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Exhibit 10.1
EXECUTION COPY
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EMPLOYMENT AGREEMENT
BETWEEN
PIONEER-STANDARD ELECTRONICS, INC.
AND
JAMES L. BAYMAN
April 26, 2000
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TABLE OF CONTENTS
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Page
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Employment........................................................................................................1
Period of Employment..............................................................................................1
Position, Duties, Responsibilities................................................................................2
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............................................................................................8
Arbitration..............................................................................................9
Non-Competition, Confidential Information and Non-Interference....................................................9
Withholding......................................................................................................11
Notices..........................................................................................................11
General Provisions...............................................................................................12
Amendment or Modification; Waiver................................................................................13
Severability.....................................................................................................13
Successors to the Company........................................................................................13
Operation of Agreement...........................................................................................14
Enforcement Costs................................................................................................15
</TABLE>
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EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT between PIONEER-STANDARD ELECTRONICS, INC., an
Ohio corporation (the "Company"), and JAMES L. BAYMAN ("Bayman"), dated April
26, 2000, effective April 1, 2000.
W I T N E S S E T H:
WHEREAS: Bayman has been providing services to the Company as Chairman
and Chief Executive Officer pursuant to an Amended and Restated Employment
Agreement dated April 27, 1999, effective April 1, 1999, between Bayman and the
Company (the "1999 Agreement");
WHEREAS: The Company and Bayman desire to replace the 1999 Agreement
with a new Employment Agreement in order to reflect certain modifications to the
terms and conditions of Bayman's employment as Chairman and Chief Executive
Officer;
WHEREAS: A new Employment Agreement containing such modified terms is
deemed necessary at the present time to meet the need for a continued strong
management without substantial change;
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
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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 hereof (the "Period of Employment"), in
the position and with the duties and responsibilities set forth in
Section 3 hereof, and upon the other terms and conditions hereinafter
stated.
2. Period of Employment
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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 hereof; (ii) the earlier termination of
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employment as set forth in Section 7 hereof; and (iii) the
commencement of the Period of Transition pursuant to Section
2(c) hereof.
(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 hereof and (ii) the earlier
termination of employment as set forth in Section 7 hereof.
(c) Not later than the February 1 next preceding the
first anniversary of this Agreement, Bayman 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 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 CHIEF EXECUTIVE OFFICER. 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 BOARD MEMBERSHIP. 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
Section 7 hereof, 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 ATTENTION TO DUTIES. 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.
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3.04 OFFICE. 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 appropriate office which shall be
mutually acceptable to Bayman and his successor as Chairman and Chief
Executive Officer.
3.05 PERIOD OF TRANSITION. 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 and Perquisites
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4.01 COMPENSATION.
(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 entitled as
compensation to the following:
(i) A base salary, payable not less often than
monthly, at the rate of $50,000 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; and
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(ii) Participation in the Company's 2000 Annual
Incentive Plan (the "Annual Incentive Plan")
in accordance with the provisions of such
plan as in effect as of the date of this
Agreement and as may be amended from time to
time, conditioned upon and subject to
Bayman's prior written consent to any such
amendment as shall apply to him.
(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 as 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 PERQUISITES. 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 elected 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 BENEFIT PLANS. 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 Plan,
its Benefit Equalization Plan, its group life insurance plan, its
accidental death and dismemberment insurance, its 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 except for the Supplemental Executive Retirement Plan, 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.
5.02 STOCK PLANS. Bayman shall be eligible to participate in the
Company's 1991 Stock Option Plan and 2000 Stock Incentive Plan (which,
together with any successor stock option plan or plans as may be in
effect from time to time, are 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
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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 Section
15.02 hereof, then notwithstanding the provisions of said Option
Agreements, all options (including those granted to him under the 1982
Incentive Stock Option Plan, the 1991 Stock Option Plan and the 2000
Stock Incentive 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 is discharged or resigns his employment during the
one (1) year period following a Change in Control as defined in Section
15.02 hereof, Bayman shall have the period of one (1) year after the
date of such termination or resignation (or such longer period as may
be specified in the Option Agreement) or the remainder of the term of
such Options, whichever is shorter, to exercise his Options, and any
such exercise shall be irrevocable. Bayman shall also be entitled to
participate in the Company's 1999 Restricted Stock Plan.
