amount or, if no beneficiary has
been so designated, the legal representative of Margheret's estate.
14.03. No right, benefit or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
14.04. In the event of Margheret's death or a judicial determination of
her incompetence, reference in this Agreement to Margheret shall be deemed,
where appropriate, to refer to her legal representative or, where appropriate,
to her beneficiary or beneficiaries.
14.05. The titles to sections in this Agreement are intended solely for
convenience and no provision of this Agreement is to be construed by reference
to the title of any section.
14.06. This Agreement shall be binding upon and shall inure to the
benefit of (a) Margheret and, subject to the
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<PAGE> 13
provisions of paragraphs 14.02 and 14.03, her heirs and legal representatives,
and (b) the Company and its successors as provided in Section 17 hereof.
15. Amendment or Modification; Waiver
No provision of this Agreement may be amended or waived unless such
amendment or waiver is authorized by the Board of Directors of the Company or
any authorized committee of the Board of Directors and is agreed to in writing,
signed by Margheret and by an officer of the Company thereunto duly authorized
by either the Board of Directors or the Compensation Committee. Except as
otherwise specifically provided in this Agreement, no waiver by either party
hereto of any breach by the other party hereto of any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of a
subsequent breach of such condition or provision or a waiver of a similar or
dissimilar provision or condition at the same or at any prior or subsequent
time.
16. Severability
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
17. Successors to the Company
Except as otherwise provided herein, this Agreement shall be binding
upon and inure to the benefit of the Company and any successor of the Company,
including, without limitation, any corporation which acquires directly or
indirectly all or substantially all of the assets of the Company whether by
merger, consolidation, sale or otherwise (and such successor shall thereafter be
deemed "the Company" for the purposes of this Agreement), but shall not
otherwise be assignable by the Company.
18. Operation of Agreement
18.01. This Agreement shall be effective April 3, 1995, and shall
supersede the Employment Agreement effective April 1, 1993 between Margheret and
the Company.
18.02. For the purpose of this Agreement, the term "Change in Control"
of the Company shall mean a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934 as in effect on the date
of this Agreement; provided that, without limitation, such a change in control
shall be deemed to have occurred if and when (a) any
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<PAGE> 14
"person" (as such term is used in Sections 13(d) and 14(d) (2) of the Securities
Exchange Act of 1934) is or becomes a beneficial owner, directly or indirectly,
of securities of the Company representing 20% or more of the combined voting
power of the Company's then outstanding securities or (b) during any period of
twelve (12) consecutive months, commencing before or after the date of this
Agreement, individuals who, at the beginning of such twelve (12) month period
were directors of the Company for whom Margheret, as a shareholder, shall have
voted, cease for any reason to constitute at least a majority of the Board of
Directors of the Company.
19. Enforcement Costs
The Company is aware that upon the occurrence of a Change in Control
the Board of Directors or a shareholder of the Company may then cause or attempt
to cause the Company to refuse to comply with its obligations under this
Agreement, or may cause or attempt to cause the Company to institute, or may
institute, litigation seeking to have this Agreement declared unenforceable, or
may take, or attempt to take, other action to deny Margheret the benefits
intended under this Agreement. In these circumstances, the purpose of this
Agreement could be frustrated. It is the intent of the Company that Margheret
not be required to incur the expenses associated with the enforcement of her
rights under this Agreement by litigation or other legal action because the cost
and expense thereof would substantially detract from the benefits intended to be
extended to Margheret hereunder, nor be bound to negotiate any settlement of her
rights hereunder under threat of incurring such expenses. Accordingly, if
following a Change in Control it should appear to Margheret that the Company has
failed to comply with any of its obligations under this Agreement or in the
event that the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation or other legal
action designed to deny, diminish or to recover from, Margheret, or in the event
the Company fails or refuses to comply with the obligations under this
Agreement, the benefits intended to be provided to Margheret hereunder, and that
Margheret has complied with all of her obligations under this Agreement, the
Company irrevocably authorizes Margheret from time to time to retain counsel of
her choice at the expense of the Company as provided in this Section 19, to
represent Margheret in connection with the initiation or defense of any
litigation or other legal action, whether by or against the Company or any
Director, officer, shareholder or other person affiliated with the Company, in
any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to Margheret entering into an attorney-client relationship with such
counsel, and in that connection the Company and Margheret agree that a
confidential relationship shall exist between Margheret and such counsel. The
reasonable fees and expenses of counsel selected from time to time
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<PAGE> 15
by Margheret as hereinabove provided shall be paid or reimbursed to Margheret by
the Company on a regular, periodic basis upon presentation by Margheret of a
statement or statements prepared by such counsel in accordance with its
customary practices, up to a maximum aggregate amount of $500,000.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ATTEST: PIONEER-STANDARD ELECTRONICS, INC.
/s/ Colleen M. Simon By/s/ James L. Bayman
- -------------------------- --------------------------------
James L. Bayman, Chief Executive
Officer and President
ATTEST:
/s/ Beverly M. Fisher /s/ Janice M. Margheret
- -------------------------- --------------------------------
Janice M. Margheret
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<PAGE> 1
Exhibit 10(d)
EXECUTION COPY
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT BETWEEN PIONEER-STANDARD ELECTRONICS, INC.
AND
ARTHUR RHEIN
June 12, 1995
<PAGE> 2
Table of Contents
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<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Period of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Position, Duties, Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
4. Compensation, Compensation Plans, Perquisites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. Effect of Death or Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
8. Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9. Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
10. Noninterference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
11. Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
12. Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
13. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
14. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
15. Amendment or Modification; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
16. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
17. Successors to the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
18. Operation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
19. Enforcement Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE> 3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT between
PIONEER-STANDARD ELECTRONICS, INC., an Ohio corporation (the "Company"), and
ARTHUR RHEIN ("Rhein"), dated June ___, 1995, to be effective April 3, 1995.
W I T N E S S E T H:
WHEREAS: The Company and Rhein have given consideration to an
employment agreement providing for the services of Rhein as Senior Vice
President; and
WHEREAS: This agreement is deemed necessary at the present time
to meet the need for a continued strong management without substantial change;
and
WHEREAS: Together with other officers of the Company, Rhein has
been responsible for the success of the business of the Company;
NOW, THEREFORE, it is hereby agreed by and between the Company
and Rhein as follows:
1 . Employment
The Company hereby agrees to continue to employ Rhein, and
Rhein hereby agrees to remain in the employ of the Company, for the period set
forth in Section 2 below (the "Period of Employment"), in the position and with
the duties and responsibilities set forth in Section 3 below, and upon the other
terms and conditions hereinafter stated.
2 . Period of Employment
For the purposes of this Agreement, the Period of Employment,
subject only to the provisions of Section 6 below (relating to Death or
Disability), shall continue until termination of employment as set forth in
Section 7 (relating to Termination).
3 . Position, Duties, Responsibilities
3.01 (a) During the Period of Employment, Rhein shall serve as
Senior Vice President of the Company reporting to the President and Chief
Executive Officer of the Company and shall have the authority, power, and duties
with regard to his position as may from time to time be assigned by the
President and Chief Executive Officer or the Board of Directors of the Company.
His duties shall exclude the Company's affiliate, Pioneer/Technologies Group,
Inc. ("Technologies").
3.01 (b) At all times during the Period of Employment, Rhein
shall hold a position of responsibility and importance and a position of scope,
with the functions, duties and responsibilities attached thereto, at least equal
in responsibility and importance
<PAGE> 4
and in scope to and commensurate with his position on the date of this Agreement
described in general terms in paragraph 3.01(a) above.
3.02. Throughout the Period of Employment Rhein shall devote
his full time and undivided attention during normal business hours to the
business and affairs of the Company, except for reasonable vacations afforded
the Company's executive officers consistent with past practices and except for
illness or incapacity, but nothing in this Agreement shall preclude Rhein from
devoting reasonable time required for serving as a director or member of an
advisory committee of any organization involving no conflict of interest with
the interests of the Company, from engaging in charitable and community
activities, and from managing his personal investments, provided that such
activities do not materially interfere with the regular performance of his
duties and responsibilities under this Agreement.
3.03. Rhein's office shall be located at the corporate offices
of the Company in the Greater Cleveland Area, State of Ohio, and Rhein shall not
be required to locate his office elsewhere without his prior written consent,
nor shall he be required to be absent therefrom on travel status or otherwise
more than a total of sixty (60) days in any calendar year nor more than fifteen
(15) consecutive days at any one time.
4 . Compensation, Compensation Plans, Perquisites
4.01 (a) For all services rendered by Rhein in any capacity
during the Period of Employment, including without limitation, services as an
executive officer, director or member of any committee of the Company or of any
subsidiary, division or affiliate thereof, Rhein shall be paid as compensation:
(i) A base salary, payable not less often than
monthly, at the rate of no less than $16,666 per month, with such increases in
such rate as shall be awarded from time to time in accordance with the Company's
regular administrative practices of salary increases applicable to executives of
the Company in effect on the date of this Agreement; and
(ii) A cash incentive bonus equal to the product
of 65/100 of 1% of the sum of the "actual operating income" of the Company plus
its equity earnings in profits/losses from Technologies, multiplied by the ratio
of the Company's "actual return on capital" to 22.0%, or such equivalent
successor bonus plan as may be adopted by the Company with Rhein's written
consent. The term "actual operating income" shall be defined as the income
before income tax (state and federal income tax), interest, and the Company's
equity earnings in profits/losses from Technologies. The term "actual return on
capital" shall be defined as the Company's "actual operating income" divided by
the sum of its interest-bearing debt, plus equity, less the Company's equity
investment in Technologies (the denominator shall be calculated for each fiscal
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<PAGE> 5
year as the average of such amounts as at the end of each of the Company's four
(4) fiscal quarters). The Company shall calculate and pay 75% of such bonus to
Rhein at the end of each of the first three (3) fiscal quarters. After April 1
and before June 16 of the next fiscal year, and after audited financial
statements are available to the Company, the Company shall pay Rhein the balance
of any bonus due Rhein based on the full year calculation less payments made for
the first three (3) fiscal quarters, which payment shall be vested in the event
of termination by reason of Death or Disability (Section 6), Change of Control,
(Section 7.02), or Without Cause (Section 7.04), but shall be forfeited in the
event of termination For Cause or Voluntary Termination (Section 7.03).
(b) Any increase in salary or bonus or other
compensation shall in no way diminish any other obligation of the Company under
this Agreement, unless specifically agreed to in writing by Rhein.
4.02. During the Period of Employment Rhein shall be and
continue to be a full participant in the Company's Employees' Profit Sharing
Plan or any equivalent successor plan that may be adopted by the Company.
4.03. During the Period of Employment Rhein shall be entitled
to perquisites, including without limitation, an office, secretarial and
clerical staff, and to fringe benefits comparable to those enjoyed by the other
executive officers of the Company, but in each case at least equal to those
attached to his office on the date of this Agreement, as well as to
reimbursement, upon proper accounting, of reasonable expenses and disbursements
incurred by him in the course of his duties.
5 . Employee Benefit Plans
5.01. The compensation, together with other matters provided
for in Section 4 above, is in addition to the benefits provided for in this
Section 5.
5.02. Rhein, his dependents, beneficiaries and estate shall be
entitled to all payments and benefits and service credit for benefits during the
Period of Employment to which executive officers of the Company, their
dependents and beneficiaries are entitled as the result of the employment of
such executive officers during the Period of Employment under the terms of
employee plans and practices of the Company, including, without limitation, the
Company's retirement program consisting of its Employees' Profit Sharing Plan,
its group life insurance plan, its accidental death and dismemberment insurance,
disability, medical and health and welfare plans, any key person individual life
and disability policies, automobile expense reimbursement, club membership fees
and dues, and other present or equivalent successor plans and practices of the
Company, its subsidiaries and divisions, for which officers, their dependents
and beneficiaries are eligible, and to
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<PAGE> 6
all payments or other benefits under any such plan or practice after the Period
of Employment as a result of participation in such plan or practice during the
Period of Employment.
5.03. Rhein shall be eligible to participate in the Company's
1991 Stock Option Plan (which, together with any successor stock option plan or
plans that may be adopted by the Company, is referred to herein as the "Option
Plan"). The Company has granted Rhein stock options ("Options") at an option
price equal to the fair market value of the Company's Common Shares at the date
of grant. The terms and conditions of exercise of Rhein's Options shall be as is
set forth in Rhein's Stock Option Agreements (the "Option Agreements") with the
Company; provided, however, that in the event of a Change in Control, as defined
in paragraph 18.02 below, then notwithstanding the provisions of said Option
Agreements, all options (including those granted to his under the 1982 Incentive
Stock Option Plan) shall immediately be 100% vested and Rhein shall have the
immediate right of exercise with respect to all Options and their underlying
Common Shares covered by said Option Agreements. In the event that Rhein's
employment is terminated as a result of a Change in Control, as defined in
paragraph 18.02 below, Rhein shall have the period of one (1) year after the
date of such termination to exercise his Options or the remainder of the term of
such Options, whichever is shorter, and any such exercise shall be irrevocable.
6 . Effect of Death or Disability
6.01. In the event of the death of Rhein during the Period of
Employment, the Period of Employment shall be deemed to have ended as of the
close of business on the last day of the month in which death shall have
occurred, and his legal representative shall be entitled to (i) the compensation
provided for in paragraph 4.01(a)(i) above for the month in which death shall
take place at the rate being paid at the time of death, (ii) any cash bonus
payable for the fiscal quarter in which the Period of Employment shall be deemed
to have terminated due to death, plus the balance of any bonus due Rhein for any
prior fiscal quarters in accordance with, and payable at the times set forth in,
paragraph 4.01(a)(ii) above, and (iii) any benefits provided pursuant to
paragraph 5.02 hereof which are payable pursuant to the terms of the applicable
plan or practice.
6.02 (a) The term "Disability," as used in this Agreement,
shall mean an illness or accident which prevents Rhein from performing his
duties under this Agreement for a period of three (3) consecutive months. The
Period of Employment shall be deemed to have ended as of the close of business
on the last day of such three (3) months' period but without prejudice to any
payments due Rhein in respect of disability.
(b) In the event of the Disability of Rhein during the
Period of Employment, Rhein shall be entitled to (i) the compensation provided
for in paragraph 4.01(a)(i) above, at the
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<PAGE> 7
rate being paid at the time of the commencement of Disability, for the period of
such Disability but not in excess of three (3) months, (ii) any cash bonus
payable for the fiscal quarter in which the Period of Employment shall be deemed
to have terminated due to Disability, plus the balance of any bonus due Rhein
for any prior fiscal quarters in accordance with, and payable at the times set
forth in, paragraph 4.01(a)(ii) above, and (iii) any benefits provided pursuant
to paragraph 5.02 hereof which are payable pursuant to the terms of the
applicable plan or practice.
(c) The amount of any payments due under this
paragraph 6.02 shall be reduced by any payments to which Rhein may be paid for
the same period under any disability plan of the Company or of any subsidiary or
affiliate thereof.
7. Termination
7.01. GENERAL. The Company may terminate Rhein with or
without cause at any time during the Period of Employment, subject to the
provisions of this Section 7.
