-----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, QyaCuXSfoAkkH+/eoIgBtSkhouzVlQDfhXSNmwufpKMkGsWxe8nve5oc1vKFgp+U C17JvW1X48EVqqQ/hY3iOw== 0000950152-98-002067.txt : 19980319 0000950152-98-002067.hdr.sgml : 19980319 ACCESSION NUMBER: 0000950152-98-002067 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19980318 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIONEER STANDARD ELECTRONICS INC CENTRAL INDEX KEY: 0000078749 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 340907152 STATE OF INCORPORATION: OH FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-05734 FILM NUMBER: 98567843 BUSINESS ADDRESS: STREET 1: 4800 E 131ST ST CITY: CLEVELAND STATE: OH ZIP: 44105 BUSINESS PHONE: 2165873600 10-Q/A 1 PIONEER-STANDARD ELECTRONICS--10-Q/AMENDMENT #1 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A (AMENDMENT NO. 1) (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES --- EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997. ------------------ OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) --- OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to ________________. Commission file number 0-5734 ------ Pioneer-Standard Electronics, Inc. ---------------------------------- (Exact name of registrant as specified in its charter) Ohio 34-0907152 ---- ---------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 4800 East 131st Street, Cleveland, OH 44105 - ------------------------------------- ----- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (216) 587-3600 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- -- Indicate the number of shares outstanding of each of the issuer's classes of Common Shares, as of the latest practical date. COMMON SHARES, WITHOUT PAR VALUE, AS OF NOVEMBER 3, 1997: 26,307,566. (Excludes 4,780,000 Common Shares subscribed by the Pioneer Stock Benefit Trust.) 2 PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Annual Meeting of Shareholders held on July 29, 1997 (the "Annual Meeting"), the shareholders voted to elect Arthur Rhein and Thomas C. Sullivan each to an additional three-year term as Directors of the Company and Charles F. Christ to a new three-year term. Following is a summary of the voting: Arthur Thomas C. Charles F. Votes Rhein Sullivan Christ ----- For 26,211,841 26,370,311 26,401,480 Withheld 797,239 638,769 607,600 The term of office of the following Directors of the Company continued after the Annual Meeting: James L. Bayman; Frederick A. Downey; Victor Gelb; Gordon E. Heffern; Edwin Z. Singer; and Karl E. Ware. Also at the Annual Meeting, shareholders voted to fix the number of Class B Directors at three. The following is a summary of the voting: Votes ----- For 26,503,074 Against 321,040 Abstaining 184,965 In addition, at the Annual Meeting an amendment to the amended articles of incorporation to authorize a new class of 5,000,000 serial preferred, without par was approved by the shareholders. The following is a summary of the voting: Voting ------ For 21,300,108 Against 3,564,620 Abstaining 330,139 3 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS Number Description ------ ----------- 2 Amended Articles of Incorporation, as amended (filed herewith) 10.1 Employment Agreement, dated July 29, 1997, between Pioneer-Standard Electronics, Inc. and James L. Bayman (filed herewith) 10.2 Employment Agreement, dated July 29, 1997, between Pioneer-Standard Electronics, Inc. and Arthur Rhein (filed herewith) 10.3 Employment Agreement, dated July 29, 1997, between Pioneer-Standard Electronics, Inc. and Robert E. Danielson (filed herewith) 10.4 Employment Agreement, dated July 29, 1997 between Pioneer-Standard Electronics, Inc. and John V. Goodger (filed herewith) 11 Calculation of Primary Earnings Per Share 27 Financial Data Schedule 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PIONEER-STANDARD ELECTRONICS, INC. Date: March 17, 1998 James L. Bayman ---------------------------------------- Chairman and CEO Date: March 17, 1998 John V. Goodger ---------------------------------------- Vice President & Treasurer EX-2 2 EXHIBIT 2 1 Exhibit 2 CERTIFICATE OF ADOPTION OF AMENDMENT TO AMENDED ARTICLES OF INCORPORATION OF PIONEER-STANDARD ELECTRONICS, INC. Preston B. Heller, Jr., President, and William X. Haase, Secretary of Pioneer-Standard Electronics, Inc, an Ohio corporation, with its principal office located in the County of Cuyahoga of the State of Ohio do hereby certify that an annual meeting of the holders of the shares of said corporation entitling them to vote on the proposal to amend the Amended Articles of Incorporation thereof, as contained in the following resolution was duly called and notice thereof was duly given, and that said meeting was held on the 20th day of June, 1973, at which meeting a quorum of such shareholders was present in person or by proxy and that by the affirmative vote of the holders of shares entitled under the Articles to exercise two-thirds of the voting power of the corporation on such proposal, the following resolution to amend the Amended Articles was adopted: RESOLUTION: RESOLVED, that Article Fourth of the Amended Articles of Incorporation of this Corporation be and thereby is amended so that it reads as follows: "FOURTH: The authorized number of shares of the Corporation is 2,000,000, all of which shall be common shares without par value." IN WITNESS WHEREOF, the said Preston B. Heller, Jr., President, and William X. Haase, Secretary, of Pioneer-Standard Electronics, Inc. acting for and on behalf of said corporation, have hereunto subscribed their names this 17th day of May, 1974. /s/ Preston B. Heller --------------------------------------- President /s/ William X. Haase --------------------------------------- Secretary 2 CERTIFICATE OF ADOPTION OF AMENDMENT TO AMENDED ARTICLES OF INCORPORATION OF PIONEER-STANDARD ELECTRONICS, INC. Preston B. Heller, Jr., President, and William X. Haase, Secretary, of Pioneer-Standard Electronics, Inc., an Ohio corporation, with its principal office located in the County of Cuyahoga of the State of Ohio do hereby certify that an annual meeting of the holders of the shares of said corporation entitling them to vote on the proposal to amend the Amended Articles of Incorporation thereof, as contained in the following resolution, was duly called and notice thereof was duly given, and that said meeting was held on the 28th day of June, 1979, at which meeting a quorum of such shareholders was present in person or by proxy and that by the affirmative vote of the holders of shares entitled under the Articles to exercise two-thirds of the voting power of the corporation on such proposal, the following resolution to amend the Amended Articles was adopted: RESOLUTION RESOLVED, that Article Fourth of the Amended Articles of Incorporation of this Corporation be and it hereby is amended so that it reads as follows: "FOURTH: The authorized number of shares of the Corporation is 5,000,000, all of which shall be common shares without par value." IN WITNESS WHEREOF, the said Preston D. Heller, Jr., President, and William X. Haase, Secretary, of Pioneer-Standard Electronics, Inc., acting for and on behalf of said corporation, have hereunto subscribed their names this 10th day of August 1979. /s/ Preston B. Heller --------------------------------------- President /s/ William X. Haase --------------------------------------- Secretary 3 CERTIFICATE OF AMENDMENT TO AMENDED ARTICLES OF INCORPORATION OF PIONEER-STANDARD ELECTRONICS, INC. Charter No. 317430 James L. Bayman, President, and John S. Zarka, Secretary, of Pioneer-Standard Electronics, Inc., an Ohio corporation, do hereby certify that a meeting of the Shareholders of Pioneer-Standard Electronics, Inc. was duly called and held on June 27, 1985, at which meeting a quorum of such Shareholders was present in person or by proxy at all times, and that by the affirmative vote of the holders of shares entitling them to exercise two-thirds of the voting power of said corporation, the following resolutions were adopted for the purpose of adding a new Article SEVENTH to the Amended Articles of Incorporation of said corporation: "RESOLVED, that a new Article SEVENTH be added to the Company's Amended Articles of Incorporation to read in its entirety as follows: 'SEVENTH. A. A Business Combination (as hereinafter defined) shall be authorized and approved by the affirmative vote of the shareholders of not less than eighty percent (80%) of the outstanding shares of the corporation entitled to vote generally in elections of Directors; provided, however, that the eighty percent (80%) voting requirement shall not be applicable if: 1. The Board of Directors of the corporation by affirmative vote, which shall include not less than a majority of the entire number of Continuing Directors (as hereinafter defined), (a) has approved in advance the acquisition of those outstanding shares of the corporation which caused the Interested Party (as hereinafter defined) to become an Interested Party or (b) has approved the Business Combination; or 2. The Business Combination is a merger or consolidation and the cash or Fair Market Value of other consideration to be received per share by holders of the common shares of the corporation in said merger or consolidation is not less than an amount equal to the sum of: 4 (a) the greatest of (i) the highest per share price, including commissions, paid by the Interested Party for any shares of the same class or series during the two-year period ending on the date of the most recent purchase by the Interested Party of any such shares, or (ii) the highest sales price reported for shares of the same class or series traded on a national securities exchange or in the over-the-counter market during the two-year period preceding the first public announcement of the proposed business transaction; plus (b) interest on the per share price calculated at the rate of ten percent (10%) per annum, compounded annually from the date the Interested Party first became an Interested Party until the business combination is consummated, less the per share amount of cash dividends payable to holders of record on record dates in the interim up to the amount of such interest. For purposes of this clause (2), per share amounts will be adjusted for any stock dividend, stock split or similar transaction. B. For purposes of this Article Seventh: 1. The term "Business Combination" shall mean (a) any merger or consolidation of the corporation or a subsidiary of the corporation with or into an Interested Party, (b) any merger or consolidation of an Interested Party with or into the corporation or a subsidiary, (c) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) in which an interested Party is involved, of any of the assets either of the corporation (including without limitation any voting securities of a subsidiary) or of a subsidiary having a Fair Marker Value in excess of $2,000,000, (d) the adoption of any plan or proposal for the liquidation or dissolution of the corporation proposal by or on behalf of any Interested Party, (e) the issuance or transfer (in one transaction or a series of transactions) by the corporation or a subsidiary of the corporation to an Interested Party of any securities of the corporation or such subsidiary, which securities have a Fair Market Value of $2,000,000 or more, or (f) any recapitalization, reclassification, merger or consolidation involving the corporation or a subsidiary of the corporation that would have the effect of increasing, directly or indirectly, the Interested Party's voting power in the corporation or such subsidiary. 5 2. The term "Interested Party" shall mean and include (a) any individual, corporation, partnership, trust or other person or entity which, together with its "affiliates" and "associates" (as those terms are defined in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on May 22, 1985) is or, with respect to a Business Combination, was within two years prior thereto a beneficial owner of shares aggregating ten percent (10%) or more of the aggregate voting power of any class of capital stock of the corporation entitled to vote generally in the election of Directors, and (b) any affiliate or associate of any such individual, corporation, partnership, trust or other person or entity. For the purposes of determining whether a person is an Interested Party, the number of shares deemed to be outstanding shall include shares which the Interested Party or any of its affiliates or associates has the right to acquire (whether immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants, or options, or otherwise, but shall not include any other shares which may be issuable to any other person. 3. The term "Continuing Director" shall mean a director who is not an affiliate of an Interested Party and who was a member of the Board of Directors of the corporation immediately prior to the time that the Interested Party involved in a Business Combination became an Interested Party, and any successor to a Continuing Director who is not such an affiliate and who is nominated to succeed a Continuing Director by a majority of the Continuing Directors in office at the time of such nomination. 