<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999.
-------------
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 AUGUST 2, 1999: 27,086,354. (Excludes 4,056,202 Common Shares
subscribed by the Pioneer Stock Benefit Trust.)
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PIONEER-STANDARD ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30, 1999
(Unaudited) March 31, 1999
------------- ---------------
<S> <C> <C>
ASSETS
Current assets
Cash $ 20,408 $ 28,898
Accounts receivable - net 338,106 323,461
Merchandise inventory 334,478 314,362
Prepaid expenses 1,449 2,475
Deferred income taxes 9,929 8,049
--------- ---------
Total current assets 704,370 677,245
Intangible assets 153,472 154,405
Investments 34,132 13,964
Other assets 8,106 7,898
Property and equipment, at cost 167,257 163,602
Accumulated depreciation 77,771 72,645
--------- ---------
Net 89,486 90,957
--------- ---------
$ 989,566 $ 944,469
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 185,694 $ 161,379
Accrued liabilities 38,396 36,415
Long-term debt due within one year 3,070 3,104
--------- ---------
Total current liabilities 227,160 200,898
Long-term debt 316,163 313,240
Other long-term liabilities 19,219 15,078
Mandatorily redeemable convertible trust preferred securities 143,750 143,750
Shareholders' equity
Common stock, at stated value 9,258 9,258
Capital in excess of stated value 119,315 93,324
Retained earnings 208,973 202,056
Unearned compensation (57,360) (31,369)
Accumulated other comprehensive income (loss) 3,088 (1,766)
--------- ---------
283,274 271,503
--------- ---------
$ 989,566 $ 944,469
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 3
PIONEER-STANDARD ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Quarter Ended
June 30,
1999 1998
---- ----
<S> <C> <C>
Net sales $ 575,973 $ 544,327
Cost and expenses:
Cost of goods sold 486,699 457,857
Warehouse, selling and
administrative expense 66,954 68,414
----------- -----------
Operating profit 22,320 18,056
Interest expense 6,096 6,754
----------- -----------
Income before income taxes 16,224 11,302
Provision for income taxes 7,056 4,268
Distributions on mandatorily redeemable
convertible trust preferred securities,
net of tax 1,459 1,455
----------- -----------
Net income $ 7,709 $ 5,579
=========== ===========
Weighted average shares outstanding
Basic 26,354,741 26,348,554
Diluted 35,818,273 35,792,921
Earnings per share:
Basic $ .29 $ .21
Diluted $ .26 $ .20
Dividends per share $ .03 $ .03
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
PIONEER-STANDARD ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three months ended
June 30,
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 7,709 $ 5,579
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation 3,691 3,707
Amortization 2,432 2,283
Increase in operating working capital (3,978) (18,856)
Increase in other assets (3,052) (4,412)
Deferred taxes (398) 1,606
-------- --------
Total adjustments (1,305) (15,672)
Net cash provided by (used in) operating
activities 6,404 (10,093)
Cash flows from investing activities:
Additions to property and equipment (3,655) (4,769)
Investment in affiliates (13,029) (7,433)
-------- --------
Net cash used in operating (16,684) (12,202)
Cash flows from financing activities:
Increase in revolving credit borrowings 3,000 5,000
Decrease in other long-term
debt obligations (111) (51)
Proceeds from issuance of mandatorily redeemable
convertible trust preferred securities -- 18,750
Dividends paid (791) (790)
-------- --------
Net cash provided by financing activities 2,098 22,909
Effect of exchange rate changes on cash (308) (127)
Net (decrease) increase in cash (8,490) 487
Cash at beginning of period 28,898 31,999
-------- --------
Cash at end of period $ 20,408 $ 32,486
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE> 5
Notes to Consolidated Financial Statements
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the quarter ended June 30, 1999 are not
necessarily indicative of the results that may be expected for the full fiscal
year. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's annual report on Form 10-K for
the year ended March 31, 1999.
2. COMPREHENSIVE INCOME
The components of comprehensive income for the three months ended June 30, 1999
and 1998 are as follows (in thousands):
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Net income $ 7,709 $ 5,579
Unrealized gain on investments, net of tax 4,295 --
Foreign currency translation adjustment 559 (809)
------- -------
Comprehensive income $12,563 $ 4,770
======= =======
</TABLE>
3. NET INCOME PER SHARE DATA
Basic earnings per common share is computed by dividing net income available to
common shareholders by the weighted average number of common shares outstanding
during each period. Diluted computations include dilutive common share
equivalents of outstanding stock options and assumed conversion of
company-obligated mandatorily redeemable convertible trust preferred securities
and the elimination of related distributions, net of income taxes.
5
<PAGE> 6
The computation of basic and diluted earnings per common share for the quarters
ended June 30, 1999 and June 30, 1998 is shown below:
<TABLE>
<CAPTION>
Quarter ended
June 30,
1999 1998
---- ----
<S> <C> <C>
Basic
Net income applicable to common shareholders $ 7,709,000 $ 5,579,000
Weighted average shares outstanding 26,354,741 26,348,554
Basic earnings per share $ .29 $ .21
Diluted
Net income applicable to common shareholders $ 7,709,000 $ 5,579,000
Add back:
Distributions on mandatorily redeemable
convertible trust preferred securities, net of tax 1,459,000 1,455,000
----------- -----------
Net income applicable to common shareholders
after assumed conversion $ 9,168,000 $ 7,034,000
=========== ===========
Weighted average shares outstanding 26,354,741 26,348,554
Effect of diluted securities:
Common share equivalents of outstanding stock options 336,548 375,931
Common shares issuable upon conversion of mandatorily
redeemable convertible trust preferred securities 9,126,984 9,068,436
----------- -----------
Diluted weighted average shares outstanding 35,818,273 35,792,921
=========== ===========
Diluted earnings per share $ .26 $ .20
</TABLE>
4. BUSINESS SEGMENT INFORMATION
The Company's operations are classified into two reporting segments: Computer
Systems and Industrial Electronics. The Company's two reportable business
segments are managed separately based on the product and market differences.
Computer Systems products include mid-range computer systems and high-end
platforms, personal computers, display terminals and networking products.
Industrial Electronics products include semiconductors, and interconnect,
passive and electromechanical products.
6
<PAGE> 7
The Company measures segment profit or loss based on earnings before interest
and income taxes (EBIT). Corporate expenses are allocated to each segment based
on headcount, sales and asset utilization.
<TABLE>
<CAPTION>
Quarter ended
June 30,
<S> <C> <C>
Business Segment Information
(in thousands) 1999 1998
SALES
Computer Systems $278,113 $274,240
Industrial Electronics 297,860 270,087
-------- --------
Total Sales $575,973 $544,327
OPERATING INCOME
Computer Systems $ 9,807 $ 10,668
Industrial Electronics 12,513 7,388
-------- --------
Total Operating Income $ 22,320 $ 18,056
RECONCILIATION TO INCOME BEFORE INCOME TAXES
Interest Expense 6,096 6,754
-------- --------
Income Before Income Taxes $ 16,224 $ 11,302
</TABLE>
5. CONTINGENCIES
The Company is the subject of various threatened or pending legal actions and
contingencies in the normal course of conducting its business. The Company
provides for costs related to these matters when a loss is probable and the
amount is reasonably estimable. The effect of the outcome of these matters on
the Company's future results of operations and liquidity cannot be predicted
because any such effect depends on future results of operations and the amount
or timing of the resolution of such matters. While it is not possible to predict
with certainty, management believes that the ultimate resolution of such matters
will not have a material adverse effect on the consolidated financial position
or results of operations of the Company.
In connection with the Year 2000 issue, the Company believes that the greatest
threat posed to it by the Year 2000 problem is potential litigation arising out
of any failure of products sold or services performed by the Company due to the
Year 2000 non-compliance. However, the Company is not currently aware of any
threatened litigation. Based on currently available information, the Company is
unable to quantify losses, if any, it may incur as a result of any Year 2000
non-compliant products or services sold by it, and cannot provide any assurance
that such losses may not be material. The Company believes that its exposure to
liability resulting from the malfunction of Year 2000 non-compliant products is
mitigated in substantial part by certain manufacturers' warranties that are
passed through to the customer. Regardless of whether the Company is ultimately
held liable for any customer's losses, the costs of defending customer lawsuits
could have a material adverse effect on the Company's business, results of
operations and financial condition, depending on the number and nature of such
actions. Due to the uncertain number and nature of such potential lawsuits, the
Company is unable to estimate its potential litigation expenses resulting from
any Year 2000 non-compliance of products or services sold by it.
7
<PAGE> 8
6. OTHER EVENT
On May 13, 1999, ProGen Technologies, Inc. one of the Company's major customers,
filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the Central
District of the state of California. ProGen subsequently filed a motion, which
was granted June 18, 1999, to convert its Chapter 11 proceeding to a Chapter 7
proceeding. At the time of this filing, ProGen owed the Company approximately
$9.3 million. The Company intends to pursue its rights in the bankruptcy
proceedings, and, at this time, management anticipates any effects resulting
from this matter will not result in a material adverse effect on the
consolidated financial condition or results of operations of the Company.
8
<PAGE> 9
PIONEER-STANDARD ELECTRONICS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 COMPARED WITH
THE THREE MONTHS ENDED JUNE 30, 1998
Net sales for the three-month period ended June 30, 1999 of $576.0 million
increased 6% over the prior year three-month period of $544.3 million. The
increase in sales was primarily due to higher sales of industrial electronics
which were up 10% over the prior year. Computer systems sales increased 1% over
the prior year three-month period. Industrial electronics comprised 52% of sales
and computer systems were 48% of sales in the first quarter of the current year
compared with 50% and 50%, respectively, a year ago.
Cost of goods sold also increased 6% compared with the prior year quarter,
resulting in a gross margin of 15.5% in the current quarter compared with 15.9%
a year ago.
Warehouse, selling and administrative expenses were $67.0 million compared with
$68.4 million incurred during the prior year three-month period. This resulted
in a ratio of these expenses to sales of 11.6% for the current quarter compared
with 12.6% a year ago. The reduced ratio of operating expenses to sales in the
current year reflects a combination of the effects of ongoing cost containment
programs as well as leveraging costs on higher sales volume.
The operating profit resulting from the activity described above of $22.3
million, or 3.9% of sales in the current period, was up 24% compared with $18.1
million, or 3.3% of sales a year ago. Operating profit of the computer systems
segment was 3.5% of sales for the current quarter compared with 3.9% of a year
ago. Operating profit of the industrial electronics segment was 4.2% of sales
compared with 2.7% a year ago.
Interest expense was $6.1 million in the current quarter compared with $6.8
million a year ago. The decreased interest expense is primarily attributable to
the reduction in debt required to fund the reduced average working capital and
capital expenditure requirements compared with a year ago.
The effective tax rate for the current year three-month period was 43.5%
compared with 37.8% for the same period a year ago. The tax rate increase was
primarily due to the unrecognized tax benefit of operating losses of the
Canadian subsidiary.
Primarily as a result of the factors above, the Company's net income for the
three-month period ending June 30, 1999 increased 38% to $7.7 million from $5.6
million earned in the prior year.
9
<PAGE> 10
FINANCIAL CONDITION
Current assets increased by $27.1 million and current liabilities increased by
$26.3 million during the three-month period ended June 30, 1999, resulting in an
increase of $.8 million in working capital. The current ratio was 3.1:1 at June
30, 1999 and 3.4:1 at year-end March 31, 1999.
During the first three months of the current year, total interest-bearing debt
increased by $2.9 million reflective of the nominal change in working capital
noted above. The ratio of interest-bearing debt to capitalization was 43% at
June 30, 1999 compared with 43% at March 31, 1999.
The Company's investments in affiliates increased $20.1 million during the first
quarter primarily due to cash investments and unrealized gains in the market
value of these investments.
Management estimates that capital expenditures for the fiscal year 2000 will
approximate $35.0 million. Capital expenditures in the first three months of the
current year were $3.7 million. Under present business conditions, it is
anticipated that funds from current operations and available credit facilities
will be sufficient to finance both capital spending and working capital needs
for the balance of the current fiscal year.
The Company capitalized approximately $34.2 million over the past two years in
connection with the acquisition and installation of an upgraded information
technology system. Amounts representing approximately $11.5 million of these
expenditures were operational in fiscal 1999 and $8.5 million are planned to
become operational in fiscal 2000. The balance of $14.2 million represents
work-in-process components which are not yet operational. The Company is
evaluating these components and presently has no reason to believe that they
will not become operational. In addition, management believes there would be no
material adverse effect on the financial condition or results of operations of
the Company should such components require further modification or replacement.