7.02. CHANGE OF CONTROL. Within one (1) year of a Change of
Control of the Company, as defined in paragraph 18.02, Rhein shall have the
right to terminate his employment with the Company and there shall be paid or
provided to Rhein, his dependents, beneficiaries and estate, as liquidated
damages or severance pay, or both, the following:
(a) The compensation provided for in paragraph
4.01(a)(i) above for the month in which Termination shall have occurred at the
rate being paid at the time of Termination; and an amount equal to his previous
twenty four (24) months of base salary plus an amount equal to the earned
incentive cash bonus referred to in paragraph 4.01(a)(ii) above for the two (2)
previously completed fiscal years. Such amount shall be paid to Rhein in one
payment, immediately upon Termination. Rhein shall also receive any cash bonus
payable for the fiscal quarter in which the Period of Employment shall be deemed
to have terminated due to Change of Control, plus the balance of any bonus due
Rhein for any prior fiscal quarters in accordance with, and payable at the times
set forth in, paragraph 4.01(a)(ii) above.
(b) For two (2) years following the date of
Termination, Rhein, his dependents, beneficiaries and estate, shall continue to
be entitled to all benefits provided pursuant to paragraph 5.02 hereof which are
payable pursuant to the terms of the applicable plan or practice, and service
credit for benefits under all employee benefit plans of the Company, including,
without limitation, the Company's profit sharing plan referred to in paragraph
5.02 above, upon the same basis as immediately prior to Termination and, to the
extent that such benefits or service credit for benefits shall not be payable or
provided under any such plans to Rhein, his dependents, beneficiaries and
estate, by reason of his no longer being an employee of the Company as the
result of
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<PAGE> 8
Termination, or any such plan, program or arrangement is discontinued or the
benefits thereunder are materially reduced, the Company shall itself arrange to
provide benefits substantially similar to those which Rhein, his dependents and
beneficiaries were entitled to receive under such plans, programs and
arrangements immediately prior to termination to Rhein, his dependents,
beneficiaries and estate.
Any termination by the Company within the period of ninety (90)
days prior to the execution of a letter of intent or a definitive agreement
which could lead to a Change of Control and the closing of the transaction
actually resulting in the Change of Control, as defined in paragraph 18.02,
shall be deemed to be a termination under this paragraph 7.02. An election by
Rhein to terminate his employment under the provisions of this paragraph 7.02
shall not be deemed a Voluntary Termination of employment by Rhein under
paragraph 7.03 of this Agreement or any plan or practice of the Company.
7.03. FOR CAUSE OR VOLUNTARY TERMINATION. For the purpose of
any provision of this Agreement, the termination of Rhein's employment shall be
deemed to have been For Cause only if:
(a) termination of his employment shall have been the
result of Rhein's conviction of any of the following: (i) embezzlement; (ii)
misappropriation of money or other property of the Company; or (iii) any felony;
or
(b) there has been a breach by Rhein during the Period
of Employment of the provisions of paragraph 3.02 above, relating to devotion of
full time to the affairs of the Company, Section 8 relating to Competition,
Section 9 relating to Confidential Information, or Section 10 relating to
Noninterference, and such breach results in demonstrably material injury to the
Company, and with respect to any alleged breach of paragraph 3.02 hereof, Rhein
shall have failed to remedy such proven breach within thirty (30) days from his
receipt of written notice from the Company.
If Rhein's employment is terminated by the Company For Cause,
or if Rhein shall Voluntarily Terminate his employment with the Company, Rhein
shall be entitled to the compensation provided for in paragraph 4.01(a)(i)
through the date of such termination. Rhein shall not be entitled to any
additional compensation or benefits (except for any vested benefits), and shall
continue to be bound by the provisions of Section 8 of this Agreement (relating
to Competition), the provisions of Section 9 of this Agreement (relating to
Confidential Information), and the provisions of Section 10 (relating to
Noninterference).
7.04. WITHOUT CAUSE. Subject to compliance by Rhein with the
provisions of Section 8 of this Agreement (relating to Competition), the
provisions of Section 9 of this Agreement (relating to Confidential
Information), and the provisions of
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<PAGE> 9
Section 10 of this Agreement (relating to Noninterference), if the Company shall
terminate Rhein's employment, Without Cause, there shall be paid or provided to
Rhein, his dependents, beneficiaries and estate, as liquidated damages or
severance pay, or both, the compensation provided for in paragraph 4.01(a)(i)
above for the month in which termination shall have occurred at the rate being
paid at the time of such termination, and the amount (the "Payment Amount") per
month, which shall consist of 1/24th of the total of an amount equal to his
previous twenty-four (24) months of base salary plus an amount equal to the
earned incentive cash bonus referred to in paragraph 4.01(a)(ii) above for the
two (2) previously completed fiscal years. Such Payment Amount shall be paid to
Rhein or, in case of his prior death, to his legal representative, in monthly
installments at the end of each month commencing with the month next following
that in which such termination shall have occurred, and continuing for a period
of twelve (12) months. Rhein shall also receive any cash bonus payable for the
fiscal quarter in which the Period of Employment shall be deemed to have
terminated due to termination Without Cause, plus the balance of any bonus due
Rhein for any prior fiscal quarters in accordance with, and payable at the times
set forth in, paragraph 4.01(a)(ii) above, plus any benefits provided pursuant
to paragraph 5.02 hereof which are payable pursuant to the terms of the
applicable plan or practice. In the event the Company fails to make such
payments when due, then the remaining payments shall become due and payable
immediately.
7.05. ARBITRATION. In the event that Rhein's employment
shall be terminated by the Company during the Period of Employment or the
Company shall withhold payments or provision of benefits because Rhein is
alleged to be engaged in activities prohibited by Sections 8, 9 or 10 of this
Agreement or for any other reason, Rhein shall have the right, in addition to
all other rights and remedies provided by law, at his election either to seek
arbitration in the metropolitan area of Cleveland, Ohio, under the rules of the
American Arbitration Association by serving a notice to arbitrate upon the
Company or to institute a judicial proceeding, in either case within one hundred
and twenty (120) days after having received notice of termination of his
employment or within such longer period as may reasonably be necessary for Rhein
to take action in the event that his illness or incapacity should preclude his
taking such action within such one hundred and twenty (120) day period.
8. Competition
There shall be no obligation on the part of the Company to make
any further payments provided for in paragraph 7.04 above if Rhein shall, during
the one (1) year following termination of Rhein's employment for any reason
except Change of Control as described in paragraph 7.02, engage in Competition
with the Company as hereinafter defined. The word "Competition" for purposes of
this Section 8 and any other provision of this Agreement shall mean taking any
employment or consulting position with or control of one
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<PAGE> 10
of the Company's top twenty-five (25) competitors as listed in the most current
issue at the date of termination of Electronic Buyer's News and/or
Electronic News; provided, however, that in no event shall ownership of less
than 5% of the outstanding capital stock entitled to vote for the election of
directors of a corporation with a class of equity securities held of record by
more than 500 persons be deemed Competition with the Company within the meaning
of this Section 8.
9 . Confidential Information
9.01. Except for information which is already in the public
domain, or which is publicly disclosed by persons other than Rhein, or which is
required by law or court order to be disclosed, or information given to Rhein by
a third party not bound by any obligation of confidentiality, Rhein shall at all
times during and after his employment with the Company hold in strictest
confidence any and all confidential information within his knowledge and which
is material to the business of the Company (whether acquired prior to or during
his employment with the Company) concerning the inventions, products, processes,
methods of distribution, customers, services, business, suppliers or trade
secrets of the Company, except that Rhein may, in connection with the
performance of his duties to the Company, divulge confidential information to
the directors, officers, employees and shareholders of the Company and to the
advisors, accountants, attorneys or lenders of the Company or such other
individuals as deemed prudent in the course of business to carry out the
responsibilities and duties of his position. Such confidential information
includes, without limitation, financial information, sales information, price
lists, marketing data, the identity and lists of actual and potential customers
and technical information, all to the extent that such information is not
intended by the Company for public dissemination.
9.02. Rhein also agrees that upon leaving the Company's employ
he will not take with him, without the prior written consent of an officer
authorized to act in the matter by the Board of Directors of the Company, any
Company document, contract, internal financial or management reports, customers
list, product list, price list, catalog, employee list, procedures, software,
MIS data, drawing, blueprint, specification or other document of the Company,
its subsidiaries, affiliates and divisions, which is of a confidential nature
relating to the Company, its subsidiaries, affiliates and divisions, or, without
limitation, relating to its or their methods of purchase or distribution, or any
description of any trade secret, formulae or secret processes.
10. Noninterference
Except for Change of Control as described in paragraph 7.02,
Rhein shall not, at any time during or within one (1) year after his employment
is terminated with the Company, without the prior written consent of the
Company, directly or indirectly,
-8-
<PAGE> 11
induce or attempt to induce any key employee, key agent or other key
representative or associate of the Company to terminate his or her relationship
with the Company, or in any way directly or indirectly interfere with such a
relationship or any relationship between the Company and any of its top fifty
(50) suppliers or top two hundred fifty (250) customers, both in terms of the
Company's sales volume, provided that purchasing goods from a supplier to the
Company or making a sale to any of the Company's customers shall not be deemed
to be interference.
11. Remedy
Rhein acknowledges that Sections 8, 9 and 10 hereof were
negotiated at arms length and are required for the fair and reasonable
protection of the Company. Rhein and the Company further acknowledge and agree
that a breach of those obligations and agreements will result in irreparable and
continuing damage to the Company for which there will be no adequate remedy at
law and, therefore, Rhein and the Company agree that in the event of any breach
of said obligations and agreements the Company, and its successors and assigns,
shall be entitled to injunctive relief and such other and further relief,
including monetary damages, as is proper in the circumstances. It is further
agreed that the running of the periods provided above in Sections 8 and 10,
shall be tolled during any period which Rhein shall be adjudged to have been in
violation of any of his obligations under such Sections.
12. Withholding
Anything to the contrary notwithstanding, all payments required
to be made by the Company hereunder to Rhein or his estate or beneficiaries,
shall be subject to the withholding of such amounts, if any, relating to tax and
other payroll deductions as the Company may reasonably determine it should
withhold pursuant to any applicable law or regulation. In lieu of withholding
such amounts, the Company may accept other provisions to the end that it has
sufficient funds to pay all taxes required by law to be withheld in respect of
such payments or any of them.
13. Notices
All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be sufficiently
given if and when mailed in the continental United States by registered or
certified mail or personally delivered to the party entitled thereto at the
address stated below or to such changed address as the addressee may have given
by a similar notice:
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<PAGE> 12
To the Company: Pioneer-Standard Electronics, Inc.
4800 East 131st Street
Cleveland, Ohio 44105
Attention: Secretary or
Assistant Secretary
To Rhein: Arthur Rhein
40 Stonehill Lane
Moreland Hills, Ohio 44022
14. General Provisions
14.01. There shall be no right of set-off or counter claim, in
respect any claim, debt or obligation, against payments to Rhein, his
dependents, beneficiaries or estate provided for in this Agreement.
14.02. No right or interest to or in any payments shall be
assignable by Rhein; provided, however, that this provision shall not preclude
him from designating one or more beneficiaries to receive any amount that may be
payable after his death and shall not preclude the legal representative of his
estate from assigning any right hereunder to the person or persons entitled
thereto under his will or, in the case of intestacy, to the person or persons
entitled thereto under the laws of intestacy applicable to his estate. The term
"beneficiaries" as used in this Agreement shall mean a beneficiary or
beneficiaries so designated to receive any such amount or, if no beneficiary has
been so designated, the legal representative of Rhein's estate.
14.03. No right, benefit or interest hereunder, shall be
subject to anticipation, alienation, sale, assignment, encumbrance, charge,
pledge, hypothecation, or set-off in respect of any claim, debt or obligation,
or to execution, attachment, levy or similar process, or assignment by operation
of law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
14.04. In the event of Rhein's death or a judicial
determination of his incompetence, reference in this Agreement to Rhein shall be
deemed, where appropriate, to refer to his legal representative or, where
appropriate, to his beneficiary or beneficiaries.
14.05. The titles to sections in this Agreement are intended
solely for convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
14.06. This Agreement shall be binding upon and shall inure to
the benefit of (a) Rhein and, subject to the provisions of
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<PAGE> 13
paragraphs 14.02 and 14.03, his heirs and legal representatives, and (b) the
Company and its successors as provided in Section 17 hereof.
15. Amendment or Modification; Waiver
No provision of this Agreement may be amended or waived unless
such amendment or waiver is authorized by the Board of Directors of the Company
or any authorized committee of the Board of Directors and is agreed to in
writing, signed by Rhein and by an officer of the Company thereunto duly
authorized by either the Board of Directors or the Compensation Committee.
Except as otherwise specifically provided in this Agreement, no waiver by either
party hereto of any breach by the other party hereto of any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of a subsequent breach of such condition or provision or a waiver of a
similar or dissimilar provision or condition at the same or at any prior or
subsequent time.
16. Severability
In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
17. Successors to the Company
Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the Company and any successor of the
Company, including, without limitation, any corporation which acquires directly
or indirectly all or substantially all of the assets of the Company whether by
merger, consolidation, sale or otherwise (and such successor shall thereafter be
deemed "the Company" for the purposes of this Agreement), but shall not
otherwise be assignable by the Company.
18. Operation of Agreement
18.01. This Agreement shall be effective April 3, 1995, and
shall supersede the Employment Agreement effective April 1, 1993 between Rhein
and the Company.
18.02. For the purpose of this Agreement, the term "Change in
Control" of the Company shall mean a change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934 as in effect on the
date of this Agreement; provided that, without limitation, such a change in
control shall be deemed to have occurred if and when (a) any
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<PAGE> 14
"person" (as such term is used in Sections 13(d) and 14(d) (2) of the Securities
Exchange Act of 1934) is or becomes a beneficial owner, directly or indirectly,
of securities of the Company representing 20% or more of the combined voting
power of the Company's then outstanding securities or (b) during any period of
twelve (12) consecutive months, commencing before or after the date of this
Agreement, individuals who, at the beginning of such twelve (12) month period
were directors of the Company for whom Rhein, as a shareholder, shall have
voted, cease for any reason to constitute at least a majority of the Board of
Directors of the Company.
19. Enforcement Costs
The Company is aware that upon the occurrence of a Change in
Control the Board of Directors or a shareholder of the Company may then cause or
attempt to cause the Company to refuse to comply with its obligations under this
Agreement, or may cause or attempt to cause the Company to institute, or may
institute, litigation seeking to have this Agreement declared unenforceable, or
may take, or attempt to take, other action to deny Rhein the benefits intended
under this Agreement. In these circumstances, the purpose of this Agreement
could be frustrated. It is the intent of the Company that Rhein not be required
to incur the expenses associated with the enforcement of his rights under this
Agreement by litigation or other legal action because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
Rhein hereunder, nor be bound to negotiate any settlement of his rights
hereunder under threat of incurring such expenses. Accordingly, if following a
Change in Control it should appear to Rhein that the Company has failed to
comply with any of its obligations under this Agreement or in the event that the
Company or any other person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation or other legal action designed to
deny, diminish or to recover from, Rhein, or in the event the Company fails or
refuses to comply with the obligations under this Agreement, the benefits
intended to be provided to Rhein hereunder, and that Rhein has complied with all
of his obligations under this Agreement, the Company irrevocably authorizes
Rhein from time to time to retain counsel of his choice at the expense of the
Company as provided in this Section 19, to represent Rhein in connection with
the initiation or defense of any litigation or other legal action, whether by or
against the Company or any Director, officer, shareholder or other person
affiliated with the Company, in any jurisdiction. Notwithstanding any existing
or prior attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to Rhein entering into an attorney-client
relationship with such counsel, and in that connection the Company and Rhein
agree that a confidential relationship shall exist between Rhein and such
counsel. The reasonable fees and expenses of counsel selected from time to time
by Rhein as hereinabove provided shall be paid or reimbursed to Rhein by the
Company on a regular, periodic basis
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<PAGE> 15
upon presentation by Rhein of a statement or statements prepared by such counsel
in accordance with its customary practices, up to a maximum aggregate amount of
$500,000.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
ATTEST: PIONEER-STANDARD ELECTRONICS, INC.
