-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WPjOYbFgaDekFlGAZfhu9DJPlgcr7LonrUTHs9LlaB3HvS8FtVwBVGFlpoaHdQA8 g4luI+GI3zxvVl60aW2/xw== 0000052971-98-000026.txt : 19981118 0000052971-98-000026.hdr.sgml : 19981118 ACCESSION NUMBER: 0000052971-98-000026 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JACO ELECTRONICS INC CENTRAL INDEX KEY: 0000052971 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 111978958 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-05896 FILM NUMBER: 98751661 BUSINESS ADDRESS: STREET 1: 145 OSER AVE CITY: HAUPPAUGE STATE: NY ZIP: 11788 BUSINESS PHONE: 5162735500 MAIL ADDRESS: STREET 1: 145 OSER AVE CITY: HAUPPAUGE STATE: NY ZIP: 11788 10-Q 1 QUARTELY REPORT FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 {X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period ended September 30, 1998 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 0-5896 JACO ELECTRONICS, INC. (Exact name of registrant as specified in its charter) NEW YORK 11-1978958 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 145 OSER AVENUE, HAUPPAUGE, NEW YORK 11788 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (516) 273-5500 Indicated 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 report), and (2) has been subject to such filing requirements for the past 90 days. YES X NO __ Number of Shares of Registrant's Common Stock Outstanding as of November 11, 1998 - 3,653,521 (Excluding 412,200 Shares of Treasury Stock).
FORM 10-Q September 30, 1998 Page 2 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, June 30, 1998 1998 ----------- ----------- ASSETS Current Assets Cash $ 1,519,542 $ 562,556 Marketable securities 687,060 764,810 Accounts receivable - net 21,331,931 21,887,618 Inventories 35,756,451 35,737,288 Prepaid expenses and other 1,074,337 1,203,198 Prepaid income taxes 762,613 610,132 Deferred income taxes 824,000 772,500 ----------- ----------- Total current assets 61,955,934 61,538,102 Property, plant and equipment - net 7,102,677 6,102,445 Deferred income taxes 342,000 333,000 Excess of cost over net assets acquired - net 3,729,796 3,776,912 Other assets 1,589,426 1,668,830 ----------- ----------- $74,719,833 $73,419,289 =========== ===========
See accompanying notes to condensed consolidated financial statements. FORM 10-Q September 30, 1998 Page 3
JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, June 30, 1998 1998 ------------ ----------- LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities Accounts payable and accrued expenses $ 18,012,534 $ 18,394,251 Current maturities of long term debt and capitalized lease obligations 733,613 663,198 ------------- ------------ Total current liabilities 18,746,147 19,057,449 Long term debt and capitalized lease obligations 19,661,795 17,036,593 Deferred compensation 712,500 700,000 SHAREHOLDERS' EQUITY Preferred stock - authorized, 100,000 shares, $10 par value; none issued Common stock - authorized 10,000,000 shares, $.10 par value; issued 4,065,721 shares and 3,657,321 and 3,866,221 shares outstanding, respectively 406,572 406,572 Additional paid-in capital - net 22,430,045 22,396,295 Accumulated other comprehensive income 118,135 164,385 Retained earnings 14,835,851 15,077,957 Treasury stock (2,191,212) (1,419,962) ------------ ------------ Total shareholders' equity 35,599,391 36,625,247 ---------- ---------- $74,719,833 $73,419,289 =========== =============
See accompanying notes to condensed consolidated financial statements. FORM 10-Q September 30, 1998 Page 4 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS FOR THE THREE MONTHS ENDED SEPTEMBER 30, (UNAUDITED)
1998 1997 -------------- ------------- NET SALES $33,256,456 $36,878,534 COST AND EXPENSES Cost of goods sold 26,554,068 29,061,380 ---------- ---------- Gross profit 6,702,388 7,817,154 Selling, general and administrative expenses 6,795,052 6,877,115 ------------ ------------ Operating (loss) profit (92,664) 940,039 Interest expense 313,442 272,009 ------------ ------------ (Loss) earnings before income taxes (406,106) 668,030 Income tax benefit (provision) 164,000 (270,000) ------------ ------------ NET (LOSS) EARNINGS $ (242,106) $ 398,030 ============ ============ Net (loss) earnings per common share Basic and diluted $ (0.06) $ 0.10 ============ ============ Weighted average common shares outstanding Basic 3,830,397 3,888,221 Diluted 3,830,397 3,943,192 ============ ============
See accompanying notes to condensed consolidated financial statements. FORM 10-Q September 30, 1998 Page 5
JACO ELECTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED) Accumulated Additional Other Common Stock Paid-In Comprehensive Retained Treasury Shares Amount Capital Income Earnings Stock --------------- -------------- ---------------- -------------- ----------------- --------------- Balance at July 1, 1998 4,065,721 $406,572 $ 22,801,295 $ 164,385 $15,077,957 $ (1,419,962) Deferred compensation expense Purchase of treasury stock (771,250) Unrealized loss on marketable securities - net (46,250) Net loss $ (242,106) --------------- -------------- ---------------- -------------- ----------------- --------------- Balance at September 30, 1998 4,065,721 $406,572 $ 22,801,295 $ 118,135 $14,835,851 $ (2,191,212) =============== ============== ================ ============== ================= ===============
Total Deferred Shareholders' Compensation Equity --------------- -------------- Balance at July 1, 1998 $ (405,000) $36,625,247 Deferred compensation expense 33,750 33,750 Purchase of treasury stock (771,250) Unrealized loss on marketable securities - net (46,250) Net loss (242,106) --------------- -------------- Balance at September 30, 1998 $ (371,250) $35,599,391 =============== ============== See accompanying notes to condensed consolidated financial statements. FORM 10-Q September 30, 1998 Page 6 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED SEPTEMBER 30, (UNAUDITED)
1998 1997 ----------------- ----------------- Cash flows from operating activities Net (loss) earnings $ (242,106) $ 398,030 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities Depreciation and amortization 375,299 330,083 Deferred compensation 46,250 12,500 Deferred income tax benefit (29,000) (55,000) Provision for doubtful accounts 120,814 89,375 Changes in operating assets and liabilities, Decrease (increase) in operating assets - net 392,090 (702,433) (Decrease) increase in operating liabilities - net (381,717) 318,005 ----------------- ----------------- Net cash provided by operating activities 281,630 390,560 ----------------- ----------------- Cash flows from investing activities Capital expenditures (742,538) (260,536) Decrease (increase) in other assets 46,071 (6,130) ----------------- ----------------- Net cash used in investing activities (696,467) (266,666) ----------------- ----------------- Cash flows from financing activities Borrowings under line of credit 15,987,250 35,455,080 Payments under line of credit (13,656,102) (35,489,278) Principal payments under equipment financing and term loans (188,075) (151,352) Purchase of treasury stock (771,250) ----------------- ----------------- Net cash provided by (used in) financing activities 1,371,823 (185,550) ----------------- ----------------- NET INCREASE (DECREASE) IN CASH 956,986 (61,656) ----------------- ----------------- Cash at beginning of period 562,556 463,352 ----------------- ----------------- Cash at end of period $ 1,519,542 $ 401,696 ================= ================= Supplemental schedule of non-cash financing and investing activities Equipment under capital leases $ 552,544
See accompanying notes to condensed consolidated financial statements. FORM 10-Q September 30, 1998 Page 7 JACO ELECTRONICS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE A - BASIS OF PRESENTATION 1) The accompanying condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring accrual adjustments, which are in the opinion of management, necessary for a fair presentation of the consolidated financial position and the results of operations at and for the periods presented. Such financial statements do not include all the information or footnotes necessary for a complete presentation. Therefore, they should be read in conjunction with the Company's audited consolidated statements for the year ended June 30, 1998 and the notes thereto included in the Company's annual report on Form 10-K. The results of operations for the interim periods are not necessarily indicative of the results for the entire year. 2) The Company has a $30,000,000 term loan and revolving line of credit facility with its banks, which are based principally on eligible accounts receivables and inventories as defined in the agreement. The agreement was amended to: (i) extend the maturity date to September 13, 2000, (ii) change the interest rate to a rate based on the average 30 day LIBOR rate plus 3/4 % to 1 1/4% depending on the Company's performance for the immediately preceding four fiscal quarters measured by a certain financial ratio, and (iii) changed the requirements of certain financial covenants. The applicable interest rate may be adjusted quarterly and borrowings under this facility are collateralized by substantially all of the assets of the Company. 3) The Board of Directors of the Company has authorized the purchase of up to 650,000 shares of its outstanding common stock under a stock repurchase program. The purchases may be made by the Company from time to time on the open market. The Company has made purchases of 412,200 shares of its common stock as of November 12, 1998 for aggregate consideration of $2,204,514. 4) For interim financial reporting purposes, the Company uses the gross profit method for computing inventories, which consists of goods held for resale. 5) In fiscal 1998, the Company adopted the provisions of Statement of Financial Accounting Standards No. 128 ("SFAS No. 128"), "Earnings per Share." SFAS No. 128 replaces the calculation of primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants and convertible securities. Diluted earnings per share is very similar to the previously reported fully diluted earnings per share. All earnings per share amounts for all periods have been presented, and, where appropriate, restated to conform to the SFAS No. 128 computation. FORM 10-Q September 30, 1998 Page 8 The number of shares used in the Company's basic and diluted earnings per share computations are as follows:
Three Months Ended September 30, -------------------------------------------- 1998 1997 ----------------- ------------------ Weighted average common shares outstanding net of treasury shares, for basic earnings per share 3,830,397 3,888,221 Common stock equivalents for stock options 54,971 ----------------- ------------------ Weighted average common shares outstanding for diluted earnings per share 3,830,397 3,943,192 ================= ==================
6) The company has adopted SFAS No. 130 "Reporting Comprehensive Income" which establishes guidance for the reporting and display of comprehensive income and its components. The purpose of reporting comprehensive income is to report a measure of all changes in equity that resulted from recognized transactions and other economic events of the period other than transactions with stockholders. Adoption of SFAS No. 130 had no economic impact on the Company's consolidated financial position, net earnings, stockholders' equity or cash flows, although the presentation of certain items has changed. Comprehensive income and its components, net of tax, are as follows:
Three Months Ended September 30, -------------------------------------------- 1998 1997 ----------------- ------------------ (in thousands) Net (loss) earnings $(242) $398 Other comprehensive income: Net unrealized investments (losses) gains (46) 30 ----------------- ------------------ Comprehensive (loss) income $(288) $428 ================= ==================
The components of accumulated other comprehensive income included in the accompanying condensed consolidated balance sheets and consolidated statement of changes in shareholders' equity consists of net unrealized investment gains as of the end of the period. FORM 10-Q September 30, 1998 Page 9 7) The Financial Accounting Standard Board issued Statement of Financial Accounting Standards No. 131 "Disclosures about Segments of an Enterprise and Related Information" ( "SFAS 131"). SFAS 131 established standards to report information about operating segments and related discussions about products and services, geographic areas and major customers. SFAS 131 is effective for fiscal years beginning after December 15, 1997. This statement permits early application and requires restatement for all prior period. SFAS 131 is not required to be applied to interim financial statements in the initial year of adoption. Management believes that the adoption of this statement will not have any material impact on previously reported information. 8) The Company has entered into three employment agreements during the current fiscal year with its Chairman and two other key executives. The agreements are for four years and are renewable for one year periods thereafter, they provide for base salary along with cash bonuses which are dependent upon the Company's performance. In addition, among other items, the agreements have made provisions in the event of a change in control of the Company. JACO ELECTRONICS, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 Statements in this filing, and elsewhere, which look forward in time involve risks and uncertainties which may effect the actual results of operations. The following important factors, among others, have affected and, in the future, could affect the Company's actual results: dependence on a limited number of suppliers for products which generate a significant portion of the Company's sales, the effect upon the Company of increases in tariffs or duties, changes in trade treaties, strikes or delays in air or sea transportation and possible future United States legislation with respect to pricing and/or import quotas on products imported from foreign countries, and general economic downturns in the electronics distribution industry which may have an adverse economic effect upon manufacturers, end-users of electronic components and electronic component distributors. GENERAL Jaco is a distributor of electronic components, provider of contract manufacturing and value-added services. Products distributed by Jaco include semiconductors, capacitors, resistors, electromechanical devices, flat panel displays and monitors, and power supplies used in the assembly and manufacturing of electronic equipment. The Company's customers are primarily small and medium sized manufacturers. The trend for these customers has been to shift certain manufacturing functions to third parties (outsourcing). The Company intends to seek to capitalize on this trend toward outsourcing by increasing sales of products enhanced by value-added services. Value-added services currently provided by Jaco consist of configuring complete computer systems to customer specifications both in tower and desktop configurations, kitting (e.g. supplying sets of specified quantities of products to a customer that are prepackaged for ease of feeding the customer's production lines), and contract manufacturing through the Company's wholly owned subsidiary Nexus Custom Electronics, Inc. FORM 10-Q September 30, 1998 Page 10 Results of Operations The following table sets forth certain items in the Company's statement of earnings as a percentage of net sales for the periods shown
Three Months Ended September 30, -------------------------------------------- 1998 1997 ------------ ------------ Net sales 100.0% 100.0% Cost of goods sold 79.8 78.8 ------------ ------------ Gross profit 20.2 21.2 Selling, general and administrative expenses 20.4 18.6 ------------ ------------ Operating (loss) profit (.2) 2.6 Interest expense 1.0 0.8 ------------ ------------ (Loss) earnings before income taxes (1.2) 1.8 Income tax (benefit) expense (0.5) 0.7 ------------ ------------ NET (LOSS) EARNINGS (0.7%) 1.1% ============ ===========
COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997 Net sales for the first quarter of fiscal 1999 decreased 10% to $33.3 million as compared to $36.9 million for the first quarter of fiscal 1998. The Company's first quarter results were impacted by the continued industry wide pressures on pricing; compounded by the softening demand for electronic components which has affected the electronics industry for over two years. The Company derived approximately $3.2 million in sales from contract manufacturing. The Company believes that with the expansion of the semiconductor management group, flat panel display division and field application engineer program it is positioned for future growth and will benefit from these strategic investments. Gross profit margin as a percentage of net sales was 20.2% for the three months ended September 30, 1998 compared to 21.2% for the comparable period last fiscal year. The Company's product mix has remained relatively constant. The decrease in margin is attributable to the pressure on pricing that has existed due to the excess availability of components. Selling, general and administrative expenses decreased to $6.8 million for the first quarter of fiscal 1999 compared to $6.9 million and $7.5 million for the first and fourth quarters of fiscal 1998 respectively. The Company implemented cost saving initiatives of overhead items that the Company believes to be non-essential to future growth. FORM 10-Q September 30, 1998 Page 11 Interest expense increased to $313,000 for the three months ended September 30, 1998 compared to $272,000 for the comparable period last fiscal year. The increase was primarily attributable to the increased borrowings resulting from the Company's purchasing of approximately 209,000 shares of its common stock for an aggregate consideration of $771,000 through its stock repurchase program and maintaining higher levels of inventory during this fiscal quarter compared to the same quarter last fiscal year. Net loss for the three months ended September 30, 1998 was $242,000 or approximately $.06 per share diluted, compared to net earnings of $398,000 or $.10 per share diluted for the three months ended September 30, 1997. The decrease in sales during this fiscal quarter and decrease in gross profit dollars resulted in the reported loss during the quarter ended September 30, 1998. LIQUIDITY AND CAPITAL RESOURCES The Company's agreement with its banks, as amended, provides the Company with a $30,000,000 term loan and revolving line of credit facility based principally on eligible accounts receivable and inventories of the Company as defined in the agreements expiring September 13, 2000. The interest rate of the credit facility is based on the average 30 day LIBOR rate plus 3/4% to 1-1/4% depending on the Company's performance for the immediately preceding four fiscal quarters measured by a certain financial ratio, and may be adjusted quarterly. The outstanding balance on the revolving line of credit facility was $17,643,943 at September 30, 1998. The term loan, with a remaining balance of $535,714 at September 30, 1998, requires monthly principal payments of $17,857, together with interest through September 13, 2000, with a final payment of $107,146 due on September 13, 2000. Borrowings under this facility are collateralized by substantially all of the assets of the Company. The agreement contains provisions for maintenance of certain financial ratios, all of which the Company is in compliance with at September 30, 1998, and prohibits the payment of cash dividends. For the three months ended September 30, 1998, the Company's net cash provided by operating activities was approximately $.3 million as compared to net cash provided by operating activities of $.4 million for the three months ended September 30, 1997. Net cash used in investing activities increased to $.7 million for the three months ended September 30, 1998, as compared to $.3 million for the three months ended September 30, 1997. The increase is primarily attributable to the increase in capital expenditures during the quarter of $.7 million which almost entirely represented equipment required by the contract manufacturing operation. Net borrowings under the Company's line of credit increased during the quarter by approximately $2.3 million due primarily to the purchase of $.8 million of treasury stock by the Company and an increase in the days outstanding of the Company's accounts receivable, resulting in reduced collections. The Company's cash expenditures may vary significantly from current levels, based on a number of factors, including, but not limited to, future acquisitions if any. For the first three months of fiscal 1999 and fiscal 1998 inventory turnover was 3.0x and 3.4x, respectively. The average days outstanding of the Company's accounts receivable at September 30, 1998 was 59 days, as compared to 55 days at September 30, 1997. The Board of Directors of the Company had authorized the purchase of up to 250,000 shares of its common stock under a stock repurchase program. During the quarter, the Board of Directors authorized the repurchase of up to an additional 400,000 shares of the Company's common stock. The purchases may be made by the Company from time to time on the open market at the Company's discretion and will be dependent on market conditions. Through November 12, 1998, the Company has purchased 412,200 shares of its common stock for aggregate consideration of $2,204,515 under this program. The Company believes that cash flow from operations and funds available under its credit facility will be sufficient to fund the Company's capital needs for at least the next twelve months. Year 2000 Compliance The year 2000 ("Y2K") issue is the result of computer programs using a two-digit format, as opposed to four digits, to indicate the year. Such computer systems will be unable to interpret dates beyond FORM 10-Q September 30, 1998 Page 12 the year 1999, which could cause a system failure or other computer errors, leading to disruptions in operations. In April 1996, the Company developed a three-phase program for Y2K information systems compliance. Phase I was to identify those systems with which the Company has exposure to Y2K issues. Phase II was the development and implementation of action plans to be Y2K compliant in all areas by late 1998. Phase III, to be fully completed by mid 1999, is the final major area of exposure to ensure compliance. The Company has identified three major areas determined to be critical for successful Y2K compliance: (1) financial and informational system applications, (2) manufacturing applications and (3) third party relationships. As of September 1, 1998, Jaco has completed the redesign and development of an entirely new distribution software system. All of the dates in this new database are 8 