It is contemplated that plans for completing the balance of the information
technology (IT) system installation will be finalized in fiscal 2000.
On May 13, 1999, ProGen Technologies, Inc., one of the Company's major
customers, filed for protection under Chapter 11 of the U.S. Bankruptcy Code in
the Central District of the state of California. ProGen subsequently filed a
motion, which was granted on June 18, 1999, to convert its Chapter 11 proceeding
to a Chapter 7 proceeding. At the time of this filing, ProGen owed the Company
approximately $9.3 million for the shipment of microprocessors. The Company
intends to pursue its rights in the bankruptcy proceedings, and, at this time,
management anticipates any effects resulting from this matter will not result in
a material adverse effect on the consolidated financial condition or results of
operations of the Company.
YEAR 2000 READINESS DISCLOSURE
The Year 2000 problem - software, hardware or an embedded chip that does not
correctly process date information for years after 1999 - results from the
practice of storing date information with only the last two digits of the year.
The Company began to address Year 2000 issues in 1996. Since 1997, the Company
has employed internal and external resources to assist it in identifying,
remediating and testing Year
10
<PAGE> 11
2000 problems. The Company has also assembled a multi-departmental Year 2000
task force to coordinate and facilitate its Year 2000 efforts and provide
regular updates to the board of directors.
The scope of the Year 2000 readiness effort includes the Company's internal IT
systems, such as hardware and software; non-IT systems with date-sensitive
characteristics; and the status of key third parties, including suppliers,
service providers and customers.
The Company's major IT applications are currently Year 2000 ready. Remediation
and testing of the balance of the IT systems are expected to be completed by
September 30, 1999. The Company continues to analyze the readiness of non-IT
systems and anticipates that remediation and testing of any non-compliant
systems will be completed by September 1, 1999. The Company also is taking steps
to determine the compliance of key third parties and expects that it will have
received and reviewed responses from the majority of such parties by September
1, 1999.
Although the Company expects to meet the target dates for completion of
remediation and testing and for determining the status of key third parties, the
task force continues with developing contingency plans should the programs not
be completed when anticipated or should the third parties not be ready on a
timely basis. Although the Company anticipates the adoption of contingency plans
including the use of manual systems, use of alternative systems or other means
to prevent the more important IT systems from failure should serve to mitigate
potential losses arising from Year 2000 disruptions in connection with the
Company's IT system, there can be no assurances that disruptions will not have a
material adverse effect on the Company.
Despite the Company's efforts of canvassing its more critical third-party
suppliers for compliance with Year 2000 issues and identifying alternate
sources, it is more difficult to anticipate the effect of the compliance efforts
of such third parties on the financial status of the Company. The Company has
not become aware of any third party non-compliance not in the process of
remediation that might result in a major disruption.
Costs of the initiative to date approximate $2.4 million. It is anticipated that
an additional $ 0.8 million will be incurred to complete the program.
Substantially all of these outlays are expected to result from remediation of
existing systems as opposed to replacing existing systems. Costs of the
initiative are being funded from operating cash flows. The actual costs of the
Company's Year 2000 efforts may vary from current estimates, which are based on
information available at the time.
At the present time, the Company believes that the greatest threat posed to it
by the Year 2000 problem is potential litigation arising out of any failure of
product sold or services performed by the Company due to Year 2000
non-compliance; however the Company is not currently aware of any threatened
litigation. Based on currently available information, the Company is unable to
quantify losses, if any, it may incur as a result of any Year 2000 non-compliant
products or services sold by it, and cannot provide any assurance that such
losses may not be material. The Company believes that its exposure to liability
resulting from the malfunction of Year 2000 non-compliant products is mitigated
in substantial part by certain manufacturers' warranties that are passed through
to the customer. Regardless of whether the Company is ultimately held liable for
any customer's losses, the costs of defending customer lawsuits could have a
material adverse
11
<PAGE> 12
effect on the Company's business, results of operations or financial condition,
depending on the number and nature of such actions. Due to the uncertain number
and nature of such lawsuits, the Company is unable to estimate its potential
litigation expenses resulting from any Year 2000 non-compliance of products or
services sold by it.
Although the Company believes that it is taking appropriate precautions against
disruption of its systems due to the Year 2000 issue, there can be no assurance
that the Company will identify all Year 2000 problems in advance of their
occurrence, or that the Company will be able to successfully remedy all problems
that are discovered. Furthermore, there can be no assurance that the Company's
third-party relationships will not be adversely affected by Year 2000 issues.
While the Company does not anticipate that costs of Year 2000 disruptions will
have a material adverse effect, Year 2000 disruptions, arising either from
within the Company of through third-party relationships, could have a material
adverse effect on the Company's operating results or financial condition.
Portions of this report contain current management expectations which may
constitute forward-looking information. The Company's performance may differ
materially from that contemplated by such statements for a variety of reasons,
including, but not limited to: competition, dependence on the computer market,
inventory obsolescence and technology changes, dependence on key suppliers,
effects of industry consolidation, risks and uncertainties involving
acquisitions, instability in world financial markets, downward pressure on gross
margins, uneven patterns of inter-quarter and intra-quarter sales, and
management of growth of the business.
12
<PAGE> 13
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK
In the normal course of business, operations of the Company are
exposed to continuing fluctuations in foreign currency values
and interest rates that can affect the cost of operating and
financing. Accordingly, the Company addresses a portion of these
risks through a program of risk management that includes the use
of derivative financial instruments. The Company's objective is
to reduce earnings volatility associated with these
fluctuations. The Company does not enter into any derivative
transactions for speculative purposes.
The Company's primary interest rate risk exposure results from
the revolving credit facility's various floating rate pricing
mechanisms. This interest rate exposure is managed by interest
rate swaps to fix the interest rate on a portion of the debt and
the use of multiple maturity dates. If interest rates were to
increase 200 basis points (2%) from June 30, 1999 rates, and
assuming no changes in debt from June 30, 1999 levels, the
additional annual expense would be approximately $1.9 million on
a pre-tax basis.
The Company has assets, liabilities and cash flows in foreign
currencies creating foreign exchange risk, the primary foreign
currency being the Canadian dollar. Monthly measurement,
evaluation and forward exchange contracts are employed as
methods to reduce this risk. At June 30, 1999, one forward
exchange contract existed with a maturity of thirty-one days.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On April 27, 1999, the Company issued 611,567 Common shares to
James L. Bayman, Chairman and Chief Executive Officer, and
112,231 Common Shares to John V. Goodger, Vice President,
Treasurer and Assistant Secretary, pursuant to the
Pioneer-Standard Electronics, Inc. 1999 Restricted Stock Plan.
The issuance of such Common Shares was exempt from registration
under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to Section 4(2) of the Securities Act. The Plan
provides that such Common Shares may not be transferred and will
remain forfeitable to the Company by Mr. Bayman and Mr. Goodger
until they have completed certain required periods of service
with the Company or upon the earlier occurrence of certain
events as set forth in the Plan.
13
<PAGE> 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Number Description
------ -----------
10.1 Amended and Restated Employment Agreement, dated
April 27, 1999, between Pioneer-Standard Electronics,
Inc. and James L. Bayman
10.2 Amended and Restated Employment Agreement, dated
April 27, 1999, between Pioneer-Standard Electronics,
Inc. and Arthur Rhein
10.3 Employment Agreement, dated April 27, 1999, between
Pioneer-Standard Electronics, Inc. and Gregory T.
Geswein
10.4 Amended and Restated Employment Agreement, dated
April 27, 1999, between Pioneer-Standard Electronics,
Inc. and John V. Goodger
10.5 Pioneer-Standard Electronics, Inc. 1999 Stock Option
Plan for Outside Directors
10.6 Pioneer-Standard Electronics, Inc. 1999 Restricted
Stock Plan
10.7 Form of Option Agreement between Pioneer Standard
Electronics, Inc. and optionees under the
Pioneer-Standard Electronics, Inc. 1999 Stock Option
Plan for Outside Directors
27 Financial Data Schedule
(b) Reports on Form 8-K - None
14
<PAGE> 15
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: August 13, 1999 /s/ Gregory T. Geswein
------------------------- -----------------------------
Gregory T. Geswein
Senior Vice President & CFO
Date: August 13, 1999 /s/ John V. Goodger
------------------------- ------------------------------
John V. Goodger
Vice President & Treasurer
15
<PAGE> 1
Exhibit 10.1
Execution Copy
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
BETWEEN
PIONEER-STANDARD ELECTRONICS, INC.
AND
JAMES L. BAYMAN
April 27, 1999
<PAGE> 2
<TABLE>
<CAPTION>
Table of Contents
Page
<S> <C>
Employment........................................................................................................1
Period of Employment..............................................................................................1
Position, Duties, Responsibilities................................................................................2
Compensation, Compensation Plans, Perquisites.....................................................................3
Employee Benefit Plans............................................................................................5
Effect of Death or Disability.....................................................................................5
Termination.......................................................................................................6
General..................................................................................................6
Change in Control........................................................................................6
For Cause or Voluntary Termination.......................................................................7
Without Cause............................................................................................8
Arbitration..............................................................................................8
Competition.......................................................................................................9
Confidential Information..........................................................................................9
Noninterference..................................................................................................10
Remedy...........................................................................................................10
Withholding......................................................................................................10
Notices..........................................................................................................10
General Provisions...............................................................................................11
Amendment or Modification; Waiver................................................................................12
Severability.....................................................................................................12
Successors to the Company........................................................................................13
Operation of Agreement...........................................................................................13
Enforcement Costs................................................................................................13
</TABLE>
<PAGE> 3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT between
PIONEER-STANDARD ELECTRONICS, INC., an Ohio corporation (the "Company"), and
JAMES L. BAYMAN ("Bayman"), dated April 27, 1999, effective April 1, 1999.
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 purposes of this Agreement, the Period of Employment shall
consist of the Period of Full Time Employment and the Period of
Transition as described in this Section 2 as follows:
(a) For the purposes of this Agreement, the Period of
Full Time Employment shall continue for a three-year period
from the effective date hereof, subject to (i) the provisions
of Section 6 below (relating to Death or Disability); (ii) the
earlier termination of employment as set forth in Section 7;
and (iii) the commencement of the Period of Transition
pursuant to Section 2(c).
(b) For purposes of this Agreement, the Period of
Transition shall continue for a three-year period from the
termination of the Period of Full Time Employment, subject to
(i) the provisions of Section 6 below (relating to Death or
Disability) and (ii) the earlier termination of employment as
set forth in Section 7.
1
<PAGE> 4
(c) Not later than the February 1 next preceding the
second anniversary of this Agreement, Bayman may elect to
commence the Period of Transition effective on the second
anniversary of this Agreement. The Period of Transition shall
be a period of reduced employment responsibilities designed to
ensure Bayman's availability and support in the transition
from Bayman to his successor as Chairman and Chief Executive
Officer of the Company.
3. Position, Duties, Responsibilities
3.01 During the Period of Full Time 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 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
Full Time 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 Full Time 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
affairs, provided that such activities do not materially interfere with
the regular performance of his duties and responsibilities under this
Agreement.
3.04 Throughout the Period of Full Time Employment, 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. Upon the commencement of the Period of Transition, Bayman's
office shall be relocated to an
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appropriate office which shall be mutually acceptable to Bayman and his
successor as Chairman and Chief Executive Officer.
3.05 Throughout the Period of Transition, Bayman:
(a) shall serve in an advisory capacity to the Chairman and
Chief Executive Officer and shall perform such tasks as shall be
reasonably requested of him from time to time by the Chairman and Chief
Executive Officer;
(b) shall make himself available to serve as a nominee for
election by the shareholders as a Director of the Company if so
requested by the Compensation Committee and, if he is elected and does
so serve, shall receive no additional compensation for his services as
Director; and
(c) shall devote no more than five (5) days per month during
normal business hours to the business affairs of the Company as
requested from time to time by the Chairman and Chief Executive
Officer, except for illness or incapacity, but nothing in this
Agreement shall preclude Bayman from 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 affairs,
provided that such activities do not materially interfere with the
regular performance of his duties and responsibilities under this
Agreement.