6. Effect of Death or Disability
-----------------------------
6.01 DEATH. 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 Section 4.01(a)(i) or Section
4.01(b) hereof, whichever is applicable, for the month in which death
shall take place at the rate being paid at the time of death, (ii) an
incentive cash bonus amount equal to his earned incentive cash bonus
under the Annual Incentive Plan (or, if applicable, any predecessor
annual incentive plan or arrangement) for the immediately preceding
fiscal year, pro rated through the last date of the Period of
Employment, and (iii) any benefits provided pursuant to Section 5.01
hereof which are payable pursuant to the terms of the applicable plan
or practice.
6.02 Disability.
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(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 plan or 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 Section 4.01(a)(i) or Section
4.01(b) hereof, whichever is applicable, at the rate being
paid at the time of the commencement of Disability, for the
period of such
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Disability but not in excess of six (6) months, (ii) an
incentive cash bonus equal to his earned incentive cash bonus
under the Annual Incentive Plan (or, if applicable, any
predecessor annual incentive plan or arrangement) for the
immediately preceding fiscal year, pro rated through the last
date of the Period of Employment, and (iii) any benefits
provided pursuant to Section 5.01 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 Section 6.02
shall be reduced by any payments 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
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7.01 GENERAL. The Company may terminate Bayman's employment with or
without Cause, and Bayman may voluntarily terminate his employment, at
any time during the Period of Employment, subject to the provisions of
this Section 7.
7.02 CHANGE IN CONTROL. If, during the one (1) year period following a
Change in Control of the Company as defined in Section 15.02 hereof,
Bayman is discharged or voluntarily resigns his employment, there shall
be paid or provided to Bayman, his dependents, beneficiaries and
estate, as liquidated damages or severance pay, or both, the following:
(a) (i) The compensation provided for in Section
4.01(a)(i) or Section 4.01(b) hereof,
whichever is applicable, for the month in
which termination shall have occurred at the
rate being paid at the time of termination;
plus
(ii) An incentive cash bonus calculated based
upon his earned incentive cash bonus under
the Annual Incentive Plan for the
immediately preceding fiscal year, pro rated
for the then current fiscal year through his
date of termination; plus
(iii) An amount equal to the product of thirty-six
(36) times his monthly base salary at the
rate being paid at the time of termination;
plus
(iv) An amount equal to his earned incentive cash
bonus under the Annual Incentive Plan (or,
if applicable, any predecessor annual
incentive plan or arrangement) for the three
(3) previously completed fiscal years.
Such amounts shall be paid to Bayman in one payment
immediately upon his termination of employment.
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(b) For the three (3) year period following the date of his
termination of employment, Bayman, his dependents,
beneficiaries and estate, shall continue to be entitled to all
benefits provided pursuant to Section 5.01 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 Retirement Plan and Benefit Equalization Plan
referred to in Section 5.01 hereof, 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
provide Bayman, his dependents, beneficiaries and estate, as
appropriate, a benefit or payment which places Bayman, his
dependents, beneficiaries and estate in at least as good of an
economic position (taking into account the favorable economic,
tax and legal characteristics customary for such plans,
policies or arrangements) as if the benefit to which such
persons were entitled to receive under such plans, programs
and arrangements immediately prior to termination had been
paid.
Any termination of Bayman's employment which either is (x) a
termination by the Company other than for Cause or (y) a voluntary
resignation by Bayman after the occurrence of an event which would
constitute Good Reason under Section 15.03 hereof, which termination or
resignation occurs within the period commencing on the commencement
date of a tender offer for the Company's Common Shares, the execution
of a letter of intent or the execution of a definitive agreement which,
in each case, could reasonably be expected to lead to a Change in
Control as defined in Section 15.02 hereof, and ending on either (A)
the date of the Change in Control resulting from such tender offer or
the consummation of the transaction contemplated by such letter of
intent or such definitive agreement, as the case may be, or (B) the
date as of which the Board of Directors determines in good faith that
such tender offer has been withdrawn or has reached a final conclusion
not resulting in a Change in Control or the transaction contemplated by
such letter of intent or such definitive agreement is not to be
consummated or if consummated, will not lead to a Change in Control, as
the case may be, shall be deemed to be a termination under this Section
7.02.
An election by Bayman to terminate his employment under the
provisions of this Section 7.02 shall not be deemed a voluntary
termination of employment by Bayman under Section 7.03 hereof. Further,
an election by Bayman to terminate his employment under the provisions
of subsection (y) of this Section 7.02 shall not be deemed to be a
voluntary termination of employment for a Good Reason under Section
7.04 hereof.
