<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(AMENDMENT NO. 1)
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997.
------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________.
Commission file number 0-5734
------
Pioneer-Standard Electronics, Inc.
----------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-0907152
---- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4800 East 131st Street, Cleveland, OH 44105
- ------------------------------------- -----
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (216) 587-3600
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- --
Indicate the number of shares outstanding of each of the issuer's classes of
Common Shares, as of the latest practical date. COMMON SHARES, WITHOUT PAR
VALUE, AS OF NOVEMBER 3, 1997: 26,307,566. (Excludes 4,780,000 Common Shares
subscribed by the Pioneer Stock Benefit Trust.)
<PAGE> 2
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Shareholders held on July 29, 1997 (the
"Annual Meeting"), the shareholders voted to elect Arthur Rhein and
Thomas C. Sullivan each to an additional three-year term as
Directors of the Company and Charles F. Christ to a new three-year
term. Following is a summary of the voting:
Arthur Thomas C. Charles F.
Votes Rhein Sullivan Christ
-----
For 26,211,841 26,370,311 26,401,480
Withheld 797,239 638,769 607,600
The term of office of the following Directors of the Company continued
after the Annual Meeting: James L. Bayman; Frederick A. Downey; Victor
Gelb; Gordon E. Heffern; Edwin Z. Singer; and Karl E. Ware.
Also at the Annual Meeting, shareholders voted to fix the number of
Class B Directors at three. The following is a summary of the voting:
Votes
-----
For 26,503,074
Against 321,040
Abstaining 184,965
In addition, at the Annual Meeting an amendment to the amended
articles of incorporation to authorize a new class of 5,000,000 serial
preferred, without par was approved by the shareholders. The following
is a summary of the voting:
Voting
------
For 21,300,108
Against 3,564,620
Abstaining 330,139
<PAGE> 3
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Number Description
------ -----------
2 Amended Articles of Incorporation, as amended (filed
herewith)
10.1 Employment Agreement, dated July 29, 1997, between
Pioneer-Standard Electronics, Inc. and James L. Bayman
(filed herewith)
10.2 Employment Agreement, dated July 29, 1997, between
Pioneer-Standard Electronics, Inc. and Arthur Rhein (filed
herewith)
10.3 Employment Agreement, dated July 29, 1997, between
Pioneer-Standard Electronics, Inc. and Robert E. Danielson
(filed herewith)
10.4 Employment Agreement, dated July 29, 1997 between
Pioneer-Standard Electronics, Inc. and John V. Goodger
(filed herewith)
11 Calculation of Primary Earnings Per Share
27 Financial Data Schedule
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PIONEER-STANDARD ELECTRONICS, INC.
Date: March 17, 1998 James L. Bayman
----------------------------------------
Chairman and CEO
Date: March 17, 1998 John V. Goodger
----------------------------------------
Vice President & Treasurer
<PAGE> 1
Exhibit 2
CERTIFICATE OF ADOPTION
OF
AMENDMENT TO AMENDED ARTICLES OF INCORPORATION
OF
PIONEER-STANDARD ELECTRONICS, INC.
Preston B. Heller, Jr., President, and William X. Haase, Secretary of
Pioneer-Standard Electronics, Inc, an Ohio corporation, with its principal
office located in the County of Cuyahoga of the State of Ohio do hereby certify
that an annual meeting of the holders of the shares of said corporation
entitling them to vote on the proposal to amend the Amended Articles of
Incorporation thereof, as contained in the following resolution was duly called
and notice thereof was duly given, and that said meeting was held on the 20th
day of June, 1973, at which meeting a quorum of such shareholders was present in
person or by proxy and that by the affirmative vote of the holders of shares
entitled under the Articles to exercise two-thirds of the voting power of the
corporation on such proposal, the following resolution to amend the Amended
Articles was adopted:
RESOLUTION:
RESOLVED, that Article Fourth of the Amended Articles of Incorporation
of this Corporation be and thereby is amended so that it reads as follows:
"FOURTH: The authorized number of shares of the Corporation is
2,000,000, all of which shall be common shares without par
value."
IN WITNESS WHEREOF, the said Preston B. Heller, Jr., President, and
William X. Haase, Secretary, of Pioneer-Standard Electronics, Inc. acting for
and on behalf of said corporation, have hereunto subscribed their names this
17th day of May, 1974.
/s/ Preston B. Heller
---------------------------------------
President
/s/ William X. Haase
---------------------------------------
Secretary
<PAGE> 2
CERTIFICATE OF ADOPTION
OF
AMENDMENT TO AMENDED ARTICLES OF INCORPORATION
OF
PIONEER-STANDARD ELECTRONICS, INC.
Preston B. Heller, Jr., President, and William X. Haase, Secretary, of
Pioneer-Standard Electronics, Inc., an Ohio corporation, with its principal
office located in the County of Cuyahoga of the State of Ohio do hereby certify
that an annual meeting of the holders of the shares of said corporation
entitling them to vote on the proposal to amend the Amended Articles of
Incorporation thereof, as contained in the following resolution, was duly called
and notice thereof was duly given, and that said meeting was held on the 28th
day of June, 1979, at which meeting a quorum of such shareholders was present
in person or by proxy and that by the affirmative vote of the holders of shares
entitled under the Articles to exercise two-thirds of the voting power of the
corporation on such proposal, the following resolution to amend the Amended
Articles was adopted:
RESOLUTION
RESOLVED, that Article Fourth of the Amended Articles of Incorporation
of this Corporation be and it hereby is amended so that it reads as follows:
"FOURTH: The authorized number of shares of the Corporation is
5,000,000, all of which shall be common shares without par
value."
IN WITNESS WHEREOF, the said Preston D. Heller, Jr., President, and
William X. Haase, Secretary, of Pioneer-Standard Electronics, Inc., acting for
and on behalf of said corporation, have hereunto subscribed their names this
10th day of August 1979.
/s/ Preston B. Heller
---------------------------------------
President
/s/ William X. Haase
---------------------------------------
Secretary
<PAGE> 3
CERTIFICATE OF AMENDMENT
TO
AMENDED ARTICLES OF INCORPORATION
OF
PIONEER-STANDARD ELECTRONICS, INC.
Charter No. 317430
James L. Bayman, President, and John S. Zarka, Secretary, of
Pioneer-Standard Electronics, Inc., an Ohio corporation, do hereby certify that
a meeting of the Shareholders of Pioneer-Standard Electronics, Inc. was duly
called and held on June 27, 1985, at which meeting a quorum of such Shareholders
was present in person or by proxy at all times, and that by the affirmative vote
of the holders of shares entitling them to exercise two-thirds of the voting
power of said corporation, the following resolutions were adopted for the
purpose of adding a new Article SEVENTH to the Amended Articles of
Incorporation of said corporation:
"RESOLVED, that a new Article SEVENTH be added to the
Company's Amended Articles of Incorporation to read in its entirety as
follows:
'SEVENTH.