/s/ Colleen M. Simon By/s/ James L. Bayman
- ---------------------------- --------------------------------
James L. Bayman, Chief Executive
Officer and President
ATTEST:
/s/ Nelle Wolff /s/ Arthur Rhein
- ---------------------------- --------------------------------
Arthur Rhein
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<PAGE> 1
Exhibit 10(e)
EXECUTION COPY
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT BETWEEN PIONEER-STANDARD ELECTRONICS, INC.
AND
JOHN V. GOODGER
June 12, 1995
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Employment . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Period of Employment . . . . . . . . . . . . . . . . . . . . . 1
3. Position, Duties, Responsibilities . . . . . . . . . . . . . . 1
4. Compensation, Compensation Plans, Perquisites . . . . . . . . 2
5. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . 3
6. Effect of Death or Disability . . . . . . . . . . . . . . . . 4
7. Termination . . . . . . . . . . . . . . . . . . . . . . . . . 5
8. Competition . . . . . . . . . . . . . . . . . . . . . . . . . 7
9. Confidential Information . . . . . . . . . . . . . . . . . . . 8
10. Noninterference . . . . . . . . . . . . . . . . . . . . . . . 8
11. Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
12. Withholding . . . . . . . . . . . . . . . . . . . . . . . . . 9
13. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
14. General Provisions . . . . . . . . . . . . . . . . . . . . . . 10
15. Amendment or Modification; Waiver . . . . . . . . . . . . . . 11
16. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 11
17. Successors to the Company . . . . . . . . . . . . . . . . . . 11
18. Operation of Agreement . . . . . . . . . . . . . . . . . . . . 11
19. Enforcement Costs . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE> 3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT between
PIONEER-STANDARD ELECTRONICS, INC., an Ohio corporation (the "Company"), and
JOHN V. GOODGER ("Goodger"), dated June ___, 1995, effective April 3, 1995.
W I T N E S S E T H:
WHEREAS: The Company and Goodger have given consideration to
an employment agreement providing for the services of Goodger as Vice
President, Treasurer and Assistant Secretary; and
WHEREAS: This agreement is deemed necessary at the present
time to meet the need for a continued strong management without substantial
change; and
WHEREAS: Together with other officers of the Company, Goodger
has been responsible for the success of the business of the Company;
NOW, THEREFORE, it is hereby agreed by and between the Company
and Goodger as follows:
1. Employment
The Company hereby agrees to continue to employ Goodger, and
Goodger hereby agrees to remain in the employ of the Company, for the period
set forth in Section 2 below (the "Period of Employment"), in the position and
with the duties and responsibilities set forth in Section 3 below, and upon the
other terms and conditions hereinafter stated.
2 . Period of Employment
For the purposes of this Agreement, the Period of Employment,
subject only to the provisions of Section 6 below (relating to Death or
Disability), shall continue until termination of employment as set forth in
Section 7 (relating to Termination).
3 . Position, Duties, Responsibilities
3.01 (a) During the Period of Employment, Goodger shall serve
as Vice President, Treasurer and Assistant Secretary of the Company reporting
to the Chief Executive Officer and President of the Company and shall have the
authority, power, and duties with regard to his position as may from time to
time be assigned by the Chief Executive Officer and President or the Board of
Directors of the Company. His duties shall exclude the Company's affiliate,
Pioneer/ Technologies Group, Inc. ("Technologies").
3.01 (b) At all times during the Period of Employment,
Goodger shall hold a position of responsibility and importance and a position
of scope, with the functions, duties and
<PAGE> 4
responsibilities attached thereto, at least equal in responsibility and
importance and in scope to and commensurate with his position on the date of
this Agreement described in general terms in paragraph 3.01(a) above.
3.02. Throughout the Period of Employment Goodger shall
devote his full time and undivided attention during normal business hours to
the business and affairs of the Company, except for reasonable vacations
afforded the Company's executive officers consistent with past practices and
except for illness or incapacity, but nothing in this Agreement shall preclude
Goodger from devoting reasonable time required for serving as a director or
member of an advisory committee of any organization involving no conflict of
interest with the interests of the Company, from engaging in charitable and
community activities, and from managing his personal investments, provided that
such activities do not materially interfere with the regular performance of his
duties and responsibilities under this Agreement.
3.03. Goodger's office shall be located at the corporate
offices of the Company in the Greater Cleveland Area, State of Ohio, and
Goodger shall not be required to locate his office elsewhere without his prior
written consent, nor shall he be required to be absent therefrom on travel
status or otherwise more than a total of sixty (60) days in any calendar year
nor more than fifteen (15) consecutive days at any one time.
4. Compensation, Compensation Plans, Perquisites
4.01 (a) For all services rendered by Goodger in any
capacity during the Period of Employment, Goodger shall be paid as compensation:
(i) A base salary, payable not less often than
monthly, at the rate of no less than $10,833 per month, with such increases in
such rate as shall be awarded from time to time in accordance with the Company's
regular administrative practices of salary increases applicable to executives of
the Company in effect on the date of this Agreement; and
(ii) A cash incentive bonus equal to the
product of 15/100 of 1% of the sum of the "actual operating income" of the
Company plus its equity earnings in profits/losses from Technologies,
multiplied by the ratio of the Company's "actual return on capital" to 22.0%,
or such equivalent successor bonus plan as may be adopted by the Company with
Goodger's written consent. The term "actual operating income" shall be defined
as the income before income tax (state and federal income tax), interest, and
the Company's equity earnings in profits/losses from Technologies. The term
"actual return on capital" shall be defined as the Company's "actual operating
income" divided by the sum of its interest-bearing debt, plus equity, less the
Company's equity investment in Technologies (the denominator shall be
calculated for each fiscal year as the average of such amounts as at the end of
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<PAGE> 5
each of the Company's four (4) fiscal quarters). The Company shall calculate
and pay 75% of such bonus to Goodger at the end of each of the first three (3)
fiscal quarters. After April 1 and before June 16 of the next fiscal year, and
after audited financial statements are available to the Company, the Company
shall pay Goodger the balance of any bonus due Goodger based on the full year
calculation less payments made for the first three (3) fiscal quarters, which
payment shall be vested in the event of termination by reason of Death or
Disability (Section 6), Change of Control, (Section 7.02), or Without Cause
(Section 7.04), but shall be forfeited in the event of termination For Cause or
Voluntary Termination (Section 7.03).
(b) Any increase in salary or bonus or other
compensation shall in no way diminish any other obligation of the Company under
this Agreement, unless specifically agreed to in writing by Goodger.
4.02. During the Period of Employment Goodger shall be and
continue to be a full participant in the Company's Employees' Profit Sharing
Plan or any equivalent successor plan that may be adopted by the Company.
4.03. During the Period of Employment Goodger shall be
entitled to perquisites, including without limitation, an office, secretarial
and clerical staff, and to fringe benefits comparable to those enjoyed by the
other executive officers of the Company, but in each case at least equal to
those attached to his office on the date of this Agreement, as well as to
reimbursement, upon proper accounting, of reasonable expenses and disbursements
incurred by him in the course of his duties.
5. Employee Benefit Plans
5.01. The compensation, together with other matters provided
for in Section 4 above, is in addition to the benefits provided for in this
Section 5.
5.02. Goodger, his dependents, beneficiaries and estate shall
be entitled to all payments and benefits and service credit for benefits during
the Period of Employment to which executive officers of the Company, their
dependents and beneficiaries are entitled as the result of the employment of
such executive officers during the Period of Employment under the terms of
employee plans and practices of the Company, including, without limitation, the
Company's retirement program consisting of its Employees' Profit Sharing Plan,
its group life insurance plan, its accidental death and dismemberment
insurance, disability, medical and health and welfare plans, any key person
individual life and disability policies, automobile expense reimbursement, club
membership fees and dues, and other present or equivalent successor plans and
practices of the Company, its subsidiaries and divisions, for which officers,
their dependents and beneficiaries are eligible, and to all payments or other
benefits under any such plan or practice
-3-
<PAGE> 6
after the Period of Employment as a result of participation in such plan or
practice during the Period of Employment.
5.03. Goodger shall be eligible to participate in the
Company's 1991 Stock Option Plan (which, together with any successor stock
option plan or plans that may be adopted by the Company, is referred to herein
as the "Option Plan"). The Company has granted Goodger stock options
("Options") at an option price equal to the fair market value of the Company's
Common Shares at the date of grant. The terms and conditions of exercise of
Goodger's Options shall be as is set forth in Goodger's Stock Option Agreements
(the "Option Agreements") with the Company; provided, however, that in the
event of a Change in Control, as defined in paragraph 18.02 below, then
notwithstanding the provisions of said Option Agreements, all options
(including those granted to him under the 1982 Incentive Stock Option Plan)
shall immediately be 100% vested and Goodger shall have the immediate right of
exercise with respect to all Options and their underlying Common Shares covered
by said Option Agreements. In the event that Goodger's employment is
terminated as a result of a Change in Control, as defined in paragraph 18.02
below, Goodger shall have the period of one (1) year after the date of such
termination to exercise his Options or the remainder of the term of such
Options, whichever is shorter, and any such exercise shall be irrevocable.
6. Effect of Death or Disability
6.01. In the event of the death of Goodger during the Period
of Employment, the Period of Employment shall be deemed to have ended as of the
close of business on the last day of the month in which death shall have
occurred, and his legal representative shall be entitled to (i) the
compensation provided for in paragraph 4.01(a)(i) above for the month in which
death shall take place at the rate being paid at the time of death, (ii) any
cash bonus payable for the fiscal quarter in which the Period of Employment
shall be deemed to have terminated due to death, plus the balance of any bonus
due Goodger for any prior fiscal quarters in accordance with, and payable at
the times set forth in, paragraph 4.01(a)(ii) above, and (iii) any benefits
provided pursuant to paragraph 5.02 hereof which are payable pursuant to the
terms of the applicable plan or practice.
6.02 (a) The term "Disability," as used in this Agreement,
shall mean an illness or accident which prevents Goodger from performing his
duties under this Agreement for a period of three (3) consecutive months. The
Period of Employment shall be deemed to have ended as of the close of business
on the last day of such three (3) months' period but without prejudice to any
payments due Goodger in respect of disability.
(b) In the event of the Disability of Goodger
during the Period of Employment, Goodger shall be entitled to (i) the
compensation provided for in paragraph 4.01(a)(i) above, at the rate being paid
at the time of the commencement of Disability,
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<PAGE> 7
for the period of such Disability but not in excess of three (3) months, (ii)
any cash bonus payable for the fiscal quarter in which the Period of Employment
shall be deemed to have terminated due to Disability, plus the balance of any
bonus due Goodger for any prior fiscal quarters in accordance with, and payable
at the times set forth in, paragraph 4.01(a)(ii) above, and (iii) any benefits
provided pursuant to paragraph 5.02 hereof which are payable pursuant to the
terms of the applicable plan or practice.
(c) The amount of any payments due under this
paragraph 6.02 shall be reduced by any payments to which Goodger may be paid
for the same period under any disability plan of the Company or of any
subsidiary or affiliate thereof.
7. Termination
7.01. GENERAL. The Company may terminate Goodger with or
without cause at any time during the Period of Employment, subject to the
provisions of this Section 7.
7.02. CHANGE OF CONTROL. Within one (1) year of a Change of
Control of the Company, as defined in paragraph 18.02, Goodger shall have the
right to terminate his employment with the Company and there shall be paid or
provided to Goodger, his dependents, beneficiaries and estate, as liquidated
damages or severance pay, or both, the following:
(a) The compensation provided for in paragraph
4.01(a)(i) above for the month in which Termination shall have occurred at the
rate being paid at the time of Termination; and an amount equal to his previous
twenty four (24) months of base salary plus an amount equal to the earned
incentive cash bonus referred to in paragraph 4.01(a)(ii) above for the two (2)
previously completed fiscal years. Such amount shall be paid to Goodger in one
payment, immediately upon Termination. Goodger shall also receive any cash
bonus payable for the fiscal quarter in which the Period of Employment shall be
deemed to have terminated due to Change of Control, plus the balance of any
bonus due Goodger for any prior fiscal quarters in accordance with, and payable
at the times set forth in, paragraph 4.01(a)(ii) above.
(b) For two (2) years following the date of
Termination, Goodger, his dependents, beneficiaries and estate, shall continue
to be entitled to all benefits provided pursuant to paragraph 5.02 hereof which
are payable pursuant to the terms of the applicable plan or practice, and
service credit for benefits under all employee benefit plans of the Company,
including, without limitation, the Company's profit sharing plan referred to in
paragraph 5.02 above, upon the same basis as immediately prior to Termination
and, to the extent that such benefits or service credit for benefits shall not
be payable or provided under any such plans to Goodger, his dependents,
beneficiaries and estate, by reason of his no longer being an employee of the
Company as the result of Termination, or any such plan, program or arrangement
is
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<PAGE> 8
discontinued or the benefits thereunder are materially reduced, the Company
shall itself arrange to provide benefits substantially similar to those which
Goodger, his dependents and beneficiaries were entitled to receive under such
plans, programs and arrangements immediately prior to termination to Goodger,
his dependents, beneficiaries and estate.
Any termination by the Company within the period of ninety
(90) days prior to the execution of a letter of intent or a definitive
agreement which could lead to a Change of Control and the closing of the
transaction actually resulting in the Change of Control, as defined in
paragraph 18.02, shall be deemed to be a termination under this paragraph 7.02.
An election by Goodger to terminate his employment under the provisions of this
paragraph 7.02 shall not be deemed a Voluntary Termination of employment by
Goodger under paragraph 7.03 of this Agreement or any plan or practice of the
Company.
7.03. FOR CAUSE OR VOLUNTARY TERMINATION. For the purpose of
any provision of this Agreement, the termination of Goodger's employment shall
be deemed to have been For Cause only if:
(a) termination of his employment shall have been
the result of Goodger's conviction of any of the following: (i) embezzlement;
(ii) misappropriation of money or other property of the Company; or (iii) any
felony; or
(b) there has been a breach by Goodger during the
Period of Employment of the provisions of paragraph 3.02 above, relating to
devotion of full time to the affairs of the Company, Section 8 relating to
Competition, Section 9 relating to Confidential Information, or Section 10
relating to Noninterference, and such breach results in demonstrably material
injury to the Company, and with respect to any alleged breach of paragraph 3.02
hereof, Goodger shall have failed to remedy such proven breach within thirty
(30) days from his receipt of written notice from the Company.