4. "Fair Market Value" shall mean the fair market value of the property in question as determined by a majority of the Continuing Directors in good faith. C. The provisions of this Article Seventh shall be construed liberally to the end that the consideration paid to holders whose shares are acquired by an Interested Party in connection with a merger or consolidation shall not be less favorable than that paid to holders, of such shares prior to such merger or consolidation. Nothing contained in this Article Seventh shall be construed to relieve any Interested Party from any fiduciary duties or obligations imposed by law. D. Notwithstanding any other provision of the Amended Articles of Incorporation or the Amended Code of Regulations of the corporation and notwithstanding the fact that a lesser percentage may be specified by law, these Amended Articles of Incorporation or the Amended Code of Regulations of the corporation, the affirmative 6 vote of the holders of not less than eighty percent (80%) of the then outstanding shares shall be required to amend, alter, change or repeal, or adopt any provisions inconsistent with, this Article Seventh; provided, however, that this paragraph D shall not apply to, and the eighty percent (80%) vote shall not be required for, any amendment, alteration, change or repeal recommended to the shareholders by the Board of Directors of the corporation if the recommendation has been approved by at least two-thirds of the Continuing Directors. BE IT FURTHER RESOLVED, that current Article SEVENTH of the Company's Amended Articles of Incorporation be redesignated as Article EIGHTH. BE IT FURTHER RESOLVED, that the President and the Secretary of the Company be and they are hereby authorized and directed to file promptly in the Office of the Secretary of State of Ohio an appropriate Certificate of Amendment, and to take such other action as may be appropriate, in order to render effective the foregoing amendment and carry out the purposes of these resolutions." IN WITNESS WHEREOF, said James L. Bayman, President, and John S. Zarka, Secretary, of Pioneer-Standard Electronics, Inc., acting for and on behalf of said corporation, have hereunto subscribed their names this 27th day of June, 1985. /s/ James L. Bayman ------------------------------------------ James L. Bayman, President /s/ John S. Zarka ------------------------------------------ John S. Zarka, Secretary 7 CERTIFICATE OF AMENDMENT TO AMENDED ARTICLES OF INCORPORATION OF PIONEER-STANDARD ELECTRONICS, INC. Charter No. 317430 James L. Bayman, President, and John V. Goodger, Assistant Secretary of Pioneer-Standard Electronics, Inc., an Ohio corporation, do hereby certify that a meeting of the Shareholders of Pioneer-Standard Electronics, Inc. was duly called and held on July 26, 1994, at which meeting a quorum of such Shareholders was present in person or by proxy at all times, and that by the affirmative vote of the holders of shares entitling them to exercise at least two-thirds of the voting power of said corporation, the following resolutions were adopted for the purpose of amending Article FOURTH of the Amended Articles of Incorporation of said corporation: RESOLVED, that Article FOURTH of the Amended Articles of Incorporation shall be deleted and replaced by the following: "FOURTH: The authorized number of shares of the corporation is Forty Million (40,000,000) shares, all of which shall be Common Shares, without par value." IN WITNESS WHEREOF, said James L. Bayman, President, and John V. Goodger, Assistant Secretary, of Pioneer-Standard Electronics, Inc., acting for and on behalf of said corporation, have hereunto subscribed their names on this 28th day of July, 1994. /s/ James L. Bayman ------------------------------------------ James L. Bayman, President /s/ John V. Goodger ------------------------------------------ John V. Goodger, Assistant Secretary 8 CERTIFICATE OF AMENDMENT TO AMENDED ARTICLES OF INCORPORATION OF PIONEER-STANDARD ELECTRONICS, INC. Charter No. 317430 James L. Bayman, President, and John V. Goodger, Assistant Secretary, of Pioneer-Standard Electronics, Inc., an Ohio corporation, do hereby certify that a meeting of the Shareholders of Pioneer-Standard Electronics, Inc. was duly called and held on July 23, 1996, at which meeting a quorum of such Shareholders was present in person or by proxy at all times, and that by the affirmative vote of holders of shares entitling them to exercise at least two-thirds of the voting power of said corporation, the following resolutions were adopted for the purpose of amending Article FOURTH of Amended Articles of Incorporation of said corporation: RESOLVED, that Article FOURTH of the Amended Articles of Incorporation shall be deleted and replaced by the following: "FOURTH: The authorized number of shares of the corporation is Eighty Million (80,000,000) shares, all of which shall be Common Shares, without par value." IN WITNESS WHEREOF, said James L. Bayman, President, and John V. Goodger, Assistant Secretary, of Pioneer-Standard Electronics, Inc., acting for and on behalf of said corporation, have hereunto subscribed their names this 29th day of July, 1996. /s/ James L. Bayman ------------------------------------------ James L. Bayman, President /s/ John V. Goodger ------------------------------------------ John V. Goodger, Assistant Secretary 9 CERTIFICATE OF AMENDMENT TO AMENDED ARTICLES OF INCORPORATION OF PIONEER-STANDARD ELECTRONICS, INC. Charter No. 317430 William A. Papenbrock, Secretary, of Pioneer-Standard Electronics, Inc., an Ohio corporation, does hereby certify that a meeting of the Shareholders of Pioneer-Standard Electronics, Inc. was duly called and held on July 29, 1997, at which meeting a quorum of such Shareholders was present in person or by proxy at all times, and that by the affirmative vote of the holders of shares entitling them to exercise at least two-thirds of the voting power of said corporation, the following resolution was adopted for the purpose of amending Article FOURTH of the Amended Articles of Incorporation of said corporation: RESOLVED, that Article FOURTH of the Amended Articles of Incorporation shall be deleted and replaced by the following: "FOURTH: The authorized number of shares of the Corporation is Eighty-Five Million (85,000,000) shares, of which Eighty Million (80,000,000) shall be Common Shares, without par value, and Five Million (5,000,000) shall be Serial Preferred Shares, without par value. SUBDIVISION A PROVISIONS APPLICABLE TO SERIAL PREFERRED SHARES The Serial Preferred Shares may be issued, from time to time, in one or more series, with such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereon, as shall be stated and expressed in the resolution or resolutions providing for the issuance of such series as adopted by the Board of Directors. The Board of Directors, in such resolution or resolutions (a copy of which shall be filed and recorded as required by law), is also expressly authorized to fix: (a) The distinctive serial designations and the division of such shares into series and the number of shares of a particular series, which may be increased or decreased, 10 but not below the number of shares thereof then outstanding, by a certificate made, signed, filed and recorded as required by law; (b) The annual dividend rate for the particular series, and the date or dates from which dividends on all shares of such series shall be cumulative, if dividends on shares of the particular series shall be cumulative; (c) The redemption price or prices, if any, for the particular series; (d) The right, if any, of the holders of a particular series to convert such shares into other classes of shares, and the terms and conditions of such conversions; and (e) The obligation, if any, of the Corporation to purchase and retire and redeem shares of a particular series as a sinking fund or redemption or purchase account, the terms thereof and the redemption price or prices per share for such series redeemed pursuant to the sinking fund or redemption or purchase account. All shares of any one series of Serial Preferred Shares shall be alike in every particular and all series shall rank equally and be identical in all respects except insofar as they may vary with respect to the matters which the Board of Directors is hereby expressly authorized to determine in the resolution or resolutions providing for the issuance of any series of the Serial Preferred Shares. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, then before any distribution or payment shall have been made to the holders of the Common Shares, the holders of the Serial Preferred Shares of each series shall be entitled to be paid, or to have set apart in trust for payment, an amount from the net assets of the Corporation equal to that stated and expressed in the resolution or resolutions adopted by the Board of Directors which provide for the issuance of such series, respectively. The remaining net assets of the Corporation shall be distributed solely among the holders of the Common Shares according to their respective shares. 2 11 The holders of Serial Preferred Shares shall be entitled to one vote for each Serial Preferred Share upon all matters presented to the shareholders, and, except as otherwise provided by these Amended Articles of Incorporation or required by law, the holders of Serial Preferred Shares and the holders of Common Shares shall vote together as one class on all matters. No adjustment of the voting rights of holders of Serial Preferred Shares shall be made in the event of an increase or decrease in the number of Common Shares authorized or issued or in the event of a stock split or combination of the Common Shares in the event of a stock dividend on any class of shares payable solely in Common Shares. The affirmative vote of the holders of at least two-thirds of the Serial Preferred Shares at the time outstanding, given in person or by proxy at a meeting called for the purpose at which the holders of Serial Preferred Shares shall vote separately as a class, shall he necessary to adopt any amendment to the Amended Articles of Incorporation (but so far as the holders of Serial Preferred Shares are concerned, such amendment may be adopted with such vote) which: (i) changes issued Serial Preferred Shares of all series then outstanding into a lesser number of shares of the Corporation of the same class and series or into the same or a different number of shares of the Corporation of any other class or series; or (ii) changes the express terms of the Serial Preferred Shares in any manner substantially prejudicial to the holders of all series thereof then outstanding or (iii) authorizes shares of any class, or any security convertible into shares of any class, or authorizes the conversion of any security into shares of any class, ranking prior to the Serial Preferred Shares; or (iv) changes the express terms of issued shares of any class ranking prior to the Serial Preferred Shares in any manner substantially prejudicial to the holders of all series of Serial Preferred Shares then outstanding; and the affirmative vote of the holders of at least two-thirds of the shares of each affected series of Serial Preferred Shares at the time outstanding, given in person or by proxy at a meeting called for the purpose at which the holders of each affected series of Serial 3 12 Preferred Shares shall vote separately as a series, shall be necessary to adopt any amendment to the Amended Articles of Incorporation (but so far as the holders of each such series of Serial Preferred Shares are concerned such amendment may be adopted with such vote) which: (i) changes issued Serial Preferred Shares of one or more but not all series then outstanding into a lesser number of shares of the Corporation of the same series or into the same or a different number of shares of the Corporation of any other class or series; or (ii) changes the express terms of any series of the Serial Preferred Shares in any manner substantially prejudicial to the holders of one or more but not all series thereof then outstanding; or (iii) changes the express terms of issued shares of any class ranking prior to the Serial Preferred Shares in any manner substantially prejudicial to the holders of one or more but not all series of Serial Preferred Shares then outstanding. Whenever reference is made herein to shares "ranking prior to the Serial Preferred Shares," such reference shall mean and include all shares of the Corporation in respect of which the rights of the holders thereof either as to the payment of dividends or as to distributions in the event of a voluntary or involuntary liquidation, dissolution or winding up of the Corporation are given preference over the rights of the holders of Serial Preferred Shares; whenever reference is made to shares "on a parity with the Serial Preferred Shares," such reference, shall mean and include all shares of the Corporation in respect of which the rights of the holders thereof (i) neither as to the payment of dividends nor as to distributions in the event of a voluntary or involuntary liquidation, dissolution or winding up of the Corporation are given preference over the rights of the holders of Serial Preferred Shares and (ii) either as to the payment of dividends or as to distributions in the event of a voluntary or involuntary liquidation, dissolution or winding up of the Corporation rank on an equality (except as to the amounts fixed therefor) with the rights of the holders of Serial Preferred Shares; and whenever reference is made to shares "ranking junior to the Serial Preferred Shares," such reference shall mean and include all shares of the Corporation in respect of which the rights of the holders thereof both as to the payment of dividends and as to 4 13 distributions in the event of a voluntary or involuntary liquidation, dissolution or winding up of the Corporation are junior and subordinate to the rights of the holders of the Serial Preferred Shares. SUBDIVISION B PROVISIONS APPLICABLE TO COMMON SHARES The Common Shares shall be subject to the express terms of the Serial Preferred Shares and of any series thereof. Each Common Share shall be equal to every other Common Share and the holders thereof shall have such rights as are provided by law and, except as otherwise provided herein or as required by law, shall be entitled to one vote for each share held by them upon all matters presented to shareholders." IN WITNESS WHEREOF, said William A. Papenbrock, Secretary of Pioneer-Standard Electronics, Inc., acting for and on behalf of said corporation, has hereunto subscribed his name this 1st day of August, 1997. /s/ William A. Papenbrock ----------------------------------- William A. Papenbrock, Secretary EX-10.1 3 EXHIBIT 10.1 1 Exhibit 10.1 EMPLOYMENT AGREEMENT BETWEEN PIONEER-STANDARD ELECTRONICS, INC. AND JAMES L. BAYMAN July 29, 1997 2 Table of Contents ----------------- Page ---- Employment................................................................1 Period of Employment......................................................1 Position, Duties, Responsibilities........................................1 Compensation, Compensation Plans, Perquisites............................2 Employee Benefit Plans....................................................4 Effect of Death or Disability.............................................4 Termination...............................................................5 General..........................................................5 Change of Control................................................6 For Cause or Voluntary Termination...............................7 Without Cause....................................................7 Arbitration......................................................8 Competition...............................................................8 Confidential Information..................................................8 Noninterference...........................................................9 Remedy .................................................................9 Withholding...............................................................9 Notices..................................................................10 General Provisions.......................................................10 Amendment or Modification; Waiver........................................11 Severability.............................................................11 Successors to the Company................................................11 Operation of Agreement...................................................12 Enforcement Costs........................................................12 3 EMPLOYMENT AGREEMENT -------------------- EMPLOYMENT AGREEMENT between PIONEER-STANDARD ELECTRONICS, INC., an Ohio corporation (the "Company"), and JAMES L. BAYMAN ("Bayman"), dated July 29, 1997, to be effective April 1, 1997. W I T N E S S E T H: WHEREAS: The Company and Bayman have given consideration to an employment agreement providing for the services of Bayman as Chairman and Chief Executive Officer; and WHEREAS: This Agreement is deemed necessary at the present time to meet the need for a continued strong management without substantial change; and WHEREAS: Together with other officers of the Company, Bayman has been responsible for the success of the business of the Company; NOW, THEREFORE, it is hereby agreed by and between the Company and Bayman as follows: 1. Employment ---------- The Company hereby agrees to continue to employ Bayman, and Bayman hereby agrees to remain in the employ of the Company, for the period set forth in Section 2 below (the "Period of Employment"), in the position and with the duties and responsibilities set forth in Section 3 below, and upon the other terms and conditions hereinafter stated. 