A. A Business Combination (as hereinafter defined) shall be
authorized and approved by the affirmative vote of the shareholders of
not less than eighty percent (80%) of the outstanding shares of the
corporation entitled to vote generally in elections of Directors;
provided, however, that the eighty percent (80%) voting requirement
shall not be applicable if:
1. The Board of Directors of the corporation by
affirmative vote, which shall include not less than a
majority of the entire number of Continuing Directors (as
hereinafter defined), (a) has approved in advance the
acquisition of those outstanding shares of the corporation
which caused the Interested Party (as hereinafter defined) to
become an Interested Party or (b) has approved the Business
Combination; or
2. The Business Combination is a merger or
consolidation and the cash or Fair Market Value of other
consideration to be received per share by holders of the
common shares of the corporation in said merger or
consolidation is not less than an amount equal to the sum of:
<PAGE> 4
(a) the greatest of (i) the highest per
share price, including commissions, paid by the
Interested Party for any shares of the same class or
series during the two-year period ending on the date
of the most recent purchase by the Interested Party
of any such shares, or (ii) the highest sales price
reported for shares of the same class or series
traded on a national securities exchange or in the
over-the-counter market during the two-year period
preceding the first public announcement of the
proposed business transaction; plus
(b) interest on the per share price
calculated at the rate of ten percent (10%) per
annum, compounded annually from the date the
Interested Party first became an Interested Party
until the business combination is consummated, less
the per share amount of cash dividends payable to
holders of record on record dates in the interim up
to the amount of such interest.
For purposes of this clause (2), per share amounts will be
adjusted for any stock dividend, stock split or similar
transaction.
B. For purposes of this Article Seventh:
1. The term "Business Combination" shall mean (a) any merger
or consolidation of the corporation or a subsidiary of the corporation
with or into an Interested Party, (b) any merger or consolidation of an
Interested Party with or into the corporation or a subsidiary, (c) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition
(in one transaction or a series of transactions) in which an interested
Party is involved, of any of the assets either of the corporation
(including without limitation any voting securities of a subsidiary) or
of a subsidiary having a Fair Marker Value in excess of $2,000,000, (d)
the adoption of any plan or proposal for the liquidation or dissolution
of the corporation proposal by or on behalf of any Interested Party,
(e) the issuance or transfer (in one transaction or a series of
transactions) by the corporation or a subsidiary of the corporation to
an Interested Party of any securities of the corporation or such
subsidiary, which securities have a Fair Market Value of $2,000,000 or
more, or (f) any recapitalization, reclassification, merger or
consolidation involving the corporation or a subsidiary of the
corporation that would have the effect of increasing, directly or
indirectly, the Interested Party's voting power in the corporation or
such subsidiary.
<PAGE> 5
2. The term "Interested Party" shall mean and include (a) any
individual, corporation, partnership, trust or other person or entity
which, together with its "affiliates" and "associates" (as those terms
are defined in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as in effect on May 22, 1985) is
or, with respect to a Business Combination, was within two years prior
thereto a beneficial owner of shares aggregating ten percent (10%) or
more of the aggregate voting power of any class of capital stock of the
corporation entitled to vote generally in the election of Directors,
and (b) any affiliate or associate of any such individual, corporation,
partnership, trust or other person or entity. For the purposes of
determining whether a person is an Interested Party, the number of
shares deemed to be outstanding shall include shares which the
Interested Party or any of its affiliates or associates has the right
to acquire (whether immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants, or options, or otherwise,
but shall not include any other shares which may be issuable to any
other person.
3. The term "Continuing Director" shall mean a director who is
not an affiliate of an Interested Party and who was a member of the
Board of Directors of the corporation immediately prior to the time
that the Interested Party involved in a Business Combination became an
Interested Party, and any successor to a Continuing Director who is not
such an affiliate and who is nominated to succeed a Continuing Director
by a majority of the Continuing Directors in office at the time of such
nomination.
4. "Fair Market Value" shall mean the fair market value of
the property in question as determined by a majority of the Continuing
Directors in good faith.
C. The provisions of this Article Seventh shall be construed liberally
to the end that the consideration paid to holders whose shares are acquired by
an Interested Party in connection with a merger or consolidation shall not be
less favorable than that paid to holders, of such shares prior to such merger or
consolidation. Nothing contained in this Article Seventh shall be construed to
relieve any Interested Party from any fiduciary duties or obligations imposed by
law.
D. Notwithstanding any other provision of the Amended Articles of
Incorporation or the Amended Code of Regulations of the corporation and
notwithstanding the fact that a lesser percentage may be specified by law, these
Amended Articles of Incorporation or the Amended Code of Regulations of the
corporation, the affirmative
<PAGE> 6
vote of the holders of not less than eighty percent (80%) of the then
outstanding shares shall be required to amend, alter, change or repeal, or
adopt any provisions inconsistent with, this Article Seventh; provided,
however, that this paragraph D shall not apply to, and the eighty percent (80%)
vote shall not be required for, any amendment, alteration, change or repeal
recommended to the shareholders by the Board of Directors of the corporation if
the recommendation has been approved by at least two-thirds of the Continuing
Directors.
BE IT FURTHER RESOLVED, that current Article SEVENTH of the Company's
Amended Articles of Incorporation be redesignated as Article EIGHTH.
BE IT FURTHER RESOLVED, that the President and the Secretary of the
Company be and they are hereby authorized and directed to file promptly in the
Office of the Secretary of State of Ohio an appropriate Certificate of
Amendment, and to take such other action as may be appropriate, in order to
render effective the foregoing amendment and carry out the purposes of these
resolutions."
IN WITNESS WHEREOF, said James L. Bayman, President, and John S. Zarka,
Secretary, of Pioneer-Standard Electronics, Inc., acting for and on behalf of
said corporation, have hereunto subscribed their names this 27th day of June,
1985.
/s/ James L. Bayman
------------------------------------------
James L. Bayman, President
/s/ John S. Zarka
------------------------------------------
John S. Zarka, Secretary
<PAGE> 7
CERTIFICATE OF AMENDMENT
TO
AMENDED ARTICLES OF INCORPORATION
OF
PIONEER-STANDARD ELECTRONICS, INC.
Charter No. 317430
James L. Bayman, President, and John V. Goodger, Assistant Secretary of
Pioneer-Standard Electronics, Inc., an Ohio corporation, do hereby certify that
a meeting of the Shareholders of Pioneer-Standard Electronics, Inc. was duly
called and held on July 26, 1994, at which meeting a quorum of such Shareholders
was present in person or by proxy at all times, and that by the affirmative vote
of the holders of shares entitling them to exercise at least two-thirds of the
voting power of said corporation, the following resolutions were adopted for the
purpose of amending Article FOURTH of the Amended Articles of Incorporation of
said corporation:
RESOLVED, that Article FOURTH of the Amended Articles of
Incorporation shall be deleted and replaced by the following:
"FOURTH: The authorized number of shares of the
corporation is Forty Million (40,000,000) shares, all of which
shall be Common Shares, without par value."