4. Compensation, Compensation Plans, Perquisites
4.01 (a) For all services rendered by Bayman in any capacity during the
Period of Full Time 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 $41,667 per month,
with such increases in such rate as may be
awarded from time to time by the Board of
Directors of the Company or the Compensation
Committee, as applicable;
(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% or such other standard as may
hereafter be predetermined by the
Compensation Committee of the Company, which
standard the Compensation Committee may
later revise, as appropriate, to adjust for
acquisitions, investments or other
significant capital investments made by the
Company during the fiscal year. 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
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<PAGE> 6
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
in 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) For all services rendered by Bayman in any capacity during
the Period of Transition, Bayman shall be paid as compensation
a base salary, payable not less often than monthly, at a rate
of $110,000 per year, with such increases in such rate or may
be awarded from time to time by the Chief Executive Officer of
the Company.
(c) 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 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.
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5. Employee Benefit Plans
5.01 The compensation, together with other matters provided for in
Section 4 above, is in addition to the benefits provided for in this
Section 5.
5.02 Bayman, his dependents, beneficiaries and estate shall be entitled
to all payments and benefits and service credit for benefits during the
Period of Employment to which executive officers of the Company, their
dependents and beneficiaries are entitled as the result of the
employment of such executive officers during the Period of Employment
under the terms of employee plans and practices of the Company,
including, without limitation, the Company's retirement program
consisting of its Employees' Profit Sharing Plan, its group life
insurance plan, its accidental death and dismemberment insurance,
disability, medical and health and welfare plans, any key person
individual life and disability policies, automobile expense
reimbursement, club membership fees and dues, and other present or
equivalent successor plans and practices of the Company, its
subsidiaries and divisions, for which 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) or paragraph
4.01(b) above, whichever is applicable, for the month in which death
shall take place at the rate
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<PAGE> 8
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, if applicable, 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) or paragraph
4.01(b) above, whichever is applicable, 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, if applicable, and
(iii) any benefits provided pursuant to paragraph 5.02 hereof
which are payable pursuant to the terms of the applicable plan
or practice, except that Bayman shall not be subject to the
payment cap provided for by the Company's short-term
disability plan.
(c) The amount of any payments due under this paragraph 6.02
shall be reduced by any payments to which Bayman may be paid
for the same period under any disability plan of the Company
or of any subsidiary or affiliate thereof.
7. Termination
7.01 GENERAL. The Company may terminate Bayman with or without cause at
any time during the Period of Employment, subject to the provisions of
this Section 7.
7.02 CHANGE IN CONTROL. Within one (1) year of a Change in 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) or
paragraph 4.01(b) above, whichever is applicable, above for
the month in which termination shall have occurred at the rate
being paid at the time of termination; and an
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<PAGE> 9
amount equal to his previous thirty six (36) 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 three (3)
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 in 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 three (3) 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 in Control and
the closing of the transaction actually resulting in the Change in
Control, as defined in paragraph 18.02, shall be deemed to be a
termination under this paragraph 7.02. An election by Bayman to
terminate his employment under the provisions of this paragraph 7.02
shall not be deemed a voluntary termination of employment by Bayman
under paragraph 7.03 of this Agreement or any plan or practice of the
Company.
7.03 FOR CAUSE OR VOLUNTARY TERMINATION. For the purpose of any
provision of this Agreement, the termination of Bayman's employment
shall be deemed to have been for Cause only if:
(a) termination of his employment shall have been the result
of Bayman's conviction of any of the following: (i)
embezzlement; (ii) misappropriation of money or other property
of the Company; or (iii) any felony; or
(b) there has been a breach by Bayman during the Period of
Employment of the provisions of paragraph 3.03 above, relating
to devotion of full time to the affairs of the Company,
Section 8 relating to Competition, Section 9 relating to
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<PAGE> 10
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) or paragraph 4.01(b), whichever is applicable,
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) or paragraph 4.01(b) above, whichever is applicable, 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,
if applicable, 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, if applicable, 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 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
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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 in 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, or as required by law. 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 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,
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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 in 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 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
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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 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.
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14.07 Bayman shall be entitled to a cash payment equal to the amount of
excise taxes (i.e., the "excise tax gross-up payment") which Bayman is
required to pay pursuant to Section 4999 of the Internal Revenue Code
of 1986, as amended ("Code"), as a result of any payments made by or on
behalf of the Company or any successor thereto resulting in an "excess
parachute payment" within the meaning of Section 280G(b) of the Code.
In addition to the foregoing, the cash payment due to Bayman under this
paragraph 14.07 shall be increased by the aggregate of the amount of
federal, state and local income and excise taxes for which Bayman will
be liable on account of the cash payment to be made under this
paragraph 14.07, such that Bayman will receive the excise tax gross-up
payment net of all income and excise taxes imposed on Bayman on account
of the receipt of the excise tax gross-up payment. The computation of
this payment shall be determined, at the expense of the Company, by an
independent accounting, actuarial or consulting firm selected by the
Company. Payment of the cash amount set forth above shall be made at
such time as the Company shall determine, in its sole discretion, but
in no event later than the date five (5) business days before the due
date, without regard to any extension, for filing Bayman's federal
income tax return for the calendar year which includes the date as of
which the aforementioned "excess parachute payments" are determined.
Notwithstanding the foregoing, there shall be no duplication of
payments by the Company under this paragraph 14.07 in respect of excise
taxes under Section 4999 of the Code to the extent the Company is
making cash payments in respect of such excise taxes for any other
arrangement with Bayman. In the event that Bayman is ultimately
assessed with excise taxes under Section 4999 of the Code as a result
of payments made by the Company or any successor thereto which exceed
the amount of excise taxes used in computing Bayman's payment under
this paragraph 14.07, the Company or its successor shall indemnify
Bayman for such additional excise taxes plus any additional excise
taxes, income taxes, interest and penalties resulting from the
additional excise taxes and the indemnity hereunder.
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
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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, 1999, and shall supersede
any prior employment arrangement or agreement, including the Employment
Agreement dated July 29, 1997, which was effective April 1, 1997, 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 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 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
13
<PAGE> 16
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 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.
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<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
ATTEST: PIONEER-STANDARD ELECTRONICS, INC.
/s/ Lawrence N. Schultz By /s/ Victor Gelb
- ---------------------------- -----------------------------------------
Victor Gelb, Chairman of the Compensation
Committee
ATTEST:
/s/ Nancy E. Hoyt /s/ James L. Bayman
- ---------------------------- -----------------------------------------
James L. Bayman
15
<PAGE> 1
Exhibit 10.2
Execution Copy
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
BETWEEN
PIONEER-STANDARD ELECTRONICS, INC.
AND
ARTHUR RHEIN
April 27, 1999
<PAGE> 2
<TABLE>
<CAPTION>
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 in 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.....................................................................................................12
Successors to the Company........................................................................................12
Operation of Agreement...........................................................................................12
Enforcement Costs................................................................................................12
</TABLE>
<PAGE> 3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT between
PIONEER-STANDARD ELECTRONICS, INC., an Ohio corporation (the "Company"), and
ARTHUR RHEIN ("Rhein"), dated April 27, 1999, effective April 1, 1999.
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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<PAGE> 4
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 affairs,
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) A base salary, payable not less often than
monthly, at the rate of $33,333 per month,
with such increases in such rate as may be
awarded from time to time by the Board of
Directors of the Company or the Compensation
Committee, as applicable;
(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% or such other standard as may
hereafter be predetermined by the
Compensation Committee of the Company, which
standard the Compensation Committee may
later revise, as appropriate, to adjust for
acquisitions, investments or other
significant capital investments made by the
Company during the
2
<PAGE> 5
fiscal year. 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 Rhein 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 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 or disability (Section
6), Change in 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.
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<PAGE> 6
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
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
4
<PAGE> 7
to paragraph 5.02 hereof which are payable pursuant to the terms of the
applicable plan or practice.
6.02 (a) The term "Disability," as used in this Agreement, shall
mean an illness or accident which prevents Rhein from
performing his duties under this Agreement for a period of 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, except that
Rhein shall not be subject to the payment cap provided for by
the Company's short-term disability plan.
(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 IN CONTROL. Within one (1) year of a Change in Control of
the Company, as defined in paragraph 18.02, Rhein shall have the right
to terminate his employment
5
<PAGE> 8
with the Company and there shall be paid or provided to Rhein, his
dependents, beneficiaries and estate, as liquidated damages or
severance pay, or both, the following:
(a) The compensation provided for in paragraph 4.01(a)(i)
above for the month in which termination shall have occurred
at the rate being paid at the time of termination; and an
amount equal to his previous thirty six (36) 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 three (3)
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 in 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 three (3) 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 in Control and
the closing of the transaction actually resulting in the Change in
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
6
<PAGE> 9
(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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<PAGE> 10
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 in 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, or as required by law. Such confidential information
includes, without limitation, financial information, sales information,
price lists, marketing data, the identity and lists of actual and
potential customers and technical information, all to the extent that
such information is not intended by the Company for public
dissemination.
9.02. Rhein also agrees that upon leaving the Company's employ he will
not take with him, without the prior written consent of an officer
authorized to act in the matter by the Board of Directors of the
Company, any Company document, contract, internal financial or
management reports, customers list, product list, price list, catalog,
employee list, procedures, software, MIS data, drawing, blueprint,
specification or other document of
8
<PAGE> 11
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 in 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.
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
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<PAGE> 12
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.
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.
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<PAGE> 13
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.
14.07 Rhein shall be entitled to a cash payment equal to the amount of
excise taxes (i.e., the "excise tax gross-up payment") which Rhein is
required to pay pursuant to Section 4999 of the Internal Revenue Code
of 1986, as amended ("Code"), as a result of any payments made by or on
behalf of the Company or any successor thereto resulting in an "excess
parachute payment" within the meaning of Section 280G(b) of the Code.
In addition to the foregoing, the cash payment due to Rhein under this
paragraph 14.07 shall be increased by the aggregate of the amount of
federal, state and local income and excise taxes for which Rhein will
be liable on account of the cash payment to be made under this
paragraph 14.07, such that Rhein will receive the excise tax gross-up
payment net of all income and excise taxes imposed on Rhein on account
of the receipt of the excise tax gross-up payment. The computation of
this payment shall be determined, at the expense of the Company, by an
independent accounting, actuarial or consulting firm selected by the
Company. Payment of the cash amount set forth above shall be made at
such time as the Company shall determine, in its sole discretion, but
in no event later than the date five (5) business days before the due
date, without regard to any extension, for filing Rhein's federal
income tax return for the calendar year which includes the date as of
which the aforementioned "excess parachute payments" are determined.
Notwithstanding the foregoing, there shall be no duplication of
payments by the Company under this paragraph 14.07 in respect of excise
taxes under Section 4999 of the Code to the extent the Company is
making cash payments in respect of such excise taxes for any other
arrangement with Rhein. In the event that Rhein is ultimately assessed
with excise taxes under Section 4999 of the Code as a result of
payments made by the Company or any successor thereto which exceed the
amount of excise taxes used in computing Rhein's payment under this
paragraph 14.07, the Company or its successor shall indemnify Rhein for
such additional excise taxes plus any additional excise taxes, income
taxes, interest and penalties resulting from the additional excise
taxes and the indemnity hereunder.
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.
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<PAGE> 14
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, 1999, and shall supersede
any prior employment arrangement or agreement, including the Employment
Agreement dated July 29, 1997, which was effective April 1, 1997, 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 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 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
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<PAGE> 15
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
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.
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<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
ATTEST: PIONEER-STANDARD ELECTRONICS, INC.
/s/ Nancy E. Hoyt By /s/ James L. Bayman
- ---------------------------- -----------------------------------------
James L. Bayman, Chairman and Chief
Executive Officer
ATTEST:
/s/ Nancy E. Hoyt /s/ Arthur Rhein
- ---------------------------- -----------------------------------------
Arthur Rhein
14
<PAGE> 1
Exhibit 10.3
Execution Copy
EMPLOYMENT AGREEMENT
BETWEEN
PIONEER-STANDARD ELECTRONICS, INC.
AND
GREGORY T. GESWEIN
April 27, 1999
<PAGE> 2
<TABLE>
<CAPTION>
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 in Control........................................................................................5
For Cause or Voluntary Termination.......................................................................7
Without Cause............................................................................................8
Arbitration..............................................................................................9
Competition.......................................................................................................9
Confidential Information..........................................................................................9
Noninterference..................................................................................................10
Remedy...........................................................................................................10
Withholding......................................................................................................10
Notices..........................................................................................................11
General Provisions...............................................................................................11
Amendment or Modification; Waiver................................................................................12
Severability.....................................................................................................13
Successors to the Company........................................................................................13
Operation of Agreement...........................................................................................13
Enforcement Costs................................................................................................13
</TABLE>
<PAGE> 3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT between PIONEER-STANDARD ELECTRONICS,
INC., an Ohio corporation (the "Company"), and Gregory T. Geswein ("Geswein"),
dated April 27, 1999.