2. Period of Employment --------------------- For the purposes of this Agreement, the Period of Employment, subject only to the provisions of Section 6 below (relating to Death or Disability), shall continue for a one-year period from the effective date hereof and thereafter (i) subject to termination of this Agreement by the Company effective as of the next anniversary of the effective date hereof following written notice of termination, which notice must be given to Bayman no later than February 1 of the Company's then current fiscal year, or (ii) until the earlier termination of employment as set forth in Section 7. 3. Position, Duties, Responsibilities ------------------------------------ 3.01 During the Period of Employment, Bayman shall serve as Chairman and Chief Executive Officer of the Company and shall have the responsibility for all of the operations of the Company including the authority, power and duties with regard to his 1 4 position as may from time to time be assigned by the Board of Directors of the Company. Bayman's duties will include the supervision and direction of the corporate professional staff and the strategic direction of the Company's operations. He shall at all times during such period have the authority, power and duties of the person charged with the general management of the business and affairs of the areas assigned to him with authority to manage and direct all operations and affairs of those areas and to employ and discharge all employees thereof, reporting and being responsible only to the Board of Directors of the Company. 3.02 It is further contemplated that at all times during the Period of Employment Bayman shall serve and continue to serve as a member of its Board of Directors. In the event that Bayman's employment is terminated for any reason as provided in paragraph 7 below, Bayman agrees that he shall immediately submit his written resignation as a member of the Board of Directors of the Company, which may choose to either accept or reject such resignation. 3.03 Throughout the Period of Employment Bayman shall devote his full time and undivided attention during normal business hours to the business and affairs of the Company, except for reasonable vacations afforded the Company's executive officers and except for illness or incapacity, but nothing in this Agreement shall preclude Bayman from devoting reasonable time required for serving as a director or member of an advisory committee of any organization involving no conflict of interest with the interests of the Company, from engaging in charitable and community activities, and from managing his personal investments, provided that such activities do not materially interfere with the regular performance of his duties and responsibilities under this Agreement. 3.04 Bayman's office shall be located at the corporate offices of the Company, and Bayman shall not be required to locate his office elsewhere without his prior written consent, nor shall he be required to be absent therefrom on travel status or otherwise more than a total of sixty (60) days in any calendar year nor more than fifteen (15) consecutive days at any one time. 4. Compensation, Compensation Plans, Perquisites ----------------------------------------------- 4.01 (a) For all services rendered by Bayman in any capacity during the Period of Employment, including without limitation, services as an executive officer, director or member of any committee of the Company or of any subsidiary, division or affiliate thereof, Bayman shall be paid as compensation: (i) A base salary, payable not less often than monthly, at the rate of $25,000 per month, with such increases in such rate as may be awarded from time to time by the Board of Directors of the Company; 2 5 (ii) A cash incentive compensation payment equal to the product of 8/10 of 1% of the sum of the "actual operating income" of the Company, multiplied by the ratio of the Company's "actual return on capital" to 20.4%. The term "actual operating income" shall be defined as the income before income tax (state and federal income tax) and interest expense. The term "actual return on capital" shall be defined as the Company's "actual operating income" divided by the sum of its interest-bearing debt, plus equity (the denominator shall be calculated for each fiscal year as the average of such amounts as at the end of each of the Company's four (4) fiscal quarters). All amounts used to calculate the incentive compensation payment shall reflect the operations of the Company and its consolidated subsidiaries and affiliates and shall be calculated in conformity with generally accepted accounting principles. The Company shall calculate the incentive compensation payment for each fiscal year on a quarterly basis and shall pay Bayman the incentive compensation amount based on such quarterly calculation at the end of each of the first three (3) fiscal quarters. After April 1 and before June 16 of the next fiscal year, and after audited financial statements are available to the Company, the Company shall pay Bayman the balance of any amount due Bayman based on the calculation of the incentive compensation amount for the fiscal year less payments made for the first three (3) fiscal quarters, which payment shall be vested in the event of termination by reason of Death or disability (Section 6), Change of Control, (Section 7.02), or without Cause (Section 7.04), but shall be forfeited in the event of termination for Cause or voluntary termination (Section 7.03). (b) Any increase in salary, incentive compensation or other form of compensation shall in no way diminish any other obligation of the Company under this Agreement, unless specifically agreed to in writing by Bayman. 4.02 During the Period of Employment Bayman shall be and continue to be a full participant in the Company's Employees' Profit Sharing Plan or any equivalent successor plan that may be adopted by the Company. 4.03 During the Period of Employment Bayman shall be entitled to perquisites, including without limitation, an office, secretarial staff and clerical staff, and to fringe benefits comparable to those enjoyed by the other executive officers of the Company, as well as to reimbursement, upon proper accounting, of reasonable business expenses and disbursements incurred by him in the course of his duties. 3 6 5. Employee Benefit Plans ---------------------- 5.01 The compensation, together with other matters provided for in Section 4 above, is in addition to the benefits provided for in this Section 5. 5.02 Bayman, his dependents, beneficiaries and estate shall be entitled to all payments and benefits and service credit for benefits during the Period of Employment to which other executive officers of the Company, their dependents and beneficiaries are entitled as the result of the employment of such executive officers during the Period of Employment under the terms of employee plans and practices of the Company, including, without limitation, the Company's retirement program consisting of its Employees' Profit Sharing Plan, its group life insurance plan, its accidental death and dismemberment insurance, disability, medical and health and welfare plans, any key person individual life and disability policies, automobile expense reimbursement, club membership fees and dues, and other present or equivalent successor plans and practices of the Company, its subsidiaries and divisions, for which other executive officers, their dependents and beneficiaries are eligible, and to all payments or other benefits under any such plan or practice after the Period of Employment as a result of participation in such plan or practice during the Period of Employment. 5.03 Bayman shall be eligible to participate in the Company's 1991 Stock Option Plan (which, together with any successor stock option plan or plans that may be adopted by the Company, is referred to herein as the "Option Plan"); provided, however, that the grant of any stock options ("Options") under any Option Plan shall be at the sole discretion of the Compensation Committee of the Board of Directors of the Company. The Company has granted Bayman stock options at an option price equal to the fair market value of the Company's Common Shares at the date of grant. The terms and conditions of exercise of Options shall be as is set forth in Bayman's Stock Option Agreements (the "Option Agreements") with the Company; provided, however, that in the event of a Change in Control, as defined in paragraph 18.02 below, then notwithstanding the provisions of said Option Agreements, all options (including those granted to him under the 1982 Incentive Stock Option Plan and the 1991 Stock Option Plan) shall immediately be 100% vested and Bayman shall have the immediate right of exercise with respect to all Options and the underlying Common Shares covered by said Option Agreements. In the event that Bayman's employment is terminated as a result of a Change in Control, as defined in paragraph 18.02 below, Bayman shall have the period of one (1) year after the date of such termination to exercise his Options or the remainder of the term of such Options, whichever is shorter, and any such exercise shall be irrevocable. 6. Effect of Death or Disability ------------------------------ 6.01 In the event of the death of Bayman during the Period of Employment, the Period of Employment shall be deemed to have ended as of the close of business on the last day of the month in which death shall have occurred, and his legal representative shall be entitled to (i) the compensation provided for in paragraph 4.01(a)(i) above for the month 4 7 in which death shall take place at the rate being paid at the time of death, (ii) any incentive compensation payable for the fiscal quarter in which the Period of Employment shall be deemed to have terminated due to death, plus the balance of any incentive compensation due Bayman for any prior fiscal quarters in accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii) above, and (iii) any benefits provided pursuant to paragraph 5.02 hereof which are payable pursuant to the terms of the applicable plan or practice. 6.02 (a) The term "Disability," as used in this Agreement, shall mean an illness or accident which prevents Bayman from performing his duties under this Agreement for a period of six (6) consecutive months. The Period of Employment shall be deemed to have ended as of the close of business on the last day of such six (6) month period but without prejudice to any payments due Bayman during such six (6) month period or pursuant to any disability insurance policy. (b) In the event of the Disability of Bayman during the Period of Employment, Bayman shall be entitled to (i) the compensation provided for in paragraph 4.01(a)(i) above, at the rate being paid at the time of the commencement of Disability, for the period of such Disability but not in excess of six (6) months, (ii) any incentive compensation payable for the fiscal quarter in which the Period of Employment shall be deemed to have terminated due to Disability, plus the balance of any incentive compensation due Bayman for any prior fiscal quarters in accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii) above, and (iii) any benefits provided pursuant to paragraph 5.02 hereof which are payable pursuant to the terms of the applicable plan or practice. (c) The amount of any payments due under this paragraph 6.02 shall be reduced by any payments to which Bayman may be paid for the same period under any disability plan of the Company or of any subsidiary or affiliate thereof. 7. Termination ----------- 7.01 GENERAL. The Company may terminate Bayman with or without cause at any time during the Period of Employment, subject to the provisions of this Section 7. The termination of this Agreement by the Company pursuant to Section 2(i) hereof shall be deemed to be a termination of employment without Cause as set forth in Section 7.04 hereof. In the event that this Agreement is to be terminated pursuant to Section 2(i) hereof, upon receipt of the notice of termination Bayman shall have the option of either leaving the Company at any time thereafter or continuing his employment until the March 31 effective date of the termination of this Agreement, and in either event Bayman shall be entitled to receive all of the payments and benefits as provided in Section 7.04 hereof; provided, however, that in the event Bayman elects to continue his employment with the Company subsequent to the March 31 effective date of the termination of this Agreement, for a period of three (3) months thereafter Bayman shall have the right to terminate his 5 8 employment with the Company and any such termination shall be deemed to be a termination of employment without Cause as set forth above. 