IN WITNESS WHEREOF, said James L. Bayman, President, and John
V. Goodger, Assistant Secretary, of Pioneer-Standard Electronics, Inc.,
acting for and on behalf of said corporation, have hereunto subscribed
their names on this 28th day of July, 1994.
/s/ James L. Bayman
------------------------------------------
James L. Bayman, President
/s/ John V. Goodger
------------------------------------------
John V. Goodger, Assistant Secretary
<PAGE> 8
CERTIFICATE OF AMENDMENT
TO
AMENDED ARTICLES OF INCORPORATION
OF PIONEER-STANDARD ELECTRONICS, INC.
Charter No. 317430
James L. Bayman, President, and John V. Goodger, Assistant Secretary,
of Pioneer-Standard Electronics, Inc., an Ohio corporation, do hereby certify
that a meeting of the Shareholders of Pioneer-Standard Electronics, Inc. was
duly called and held on July 23, 1996, at which meeting a quorum of such
Shareholders was present in person or by proxy at all times, and that by the
affirmative vote of holders of shares entitling them to exercise at least
two-thirds of the voting power of said corporation, the following resolutions
were adopted for the purpose of amending Article FOURTH of Amended Articles of
Incorporation of said corporation:
RESOLVED, that Article FOURTH of the Amended Articles of
Incorporation shall be deleted and replaced by the following:
"FOURTH: The authorized number of shares of the
corporation is Eighty Million (80,000,000) shares, all of
which shall be Common Shares, without par value."
IN WITNESS WHEREOF, said James L. Bayman, President, and John
V. Goodger, Assistant Secretary, of Pioneer-Standard Electronics, Inc.,
acting for and on behalf of said corporation, have hereunto subscribed
their names this 29th day of July, 1996.
/s/ James L. Bayman
------------------------------------------
James L. Bayman, President
/s/ John V. Goodger
------------------------------------------
John V. Goodger, Assistant Secretary
<PAGE> 9
CERTIFICATE OF AMENDMENT
TO
AMENDED ARTICLES OF INCORPORATION
OF
PIONEER-STANDARD ELECTRONICS, INC.
Charter No. 317430
William A. Papenbrock, Secretary, of Pioneer-Standard Electronics,
Inc., an Ohio corporation, does hereby certify that a meeting of the
Shareholders of Pioneer-Standard Electronics, Inc. was duly called and held on
July 29, 1997, at which meeting a quorum of such Shareholders was present in
person or by proxy at all times, and that by the affirmative vote of the
holders of shares entitling them to exercise at least two-thirds of the voting
power of said corporation, the following resolution was adopted for the purpose
of amending Article FOURTH of the Amended Articles of Incorporation of said
corporation:
RESOLVED, that Article FOURTH of the Amended Articles of Incorporation
shall be deleted and replaced by the following:
"FOURTH: The authorized number of shares of the Corporation is
Eighty-Five Million (85,000,000) shares, of which Eighty Million
(80,000,000) shall be Common Shares, without par value, and Five
Million (5,000,000) shall be Serial Preferred Shares, without par
value.
SUBDIVISION A
PROVISIONS APPLICABLE TO SERIAL PREFERRED SHARES
The Serial Preferred Shares may be issued, from time to time,
in one or more series, with such designations, preferences and
relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereon, as shall be stated
and expressed in the resolution or resolutions providing for the
issuance of such series as adopted by the Board of Directors. The
Board of Directors, in such resolution or resolutions (a copy of which
shall be filed and recorded as required by law), is also expressly
authorized to fix:
(a) The distinctive serial designations and the
division of such shares into series and the number of shares
of a particular series, which may be increased or decreased,
<PAGE> 10
but not below the number of shares thereof then outstanding,
by a certificate made, signed, filed and recorded as required
by law;
(b) The annual dividend rate for the particular
series, and the date or dates from which dividends on all
shares of such series shall be cumulative, if dividends on
shares of the particular series shall be cumulative;
(c) The redemption price or prices, if any, for the
particular series;
(d) The right, if any, of the holders of a particular
series to convert such shares into other classes of shares,
and the terms and conditions of such conversions; and
(e) The obligation, if any, of the Corporation to
purchase and retire and redeem shares of a particular series
as a sinking fund or redemption or purchase account, the
terms thereof and the redemption price or prices per share for
such series redeemed pursuant to the sinking fund or
redemption or purchase account.
All shares of any one series of Serial Preferred Shares shall
be alike in every particular and all series shall rank equally and be
identical in all respects except insofar as they may vary with respect
to the matters which the Board of Directors is hereby expressly
authorized to determine in the resolution or resolutions providing for
the issuance of any series of the Serial Preferred Shares.
In the event of any liquidation, dissolution or winding up of
the affairs of the Corporation, then before any distribution or payment
shall have been made to the holders of the Common Shares, the holders
of the Serial Preferred Shares of each series shall be entitled to be
paid, or to have set apart in trust for payment, an amount from the net
assets of the Corporation equal to that stated and expressed in the
resolution or resolutions adopted by the Board of Directors which
provide for the issuance of such series, respectively. The remaining
net assets of the Corporation shall be distributed solely among the
holders of the Common Shares according to their respective shares.
2
<PAGE> 11
The holders of Serial Preferred Shares shall be entitled to
one vote for each Serial Preferred Share upon all matters presented to
the shareholders, and, except as otherwise provided by these Amended
Articles of Incorporation or required by law, the holders of Serial
Preferred Shares and the holders of Common Shares shall vote together
as one class on all matters. No adjustment of the voting rights of
holders of Serial Preferred Shares shall be made in the event of an
increase or decrease in the number of Common Shares authorized or
issued or in the event of a stock split or combination of the Common
Shares in the event of a stock dividend on any class of shares payable
solely in Common Shares.
The affirmative vote of the holders of at least two-thirds of
the Serial Preferred Shares at the time outstanding, given in person or
by proxy at a meeting called for the purpose at which the holders of
Serial Preferred Shares shall vote separately as a class, shall he
necessary to adopt any amendment to the Amended Articles of
Incorporation (but so far as the holders of Serial Preferred Shares are
concerned, such amendment may be adopted with such vote) which:
(i) changes issued Serial Preferred Shares of all
series then outstanding into a lesser number of shares of the
Corporation of the same class and series or into the same or a
different number of shares of the Corporation of any other
class or series; or
(ii) changes the express terms of the Serial
Preferred Shares in any manner substantially prejudicial to
the holders of all series thereof then outstanding or
(iii) authorizes shares of any class, or any security
convertible into shares of any class, or authorizes the
conversion of any security into shares of any class, ranking
prior to the Serial Preferred Shares; or
(iv) changes the express terms of issued shares of
any class ranking prior to the Serial Preferred Shares in any
manner substantially prejudicial to the holders of all series
of Serial Preferred Shares then outstanding;
and the affirmative vote of the holders of at least two-thirds of the
shares of each affected series of Serial Preferred Shares at the time
outstanding, given in person or by proxy at a meeting called for the
purpose at which the holders of each affected series of Serial
3
<PAGE> 12
Preferred Shares shall vote separately as a series, shall be necessary
to adopt any amendment to the Amended Articles of Incorporation (but so
far as the holders of each such series of Serial Preferred Shares are
concerned such amendment may be adopted with such vote) which:
(i) changes issued Serial Preferred Shares of one or
more but not all series then outstanding into a lesser number
of shares of the Corporation of the same series or into the
same or a different number of shares of the Corporation of any
other class or series; or
(ii) changes the express terms of any series of the
Serial Preferred Shares in any manner substantially
prejudicial to the holders of one or more but not all series
thereof then outstanding; or
(iii) changes the express terms of issued shares of
any class ranking prior to the Serial Preferred Shares in any
manner substantially prejudicial to the holders of one or more
but not all series of Serial Preferred Shares then
outstanding.