W I T N E S S E T H:
WHEREAS: The Company desires to retain the services of Geswein
as Senior Vice President and Chief Financial Officer, and Geswein desires to
render his services to the Company in such capacities; and
WHEREAS, The Company and Geswein desire to set forth their
mutual understanding regarding the terms of Geswein's employment with the
Company; and
WHEREAS: The Company deems this Agreement necessary at the
present time to meet the need to retain strong management;
NOW, THEREFORE, it is hereby agreed by and between the Company
and Geswein as follows:
1. Employment
The Company hereby agrees to employ Geswein, and Geswein
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 from the date hereof until April 1, 2000
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 Geswein 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, Geswein shall serve as Senior
Vice President and Chief Financial 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.
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<PAGE> 4
3.02 Throughout the Period of Employment Geswein 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 Geswein 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 affairs,
provided that such activities do not materially interfere with the
regular performance of his duties and responsibilities under this
Agreement.
3.03 Geswein's office shall be located at the corporate offices of the
Company, and Geswein 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 Geswein 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, Geswein 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 or the Compensation
Committee, as applicable;
(ii) (A) A cash incentive compensation payment
equal to the product of 40/100 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% or such other standard as may
hereafter be predetermined by the
Compensation Committee of the Company, which
standard the Compensation Committee may
later revise, as appropriate, to adjust for
acquisitions, investments or other
significant capital investments made by the
Company during the fiscal year. 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
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<PAGE> 5
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 Geswein 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 Geswein the balance of any
amount due Geswein 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 in 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); provided, however, for the fiscal
year ending March 31, 2000, Geswein shall be
entitled to receive incentive compensation
in an aggregate amount of no less than
$100,000 unless Geswein is terminated for
Cause or voluntarily terminates his
employment prior to March 31, 2000.
(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 Geswein.
4.02 During the Period of Employment Geswein 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 Geswein 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 Geswein, 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,
3
<PAGE> 6
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 Geswein 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 Geswein 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 Geswein's
Options shall be as is set forth in Geswein'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 below,
then notwithstanding the provisions of said Option Agreements, all
options (including those granted to him under the 1991 Stock Option
Plan) shall immediately be 100% vested and Geswein 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 Geswein's employment is terminated as a result of a Change
in Control, as defined in paragraph 18 below, Geswein 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 Geswein 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 Geswein 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 Geswein from
performing his duties under this Agreement for a period of six
(6) consecutive months. The Period of
4
<PAGE> 7
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 Geswein during such six
(6) month period or pursuant to any disability insurance
policy.
(b) In the event of the Disability of Geswein during the
Period of Employment, Geswein 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
Geswein 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, except that Geswein shall not be
subject to the payment cap provided for by the Company's
short-term disability plan.
(c) The amount of any payments due under this paragraph 6.02
shall be reduced by any payments to which Geswein 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 Geswein 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 Geswein 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 Geswein shall be
entitled to receive all of the payments and benefits as provided in
Section 7.04 hereof; provided, however, that in the event Geswein
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 Geswein 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 IN CONTROL. Within one (1) year of a Change in Control of
the Company, as defined in paragraph 18, Geswein shall have the right
to terminate his employment with the Company and there shall be paid or
provided to Geswein, his dependents, beneficiaries and estate, as
liquidated damages or severance pay, or both, the following:
5
<PAGE> 8
(a) (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 termination; and
(ii) (A) if such termination shall occur on or before
March 31, 2000, an amount equal to thirty six (36) times his
monthly base salary then in effect plus $300,000;
(B) if such termination shall occur on or
after April 1, 2000 but before April 1, 2001, (x) an amount
equal to the aggregate base salary paid or payable to Geswein
from the commencement of his employment with the Company
through the most recent completed month; plus (y) an amount
equal to his monthly base salary then in effect multiplied by
the difference obtained by subtracting the number of complete
months for which Geswein has been employed by the Company from
thirty six (36); plus (z) an amount equal to three (3) times
his earned incentive compensation bonus referred to in
paragraph 4.01(a)(ii) above for the fiscal year ending March
31, 2000;
(C) if such termination shall occur on or
after April 1, 2001 but before April 1, 2002, (x) an amount
equal to the aggregate base salary paid or payable to Geswein
from the commencement of his employment with the Company
through the most recent completed month; plus (y) an amount
equal to his monthly base salary then in effect multiplied by
the difference obtained by subtracting the number of complete
months for which Geswein has been employed by the Company from
thirty six (36); plus (z) an amount equal to the sum of (X)
his earned incentive cash bonus referred to in paragraph
4.01(a)(ii) above for the fiscal year ending March 31, 2000
and (Y) two (2) times his earned incentive cash bonus referred
to in paragraph 4.01(a)(ii) above for the fiscal year ending
March 31, 2001; or
(D) if such termination shall occur on or
after April 1, 2002, an amount equal to his previous thirty
six (36) 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 three (3) previously completed
fiscal years.
The amounts payable to Geswein under this
paragraph 7.02(a)(ii) shall be paid to Geswein in one payment,
immediately upon termination. Geswein 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 in Control, plus the balance of any incentive
compensation due Geswein for any prior fiscal quarters in
accordance with, and payable at the times set forth in,
paragraph 4.01(a)(ii) above.
(b) For three (3) years following the date of termination,
Geswein, 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
6
<PAGE> 9
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 Geswein, 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
Geswein, his dependents, beneficiaries and estate benefits
substantially similar to those which Geswein, 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 in Control and
the closing of the transaction actually resulting in the Change in
Control, as defined in paragraph 18, shall be deemed to be a
termination under this paragraph 7.02. An election by Geswein to
terminate his employment under the provisions of this paragraph 7.02
shall not be deemed a voluntary termination of employment by Geswein
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 Geswein's employment
shall be deemed to have been for "Cause" only if:
(a) termination of his employment shall have been the result
of Geswein'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 Geswein 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, Geswein shall have
failed to remedy such breach within thirty (30) days from his
receipt of written notice from the Company.
If Geswein's employment is terminated by the Company for
Cause, or if Geswein shall voluntarily terminate his employment with
the Company, Geswein shall be entitled to the compensation provided for
in paragraph 4.01(a)(i) through the date of such termination. Geswein
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
7
<PAGE> 10
Agreement (relating to Confidential Information), and the provisions of
Section 10 (relating to Noninterference).
7.04 WITHOUT CAUSE. Subject to compliance by Geswein 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 Geswein's
employment without Cause, there shall be paid or provided to Geswein,
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) (A) if such termination shall occur on or before
March 31, 2000, an amount equal to 1/24th of the total of (x)
twenty-four (24) times his monthly base salary then in effect
plus (y) $200,000;
(B) if such termination shall occur on or
after April 1, 2000 but before April 1, 2001, an amount equal
to 1/24th of the total of (x) an amount equal to the aggregate
base salary paid or payable to Geswein from the commencement
of his employment with the Company through the most recent
completed month; plus (y) an amount equal to his monthly base
salary then in effect multiplied by the difference obtained by
subtracting the number of complete months for which Geswein
has been employed by the Company from twenty four (24); plus
(z) an amount equal to two (2) times his earned incentive
compensation bonus referred to in paragraph 4.01(a)(ii) above
for the previously completed fiscal year; or
(C) if such termination shall occur on or
after April 1, 2001, an amount equal to 1/24th of the total of
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.
The amount payable to Geswein under (A), (B)
or (C) of this paragraph 7.04(ii) shall hereinafter be
referred to as the "Payment Amount." Such Payment Amount shall
be paid to Geswein 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. Geswein
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 Geswein 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
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<PAGE> 11
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 Geswein's employment shall be
terminated by the Company during the Period of Employment or the
Company shall withhold payments or provision of benefits because
Geswein is alleged to be engaged in activities prohibited by Sections
8, 9 or 10 of this Agreement or for any other reason, Geswein 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
Geswein shall, during the one (1) year following termination of
Geswein's employment for any reason except Change in 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 Geswein, or which is
required by law or court order to be disclosed, or information given to
Geswein by a third party not bound by any obligation of
confidentiality, Geswein 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 Geswein 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, or as required by law. Such confidential information
includes, without limitation, financial information, sales information,
price lists, marketing data, the identity and lists of actual and
potential
9
<PAGE> 12
customers and technical information, all to the extent that such
information is not intended by the Company for public dissemination.
9.02. Geswein 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 in Control as described in paragraph 7.02,
Geswein 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
Geswein 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. Geswein 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, Geswein 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 Geswein
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 Geswein 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
10
<PAGE> 13
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 Geswein: Gregory T. Geswein
10 Quail Ridge Drive
Bentleyville, 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 Geswein, 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
Geswein; 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 Geswein'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.
11
<PAGE> 14
14.04 In the event of Geswein's death or a judicial determination of
his incompetence, reference in this Agreement to Geswein 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) Geswein 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.
14.07 Geswein shall be entitled to a cash payment equal to the amount
of excise taxes (i.e., the "excise tax gross-up payment") which Geswein
is required to pay pursuant to Section 4999 of the Internal Revenue
Code of 1986, as amended ("Code"), as a result of any payments made by
or on behalf of the Company or any successor thereto resulting in an
"excess parachute payment" within the meaning of Section 280G(b) of the
Code. In addition to the foregoing, the cash payment due to Geswein
under this paragraph 14.07 shall be increased by the aggregate of the
amount of federal, state and local income and excise taxes for which
Geswein will be liable on account of the cash payment to be made under
this paragraph 14.07, such that Geswein will receive the excise tax
gross-up payment net of all income and excise taxes imposed on Geswein
on account of the receipt of the excise tax gross-up payment. The
computation of this payment shall be determined, at the expense of the
Company, by an independent accounting, actuarial or consulting firm
selected by the Company. Payment of the cash amount set forth above
shall be made at such time as the Company shall determine, in its sole
discretion, but in no event later than the date five (5) business days
before the due date, without regard to any extension, for filing
Geswein's federal income tax return for the calendar year which
includes the date as of which the aforementioned "excess parachute
payments" are determined. Notwithstanding the foregoing, there shall be
no duplication of payments by the Company under this paragraph 14.07 in
respect of excise taxes under Section 4999 of the Code to the extent
the Company is making cash payments in respect of such excise taxes for
any other arrangement with Geswein. In the event that Geswein is
ultimately assessed with excise taxes under Section 4999 of the Code as
a result of payments made by the Company or any successor thereto which
exceed the amount of excise taxes used in computing Geswein's payment
under this paragraph 14.07, the Company or its successor shall
indemnify Geswein for such additional excise taxes plus any additional
excise taxes, income taxes, interest and penalties resulting from the
additional excise taxes and the indemnity hereunder.
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 Geswein 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
12
<PAGE> 15
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
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 Geswein, 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 Geswein the benefits intended under this
Agreement. In these circumstances, the purpose
13
<PAGE> 16
of this Agreement could be frustrated. It is the intent of the Company
that Geswein 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 Geswein 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 Geswein 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, Geswein,
the benefits intended to be provided to Geswein hereunder, and that
Geswein has complied with all of his obligations under this Agreement,
the Company irrevocably authorizes Geswein from time to time to retain
counsel of his choice at the expense of the Company as provided in this
Section 19, to represent Geswein 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 Geswein entering into
an attorney-client relationship with such counsel, and in that
connection the Company and Geswein agree that a confidential
relationship shall exist between Geswein and such counsel. The
reasonable fees and expenses of counsel selected from time to time by
Geswein as hereinabove provided shall be paid or reimbursed to Geswein
by the Company on a regular, periodic basis upon presentation by
Geswein 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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<PAGE> 17
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/ Cathy Fedio /s/ Gregory T. Geswein
- ---------------------------- -----------------------------------------
Gregory T. Geswein
15
<PAGE> 1
Exhibit 10.4
Execution Copy
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
BETWEEN
PIONEER-STANDARD ELECTRONICS, INC.