7.02 CHANGE OF CONTROL. Within one (1) year of a Change of Control of the Company, as defined in paragraph 18.02, Bayman shall have the right to terminate his employment with the Company and there shall be paid or provided to Bayman, his dependents, beneficiaries and estate, as liquidated damages or severance pay, or both, the following: (a) The compensation provided for in paragraph 4.01(a)(i) above for the month in which termination shall have occurred at the rate being paid at the time of termination; and an amount equal to his previous twenty four (24) months of base salary plus an amount equal to the earned incentive cash bonus referred to in paragraph 4.01(a)(ii) above for the two (2) previously completed fiscal years. Such amount shall be paid to Bayman in one payment, immediately upon termination. Bayman shall also receive any incentive compensation payable for the fiscal quarter in which the Period of Employment shall be deemed to have terminated due to Change of Control, plus the balance of any incentive compensation due Bayman for any prior fiscal quarters in accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii) above. (b) For two (2) years following the date of termination, Bayman, his dependents, beneficiaries and estate, shall continue to be entitled to all benefits provided pursuant to paragraph 5.02 hereof which are payable pursuant to the terms of the applicable plan or practice, and service credit for benefits under all employee benefit plans of the Company, including, without limitation, the Company's Profit Sharing Plan referred to in paragraph 5.02 above, upon the same basis as immediately prior to termination and, to the extent that such benefits or service credit for benefits shall not be payable or provided under any such plans to Bayman, his dependents, beneficiaries and estate, by reason of his no longer being an employee of the Company as the result of termination, or any such plan, program or arrangement is discontinued or the benefits thereunder are materially reduced, the Company shall itself arrange to provide to Bayman, his dependents, beneficiaries and estate benefits substantially similar to those which Bayman, his dependents and beneficiaries were entitled to receive under such plans, programs and arrangements immediately prior to termination. Any termination by the Company within the period of one hundred eighty (180) days prior to the execution of a letter of intent or a definitive agreement which could lead to a Change of Control and the closing of the transaction actually resulting in the Change of Control, as defined in paragraph 18.02, shall be deemed to be a termination under this paragraph 7.02. An election by Bayman to terminate his employment under the provisions of this paragraph 7.02 shall not be deemed a voluntary termination of employment by Bayman under paragraph 7.03 of this Agreement or any plan or practice of the Company. 6 9 7.03 FOR CAUSE OR VOLUNTARY TERMINATION. For the purpose of any provision of this Agreement, the termination of Bayman's employment shall be deemed to have been for Cause only if: (a) termination of his employment shall have been the result of Bayman's conviction of any of the following: (i) embezzlement; (ii) misappropriation of money or other property of the Company; or (iii) any felony; or (b) there has been a breach by Bayman during the Period of Employment of the provisions of paragraph 3.03 above, relating to devotion of full time to the affairs of the Company, Section 8 relating to Competition, Section 9 relating to Confidential Information, or Section 10 relating to Noninterference, and such breach results in demonstrable significant injury to the Company, and with respect to any alleged breach of paragraph 3.03 hereof, Bayman shall have failed to remedy such breach within thirty (30) days from his receipt of written notice from the Company. If Bayman's employment is terminated by the Company for Cause, or if Bayman shall voluntarily terminate his employment with the Company, Bayman shall be entitled to the compensation provided for in paragraph 4.01(a)(i) through the date of such termination. Bayman shall not be entitled to any additional compensation or benefits (except for any vested benefits), and shall continue to be bound by the provisions of Section 8 of this Agreement (relating to Competition), the provisions of Section 9 of this Agreement (relating to Confidential Information), and the provisions of Section 10 (relating to Noninterference). 7.04 WITHOUT CAUSE. Subject to compliance by Bayman with the provisions of Section 8 of this Agreement (relating to Competition), the provisions of Section 9 of this Agreement (relating to Confidential Information), and the provisions of Section 10 of this Agreement (relating to Noninterference), if the Company shall terminate Bayman's employment, without Cause, there shall be paid or provided to Bayman, his dependents, beneficiaries and estate, as liquidated damages or severance pay, or both, (i) the compensation provided for in paragraph 4.01(a)(i) above for the month in which termination shall have occurred at the rate being paid at the time of such termination, and (ii) the amount (the "Payment Amount") per month equal to 1/24th of (A) the total of his previous twenty-four (24) months of base salary plus (B) an amount equal to the earned incentive cash bonus referred to in paragraph 4.01(a)(ii) above for the two (2) previously completed fiscal years. Such Payment Amount shall be paid to Bayman or, in case of his prior death, to his legal representative or estate, in monthly installments at the end of each month commencing with the month next following that in which such termination shall have occurred, and continuing for a period of twenty-four (24) months. Bayman shall also receive any incentive compensation payable for the fiscal quarter in which the Period of Employment shall be deemed to have been terminated without Cause, plus the balance of any incentive compensation due Bayman for any prior fiscal quarters in accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii) above, plus any benefits 7 10 provided pursuant to paragraph 5.02 hereof which are payable pursuant to the terms of the applicable plan or practice. In the event the Company fails to make such payments when due, then the remaining payments shall become due and payable immediately. 7.05 ARBITRATION. In the event that Bayman's employment shall be terminated by the Company during the Period of Employment or the Company shall withhold payments or provision of benefits because Bayman is alleged to be engaged in activities prohibited by Sections 8, 9 or 10 of this Agreement or for any other reason, Bayman shall have the right, in addition to all other rights and remedies provided by law, at his election either to seek arbitration in the metropolitan area of Cleveland, Ohio, under the rules of the American Arbitration Association by serving a notice to arbitrate upon the Company or to institute a judicial proceeding, in either case within one hundred and twenty (120) days after having received notice of termination of his employment. 8. Competition ------------ There shall be no obligation on the part of the Company to make any further payments provided for in paragraph 7.04 above if Bayman shall, during the two (2) years following termination of Bayman's employment for any reason except Change of Control as described in paragraph 7.02, engage in Competition with the Company as hereinafter defined. The word "Competition" for purposes of this Section 8 and any other provision of this Agreement shall mean taking any employment or consulting position with or control of one of the Company's top twenty-five (25) competitors as listed in the most current issue at the date of termination of Electronic Buyer's News and/or Electronic News; provided, however, that in no event shall ownership of less than 5% of the outstanding capital stock entitled to vote for the election of directors of a corporation with a class of equity securities held of record by more than 500 persons be deemed Competition with the Company within the meaning of this Section 8. 9. Confidential Information ------------------------- 9.01 Except for information which is already in the public domain, or which is publicly disclosed by persons other than Bayman, or which is required by law or court order to be disclosed, or information given to Bayman by a third party not bound by any obligation of confidentiality, Bayman shall at all times during and after his employment with the Company hold in strictest confidence any and all confidential information within his knowledge and which is material to the business of the Company (whether acquired prior to or during his employment with the Company) concerning the inventions, products, processes, methods of distribution, customers, services, business, suppliers or trade secrets of the Company, except that Bayman may, in connection with the performance of his duties to the Company, divulge confidential information to the directors, officers, employees and shareholders of the Company and to the advisors, accountants, attorneys or lenders of the Company or such other individuals as deemed prudent in the course of business to carry out the responsibilities and duties of his position. Such confidential information includes, without limitation, financial information, sales information, price 8 11 lists, marketing data, the identity and lists of actual and potential customers and technical information, all to the extent that such information is not intended by the Company for public dissemination. 9.02 Bayman also agrees that upon leaving the Company's employ he will not take with him, without the prior written consent of an officer authorized to act in the matter by the Board of Directors of the Company, any Company document, contract, internal financial or management reports, customers list, product list, price list, catalog, employee list, procedures, software, MIS data, drawing, blueprint, specification or other document of the Company, its subsidiaries, affiliates and divisions, which is of a confidential nature relating to the Company, its subsidiaries, affiliates and divisions, or, without limitation, relating to its or their methods of purchase or distribution, or any description of any trade secret, formulae or secret processes. 10. Noninterference ---------------- Except for Change of Control as described in paragraph 7.02, Bayman shall not, at any time during or within two (2) years after his employment is terminated with the Company, without the prior written consent of the Company, directly or indirectly, induce or attempt to induce any employee, agent or other representative or associate of the Company to terminate his or her relationship with the Company, or in any way directly or indirectly interfere with such a relationship or any relationship between the Company and any of its top fifty (50) suppliers or top two hundred fifty (250) customers, both in terms of the Company's sales volume, provided that purchasing goods from a supplier to the Company or making a sale to any of the Company's customers shall not be deemed to be interference. 11. Remedy ------- Bayman acknowledges that Sections 8, 9 and 10 hereof were negotiated at arms length and are required for the fair and reasonable protection of the Company. Bayman and the Company further acknowledge and agree that a breach of those obligations and agreements will result in irreparable and continuing damage to the Company for which there will be no adequate remedy at law and, therefore, Bayman and the Company agree that in the event of any breach of said obligations and agreements the Company, and its successors and assigns, shall be entitled to injunctive relief and such other and further relief, including monetary damages, as is proper in the circumstances. It is further agreed that the running of the periods provided above in Sections 8 and 10, shall be tolled during any period which Bayman shall be adjudged to have been in violation of any of his obligations under such Sections. 12. Withholding ----------- Anything to the contrary notwithstanding, all payments required to be made by the Company hereunder to Bayman or his estate or beneficiaries, shall be subject to the 9 12 withholding of such amounts, if any, relating to tax and other payroll deductions as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation. In lieu of withholding such amounts, the Company may accept other provisions to the end that it has sufficient funds to pay all taxes required by law to be withheld in respect of such payments or any of them. 13. Notices -------- All notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be sufficiently given if and when mailed in the continental United States by registered or certified mail or personally delivered to the party entitled thereto at the address stated below or to such changed address as the addressee may have given by a similar notice: To the Company: Pioneer-Standard Electronics, Inc. 4800 East 131st Street Cleveland, Ohio 44105 Attention: Secretary or Assistant Secretary To Bayman: James L. Bayman 2749 Cranlyn Road Shaker Heights, Ohio 44122 14. General Provisions ------------------ 14.01 There shall be no right of set-off or counter claim, in respect of any claim, debt or obligation, against payments to Bayman, his dependents, beneficiaries or estate provided for in this Agreement. 14.02 No right or interest to or in any payments shall be assignable by Bayman; provided, however, that this provision shall not preclude him from designating one or more beneficiaries to receive any amount that may be payable after his death and shall not preclude the legal representative of his estate from assigning any right hereunder to the person or persons entitled thereto under his will or, in the case of intestacy, to the person or persons entitled thereto under the laws of intestacy applicable to his estate. The term "beneficiaries" as used in this Agreement shall mean a beneficiary or beneficiaries so designated to receive any such amount or, if no beneficiary has been so designated, the legal representative of Bayman's estate. 