If Goodger's employment is terminated by the Company For
Cause, or if Goodger shall Voluntarily Terminate his employment with the
Company, Goodger shall be entitled to the compensation provided for in
paragraph 4.01(a)(i) through the date of such termination. Goodger shall not
be entitled to any additional compensation or benefits (except for any vested
benefits), and shall continue to be bound by the provisions of Section 8 of
this Agreement (relating to Competition), the provisions of Section 9 of this
Agreement (relating to Confidential Information), and the provisions of Section
10 (relating to Noninterference).
7.04. WITHOUT CAUSE. Subject to compliance by Goodger with
the provisions of Section 8 of this Agreement (relating to Competition), the
provisions of Section 9 of this Agreement (relating to Confidential
Information), and the provisions of
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<PAGE> 9
Section 10 of this Agreement (relating to Noninterference), if the Company
shall terminate Goodger's employment, Without Cause, there shall be paid or
provided to Goodger, his dependents, beneficiaries and estate, as liquidated
damages or severance pay, or both, the compensation provided for in paragraph
4.01(a)(i) above for the month in which termination shall have occurred at the
rate being paid at the time of such termination, and the amount (the "Payment
Amount") per month, which shall consist of 1/24th of the total of an amount
equal to his previous twenty-four (24) months of base salary plus an amount
equal to the earned incentive cash bonus referred to in paragraph 4.01(a)(ii)
above for the two (2) previously completed fiscal years. Such Payment Amount
shall be paid to Goodger or, in case of his prior death, to his legal
representative, in monthly installments at the end of each month commencing
with the month next following that in which such termination shall have
occurred, and continuing for a period of six (6) months. Goodger shall also
receive any cash bonus payable for the fiscal quarter in which the Period of
Employment shall be deemed to have terminated due to termination Without Cause,
plus the balance of any bonus due Goodger for any prior fiscal quarters in
accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii)
above, plus any benefits provided pursuant to paragraph 5.02 hereof which are
payable pursuant to the terms of the applicable plan or practice. In the event
the Company fails to make such payments when due, then the remaining payments
shall become due and payable immediately.
7.05. ARBITRATION. In the event that Goodger's employment
shall be terminated by the Company during the Period of Employment or the
Company shall withhold payments or provision of benefits because Goodger is
alleged to be engaged in activities prohibited by Sections 8, 9 or 10 of this
Agreement or for any other reason, Goodger shall have the right, in addition to
all other rights and remedies provided by law, at his election either to seek
arbitration in the metropolitan area of Cleveland, Ohio, under the rules of the
American Arbitration Association by serving a notice to arbitrate upon the
Company or to institute a judicial proceeding, in either case within one
hundred and twenty (120) days after having received notice of termination of
his employment or within such longer period as may reasonably be necessary for
Goodger to take action in the event that his illness or incapacity should
preclude his taking such action within such one hundred and twenty (120) day
period.
8. Competition
There shall be no obligation on the part of the Company to
make any further payments provided for in paragraph 7.04 above if Goodger
shall, during the six (6) months following termination of Goodger's employment
for any reason except Change of Control as described in paragraph 7.02, engage
in Competition with the Company as hereinafter defined. The word "Competition"
for purposes of this Section 8 and any other provision of this Agreement shall
mean taking any employment or consulting position with or control of one
-7-
<PAGE> 10
of the Company's top twenty-five (25) competitors as listed in the most current
issue at the date of termination of Electronic Buyer's News and/or Electronic
News; provided, however, that in no event shall ownership of less than 5% of
the outstanding capital stock entitled to vote for the election of directors of
a corporation with a class of equity securities held of record by more than 500
persons be deemed Competition with the Company within the meaning of this
Section 8.
9. Confidential Information
9.01. Except for information which is already in the public
domain, or which is publicly disclosed by persons other than Goodger, or which
is required by law or court order to be disclosed, or information given to
Goodger by a third party not bound by any obligation of confidentiality,
Goodger shall at all times during and after his employment with the Company
hold in strictest confidence any and all confidential information within his
knowledge and which is material to the business of the Company (whether
acquired prior to or during his employment with the Company) concerning the
inventions, products, processes, methods of distribution, customers, services,
business, suppliers or trade secrets of the Company, except that Goodger may,
in connection with the performance of his duties to the Company, divulge
confidential information to the directors, officers, employees and shareholders
of the Company and to the advisors, accountants, attorneys or lenders of the
Company or such other individuals as deemed prudent in the course of business
to carry out the responsibilities and duties of his position. Such
confidential information includes, without limitation, financial information,
sales information, price lists, marketing data, the identity and lists of
actual and potential customers and technical information, all to the extent
that such information is not intended by the Company for public dissemination.
9.02. Goodger also agrees that upon leaving the Company's
employ he will not take with him, without the prior written consent of an
officer authorized to act in the matter by the Board of Directors of the
Company, any Company document, contract, internal financial or management
reports, customers list, product list, price list, catalog, employee list,
procedures, software, MIS data, drawing, blueprint, specification or other
document of the Company, its subsidiaries, affiliates and divisions, which is
of a confidential nature relating to the Company, its subsidiaries, affiliates
and divisions, or, without limitation, relating to its or their methods of
purchase or distribution, or any description of any trade secret, formulae or
secret processes.
10. Noninterference
Except for Change of Control as described in paragraph 7.02,
Goodger shall not, at any time during or within six (6) months after his
employment is terminated with the Company, without
-8-
<PAGE> 11
the prior written consent of the Company, directly or indirectly, induce or
attempt to induce any key employee, key agent or other key representative or
associate of the Company to terminate his or her relationship with the Company,
or in any way directly or indirectly interfere with such a relationship or any
relationship between the Company and any of its top fifty (50) suppliers or top
two hundred fifty (250) customers, both in terms of the Company's sales volume,
provided that purchasing goods from a supplier to the Company or making a sale
to any of the Company's customers shall not be deemed to be interference.
11. Remedy
Goodger acknowledges that Sections 8, 9 and 10 hereof were
negotiated at arms length and are required for the fair and reasonable
protection of the Company. Goodger and the Company further acknowledge and
agree that a breach of those obligations and agreements will result in
irreparable and continuing damage to the Company for which there will be no
adequate remedy at law and, therefore, Goodger and the Company agree that in
the event of any breach of said obligations and agreements the Company, and its
successors and assigns, shall be entitled to injunctive relief and such other
and further relief, including monetary damages, as is proper in the
circumstances. It is further agreed that the running of the periods provided
above in Sections 8 and 10, shall be tolled during any period which Goodger
shall be adjudged to have been in violation of any of his obligations under
such Sections.
12. Withholding
Anything to the contrary notwithstanding, all payments
required to be made by the Company hereunder to Goodger or his estate or
beneficiaries, shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the Company may reasonably
determine it should withhold pursuant to any applicable law or regulation. In
lieu of withholding such amounts, the Company may accept other provisions to
the end that it has sufficient funds to pay all taxes required by law to be
withheld in respect of such payments or any of them.
13. Notices
All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be sufficiently
given if and when mailed in the continental United States by registered or
certified mail or personally delivered to the party entitled thereto at the
address stated below or to such changed address as the addressee may have given
by a similar notice:
-9-
<PAGE> 12
To the Company: Pioneer-Standard Electronics, Inc.
4800 East 131st Street
Cleveland, Ohio 44105
Attention: Secretary or Chief Executive
Officer and President
To Goodger: John V. Goodger
104 Manor Brook Drive
Chagrin Falls, Ohio 44022
14. General Provisions
14.01. There shall be no right of set-off or counter claim,
in respect any claim, debt or obligation, against payments to Goodger, his
dependents, beneficiaries or estate provided for in this Agreement.
14.02. No right or interest to or in any payments shall be
assignable by Goodger; provided, however, that this provision shall not
preclude him from designating one or more beneficiaries to receive any amount
that may be payable after his death and shall not preclude the legal
representative of his estate from assigning any right hereunder to the person
or persons entitled thereto under his will or, in the case of intestacy, to the
person or persons entitled thereto under the laws of intestacy applicable to
his estate. The term "beneficiaries" as used in this Agreement shall mean a
beneficiary or beneficiaries so designated to receive any such amount or, if no
beneficiary has been so designated, the legal representative of Goodger's
estate.
14.03. No right, benefit or interest hereunder, shall be
subject to anticipation, alienation, sale, assignment, encumbrance, charge,
pledge, hypothecation, or set-off in respect of any claim, debt or obligation,
or to execution, attachment, levy or similar process, or assignment by
operation of law. Any attempt, voluntary or involuntary, to effect any action
specified in the immediately preceding sentence shall, to the full extent
permitted by law, be null, void and of no effect.
14.04. In the event of Goodger's death or a judicial
determination of his incompetence, reference in this Agreement to Goodger shall
be deemed, where appropriate, to refer to his legal representative or, where
appropriate, to his beneficiary or beneficiaries.
14.05. The titles to sections in this Agreement are intended
solely for convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
14.06. This Agreement shall be binding upon and shall inure
to the benefit of (a) Goodger and, subject to the provisions of paragraphs
14.02 and 14.03, his heirs and legal representatives,
-10-
<PAGE> 13
and (b) the Company and its successors as provided in Section 17 hereof.
15. Amendment or Modification; Waiver
No provision of this Agreement may be amended or waived unless
such amendment or waiver is authorized by the Board of Directors of the Company
or any authorized committee of the Board of Directors and is agreed to in
writing, signed by Goodger and by an officer of the Company thereunto duly
authorized by either the Board of Directors or the Compensation Committee.
Except as otherwise specifically provided in this Agreement, no waiver by
either party hereto of any breach by the other party hereto of any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of a subsequent breach of such condition or provision or a waiver of a
similar or dissimilar provision or condition at the same or at any prior or
subsequent time.
16. Severability
In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the
remaining provisions and portions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law.
17. Successors to the Company
Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the Company and any successor of the
Company, including, without limitation, any corporation which acquires directly
or indirectly all or substantially all of the assets of the Company whether by
merger, consolidation, sale or otherwise (and such successor shall thereafter
be deemed "the Company" for the purposes of this Agreement), but shall not
otherwise be assignable by the Company.
18. Operation of Agreement
18.01. This Agreement is effective as of April 3, 1995, and
supersedes the Amended and Restated Employment Agreement effective April 1,
1994, between Goodger and the Company.
18.02. For the purpose of this Agreement, the term "Change in
Control" of the Company shall mean a change in control of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934 as in
effect on the date of this Agreement; provided that, without limitation, such a
change in control shall be deemed to have occurred if and when (a) any "person"
(as such term is used in Sections 13(d) and 14(d) (2) of
-11-
<PAGE> 14
the Securities Exchange Act of 1934) is or becomes a beneficial owner, directly
or indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding securities or (b)
during any period of twelve (12) consecutive months, commencing before or after
the date of this Agreement, individuals who, at the beginning of such twelve
(12) month period were directors of the Company for whom Goodger, as a
shareholder, shall have voted, cease for any reason to constitute at least a
majority of the Board of Directors of the Company.
19. Enforcement Costs
The Company is aware that upon the occurrence of a Change in
Control the Board of Directors or a shareholder of the Company may then cause
or attempt to cause the Company to refuse to comply with its obligations under
this Agreement, or may cause or attempt to cause the Company to institute, or
may institute, litigation seeking to have this Agreement declared
unenforceable, or may take, or attempt to take, other action to deny Goodger
the benefits intended under this Agreement. In these circumstances, the
purpose of this Agreement could be frustrated. It is the intent of the Company
that Goodger not be required to incur the expenses associated with the
enforcement of his rights under this Agreement by litigation or other legal
action because the cost and expense thereof would substantially detract from
the benefits intended to be extended to Goodger hereunder, nor be bound to
negotiate any settlement of his rights hereunder under threat of incurring such
expenses. Accordingly, if following a Change in Control it should appear to
Goodger that the Company has failed to comply with any of its obligations under
this Agreement or in the event that the Company or any other person takes any
action to declare this Agreement void or unenforceable, or institutes any
litigation or other legal action designed to deny, diminish or to recover from,
Goodger, or in the event the Company fails or refuses to comply with the
obligations under this Agreement, the benefits intended to be provided to
Goodger hereunder, and that Goodger has complied with all of his obligations
under this Agreement, the Company irrevocably authorizes Goodger from time to
time to retain counsel of his choice at the expense of the Company as provided
in this Section 19, to represent Goodger in connection with the initiation or
defense of any litigation or other legal action, whether by or against the
Company or any Director, officer, shareholder or other person affiliated with
the Company, in any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel, the Company
irrevocably consents to Goodger entering into an attorney-client relationship
with such counsel, and in that connection the Company and Goodger agree that a
confidential relationship shall exist between Goodger and such counsel. The
reasonable fees and expenses of counsel selected from time to time by Goodger
as hereinabove provided shall be paid or reimbursed to Goodger by the Company
on a regular,
-12-
<PAGE> 15
periodic basis upon presentation by Goodger of a statement or statements
prepared by such counsel in accordance with its customary practices, up to a
maximum aggregate amount of $500,000.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
ATTEST: PIONEER-STANDARD ELECTRONICS, INC.
/s/ Colleen M. Simon By/s/ James L. Bayman
- --------------------------- -----------------------------------------
James L. Bayman, Chief Executive
Officer and President
ATTEST:
/s/ Beverly M. Fisher /s/ John V. Goodger
- --------------------------- -----------------------------------------
John V. Goodger
-13-
<PAGE> 1
Exhibit 11
PIONEER-STANDARD ELECTRONICS, INC.
CALCULATION OF EARNINGS PER SHARE
Years Ended March 31, 1995, 1994, and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Primary
Weighted Average Common
Shares and Common Share Equivalents
outstanding 15,257,918 15,118,023 13,782,768
Net income $25,009,000 $19,676,000 $12,913,000
=========== =========== ===========
Earnings per share $1.64 $1.30 $.94
Fully diluted
Weighted average Common
Shares and Common Share equivalents
outstanding 15,289,765 15,168,888 13,831,527
Assumed conversion of
9% convertible
debentures -- -- 1,134,976
----------- ----------- -----------
Total 15,289,765 15,168,888 14,966,503
=========== =========== ===========
Net income $25,009,000 $19,676,000 $12,913,000
Add 9% convertible
debenture interest, net of federal
income tax effect
-- -- 399,000
Total net income as
adjusted $25,009,000 $19,676,000 $13,312,000
=========== =========== ===========
Earnings per share $1.64 $1.30 $.89
===== ===== ====
</TABLE>
<PAGE> 1
Exhibit 24
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Pioneer-Standard Electronics, Inc. of our report dated May 5, 1995 included
in the 1995 Annual Report to Shareholders of Pioneer-Standard Electronics, Inc.
We also consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 33-46008 and Form S-8 No. 33-53329) pertaining to the 1991
Incentive Stock Option Plan of Pioneer-Standard Electronics, Inc. and in the
related Prospectuses and in the Registration Statement (Form S-8 No. 33-18790)
pertaining to the 1982 Incentive Stock Option Plan of Pioneer-Standard
Electronics, Inc. and in the related Prospectus of our reports dated May 5, 1995
with respect to the consolidated financial statements and schedule of
Pioneer-Standard Electronics, Inc. included in this Annual Report (Form 10-K)
for the year ended March 31, 1995.