7.03 FOR CAUSE OR VOLUNTARY TERMINATION WITHOUT A GOOD REASON. 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:
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(a) termination of his employment shall have been the result
of Bayman's conviction of any of the following offenses,
provided that such offense results in material economic harm
to the Company or has a materially adverse effect on the
Company's operations, property or business relationships: (i)
misappropriation of money or other property of the Company or
(ii) any felony;
(b) there has been a breach by Bayman during the Period of
Employment of the provisions of Section 3.03 hereof relating
to devotion of full time to the affairs of the Company or any
provision of Section 8 hereof, and such breach results in
demonstrable significant injury to the Company, and with
respect to any alleged breach of Section 3.03 hereof, Bayman
shall have failed to remedy such breach within thirty (30)
days after his receipt of written notice from the Company; or
(c) there has been a substantial and continued failure or
refusal to perform under this Agreement which Bayman shall
have failed to remedy within thirty (30) days after 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 without a Good Reason as defined in Section 15.03 hereof,
Bayman shall be entitled to the compensation provided for in Section
4.01(a)(i) or Section 4.01(b) hereof, 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 hereof.
7.04 WITHOUT CAUSE OR VOLUNTARY TERMINATION FOR A GOOD REASON. Subject
to compliance by Bayman with the provisions of Section 8 hereof, if the
Company shall terminate Bayman's employment without Cause or if Bayman
shall voluntarily terminate his employment for a Good Reason as defined
in Section 15.03 hereof, 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 Section
4.01(a)(i) or Section 4.01(b) hereof, whichever is applicable, for the
month in which termination shall have occurred at the rate being paid
at the time of such termination; (ii) an incentive cash bonus
calculated based upon his earned incentive cash bonus under the Annual
Incentive Plan for the immediately preceding fiscal year, pro rated for
the then current fiscal year through his date of termination; and (iii)
the amount (the "Payment Amount") per month equal to 1/24th of (A)
twenty-four (24) times his monthly base salary at the rate being paid
at the time of termination PLUS (B) an amount equal to his earned
incentive cash bonus under the Annual Incentive Plan (or, if
applicable, any predecessor annual incentive plan or arrangement) 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, his dependents, beneficiaries and
estate shall also receive, for the twenty-four (24) month period
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following such termination, all benefits provided pursuant to Section
5.01 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 Retirement Plan and Benefit Equalization Plan referred to in
Section 5.01 hereof, 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 provide
Bayman, his dependents, beneficiaries and estate, as appropriate, a
benefit or payment which places Bayman, his dependents, beneficiaries
and estate in at least as good of an economic position (taking into
account the favorable economic, tax and legal characteristics customary
for such plans, policies or arrangements) as if the benefit to which
such persons were entitled to receive under such plans, programs and
arrangements immediately prior to termination had been paid. In the
event the Company fails to make such payments when due, then the
remaining payments shall become due and payable immediately. Bayman
shall be under no obligation to seek other employment, but without
otherwise limiting the purposes or effect of this Section 7.04, any
amounts payable to Bayman pursuant to Section 7.04(iii) hereof shall be
reduced by any amounts which Bayman actually receives from another
employer during the twenty-four (24) month period following the date of
his termination without Cause, and any benefits payable to Bayman or
his dependents pursuant to this Section 7.04 by reason of any "welfare
benefit plan" of the Company (as the term "welfare benefit plan" is
defined in Section 3(1) of the Employee Retirement Income Security Act
of 1974, as amended) or perquisites shall be reduced to the extent
comparable benefits or perquisites (or the cash equivalent thereof) are
actually received by Bayman or his dependents from another employer
during such period. Notwithstanding any provision in this Section 7.04
to the contrary, all obligations of the Company and Bayman's right to
any payment or benefit under this Section 7.04 shall cease upon
Bayman's breach of any provision of Section 8 hereof.