AND
JOHN V. GOODGER
April 27, 1999
<PAGE> 2
<TABLE>
<CAPTION>
Table of Contents
Page
<S> <C>
Employment........................................................................................................1
Period of Employment..............................................................................................1
Compensation, Compensation Plans, Perquisites.....................................................................3
Employee Benefit Plans............................................................................................4
Effect of Death or Disability.....................................................................................5
Termination.......................................................................................................6
General..................................................................................................6
Change in Control........................................................................................6
For Cause or Voluntary Termination.......................................................................7
Without Cause............................................................................................7
Arbitration..............................................................................................8
Competition.......................................................................................................8
Confidential Information..........................................................................................8
Noninterference...................................................................................................9
Remedy............................................................................................................9
Withholding......................................................................................................10
Notices..........................................................................................................10
General Provisions...............................................................................................10
Amendment or Modification; Waiver................................................................................12
Severability.....................................................................................................12
Successors to the Company........................................................................................12
Operation of Agreement...........................................................................................12
Enforcement Costs................................................................................................13
</TABLE>
<PAGE> 3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT between
PIONEER-STANDARD ELECTRONICS, INC., an Ohio corporation (the "Company"), and
JOHN V. GOODGER ("Goodger"), dated April 27, 1999, effective April 1, 1999.
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 purposes of this Agreement, the Period of Employment shall
consist of the Period of Full Time Employment and the Period of
Transition as described in this Section 2 as follows:
(a) For the purposes of this Agreement, the Period of
Full Time Employment shall continue for a two-year period from
the effective date hereof, subject to (i) the provisions of
Section 6 below (relating to Death or Disability); (ii) the
earlier termination of employment as set forth in Section 7;
and (iii) the commencement of the Period of Transition
pursuant to Section 2(c).
(b) For purposes of this Agreement, the Period of
Transition shall continue for a three-year period from the
termination of the Period of Full Time Employment, subject to
(i) the provisions of Section 6 below (relating to Death or
Disability) and (ii) the earlier termination of employment as
set forth in Section 7.
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<PAGE> 4
(c) Not later than the February 1 next preceding the
first anniversary of this Agreement, Goodger may elect to
commence the Period of Transition effective on the first
anniversary of this Agreement. The Period of Transition shall
be a period of reduced employment responsibilities designed to
ensure Goodger's availability and support in the transition
from Goodger to his successor as Vice President, Treasurer and
Assistant Secretary of the Company.
3. Position, Duties, Responsibilities
3.01 During the Period of Full Time 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 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 Full Time 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 affairs, provided that such activities do not materially
interfere with the regular performance of his duties and
responsibilities under this Agreement.
3.03 Throughout the Period of Full Time Employment, 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. Upon the commencement of the Period of Transition, Goodger's
office shall be relocated to an appropriate office which shall be
mutually acceptable to Goodger and the Chairman and Chief Executive
Officer.
3.04 Throughout the Period of Transition, Goodger:
(a) shall serve in an advisory capacity to the Chairman and
Chief Executive Officer and shall perform such tasks as shall be
reasonably requested of him from time to time by the Chairman and Chief
Executive Officer; and
(b) shall devote no more than five (5) days per month during
normal business hours to the business affairs of the Company as
requested from time to time by the Chairman and Chief Executive
Officer, except for illness or incapacity, but nothing in this
Agreement shall preclude Goodger from serving as a director or member
of an
2
<PAGE> 5
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 affairs,
provided that such activities do not materially interfere with the
regular performance of his duties and responsibilities under this
Agreement.
4. Compensation, Compensation Plans, Perquisites
4.01 (a) For all services rendered by Goodger in any capacity during
the Period of Full Time Employment, Goodger shall be paid as
compensation:
(i) A base salary, payable not less often than
monthly, at the rate of $18,750 per month,
with such increases in such rate as may be
awarded from time to time by the Board of
Directors of the Company or the Compensation
Committee, as applicable;
(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% or such other standard as may
hereafter be predetermined by the
Compensation Committee of the Company, which
standard the Compensation Committee may
later revise, as appropriate, to adjust for
acquisitions, investments or other
significant capital investments made by the
Company during the fiscal year. 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 Goodger 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 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
in Control, (Section 7.02), or without Cause
3
<PAGE> 6
(Section 7.04), but shall be forfeited in
the event of termination for Cause or
voluntary termination (Section 7.03).
(b) For all services rendered by Goodger in any capacity
during the Period of Transition, Goodger shall be paid as
compensation a base salary, payable not less often than
monthly, at a rate of $55,000 per year, with such increases in
such rate or may be awarded from time to time by the Chief
Executive Officer of the Company.
(c) 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 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 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 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
4
<PAGE> 7
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) or paragraph
4.01(b) above, whichever is applicable, 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, if applicable, 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 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 Goodger during such six (6) 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 paragraph 4.01(a)(i) or paragraph
4.01(b) above, whichever is applicable, 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 Goodger for any prior fiscal
quarters in accordance
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<PAGE> 8
with, and payable at the times set forth in, paragraph
4.01(a)(ii) above, if applicable, and (iii) any benefits
provided pursuant to paragraph 5.02 hereof which are payable
pursuant to the terms of the applicable plan or practice,
except that Goodger shall not be subject to the payment cap
provided for by the Company's short-term disability plan.
(c) The amount of any payments due under this paragraph 6.02
shall be reduced by any payments to which Goodger may be paid
for the same period under any disability plan of the Company
or of any subsidiary or affiliate thereof.
7. Termination
7.01 GENERAL. The Company may terminate Goodger with or without cause
at any time during the Period of Employment, subject to the provisions
of this Section 7.
7.02 CHANGE IN CONTROL. Within one (1) year of a Change in 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) or
paragraph 4.01(b) above, whichever is applicable, 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 thirty six (36) 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 three (3) 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 in Control, 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.
(b) For three (3) 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
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<PAGE> 9
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 in Control and
the closing of the transaction actually resulting in the Change in
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.
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) or paragraph 4.01(b), whichever is applicable,
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) or paragraph 4.01(b) above, whichever is applicable, for the
month in which termination shall have occurred at the rate being
7
<PAGE> 10
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,
if applicable, 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 twelve (12) 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, if applicable, 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.
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 in 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
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<PAGE> 11
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, or as required by law.
Such confidential information includes, without limitation, financial
information, sales information, price lists, marketing data, the
identity and lists of actual and potential customers and technical
information, all to the extent that such information is not intended by
the Company for public dissemination.
9.02 Goodger also agrees that upon leaving the Company's employ he will
not take with him, without the prior written consent of an officer
authorized to act in the matter by the Board of Directors of the
Company, any Company document, contract, internal financial or
management reports, customers list, product list, price list, catalog,
employee list, procedures, software, MIS data, drawing, blueprint,
specification or other document of the Company, its subsidiaries,
affiliates and divisions, which is of a confidential nature relating to
the Company, its subsidiaries, affiliates and divisions, or, without
limitation, relating to its or their methods of purchase or
distribution, or any description of any trade secret, formulae or
secret processes.
10. Noninterference
Except for Change in 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
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<PAGE> 12
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:
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
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<PAGE> 13
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.
14.07 Goodger shall be entitled to a cash payment equal to the amount
of excise taxes (i.e., the "excise tax gross-up payment") which Goodger
is required to pay pursuant to Section 4999 of the Internal Revenue
Code of 1986, as amended ("Code"), as a result of any payments made by
or on behalf of the Company or any successor thereto resulting in an
"excess parachute payment" within the meaning of Section 280G(b) of the
Code. In addition to the foregoing, the cash payment due to Goodger
under this paragraph 14.07 shall be increased by the aggregate of the
amount of federal, state and local income and excise taxes for which
Goodger will be liable on account of the cash payment to be made under
this paragraph 14.07, such that Goodger will receive the excise tax
gross-up payment net of all income and excise taxes imposed on Goodger
on account of the receipt of the excise tax gross-up payment. The
computation of this payment shall be determined, at the expense of the
Company, by an independent accounting, actuarial or consulting firm
selected by the Company. Payment of the cash amount set forth above
shall be made at such time as the Company shall determine, in its sole
discretion, but in no event later than the date five (5) business days
before the due date, without regard to any extension, for filing
Goodger's federal income tax return for the calendar year which
includes the date as of which the aforementioned "excess parachute
payments" are determined. Notwithstanding the foregoing, there shall be
no duplication of payments by the Company under this paragraph 14.07 in
respect of excise taxes under Section 4999 of the Code to the extent
the Company is making cash payments in respect of such excise taxes for
any other arrangement with Goodger. In the event that Goodger is
ultimately assessed with excise taxes under Section 4999 of the Code as
a result of payments made by the Company or any successor thereto which
exceed the amount of excise taxes used
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<PAGE> 14
in computing Goodger's payment under this paragraph 14.07, the Company
or its successor shall indemnify Goodger for such additional excise
taxes plus any additional excise taxes, income taxes, interest and
penalties resulting from the additional excise taxes and the indemnity
hereunder.
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
This Agreement is effective April 1, 1999, and shall supersede any
prior employment arrangement or agreement, including the Employment
Agreement dated July 29, 1997, which was effective April 1, 1997, 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 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
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<PAGE> 15
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 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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<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
ATTEST: PIONEER-STANDARD ELECTRONICS, INC.
/s/ Nancy E. Hoyt By /s/ James L. Bayman
- ---------------------------- -----------------------------------------
James L. Bayman, Chairman and Chief
Executive Officer
ATTEST:
/s/ Nancy E. Hoyt /s/ John V. Goodger
- ---------------------------- -----------------------------------------
John V. Goodger
14
<PAGE> 1
Exhibit 10.5
PIONEER-STANDARD ELECTRONICS, INC.
1999 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
Pioneer-Standard Electronics, Inc., hereinafter called the "Company,"
hereby adopts a stock option plan for eligible directors of the Company pursuant
to the following terms and provisions:
1. PURPOSE OF THE PLAN. The purpose of this plan, hereinafter called
the "Plan," is to provide additional incentive to those directors of the Company
who are not employees of the Company or any of its subsidiaries or affiliates by
encouraging them to acquire a new or an additional share ownership in the
Company, thus increasing their proprietary interest in the Company's business
and providing them with an increased personal interest in the Company's
continued success and progress. These objectives will be promoted through the
grant of options to acquire the Company's Common Shares, without par value (the
"Common Shares"), pursuant to the terms of the Plan. Only those directors who
meet the qualifications stated above are eligible for and shall receive options
under this Plan.
2. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective upon
adoption by the Board of Directors on April 27, 1999, subject to approval by
holders of a majority of the outstanding shares of voting capital stock of the
Company. In the event the Plan is not so approved within twelve (12) months
after the date the Plan is adopted by the Board of Directors, the Plan and the
options granted hereunder shall be null and void.
3. SHARES SUBJECT TO THE PLAN. The shares to be issued upon the
exercise of the options granted under the Plan shall be Common Shares of the
Company. Either treasury or authorized and unissued Common Shares, or both, as
the Board of Directors shall from time to time determine, may be so issued.
Common Shares which are the subject of any lapsed, expired or terminated options
may be made available for reoffering under the Plan. If an option granted under
this Plan is exercised pursuant to the terms and conditions of subsection 5(b),
any Common Shares which are the subject thereof shall not thereafter be
available for reoffering under the Plan.
Subject to the provisions of the next succeeding paragraph of this
Section 3, the aggregate number of Common Shares for which options may be
granted under the Plan shall be one hundred five thousand (105,000) Common
Shares.
In the event that, after the date of adoption of the Plan by the Board
of Directors, the Common Shares should, as a result of a stock split, stock
dividend, combination or exchange of shares, exchange for other securities,
reclassification, reorganization, redesignation, merger, consolidation,
recapitalization, spin-off or other such change, be increased or decreased or
changed into or exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation, then (i) there shall
automatically be substituted for each Common Share subject to an unexercised
option (in whole or in part) granted under the Plan and each Common Share made
available for grant to each eligible Director pursuant to Section 4 hereof, the
number and kind of shares of stock or other securities into which each
outstanding Common Share shall be changed or for which each such Common Share
shall be exchanged,
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<PAGE> 2
(ii) the option price per Common Share or unit of securities shall be increased
or decreased proportionately so that the aggregate purchase price for the
securities subject to the option shall remain the same as immediately prior to
such event, and (iii) the Board shall make such other adjustments as may be
appropriate and equitable to prevent enlargement or dilution of option rights.
Any such adjustment may provide for the elimination of fractional shares.