ERNST & YOUNG LLP
Cleveland, Ohio
June 20, 1995
<PAGE> 2
Exhibit 24
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 33-46008 and Form S-8 No. 33-53329) pertaining to the 1991
Incentive Stock Option Plan of Pioneer-Standing Electronics, Inc. and (Form S-8
No. 33-18790) pertaining to the 1982 Incentive Stock Option Plan of
Pioneer-Standard Electronics, Inc., of our report dated April 28, 1995 with
respect to the financial statements and schedule of Pioneer Technologies Group,
Inc. included in this Annual Report (Form 10-K) for the year ended March 31,
1995.
ERNST & YOUNG LLP
Washington, DC
June 20, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 9,598
<SECURITIES> 0
<RECEIVABLES> 138,593
<ALLOWANCES> 4,606
<INVENTORY> 123,008
<CURRENT-ASSETS> 273,924
<PP&E> 55,396
<DEPRECIATION> 24,467
<TOTAL-ASSETS> 327,415
<CURRENT-LIABILITIES> 142,486
<BONDS> 56,318
<COMMON> 6,630
0
0
<OTHER-SE> 119,785
<TOTAL-LIABILITY-AND-EQUITY> 327,415
<SALES> 832,152
<TOTAL-REVENUES> 832,152
<CGS> 677,171
<TOTAL-COSTS> 677,171
<OTHER-EXPENSES> 111,302
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,966
<INCOME-PRETAX> 42,213
<INCOME-TAX> 17,204
<INCOME-CONTINUING> 25,009
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,009
<EPS-PRIMARY> 1.64
<EPS-DILUTED> 1.64
</TABLE>
<PAGE> 1
EXHIBIT 99(a)
ACORD. CERTIFICATE OF INSURANCE ISSUE DATE (MM/DD/YY)
6/07/95
PRODUCER
Alexander & Alexander Inc
1660 West 2nd Street
Ste 650, Skylight Office Tower
Cleveland, OH 44113
INSURED
Pioneer Standard Electronics
4800 East 131st Street
Cleveland OH 44105
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS
UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER
THE COVERAGE AFFORDED BY THE POLICIES BELOW.
COMPANIES AFFORDING COVERAGE
COMPANY
LETTER A Federal Insurance Company
COMPANY
LETTER B
COMPANY
LETTER C [STAMPED - OHIO INSURANCE FRAUD WARNING
ANY PERSON, WHO WITH INTENT TO DEFRAUD
COMPANY OR KNOWING THAT HE IS FACILITATING A
LETTER D FRAUD AGAINST AN INSURER, SUBMITS AN
APPLICATION OR FILES A CLAIM CONTAINING
COMPANY A FALSE OR DECEPTIVE STATEMENT IS GUILTY
LETTER E OF INSURANCE FRAUD]
- -------------------------------------------------------------------------------
COVERAGES
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN
ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED,
NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER
DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN,
THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL
THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE
BEEN REDUCED BY PAID CLAIMS.
<TABLE>
<CAPTION>
CO POLICY EFFECTIVE POLICY EXPIRATION
LTR TYPE OF INSURANCE POLICY NUMBER DATE (MM/DD/YY) DATE (MM/DD/YY) LIMITS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GENERAL LIABILITY GENERAL AGGREGATE $
COMMERCIAL GENERAL LIABILITY PRODUCTS-COMP/OP AGG. $
CLAIMS MADE OCCUR. PERSONAL & ADV. INJURY $
OWNER'S & CONTRACTOR'S PROT. EACH OCCURRENCE $
FIRE DAMAGE (Any one fire) $
MED. EXPENSE (Any one person) $
- ------------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE LIABILITY COMBINED SINGLE
ANY AUTO LIMIT $
ALL ALLOWED AUTOS BODILY INJURY
(Per person) $
SCHEDULED AUTOS
HIRED AUTOS BODILY INJURY
(Per accident) $
NON-OWNED AUTOS
GARAGE LIABILITY PROPERTY DAMAGE $
- ------------------------------------------------------------------------------------------------------------------------------------
EXCESS LIABILITY
UMBRELLA FORM EACH OCCURRENCE $
OTHER THAN UMBRELLA FORM AGGREGATE $
- ------------------------------------------------------------------------------------------------------------------------------------
WORKER'S COMPENSATION STATUTORY LIMITS
AND EACH ACCIDENT $
EMPLOYER'S LIABILITY DISEASE-POLICY LIMIT $
DISEASE-EACH EMPLOYEE $
- ------------------------------------------------------------------------------------------------------------------------------------
A OTHER 8102-64-55G 11/01/95 11/01/96
Executive Risk $15,000,000 Ea. Loss
D & O Liability $15,000,000 Each
Policy Year
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS
Deductible - $500,000. Insured Organization
- ------------------------------------------------------------------------------------------------------------------------------------
CERTIFICATE HOLDER CANCELLATION
SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE
CANCELLED BEFORE THE EXPIRATION DATE THEREOF, THE
ISSUING COMPANY WILL ENDEAVOR TO MAIL 30 DAYS WRITTEN
SAMPLE NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT,
BUT FAILURE TO MAIL SUCH NOTICE SHALL IMPOSE NO
OBLIGATION OR LIABILITY OF ANY KIND UPON THE COMPANY,
ITS AGENTS OR REPRESENTATIVES.
-------------------------------------------------------
AUTHORIZED REPRESENTATIVE
/s/ Ralph E. Hodges
-------------------------------------------------------
ALEXANDER & ALEXANDER OF OHIO, INC.
ACORD 25-S (7/90) (C)ACCORD CORPORATION 1990
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
40 - 18
<PAGE> 1
EXHIBIT 99(c)
DIVIDEND INFORMATION AND PRICE RANGE OF COMMONSHARES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Fiscal Year First Second Third Fourth
Ending March 31 Quarter Quarter Quarter Quarter Year
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
High $ 18.67 $ 19.00 $ 19.75 $ 19.75 $ 19.75
Low 14.50 13.75 14.25 16.00 13.75
Dividends paid .023 .03 .03 .03 .113
- --------------------------------------------------------------------------------------------------------------
1994
High $ 11.83 $ 16.00 $ 16.50 $ 18.83 $ 18.83
Low 8.00 11.17 12.50 12.33 8.00
Dividends paid .02 .02 .023 .023 .087
- --------------------------------------------------------------------------------------------------------------
</TABLE>
As of April 5, 1995 there were 14,916,146 Common Shares of Pioneer-Standard
Electronics, Inc. outstanding, and there were 540 shareholders of record.
The market price of Pioneer-Standard Electronics, Inc. Common Shares at the
close of business May 5, 1995 was $20.63.
See Note 3 for information regarding dividend restrictions.
<PAGE> 1
EXHIBIT 99(d)
FINANCIAL REVIEW
Summary of Operations/Fiscal Years ended March 31
<TABLE>
<CAPTION>
(Dollars in thousands except per share amounts)
===============================================================================================================================
For the Year 1995 1994 1993 1992 1991
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Combined Sales
(Pioneer-Standard Electronics, Inc. and
Pioneer Technologies Group, Inc.) $ 1,200,252 $ 1,002,758 $ 714,021 $ 552,294 $ 501,834
Pioneer-Standard Electronics, Inc.
Net Sales 832,152 580,757 430,013 362,386 345,064
Interest Expense 3,966 2,687 3,581 4,505 4,748
Income from Continuing Operations before
Income Taxes and Equity in Earnings of
Pioneer Technologies Group, Inc. 39,713 28,702 17,480 7,888 12,673
Equity in Earnings of Pioneer Technologies
Group, Inc. 2,500 3,001 2,505 654 703
Income Taxes 17,204 12,027 7,072 3,215 5,084
Income from Continuing Operations 25,009 19,676 12,913 5,327 8,292
Net Income* 25,009 19,676 12,913 5,327 8,292
- -------------------------------------------------------------------------------------------------------------------------------
Year-End Position
Accounts Receivable 133,987 81,155 62,347 50,004 51,378
Inventory 123,008 85,754 67,101 60,983 56,981
Working Capital 131,438 85,132 70,781 69,325 66,553
Net Property and Equipment 30,929 25,572 23,159 23,579 22,534
Total Assets* 327,415 220,039 171,860 150,871 146,348
Long-Term Debt* 56,318 22,272 21,328 44,717 44,306
Shareholders' Equity* 126,415 102,740 84,117 57,455 52,855
Weighted Average Shares Outstanding 15,257,918 15,118,023 13,782,768 12,306,934 12,183,877
Average Number of Employees 1,213 1,003 940 937 917
- -------------------------------------------------------------------------------------------------------------------------------
Per Share Data
Income Per Share from Continuing Operations 1.64 1.30 .94 .43 .68
Net Income Per Share* 1.64 1.30 .94 .43 .68
Cash Dividends Paid Per Share* .113 .087 .073 .071 .067
Shareholders' Equity Per Share* 8.48 6.91 5.73 4.67 4.30
Price Range of Common Shares*
High 19.75 18.83 13.33 7.89 6.89
Low 13.75 8.00 4.67 4.45 3.22
- -------------------------------------------------------------------------------------------------------------------------------
Measurement Data
Gross Margin Percent of Sales 18.6 19.8 21.7 21.4 22.5
Income from Continuing Operations Percent
of Sales 3.0 3.4 3.0 1.5 2.4
Net Income Percent of Average Shareholders' Equity 21.8 21.1 18.2 9.7 17.0
Sales Per Employee 686 579 457 387 376
Accounts Receivable Days Outstanding at Year-End 47 43 45 47 50
Turns on Annual Average Inventory 6.5 6.1 5.3 4.8 4.7
Interest Bearing Debt Percent of Equity Plus Debt* 34.4 21.0 22.3 46.4 45.9
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
*All data are for continuing operations unless marked with an asterisk.
1 Price range covers the period when the stock was first publicly traded,
January 7, 1971 through March 31, 1972.
<PAGE> 1
EXHIBIT 99(e)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
PIONEER-STANDARD SALES UP 43 PERCENT
Fiscal 1995 was the ninth consecutive year of record Pioneer-Standard sales
and the 23rd year in the 24 years we have been public that sales increased. The
year's sales were $832.2 million, up 43 percent from $580.8 million in 1994. The
Company's traditional sales increased 36 percent and including the ten-month
contribution of the newly acquired Canadian electronics distribution unit,
Zentronics, sales increased 43 percent.
All three of our major product categories added to sales growth this past
year. Semiconductor products accounted for 37 percent of sales, compared to 41
percent and 37 percent in 1994 and 1993, respectively. Computer systems products
comprised 38 percent of sales compared with 33 percent in 1994 and 39 percent in
1993. Passive and electromechanical products were 22 percent of sales, versus 24
percent in 1994 and 21 percent in 1993. Miscellaneous products accounted for 3
percent in 1995, 2 percent in 1994 and 3 percent in 1993.
The 1995 gross margin was 18.6 percent compared to 19.8 percent in 1994 and
21.7 percent in 1993. A principal reason for the reduced gross margin percent
in 1995 and 1994 was a change in product mix, particularly with respect to the
increase in sales volume of microprocessors over the past two years. While
microprocessors earn a relatively low gross profit margin, they are marketed
through an efficient low cost sales channel. Computer system products had the
highest line item value in 1995 and passive and electromechanical products had
the lowest, with the gross margin percent of passives being the higher of
these two products. The gross margin percent of the semiconductor products was
below the other two categories the past two years primarily due to the effect
of the increased microprocessor sales noted above.
OPERATING EFFICIENCIES CONTRIBUTE
As was the case in the prior year, our operating expenses in 1995 increased
less rapidly than sales--a direct result of operating efficiencies. Warehouse,
selling and administrative expenses in 1995 were 13.4 percent of sales, down
from 14.4 percent of 1994, and 16.8 percent of 1993. The improvements in the
past three years reflect to some extent the leveraging of expenses on greater
sales volume, and to a larger extent the many efficiencies realized through
FutureStart, our total quality management initiative. In addition, operating
expenses in all three years included outlays for geographic expansion of sales
operations.
The resulting operating profit amounted to $43.7 million, 39 percent ahead of
the $31.4 million of fiscal 1994, which was 49 percent greater than the $21.1
million of 1993. Operating profit amounted to 5.2 percent of net sales in 1995
compared with 5.4 percent in 1994 and 4.9 percent in 1993.
Sales per employee rose to a record $686,000, up from $579,000 in 1994 and
$457,000 in 1993. Turns on annual average inventory were 6.5, versus 6.1 in 1994
and 5.3 in 1993.
Interest expense totaled $4.0 million in 1995, $2.7 million in 1994 and $3.6
million in 1993. Total inter-
<PAGE> 2
est-bearing debt in-creased by $38.9 million during 1995 primarily due to the
working capital needs arising from in-creased sales volume coupled with the cash
investment in the Zentronics business and to an increased level of capital
expenditures.
Our equity interest in the net income of our 50%-owned affiliate, Pioneer
Technologies, was $2.5 million in fiscal 1995. This compares to $3.0 million in
1994 and $2.5 million in 1993. Pioneer Technologies' sales for fiscal 1995 were
$368.1 million, compared to $422.0 million in 1994 and $284.0 million in 1993.
Lower 1995 net sales reflected a reduced volume of microprocessor sales which
earn a relatively low gross profit margin. Reduced sales, combined with
increased operating expenses, impacted current year net income. Notwithstanding
lower microprocessor sales volume during 1995, a significant portion of the
affiliate's total sales involved highly concentrated sales of certain
microprocessors in large quantities which might not be sustainable in future
periods and the effect of which could result in a significant impact on the net
income of the affiliate. In 1994 and 1993, microprocessor sales were a major
factor in the affiliate's growth, representing a significant portion of its
sales increase.
The effective tax rate was 40.8 percent in 1995 compared with 37.9 percent in
1994. This increase is due to a decrease in the net income of Pioneer
Technologies relative to the Company's total net income in 1995 coupled with
higher effective state tax rates and the unrecognized tax benefit associated
with the operating loss of the Canadian subsidiary. The increase in the
effective tax rate from 35.4 percent in 1993 to 37.9 percent in 1994 was
primarily due to a 1.0 percent increase in the statutory rate and the accrual of
taxes on the unremitted earnings of our affiliate.
Primarily due to the factors outlined above, fiscal 1995 net income was a
record $25.0 million, up 27 percent from $19.7 million in 1994 which was, in
turn, 52 percent above the $12.9 million in 1993.
Earnings per share were a record $1.64 compared with $1.30 per share in 1994
and 89 cents fully diluted in 1993.
Systems are in place providing for continuous measurement and evaluation of
foreign exchange exposures so that timely action can be taken when considered
desirable. Reducing exposure to foreign currency fluctuations is an integral
part of the Company's risk management program. Financial instruments in the form
of forward exchange contracts are employed as one of the methods to reduce such
risk. The Company does not enter into financial instuments for trading or
speculative purposes.
We extend credit based on customers' financial condition, and generally
collateral is not required. Credit losses are provided for in the financial
statements when collectibility is in doubt.
Inflation has had little effect on our operations.
CAPITAL AND LIQUIDITY
On June 1, 1994, we acquired, for $10.1 million, certain assets of the
Zentronics Division of Westburne Industrial Enterprises Ltd. ("Westburne"), a
Canadian corporation, and assumed certain of Westburne's liabilities.