characters, including the century. The system has been tested and has been in production as of September 1, 1998. The systems include customer order entry, purchase order entry to the Company's manufacturers, warehousing and inventory control. The financial systems, Accounts Payable and General Ledger have been Y2K compliant since April 1997. The Accounts Receivable system is Y2K compliant as of September 1, 1998. Jaco's distribution facilities: warehouse, shipping and other physical handling have been tested and are Y2K compliant. The Company, as it relates to the contract manufacturing operations in accordance with Phase I of the program, is in the process of conducting an internal review of all systems and contacting all software suppliers to determine major areas of exposure to Y2K issues. In the financial and information systems area a number of applications have been identified as Y2K compliant due to their recent implementation. The contract manufacturing core financial and reporting systems are not Y2K compliant but are scheduled to be complete and fully tested by mid 1999. In the third party area, the Company has contacted most of its major third parties. These parties state that they intend to be Y2K compliant by the year 2000. The Company believes it will cost approximately $1.5 million to replace the core financial, reporting and distribution software systems. The Company utilized outside consultants to undertake a portion of the work. The Company does not expect the cost that will be incurred to be material in connection with the contract manufacturing area and the third party area. INFLATION Inflation has not had a significant impact on the Company's operations during the last three fiscal years. FORM 10-Q September 30, 1998 Page 13 PART II - OTHER INFORMATION Item 1. Legal Proceedings Nothing to Report Item 2. Changes in Securities and Use of Proceeds Nothing to Report Item 3. Defaults Upon Senior Securities Nothing to Report Item 4. Submission of Matters to a Vote of Security Holders Nothing to Report Item 5. Other Information Nothing to Report Item 6. Exhibits and Reports on Form 8-K a) Exhibits 10.13 Employment agreement between Joel Girsky and the Company 10.14 Employment agreement between Charles Girsky and the Company 10.15 Employment agreement between Jeffrey D. Gash and the Company 27.1 Financial Data Schedule 99.8.3 Amendment to Second Restated and Amended Loan and Security Agreement dated July 1, 1998 99.8.4 Amendment to Second Restated and Amended Loan and Security Agreement dated September 21, 1998 b) Reports on Form 8-K None S I G N A T U R E 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. JACO ELECTRONICS, INC. (Registrant) BY: Jeffrey D. Gash Jeffrey D. Gash, Vice President/Finance (Principal Financial Officer) DATED: November 16, 1998 EX-10.13 2 EMPLOYMENT AGMT J.GIRSKY EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT, made effective as of the 1st day of July, 1998 (the "Effective Date"), by and between Jaco Electronics, Inc., a New York corporation having offices at 145 Oser Avenue, Hauppauge, New York 11788 ("Jaco"), and Charles Girsky, residing at 3455 Twin Lake Ridge, Westlake Village, California 91361 ("Girsky"). WHEREAS, Girsky is Executive Vice President of Jaco; WHEREAS, Girsky has been employed from and after July 1, 1998, pursuant to an oral agreement of employment consistent with the terms hereof; and WHEREAS, Jaco desires to have the continued services of Girsky, and Girsky desires to continue to be employed by Jaco, on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties agree as follows: 1. Term of Employment; Duties. 1.1 Jaco hereby employs Girsky as Executive Vice President of Jaco, and Girsky hereby agrees to serve Jaco in such capacity and to perform such duties consistent therewith as Jaco's Board of Directors and/or the President from time to time shall determine for a period commencing on the Effective Date and ending on the fourth (4th) anniversary of the Effective Date (the "Initial Term"), provided, however, the term of this Employment Agreement shall be 1 automatically extended after each anniversary date of the Effective Date for an additional one year period following the Initial Term, unless either Jaco or Girsky shall provide a notice of non-renewal to the other party (the "Notice of Non-Renewal"), which notice shall be in writing and shall be delivered not less than 90 days prior to an anniversary date after the Effective Date (the "Employment Period"). In the event that a Notice of Non-Renewal is delivered by either party, this Employment Agreement shall continue for a period of three (3) years following the anniversary date which follows immediately after the date that a valid and effective Notice of Non-Renewal is delivered. By way of example, if the Notice of Non-Renewal is delivered after the second anniversary date and not less than 90 days prior to the third anniversary date of the Effective Date, this Employment Agreement shall continue until the sixth anniversary date of the Effective Date. 2. Compensation. 2.1 For all services rendered pursuant to the terms hereof, Girsky shall receive a base salary of $225,000 for each of the 12 month periods (a "Contract Year") ending June 30, 1999, and each June 30, thereafter ("Base Salary"), which Base Salary shall be paid to Girsky in equal periodic installments not less frequently than monthly. In addition and not in lieu thereof, Girsky shall be entitled to receive such fringe benefits and to participate in such benefit plans and programs as are generally made available by Jaco to other senior executive employees, including, but not limited to, health insurance. 2.2 Girsky shall receive a cash bonus (the "Cash Bonus") for each Contract Year equal to (i) two percent (2%) of Jaco's annual earnings before income taxes for the corresponding fiscal year if such earnings before income taxes are in excess of $1,000,000, and not more than 2 $2,500,000 or (ii) three percent (3%) of Jaco's earnings before income taxes for the corresponding fiscal year if such earnings before income taxes are in excess of $2,500,000 up to a maximum annual Cash Bonus of $360,000. If Jaco's earnings before income taxes are in excess of $12,000,000 for any such fiscal year, in addition to the Cash Bonus of $360,000, Girsky shall receive such number of common stock options of Jaco as shall be negotiated between Girsky and Jaco at such time (the "Option Bonus" and, together with the Cash Bonus, the "Performance Bonus"). As used herein, the term "earnings before income taxes" shall mean the income of Jaco before extraordinary items and before payment of income taxes as shown on Jaco's consolidated financial statements prepared in accordance with generally accepted accounting principles. The Performance Bonus shall be payable every year on November 1 for the preceding fiscal year. 2.3 Upon Girsky's death, his legal representative(s) shall be paid the sum of $1,000,000 (the "Death Benefit") within fifteen (15) days of Jaco's receipt of the proceeds of the insurance on Girsky's life purchased pursuant to the provisions of Section 2.4 below. If, for any reason, at the time of Girsky's death, Jaco does not have in force an insurance policy on Girsky's life, then, notwithstanding anything in this Employment Agreement to the contrary, the Death Benefit shall be due and payable within fifteen (15) days of Girsky's death. 2.4 Jaco shall use its best efforts to purchase insurance on the life of Girsky, as well as annuities or other endowment policies (collectively, "Policies"), in sufficient amounts fully to fund its obligations to Girsky under Section 2.3 above. All such policies shall be and shall remain the property of Jaco. Girsky shall cooperate fully with Jaco to enable Jaco to obtain such policies. 2.5 The obligations of Jaco to Girsky hereunder are general unsecured obligations of Jaco to Girsky, and Girsky shall have no security interest or other interest of any nature 3 whatsoever in the Policies or the proceeds thereof (except as provided in Section 2.6 below), or in any other assets of Jaco. Jaco, in its absolute discretion, may establish any reserves or special accounts or segregate assets to fund such obligations. Girsky shall not sell, transfer, assign, pledge, encumber, hypothecate or otherwise alienate any right or entitlement of his hereunder. No such purported sale, transfer, assignment, pledge, encumbrance, hypothecation or other alienation shall have any force or effect or in any way be binding upon or be enforceable against Jaco. Except as otherwise provided by law, no such right or entitlement shall be subject to attachment or garnishment. 2.6 If, at any time, Girsky ceases to be an employee of Jaco other than on account of death, Jaco, at Girsky's option, shall transfer and assign to Girsky all its right, title and interest in the Policies and Jaco shall cause the premiums on the Policies to be fully paid up to the date of Girsky's termination. Girsky shall refund to Jaco the pro rata portion (determined by the straight-line method) of premiums on the Policies, if any, paid by Jaco for any period beyond the termination date. Upon such termination of Girsky's employment and upon complete assignment of all of the Policies to Girsky, Jaco shall have no further liability to Girsky for payment of premiums under the Policies or otherwise in respect of its obligations under Sections 2.3 and 2.4 hereof. 3. Services to be Provided. 3.1 Girsky shall devote his best efforts and substantially all of his working time to the business of Jaco. 3.2 Girsky shall perform all duties, obligations, and responsibilities assigned to him by the Board of Directors and/or the President and ordinarily performed by a person employed 4 as a senior executive officer, and shall devote his full attention to the performance of the duties assigned to him. 3.3 If duly elected, Girsky shall also serve as a director of Jaco and as officer and/or director of any of its subsidiaries, whether now existing or hereafter established or acquired, and he shall perform such duties as are assigned to him, from time to time, by the Board of Directors and/or the President of Jaco or any of its subsidiaries. 4. Termination of Employment. 4.1 During the Employment Period, Girsky's employment may be terminated by the Board of Directors of Jaco on the occurrence of any one or more of the following events: (a) The death of Girsky; (b) Subject to the provisions of Section 4.2 below, the disability of Girsky;or (c) For "Cause",which shall mean (i) the willful failure by Girsky substantially to perform his duties hereunder for reasons other than death or disability; (ii) the willful engaging by Girsky in misconduct materially injurious to Jaco; or (iii) the commission by Girsky of an act constituting common law fraud or a felony. 4.2 If Girsky becomes mentally or physically disabled for a period of six (6) consecutive months so that he is not able to perform his duties substantially as contemplated herein ("Disability"), Jaco's obligations to pay the Base Salary and the Performance Bonus shall cease from and after the last day of such six (6) month period and shall not be resumed unless and until Girsky shall have returned to his duties on a full time basis for a period of two (2) consecutive months. 