4. GRANT OF OPTIONS. Subject to the terms of the Plan, options shall be
granted to each eligible director annually on the date of the Annual Meeting of
Shareholders of the Company for the purchase of seven thousand five hundred
(7,500) Common Shares by each such director at an option price per share equal
to the fair market value of a Common Share of the Company on the date said
options are granted. Each such option granted shall be immediately exercisable
in full upon grant and shall remain exercisable for a period of ten (10) years
from the date of grant, subject to the provisions of section 5 hereof.
5. OPTION PROVISIONS.
(a) Limitation on Exercise and Transfer of Options. Only the
director to whom the option is granted may exercise the same except
where a guardian or other legal representative has been duly appointed
for such director and except as otherwise provided in the case of such
director's death. No option granted hereunder shall be transferable
otherwise than by the Last Will and Testament of the director to whom
it is granted or, if the director dies intestate, by the applicable
laws of descent and distribution. No option granted hereunder may be
pledged or hypothecated, nor shall any such option be subject to
execution, attachment or similar process.
(b) Exercise of Option. Each option granted hereunder may be
exercised in whole or in part from time to time during the option
period, but this right of exercise shall be limited to whole shares.
Options shall be exercised by the optionee giving written notice to the
Secretary or the Vice President, Treasurer and Assistant Secretary of
the Company at its principal business office, by certified mail, return
receipt requested, of the intention to exercise the same and the number
of Common Shares with respect to which the Option is being exercised
(the "Notice of Exercise of Option") accompanied by full payment of the
purchase price in cash or in whole or in part in Common Shares having a
fair market value on the date before the option is exercised equal to
that portion of the purchase price for which payment in cash is not
made. Such Notice of Exercise of Option shall be deemed delivered upon
deposit into the mails.
(c) Termination of Directorship. If the optionee ceases to be
a director of the Company as a result of his or her voluntary
resignation during his or her term or his or her removal from the Board
of Directors with cause (as determined in the sole discretion of the
Board of Directors), his or her option shall terminate on the effective
date of termination of his or her directorship and neither he or she
nor any other person shall have any right after such date to exercise
all or any part of such option. If the optionee ceases to be a director
of the Company for any reason other than the foregoing, including death
or disability or not standing for reelection as a director, then the
option will remain exercisable, subject to the terms and provisions
contained herein and in the Option Agreement pursuant to which such
option was granted, until the earlier of (i) the tenth
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<PAGE> 3
anniversary of the date on which the option was granted or (ii) the
second anniversary of the effective date of termination, by the
optionee or, in the case of the optionee's death, by the optionee's
estate or by the person designated in the optionee's Last Will and
Testament or to whom transferred by the applicable laws of descent and
distribution.
(d) Option Agreements. Options granted under the Plan shall be
subject to the further terms and provisions of an Option Agreement, the
execution of which by each optionee shall be a condition to the receipt
of an option.
6. INVESTMENT REPRESENTATION, APPROVALS AND LISTING. The options to be
granted hereunder shall be further conditioned upon receipt of the following
investment representation from the optionee:
"I further agree that any Common Shares of Pioneer-Standard
Electronics, Inc., which I may acquire by virtue of this option shall
be acquired for investment purposes only and not with a view to
distribution or resale; provided, however, that this restriction shall
become inoperative in the event the said Common Shares subject to this
option shall be registered under the Securities Act of 1933, as
amended, or in the event there is presented to Pioneer-Standard
Electronics, Inc. an opinion of counsel satisfactory to
Pioneer-Standard Electronics, Inc., to the effect that the offer or
sale of the Common Shares subject to this option may lawfully be made
without registration under the Securities Act of 1933, as amended."
The Company shall not be required to issue any certificate or
certificates for Common Shares upon the exercise of an option granted under the
Plan prior to (i) the obtaining of any approval from any governmental agency
which the Company shall, in its sole discretion, determine to be necessary or
advisable, (ii) the admission of such Common Shares to listing on any national
securities exchange or transaction reporting system on which the Common Shares
may be listed, (iii) the completion of any registration or other qualification
of the Common Shares under any state or federal law or ruling or regulations of
any governmental body which the Company shall, in its sole discretion, determine
to be necessary or advisable or the determination by the Company, in its sole
discretion, that any registration or other qualification of the Common Shares is
not necessary or advisable and (iv) the obtaining of an investment
representation from the optionee in the form stated above or in such other form
as the Company, in its sole discretion, shall determine to be adequate.
7. GENERAL PROVISIONS. For all purposes of this Plan the fair market
value of a Common Share shall be determined as follows: so long as the Common
Shares of the Company are listed upon an established stock exchange or exchanges
or on the Nasdaq National Market such fair market value shall be determined to
be the highest closing price of such Common Shares on such stock exchange or
exchanges or on such transaction reporting system on the day the option is
granted (or the day before the Common Shares are tendered as payment, in the
case of determining fair market value for that purpose) or if no sale of such
Common Shares shall have been made on any stock exchange or transaction
reporting system on that day, then on the next preceding day on which there was
a sale of such Common Shares; and during any period of time as such Common
Shares are not listed upon an established stock exchange or the Nasdaq National
Market the fair market value per share shall be the last sales price of such
Common
3
<PAGE> 4
Shares in the over-the-counter market on the day the option is granted (or the
day before the shares are tendered as payment, in the case of determining fair
market value for that purpose), as reported by The Nasdaq Stock Market Inc.
The liability of the Company under the Plan and any distribution of
Common Shares made hereunder is limited to the obligations set forth herein with
respect to such distribution and no term or provision of the Plan shall be
construed to impose any liability on the Company in favor of any person with
respect to any loss, cost or expense which the person may incur in connection
with or arising out of any transaction in connection with the Plan, including,
but not limited to, any liability to any Federal, state, or local tax authority
and/or any securities regulatory authority.
Nothing in the Plan or in any option agreement shall confer upon any
optionee any right to continue as a director of the Company, or to be entitled
to any remuneration or benefits not set forth in the Plan or such option.
Nothing contained in the Plan or in any option agreement shall be
construed as entitling any optionee to any rights of a shareholder as a result
of the grant of an option until such time as Common Shares are actually issued
to such optionee pursuant to the exercise of an option.
The Plan may be assumed by the successors and assigns of the Company.
The cash proceeds received by the Company from the issuance of Common
Shares pursuant to the Plan will be used for general corporate purposes or in
such other manner as the Board of Directors deems appropriate.
The expense of administering the Plan shall be borne by the Company.
The captions and section numbers appearing in the Plan are inserted
only as a matter of convenience. They do not define, limit, construe or describe
the scope or intent of the provisions of the Plan.
8. TERMINATION OF THE PLAN. The Plan shall terminate two years from the
date of its adoption by the Board of Directors of the Company and thereafter no
options shall be granted hereunder. All options outstanding at the time of
termination of the Plan shall continue in full force and effect in accordance
with and subject to their terms and the terms and conditions of the Plan.
9. TAXES. A participant may satisfy any federal, state and local tax
obligations associated with the exercise of an option by the transfer to the
Company of Common Shares or a combination of cash and Common Shares, or by
requesting the Company to withhold a sufficient number of Common Shares to
satisfy such tax obligations. If a participant does not satisfy his or her tax
obligations in the manner described in the preceding sentence, the Company may
withhold, or require a participant to remit to the Company, an amount of cash
sufficient to pay any federal, state and local taxes associated with the
exercise of an option.
10. VENUE. The venue of any claim brought hereunder by an eligible
Director shall be Cleveland, Ohio.
4
<PAGE> 5
11. CHANGES IN GOVERNING RULES AND REGULATIONS. All references herein
to the Internal Revenue Code of 1986, as amended, or sections thereof, or to
rules and regulations of the Department of Treasury or of the Securities and
Exchange Commission, shall mean and include the Code sections thereof and such
rules and regulations as are now in effect or as they may be subsequently
amended, modified, substituted or superseded.
5
<PAGE> 1
Exhibit 10.6
PIONEER-STANDARD ELECTRONICS, INC.
1999 RESTRICTED STOCK PLAN
This Plan is hereby adopted by Pioneer-Standard Electronics,
Inc., a corporation organized and existing under and by virtue of the laws of
the State of Ohio (hereinafter referred to as the "Company");
W I T N E S S E T H:
WHEREAS, in consultation with and upon the recommendation of
Ernst & Young LLP, the Company has determined to provide an additional
retirement benefit for its senior executives;
WHEREAS, Ernst & Young LLP has determined that, in light of
the nearing retirement of the Chairman and Chief Executive Officer and the Vice
President, Treasurer and Assistant Secretary of the Company, the funding of such
a benefit under a supplemental executive retirement plan ("SERP") would have a
substantial negative effect on the Company's cash flow;
WHEREAS, in order to avoid such negative effect, Ernst & Young
LLP recommended that a separate restricted stock plan be established in order to
provide a retirement benefit for the Chairman and Chief Executive Officer and
the Vice President, Treasurer and Assistant Secretary of the Company that is
substantially equivalent to the benefit that such senior executives would have
received as participants in the SERP;
WHEREAS, it was determined that the provision of a retirement
benefit for the Chairman and Chief Executive Officer and the Vice President,
Treasurer and Assistant Secretary of the Company through a restricted stock plan
would additionally benefit the Company by providing an incentive for such senior
executives to continue their employment with the Company;
<PAGE> 2
WHEREAS, in light of the foregoing considerations, the Board
of Directors and the Compensation Committee of the Board of Directors have
approved the establishment of a restricted stock plan;
NOW, THEREFORE, the Company hereby adopts the Pioneer-Standard
Electronics, Inc. 1999 Restricted Stock Plan (hereinafter referred to as the
"Plan") effective April 27, 1999, as follows:
ii
<PAGE> 3
ARTICLE 1
NAME AND PURPOSE
1.1 Name. The name of this Plan shall be the Pioneer-Standard
Electronics, Inc. 1999 Restricted Stock Plan.
1.2 Purpose. The Plan will be maintained by the Company in
order to provide a retirement benefit and retention incentive for the Chairman
and Chief Executive Officer and the Vice President, Treasurer and Secretary of
the Company by awarding Shares to such Senior Executives of the Company under
the terms and conditions of and in accordance with this Plan.
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<PAGE> 4
ARTICLE 2
DEFINITIONS
Unless the context otherwise indicates, the following words
used herein shall have the following meanings whenever used in this instrument:
2.1 Beneficiary. The word "Beneficiary" shall mean the person,
persons, entity, or entities so designated, or deemed to be designated, by a
Participant pursuant to Article 10.
2.2 Board. The word "Board" shall mean the Board of Directors
of the Company.
2.3 Cause. A Participant's Termination of Employment shall be
deemed to have been for "Cause" only if:
(a) termination of his employment shall have been the
result of the Participant'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 the Participant during the
Period of Employment (as defined in his Employment
Agreement) of the provisions of paragraph 3.03 of
such Employment Agreement, relating to devotion of
full time to the affairs of the Company, Section 8 of
such Employment Agreement relating to Competition,
Section 9 of such Employment Agreement relating to
Confidential Information, or Section 10 of such
Employment Agreement relating to Noninterference, and
such breach results in demonstrable significant
injury to the Company, and with respect to any
alleged breach of such paragraph 3.03, the
Participant shall have failed to remedy such breach
within thirty (30) days from his receipt of written
notice from the Company.
2.4 Change in Control. The words "Change in Control" shall
mean the occurrence of any of the following events:
(a) all or substantially all of the assets of the Company
are sold or transferred to another corporation or
entity, or the Company is
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<PAGE> 5
merged, consolidated or reorganized with or into
another corporation or entity, with the result that
upon conclusion of the transaction less than
fifty-one percent (51%) of the outstanding securities
entitled to vote generally in the election of
Directors ("Voting Stock") or other capital interests
of the acquiring corporation or entity are owned,
directly or indirectly, by the holders of Voting
Stock of the Company generally prior to the
transaction; or
(b) there is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report),
each as promulgated pursuant to the Exchange Act,
disclosing that any person (as the term "person" is
used in Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act) has become the beneficial owner (as the
term "beneficial owner") is defined under Rule 13d-3
or any successor rule or regulation promulgated under
the Exchange Act) of securities representing twenty
percent (20%) or more of the combined voting power of
the then-outstanding Voting Stock of the Company; or
(c) the Company shall file a report or proxy statement
with the Securities and Exchange Commission pursuant
to the Exchange Act disclosing in response to Item 1
of Form 8-K thereunder or Item 6(e) of Schedule 14A
thereunder (or any successor schedule, form or report
or item therein) that a change in control of the
Company has or may have occurred or will or may occur
in the future pursuant to any then-existing contract
or transaction; or
(d) the individuals who, at the beginning of any period
of two consecutive calendar years, constituted the
Directors of the Company cease for any reason to
constitute at least a majority thereof unless the
nomination for election by the Company's shareholders
of each new Director of the Company was approved by a
vote of at least two-thirds of the Directors of the
Company still in office who were Directors of the
Company at the beginning of any such period.