Whenever reference is made herein to shares "ranking prior to
the Serial Preferred Shares," such reference shall mean and include all
shares of the Corporation in respect of which the rights of the holders
thereof either as to the payment of dividends or as to distributions in
the event of a voluntary or involuntary liquidation, dissolution or
winding up of the Corporation are given preference over the rights of
the holders of Serial Preferred Shares; whenever reference is made to
shares "on a parity with the Serial Preferred Shares," such reference,
shall mean and include all shares of the Corporation in respect of
which the rights of the holders thereof (i) neither as to the payment
of dividends nor as to distributions in the event of a voluntary or
involuntary liquidation, dissolution or winding up of the Corporation
are given preference over the rights of the holders of Serial Preferred
Shares and (ii) either as to the payment of dividends or as to
distributions in the event of a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation rank on an equality
(except as to the amounts fixed therefor) with the rights of the
holders of Serial Preferred Shares; and whenever reference is made to
shares "ranking junior to the Serial Preferred Shares," such reference
shall mean and include all shares of the Corporation in respect of
which the rights of the holders thereof both as to the payment of
dividends and as to
4
<PAGE> 13
distributions in the event of a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation are junior and subordinate
to the rights of the holders of the Serial Preferred Shares.
SUBDIVISION B
PROVISIONS APPLICABLE TO COMMON SHARES
The Common Shares shall be subject to the express terms of the Serial
Preferred Shares and of any series thereof. Each Common Share shall be
equal to every other Common Share and the holders thereof shall have
such rights as are provided by law and, except as otherwise provided
herein or as required by law, shall be entitled to one vote for each
share held by them upon all matters presented to shareholders."
IN WITNESS WHEREOF, said William A. Papenbrock, Secretary of
Pioneer-Standard Electronics, Inc., acting for and on behalf of said
corporation, has hereunto subscribed his name this 1st day of August, 1997.
/s/ William A. Papenbrock
-----------------------------------
William A. Papenbrock, Secretary
<PAGE> 1
Exhibit 10.1
EMPLOYMENT AGREEMENT
BETWEEN
PIONEER-STANDARD ELECTRONICS, INC.
AND
JAMES L. BAYMAN
July 29, 1997
<PAGE> 2
Table of Contents
-----------------
Page
----
Employment................................................................1
Period of Employment......................................................1
Position, Duties, Responsibilities........................................1
Compensation, Compensation Plans, Perquisites............................2
Employee Benefit Plans....................................................4
Effect of Death or Disability.............................................4
Termination...............................................................5
General..........................................................5
Change of Control................................................6
For Cause or Voluntary Termination...............................7
Without Cause....................................................7
Arbitration......................................................8
Competition...............................................................8
Confidential Information..................................................8
Noninterference...........................................................9
Remedy .................................................................9
Withholding...............................................................9
Notices..................................................................10
General Provisions.......................................................10
Amendment or Modification; Waiver........................................11
Severability.............................................................11
Successors to the Company................................................11
Operation of Agreement...................................................12
Enforcement Costs........................................................12
<PAGE> 3
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT between PIONEER-STANDARD ELECTRONICS,
INC., an Ohio corporation (the "Company"), and JAMES L. BAYMAN ("Bayman"), dated
July 29, 1997, to be effective April 1, 1997.
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 Chairman 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 for a one-year period from the effective
date hereof and thereafter (i) subject to termination of this Agreement
by the Company effective as of the next anniversary of the effective
date hereof following written notice of termination, which notice must
be given to Bayman no later than February 1 of the Company's then
current fiscal year, or (ii) until the earlier termination of
employment as set forth in Section 7.
3. Position, Duties, Responsibilities
------------------------------------
3.01 During the Period of Employment, Bayman shall serve as Chairman
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
1
<PAGE> 4
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 and the strategic
direction of the Company's operations. 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 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.
3.02 It is further contemplated that at all times during the Period of
Employment Bayman shall serve and continue to serve 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, which may choose to either accept or
reject such resignation.
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 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, 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 $25,000 per month,
with such increases in such rate as may be
awarded from time to time by the Board of
Directors of the Company;
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<PAGE> 5
(ii) A cash incentive compensation payment equal to the
product of 8/10 of 1% of the sum of the "actual
operating income" of the Company, multiplied by the
ratio of the Company's "actual return on capital" to
20.4%. The term "actual operating income" shall be
defined as the income before income tax (state and
federal income tax) and interest expense. 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 (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). All
amounts used to calculate the incentive compensation
payment shall reflect the operations of the Company
and its consolidated subsidiaries and affiliates and
shall be calculated in conformity with generally
accepted accounting principles. The Company shall
calculate the incentive compensation payment for each
fiscal year on a quarterly basis and shall pay Bayman
the incentive compensation amount based on such
quarterly calculation 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
amount due Bayman based on the calculation of the
incentive compensation amount for the fiscal year
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, incentive compensation or other
form of 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 staff
and clerical staff, and to fringe benefits comparable to those enjoyed
by the other executive officers of the Company, as well as to
reimbursement, upon proper accounting, of reasonable business expenses
and disbursements incurred by him in the course of his duties.
3
<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 other 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 other executive 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"); provided, however, that the grant of any stock
options ("Options") under any Option Plan shall be at the sole
discretion of the Compensation Committee of the Board of Directors of
the Company. The Company has granted Bayman stock 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 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 him under the 1982 Incentive Stock Option
Plan and the 1991 Stock Option Plan) shall immediately be 100% vested
and Bayman shall have the immediate right of exercise with respect to
all Options and the 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 4.01(a)(i) above for the
month
4
<PAGE> 7
in which death shall take place at the rate being paid at the time of
death, (ii) any incentive compensation 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 incentive compensation 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) month period but without
prejudice to any payments due Bayman during such six (6) month period
or pursuant to any disability insurance policy.