5 During such two (2) month period, Girsky shall be paid at the rates of Base Salary and Performance Bonus which would then have been prevailing hereunder had he not become so disabled. If Girsky's Disability becomes permanent, Jaco, at its option, may terminate Girsky's employment with Jaco and its obligation hereunder to pay the Base Salary and the Performance Bonus. Girsky's Disability shall be deemed to have become permanent when, as a result of the injury or sickness, Girsky becomes wholly and continuously disabled and is thus prevented from performing the material and substantial duties of his employment as set forth in Section 1.1 above and while under the care of a physician. 5. Reimbursement of Expenses. Jaco shall reimburse Girsky for all reasonable expenses incurred in connection with the promotion of the business of Jaco, including expenses for travel, entertainment and similar expenses incurred by Girsky on Jaco's behalf. No such reimbursement shall be made except upon the presentation by Girsky of an itemized account of such expenses or other evidence thereof for which reimbursement then is being sought, all in form reasonably satisfactory to Jaco. 6. Indemnity. Jaco, to the maximum extent it may provide indemnification to an officer or director under applicable law, shall indemnify Girsky and hold him harmless from any and all liability arising out of any act or failure to act undertaken by him in good faith while performing services for Jaco, and shall use its best efforts to obtain coverage for him under any insurance policy now in force or hereafter obtained during the Employment Period covering officers and directors of Jaco against claims made against them or any of them for any act or failure to act in such capacities. 6 Jaco shall pay all expenses, including reasonable attorneys' fees, actually or necessarily incurred by Girsky in connection with the defense of any action, suit, or proceeding arising out of any such claim and in connection with any appeal arising therefrom. 7. Disclosure of Information. All memoranda, notes, records, or other documents made or compiled by Girsky or made available to him during the course of his employment with Jaco concerning the business of Jaco shall be Jaco's property and shall be delivered to Jaco by Girsky on the termination of Girsky's employment. Unless authorized by Jaco, Girsky shall not use for himself or others or divulge to others, any proprietary or confidential information of Jaco obtained by him as a result of his employment. For purposes of this Section 7, the term "proprietary or confidential information" shall mean all information which (i) is known only to Girsky or to Girsky and employees, former employees, consultants of Jaco, or others in a confidential relationship with Jaco, (ii) relates to specific matters such as trade secrets, customers, potential customers, vendor lists, pricing and credit techniques, research and development activities, books and records, and commission schedules, as they may exist from time to time, which Girsky may have acquired or obtained by virtue of work heretofore or hereafter performed for or on behalf of Jaco or which he may acquire or may have acquired knowledge of during the performance of such work, and (iii) is not readily available to others. In the event of a breach or a threatened breach by Girsky of the provisions of this Section 7, Jaco shall be entitled to an injunction restraining Girsky from disclosing, in whole or in part, the aforementioned proprietary or confidential information of Jaco, or from rendering any services to any person, firm, corporation, association, or other entity to whom or to which such proprietary or confidential information, in whole or in part, has been disclosed or 7 is threatened to be disclosed. Nothing contained herein shall be construed as prohibiting Jaco from pursuing any other remedies available to Jaco for such breach or threatened breach, including the recovery of damages from Girsky. 8. Restrictive Covenants. 8.1 Girsky hereby acknowledges and recognizes the highly competitive nature of Jaco's business and, accordingly, in consideration of the premises contained herein, agrees that during the Employment Period and thereafter until the Designated Date (as hereinafter defined) he will not: (i) directly or indirectly engage in any Competitive Activity (as hereinafter defined), whether such engagement shall be as an officer, director, employee, consultant, agent, lender, stockholder, or other participant; or (ii) assist others in engaging in any Competitive Activity. The term "Competitive Activity" shall mean and shall include soliciting, raiding, enticing, or inducing, individually or in concert with others, (i) any person or entity to be a customer for the same or similar services for which that person or entity engaged Jaco, if such person or entity (A) was a customer of Jaco's during the Employment Period or at any time thereafter prior to the Designated Date, or (B) was solicited by Jaco to be a customer during the one-year period prior to the termination of this Employment Agreement; (ii) any manufacturer or supplier whose products are distributed by Jaco at the time this Employment Agreement is terminated to act as a manufacturer or supplier for any other party of the same or similar goods that it supplies to Jaco; or (iii) any employee of Jaco to leave Jaco or to do business with any enterprise or business which competes with Jaco. 8 8.2 As used in this Section 8, the "Designated Date"shall mean any of the following dates: (a) in the event Girsky willfully terminates his employment with Jaco in violation of this Employment Agreement prior to the expiration of the Employment Period, the term "Designated Date" shall mean the first anniversary of the date of such termination; (b) in the event Jaco terminates the employment of Girsky under this Employment Agreement for Cause, the term "Designated Date" shall mean the first anniversary of the date of such termination; or (c) in the event Jaco terminates the employment of Girsky without cause, the term "Designated Date" shall mean the date of such termination. 8.3 It is the desire and intent of the parties that the provisions of this Section 8 shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any provision of this Section 8 shall be adjudicated to be invalid or unenforceable in any such jurisdiction, such provision of this Section 8 shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such deletion to apply only with respect to the operation of such provision of this Section 8 in the particular jurisdiction in which such adjudication is made. In addition, if the scope of any restriction contained in this Section 8 is adjudicated to be too broad to permit enforcement thereof to its fullest extent, then such restriction shall be enforced to the maximum extent permitted by law, and Girsky hereby consents and agrees that such scope may be judicially modified accordingly in any proceeding brought to enforce such restriction. 9 8.4 In the event of a breach or threatened breach by Girsky of the provisions of this Section 8, Jaco shall be entitled to an injunction restraining him from such breach. Nothing contained herein shall be construed as prohibiting Jaco from pursuing any other remedies available to it for such breach or threatened breach or any other breach of this Employment Agreement. 9. Consolidation; Merger; Change of Control. 9.1 In the event of any consolidation or merger of Jaco into or with another corporation during the Employment Period, and Jaco is not the surviving entity, or the sale of all or substantially all of the assets of Jaco to another corporation during the Employment Period, or in the event that fifty (50%) percent or more of the voting common stock of Jaco shall be owned by one or more individuals or entities, who are acting in concert or as part of an affiliated group (other than a group one of the members of which is Girsky) at any time during the Employment Period, (the occurrence of any of the foregoing, a "Change of Control"), then (i) Jaco shall pay or cause to be paid to Girsky a certified or cashier's check in an amount equal to two hundred and fifty percent (250%) of the average of Girsky's Base Salary plus Cash Bonus for the previous five (5) years; and (ii) this Employment Agreement may be assigned by Jaco or any such successor or surviving corporation on sixty (60) days prior written notice to Girsky; provided, however, such assignment shall not cause Girsky's principal place of employment to be moved to any space located more than forty-five (45) miles from Girsky's principal place of employment prior to a Change of Control without his prior written consent. 9.2 Notwithstanding the provisions of Section 9.1 above, any such payments shall be made only in an amount which, when taken together with the present value of all other payments 10 to Girsky that are contingent on a Change in Control of Jaco, computed in accordance with the provisions of Section 280G(d)(4) of the Internal Revenue Code of 1986 (the "Code"), does not equal or exceed three times Girsky's "Base Amount", as computed in accordance with Code Section 280G(b)(3). 10. Notices. Any notices required or permitted to be given under the provisions of this Employment Agreement shall be in writing and delivered personally, sent by recognized overnight courier or mailed by certified or registered mail, return receipt requested, postage prepaid to the persons and at the addresses first set forth above, or to such other person at such other address as any party may request by notice in writing to the other party to this Employment Agreement. Notices which are hand delivered or delivered by recognized overnight courier shall be effective on delivery. Notices which are mailed shall be effective on the third day after mailing. 11. Construction, This Employment Agreement shall be construed in accordance with, and be governed by, the laws of the State of New York for contracts entered into and to be performed in New York. 12. Successors and Assigns. This Employment Agreement shall be binding on the successors and assigns of Jaco and shall inure to the benefit and be enforceable by and against its successors and assigns. This Employment Agreement is personal in nature and may not be assigned or transferred by Girsky without the prior written consent of Jaco. 11 13. Entire Agreement. This Employment Agreement contains the entire understanding and agreement between the parties relating to the subject matter hereof, and neither this Employment Agreement nor any provision hereof may be waived, modified, amended, changed, discharged, or terminated, except by an agreement in writing signed by the party against whom enforcement of any waiver, modification, change, amendment, discharge, or termination is sought. 14. Counterparts. This Employment Agreement may be executed simultaneously in counterparts, each of which shall be deemed an original, and all of which counterparts shall together constitute a single agreement. 15. Illegality. In case any one or more of the provisions of this Employment Agreement shall be invalid, illegal, or unenforceable in any respect, the validity, the legality, and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. 16. Captions. The captions of the sections hereof are for convenience only and shall not control or affect the meaning or construction of any of the terms or provisions of this Employment Agreement. 