2.5 Code. The word "Code" shall mean the Internal Revenue Code
of 1986, as amended, and any regulations or other pronouncements promulgated
thereunder. Any reference made herein to a specific Code Section shall be deemed
to include any successor Code Section having the same or a similar purpose.
2-2
<PAGE> 6
2.6 Committee. The word "Committee" shall mean the
Compensation Committee of the Board, or the successor of such Committee, which
satisfies the requirements of Section 7.1 hereof.
2.7 Company. The word "Company" shall mean Pioneer-Standard
Electronics, Inc. and any successor corporation or business organization which
shall assume the duties and obligations of Pioneer-Standard Electronics, Inc.
under this Plan.
2.8 Continuous Service. The words "Continuous Service" shall
mean for any Participant the period during which he is or has been an Employee
of the Company. Such period shall be measured from his date of hire (which date
shall be considered to be the first day on which the Employee performs any
service for the Company for which he is directly or indirectly compensated as an
Employee) until his date of Termination of Employment.
2.9 Director. The word "Director" shall mean a member of the
Board of Directors of the Company.
2.10 Disability. The word "Disability" shall mean an illness
or accident which prevents the Participant from performing his duties with the
Company for a period of six (6) consecutive months. His Termination of
Employment shall be deemed to have occurred as of the close of business on the
last day of such six (6) month period.
2.11 Effective Date. The words "Effective Date" shall mean the
date on which this Plan became effective, which date is April 27, 1999.
2.12 Employee. The word "Employee" shall mean any common-law
employee of the Company, whether or not an officer or member of the Board, but
excluding any temporary employee and any person serving the Company only in the
capacity of a member of the Board.
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<PAGE> 7
2.13 Employment Agreement. The words "Employment Agreement"
shall mean, in the case of a Participant, that certain Employment Agreement
between the Participant and the Company dated as of the Effective Date and any
successor thereto. References in this Plan to specific sections or articles of
an Employment Agreement shall be deemed also to be references to successor
provisions dealing with the same subject, however numbered.
2.14 Escrow Agreement. The words "Escrow Agreement" shall mean
any escrow agreement entered into between the Company and an escrow agent for
the purpose of holding Shares thereunder.
2.15 Exchange Act. The words "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
2.16 Participant. The word "Participant" shall mean James L.
Bayman and John V. Goodger, individually, commencing with the Effective Date and
thereafter, in each case, while he remains a Participant hereunder.
2.17 Period of Transition. The words "Period of Transition"
shall mean a period of reduced employment responsibilities designed to ensure a
Participant's availability and support in the transition from the Participant to
his successor as an executive officer of the Company.
2.18 Plan. The word "Plan" shall mean the Pioneer-Standard
Electronics, Inc. 1999 Restricted Stock Plan as set forth herein, as in effect
on the Effective Date, and as it may be later amended.
2.19 Plan Year. The words "Plan Year" shall mean the period
beginning on the Effective Date and ending on March 31, 2000, and each 12-month
period beginning on April 1 and ending on March 31 thereafter while the Plan
remains in existence.
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<PAGE> 8
2.20 SSAT. The acronym "SSAT" shall mean The Pioneer Stock
Benefit Trust established pursuant to the Pioneer-Standard Electronics, Inc.
Share Subscription Agreement and Trust effective as of July 2, 1996.
2.21 Senior Executive. The words "Senior Executive" shall mean
James L. Bayman and John V. Goodger. A Participant who incurs a Disability at a
time when he is a Senior Executive shall be deemed to continue to be a Senior
Executive during the period of his Disability until his Termination of
Employment. A Participant shall automatically cease to be a Senior Executive on
his date of Termination of Employment.
2.22 Shareholders. The word "Shareholders" shall mean the
individuals or entities that own one or more of the Company's Common Shares.
2.23 Shares. The word "Shares" shall mean common shares,
without par value, of the Company.
2.24 Termination of Employment. The words "Termination of
Employment" shall mean the cessation of a Participant's service with the Company
as an Employee for any reason whatsoever, whether voluntary or involuntary,
including by reason of retirement, death, or Disability.
2.25 Vested Percentage. The words "Vested Percentage" shall
mean for any Participant a percentage determined on the basis of his Continuous
Service during his Period of Transition in accordance with the following table:
<TABLE>
<CAPTION>
If his Continuous Service ends as follows: His Vested Percentage Shall be:
------------------------------------------ -------------------------------
<S> <C>
Before March 31 of the first year of his 0%
Period of Transition
On or after such first March 31 but before 33-1/3% March 31 of
the second year of his Period of Transition
</TABLE>
2-5
<PAGE> 9
<TABLE>
<S> <C>
On or after such second March 31 but 66-2/3%
before March 31 of the third year
of his Period of Transition
On or after such third March 31 100%
</TABLE>
Notwithstanding the foregoing, the Vested Percentage of a
Participant who has a Termination of Employment as a result of his death,
Disability or termination by the Company without "Cause" shall be one hundred
percent (100%) as of the date of such Termination of Employment. In addition,
the Vested Percentage of a Participant shall be one hundred percent (100%) as of
the date of termination of the Plan or upon a Change in Control.
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<PAGE> 10
ARTICLE 3
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility. As of the Effective Date, the following two
Senior Executives are eligible to participate in the Plan:
(a) James L. Bayman; and
(b) John V. Goodger.
3.2 Participation. As of the Effective Date, the following two
eligible Senior Executives shall become Participants in the Plan:
(a) James L. Bayman; and
(b) John V. Goodger.
Each Senior Executive shall remain a Participant in the Plan during his
continued employment with the Company. (a)
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<PAGE> 11
ARTICLE 4
AWARDS OF SHARES
4.1 Award. As of the Effective Date, Shares are hereby awarded
to each Participant hereunder as follows:
James L. Bayman 611,567
John V. Goodger 112,231
-------
Total 723,798
4.2 Source of Shares. The Shares which are hereby awarded to
the Participants under this Plan shall be obtained from the SSAT.
4.3 Maximum Number of Shares. Subject to the provisions of
Section 4.4, the aggregate number of Shares which may be issued under this Plan
shall not exceed Seven Hundred Twenty-Three Thousand, Seven Hundred Ninety-Eight
(723,798) Shares.
4.4 Effect of Changes in Shares. In the event that after the
date of adoption of the Plan by the Board, the Shares should, as a result of a
stock split, stock dividend, combination or exchange of shares, exchange for
other securities, reclassification, reorganization, redesignation, merger,
consolidation, recapitalization or other such change, be increased or decreased
or changed into or exchanged for a different number or kind of shares of stock
or other securities of the Company or of another corporation, then the Shares
awarded hereunder shall be subject to such change as any other outstanding
Shares.
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<PAGE> 12
ARTICLE 5
TRANSFER RESTRICTIONS
5.1 In General. The Shares awarded hereunder shall not be
sold, transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated (and any such sale, transfer or other disposition, pledge or other
hypothecation being hereinafter referred to as "to dispose of" or "a
disposition") until the earliest of (a) the lapse of the right of the Company to
a return of such Shares pursuant to Section 5.2 below; (b) a Change in Control
with respect to the Company; or (c) the termination of the Plan. An appropriate
number of Shares may be sold by a Participant (or, at the Participant's request,
withheld by the Company) after the date that any Shares become nonforfeitable
under Section 5.2 below to enable such Participant to pay any applicable taxes
incurred as a result of such Shares becoming nonforfeitable.
5.2 Forfeiture. Any Shares awarded hereunder shall be subject
to forfeiture as of the Participant's Termination of Employment for any reason
except to the extent of the Participant's Vested Percentage in such Shares. Any
Shares forfeited in accordance with this Section 5.2 shall be sold on the open
market as soon as reasonably practicable and subject to any applicable legal
requirements, and the proceeds from such sale shall be utilized for one or more
purposes authorized by the SSAT.
5.3 Change in Control. The Committee has the sole authority to
determine whether a Change in Control has occurred. If the Committee shall
determine that a Change in Control has occurred, it shall cause to be issued a
written notice to the Participants of such fact and shall cause a certificate or
certificates representing all Shares owned by the Participants which shall have
become nonforfeitable to be delivered to the Participants as soon as practicable
after such notice.
5-1
<PAGE> 13
5.4 Plan Termination. If the Plan is terminated, the Committee
shall cause to be issued a written notice to the Participants of such fact and
shall cause a certificate or certificates representing all Shares owned by the
Participants which have become nonforfeitable to be delivered to the
Participants as soon as practicable after such notice.
5.5 Disability. The Committee has the sole authority to
determine whether a Disability has occurred. If the Committee shall determine
that a Disability has occurred, it shall cause to be issued a written notice to
the disabled Participant of such fact and shall cause a certificate or
certificates representing all Shares owned by Participant which have become
nonforfeitable to be delivered to such Participant as soon as practicable after
such notice.
5.6 Death. Upon notification of the death of a Participant,
the Committee shall cause to be issued a written notice to the Beneficiary of
the Participant determined pursuant to Article 10 hereof of such fact and shall
cause a certificate or certificates representing all Shares which have become
nonforfeitable to be delivered to such Beneficiary as soon as practicable after
such notice.
5.7 Rights with Respect to the Shares. Notwithstanding
retention of certificates representing some or all of the Shares awarded
hereunder by the Company or an agent of the Company, the Participant in whose
name certificates are issued shall have all rights (including dividend and
voting rights) with respect to the Shares represented by such certificates,
subject to the terms, conditions and restrictions specified under this Plan, and
the Shares represented by such certificates shall be considered as issued and
outstanding.
5-2
<PAGE> 14
ARTICLE 6
ESCROW AGREEMENT AND LEGENDS
In order to enforce the restrictions imposed upon Shares
issued hereunder, the Committee also may require any Participant to enter into
an Escrow Agreement providing that the certificates representing Shares issued
pursuant to this Plan shall remain in the physical custody of an escrow agent
until any or all of the restrictions imposed pursuant to this Plan have
terminated. Alternatively, the Committee may make such arrangements in lieu of
an Escrow Agreement as it shall deem appropriate hereunder. The Committee may
impose such additional restrictions on any Shares awarded pursuant to the Plan
as it may deem advisable, including, without limitation, restrictions under the
Securities Act of 1933, as amended, as required by the New York Stock Exchange
or any other stock exchange or reporting system upon which such Shares are then
listed or under any state blue sky or securities laws applicable to such Shares.
In addition, the Committee may cause a legend or legends to be placed on any
certificates representing Shares issued pursuant to this Plan, which legend or
legends shall make appropriate reference to the various restrictions imposed
hereunder or by law.
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<PAGE> 15
ARTICLE 7
ADMINISTRATION OF THE PLAN
7.1 Composition of Committee. This Plan shall be administered
by the Committee, which shall consist of at least three members of the Board,
each of whom shall be a "non-employee director" within the meaning of Rule 16b-3
promulgated under the Exchange Act. The Committee may, from time to time,
designate one or more persons or agents to carry out any or all of its
administrative duties hereunder, provided that none of the duties required to be
performed by the Committee under Rule 16b-3 promulgated under the Exchange Act
or Section 7.2 of the Plan may be delegated to any other person.
7.2 Duties and Rights of Committee. The Committee shall
interpret the Plan, and to the extent and in the manner contemplated herein, it
shall exercise the discretion granted to it. The Committee may issue from time
to time such rules and interpretations as in its judgment are necessary in order
to administer the Plan effectively. The Committee shall have the exclusive right
to prescribe the form, which shall be consistent with this Plan, of the
instruments evidencing any award and issuance under this Plan and the legend, if
any, to be affixed to the certificates representing Shares issued under this
Plan.
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<PAGE> 16
ARTICLE 8
AMENDMENTS
This Plan may be amended at any time by the Board; provided,
however, that if this Plan shall have received Shareholder approval, no such
amendment shall increase the maximum number of Shares that may be issued
pursuant to this Plan, except pursuant to Section 4.4 hereof, without
Shareholder approval of such amendment; and provided further, that no amendment
to this Plan shall impair the rights of Participants who have been awarded
Shares.