14.03 No right, benefit or interest hereunder, shall be subject to anticipation, alienation, sale, assignment, encumbrance, charge, pledge, hypothecation, or set-off in respect of any claim, debt or obligation, or to execution, attachment, levy or similar process, or assignment by operation of law. Any attempt, voluntary or involuntary, to effect any 10 13 action specified in the immediately preceding sentence shall, to the full extent permitted by law, be null, void and of no effect. 14.04 In the event of Bayman's death or a judicial determination of his incompetence, reference in this Agreement to Bayman shall be deemed, where appropriate, to refer to his legal representative or, where appropriate, to his beneficiary or beneficiaries. 14.05 The titles to sections in this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the title of any section. 14.06 This Agreement shall be binding upon and shall inure to the benefit of (a) Bayman and, subject to the provisions of paragraphs 14.02 and 14.03, his heirs and legal representatives, and (b) the Company and its successors as provided in Section 17 hereof. 15. Amendment or Modification; Waiver ----------------------------------- No provision of this Agreement may be amended or waived unless such amendment or waiver is authorized by the Board of Directors of the Company or the Compensation Committee thereof and is agreed to in writing, signed by Bayman and by an officer of the Company thereunto duly authorized by either the Board of Directors or the Compensation Committee. Except as otherwise specifically provided in this Agreement, no waiver by either party hereto of any breach by the other party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of a subsequent breach of such condition or provision or a waiver of a similar or dissimilar provision or condition at the same or at any prior or subsequent time. 16. Severability --------------------- In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions and portions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law. 17. Successors to the Company ------------------------- Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the Company and any successor of the Company, including, without limitation, any corporation which acquires directly or indirectly all or substantially all of the assets or capital stock of the Company whether by merger, consolidation, sale or otherwise (and such successor shall thereafter be deemed the Company for the purposes of this Agreement), but shall not otherwise be assignable by the Company. 11 14 18. Operation of Agreement ---------------------- 18.01 This Agreement is effective April 1, 1997, and shall supersede any prior employment arrangement or agreement, including the Amended and Restated Employment Agreement dated June 12, 1995, which was effective April 3, 1995, and the Employment Agreement dated May 7, 1996, which was effective April 1, 1996 between Bayman and the Company, which shall be deemed to be terminated and null and void except for any vested rights to receive compensation under Section 4.01(a)(ii) thereof. 18.02 For the purpose of this Agreement, the term "Change in Control" of the Company shall mean a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 as in effect on the date of this Agreement; provided that, without limitation, such a change in control shall be deemed to have occurred if and when (a) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes a beneficial owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities, or (b) during any period of twelve (12) consecutive months, commencing before or after the date of this Agreement, individuals who, at the beginning of such twelve (12) month period were directors of the Company for whom Bayman, as a shareholder, shall have voted, cease for any reason to constitute at least a majority of the Board of Directors of the Company. 19. Enforcement Costs ----------------- The Company is aware that upon the occurrence of a Change in Control the Board of Directors or a shareholder of the Company may then cause or attempt to cause the Company to refuse to comply with its obligations under this Agreement, or may cause or attempt to cause the Company to institute, or may institute, litigation seeking to have this Agreement declared unenforceable, or may take, or attempt to take, other action to deny Bayman the benefits intended under this Agreement. In these circumstances, the purpose of this Agreement could be frustrated. It is the intent of the Company that Bayman not be required to incur the expenses associated with the enforcement of his rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to Bayman hereunder, nor be bound to negotiate any settlement of his rights hereunder under threat of incurring such expenses. Accordingly, if following a Change in Control it should appear to Bayman that the Company has failed to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any litigation or other legal action designed to deny, diminish or to recover from, Bayman, the benefits intended to be provided to Bayman hereunder, and that Bayman has complied with all of his obligations under this Agreement, the Company irrevocably authorizes Bayman from time to time to retain counsel of his choice at the expense of the Company as provided in this Section 19, to represent Bayman in connection with the initiation or defense of any litigation or other 15 legal action, whether by or against the Company or any Director, officer, shareholder or other person affiliated with the Company, in any jurisdiction. Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the Company irrevocably consents to Bayman entering into an attorney-client relationship with such counsel, and in that connection the Company and Bayman agree that a confidential relationship shall exist between Bayman and such counsel. The reasonable fees and expenses of counsel selected from time to time by Bayman as hereinabove provided shall be paid or reimbursed to Bayman by the Company on a regular, periodic basis upon presentation by Bayman of a statement or statements prepared by such counsel in accordance with its customary practices, up to a maximum aggregate amount of $500,000. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. ATTEST: PIONEER-STANDARD ELECTRONICS, INC. /s/ Diana Lindsay /s/ Vic Gelb - ------------------------------ ---------------------------------------- Vic Gelb, Chairman of the Compensation Committee ATTEST: /s/ Carol J. Torre /s/ James L. Bayman - ------------------------------ --------------------------------------- James L. Bayman EX-10.2 4 EXHIBIT 10.2 1 Exhibit 10.2 EMPLOYMENT AGREEMENT BETWEEN PIONEER-STANDARD ELECTRONICS, INC. AND ARTHUR RHEIN July 29, 1997 2
Table of Contents Page Employment.............................................................................1 Period of Employment...................................................................1 Position, Duties, Responsibilities.....................................................1 Compensation, Compensation Plans, Perquisites.........................................2 Employee Benefit Plans.................................................................3 Effect of Death or Disability..........................................................4 Termination............................................................................5 General.......................................................................5 Change of Control.............................................................5 For Cause or Voluntary Termination............................................6 Without Cause.................................................................7 Arbitration...................................................................7 Competition............................................................................8 Confidential Information...............................................................8 Noninterference........................................................................9 Remedy.................................................................................9 Withholding............................................................................9 Notices ..............................................................................10 General Provisions....................................................................10 Amendment or Modification; Waiver.....................................................11 Severability..........................................................................11 Successors to the Company.............................................................11 Operation of Agreement................................................................11 Enforcement Costs.....................................................................12
3 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT between PIONEER-STANDARD ELECTRONICS, INC., an Ohio corporation (the "Company"), and ARTHUR RHEIN ("Rhein"), dated July 29, 1997, to be effective April 1, 1997. W I T N E S S E T H: WHEREAS: The Company and Rhein have given consideration to an employment agreement providing for the services of Rhein as President and Chief Operating Officer; and WHEREAS: This Agreement is deemed necessary at the present time to meet the need for a continued strong management without substantial change; and WHEREAS: Together with other officers of the Company, Rhein has been responsible for the success of the business of the Company; NOW, THEREFORE, it is hereby agreed by and between the Company and Rhein as follows: 1. Employment ---------- The Company hereby agrees to continue to employ Rhein, and Rhein hereby agrees to remain in the employ of the Company, for the period set forth in Section 2 below (the "Period of Employment"), in the position and with the duties and responsibilities set forth in Section 3 below, and upon the other terms and conditions hereinafter stated. 2. Period of Employment -------------------- For the purposes of this Agreement, the Period of Employment, subject only to the provisions of Section 6 below (relating to Death or Disability), shall continue for a one-year period from the effective date hereof and thereafter on a year-to-year basis (i) subject to termination of this Agreement by the Company effective as of the next anniversary of the effective date hereof following written notice of termination, which notice must be given to Rhein no later than February 1 of the Company's then current fiscal year, or (ii) until the earlier termination of employment as set forth in Section 7. 3. Position, Duties, Responsibilities ---------------------------------- 3.01 During the Period of Employment, Rhein shall serve as President and Chief Operating Officer of the Company reporting to the Chief Executive Officer of the Company and shall have the authority, power, and duties with regard to his position as 4 may from time to time be assigned by the Chief Executive Officer or the Board of Directors of the Company. 3.02 It is further contemplated that at all times during the Period of Employment Rhein shall serve and continue to serve as a member of its Board of Directors. In the event that Rhein's employment is terminated for any reason as provided in paragraph 7 below, Rhein agrees that he shall immediately submit his written resignation as a member of the Board of Directors of the Company, which may choose to either accept or reject such resignation. 3.03 Throughout the Period of Employment Rhein shall devote his full time and undivided attention during normal business hours to the business and affairs of the Company, except for reasonable vacations afforded the Company's executive officers and except for illness or incapacity, but nothing in this Agreement shall preclude Rhein from devoting reasonable time required for serving as a director or member of an advisory committee of any organization involving no conflict of interest with the interests of the Company, from engaging in charitable and community activities, and from managing his personal investments, provided that such activities do not materially interfere with the regular performance of his duties and responsibilities under this Agreement. 3.04 Rhein's office shall be located at the corporate offices of the Company, and Rhein shall not be required to locate his office elsewhere without his prior written consent, nor shall he be required to be absent therefrom on travel status or otherwise more than a total of sixty (60) days in any calendar year nor more than fifteen (15) consecutive days at any one time. 4. Compensation, Compensation Plans, Perquisites 4.01 (a) For all services rendered by Rhein in any capacity during the Period of Employment, including without limitation, services as an executive officer, director or member of any committee of the Company or of any subsidiary, division or affiliate thereof, Rhein shall be paid as compensation: (i) Effective May 1, 1997, a base salary, payable not less often than monthly, at the rate of $22,917 per month, with such increases in such rate as may be awarded from time to time by the Board of Directors of the Company; (ii) A cash incentive compensation payment equal to the product of 65/100 of 1% of the sum of the "actual operating income" of the Company, multiplied by the ratio of the Company's "actual return on capital" to 20.4%. The term "actual operating income" shall be defined as the income before income tax (state and federal income tax) and interest expense. The term "actual return on capital" shall be defined as the Company's "actual operating income" divided by 2 5 the sum of its interest-bearing debt, plus equity (the denominator shall be calculated for each fiscal year as the average of such amounts as at the end of each of the Company's four (4) fiscal quarters). All amounts used to calculate the incentive compensation payment shall reflect the operations of the Company and its consolidated subsidiaries and affiliates and shall be calculated in conformity with generally accepted accounting principles. The Company shall calculate the incentive compensation payment for each fiscal year on a quarterly basis and at the end of each of the first three (3) fiscal quarters shall pay Rhein the incentive compensation amount based on such quarterly calculation. After April 1 and before June 16 of the next fiscal year, and after audited financial statements are available to the Company, the Company shall pay Rhein the balance of any amount due Rhein based on the calculation of the incentive compensation amount for the fiscal year less payments made for the first three (3) fiscal quarters, which payment shall be vested in the event of termination by reason of Death disability (Section 6), Change of Control, (Section 7.02), or without Cause (Section 7.04), but shall be forfeited in the event of termination for Cause or voluntary termination (Section 7.03). (b) Any increase in salary, incentive compensation or other form of compensation shall in no way diminish any other obligation of the Company under this Agreement, unless specifically agreed to in writing by Rhein. 