12 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. JACO ELECTRONICS, INC. By: JOEL H., GIRSKY President CHARLES GIRSKY 13 EX-10.14 3 EMPLOYMENT AGMT C.GIRSKY EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT, made effective as of the 1st day of July, 1997 (the "Effective Date"), by and between Jaco Electronics, Inc., a New York corporation having offices at 145 Oser Avenue, Hauppauge, New York 11788 ("Jaco"), and Joel H. Girsky, residing at 29 Winter Lane, Dix Hills, New York 11746 ("Girsky"). WHEREAS, Girsky is Chairman of the Board of Directors ("Chairman"), President,and Treasurer of Jaco; WHEREAS, Girsky's last written employment agreement with Jaco expired on June 30, 1997; and WHEREAS, Girsky has been employed from and after July 1, 1997, pursuant to an oral agreement of employment consistent with the terms hereof; and WHEREAS, Jaco desires to have the continued services of Girsky, and Girsky desires to continue to be employed by Jaco, on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties agree as follows: 1. Term of Employment; Duties. 1.1 Jaco hereby employs Girsky as Chairman and President of Jaco, and Girsky hereby agrees to serve Jaco in such capacities and to perform such duties consistent therewith as Jaco's Board of Directors from time to time shall determine for a period commencing on the 1 Effective Date and ending on the fourth (4th) anniversary of the Effective Date (the "Initial Term"), provided, however, the term of this Employment Agreement shall be automatically extended after each anniversary date of the Effective Date for an additional one year period following the Initial Term, unless either Jaco or Girsky shall provide a notice of non-renewal to the other party (the "Notice of Non-Renewal"), which notice shall be in writing and shall be delivered not less than 90 days prior to the third anniversary date after the Effective Date (the "Employment Period"). In the event that a Notice of Non-Renewal is delivered by either party, this Employment Agreement shall continue for a period of three (3) years following the anniversary date which follows immediately after the date that a valid and effective Notice of Non-Renewal is delivered. By way of example, if the Notice of Non-Renewal is delivered after the second anniversary date and not less than 90 days prior to the third anniversary date of the Effective Date, this Employment Agreement shall continue until the sixth anniversary date of the Effective Date. 2. Compensation. 2.1 For all services rendered pursuant to the terms hereof, Girsky shall receive a base salary of $325,000 for each of the 12 month periods (a "Contract Year") ending June 30, 1998, and each June 30, thereafter ("Base Salary"), which Base Salary shall be paid to Girsky in equal periodic installments not less frequently than monthly. In addition and not in lieu thereof, Girsky shall be entitled to receive such fringe benefits and to participate in such benefit plans and programs as are generally made available by Jaco to other senior executive employees, including, but not limited to, health insurance. 2 2.2 Girsky shall receive a cash bonus (the "Cash Bonus") for each Contract Year equal to (i) four percent (4%) of Jaco's annual earnings before income taxes for the corresponding fiscal year if such earnings before income taxes are in excess of $1,000,000, and not more than $2,500,000 or (ii) six percent (6%) of Jaco's earnings before income taxes for the corresponding fiscal year if such earnings before income taxes are in excess of $2,500,000 up to a maximum annual Cash Bonus of $720,000. If Jaco's earnings before income taxes are in excess of $12,000,000 for any such fiscal year, in addition to the Cash Bonus of $720,000, Girsky shall receive such number of common stock options of Jaco as shall be negotiated between Girsky and Jaco at such time (the "Option Bonus" and, together with the Cash Bonus, the "Performance Bonus"). As used herein, the term "earnings before income taxes" shall mean the income of Jaco before extraordinary items and before payment of income taxes as shown on Jaco's consolidated financial statements prepared in accordance with generally accepted accounting principles. The Performance Bonus shall be payable every year on November 1 for the preceding fiscal year. 2.3 In addition to the Base Salary and Performance Bonus and not in lieu thereof, in accordance with Section 2.4 hereof, Girsky shall receive as additional compensation the product of $50,000, multiplied by the number of years which shall have passed since July 1, 1984 and until the end of the last day on which Girsky shall be employed hereunder ("Deferred Compensation"). Jaco may, but shall not be obligated to, set aside funds with which to pay the Deferred Compensation, it being understood and agreed that such funds are and shall be the sole and exclusive property of Jaco, free from any lien or claim of Girsky. Should Girsky so request, Jaco, in its sole and absolute discretion, may, but shall not be obligated to, invest such funds in one or more nationally recognized, institutionally managed mutual funds which invest in publicly traded equity 3 or debt securities. Should Girsky make any such request and should Jaco make any such investment in accordance with such request, the Deferred Compensation shall be increased by an amount equal to any after tax gain or after tax income realized therefrom or reduced by an amount equal to any loss realized therefrom, as the case may be. For purposes of calculating after tax gain, income or loss for purposes of this Section 2.3, it shall be assumed that Jaco is taxable on its income at the highest applicable marginal rates. 2.4 The Deferred Compensation shall become payable to Girsky in its entirety not later than January 15th of the year next following the later to occur of the following events: (a) Girsky's attainment of age 60; or (b) Girsky's cessation of employment hereunder for any reason; provided, however, if Girsky continues to be employed by Jaco after the expiration of this Employment Agreement in a substantially similar executive position to that provided for hereunder, the Deferred Compensation shall not become payable to him until cessation of such employment, whether or not such employment is pursuant to a written agreement. 2.5 (a) Upon Girsky's death, his legal representative(s) shall be paid the sum of $1,500,000 (the "Death Benefit") within fifteen (15) days of Jaco's receipt of the proceeds of the insurance on Girsky's life purchased pursuant to the provisions of Section 2.6 below. If, for any reason, at the time of Girsky's death, Jaco does not have in force an insurance policy on Girsky's life, then, notwithstanding anything in this Employment Agreement to the contrary, the Death Benefit shall be due and payable within fifteen (15) days of Girsky's death. (b) Upon Girsky's retirement on account of permanent disability (as that term is defined in Section 4.2 below) during the term hereof, he shall be paid the sum of $500,000 4 (the "Disability Benefit") in twelve (12) equal monthly installments, commencing with the month in which Jaco receives the proceeds of the annuity or other endowment policy purchased for Girsky's benefit pursuant to the provisions of Section 2.6 below. If, for any reason, at the time of Girsky's retirement on account of permanent disability, Jaco does not have in force an annuity or other endowment policy for the benefit of Girsky, then, notwithstanding anything in this Employment Agreement to the contrary, Jaco shall commence monthly payments of the Disability Benefit in the month next succeeding the month of Girsky's retirement on account of permanent disability. 2.6 Jaco shall use its best efforts to purchase insurance on the life of Girsky, and insurance against Girsky becoming disabled, as well as annuities or other endowment policies (collectively, "Policies"), in sufficient amounts fully to fund its obligations to Girsky under Section 2.5 above. All such policies shall be and shall remain the property of Jaco. Girsky shall cooperate fully with Jaco to enable Jaco to obtain such policies. 2.7 The obligations of Jaco to Girsky hereunder are general unsecured obligations of Jaco to Girsky, and Girsky shall have no security interest or other interest of any nature whatsoever in the Policies or the proceeds thereof (except as provided in Section 2.8 below), or in any other assets of Jaco. Jaco, in its absolute discretion, may establish any reserves or special accounts or segregate assets to fund such obligations. Girsky shall not sell, transfer, assign, pledge, encumber, hypothecate or otherwise alienate any right or entitlement of his hereunder. No such purported sale, transfer, assignment, pledge, encumbrance, hypothecation or other alienation shall have any force or effect or in any way be binding upon or be enforceable against Jaco. Except as otherwise provided by law, no such right or entitlement shall be subject to attachment or garnishment. 5 2.8 If, at any time, Girsky ceases to be an employee of Jaco other than on account of death or retirement on account of permanent disability, Jaco, at Girsky's option, shall transfer and assign to Girsky all its right, title and interest in the Policies and Jaco shall cause the premiums on the Policies to be fully paid up to the date of Girsky's termination. Girsky shall refund to Jaco the pro rata portion (determined by the straight-line method) of premiums on the Policies, if any, paid by Jaco for any period beyond the termination date. Upon such termination of Girsky's employment and upon complete assignment of all of the Policies to Girsky, Jaco shall have no further liability to Girsky for payment of premiums under the Policies or otherwise in respect of its obligations under Sections 2.5 and 2.6 hereof. 3. Services to be Provided. 3.1 Girsky shall devote his best efforts and substantially all of his working time to the business of Jaco. 3.2 Girsky shall perform all duties, obligations, and responsibilities assigned to him by the Board of Directors and ordinarily performed by a person employed as a senior executive officer, and shall devote his full attention to the performance of the duties assigned to him. 3.3 If duly elected, Girsky shall also serve as a director of Jaco and as an officer and/or director of any of its subsidiaries, whether now existing or hereafter established or acquired, and he shall perform such duties as are assigned to him, from time to time, by the Board of Directors of Jaco or any of its subsidiaries. 6 4. Termination of Employment. 4.1 During the Employment Period, Girsky's employment may be terminated by the Board of Directors of Jaco on the occurrence of any one or more of the following events: (a) The death of Girsky; (b) Subject to the provisions of Section 4.2 below, the disability of Girsky; or (c) For "Cause", which shall mean (i) the willful failure by Girsky substantially to perform his duties hereunder for reasons other than death or disability; (ii) the willful engaging by Girsky in misconduct materially injurious to Jaco; or (iii) the commission by Girsky of an act constituting common law fraud or a felony. 