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 Section 8 hereof
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 Commercial Arbitration 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. Non-Competition, Confidential Information and Non-Interference
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8.01 NON-COMPETITION. During the Period of Employment and the two (2)
year period following the termination of his employment (except in the
case of a voluntary or involuntary termination of employment within one
(1) year after a Change in Control),
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Bayman shall not become an officer, director, joint venturer, employee,
consultant or five percent (5%) shareholder (directly or indirectly),
or promote or assist (financially or otherwise), any entity which
competes with any business in which the Company or any of its
affiliates are engaged as of the date of such termination of
employment. Bayman understands that the foregoing restrictions may
limit his ability to engage in certain business pursuits during the
period provided for herein, but acknowledges that he will receive
sufficiently higher remuneration and other benefits from the Company
hereunder than he would otherwise receive to justify such restriction.
Bayman acknowledges that he understands the effect of the provisions of
this Section 8(a), and that he has had reasonable time to consider the
effect of these provisions, and that he was encouraged to and had an
opportunity to consult an attorney with respect to these provisions.
8.02 CONFIDENTIAL INFORMATION. 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.
Bayman also agrees that upon leaving the Company's employ he
will not take with him, without the prior written consent of an officer
authorized to act in the matter by the Board of Directors of the
Company, any Company document, contract, internal financial or
management reports, customers list, product list, price list, catalog,
employee list, procedures, software, MIS data, drawing, blueprint,
specification or other document of the Company, its subsidiaries,
affiliates and divisions, which is of a confidential nature relating to
the Company, its subsidiaries, affiliates and divisions, or, without
limitation, relating to its or their methods of purchase or
distribution, or any description of any trade secret, formulae or
secret processes.
8.03. NONINTERFERENCE. Bayman shall not, at any time during the Period
of Employment or within the two (2) year period after his employment is
terminated with the Company (except in the case of a voluntary or
involuntary termination of employment within one (1) year after a
Change in Control), 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 employment,
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representation or other relationship with the Company, or in any way
directly or indirectly interfere with any relationship between the
Company and its suppliers or customers.
8.04. REMEDY. Bayman acknowledges that Sections 8.01, 8.02 and 8.03
hereof were negotiated at arms length and are required for the fair and
reasonable protection of the Company. Nevertheless, if any aspect of
these restrictions is found to be unreasonable or otherwise
unenforceable by a court of competent jurisdiction, the Company and
Bayman intend for such restrictions to be modified by such court so as
to be reasonable and enforceable and, as so modified by the court, to
be fully enforced. 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 in Sections
8.01 and 8.03 hereof shall be tolled during any period which Bayman
shall be adjudged to have been in violation of any of his obligations
under such Sections.
9. Withholding
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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.
10. Notices
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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 herein or to such changed
address as the addressee may have given by a similar notice:
To the Company: Pioneer-Standard Electronics, Inc.
6065 Parkland Boulevard
Mayfield Heights, Ohio 44124
Attention: Secretary or
Assistant Secretary
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To Bayman: James L. Bayman
1760 County Line Road
Gates Mills, OH 44040
11. General Provisions
------------------
11.01 NO SET-OFF OR COUNTER CLAIM. 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.
11.02 BENEFICIARY. 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.
11.03 ASSIGNMENT. 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.
11.04 LEGAL REPRESENTATIVE. 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.
11.05 HEADINGS. 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.
11.06 BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of (a) Bayman and, subject to the provisions of
Sections 11.02 and 11.03 hereof, his heirs and legal representatives,
and (b) the Company and its successors as provided in Section 14
hereof.
11.07 EXCISE TAX GROSS UP. Bayman shall be entitled to a cash payment
(the "Excise Tax Gross-Up Payment") equal to the amount of excise taxes
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
parachute payments as defined in Section 280G(b)(2)made by or on behalf
of the Company or any successor thereto, under this Agreement or
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otherwise, resulting in an "excess parachute payment" as defined in
Section 280G(b)(1) of the Code. In addition to the foregoing, the
Excise Tax Gross-Up Payment due to Bayman under this Section 11.07
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 Excise Tax Gross-Up Payment to be made under this
Section 11.07, 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
the Excise Tax Gross-Up Payment shall be determined, at the expense of
the Company, by an independent accounting, actuarial or consulting firm
selected by the Company. Such Excise Tax Gross-Up Payment 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 for which it is determined that
excise taxes are payable under Section 4999 of the Code.
Notwithstanding the foregoing, there shall be no duplication of
payments by the Company under this Section 11.07 in respect of excise
taxes under Section 4999 of the Code to the extent the Company is
making payments in respect of such excise taxes under any other
arrangement with Bayman. In the event that Bayman is ultimately
assessed with excise taxes under Section 4999 of the Code which exceed
the amount of excise taxes used in computing Bayman's payment under
this Section 11.07, 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.