(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 incentive compensation
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 incentive compensation 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. The termination of this Agreement by the Company
pursuant to Section 2(i) hereof shall be deemed to be a termination of
employment without Cause as set forth in Section 7.04 hereof. In the
event that this Agreement is to be terminated pursuant to Section 2(i)
hereof, upon receipt of the notice of termination Bayman shall have the
option of either leaving the Company at any time thereafter or
continuing his employment until the March 31 effective date of the
termination of this Agreement, and in either event Bayman shall be
entitled to receive all of the payments and benefits as provided in
Section 7.04 hereof; provided, however, that in the event Bayman elects
to continue his employment with the Company subsequent to the March 31
effective date of the termination of this Agreement, for a period of
three (3) months thereafter Bayman shall have the right to terminate
his
5
<PAGE> 8
employment with the Company and any such termination shall be deemed to
be a termination of employment without Cause as set forth above.
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 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 incentive compensation 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 incentive compensation 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 to
Bayman, his dependents, beneficiaries and estate 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.
Any termination by the Company within the period of one
hundred eighty (180) 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.
6
<PAGE> 9
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 3.03 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 demonstrable
significant injury to the Company, and with respect to any
alleged breach of paragraph 3.03 hereof, Bayman shall have
failed to remedy such 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, (i) 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 (ii) the
amount (the "Payment Amount") per month equal to 1/24th of (A) the
total of his previous twenty-four (24) months of base salary plus (B)
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 or estate, 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 incentive compensation payable for the fiscal quarter in
which the Period of Employment shall be deemed to have been terminated
without Cause, plus the balance of any incentive compensation 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
7
<PAGE> 10
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 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 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.
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
8
<PAGE> 11
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 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 employee, agent or other 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
9
<PAGE> 12
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 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
of 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 or involuntary,
to effect any
10
<PAGE> 13
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 the Compensation Committee thereof 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 or capital stock 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.
11
<PAGE> 14
18. Operation of Agreement
----------------------
18.01 This Agreement is effective April 1, 1997, and shall supersede
any prior employment arrangement or agreement, including the Amended
and Restated Employment Agreement dated June 12, 1995, which was
effective April 3, 1995, and the Employment Agreement dated May 7,
1996, which was effective April 1, 1996 between Bayman and the Company,
which shall be deemed to be terminated and null and void except for any
vested rights to receive compensation under Section 4.01(a)(ii)
thereof.
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, the benefits
intended to be 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
<PAGE> 15
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/ Diana Lindsay /s/ Vic Gelb
- ------------------------------ ----------------------------------------
Vic Gelb, Chairman of the Compensation
Committee
ATTEST:
/s/ Carol J. Torre /s/ James L. Bayman
- ------------------------------ ---------------------------------------
James L. Bayman
<PAGE> 1
Exhibit 10.2
EMPLOYMENT AGREEMENT
BETWEEN
PIONEER-STANDARD ELECTRONICS, INC.
AND
ARTHUR RHEIN
July 29, 1997
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<TABLE>
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Table of Contents
Page
<S> <C>
Employment.............................................................................1
Period of Employment...................................................................1
Position, Duties, Responsibilities.....................................................1
Compensation, Compensation Plans, Perquisites.........................................2
Employee Benefit Plans.................................................................3
Effect of Death or Disability..........................................................4
Termination............................................................................5
General.......................................................................5
Change of Control.............................................................5
For Cause or Voluntary Termination............................................6
Without Cause.................................................................7
Arbitration...................................................................7
Competition............................................................................8
Confidential Information...............................................................8
Noninterference........................................................................9
Remedy.................................................................................9
Withholding............................................................................9
Notices ..............................................................................10
General Provisions....................................................................10
Amendment or Modification; Waiver.....................................................11
Severability..........................................................................11
Successors to the Company.............................................................11
Operation of Agreement................................................................11
Enforcement Costs.....................................................................12
</TABLE>
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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT between PIONEER-STANDARD ELECTRONICS, INC., an Ohio
corporation (the "Company"), and ARTHUR RHEIN ("Rhein"), dated July 29, 1997, to
be effective April 1, 1997.
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 President and Chief
Operating 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, 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 for a one-year period from the effective
date hereof and thereafter on a year-to-year basis (i) subject to
termination of this Agreement by the Company effective as of the next
anniversary of the effective date hereof following written notice of
termination, which notice must be given to Rhein no later than February
1 of the Company's then current fiscal year, or (ii) until the earlier
termination of employment as set forth in Section 7.
3. Position, Duties, Responsibilities
----------------------------------
3.01 During the Period of Employment, Rhein shall serve as President
and Chief Operating Officer of the Company reporting to the Chief
Executive Officer of the Company and shall have the authority, power,
and duties with regard to his position as
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may from time to time be assigned by the Chief Executive Officer or the
Board of Directors of the Company.
3.02 It is further contemplated that at all times during the Period of
Employment Rhein shall serve and continue to serve as a member of its
Board of Directors. In the event that Rhein's employment is terminated
for any reason as provided in paragraph 7 below, Rhein agrees that he
shall immediately submit his written resignation as a member of the
Board of Directors of the Company, which may choose to either accept or
reject such resignation.
3.03 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 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.
3.04 Rhein's office shall be located at the corporate offices of the
Company, 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) Effective May 1, 1997, a base salary,
payable not less often than monthly, at the
rate of $22,917 per month, with such
increases in such rate as may be awarded
from time to time by the Board of Directors
of the Company;
(ii) A cash incentive compensation payment equal
to the product of 65/100 of 1% of the sum of
the "actual operating income" of the
Company, multiplied by the ratio of the
Company's "actual return on capital" to
20.4%. The term "actual operating income"
shall be defined as the income before income
tax (state and federal income tax) and
interest expense. The term "actual return on
capital" shall be defined as the Company's
"actual operating income" divided by
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the sum of its interest-bearing debt, plus
equity (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). All
amounts used to calculate the incentive
compensation payment shall reflect the
operations of the Company and its
consolidated subsidiaries and affiliates and
shall be calculated in conformity with
generally accepted accounting principles.
The Company shall calculate the incentive
compensation payment for each fiscal year on
a quarterly basis and at the end of each of
the first three (3) fiscal quarters shall
pay Rhein the incentive compensation amount
based on such quarterly calculation. 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
amount due Rhein based on the calculation of
the incentive compensation amount for the
fiscal year less payments made for the first
three (3) fiscal quarters, which payment
shall be vested in the event of termination
by reason of Death 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, incentive compensation or other
form of 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 staff
and clerical staff, and to fringe benefits comparable to those enjoyed
by the other executive officers of the Company, as well as to
reimbursement, upon proper accounting, of reasonable business 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 other 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
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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 other executive 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 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"); provided, however, that the grant of any stock options
("Options") under any Option Plan shall be at the sole discretion of
the Compensation Committee of the Board of Directors of the Company.
The Company has granted Rhein stock 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 him under the 1982 Incentive Stock Option
Plan and the 1991 Stock Option Plan) shall immediately be 100% vested
and Rhein shall have the immediate right of exercise with respect to
all Options and the 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 incentive compensation 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 incentive compensation
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.
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(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 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) month period but without prejudice to any
payments due Rhein during such six (6) month period or
pursuant to any disability insurance policy.