We maintain a strong financial position and excellent liquidity. Current
assets at fiscal 1995 year-end were $273.9 million, 1.9 times current
liabilities. Of signifi-
<PAGE> 3
cance, sales have increased 160 percent in the past five years compared with
only a 104 percent increase in working capital requirements.
On August 1, 1994, we effected a three-for-two split of common shares in the
form of a 50 percent share dividend. Also at that time, reflecting sales and
earnings progress, the quarterly dividend rate was increased from 3.5 cents per
share to 4.5 cents per share on a pre-split basis, 3 cents per share on a
post-split basis, for a 29 percent increase. In addition to this increase, the
fiscal 1996 first quarter dividend paid May 1, 1995 was increased by 17 percent
to a 3.5 cents per share quarterly dividend rate. This marks the 7th consecutive
year of a dividend increase and the 20th increase in the 24 years we have been
publicly traded.
We continued investing in programs to stimulate and support future growth.
Capital expenditures were $11.3 million in 1995, $7.6 million in 1994 and $4.2
million in 1993. The increased spending in 1995 is largely related to ongoing
initiatives designed to improve efficiencies through computer enhancement of
operating processes. Plans call for approximately $20.0 million of capital
expenditures in 1996. The planned increase in spending during 1996 is largely
attributable to results of our continuing business process redesign efforts.
Amounts expended will enable our technology toolset migration to a new,
state-of-the art software platform to support growth and flexibility
requirements. In addition, a portion of prior year expenditures as well as those
planned for 1996 also relate to ongoing initiatives designed to improve
efficiencies through computer enhancement of operating processes as well as
meeting normal expansion needs of the business.
In addition to excellent liquidity, we believe our credit facilities are
sufficient to finance growth. In February 1995, we increased our revolving
credit agreement to $65.0 million in total. As of March 31, 1995, $24.0 million
of this total commitment was available for use. In addition to the revolving
credit line, unsecured short-term lines of credit are available whereby a
maximum of $20.0 million may be borrowed. At March 31, 1995, borrowings pursuant
to these short-term lines totaled $7.0 million.
Considering the available credit lines and funds derived from current
operations plus the financing flexibility provided by the conservative debt to
capitalization ratio of 34 percent, Pioneer-Standard believes that it has the
alternative resources available to finance its growth needs.
<PAGE> 1
Exhibit 99(f)
PIONEER-STANDARD ELECTRONICS, INC.
FINANCIAL STATEMENTS AND SCHEDULE
PIONEER TECHNOLOGIES GROUP, INC.
FINANCIAL STATEMENTS AND SCHEDULE
<PAGE> 2
REPORT OF INDEPENDENT AUDITORS
Shareholders and the Board of Directors
Pioneer-Standard Electronics, Inc.
We have audited the accompanying consolidated balance sheets of
Pioneer-Standard Electronics, Inc. as of March 31, 1995 and 1994 and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended March 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of
Pioneer-Standard Electronics, Inc. at March 31, 1995 and 1994 and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended March 31, 1995, in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
Cleveland, Ohio
May 5, 1995
<PAGE> 3
CONSOLIDATED BALANCE SHEETS
March 31, 1995 and 1994
<TABLE>
<CAPTION>
=============================================================================================================
ASSETS 1995 1994
=============================================================================================================
<S> <C> <C>
CURRENT ASSETS:
Cash $ 9,598,000 $ 5,954,000
Accounts receivable, less allowance for doubtful accounts
(1995-$4,606,000, 1994-$2,869,000) 133,987,000 81,155,000
Merchandise inventory 123,008,000 85,754,000
Prepaid expenses 1,623,000 919,000
Deferred income taxes 5,708,000 4,391,000
- -------------------------------------------------------------------------------------------------------------
Total current assets 273,924,000 178,173,000
INVESTMENT AND OTHER ASSETS:
Investment in 50%-owned company 16,963,000 14,463,000
Other assets 5,599,000 1,831,000
PROPERTY AND EQUIPMENT, AT COST:
Land 1,070,000 1,070,000
Buildings 12,984,000 12,706,000
Furniture and equipment 39,166,000 30,165,000
Leasehold improvements 2,176,000 1,876,000
- -------------------------------------------------------------------------------------------------------------
55,396,000 45,817,000
Less accumulated depreciation and amortization 24,467,000 20,245,000
- -------------------------------------------------------------------------------------------------------------
Net property and equipment 30,929,000 25,572,000
- -------------------------------------------------------------------------------------------------------------
$ 327,415,000 $ 220,039,000
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable to banks $ 7,000,000 $ 2,000,000
Accounts payable 106,905,000 68,585,000
Income taxes 3,946,000 3,088,000
Accrued salaries, wages and commissions 8,593,000 6,835,000
Other accrued liabilities 13,086,000 9,477,000
Long-term debt due within one year 2,956,000 3,056,000
- -------------------------------------------------------------------------------------------------------------
Total current liabilities 142,486,000 93,041,000
LONG-TERM DEBT 56,318,000 22,272,000
DEFERRED INCOME TAXES 2,196,000 1,986,000
SHAREHOLDERS' EQUITY:
Common shares, without par value, $.44 stated value: authorized
40,000,000 shares (20,000,000 shares in 1994); outstanding
14,916,146 shares in 1995 and 14,869,359 shares in 1994 6,630,000 6,609,000
Capital in excess of stated value 16,318,000 15,806,000
Retained earnings 103,646,000 80,325,000
Foreign currency translation adjustment (179,000) --
- -------------------------------------------------------------------------------------------------------------
Total shareholders' equity 126,415,000 102,740,000
- -------------------------------------------------------------------------------------------------------------
$ 327,415,000 $ 220,039,000
============== ==============
</TABLE>
See accompanying notes to consolidated finacial statements.
<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME
Years ended March 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
1995 1994 1993
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $ 832,152,000 $ 580,757,000 $ 430,013,000
Operating costs and expenses:
Cost of goods sold 677,171,000 465,614,000 336,589,000
Warehouse, selling and administrative expenses 111,302,000 83,754,000 72,363,000
- -------------------------------------------------------------------------------------------------------------
788,473,000 549,368,000 408,952,000
- -------------------------------------------------------------------------------------------------------------
Operating profit 43,679,000 31,389,000 21,061,000
Equity in earnings of 50%-owned company 2,500,000 3,001,000 2,505,000
Interest expense (3,966,000) (2,687,000) (3,581,000)
- -------------------------------------------------------------------------------------------------------------
Income from operations before
income taxes 42,213,000 31,703,000 19,985,000
Provision for income taxes:
Federal
Current 14,517,000 9,946,000 6,267,000
Deferred (1,107,000) (574,000) (811,000)
- -------------------------------------------------------------------------------------------------------------
13,410,000 9,372,000 5,456,000
State 3,794,000 2,655,000 1,616,000
- -------------------------------------------------------------------------------------------------------------
17,204,000 12,027,000 7,072,000
- -------------------------------------------------------------------------------------------------------------
NET INCOME $ 25,009,000 $ 19,676,000 $ 12,913,000
=============================================================================================================
INCOME PER COMMON SHARE:
Primary $ 1.64 $ 1.30 $ .94
Fully diluted .89
=============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years ended March 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Foreign
Stated value Capital in currency
of common excess of Retained translation
shares stated value earnings adjustment Total
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT MARCH 31, 1992 $ 5,471,000 $ 1,984,000 $ 50,000,000 $ 57,455,000
Net income 12,913,000 12,913,000
Cash dividends ($.073 per share) (990,000) (990,000)
Shares issued upon conversion of debentures 1,026,000 13,280,000 14,306,000
Shares issued upon exercise of stock options 32,000 344,000 376,000
Tax benefit related to exercise of stock
options 57,000 57,000
- ------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1993 6,529,000 15,665,000 61,923,000 84,117,000
Net income 19,676,000 19,676,000
Cash dividends ($.087 per share) (1,274,000) (1,274,000)
Shares issued upon exercise of stock options 95,000 719,000 814,000
Tax benefit related to exercise of stock
options 21,000 21,000
Shares retired (15,000) (599,000) (614,000)
- ------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1994 6,609,000 15,806,000 80,325,000 102,740,000
Net income 25,009,000 25,009,000
Cash dividends ($.113 per share) (1,688,000) (1,688,000)
Shares issued upon exercise of stock options 21,000 388,000 409,000
Tax benefit related to exercise of stock
options 124,000 124,000
Foreign currency translation adjustment $ (179,000) (179,000)
- ------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1995 $ 6,630,000 $ 16,318,000 $ 103,646,000 $ (179,000) $ 126,415,000
==============================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended March 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 25,009,000 $ 19,676,000 $ 12,913,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,230,000 5,264,000 4,646,000
Undistributed earnings of affiliate (2,500,000) (3,001,000) (2,505,000)
(Increase) decrease in operating working capital (38,566,000) (11,635,000) 1,532,000
(Increase) decrease in other assets (1,713,000) (199,000) 140,000
Deferred taxes (1,115,000) (574,000) (622,000)
- -------------------------------------------------------------------------------------------------------------
Total adjustments (37,664,000) (10,145,000) 3,191,000
- -------------------------------------------------------------------------------------------------------------
Net cash (used) provided by operating activities (12,655,000) 9,531,000 16,104,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (11,326,000) (7,626,000) (4,160,000)
Acquisition of business (10,068,000) -- --
- -------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (21,394,000) (7,626,000) (4,160,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term financing 5,000,000 (500,000) --
Borrowings under revolving credit 65,000,000 25,000,000 8,000,000
Repayment under revolving credit (28,000,000) (21,000,000) (17,000,000)
Purchase of subordinated debt -- -- (916,000)
Principal payments under long-term debt obligations (3,056,000) (262,000) (1,494,000)
Issuance of common shares under stock option plans 409,000 200,000 376,000
Tax benefit related to exercise of stock options 124,000 21,000 57,000
Dividends paid (1,688,000) (1,274,000) (990,000)
- -------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 37,789,000 2,185,000 (11,967,000)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (96,000) -- --
- -------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 3,644,000 4,090,000 (23,000)
CASH AT BEGINNING OF YEAR 5,954,000 1,864,000 1,887,000
- -------------------------------------------------------------------------------------------------------------
CASH AT END OF YEAR $ 9,598,000 $ 5,954,000 $ 1,864,000
=============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 ACCOUNTING POLICIES
The Company is a distributor of electronic components and computer products and
maintains the following accounting policies:
PRINCIPLES OF CONSOLIDATION--The consolidated financial statements include the
accounts of the Company and its wholly-owned Canadian subsidiary. The Company's
50% ownership investment in Pioneer Technologies Group, Inc. is accounted for by
the equity method. All significant intercompany transactions have been
eliminated.
CASH EQUIVALENTS--The Company considers highly liquid instruments with a
maturity of ninety days or less at date of purchase to be cash equivalents.
MERCHANDISE INVENTORY--Inventory is stated at the lower of cost (first-in,
first-out basis) or market. The Company's inventory is constantly monitored for
obsolescence. This review considers such factors as turnover, technical
obsolescence, right of return status to suppliers and price protection offered
by suppliers. Reserves for slow-moving and obsolete inventory at March 31, were
$3,416,000 in 1995 and $2,540,000 in 1994.
OTHER ASSETS--Other assets include the excess of cost over value assigned to net
assets of purchased businesses, which is being amortized on the straight-line
method over 40 years; cash surrender value of life insurance; security deposits;
and certain deferred charges.
PROPERTY AND EQUIPMENT--The Company capitalizes costs associated with software
developed for its own use. Depreciation and amortization is com puted using
principally the straight-line method. Accelerated methods are used for tax
reporting purposes.
FOREIGN CURRENCY--The assets and liabilities of foreign operations are
translated into U.S. dollars at the exchange rates in effect at the balance
sheet date whereas income statement accounts are translated at the weighted
average exchange rates for the year. The gains or losses resulting from these
translations are recorded in a separate component of shareholders' equity. Gains
or losses resulting from realized foreign currency transactions are included in
net income.
INCOME TAXES--Effective April 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes." Adoption
of this statement was not material to the financial results.
STOCK SPLIT--On June 23, 1994, the Board of Directors declared a three-for-two
stock split effected in the form of a 50% share dividend of the Company's Common
Shares payable August 1, 1994 to shareholders of record July 6, 1994. All share
and per share data have been restated for all periods presented to reflect the
stock split.
COMMON SHARES AND NET INCOME PER COMMON SHARE--Net income per common share is
computed using the weighted average common shares and common share equivalents
outstanding during the year of 15,257,918 in 1995, 15,118,023 in 1994 and
13,782,768 in 1993. Common share equivalents consists of shares issuable upon
exercise of stock options computed by using the treasury stock method.
In 1993, fully diluted net income per common share was computed on the same
basis as above with the assumption that all of the 9% Subordinated Convertible
Debentures (which were called in fiscal 1993) were converted into common shares
and that the related interest expense, net of income taxes, was added to net
income. The number of shares used for this computation was 14,966,503 in 1993.
2 ACQUISITIONS
On June 1, 1994, the Company acquired certain of the assets of the Zentronics
Division of Westburne Industrial Enterprises Ltd. ("Westburne"), a Canadian
corporation, and assumed certain of Westburne's liabilities for a purchase price
of approximately $10,068,000. The transaction has been accounted for by the
purchase method of accounting and the pro forma effects are not material.
Operating results are included in the consolidated financial statements from the
date of acquisition.
<PAGE> 8
3 FINANCING AND LONG-TERM DEBT
SHORT-TERM:
The Company has unsecured short-term lines of credit aggregating
$20,000,000 available for use. The unsecured lines, which may be withdrawn at
the option of the lenders, permit the Company to borrow at varying interest
rates. There were $7,000,000 of borrowings against these lines at March 31, 1995
with a weighted average interest rate of 6.69%. Such borrowings at March 31,
1994 were $2,000,000 with a weighted average interest rate of 5.75%.
LONG-TERM:
Long-term debt at March 31, 1995 and 1994 consisted of the following:
<TABLE>
<CAPTION>
- -----------------------------------------------------
1995 1994
- -----------------------------------------------------
<S> <C> <C>
Revolving credit $ 41,000,000 $ 4,000,000
9.79% Senior Notes 17,140,000 20,000,000
Obligations under
capital leases 1,134,000 1,328,000
--------------------------
59,274,000 25,328,000
--------------------------
Less amounts due
within one year 2,956,000 3,056,000
--------------------------
$ 56,318,000 $ 22,272,000
==========================
</TABLE>
The Company's revolving credit agreement was amended in February 1995,
increasing the committed line to $65,000,000. Terms of the agreement provide for
up to an aggregate of $65,000,000 of unsecured borrowings on a revolving credit
basis until January 1, 1998 after which time any outstanding borrowings are
convertible into a four-year term loan amortized in equal quarterly
installments. The agreement contains a provision whereby annually, upon consent
of the parties, the maturity date may be extended for one additional year
resulting in a remaining three-year revolving credit and four-year term loan
facility. At the choice of the Company, interest on borrowings is payable at a
floating prime rate or at other floating rate options (certificate of deposit,
LIBOR, or banker's acceptance) plus 3/4%. There is a commitment fee of 1/4% on
the unborrowed amount.