4.2 If Girsky becomes mentally or physically disabled for a period of six (6) consecutive months so that he is not able to perform his duties substantially as contemplated herein ("Disability"), Jaco's obligations to pay the Base Salary and the Performance Bonus shall cease from and after the last day of such six (6) month period and shall not be resumed unless and until Girsky shall have returned to his duties on a full time basis for a period of two (2) consecutive months. During such two (2) month period, Girsky shall be paid at the rates of Base Salary and Performance Bonus which would then have been prevailing hereunder had he not become so disabled. If Girsky's Disability becomes permanent, Jaco, at its option, may terminate Girsky's employment with Jaco and its obligation hereunder to pay the Base Salary and the Performance Bonus. Girsky's Disability shall be deemed to have become permanent when, as a result of the injury or sickness, Girsky becomes wholly and continuously disabled and is thus prevented from performing the material and substantial duties of his employment as set forth in Section 1.1 above and while under the care of 7 a physician. 5. Reimbursement of Expenses. Jaco shall reimburse Girsky for all reasonable expenses incurred in connection with the promotion of the business of Jaco, including expenses for travel, entertainment and similar expenses incurred by Girsky on Jaco's behalf. No such reimbursement shall be made except upon the presentation by Girsky of an itemized account of such expenses or other evidence thereof for which reimbursement then is being sought, all in form reasonably satisfactory to Jaco. 6. Indemnity. Jaco, to the maximum extent it may provide indemnification to an officer or director under applicable law, shall indemnify Girsky and hold him harmless from any and all liability arising out of any act or failure to act undertaken by him in good faith while performing services for Jaco, and shall use its best efforts to obtain coverage for him under any insurance policy now in force or hereafter obtained during the Employment Period covering officers and directors of Jaco against claims made against them or any of them for any act or failure to act in such capacities. Jaco shall pay all expenses, including reasonable attorneys' fees, actually or necessarily incurred by Girsky in connection with the defense of any action, suit, or proceeding arising out of any such claim and in connection with any appeal arising therefrom. 7. Disclosure of Information. All memoranda, notes, records, or other documents made or compiled by Girsky or made available to him during the course of his employment with 8 Jaco concerning the business of Jaco shall be Jaco's property and shall be delivered to Jaco by Girsky on the termination of Girsky's employment. Unless authorized by Jaco, Girsky shall not use for himself or others or divulge to others, any proprietary or confidential information of Jaco obtained by him as a result of his employment. For purposes of this Section 7, the term "proprietary or confidential information" shall mean all information which (i) is known only to Girsky or to Girsky and employees, former employees, consultants of Jaco, or others in a confidential relationship with Jaco, (ii) relates to specific matters such as trade secrets, customers, potential customers, vendor lists, pricing and credit techniques, research and development activities, books and records, and commission schedules, as they may exist from time to time, which Girsky may have acquired or obtained by virtue of work heretofore or hereafter performed for or on behalf of Jaco or which he may acquire or may have acquired knowledge of during the performance of such work, and (iii) is not readily available to others. In the event of a breach or a threatened breach by Girsky of the provisions of this Section 7, Jaco shall be entitled to an injunction restraining Girsky from disclosing, in whole or in part, the aforementioned proprietary or confidential information of Jaco, or from rendering any services to any person, firm, corporation, association, or other entity to whom or to which such proprietary or confidential information, in whole or in part, has been disclosed or is threatened to be disclosed. Nothing contained herein shall be construed as prohibiting Jaco from pursuing any other remedies available to Jaco for such breach or threatened breach, including the recovery of damages from Girsky. 9 8. Restrictive Covenants. 8.1 Girsky hereby acknowledges and recognizes the highly competitive nature of Jaco's business and, accordingly, in consideration of the premises contained herein, agrees that during the Employment Period and thereafter until the Designated Date (as hereinafter defined) he will not: (i) directly or indirectly engage in any Competitive Activity (as hereinafter defined), whether such engagement shall be as an officer, director, employee, consultant, agent, lender, stockholder, or other participant; or (ii) assist others in engaging in any Competitive Activity. The term "Competitive Activity" shall mean and shall include soliciting, raiding, enticing, or inducing, individually or in concert with others, (i) any person or entity to be a customer for the same or similar services for which that person or entity engaged Jaco, if such person or entity (a) was a customer of Jaco's during the Employment Period or at any time thereafter prior to the Designated Date, or (b) was solicited by Jaco to be a customer during the one-year period prior to the termination of this Employment Agreement; (ii) any manufacturer or supplier whose products are distributed by Jaco at the time this Employment Agreement is terminated to act as a manufacturer or supplier for any other party of the same or similar goods that it supplies to Jaco; or (iii) any employee of Jaco to leave Jaco or to do business with any enterprise or business which competes with Jaco. 8.2 As used in this Section 8, the "Designated Date" shall mean any of the following dates: (a) in the event Girsky willfully terminates his employment with Jaco in violation of this Employment Agreement prior to the expiration of the Employment Period, the term "Designated Date" shall mean the first anniversary of the date of such termination; 10 (b) in the event Jaco terminates the employment of Girsky under this Employment Agreement for Cause, the term "Designated Date" shall mean the first anniversary of the date of such termination; or (c) in the event Jaco terminates the employment of Girsky without cause, the term "Designated Date" shall mean the date of such termination. 8.3 It is the desire and intent of the parties that the provisions of this Section 8 shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any provision of this Section 8 shall be adjudicated to be invalid or unenforceable in any such jurisdiction, such provision of this Section 8 shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such deletion to apply only with respect to the operation of such provision of this Section 8 in the particular jurisdiction in which such adjudication is made. In addition, if the scope of any restriction contained in this Section 8 is adjudicated to be too broad to permit enforcement thereof to its fullest extent, then such restriction shall be enforced to the maximum extent permitted by law, and Girsky hereby consents and agrees that such scope may be judicially modified accordingly in any proceeding brought to enforce such restriction. 8.4 In the event of a breach or threatened breach by Girsky of the provisions of this Section 8, Jaco shall be entitled to an injunction restraining him from such breach. Nothing contained herein shall be construed as prohibiting Jaco from pursuing any other remedies available to it for such breach or threatened breach or any other breach of this Employment Agreement. 11 9. Consolidation; Merger; Change of Control. 9.1 In the event of any consolidation or merger of Jaco into or with another corporation during the Employment Period, and Jaco is not the surviving entity, or the sale of all or substantially all of the assets of Jaco to another corporation during the Employment Period, or in the event that fifty (50%) percent or more of the voting common stock of Jaco shall be owned by one or more individuals or entities, who are acting in concert or as part of an affiliated group (other than a group one of the members of which is Girsky) at any time during the Employment Period, (the occurrence of any of the foregoing, a "Change of Control"), then (i) Jaco shall pay or cause to be paid to Girsky a certified or cashier's check in an amount equal to two hundred and ninety-nine percent (299%) of the average of Girsky's Base Salary plus Cash Bonus for the previous five (5) years; and (ii) this Employment Agreement may be assigned by Jaco or any such successor or surviving corporation on sixty (60) days prior written notice to Girsky; provided, however, such assignment shall not cause Girsky's principal place of employment to be moved to any space located more than forty-five (45) miles from Girsky's principal place of employment prior to a Change of Control without his prior written consent. 9.2 Notwithstanding the provisions of Section 9.1 above, any such payments shall be made only in an amount which, when taken together with the present value of all other payments to Girsky that are contingent on a Change in Control of Jaco, computed in accordance with the provisions of Section 280G(d)(4) of the Internal Revenue Code of 1986 (the "Code"), does not equal or exceed three times Girsky's "Base Amount", as computed in accordance with Code Section 280G(b)(3). 12 10. Notices. Any notices required or permitted to be given under the provisions of this Employment Agreement shall be in writing and delivered personally, sent by recognized overnight courier or mailed by certified or registered mail, return receipt requested, postage prepaid to the persons and at the addresses first set forth above, or to such other person at such other address as any party may request by notice in writing to the other party to this Employment Agreement. Notices which are hand delivered or delivered by recognized overnight courier shall be effective on delivery. Notices which are mailed shall be effective on the third day after mailing. 11. Construction, This Employment Agreement shall be construed in accordance with, and be governed by, the laws of the State of New York for contracts entered into and to be performed in New York. 12. Successors and Assigns. This Employment Agreement shall be binding on the successors and assigns of Jaco and shall inure to the benefit and be enforceable by and against its successors and assigns. This Employment Agreement is personal in nature and may not be assigned or transferred by Girsky without the prior written consent of Jaco. 13. Entire Agreement. This Employment Agreement contains the entire understanding and agreement between the parties relating to the subject matter hereof, and neither this Employment Agreement nor any provision hereof may be waived, modified, amended, changed, discharged, or terminated, except by an agreement in writing signed by the party against whom enforcement of any waiver, modification, change, amendment, discharge, or termination is sought. 13 14. Counterparts. This Employment Agreement may be executed simultaneously in counterparts, each of which shall be deemed an original, and all of which counterparts shall together constitute a single agreement. 15. Illegality. In case any one or more of the provisions of this Employment Agreement shall be invalid, illegal, or unenforceable in any respect, the validity, the legality, and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. 16. Captions. The captions of the sections hereof are for convenience only and shall not control or affect the meaning or construction of any of the terms or provisions of this Employment Agreement. 