(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 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 incentive compensation 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
incentive compensation 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. The termination of this Agreement by the Company
pursuant to Section 2(i) hereof shall be deemed to be a termination of
employment without Cause as set forth in Section 7.04 hereof. In the
event that this Agreement is to be terminated pursuant to Section 2(i)
hereof, upon receipt of the notice of termination Rhein shall have the
option of either leaving the Company at any time thereafter or
continuing his employment until the March 31 effective date of the
termination of this Agreement, and in either event Rhein shall be
entitled to receive all of the payments and benefits as provided in
Section 7.04 hereof; provided, however, that in the event Rhein elects
to continue his employment with the Company subsequent to the March 31
effective date of the termination of this Agreement, for a period of
three (3) months thereafter Rhein shall have the right to terminate his
employment with the Company and any such termination shall be deemed to
be a termination of employment without Cause as set forth above.
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:
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(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 incentive compensation 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 incentive compensation 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
termination, or any such plan, program or arrangement is
discontinued or the benefits thereunder are materially
reduced, the Company shall itself arrange to provide to Rhein,
his dependents, beneficiaries and estate 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.
Any termination by the Company within the period of one
hundred eighty (180) 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
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(b) there has been a breach by Rhein during the Period of
Employment of the provisions of paragraph 3.03 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 demonstrable
significant injury to the Company, and with respect to any
alleged breach of paragraph 3.03 hereof, Rhein shall have
failed to remedy such 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 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, (i) 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 (ii) the
amount (the "Payment Amount") per month equal to 1/24th of the total of
(A) his previous twenty-four (24) months of base salary plus (B) 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 or estate, 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. Rhein shall also
receive any incentive compensation payable for the fiscal quarter in
which the Period of Employment shall be deemed to have been terminated
without Cause, plus the balance of any incentive compensation 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,
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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.
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 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,
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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, induce or attempt to
induce any employee, agent or other 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.
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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 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
of 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.
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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 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 the Compensation Committee thereof 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
or capital stock 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 April 1, 1997, and shall supersede
any prior employment arrangement or agreement, including the Amended
and Restated Employment Agreement dated June 12, 1995, which was
effective April 3, 1995, and the Employment Agreement dated May 7,
1996, which was effective April 1, 1996 between Rhein and the Company,
which shall be deemed to be terminated and null and void except for any
vested rights to receive compensation under Section 4.01(a)(ii)
thereof.
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<PAGE> 14
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 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, 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 upon
12
<PAGE> 15
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/ Carol J. Torre By /s/ James L. Bayman
- ------------------------------- ----------------------------------------
James L. Bayman, Chairman and Chief
Executive Officer
ATTEST:
/s/ Nelle Wulff /s/ Arthur Rhein
- ------------------------------- ----------------------------------------
Arthur Rhein
<PAGE> 1
Exhibit 10.3
EMPLOYMENT AGREEMENT
BETWEEN
PIONEER-STANDARD ELECTRONICS, INC.
AND
ROBERT E. DANIELSON
July 29, 1997
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<S> <C>
EMPLOYMENT........................................................................................................1
PERIOD OF EMPLOYMENT..............................................................................................1
POSITION, DUTIES, RESPONSIBILITIES................................................................................1
COMPENSATION, COMPENSATION PLANS, PERQUISITES....................................................................2
EMPLOYEE BENEFIT PLANS............................................................................................3
EFFECT OF DEATH OR DISABILITY.....................................................................................4
TERMINATION.......................................................................................................5
GENERAL........................................................................................................5
CHANGE OF CONTROL..............................................................................................5
FOR CAUSE OR VOLUNTARY TERMINATION.............................................................................6
WITHOUT CAUSE..................................................................................................6
ARBITRATION....................................................................................................7
COMPETITION.......................................................................................................7
CONFIDENTIAL INFORMATION..........................................................................................8
NONINTERFERENCE...................................................................................................8
REMEDY............................................................................................................9
WITHHOLDING.......................................................................................................9
NOTICES...........................................................................................................9
GENERAL PROVISIONS................................................................................................9
AMENDMENT OR MODIFICATION; WAIVER................................................................................10
SEVERABILITY.....................................................................................................11
SUCCESSORS TO THE COMPANY........................................................................................11
OPERATION OF AGREEMENT...........................................................................................11
ENFORCEMENT COSTS................................................................................................11
</TABLE>
<PAGE> 3
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT between PIONEER-STANDARD ELECTRONICS,
INC., an Ohio corporation (the "Company"), and ROBERT E. DANIELSON
("Danielson"), dated July 29, 1997, to be effective April 1, 1997.
W I T N E S S E T H:
WHEREAS: The Company and Danielson have given consideration to
an employment agreement providing for the services of Danielson as Senior Vice
President and Chief Information 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,
Danielson has been responsible for the success of the business of the Company;
NOW, THEREFORE, it is hereby agreed by and between the Company
and Danielson as follows:
1. Employment
----------
The Company hereby agrees to continue to employ Danielson, and
Danielson 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 for a one-year period from the effective
date hereof and thereafter on a year-to-year basis (i) subject to
termination of this Agreement by the Company effective as of the next
anniversary of the effective date hereof following written notice of
termination, which notice must be given to Danielson no later than
February 1 of the Company's then current fiscal year, or (ii) until the
earlier termination of employment as set forth in Section 7.
3. Position, Duties, Responsibilities
----------------------------------
3.01 During the Period of Employment, Danielson shall serve as Senior
Vice President and Chief Information Officer of the Company reporting
to the 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 Chief Executive Officer or the Board of
Directors of the Company.
<PAGE> 4
3.02 Throughout the Period of Employment Danielson 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 and except for illness or
incapacity, but nothing in this Agreement shall preclude Danielson 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 Danielson's office shall be located at the corporate offices of
the Company, and Danielson 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 Danielson 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, Danielson shall be
paid as compensation:
(i) A base salary, payable not less often than monthly,
at the rate of $18,333 per month, with such increases
in such rate as may be awarded from time to time by
the Board of Directors of the Company;
(ii) A cash incentive compensation payment equal to the
product of 20/100 of 1% of the sum of the "actual
operating income" of the Company, multiplied by the
ratio of the Company's "actual return on capital" to
20.4%. The term "actual operating income" shall be
defined as the income before income tax (state and
federal income tax) and interest expense. 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 (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). All
amounts used to calculate the incentive compensation
payment shall reflect the operations of the Company
and its consolidated subsidiaries and affiliates and
shall be calculated in conformity with generally
accepted accounting principles. The Company shall
calculate the incentive compensation payment for each
fiscal year on a quarterly basis and at the end of
each of the first three (3) fiscal quarters shall pay
Danielson the incentive compensation amount based on
such
2
<PAGE> 5
quarterly calculation. 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 Danielson the balance of any
amount due Danielson based on the calculation of the
incentive compensation amount for the fiscal year
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, incentive compensation or
other form of compensation shall in no way diminish
any other obligation of the Company under this
Agreement, unless specifically agreed to in writing
by Danielson.