4.02 During the Period of Employment Rhein shall be and continue to be a full participant in the Company's Employees' Profit Sharing Plan or any equivalent successor plan that may be adopted by the Company. 4.03 During the Period of Employment Rhein shall be entitled to perquisites, including without limitation, an office, secretarial staff and clerical staff, and to fringe benefits comparable to those enjoyed by the other executive officers of the Company, as well as to reimbursement, upon proper accounting, of reasonable business expenses and disbursements incurred by him in the course of his duties. 5. Employee Benefit Plans ---------------------- 5.01 The compensation, together with other matters provided for in Section 4 above, is in addition to the benefits provided for in this Section 5. 5.02 Rhein, his dependents, beneficiaries and estate shall be entitled to all payments and benefits and service credit for benefits during the Period of Employment to which other executive officers of the Company, their dependents and beneficiaries are entitled as the result of the employment of such executive officers during the Period of Employment 3 6 under the terms of employee plans and practices of the Company, including, without limitation, the Company's retirement program consisting of its Employees' Profit Sharing Plan, its group life insurance plan, its accidental death and dismemberment insurance, disability, medical and health and welfare plans, any key person individual life and disability policies, automobile expense reimbursement, club membership fees and dues, and other present or equivalent successor plans and practices of the Company, its subsidiaries and divisions, for which other executive officers, their dependents and beneficiaries are eligible, and to all payments or other benefits under any such plan or practice after the Period of Employment as a result of participation in such plan or practice during the Period of Employment. 5.03 Rhein shall be eligible to participate in the Company's 1991 Stock Option Plan (which, together with any successor stock option plan or plans that may be adopted by the Company, is referred to herein as the "Option Plan"); provided, however, that the grant of any stock options ("Options") under any Option Plan shall be at the sole discretion of the Compensation Committee of the Board of Directors of the Company. The Company has granted Rhein stock options at an option price equal to the fair market value of the Company's Common Shares at the date of grant. The terms and conditions of exercise of Rhein's Options shall be as is set forth in Rhein's Stock Option Agreements (the "Option Agreements") with the Company; provided, however, that in the event of a Change in Control, as defined in paragraph 18.02 below, then notwithstanding the provisions of said Option Agreements, all options (including those granted to him under the 1982 Incentive Stock Option Plan and the 1991 Stock Option Plan) shall immediately be 100% vested and Rhein shall have the immediate right of exercise with respect to all Options and the underlying Common Shares covered by said Option Agreements. In the event that Rhein's employment is terminated as a result of a Change in Control, as defined in paragraph 18.02 below, Rhein shall have the period of one (1) year after the date of such termination to exercise his Options or the remainder of the term of such Options, whichever is shorter, and any such exercise shall be irrevocable. 6. Effect of Death or Disability ----------------------------- 6.01 In the event of the death of Rhein during the Period of Employment, the Period of Employment shall be deemed to have ended as of the close of business on the last day of the month in which death shall have occurred, and his legal representative shall be entitled to (i) the compensation provided for in paragraph 4.01(a)(i) above for the month in which death shall take place at the rate being paid at the time of death, (ii) any incentive compensation payable for the fiscal quarter in which the Period of Employment shall be deemed to have terminated due to death, plus the balance of any incentive compensation due Rhein for any prior fiscal quarters in accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii) above, and (iii) any benefits provided pursuant to paragraph 5.02 hereof which are payable pursuant to the terms of the applicable plan or practice. 4 7 (a) The term "Disability," as used in this Agreement, shall mean an illness or accident which prevents Rhein from performing his duties under this Agreement for a period of six (6) consecutive months. The Period of Employment shall be deemed to have ended as of the close of business on the last day of such six (6) month period but without prejudice to any payments due Rhein during such six (6) month period or pursuant to any disability insurance policy. (b) In the event of the Disability of Rhein during the Period of Employment, Rhein shall be entitled to (i) the compensation provided for in paragraph 4.01(a)(i) above, at the rate being paid at the time of the commencement of Disability, for the period of such Disability but not in excess of six (6) months, (ii) any incentive compensation payable for the fiscal quarter in which the Period of Employment shall be deemed to have terminated due to Disability, plus the balance of any incentive compensation due Rhein for any prior fiscal quarters in accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii) above, and (iii) any benefits provided pursuant to paragraph 5.02 hereof which are payable pursuant to the terms of the applicable plan or practice. (c) The amount of any payments due under this paragraph 6.02 shall be reduced by any payments to which Rhein may be paid for the same period under any disability plan of the Company or of any subsidiary or affiliate thereof. 7. Termination ----------- 7.01 GENERAL. The Company may terminate Rhein with or without cause at any time during the Period of Employment, subject to the provisions of this Section 7. The termination of this Agreement by the Company pursuant to Section 2(i) hereof shall be deemed to be a termination of employment without Cause as set forth in Section 7.04 hereof. In the event that this Agreement is to be terminated pursuant to Section 2(i) hereof, upon receipt of the notice of termination Rhein shall have the option of either leaving the Company at any time thereafter or continuing his employment until the March 31 effective date of the termination of this Agreement, and in either event Rhein shall be entitled to receive all of the payments and benefits as provided in Section 7.04 hereof; provided, however, that in the event Rhein elects to continue his employment with the Company subsequent to the March 31 effective date of the termination of this Agreement, for a period of three (3) months thereafter Rhein shall have the right to terminate his employment with the Company and any such termination shall be deemed to be a termination of employment without Cause as set forth above. 7.02 CHANGE OF CONTROL. Within one (1) year of a Change of Control of the Company, as defined in paragraph 18.02, Rhein shall have the right to terminate his employment with the Company and there shall be paid or provided to Rhein, his dependents, beneficiaries and estate, as liquidated damages or severance pay, or both, the following: 5 8 (a) The compensation provided for in paragraph 4.01(a)(i) above for the month in which termination shall have occurred at the rate being paid at the time of termination; and an amount equal to his previous twenty four (24) months of base salary plus an amount equal to the earned incentive cash bonus referred to in paragraph 4.01(a)(ii) above for the two (2) previously completed fiscal years. Such amount shall be paid to Rhein in one payment, immediately upon termination. Rhein shall also receive any incentive compensation payable for the fiscal quarter in which the Period of Employment shall be deemed to have terminated due to Change of Control, plus the balance of any incentive compensation due Rhein for any prior fiscal quarters in accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii) above. (b) For two (2) years following the date of termination, Rhein, his dependents, beneficiaries and estate, shall continue to be entitled to all benefits provided pursuant to paragraph 5.02 hereof which are payable pursuant to the terms of the applicable plan or practice, and service credit for benefits under all employee benefit plans of the Company, including, without limitation, the Company's Profit Sharing Plan referred to in paragraph 5.02 above, upon the same basis as immediately prior to termination and, to the extent that such benefits or service credit for benefits shall not be payable or provided under any such plans to Rhein, his dependents, beneficiaries and estate, by reason of his no longer being an employee of the Company as the result of termination, or any such plan, program or arrangement is discontinued or the benefits thereunder are materially reduced, the Company shall itself arrange to provide to Rhein, his dependents, beneficiaries and estate benefits substantially similar to those which Rhein, his dependents and beneficiaries were entitled to receive under such plans, programs and arrangements immediately prior to termination. Any termination by the Company within the period of one hundred eighty (180) days prior to the execution of a letter of intent or a definitive agreement which could lead to a Change of Control and the closing of the transaction actually resulting in the Change of Control, as defined in paragraph 18.02, shall be deemed to be a termination under this paragraph 7.02. An election by Rhein to terminate his employment under the provisions of this paragraph 7.02 shall not be deemed a voluntary termination of employment by Rhein under paragraph 7.03 of this Agreement or any plan or practice of the Company. 7.03 FOR CAUSE OR VOLUNTARY TERMINATION. For the purpose of any provision of this Agreement, the termination of Rhein's employment shall be deemed to have been for "Cause" only if: (a) termination of his employment shall have been the result of Rhein's conviction of any of the following: (i) embezzlement; (ii) misappropriation of money or other property of the Company; or (iii) any felony; or 6 9 (b) there has been a breach by Rhein during the Period of Employment of the provisions of paragraph 3.03 above, relating to devotion of full time to the affairs of the Company, Section 8 relating to Competition, Section 9 relating to Confidential Information, or Section 10 relating to Noninterference, and such breach results in demonstrable significant injury to the Company, and with respect to any alleged breach of paragraph 3.03 hereof, Rhein shall have failed to remedy such breach within thirty (30) days from his receipt of written notice from the Company. If Rhein's employment is terminated by the Company for Cause, or if Rhein shall voluntarily terminate his employment with the Company, Rhein shall be entitled to the compensation provided for in paragraph 4.01(a)(i) through the date of such termination. Rhein shall not be entitled to any additional compensation or benefits (except for any vested benefits), and shall continue to be bound by the provisions of Section 8 of this Agreement (relating to Competition), the provisions of Section 9 of this Agreement (relating to Confidential Information), and the provisions of Section 10 (relating to Noninterference). 7.04 WITHOUT CAUSE. Subject to compliance by Rhein with the provisions of Section 8 of this Agreement (relating to Competition), the provisions of Section 9 of this Agreement (relating to Confidential Information), and the provisions of Section 10 of this Agreement (relating to Noninterference), if the Company shall terminate Rhein's employment, without Cause, there shall be paid or provided to Rhein, his dependents, beneficiaries and estate, as liquidated damages or severance pay, or both, (i) the compensation provided for in paragraph 4.01(a)(i) above for the month in which termination shall have occurred at the rate being paid at the time of such termination, and (ii) the amount (the "Payment Amount") per month equal to 1/24th of the total of (A) his previous twenty-four (24) months of base salary plus (B) an amount equal to the earned incentive cash bonus referred to in paragraph 4.01(a)(ii) above for the two (2) previously completed fiscal years. Such Payment Amount shall be paid to Rhein or, in case of his prior death, to his legal representative or estate, in monthly installments at the end of each month commencing with the month next following that in which such termination shall have occurred, and continuing for a period of twenty-four (24) months. Rhein shall also receive any incentive compensation payable for the fiscal quarter in which the Period of Employment shall be deemed to have been terminated without Cause, plus the balance of any incentive compensation due Rhein for any prior fiscal quarters in accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii) above, plus any benefits provided pursuant to paragraph 5.02 hereof which are payable pursuant to the terms of the applicable plan or practice. In the event the Company fails to make such payments when due, then the remaining payments shall become due and payable immediately. 7.05 ARBITRATION. In the event that Rhein's employment shall be terminated by the Company during the Period of Employment or the Company shall withhold payments or provision of benefits because Rhein is alleged to be engaged in activities prohibited by Sections 8, 9 or 10 of this Agreement or for any other reason, Rhein shall have the right, 7 10 in addition to all other rights and remedies provided by law, at his election either to seek arbitration in the metropolitan area of Cleveland, Ohio, under the rules of the American Arbitration Association by serving a notice to arbitrate upon the Company or to institute a judicial proceeding, in either case within one hundred and twenty (120) days after having received notice of termination of his employment. 