14 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. JACO ELECTRONICS, INC. By: HERBERT ENTENBERG Vice President JOEL H. GIRSKY 15 EX-10.15 4 EMPLOYMENT AGMT J. GASH EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT, made effective as of the 1st day of July, 1998 (the "Effective Date"), by and between Jaco Electronics, Inc., a New York corporation having offices at 145 Oser Avenue, Hauppauge, New York 11788 ("Jaco"), and Jeffrey D. Gash, residing at 12 Carpenter Lane, Hauppauge, New York 11788 ("Gash"). WHEREAS, Gash is the Vice President of Finance of Jaco; WHEREAS, Gash has been employed from and after July 1, 1998, pursuant to an oral agreement of employment consistent with the terms hereof; and WHEREAS, Jaco desires to have the continued services of Gash, and Gash desires to continue to be employed by Jaco, on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties agree as follows: 1. Term of Employment; Duties. 1.1 Jaco hereby employs Gash as Vice President of Finance of Jaco, and Gash hereby agrees to serve Jaco in such capacity and to perform such duties consistent therewith as Jaco's Board of Directors and/or President from time to time shall determine for a period commencing on the Effective Date and ending on the fourth (4th) anniversary of the Effective Date (the "Initial Term"), provided, however, the term of this Employment Agreement shall be 1 automatically extended after each anniversary date of the Effective Date for an additional one year period following the Initial Term, unless either Jaco or Gash shall provide a notice of non-renewal to the other party (the "Notice of Non-Renewal"), which notice shall be in writing and shall be delivered not less than 90 days prior to an anniversary date after the Effective Date (the "Employment Period"). In the event that a Notice of Non-Renewal is delivered by either party, this Employment Agreement shall continue for a period of three (3) years following the anniversary date which follows immediately after the date that a valid and effective Notice of Non-Renewal is delivered. By way of example, if the Notice of Non-Renewal is delivered after the second anniversary date and not less than 90 days prior to the third anniversary date of the Effective Date, this Employment Agreement shall continue until the sixth anniversary date of the Effective Date. 2. Compensation. 2.1 For all services rendered pursuant to the terms hereof, Gash shall receive a base salary of $125,000 for each of the 12 month periods (a "Contract Year") ending June 30, 1999, and each June 30, thereafter ("Base Salary"), which Base Salary may be reviewed by the Board of Directors and the President for each of the Contract Years after the fiscal year ending June 30, 1998, to determine whether the Base Salary should be increased for any such year. The Base Salary shall be paid to Gash in equal periodic installments not less frequently than monthly. In addition and not in lieu thereof, Gash shall be entitled to receive such fringe benefits and to participate in such benefit plans and programs as are generally made available by Jaco to other senior executive employees, including, but not limited to, health insurance. 2 2.2 Gash may receive a cash bonus (the "Cash Bonus") for each Contract Year as shall be determined by the Board of Directors and the President. The Cash Bonus, if any, shall be payable every year on or before November 1 for the preceding fiscal year. 2.3 Upon Gash's death, his legal representative(s) shall be paid the sum of $750,000 (the "Death Benefit") within fifteen (15) days of Jaco's receipt of the proceeds of the insurance on Gash's life purchased pursuant to the provisions of Section 2.4 below. If, for any reason, at the time of Gash's death, Jaco does not have in force an insurance policy on Gash's life, then, notwithstanding anything in this Employment Agreement to the contrary, the Death Benefit shall be due and payable within fifteen (15) days of Gash's death. 2.4 Jaco shall use its best efforts to purchase insurance on the life of Gash, as well as annuities or other endowment policies (collectively, "Policies"), in sufficient amounts fully to fund its obligations to Gash under Section 2.3 above. All such policies shall be and shall remain the property of Jaco. Gash shall cooperate fully with Jaco to enable Jaco to obtain such policies. 2.5 The obligations of Jaco to Gash hereunder are general unsecured obligations of Jaco to Gash, and Gash shall have no security interest or other interest of any nature whatsoever in the Policies or the proceeds thereof (except as provided in Section 2.6 below), or in any other assets of Jaco. Jaco, in its absolute discretion, may establish any reserves or special accounts or segregate assets to fund such obligations. Gash shall not sell, transfer, assign, pledge, encumber, hypothecate or otherwise alienate any right or entitlement of his hereunder. No such purported sale, transfer, assignment, pledge, encumbrance, hypothecation or other alienation shall have any force or effect or in any way be binding upon or be enforceable against Jaco. Except as otherwise provided by law, no such right or entitlement shall be subject to attachment or garnishment. 3 2.6 If, at any time, Gash ceases to be an employee of Jaco other than on account of death, Jaco, at Gash's option, shall transfer and assign to Gash all its right, title and interest in the Policies and Jaco shall cause the premiums on the Policies to be fully paid up to the date of Gash's termination. Gash shall refund to Jaco the pro rata portion (determined by the straight-line method) of premiums on the Policies, if any, paid by Jaco for any period beyond the termination date. Upon such termination of Gash's employment and upon complete assignment of all of the Policies to Gash, Jaco shall have no further liability to Gash for payment of premiums under the Policies or otherwise in respect of its obligations under Sections 2.3 and 2.4 hereof. 3. Services to be Provided. 3.1 Gash shall devote his best efforts and substantially all of his time to the business of Jaco. 3.2 Gash shall perform all duties, obligations, and responsibilities assigned to him by the Board of Directors and/or the President and ordinarily performed by a person employed as a senior executive officer, and shall devote his full attention to the performance of the duties assigned to him. 3.3 If duly elected, Gash shall serve as an officer and/or director of any of Jaco's subsidiaries, whether now existing or hereafter established or acquired, and he shall perform such duties as are assigned to him, from time to time, by the Board of Directors and/or the President of Jaco or any of its subsidiaries. 4 4. Termination of Employment. 4.1 During the Employment Period, Gash's employment may be terminated by the Board of Directors of Jaco on the occurrence of any one or more of the following events: (a) The death of Gash; (b) Subject to the provisions of Section 4.2 below, the disability of Gash; or (c) For "Cause",which shall mean (i) the willful failure by Gash substantially to perform his duties hereunder for reasons other than death or disability; (ii) the willful engaging by Gash in misconduct materially injurious to Jaco; or (iii) the commission by Gash of an act constituting common law fraud or a felony. 4.2 If Gash becomes mentally or physically disabled for a period of six (6) consecutive months so that he is not able to perform his duties substantially as contemplated herein ("Disability"), Jaco's obligations to pay the Cash Base Salary and the Cash Bonus shall cease from and after the last day of such six (6) month period and shall not be resumed unless and until Gash shall have returned to his duties on a full time basis for a period of two (2) consecutive months. During such two (2) month period, Gash shall be paid at the rates of Base Salary and Cash Bonus which would then have been prevailing hereunder had he not become so disabled. If Gash's Disability becomes permanent, Jaco, at its option, may terminate Gash's employment with Jaco and its obligation hereunder to pay the Base Salary and the Cash Bonus. Gash's Disability shall be deemed to have become permanent when, as a result of the injury or sickness, Gash becomes wholly and continuously disabled and is thus prevented from performing the material and substantial duties of his employment as set forth in Section 1.1 above and while under the care of a physician. 5 5. Reimbursement of Expenses. Jaco shall reimburse Gash for all reasonable expenses incurred in connection with the promotion of the business of Jaco, including expenses for travel, entertainment and similar expenses incurred by Gash on Jaco's behalf. No such reimbursement shall be made except upon the presentation by Gash of an itemized account of such expenses or other evidence thereof for which reimbursement then is being sought, all in form reasonably satisfactory to Jaco. 6. Indemnity. Jaco, to the maximum extent it may provide indemnification to an officer or director under applicable law, shall indemnify Gash and hold him harmless from any and all liability arising out of any act or failure to act undertaken by him in good faith while performing services for Jaco, and shall use its best efforts to obtain coverage for him under any insurance policy now in force or hereafter obtained during the Employment Period covering officers and directors of Jaco against claims made against them or any of them for any act or failure to act in such capacities. Jaco shall pay all expenses, including reasonable attorneys' fees, actually or necessarily incurred by Gash in connection with the defense of any action, suit, or proceeding arising out of any such claim and in connection with any appeal arising therefrom. 7. Disclosure of Information. All memoranda, notes, records, or other documents made or compiled by Gash or made available to him during the course of his employment with Jaco concerning the business of Jaco shall be Jaco's property and shall be delivered to Jaco by Gash on the termination of Gash's employment. Unless authorized by Jaco, Gash shall not use for himself or others or divulge to others, any proprietary or confidential information of Jaco obtained by him 6 as a result of his employment. For purposes of this Section 7, the term "proprietary or confidential information" shall mean all information which (i) is known only to Gash or to Gash and employees, former employees, consultants of Jaco, or others in a confidential relationship with Jaco, (ii) relates to specific matters such as trade secrets, customers, potential customers, vendor lists, pricing and credit techniques, research and development activities, books and records, and commission schedules, as they may exist from time to time, which Gash may have acquired or obtained by virtue of work heretofore or hereafter performed for or on behalf of Jaco or which he may acquire or may have acquired knowledge of during the performance of such work, and (iii) is not readily available to others. In the event of a breach or a threatened breach by Gash of the provisions of this Section 7, Jaco shall be entitled to an injunction restraining Gash from disclosing, in whole or in part, the aforementioned proprietary or confidential information of Jaco, or from rendering any services to any person, firm, corporation, association, or other entity to whom or to which such proprietary or confidential information, in whole or in part, has been disclosed or is threatened to be disclosed. Nothing contained herein shall be construed as prohibiting Jaco from pursuing any other remedies available to Jaco for such breach or threatened breach, including the recovery of damages from Gash. 8. Restrictive Covenants. 