4.02 During the Period of Employment Danielson 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 Danielson shall be entitled to
perquisites, including without limitation, an office, secretarial staff
and clerical staff, and to fringe benefits comparable to those enjoyed
by the other executive officers of the Company, as well as to
reimbursement, upon proper accounting, of reasonable business 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 Danielson, 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 other 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 other executive 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 Danielson 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"); provided, however, that the
3
<PAGE> 6
grant of any stock options ("Options") under any Option Plan shall be
at the sole discretion of the Compensation Committee of the Board of
Directors of the Company. The terms and conditions of exercise of
Options granted to Danielson shall be as is set forth in the Stock
Option Agreements (the "Option Agreements") with the Company entered
into by Danielson in connection with such Option grants; 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 shall immediately be 100% vested and
Danielson shall have the immediate right of exercise with respect to
all Options and the underlying Common Shares covered by said Option
Agreements. In the event that Danielson's employment is terminated as a
result of a Change in Control, as defined in paragraph 18.02 below,
Danielson 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
-----------------------------
In the event of the death of Danielson 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 incentive compensation 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 incentive compensation
due Danielson 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.
(a) The term "Disability," as used in this Agreement, shall
mean an illness or accident which prevents Danielson 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) month period but without prejudice
to any payments due Danielson during such three (3) month
period or pursuant to any disability insurance policy.
(b) In the event of the Disability of Danielson during the
Period of Employment, Danielson 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 three (3) months, (ii) any incentive compensation
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 incentive compensation due
Danielson 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.
4
<PAGE> 7
(c) The amount of any payments due under this paragraph 6.02
shall be reduced by any payments to which Danielson 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 Danielson with or without cause
at any time during the Period of Employment, subject to the provisions
of this Section 7. The termination of this Agreement by the Company
pursuant to Section 2(i) hereof shall be deemed to be a termination of
employment without Cause as set forth in Section 7.04 hereof. In the
event that this Agreement is to be terminated pursuant to Section 2(i)
hereof, upon receipt of the notice of termination Danielson shall have
the option of either leaving the Company at any time thereafter or
continuing his employment until the March 31 effective date of the
termination of this Agreement, and in either event Danielson shall be
entitled to receive all of the payments and benefits as provided in
Section 7.04 hereof; provided, however, that in the event Danielson
elects to continue his employment with the Company subsequent to the
March 31 effective date of the termination of this Agreement, for a
period of three (3) months thereafter Danielson shall have the right to
terminate his employment with the Company and any such termination
shall be deemed to be a termination of employment without Cause as set
forth above.
7.02 CHANGE OF CONTROL. Within one (1) year of a Change of Control of
the Company, as defined in paragraph 18.02, Danielson shall have the
right to terminate his employment with the Company and there shall be
paid or provided to Danielson, 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 then current monthly base salary times
twenty-four (24) plus $110,000. Such amount shall be paid to
Danielson in one payment, immediately upon termination.
Danielson shall also receive any incentive compensation
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 incentive compensation due
Danielson 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,
Danielson, 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 Danielson, 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
5
<PAGE> 8
materially reduced, the Company shall itself arrange to
provide to Danielson, his dependents, beneficiaries and estate
benefits substantially similar to those which Danielson, his
dependents and beneficiaries were entitled to receive under
such plans, programs and arrangements immediately prior to
termination.
Any termination by the Company within the period of one
hundred eighty (180) 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 Danielson to
terminate his employment under the provisions of this paragraph 7.02
shall not be deemed a voluntary termination of employment by Danielson
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 Danielson's employment
shall be deemed to have been for "Cause" only if:
(a) termination of his employment shall have been the result
of Danielson'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 Danielson during the Period of
Employment of the provisions of paragraph 3.03 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 demonstrable
significant injury to the Company, and with respect to any
alleged breach of paragraph 3.03 hereof, Danielson shall have
failed to remedy such breach within thirty (30) days from his
receipt of written notice from the Company.
If Danielson's employment is terminated by the Company for
Cause, or if Danielson shall voluntarily terminate his employment with
the Company, Danielson shall be entitled to the compensation provided
for in paragraph 4.01(a)(i) through the date of such termination.
Danielson 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 Danielson 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
Danielson's employment without Cause, there shall be paid or provided
to Danielson, his dependents, beneficiaries and estate, as liquidated
damages or severance pay, or both, (i) 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
6
<PAGE> 9
(ii) the amount (the "Payment Amount") per month equal to 1/12th of the
total of (A) his current annual base salary plus (B) $110,000. Such
Payment Amount shall be paid to Danielson or, in case of his prior
death, to his legal representative or estate, 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. Danielson shall also receive any
incentive compensation payable for the fiscal quarter in which the
Period of Employment shall be deemed to have been terminated without
Cause, plus the balance of any incentive compensation due Danielson 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 Danielson's employment shall be
terminated by the Company during the Period of Employment or the
Company shall withhold payments or provision of benefits because
Danielson is alleged to be engaged in activities prohibited by Sections
8, 9 or 10 of this Agreement or for any other reason, Danielson 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.
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
Danielson shall, during the one (1) year following termination of
Danielson'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.
7
<PAGE> 10
9. Confidential Information
------------------------
9.01 Except for information which is already in the public domain, or
which is publicly disclosed by persons other than Danielson, or which
is required by law or court order to be disclosed, or information given
to Danielson by a third party not bound by any obligation of
confidentiality, Danielson 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 Danielson 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 Danielson 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,
Danielson 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, induce or
attempt to induce any employee, agent or other 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.
8
<PAGE> 11
11. Remedy
------
Danielson 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. Danielson 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, Danielson 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 Danielson
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 Danielson 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 Danielson: Robert E. Danielson
16631 Munn Road
Auburn, Ohio 44023
14. General Provisions
------------------
14.01 There shall be no right of set-off or counter claim, in respect
of any claim, debt or obligation, against payments to Danielson, his
dependents, beneficiaries or estate provided for in this Agreement.
9
<PAGE> 12
14.02 No right or interest to or in any payments shall be assignable by
Danielson; 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 Danielson'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 Danielson's death or a judicial determination of
his incompetence, reference in this Agreement to Danielson 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) Danielson 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 the Compensation Committee thereof and is agreed to in
writing, signed by Danielson 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.
10
<PAGE> 13
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 or
capital stock 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 April 1, 1997, and shall supersede
any prior employment arrangement or agreement between Danielson and the
Company, which shall be deemed to be terminated and null and void
except for any vested rights to receive compensation under paragraph
4.01(a)(ii) thereof.
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 Danielson, 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
11
<PAGE> 14
Danielson 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 Danielson 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 Danielson 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 Danielson 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, Danielson the benefits
intended to be provided to Danielson hereunder, and that Danielson has
complied with all of his obligations under this Agreement, the Company
irrevocably authorizes Danielson from time to time to retain counsel of
his choice at the expense of the Company as provided in this Section
19, to represent Danielson 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 Danielson entering
into an attorney-client relationship with such counsel, and in that
connection the Company and Danielson agree that a confidential
relationship shall exist between Danielson and such counsel. The
reasonable fees and expenses of counsel selected from time to time by
Danielson as hereinabove provided shall be paid or reimbursed to
Danielson by the Company on a regular, periodic basis upon presentation
by Danielson 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, Chairman and Chief
Executive Officer
ATTEST:
/s/ Patricia M. Pope /s/ Robert E. Danielson
- ---------------------------------- -------------------------------------------
Robert E. Danielson
12
<PAGE> 1
Exhibit 10.4
EMPLOYMENT AGREEMENT
BETWEEN
PIONEER-STANDARD ELECTRONICS, INC.