Annual principal payments of $2,860,000 on the 9.79% Senior Notes are due
each November 1 and continue through November 1, 2000 when the last payment of
$2,840,000 is due. Interest is payable semi-annually.
The terms of both the revolving credit agreement and Senior Note Purchase
Agreement provide for, among other things, restrictions regarding the payment of
cash dividends, limitations on other borrowings and capital expenditures,
minimum working capital requirements and the maintenance of certain financial
ratios. Unrestricted retained earnings available for dividends at March 31, 1995
under the most restrictive covenants are $7,248,000.
The Company's 9% Subordinated Convertible Debentures were retired during
fiscal 1993 with the issuance of 2,307,676 common shares, plus cash of $916,000.
Aggregate maturities of long-term debt for the next five fiscal years are:
1996--$2,956,000; 1997--$2,871,000; 1998--$5,435,000; 1999--$13,124,000 and
2000--$13,126,000.
4 LEASE COMMITMENTS
The Company is committed under lease agreements, which contain renewal options
for periods up to twenty years, for certain facilities and equipment expiring at
various dates to the year 2017.
Amounts for capitalized leases are included in property and equipment at
cost of $2,181,000 and $2,773,000 at March 31, 1995 and 1994, less accumulated
amortization of $1,034,000 and $1,418,000 at March 31, 1995 and 1994,
respectively.
Future minimum lease payments under capital leases and operating leases at
March 31, 1995 are as follows:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
- -----------------------------------------------------
<S> <C> <C>
1996 $ 218,000 $2,134,000
1997 132,000 1,629,000
1998 132,000 1,275,000
1999 132,000 984,000
2000 132,000 183,000
Thereafter 2,310,000 --
- -----------------------------------------------------
Total minimum
lease payments 3,056,000 $6,205,000
==========
Less amount
representing interest 1,922,000
-----------
Present value of
minimum lease
payments $ 1,134,000
===========
</TABLE>
Rental expense for operating leases was $2,897,000, $2,166,000 and
$1,979,000 for 1995, 1994 and 1993, respectively.
<PAGE> 9
5 INCOME TAXES
The following is a reconciliation of the Company's effective income tax rate to
the statutory rate:
<TABLE>
<CAPTION>
Liability Deferred
Method Method
- ---------------------------------------------- --------
1995 1994 1993
- ---------------------------------------------- --------
<S> <C> <C> <C>
Statutory rate 35.0% 35.0% 34.0%
Equity in undistributed
earnings of 50%-owned
company (1.6) (2.6) (4.3)
Provision for state taxes 5.8 5.4 5.3
Foreign losses with
unrecognized tax benefits 1.1 -- --
Other items .5 .1 .4
------------- ----
Effective rate 40.8% 37.9% 35.4%
============= ====
</TABLE>
Deferred tax assets and liabilities as of March 31, 1995 and 1994 are presented
below:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
1995 1994
- -----------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Capitalized inventory costs $1,391,000 $1,373,000
Accrued expenses 1,674,000 1,105,000
Allowance for doubtful
accounts 1,581,000 1,024,000
Inventory valuation reserve 639,000 445,000
Foreign losses 450,000 --
Other 423,000 444,000
---------- ----------
Deferred tax assets 6,158,000 4,391,000
Less valuation allowance (450,000) --
---------- ----------
Total deferred tax assets 5,708,000 4,391,000
---------- ----------
Deferred tax liabilities:
Depreciation expense 1,335,000 1,310,000
Other 861,000 676,000
---------- ----------
Total deferred tax liabilities 2,196,000 1,986,000
---------- ----------
Net deferred tax assets $3,512,000 $2,405,000
========== ==========
</TABLE>
The components of the provision for deferred income taxes for 1993 were as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------
1993
- -----------------------------------------------------
<S> <C>
Depreciation and amortization $ 57,000
Inventory valuation reserve (156,000)
Allowance for doubtful accounts (166,000)
Costs capitalized in inventory (235,000)
State tax (123,000)
Other (188,000)
---------
Deferred tax $(811,000)
=========
</TABLE>
6 COMMON SHARE PURCHASE RIGHTS PLAN
The Company maintains a Common Share Purchase Rights Plan whereby, until the
occurrences of certain events, each share of the Company's outstanding common
shares represents ownership of one right (Right). The Rights may only be
exercised if a person or group acquires twenty percent (20%) or more of the
Company's Common Shares, or announces a tender offer for at least twenty percent
(20%) of the Company's Common Shares. The exercise price of each Right is $17.78
per Common Share subject to adjustment in certain events. The Rights trade with
the Company's Common Shares until the Rights become exercisable.
If the Company is acquired in a merger or other business combination
transaction, each Right will entitle its holder to purchase, at the Right's
then-exercise price, a number of the acquiring company's common shares (or other
securities) having a market value at the time of twice the Right's then-current
exercise price. In addition, if a person or group acquires twenty percent (20%)
or more of the Company's Common Shares or certain specified transactions occur
while a person or group beneficially owns twenty percent (20%) or more of such
Common Shares, each Right will entitle its holder (other than such person or
members of such group) to purchase, at the Right's then-current exercise price,
a number of the Company's Common Shares having a market value of twice the
Right's then-exercise price.
Prior to the acquisition by a person or group of beneficial ownership of
twenty percent (20%) or more of the Company's Common Shares, the Rights are
redeemable for $.004 per Right at the option of the Board of Directors. The
Rights will expire May 10, 1999.
7 STOCK OPTIONS
The Company has stock option plans which provide for the granting of options to
purchase its Common Shares.
These plans provide for non-qualified or incentive stock options. The
options are priced at 100% of fair market value at date of grant and expire ten
years from date of grant.
No charges are made against income in accounting for stock options. Any tax
benefits arising from the exercise of options are recognized when realized and
credited to capital in excess of stated value.
<PAGE> 10
Transactions involving the stock option plans are summarized as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------
Number Average Option Price
of Shares Per Share
- -----------------------------------------------------
<S> <C> <C>
Outstanding at
March 31, 1994 672,938 $ 7.76
Exercised (46,888) $ 8.73
Granted 431,300 $18.09
Forfeited (2,850) $17.00
- -----------------------------
Outstanding at
March 31, 1995 1,054,500 $11.92
=============================
Exercisable at
March 31, 1995 319,450 $ 7.42
=============================
Available for grant
at March 31, 1995 435,550
=============================
</TABLE>
8 FINANCIAL INSTRUMENTS AND ESTIMATED FAIR VALUES
The Company uses forward exchange contracts to reduce exposure to foreign
currency fluctuations. Gains or losses on forward contracts which hedge its net
investment in its Canadian subsidiary are accrued in shareholders' equity. Gains
or losses resulting from contracts which hedge specific transactions are
in-cluded in net income offsetting the net income effect of the transaction
creating the risk. As of March 31, 1995 there is one contract outstanding for
the forward sale of U.S. dollars against Canadian dollars in a notional amount
of $1,200,000, which also approximates fair value at March 31, 1995. The
contract matured on April 28, 1995 and was utilized to hedge U.S. dollar
transactions of the Canadian subsidiary.
The carrying amounts and estimated fair values of the Company's other financial
instruments are as follows:
<TABLE>
<CAPTION>
1995
- -----------------------------------------------------
Carrying Fair
Amount Value
- -----------------------------------------------------
<S> <C> <C>
Cash $ 9,598,000 $ 9,598,000
Notes payable to banks 7,000,000 7,000,000
Long-term debt:
9.79% Senior Notes 17,140,000 17,916,000
Revolving credit
borrowings 41,000,000 41,000,000
<CAPTION>
1994
- -----------------------------------------------------
Carrying Fair
Amount Value
- -----------------------------------------------------
<S> <C> <C>
Cash $ 5,954,000 $ 5,954,000
Notes payable to banks 2,000,000 2,000,000
Long-term debt:
9.79% Senior Notes 20,000,000 22,569,000
Revolving credit
borrowings 4,000,000 4,000,000
</TABLE>
The carrying amount of cash, notes payable to banks and revolving credit
borrowings approximates fair value. The fair value of the Senior Notes is
estimated using rates currently available for securities with similar terms and
remaining maturities.
9 PIONEER TECHNOLOGIES GROUP, INC.
Pioneer-Standard Electronics, Inc. owns 50% of the common stock of Pioneer
Technologies Group, Inc. Included in the Company's retained earnings are
undistributed earnings of Pioneer Technologies Group, Inc. in the amount of
$16,908,000 at March 31, 1995, $14,408,000 at March 31, 1994 and $11,407,000 at
March 31, 1993. In accordance with accounting principles in effect at the time,
the Company has not provided deferred income taxes on $11,407,000 of
undistributed earnings of Pioneer Technologies Group, Inc. No dividends have
been paid by Pioneer Technologies Group, Inc. from date of incorporation in 1964
to March 31, 1995.
Pioneer-Standard Electronics, Inc. and Pioneer Technologies Group, Inc.,
have an agreement which provides, among other things, that they have the right
to buy each others products at cost of the product plus handling. In addition,
Pioneer Technologies Group, Inc. utilizes the Company's data processing system
for processing certain accounting and operating information for which it is
charged a monthly fee. The agreement between the two companies also provides
that Pioneer-Standard Electronics, Inc. may not sell, assign, give, transfer,
exchange, or otherwise dispose of its share ownership without allowing Pioneer
Technologies Group, Inc. the first option to purchase the shares at the then
current book value. If Pioneer Technologies Group, Inc. does not exercise this
option, then shareholders representing the other 50% of the common stock of
Pioneer Technologies Group, Inc. have the right and option to purchase all the
shares at the then current book value.
In the event of a "change in control," as defined, of Pioneer-Standard
Electronics, Inc., or upon the occurrence of certain events, Pioneer
Technologies Group, Inc. has the right to purchase all shares of its stock owned
by Pioneer-Standard Electronics, Inc. at the then current book value. If Pioneer
Technologies Group, Inc. does not exercise the right, the remaining shareholders
representing the other 50% of the common shares of Pioneer Technologies Group,
Inc. have the right and option to purchase all the shares at the then current
book value.
Comparative financial information of Pioneer Technologies Group, Inc. at
March 31, 1995, 1994 and 1993 and for the years then ended is summarized as
follows:
<PAGE> 11
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 368,100,000 $422,001,000 $ 284,008,000
Gross profit 51,888,000 49,409,000 44,854,000
Net income 5,001,000 6,002,000 5,010,000
================================================
Total current assets $ 85,085,000 $ 92,445,000 $ 74,964,000
Net fixed and other assets 5,873,000 6,148,000 4,077,000
------------------------------------------------
Total assets $ 90,958,000 $ 98,593,000 $ 79,041,000
================================================
Total current liabilities $ 38,881,000 $ 48,967,000 $ 24,242,000
Total long-term liabilities 18,148,000 20,698,000 31,873,000
Total shareholders' equity 33,929,000 28,928,000 22,926,000
------------------------------------------------
Total liabilities and shareholders' equity $ 90,958,000 $ 98,593,000 $ 79,041,000
================================================
</TABLE>
10 OPERATING WORKING CAPITAL CHANGES AND SUPPLEMENTAL INFORMATION FOR THE
STATEMENTS OF CASH FLOWS
THE COMPONENTS OF THE CHANGES IN OPERATING WORKING CAPITAL WERE:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Accounts receivable $ (47,595,000) $(18,808,000) $ (12,343,000)
Merchandise inventory (32,049,000) (18,653,000) (6,118,000)
Prepaid expenses (682,000) (146,000) 12,000
Accounts payable 35,879,000 22,566,000 12,934,000
Income taxes 858,000 (31,000) 2,778,000
Accrued salaries, wages and commissions 1,480,000 2,073,000 1,551,000
Other accrued liabilities 3,543,000 1,364,000 2,718,000
------------------------------------------------
(Increase) decrease in operating working capital $ (38,566,000) $(11,635,000) $ 1,532,000
================================================
SUPPLEMENTAL CASH FLOW INFORMATION:
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash paid or received during the year for:
Interest paid $ 4,255,000 $ 2,623,000 $ 3,488,000
Income taxes paid 17,064,000 12,659,000 4,768,000
================================================
Non-cash investing and financing activities:
Common shares issued upon conversion of subordinated
debentures $ -- $ -- $ 14,306,000
Common shares retired -- 614,000 --
================================================
Non-cash assets and liabilities of business acquired:
Working capital $ 7,684,000 $ -- $ --
Other assets 2,384,000 -- --
================================================
</TABLE>
11 EMPLOYEE RETIREMENT PLAN
The Company maintains a defined contribution profit-sharing and thrift plan
which qualifies under Section 401(k) of the Internal Revenue Code for all
employees meeting certain service requirements. The plan allows eligible
employees to contribute up to 10% of their compensation, with the Company
matching 50% of up to 4% of compensation. The Company may also make
contributions dependent on profits each year for the benefit of all eligible
employees under the plan. Total profit sharing and Company matching
contributions were $2,129,000, $1,899,000 and $1,218,000 for 1995, 1994 and
1993, respectively.
<PAGE> 12
REPORT OF INDEPENDENT AUDITORS
We have audited the consolidated financial statements of Pioneer-Standard
Electronics, Inc. as of March 31, 1995 and 1994 and for each of the three years
in the period ended March 31, 1995 and have issued our report thereon dated May
5, 1995 included elsewhere in this Annual Report on Form 10-K. Our audits also
included the consolidated financial statement schedule of Pioneer-Standard
Electronics, Inc. as of March 31, 1995 and 1994 and for each of the three years
in the period ended March 31, 1995, listed in item 14(a) of this Annual Report
(Form 10-K). This schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
Cleveland, Ohio
May 5, 1995
<PAGE> 13
PIONEER-STANDARD ELECTRONICS, INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Years ended March 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
Balance at Charged Deductions - Balance
beginning to costs net write-offs at end of
of period and expenses (Net recoveries) period
---------- ------------ ---------------- ---------
<S> <C> <C> <C> <C>
Description
- -----------
1995:
Allowance for $2,869,000 $2,281,000 $ 544,000 $4,606,000
doubtful accounts
Inventory valuation $2,540,000 $2,167,000 $1,291,000 $3,416,000
reserve
1994:
Allowance for $1,713,000 $1,808,000 $ 652,000 $2,869,000
doubtful accounts
Inventory valuation $2,659,000 $1,995,000 $2,114,000 $2,540,000
reserve
1993:
Allowance for $1,226,000 $1,672,000 $1,185,000 $1,713,000
doubtful accounts
Inventory valuation $2,190,000 $1,738,000 $1,269,000 $2,659,000
reserve
</TABLE>
<PAGE> 14
QUARTERLY FINANCIAL DATA
(unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Fiscal Year First Second Third Fourth
Ending March 31 Quarter Quarter Quarter Quarter Year
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
Net sales $ 183,832,000 $ 194,423,000 $ 212,433,000 $ 241,464,000 $ 832,152,000
Gross profit 35,155,000 37,433,000 38,592,000 43,801,000 154,981,000
Net income 5,965,000 5,649,000 6,130,000 7,265,000 25,009,000
Net income per share .39 .37 .40 .48 1.64
- -------------------------------------------------------------------------------------------------------------
1994
Net sales $ 134,509,000 $ 137,278,000 $ 149,814,000 $ 159,156,000 $ 580,757,000
Gross profit 27,360,000 28,075,000 29,007,000 30,701,000 115,143,000
Net income 4,469,000 4,790,000 4,887,000 5,530,000 19,676,000
Net income per share .30 .31 .32 .37 1.30
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 15
FINANCIAL STATEMENTS
PIONEER TECHNOLOGIES GROUP, INC.