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<PAGE> 17
ARTICLE 9
DURATION AND TERMINATION
This Plan shall terminate on March 31, 2005, or such earlier
date as may be determined by the Board; provided, however, that such termination
shall not impair the rights of any Participant hereunder with respect to any
grant of Shares made prior to such termination. Notwithstanding anything in the
foregoing to the contrary, this Plan shall terminate and all awards of Shares
under the Plan shall be revoked if, within twelve (12) months of the date of its
adoption by the Board, the Plan does not receive the approval of a majority of
the outstanding Shares present in person or by proxy and entitled to vote at a
meeting of Shareholders of the Company.
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<PAGE> 18
ARTICLE 10
BENEFICIARY DESIGNATION
Unless a Participant has designated a Beneficiary in
accordance with the provisions of the following sentence, any Shares that become
unrestricted on account of the death of a Participant shall be distributed to
the person or persons in the first of the following classes in which there are
any survivors of such Participant, which person or persons shall be deemed to
have been designated a Beneficiary or Beneficiaries by the Participant:
(a) his spouse at the time of death;
(b) his children per stirpes;
(c) his parents; and
(d) the executor or administrator of his estate.
Instead of having any Shares that become payable on account of a Participant's
death paid to a Beneficiary as determined above, a Participant may designate a
Beneficiary or Beneficiaries to receive such Shares.
10-1
<PAGE> 1
Exhibit 10.7
PIONEER-STANDARD ELECTRONICS, INC.
1999 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
OPTION AGREEMENT
This Option Agreement (the "Agreement") is entered into as of
this ___ day of _____________, _____, by and between Pioneer-Standard
Electronics, Inc., an Ohio corporation (the "Company"), and __________________
(the "Optionee").
WHEREAS, on April 27, 1999, the Board of Directors of the
Company (the "Board") adopted a stock option plan known as the Pioneer-Standard
Electronics, Inc. 1999 Stock Option Plan for Outside Directors (the "Plan") and
recommended that the Plan be approved by the Company's shareholders; and
WHEREAS, on July 27, 1999, the shareholders of the Company
approved the Plan; and
WHEREAS, the Company has granted the Optionee an Option (as
defined below) to purchase the number of the Company's common shares, without
par value (the "Common Shares"), as set forth below; and
WHEREAS, the Company and the Optionee desire to enter into a
written agreement with respect to the Option in accordance with the Plan; and
WHEREAS, capitalized terms not defined herein shall have the
meanings ascribed to them in the Plan;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein the parties hereto agree as follows.
1. INCORPORATION OF PLAN. This Option is granted pursuant to
the provisions of the Plan, and the terms and definitions of the Plan are
incorporated herein by reference and made a part hereof. A copy of the Plan has
been delivered to, and receipt is hereby acknowledged by, the Optionee.
Notwithstanding anything in this Agreement to the contrary, to the extent the
terms of this Agreement conflict with or otherwise attempt to exceed the
authority set forth under the Plan, the Plan shall govern and control in all
respects.
2. GRANT OF OPTION. Subject to the terms, restrictions,
limitations and conditions stated herein and the terms of the Plan, the Company
hereby evidences its grant to the Optionee of the right and option to purchase
all or any part of the number of Common Shares set forth on SCHEDULE A hereto
and incorporated herein by reference (the "Option"). The Option shall expire and
shall not be exercisable after the date specified on SCHEDULE A as the
expiration date or on such earlier date as determined pursuant to the Plan.
<PAGE> 2
3. PURCHASE PRICE. The price per share to be paid by the
Optionee for the Common Shares subject to this Option (the "Exercise Price")
shall be as specified on SCHEDULE A.
4. RESTRICTIONS ON TRANSFERABILITY. No Option shall be
transferable by the Optionee other than by will or the laws of descent and
distribution.
5. NOTICE OF EXERCISE OF OPTION. This Option may be exercised
by provision of a written notice (in substantially the form of the Notice of
Exercise of Option attached hereto as SCHEDULE B) signed by the person or
persons exercising the Option, and delivered or mailed to the Company as
specified in Section 11 hereof to the attention of the Secretary or the Vice
President, Treasurer and Assistant Secretary. Such notice shall (a) specify the
number of Common Shares which the person or persons exercising the Option then
elects to purchase hereunder, (b) contain such information as may be reasonably
required pursuant to Section 9 hereof; (c) if exercised by any person or persons
other than the Optionee, be accompanied by appropriate proof of the right of
such person or persons to exercise the Option; and (d) be accompanied by (i)
cash or check payable to the Company in payment of the total Exercise Price
applicable to such Common Shares as provided herein, or (ii) Common Shares,
previously owned by the Optionee and duly endorsed or accompanied by stock
transfer powers, having a fair market value (as determined under the Plan) equal
to the total Exercise Price applicable to such Common Shares purchased
hereunder, or (iii) cash or check payable to the Company accompanied by the
number of Common Shares previously owned by the Optionee and duly endorsed or
accompanied by stock transfer powers having a fair market value (as determined
under the Plan) that, when added to the amount of the cash or check, equals the
total Exercise Price applicable to such Common Shares purchased hereunder,
subject to compliance with applicable federal and state laws. Upon receipt of
such Notice of Exercise of Option and accompanying payment, and subject to the
terms, restrictions, limitations and conditions stated herein and the terms of
the Plan, the Company agrees to issue to the person or persons exercising the
Option certificates representing the Common Shares as to which the Option is so
exercised, registered in the name of the person or persons exercising the
Option.
6. PERSONS ENTITLED TO EXERCISE. During his lifetime, no
person other than the Optionee, or if a guardian or legal representative has
been appointed for the Optionee, the Optionee's guardian or legal
representative, as the case may be, shall be entitled to exercise the Option.
After the Optionee's death, no person other than the person or persons to whom
the Option is transferred pursuant to the Optionee's Last Will and Testament, or
if the Optionee died intestate, as provided by the applicable laws of descent
and distribution, shall be entitled to exercise the Option.
7. ADJUSTMENTS. The number of Common Shares subject to this
Option, the Exercise Price and other matters are subject to adjustment during
the term of this Option in accordance with the terms of the Plan.
8. DATE OF GRANT. This Option was granted by the Committee on
the date set forth in SCHEDULE A (the "Date of Grant").
2
<PAGE> 3
9. COMPLIANCE WITH REGULATORY MATTERS. The Optionee
acknowledges that the issuance of capital stock is subject to limitations
imposed by federal and state law, and the Optionee hereby agrees that the
Company shall not be obligated to issue any Common Shares upon exercise of the
Option that would cause the Company to violate any rule, regulation, order or
consent decree of any regulatory authority (including without limitation the
Securities and Exchange Commission and The Nasdaq Stock Market) having
jurisdiction over the affairs of the Company. The Optionee agrees that he or she
will provide the Company with such information as is reasonably requested by the
Company or its counsel to determine whether the issuance of Common Shares
complies with the provisions described by this Section.
10. INVESTMENT REPRESENTATION OF OPTIONEE.
(a) The Optionee represents to the Company the following:
(i) that the Optionee has read and understands
the terms and provisions of the plan, and
hereby accepts this Agreement subject to all
the terms and provisions of the Plan;
(ii) that the Optionee shall accept as binding
and final all decisions or interpretations
of the Board, or in the Board's absence, the
Compensation Committee of the Board upon any
questions arising under the Plan; and
(iii) the Optionee understands that, unless at the
time of exercise of the Option a
registration statement under the Securities
Act of 1933, as amended, is in effect
covering the Common Shares, as a condition
to the exercise of the Option the Company
may require the Optionee to represent that
the Optionee is acquiring the Common Shares
for the Optionee's own account only and not
with a view to, or for sale in connection
with, any distribution of the Shares.
(b) The Optionee understands and agrees that the
certificate or certificates representing any Common
Shares acquired hereunder may bear an appropriate
legend relating to registration and resale under
federal and state securities laws.
(c) The Optionee shall not have any rights of a
shareholder of the Company with respect to the Common
Shares which may be purchased upon exercise of this
Option, unless and until such Common Shares have been
issued and delivered and his or her name has been
entered as a shareholder on the share transfer
records of the Company.
11. MISCELLANEOUS.
(a) This Agreement shall be binding upon the parties
hereto and their representatives, successors and
assigns.
3
<PAGE> 4
(b) This Agreement shall be governed by the laws of the
State of Ohio, without regard to conflicts of laws
principles.
(c) Any notice, request, document or other communication
given hereunder shall be deemed to be sufficiently
given upon personal delivery to the other party or
upon the expiration of three (3) days after
depositing same in the United States mail, return
receipt requested, properly addressed to the
respective parties or such other address as they may
give to the other party in writing in the same
manner as follows:
Company:
Pioneer-Standard Electronics, Inc.
4800 East 131st Street
Cleveland, OH 44105
Attention: Secretary or Vice President, Treasurer
and Assistant Secretary
Optionee:
-----------------------------
-----------------------------
-----------------------------
(d) This Agreement may not be modified except in writing
executed by each of the parties hereto.
(e) The parties agree that the provisions of this
Agreement are severable and the invalidity or
unenforceability of any provision shall not affect
the validity or enforceability of any enforceable
part of such provision or any other provisions
hereof.
(f) This Agreement, together with the Plan, contains the
entire understanding of the parties hereto and
supersedes any prior understanding and/or written or
oral agreement between them respecting the subject
matter hereof.
(g) The headings with Sections herein are included
solely for convenience of reference and shall not
control the meaning or interpretation of any of the
provision of this Agreement.
(h) No waiver of any breach or default hereunder shall
be deemed a waiver of any subsequent breach or
default of the same or similar nature.
4
<PAGE> 5
(i) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an
original but all of which together shall constitute
one and the same instrument.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties thereto have executed this
Agreement, all as of the day and year first above written.
PIONEER-STANDARD ELECTRONICS, INC.
By:
--------------------------------------
James L. Bayman
Chairman and Chief Executive Officer
OPTIONEE:
By:
--------------------------------------
6
<PAGE> 7
SCHEDULE A
TO OPTION AGREEMENT
BETWEEN
PIONEER-STANDARD ELECTRONICS, INC.
AND
___________________, OPTIONEE
Dated: ___________________________
Number of Common Shares Subject to Option: _____________________ Common Shares
Option Exercise Price: ________________________
Date of Grant: ________________________
Expiration Date: ______________________
7
<PAGE> 8
SCHEDULE B
TO OPTION AGREEMENT
BETWEEN
PIONEER-STANDARD ELECTRONICS, INC.
AND
____________________, OPTIONEE
Dated: _______________________
NOTICE OF EXERCISE OF OPTION
The undersigned hereby notifies Pioneer-Standard Electronics,
Inc. (the "Company") of this election to exercise the undersigned's option to
purchase _________________ Common Shares (as defined in the Plan) pursuant to
the Option Agreement (the "Agreement") between the undersigned and the Company
dated _____________________. Accompanying this Notice is (1) cash or a check in
the amount of $_____________ payable to the Company, and/or (2)
_________________ Common Shares (as defined in the Plan) currently owned by the
undersigned and duly endorsed or accompanied by stock transfer powers, having an
aggregate fair market value (as determined under the Plan) as of the date hereof
of $_____________, such amount(s) being equal in the aggregate to the Exercise
Price (as defined in the Agreement, subject to such appropriate adjustments as
provided in the Plan and the Agreement) multiplied by the number of Common
Shares being purchased hereby.
The undersigned is a resident of the State of
__________________.
IN WITNESS WHEREOF, the undersigned has set his or her hand
this ___ day of ______________________, ______.
_________________________________________
Signature
_________________________________________
Title or Capacity (if other than Optionee)
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1999
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 20,408
<SECURITIES> 0
<RECEIVABLES> 345,711
<ALLOWANCES> 7,605
<INVENTORY> 334,478
<CURRENT-ASSETS> 704,370
<PP&E> 167,257
<DEPRECIATION> 77,771
<TOTAL-ASSETS> 989,566
<CURRENT-LIABILITIES> 227,160
<BONDS> 484,933
0
0
<COMMON> 9,258
<OTHER-SE> 274,016
<TOTAL-LIABILITY-AND-EQUITY> 989,566
<SALES> 575,973
<TOTAL-REVENUES> 575,973
<CGS> 486,699
<TOTAL-COSTS> 486,699
<OTHER-EXPENSES> 66,954
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,096
<INCOME-PRETAX> 16,224
<INCOME-TAX> 7,056
<INCOME-CONTINUING> 7,709
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,709
<EPS-BASIC> .29
<EPS-DILUTED> .26
</TABLE>