AND
JOHN V. GOODGER
July 29, 1997
<PAGE> 2
<TABLE>
<CAPTION>
Table of Contents
Page
<S> <C>
Employment........................................................................................................1
Period of Employment..............................................................................................1
Compensation, Compensation Plans, Perquisites....................................................................2
Employee Benefit Plans............................................................................................3
Effect of Death or Disability.....................................................................................4
Termination.......................................................................................................5
General..................................................................................................5
Change of Control........................................................................................5
For Cause or Voluntary Termination.......................................................................6
Without Cause............................................................................................7
Arbitration..............................................................................................7
Competition.......................................................................................................8
Confidential Information..........................................................................................8
Noninterference...................................................................................................9
Remedy............................................................................................................9
Withholding.......................................................................................................9
Notices...........................................................................................................9
General Provisions...............................................................................................10
Amendment or Modification; Waiver................................................................................11
Severability.....................................................................................................11
Successors to the Company........................................................................................11
Operation of Agreement...........................................................................................11
Enforcement Costs................................................................................................12
</TABLE>
<PAGE> 3
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT between PIONEER-STANDARD ELECTRONICS, INC., an
Ohio corporation (the "Company"), and JOHN V. GOODGER ("Goodger"), dated July
29, 1997, to be effective April 1, 1997.
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 for a one-year period from the effective
date hereof and thereafter on a year-to-year basis (i) subject to
termination of this Agreement by the Company effective as of the next
anniversary of the effective date hereof following written notice of
termination, which notice must be given to Goodger no later than
February 1 of the Company's then current fiscal year, or (ii) until the
earlier termination of employment as set forth in Section 7.
3. Position, Duties, Responsibilities
-----------------------------------
3.01 During the Period of Employment, Goodger shall serve as Vice
President, Treasurer and Assistant Secretary of the Company reporting
to the Chief Executive Officer of the Company and shall have the
authority, power, and duties with regard to his
<PAGE> 4
position as may from time to time be assigned by the Chief Executive
Officer or the Board of Directors of the Company.
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 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, 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 $12,500 per month,
with such increases in such rate as may be
awarded from time to time by the Board of
Directors of the Company;
(ii) A cash incentive compensation payment equal
to the product of 15/100 of 1% of the sum of
the "actual operating income" of the
Company, multiplied by the ratio of the
Company's "actual return on capital" to
20.4%. The term "actual operating income"
shall be defined as the income before income
tax (state and federal income tax) and
interest expense. 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
(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). All
amounts used to calculate the incentive
compensation payment, shall reflect the
operations of the Company and its
consolidated subsidiaries and affiliates and
shall be calculated in conformity with
generally accepted accounting principles.
The Company shall calculate the incentive
2
<PAGE> 5
compensation payment for each fiscal year on
a quarterly basis and at the end of each of
the first three (3) fiscal quarters shall
pay Goodger the incentive compensation
amount based on such quarterly calculation.
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
amount due Goodger based on the calculation
of the incentive compensation amount for the
fiscal year 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, incentive compensation or other
form of 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 staff
and clerical staff, and to fringe benefits comparable to those enjoyed
by the other executive officers of the Company, as well as to
reimbursement, upon proper accounting, of reasonable business 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 other 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 other executive officers, their
dependents and beneficiaries are eligible, and to all payments or other
benefits under any such plan or
<PAGE> 6
practice 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"); provided, however, that the grant of any stock
options ("Options") under any Option Plan shall be at the sole
discretion of the Compensation Committee of the Board of Directors of
the Company. The Company has granted Goodger stock 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 and the 1991 Stock Option Plan) shall immediately be 100%
vested and Goodger shall have the immediate right of exercise with
respect to all Options and the 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 incentive compensation 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 incentive compensation
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) month period
but without prejudice to any payments due Goodger during such three (3)
month period or pursuant to any disability insurance policy.
(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
4
<PAGE> 7
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 three (3) months, (ii) any
incentive compensation 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 incentive
compensation 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. The termination of this Agreement by the Company
pursuant to Section 2(i) hereof shall be deemed to be a termination of
employment without Cause as set forth in Section 7.04 hereof. In the
event that this Agreement is to be terminated pursuant to Section 2(i)
hereof, upon receipt of the notice of termination Goodger shall have
the option of either leaving the Company at any time thereafter or
continuing his employment until the March 31 effective date of the
termination of this Agreement, and in either event Goodger shall be
entitled to receive all of the payments and benefits as provided in
Section 7.04 hereof; provided, however, that in the event Goodger
elects to continue his employment with the Company subsequent to the
March 31 effective date of the termination of this Agreement, for a
period of three (3) months thereafter Goodger shall have the right to
terminate his employment with the Company and any such termination
shall be deemed to be a termination of employment without Cause as set
forth above.
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 incentive compensation 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 incentive
5
<PAGE> 8
compensation 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
discontinued or the benefits thereunder are materially
reduced, the Company shall itself arrange to provide to
Goodger, his dependents, beneficiaries and estate 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.
Any termination by the Company within the period of one
hundred eighty (180) 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 3.03 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 demonstrable
significant injury to the Company, and with respect to any
alleged breach of paragraph 3.03 hereof, Goodger shall have
failed to remedy such breach within thirty (30) days from his
receipt of written notice from the Company.
6
<PAGE> 9
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 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, (i) 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 (ii) the
amount (the "Payment Amount") per month equal to 1/24th of (A) the
total of his previous twenty-four (24) months of base salary plus (B)
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 or estate, 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 incentive compensation payable for the fiscal quarter in which the
Period of Employment shall be deemed to have been terminated without
Cause, plus the balance of any incentive compensation 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.
7
<PAGE> 10
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 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.
8
<PAGE> 11
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 the prior
written consent of the Company, directly or indirectly, induce or
attempt to induce any employee, agent or other 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
of 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, and (b) the
Company and its successors as provided in Section 17 hereof.
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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 the Compensation Committee thereof 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
or capital stock 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 1, 1997, and shall
supersede any prior employment arrangement or agreement, including the
Amended and Restated Employment Agreement dated June 12, 1995, which
was effective April 3, 1995, and the Employment Agreement dated May 7,
1996, which was effective April 1, 1996 between Goodger and the
Company, which shall be deemed to be terminated and null and void
except for any vested rights to receive compensation under Section
4.01(a)(ii) thereof.
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
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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, 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, 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.
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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, Chairman and Chief
Executive Officer
ATTEST:
/s/ Carol J. Torre /s/ John V. Goodger
- ------------------------------ ------------------------------------------
John V. Goodger