March 31, 1995 and 1994, and
years ended March 31, 1995, 1994 and 1993
with Report of Independent Auditors
<PAGE> 16
Pioneer Technologies Group, Inc.
Financial Statements
March 31, 1995 and 1994, and
years ended March 31, 1995, 1994 and 1993
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors.........................................................................1
Audited Financial Statements
Balance Sheets.......................................................................................2-3
Statements of Income and Retained Earnings.............................................................4
Statements of Cash Flows...............................................................................5
Notes to Financial Statements.......................................................................6-12
</TABLE>
<PAGE> 17
[LETTERHEAD] ERNST & YOUNG LLP
Report of Independent Auditors
The Board of Directors
Pioneer Technologies Group, Inc.
We have audited the accompanying balance sheets of Pioneer Technologies Group,
Inc. as of March 31, 1995 and 1994, and the related statements of income and
retained earnings and cash flows for each of the three years in the period
ended March 31, 1995. Our audits also included the financial statement schedule
of Pioneer Technologies Group, Inc., listed in the Index at Item 14(a). These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pioneer Technologies Group,
Inc. at March 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended March 31, 1995, in
conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
As discussed in Note 8 to the financial statements, the Company changed its
method of accounting for income taxes in 1994.
ERNST & YOUNG LLP
Washington, DC
April 28, 1995
1
<PAGE> 18
Pioneer Technologies Group, Inc.
Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
MARCH 31
1995 1994
------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 9 $ 8
Receivables:
Trade accounts, less allowance for doubtful accounts
of $1,535 in 1995 and $2,682 in 1994 (Note 3) 35,700 28,873
Other (Note 2) 678 340
Merchandise inventory, less allowance for inventory
obsolescence of $1,926 in 1995 and $2,156
in 1994 (Note 3) 46,895 60,690
Prepaid expenses 494 405
Deferred income taxes (Note 8) 1,246 2,077
Shareholder notes receivable (Note 2) 63 52
------- -------
Total Current Assets 85,085 92,445
------- -------
Other Assets:
Property and equipment, at cost:
Furniture and office equipment 7,254 6,786
Demonstration equipment 538 965
Leasehold improvements 2,905 2,650
------- -------
10,697 10,401
Less accumulated depreciation and amortization 5,289 4,746
------- -------
Net property and equipment 5,408 5,655
Shareholder notes receivable (Note 2) 193 231
Other assets 272 262
------- -------
Total Other Assets 5,873 6,148
------- -------
$90,958 $98,593
======= =======
</TABLE>
The accompanying footnotes are an integral part of these statements.
2
<PAGE> 19
<TABLE>
<CAPTION>
MARCH 31
1995 1994
------- --------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable:
Trade $34,081 $43,736
Affiliate (Note 2) 630 336
Accrued employee compensation 2,762 2,897
Other accrued liabilities 1,185 1,554
Income taxes payable 223 444
------- -------
Total current liabilities 38,881 48,967
Long-term Debt (Note 3) 18,148 20,698
------- -------
Total Liabilities 57,029 69,665
------- -------
Commitments and Contingencies (Note 7)
Shareholders' Equity (Note 4):
Common stock, $.10 par value; 100,000 shares
authorized, issued and outstanding 10 10
Capital in excess of par value 90 90
Retained earnings 33,829 28,828
------- -------
Total Shareholders' Equity 33,929 28,928
------- -------
$90,958 $98,593
======= =======
</TABLE>
3
<PAGE> 20
Pioneer Technologies Group, Inc.
Statements of Income and Retained Earnings
(Dollars in thousands, except per common share amounts)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net sales $368,100 $422,001 $284,008
-------- -------- --------
Operating costs and expenses:
Cost of goods sold 316,212 372,592 239,154
Selling and administrative 41,736 38,256 34,965
-------- -------- --------
357,948 410,848 274,119
-------- -------- --------
Operating profit 10,152 11,153 9,889
Interest expense 2,016 1,171 1,253
-------- -------- --------
Income before income taxes and other items 8,136 9,982 8,636
Provision for income taxes (Note 8) 3,135 3,980 3,626
-------- -------- --------
Net income 5,001 6,002 5,010
Retained earnings, beginning of year 28,828 22,826 17,816
-------- -------- --------
Retained earnings, end of year $ 33,829 $ 28,828 $ 22,826
-------- -------- --------
Net income per common share $ 50.01 $ 60.02 $ 50.10
-------- -------- --------
</TABLE>
The accompanying footnotes are an integral part of these statements.
4
<PAGE> 21
Pioneer Technologies Group, Inc.
Statements of Cash Flows
(Dollars in thousands)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 5,001 $ 6,002 $ 5,010
Adjustments to reconcile net income to net
cash provided by (used in) operations:
Depreciation and amortization 1,455 1,149 985
Decrease (increase) deferred income taxes 761 (365) (345)
Provision for losses on receivables
and inventory 544 1,950 2,511
(Increase) decrease in accounts and
notes receivable (6,299) 1,192 (7,443)
Decrease (increase) in merchandise inventory 12,414 (19,629) (9,403)
(Increase) decrease in prepaid expenses (89) (295) 250
Increase in other assets (10) (58) (9)
(Decrease) increase in accounts payable (9,363) 23,858 (1,266)
(Decrease) increase in accrued liabilities (504) 721 1,289
Decrease in income taxes payable (151) (123) (201)
-------- -------- --------
Net cash provided by (used in) operating activities 3,759 14,402 (8,622)
INVESTING ACTIVITIES
Net additions to property and equipment (1,208) (3,226) (702)
FINANCING ACTIVITIES
Net (payments) borrowings under line of
credit agreements (2,550) (11,175) 6,841
-------- -------- --------
Net increase (decrease) in cash and cash equivalents 1 1 (2,483)
Cash and cash equivalents at beginning of year 8 7 2,490
-------- -------- --------
Cash and cash equivalents at end of year $ 9 $ 8 $ 7
======== ======== ========
</TABLE>
The accompanying footnotes are an integral part of these statements.
5
<PAGE> 22
Pioneer Technologies Group, Inc.
Notes to Financial Statements
March 31, 1995, 1994 and 1993
(Dollars in thousands)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, deposits at financial
institutions and overnight repurchase agreements. Cash disbursements for
interest and income taxes were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Interest $1,629 $1,171 $1,363
Income taxes $2,525 $4,468 $4,172
</TABLE>
MERCHANDISE INVENTORY
Inventory is valued at the lower of cost (first-in, first-out) or market.
ALLOWANCES FOR DOUBTFUL ACCOUNTS AND OBSOLETE INVENTORY
The Company estimates losses for doubtful accounts and inventory obsolescence
based on periodic evaluations by management.
The Company sells computer equipment and electronic components to companies in
diversified industries primarily located in the Mid-Atlantic/Southeast and West
regions of the United States. Net sales to one customer were eleven percent in
1995 and seventeen percent in 1994. Management performs periodic credit
evaluations of its customers' financial condition and generally does not require
collateral. Accounts receivable are generally due within thirty days.
6
<PAGE> 23
Pioneer Technologies Group, Inc.
Notes to Financial Statements (continued)
(Dollars in thousands)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEPRECIATION AND AMORTIZATION
Depreciation of furniture, office equipment and computer equipment is determined
by using the straight-line method over estimated useful lives of seven, five and
three years, respectively. Depreciation of demonstration equipment is determined
by using accelerated methods over an estimated useful life of five years.
Amortization of leasehold improvements is determined by using the straight-line
method over the life of the related lease.
INCOME TAXES
Effective April 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." Under Statement No. 109, the
liability method is used in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse. Prior to the adoption of Statement No. 109, income tax
expense was determined using the deferred method. Deferred tax expense was based
on items of income and expense that were reported in different years in the
financial statements and tax returns and were measured at the tax rate in effect
in the year the difference originated.
RECLASSIFICATIONS
Certain balance sheet amounts in the 1994 financial statements have been
reclassified to conform to the 1995 presentation.
2. RELATED PARTY TRANSACTIONS
Pioneer-Standard Electronics, Inc. (Pioneer-Standard) owns 50% of the
outstanding common stock of the Company. The companies have an agreement which
provides, among other things, that they have the right to acquire each other's
products at cost. Such transactions are recorded as intercompany transfers of
inventory. Net transfers of inventory from Pioneer-Standard to the Company were
$6,654 in 1995, $2,488 in 1994, and $2,539 in 1993. The Company utilizes
Pioneer-Standard's data processing facilities for processing certain accounting
and operating information. Amounts charged to operations were $1,794 in each of
the years presented.
7
<PAGE> 24
2. RELATED PARTY TRANSACTIONS (CONTINUED)
The Company has various notes receivable and advances to certain shareholders,
officers and employees of the Company as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Subscription notes receivable from
shareholders, payable in ten
consecutive annual installments,
with final payment due November
1999, interest at 9% per annum. $256 $283
Other receivables 195 177
---- ----
$451 $460
==== ====
</TABLE>
3. LONG-TERM DEBT
The Company has revolving lines of credit from three banks aggregating $50,000
which are secured by accounts receivable and inventory. The expiration date for
the revolving lines of credit is October 31, 1997. Interest is payable under
either short-term fixed or variable rates of interest based on LIBOR, the prime
rate, money market rates or certificates of deposit rates at the Company's
option. The terms of the revolving lines of credit agreements provide for the
maintenance of certain financial ratios and also effectively restrict the
payment of any retained earnings as dividends.
4. COMMON STOCK
Under a stock purchase agreement among Pioneer-Standard and the Other
Shareholders of the Company, as defined in the agreement, the Other Shareholders
have the first right and option to purchase any shares offered for sale by other
members of that group at book value. If the Other Shareholders do not exercise
this option, the Company is obligated to purchase the shares at book value.
Should the Company acquire any shares, Pioneer-Standard is required to sell a
like number of shares to the Company at book value.
8
<PAGE> 25
Pioneer Technologies Group, Inc.
Notes to Financial Statements (continued)
(Dollars in thousands)
4. COMMON STOCK (CONTINUED)
In the event of a change in control, as defined, of Pioneer-Standard, or upon
the occurrence of certain events, the Company has the right to purchase all
shares of its stock owned by Pioneer-Standard at the current book value. If the
Company does not exercise the right, the Other Shareholders have the right and
option to purchase all the shares at the current book value.
5. PENSION PLANS
The Company has a qualified defined contribution profit-sharing plan covering
all full-time employees and a non-qualified defined contribution plan covering
certain officers of the Company. Company contributions to the profit-sharing
plan are a combination of mandatory matching of employee contributions (up to a
maximum of 2% of the first 4% contributed by the employee) and an amount awarded
solely at the discretion of the Company's Board of Directors. The Company's
contributions to these plans totaled $635 in 1995, $567 in 1994 and $468 in
1993, of which $223 in 1995, $268 in 1994 and $219 in 1993 were discretionary.
6. BONUSES
Certain executives of the Company receive bonuses ranging from 1/2% to 2% of
income before income taxes. Bonuses for certain other members of management are
based on agreements approved by management. Total bonus expense was $999 in
1995, $1,464 in 1994 and $1,239 in 1993.
7. COMMITMENTS AND CONTINGENCIES
The Company leases warehouse, office space and equipment under noncancellable
operating leases. The minimum future rental commitments (excluding renewal
options) under lease agreements aggregate $2,216 in 1996, $2,052 in 1997, $1,894
in 1998, $1,917 in 1999, $570 in 2000 and $22 thereafter.
The Company is liable under certain leases for increases in rental payments
based on the annual increase in the consumer price index and in the lessors'
operating expenses. Rental expense was $2,434 in 1995, $2,165 in 1994 and $2,296
in 1993.
9
<PAGE> 26
Pioneer Technologies Group, Inc.
Notes to Financial Statements (continued)
(Dollars in thousands)
8. INCOME TAXES
Effective April 1, 1993, the Company changed its method of accounting for income
taxes from the deferred method to the liability method required by Statement No.
109, "Accounting for Income Taxes." The effect of adopting Statement No. 109 was
not material and prior years' financial statements have not been restated.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Deferred tax assets:
Accounts receivable $ 559 $1,017
Inventory 953 766
Other 78 414
------ ------
1,590 2,197
------ ------
Deferred tax liabilities:
Prepaid assets 196 --
Tax over book depreciation 148 120
------ ------
344 120
------ ------
Net deferred tax assets $1,246 $2,077
====== ======
</TABLE>
<PAGE> 27
Pioneer Technologies Group, Inc.
Notes to Financial Statements (continued)
(Dollars in thousands)
8. INCOME TAXES (CONTINUED)
Significant components of the provision for income taxes are as follows for the
years ended March 31:
<TABLE>
<CAPTION>
DEFERRED
LIABILITY METHOD METHOD
-------------------------- --------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Current:
Federal $1,864 $3,476 $3,286
State 510 869 685
------ ------ ------
2,374 4,345 3,971
------ ------ ------
Deferred:
Federal 628 (292) (279)
State 133 (73) (66)
------ ------ ------
761 (365) (345)
------ ------ ------
$3,135 $3,980 $3,626
====== ====== ======
</TABLE>
The components of the provision for deferred income taxes for the year ended
March 31, 1993 is as follows:
<TABLE>
<CAPTION>
1993
-----
<S> <C>
Allowance for doubtful accounts $(428)
Allowance for inventory obsolescence 213
Capitalized inventory costs (112)
Depreciation and amortization (46)
Other 28
-----
$(345)
=====
</TABLE>
11
<PAGE> 28
Pioneer Technologies Group, Inc.
Notes to Financial Statements (continued)
(Dollars in thousands)
8. INCOME TAXES (CONTINUED)
The difference between the provision for income taxes and the amount determined
by applying the federal statutory rate follows:
<TABLE>
<CAPTION>
DEFERRED
LIABILITY METHOD METHOD
--------------------------- ------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Federal statutory amount $2,766 $3,394 $2,936
State taxes, net of federal benefit 425 525 409
Nondeductible entertainment 147 48 34
Other (203) 13 247
------ ------ ------
Provision for income taxes $3,135 $3,980 $3,626
====== ====== ======
</TABLE>
12
<PAGE> 29
PIONEER TECHNOLOGIES GROUP, INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Years ended March 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
Balance at Charged to Deductions-net Balance at
beginning costs and Write-offs end of period
Description of period expenses (Net recoveries) -------------
- ----------- ---------- ---------- ----------------
<S> <C> <C> <C> <C>
1995:
Allowance for
doubtful accounts $2,682,000 $ (838,000) $ 309,000 $1,535,000
Inventory valuation
reserve $2,156,000 $1,382,000 $1,612,000 $1,926,000
1994:
Allowance for
doubtful accounts $2,250,000 $ 561,000 $ 129,000 $2,682,000
Inventory valuation
reserve $1,463,000 $1,389,000 $ 696,000 $2,156,000
1993:
Allowance for
doubtful accounts $ 886,000 $1,356,000 $ (8,000) $2,250,000
Inventory valuation
reserve $1,060,000 $1,154,000 $ 751,000 $1,463,000
</TABLE>