8.1 Gash hereby acknowledges and recognizes the highly competitive nature of Jaco's business and, accordingly, in consideration of the premises contained herein, agrees that during the Employment Period and thereafter until the Designated Date (as hereinafter defined) he will not: (i) directly or indirectly engage in any Competitive Activity (as hereinafter defined), whether such engagement shall be as an officer, director, employee, consultant, agent, lender, 7 stockholder, or other participant; or (ii) assist others in engaging in any Competitive Activity. The term "Competitive Activity" shall mean and shall include soliciting, raiding, enticing, or inducing, individually or in concert with others, (i) any person or entity to be a customer for the same or similar services for which that person or entity engaged Jaco, if such person or entity (A) was a customer of Jaco's during the Employment Period or at any time thereafter prior to the Designated Date, or (B) was solicited by Jaco to be a customer during the one-year period prior to the termination of this Employment Agreement; (ii) any manufacturer or supplier whose products are distributed by Jaco at the time this Employment Agreement is terminated to act as a manufacturer or supplier for any other party of the same or similar goods that it supplies to Jaco; or (iii) any employee of Jaco to leave Jaco or to do business with any enterprise or business which competes with Jaco. 8.2 As used in this Section 8, the "Designated Date" shall mean any of the following dates: (a) in the event Gash willfully terminates his employment with Jaco in violation of this Employment Agreement prior to the expiration of the Employment Period, the term "Designated Date" shall mean the first anniversary of the date of such termination; (b) in the event Jaco terminates the employment of Gash under this Employment Agreement for Cause, the term "Designated Date" shall mean the first anniversary of the date of such termination; or (c) in the event Jaco terminates the employment of Gash without cause, the term "Designated Date" shall mean the date of such termination. 8 8.3 It is the desire and intent of the parties that the provisions of this Section 8 shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any provision of this Section 8 shall be adjudicated to be invalid or unenforceable in any such jurisdiction, such provision of this Section 8 shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such deletion to apply only with respect to the operation of such provision of this Section 8 in the particular jurisdiction in which such adjudication is made. In addition, if the scope of any restriction contained in this Section 8 is adjudicated to be too broad to permit enforcement thereof to its fullest extent, then such restriction shall be enforced to the maximum extent permitted by law, and Gash hereby consents and agrees that such scope may be judicially modified accordingly in any proceeding brought to enforce such restriction. 8.4 In the event of a breach or threatened breach by Gash of the provisions of this Section 8, Jaco shall be entitled to an injunction restraining him from such breach. Nothing contained herein shall be construed as prohibiting Jaco from pursuing any other remedies available to it for such breach or threatened breach or any other breach of this Employment Agreement. 9. Consolidation; Merger; Change of Control. 9.1 In the event of any consolidation or merger of Jaco into or with another corporation during the Employment Period, and Jaco is not the surviving entity, or the sale of all or substantially all of the assets of Jaco to another corporation during the Employment Period, or in the event that fifty (50%) percent or more of the voting common stock of Jaco shall be owned by one or more individuals or entities, who are acting in concert or as part of an affiliated group (other than 9 a group one of the members of which is Gash) at any time during the Employment Period, (the occurrence of any of the foregoing, a "Change of Control"), then (i) Jaco shall pay or cause to be paid to Gash a certified or cashier's check in an amount equal to two hundred percent (200%) of the average of Gash's Base Salary plus Cash Bonus for the previous five (5) years; and (ii) this Employment Agreement may be assigned by Jaco or any such successor or surviving corporation on sixty (60) days prior written notice to Gash; provided, however, such assignment shall not cause Gash's principal place of employment to be moved to any space located more than forty-five (45) miles from Gash's principal place of employment prior to a Change of Control without his prior written consent. 9.2 Notwithstanding the provisions of Section 9.1 above, any such payments shall be made only in an amount which, when taken together with the present value of all other payments to Gash that are contingent on a Change in Control of Jaco, computed in accordance with the provisions of Section 280G(d)(4) of the Internal Revenue Code of 1986 (the "Code"), does not equal or exceed three times Gash's "Base Amount", as computed in accordance with Code Section 280G(b)(3). 10. Notices. Any notices required or permitted to be given under the provisions of this Employment Agreement shall be in writing and delivered personally, sent by recognized overnight courier or mailed by certified or registered mail, return receipt requested, postage prepaid to the persons and at the addresses first set forth above, or to such other person at such other address as any party may request by notice in writing to the other party to this Employment Agreement. Notices 10 which are hand delivered or delivered by recognized overnight courier shall be effective on delivery. Notices which are mailed shall be effective on the third day after mailing. 11. Construction, This Employment Agreement shall be construed in accordance with, and be governed by, the laws of the State of New York for contracts entered into and to be performed in New York. 12. Successors and Assigns. This Employment Agreement shall be binding on the successors and assigns of Jaco and shall inure to the benefit and be enforceable by and against its successors and assigns. This Employment Agreement is personal in nature and may not be assigned or transferred by Gash without the prior written consent of Jaco. 13. Entire Agreement. This Employment Agreement contains the entire understanding and agreement between the parties relating to the subject matter hereof, and neither this Employment Agreement nor any provision hereof may be waived, modified, amended, changed, discharged, or terminated, except by an agreement in writing signed by the party against whom enforcement of any waiver, modification, change, amendment, discharge, or termination is sought. 14. Counterparts. This Employment Agreement may be executed simultaneously in counterparts, each of which shall be deemed an original, and all of which counterparts shall together constitute a single agreement. 11 15. Illegality. In case any one or more of the provisions of this Employment Agreement shall be invalid, illegal, or unenforceable in any respect, the validity, the legality, and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. 16. Captions. The captions of the sections hereof are for convenience only and shall not control or affect the meaning or construction of any of the terms or provisions of this Employment Agreement. 12 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. JACO ELECTRONICS, INC. By: JOEL H. GIRSKY President JEFFREY D. GASH 13 EX-99.8.3 5 AMENDMENT TO LOAN July 1, 1998 JACO ELECTRONICS, INC. 145 Oser Avenue Hauppauge, NY 11788 NEXUS CUSTOM ELECTRONICS, INC. Prospect Street Brandon, VT 05733 Gentleman: Reference is made to the Second Restated and Amended Loan and Security Agreement between Jaco Electronics, Inc. and Nexus Custom Electronics, Inc. as Debtor, and BNY Financial Corporation (f./k/a The Bank of New York Commercial Corporation), as Lender, and each other Lender a party hereto, dated September 13, 1995, as amended and supplemented (the "Loan Agreement"). It is hereby agreed that, effective as of July 1, 1998, the first sentence of Paragraph 5(A) of the Loan Agreement shall be amended by deleting the word "Until" at the beginning thereof and substituting the words "Upon the request of the Agent on behalf of the Secured Parties and until" in its place and stead. Except as hereinabove specifically set forth, the Loan Agreement shall remain unmodified and in full force and effect in accordance with its terms. If you are in agreement with the foregoing, please so indicate by signing and returning to us the enclosed copy of this letter. Very truly yours, BNY FINANCIAL CORPORATION f/k/a THE BANK OF NEW YORK COMMERCIAL CORPORATION, as Agent and Lender By: Frank Imperato Title: Vice President FLEET BANK, N.A., NATWEST BANK N.A., as Lender By: Alice Adleberg Title: Vice President AGREED: JACO ELECTRONICS, INC. By: Jeffrey D. Gash Title: Vice President/Finance NEXUS CUSTOM ELECTRONICS, INC. By: Jeffrey D. Gash Title: Vice President/Finance EX-99.8.4 6 AMENDMENT TO LOAN September 21, 1998 JACO ELECTRONICS, INC. 145 Oser Avenue Hauppauge, NY 11788 NEXUS CUSTOM ELECTRONICS, INC. Prospect Street Brandon, VT 05733 Gentleman: Reference is made to (a) the Second Restated and Amended Loan and Security Agreement between Jaco Electronics, Inc. and Nexus Custom Electronics, Inc. as Debtor, and our predecessor-in-interest, The Bank of New York Commercial Corporation, as Lender, and each other Lender a party thereto, dated September 13, 1995, as amended and supplemented (the "Loan Agreement") and (b) the letter agreement and amendment dated as of April 10, 1996 among the parties to the Loan Agreement (the "Letter Agreement"). It is hereby agreed that, effective as of September 21, 1998, clause (b)(ii) of the Letter Agreement shall be amended to read in its entirety a follows: "(ii)any such repurchase occurs before September 14, 2000 at the very latest; and " Except as hereinabove specifically set forth, the Loan Agreement and Letter Agreement shall remain unmodified and in full force and effect in accordance with their terms. If you are in agreement with the foregoing, please so indicate by signing and returning to us the enclosed copy of this letter. Very truly yours, BNY FINANCIAL CORPORATION f/k/a THE BANK OF NEW YORK COMMERCIAL CORPORATION, as Agent and Lender By: Frank Imperato Title: Vice President FLEET BANK, N.A., NATWEST BANK N.A., as Lender By: Alice Adleberg Title: Vice President AGREED: JACO ELECTRONICS, INC. By: Jeffrey D. Gash Title: Vice President/Finance NEXUS CUSTOM ELECTRONICS, INC. By: Jeffrey D. Gash Title: Vice President/Finance EX-27.1 7 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the unaudited condensed consolidated balance sheet as of September 30, 1998 and the unaudited condensed consolidated statement of earnings for the three months ended September 30, 1998 and is qualified in its entirety by reference to such financial statements. 3-MOS JUN-30-1999 JUL-01-1998 SEP-30-1998 1,519,542 687,060 22,593,701 1,261,770 35,756,451 61,955,934 10,548,263 3,445,586 74,719,833 18,746,147 20,374,295 0 0 406,572 35,192,819 74,719,833 33,256,456 33,256,456 26,554,068 26,554,068 6,795,052 0 313,442 (406,106) (164,000) (242,106) 0 0 0 (242,106) (0.06) (0.06)
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