12. 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.
13. 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.
14. 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,
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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.
15. Operation of Agreement
----------------------
15.01 EFFECTIVE DATE. This Agreement is effective April 1, 2000, and
shall supersede any prior employment arrangement or agreement,
including the 1999 Agreement, which shall be deemed to be terminated
and null and void.
15.02 CHANGE IN CONTROL. 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), excluding The Pioneer Stock Benefit Trust, any employee benefit
plan of the Company, any trust established under any employee benefit
plan of the Company, or any trustee of any trust established under any
employee benefit plan of the Company, is or becomes a beneficial owner,
directly or indirectly, of securities of the Company representing
twenty percent (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.
15.03 GOOD REASON. For the purpose of this Agreement, "Good Reason"
shall mean the occurrence of: (a) any reduction during the period of
Full Time Employment in Bayman's position, authority or title; (b) any
material reduction during the period of Full Time Employment in
Bayman's responsibilities or duties for the Company; (c) any material
adverse change or reduction in the aggregate perquisites, benefits and
payments to which Bayman is entitled pursuant to Sections 4.02 and 5.01
hereof; (d) any change in Bayman's reporting relationship; (e) any
relocation of Bayman's principal place of work with the Company to a
location that exceeds by fifty (50) miles the distance from the
location of his residence at the time of such relocation of Bayman's
principal place of work with the Company to 6065 Parkland Boulevard,
Mayfield Heights, Ohio; or (f) the material breach or material default
by the Company of any of its agreements or obligations under any
provision of this Agreement, unless such breach or default is
substantially cured within a reasonable period of time (hereby defined
as thirty (30) days) after written notice advising the Company of the
acts or omissions constituting such breach or default is actually
received by the Company. As used in Section 15.03(c), an "adverse
change or material reduction" in the aggregate perquisites, benefits
and payments to which Bayman is entitled pursuant to Sections 4.02 and
5.01 shall be
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<PAGE> 17
deemed to result from any reduction or any series of reductions which,
in the aggregate, exceeds five percent (5%) of the value of such
perquisites, benefits and payments determined as of the date of this
Agreement. If Bayman claims the existence of a Good Reason, he shall
give written notice to the Company of the event constituting Good
Reason not later than ninety (90) days following the later to occur of
the occurrence of the event (e.g., the actual reduction in
compensation, the scheduled date of relocation or the date of the
breach) constituting Good Reason or his actual knowledge thereof. If
the event which Bayman claims to be a Good Reason is not cured within
thirty (30) days following the date of such notice, Bayman must resign
within ten (10) days following the thirty (30) day cure period in order
to invoke his right to resign for Good Reason. If no such timely
resignation occurs or no such timely written notices are given,
Bayman's right to resign for Good Reason with respect to such event
shall be permanently waived.
16. Enforcement Costs
-----------------
The Company is aware that upon the occurrence of a Change in
Control the Board of Directors or a shareholder of the Company may then
cause or attempt to cause the Company to refuse to comply with its
obligations under this Agreement, or may cause or attempt to cause the
Company to institute, or may institute, litigation seeking to have this
Agreement declared unenforceable, or may take, or attempt to take,
other action to deny Bayman the benefits intended under this Agreement.
In these circumstances, the purpose of this Agreement could be
frustrated. It is the intent of the Company that Bayman not be required
to incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action because the
cost and expense thereof would substantially detract from the benefits
intended to be extended to Bayman hereunder, nor be bound to negotiate
any settlement of his rights hereunder under threat of incurring such
expenses. Accordingly, if following a Change in Control it should
appear to Bayman that the Company has failed to comply with any of its
obligations under this Agreement or in the event that the Company or
any other person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation or other legal action
designed to deny, diminish or to recover from, Bayman, the benefits
intended to be provided to Bayman hereunder, and that Bayman has
complied with all of his obligations under this Agreement, the Company
irrevocably authorizes Bayman from time to time to retain counsel of
his choice at the expense of the Company as provided in this Section
16, 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 herein 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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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/ Victor Gelb
----------------------------- ------------------------------------------
Victor Gelb, Chairman of the Compensation
Committee
ATTEST:
/s/ Nancy E. Hoyt /s/ James L. Bayman
---------------------------- ------------------------------------------
James L. Bayman
16