8. Competition ----------- There shall be no obligation on the part of the Company to make any further payments provided for in paragraph 7.04 above if Rhein shall, during the one (1) year following termination of Rhein's employment for any reason except Change of Control as described in paragraph 7.02, engage in Competition with the Company as hereinafter defined. The word "Competition" for purposes of this Section 8 and any other provision of this Agreement shall mean taking any employment or consulting position with or control of one of the Company's top twenty-five (25) competitors as listed in the most current issue at the date of termination of Electronic Buyer's News and/or Electronic News; provided, however, that in no event shall ownership of less than 5% of the outstanding capital stock entitled to vote for the election of directors of a corporation with a class of equity securities held of record by more than 500 persons be deemed Competition with the Company within the meaning of this Section 8. 9. Confidential Information ------------------------ 9.01 Except for information which is already in the public domain, or which is publicly disclosed by persons other than Rhein, or which is required by law or court order to be disclosed, or information given to Rhein by a third party not bound by any obligation of confidentiality, Rhein shall at all times during and after his employment with the Company hold in strictest confidence any and all confidential information within his knowledge and which is material to the business of the Company (whether acquired prior to or during his employment with the Company) concerning the inventions, products, processes, methods of distribution, customers, services, business, suppliers or trade secrets of the Company, except that Rhein may, in connection with the performance of his duties to the Company, divulge confidential information to the directors, officers, employees and shareholders of the Company and to the advisors, accountants, attorneys or lenders of the Company or such other individuals as deemed prudent in the course of business to carry out the responsibilities and duties of his position. Such confidential information includes, without limitation, financial information, sales information, price lists, marketing data, the identity and lists of actual and potential customers and technical information, all to the extent that such information is not intended by the Company for public dissemination. 9.02. Rhein also agrees that upon leaving the Company's employ he will not take with him, without the prior written consent of an officer authorized to act in the matter by the Board of Directors of the Company, any Company document, contract, internal financial or management reports, customers list, product list, price list, catalog, employee list, 8 11 procedures, software, MIS data, drawing, blueprint, specification or other document of the Company, its subsidiaries, affiliates and divisions, which is of a confidential nature relating to the Company, its subsidiaries, affiliates and divisions, or, without limitation, relating to its or their methods of purchase or distribution, or any description of any trade secret, formulae or secret processes. 10. Noninterference --------------- Except for Change of Control as described in paragraph 7.02, Rhein shall not, at any time during or within one (1) year after his employment is terminated with the Company, without the prior written consent of the Company, directly or indirectly, induce or attempt to induce any employee, agent or other representative or associate of the Company to terminate his or her relationship with the Company, or in any way directly or indirectly interfere with such a relationship or any relationship between the Company and any of its top fifty (50) suppliers or top two hundred fifty (250) customers, both in terms of the Company's sales volume, provided that purchasing goods from a supplier to the Company or making a sale to any of the Company's customers shall not be deemed to be interference. 11. Remedy ------ Rhein acknowledges that Sections 8, 9 and 10 hereof were negotiated at arms length and are required for the fair and reasonable protection of the Company. Rhein and the Company further acknowledge and agree that a breach of those obligations and agreements will result in irreparable and continuing damage to the Company for which there will be no adequate remedy at law and, therefore, Rhein and the Company agree that in the event of any breach of said obligations and agreements the Company, and its successors and assigns, shall be entitled to injunctive relief and such other and further relief, including monetary damages, as is proper in the circumstances. It is further agreed that the running of the periods provided above in Sections 8 and 10, shall be tolled during any period which Rhein shall be adjudged to have been in violation of any of his obligations under such Sections. 12. Withholding ----------- Anything to the contrary notwithstanding, all payments required to be made by the Company hereunder to Rhein or his estate or beneficiaries, shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation. In lieu of withholding such amounts, the Company may accept other provisions to the end that it has sufficient funds to pay all taxes required by law to be withheld in respect of such payments or any of them. 9 12 13. Notices ------- All notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be sufficiently given if and when mailed in the continental United States by registered or certified mail or personally delivered to the party entitled thereto at the address stated below or to such changed address as the addressee may have given by a similar notice: To the Company: Pioneer-Standard Electronics, Inc. 4800 East 131st Street Cleveland, Ohio 44105 Attention: Secretary or Assistant Secretary To Rhein: Arthur Rhein 40 Stonehill Lane Moreland Hills, Ohio 44022 14. General Provisions ------------------ 14.01 There shall be no right of set-off or counter claim, in respect of any claim, debt or obligation, against payments to Rhein, his dependents, beneficiaries or estate provided for in this Agreement. 14.02 No right or interest to or in any payments shall be assignable by Rhein; provided, however, that this provision shall not preclude him from designating one or more beneficiaries to receive any amount that may be payable after his death and shall not preclude the legal representative of his estate from assigning any right hereunder to the person or persons entitled thereto under his will or, in the case of intestacy, to the person or persons entitled thereto under the laws of intestacy applicable to his estate. The term "beneficiaries" as used in this Agreement shall mean a beneficiary or beneficiaries so designated to receive any such amount or, if no beneficiary has been so designated, the legal representative of Rhein's estate. 14.03 No right, benefit or interest hereunder, shall be subject to anticipation, alienation, sale, assignment, encumbrance, charge, pledge, hypothecation, or set-off in respect of any claim, debt or obligation, or to execution, attachment, levy or similar process, or assignment by operation of law. Any attempt, voluntary or involuntary, to effect any action specified in the immediately preceding sentence shall, to the full extent permitted by law, be null, void and of no effect. 14.04 In the event of Rhein's death or a judicial determination of his incompetence, reference in this Agreement to Rhein shall be deemed, where appropriate, to refer to his legal representative or, where appropriate, to his beneficiary or beneficiaries. 10 13 14.05 The titles to sections in this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the title of any section. 14.06 This Agreement shall be binding upon and shall inure to the benefit of (a) Rhein and, subject to the provisions of paragraphs 14.02 and 14.03, his heirs and legal representatives, and (b) the Company and its successors as provided in Section 17 hereof. 15. Amendment or Modification; Waiver --------------------------------- No provision of this Agreement may be amended or waived unless such amendment or waiver is authorized by the Board of Directors of the Company or the Compensation Committee thereof and is agreed to in writing, signed by Rhein and by an officer of the Company thereunto duly authorized by either the Board of Directors or the Compensation Committee. Except as otherwise specifically provided in this Agreement, no waiver by either party hereto of any breach by the other party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of a subsequent breach of such condition or provision or a waiver of a similar or dissimilar provision or condition at the same or at any prior or subsequent time. 16. Severability ------------ In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions and portions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law. 17. Successors to the Company ------------------------- Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the Company and any successor of the Company, including, without limitation, any corporation which acquires directly or indirectly all or substantially all of the assets or capital stock of the Company whether by merger, consolidation, sale or otherwise (and such successor shall thereafter be deemed the Company for the purposes of this Agreement), but shall not otherwise be assignable by the Company. 18. Operation of Agreement ---------------------- 18.01 This Agreement is effective April 1, 1997, and shall supersede any prior employment arrangement or agreement, including the Amended and Restated Employment Agreement dated June 12, 1995, which was effective April 3, 1995, and the Employment Agreement dated May 7, 1996, which was effective April 1, 1996 between Rhein and the Company, which shall be deemed to be terminated and null and void except for any vested rights to receive compensation under Section 4.01(a)(ii) thereof. 11 14 18.02 For the purpose of this Agreement, the term "Change in Control" of the Company shall mean a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 as in effect on the date of this Agreement; provided that, without limitation, such a change in control shall be deemed to have occurred if and when (a) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes a beneficial owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities, or (b) during any period of twelve (12) consecutive months, commencing before or after the date of this Agreement, individuals who, at the beginning of such twelve (12) month period were directors of the Company for whom Rhein, as a shareholder, shall have voted, cease for any reason to constitute at least a majority of the Board of Directors of the Company. 19. Enforcement Costs ----------------- The Company is aware that upon the occurrence of a Change in Control the Board of Directors or a shareholder of the Company may then cause or attempt to cause the Company to refuse to comply with its obligations under this Agreement, or may cause or attempt to cause the Company to institute, or may institute, litigation seeking to have this Agreement declared unenforceable, or may take, or attempt to take, other action to deny Rhein the benefits intended under this Agreement. In these circumstances, the purpose of this Agreement could be frustrated. It is the intent of the Company that Rhein not be required to incur the expenses associated with the enforcement of his rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to Rhein hereunder, nor be bound to negotiate any settlement of his rights hereunder under threat of incurring such expenses. Accordingly, if following a Change in Control it should appear to Rhein that the Company has failed to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any litigation or other legal action designed to deny, diminish or to recover from, Rhein, the benefits intended to be provided to Rhein hereunder, and that Rhein has complied with all of his obligations under this Agreement, the Company irrevocably authorizes Rhein from time to time to retain counsel of his choice at the expense of the Company as provided in this Section 19, to represent Rhein in connection with the initiation or defense of any litigation or other legal action, whether by or against the Company or any Director, officer, shareholder or other person affiliated with the Company, in any jurisdiction. Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the Company irrevocably consents to Rhein entering into an attorney-client relationship with such counsel, and in that connection the Company and Rhein agree that a confidential relationship shall exist between Rhein and such counsel. The reasonable fees and expenses of counsel selected from time to time by Rhein as hereinabove provided shall be paid or reimbursed to Rhein by the Company on a regular, periodic basis upon 12 15 presentation by Rhein of a statement or statements prepared by such counsel in accordance with its customary practices, up to a maximum aggregate amount of $500,000. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. ATTEST: PIONEER-STANDARD ELECTRONICS, INC. /s/ Carol J. Torre By /s/ James L. Bayman - ------------------------------- ---------------------------------------- James L. Bayman, Chairman and Chief Executive Officer ATTEST: /s/ Nelle Wulff /s/ Arthur Rhein - ------------------------------- ---------------------------------------- Arthur Rhein EX-10.3 5 EXHIBIT 10.3 1 Exhibit 10.3 EMPLOYMENT AGREEMENT BETWEEN PIONEER-STANDARD ELECTRONICS, INC. AND ROBERT E. DANIELSON July 29, 1997 2 TABLE OF CONTENTS EMPLOYMENT........................................................................................................1 PERIOD OF EMPLOYMENT..............................................................................................1 POSITION, DUTIES, RESPONSIBILITIES................................................................................1 COMPENSATION, COMPENSATION PLANS, PERQUISITES....................................................................2 EMPLOYEE BENEFIT PLANS............................................................................................3 EFFECT OF DEATH OR DISABILITY.....................................................................................4 TERMINATION.......................................................................................................5 GENERAL........................................................................................................5 CHANGE OF CONTROL..............................................................................................5 FOR CAUSE OR VOLUNTARY TERMINATION.............................................................................6 WITHOUT CAUSE..................................................................................................6 ARBITRATION....................................................................................................7 COMPETITION.......................................................................................................7 CONFIDENTIAL INFORMATION..........................................................................................8 NONINTERFERENCE...................................................................................................8 REMEDY............................................................................................................9 WITHHOLDING.......................................................................................................9 NOTICES...........................................................................................................9 GENERAL PROVISIONS................................................................................................9 AMENDMENT OR MODIFICATION; WAIVER................................................................................10 SEVERABILITY.....................................................................................................11 SUCCESSORS TO THE COMPANY........................................................................................11 OPERATION OF AGREEMENT...........................................................................................11 ENFORCEMENT COSTS................................................................................................11
3 EMPLOYMENT AGREEMENT -------------------- EMPLOYMENT AGREEMENT between PIONEER-STANDARD ELECTRONICS, INC., an Ohio corporation (the "Company"), and ROBERT E. DANIELSON ("Danielson"), dated July 29, 1997, to be effective April 1, 1997. W I T N E S S E T H: WHEREAS: The Company and Danielson have given consideration to an employment agreement providing for the services of Danielson as Senior Vice President and Chief Information Officer; and WHEREAS: This Agreement is deemed necessary at the present time to meet the need for a continued strong management without substantial change; and WHEREAS: Together with other officers of the Company, Danielson has been responsible for the success of the business of the Company; NOW, THEREFORE, it is hereby agreed by and between the Company and Danielson as follows: 1. Employment ---------- The Company hereby agrees to continue to employ Danielson, and Danielson hereby agrees to remain in the employ of the Company, for the period set forth in Section 2 below (the "Period of Employment"), in the position and with the duties and responsibilities set forth in Section 3 below, and upon the other terms and conditions hereinafter stated. 2. Period of Employment -------------------- For the purposes of this Agreement, the Period of Employment, subject only to the provisions of Section 6 below (relating to Death or Disability), shall continue for a one-year period from the effective date hereof and thereafter on a year-to-year basis (i) subject to termination of this Agreement by the Company effective as of the next anniversary of the effective date hereof following written notice of termination, which notice must be given to Danielson no later than February 1 of the Company's then current fiscal year, or (ii) until the earlier termination of employment as set forth in Section 7. 3. Position, Duties, Responsibilities ---------------------------------- 3.01 During the Period of Employment, Danielson shall serve as Senior Vice President and Chief Information Officer of the Company reporting to the Chief Executive Officer of the Company and shall have the authority, power, and duties with regard to his position as may from time to time be assigned by the Chief Executive Officer or the Board of Directors of the Company. 4 3.02 Throughout the Period of Employment Danielson shall devote his full time and undivided attention during normal business hours to the business and affairs of the Company, except for reasonable vacations afforded the Company's executive officers and except for illness or incapacity, but nothing in this Agreement shall preclude Danielson from devoting reasonable time required for serving as a director or member of an advisory committee of any organization involving no conflict of interest with the interests of the Company, from engaging in charitable and community activities, and from managing his personal investments, provided that such activities do not materially interfere with the regular performance of his duties and responsibilities under this Agreement. 3.03 Danielson's office shall be located at the corporate offices of the Company, and Danielson shall not be required to locate his office elsewhere without his prior written consent, nor shall he be required to be absent therefrom on travel status or otherwise more than a total of sixty (60) days in any calendar year nor more than fifteen (15) consecutive days at any one time. 4. Compensation, Compensation Plans, Perquisites ---------------------------------------------- 4.01 (a) For all services rendered by Danielson in any capacity during the Period of Employment, including without limitation, services as an executive officer, director or member of any committee of the Company or of any subsidiary, division or affiliate thereof, Danielson shall be paid as compensation: (i) A base salary, payable not less often than monthly, at the rate of $18,333 per month, with such increases in such rate as may be awarded from time to time by the Board of Directors of the Company; (ii) A cash incentive compensation payment equal to the product of 20/100 of 1% of the sum of the "actual operating income" of the Company, multiplied by the ratio of the Company's "actual return on capital" to 20.4%. The term "actual operating income" shall be defined as the income before income tax (state and federal income tax) and interest expense. The term "actual return on capital" shall be defined as the Company's "actual operating income" divided by the sum of its interest-bearing debt, plus equity (the denominator shall be calculated for each fiscal year as the average of such amounts as at the end of each of the Company's four (4) fiscal quarters). All amounts used to calculate the incentive compensation payment shall reflect the operations of the Company and its consolidated subsidiaries and affiliates and shall be calculated in conformity with generally accepted accounting principles. The Company shall calculate the incentive compensation payment for each fiscal year on a quarterly basis and at the end of each of the first three (3) fiscal quarters shall pay Danielson the incentive compensation amount based on such 2 5 quarterly calculation. After April 1 and before June 16 of the next fiscal year, and after audited financial statements are available to the Company, the Company shall pay Danielson the balance of any amount due Danielson based on the calculation of the incentive compensation amount for the fiscal year less payments made for the first three (3) fiscal quarters, which payment shall be vested in the event of termination by reason of Death or disability (Section 6), Change of Control, (Section 7.02), or without Cause (Section 7.04), but shall be forfeited in the event of termination for Cause or voluntary termination (Section 7.03). (b) Any increase in salary, incentive compensation or other form of compensation shall in no way diminish any other obligation of the Company under this Agreement, unless specifically agreed to in writing by Danielson. 4.02 During the Period of Employment Danielson shall be and continue to be a full participant in the Company's Employees' Profit Sharing Plan or any equivalent successor plan that may be adopted by the Company. 4.03 During the Period of Employment Danielson shall be entitled to perquisites, including without limitation, an office, secretarial staff and clerical staff, and to fringe benefits comparable to those enjoyed by the other executive officers of the Company, as well as to reimbursement, upon proper accounting, of reasonable business expenses and disbursements incurred by him in the course of his duties. 5. Employee Benefit Plans ---------------------- 5.01 The compensation, together with other matters provided for in Section 4 above, is in addition to the benefits provided for in this Section 5. 5.02 Danielson, his dependents, beneficiaries and estate shall be entitled to all payments and benefits and service credit for benefits during the Period of Employment to which other executive officers of the Company, their dependents and beneficiaries are entitled as the result of the employment of such executive officers during the Period of Employment under the terms of employee plans and practices of the Company, including, without limitation, the Company's retirement program consisting of its Employees' Profit Sharing Plan, its group life insurance plan, its accidental death and dismemberment insurance, disability, medical and health and welfare plans, any key person individual life and disability policies, automobile expense reimbursement, club membership fees and dues, and other present or equivalent successor plans and practices of the Company, its subsidiaries and divisions, for which other executive officers, their dependents and beneficiaries are eligible, and to all payments or other benefits under any such plan or practice after the Period of Employment as a result of participation in such plan or practice during the Period of Employment. 5.03 Danielson shall be eligible to participate in the Company's 1991 Stock Option Plan (which, together with any successor stock option plan or plans that may be adopted by the Company, is referred to herein as the "Option Plan"); provided, however, that the 3 6 grant of any stock options ("Options") under any Option Plan shall be at the sole discretion of the Compensation Committee of the Board of Directors of the Company. The terms and conditions of exercise of Options granted to Danielson shall be as is set forth in the Stock Option Agreements (the "Option Agreements") with the Company entered into by Danielson in connection with such Option grants; provided, however, that in the event of a Change in Control, as defined in paragraph 18.02 below, then notwithstanding the provisions of said Option Agreements, all Options shall immediately be 100% vested and Danielson shall have the immediate right of exercise with respect to all Options and the underlying Common Shares covered by said Option Agreements. In the event that Danielson's employment is terminated as a result of a Change in Control, as defined in paragraph 18.02 below, Danielson shall have the period of one (1) year after the date of such termination to exercise his Options or the remainder of the term of such Options, whichever is shorter, and any such exercise shall be irrevocable. 6. Effect of Death or Disability ----------------------------- In the event of the death of Danielson during the Period of Employment, the Period of Employment shall be deemed to have ended as of the close of business on the last day of the month in which death shall have occurred, and his legal representative shall be entitled to (i) the compensation provided for in paragraph 4.01(a)(i) above for the month in which death shall take place at the rate being paid at the time of death, (ii) any incentive compensation payable for the fiscal quarter in which the Period of Employment shall be deemed to have terminated due to death, plus the balance of any incentive compensation due Danielson for any prior fiscal quarters in accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii) above, and (iii) any benefits provided pursuant to paragraph 5.02 hereof which are payable pursuant to the terms of the applicable plan or practice. (a) The term "Disability," as used in this Agreement, shall mean an illness or accident which prevents Danielson from performing his duties under this Agreement for a period of three (3) consecutive months. The Period of Employment shall be deemed to have ended as of the close of business on the last day of such three (3) month period but without prejudice to any payments due Danielson during such three (3) month period or pursuant to any disability insurance policy. (b) In the event of the Disability of Danielson during the Period of Employment, Danielson shall be entitled to (i) the compensation provided for in paragraph 4.01(a)(i) above, at the rate being paid at the time of the commencement of Disability, for the period of such Disability but not in excess of three (3) months, (ii) any incentive compensation payable for the fiscal quarter in which the Period of Employment shall be deemed to have terminated due to Disability, plus the balance of any incentive compensation due Danielson for any prior fiscal quarters in accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii) above, and (iii) any benefits provided pursuant to paragraph 5.02 hereof which are payable pursuant to the terms of the applicable plan or practice. 4 7 (c) The amount of any payments due under this paragraph 6.02 shall be reduced by any payments to which Danielson may be paid for the same period under any disability plan of the Company or of any subsidiary or affiliate thereof. 7. Termination ----------- 7.01 GENERAL. The Company may terminate Danielson with or without cause at any time during the Period of Employment, subject to the provisions of this Section 7. The termination of this Agreement by the Company pursuant to Section 2(i) hereof shall be deemed to be a termination of employment without Cause as set forth in Section 7.04 hereof. In the event that this Agreement is to be terminated pursuant to Section 2(i) hereof, upon receipt of the notice of termination Danielson shall have the option of either leaving the Company at any time thereafter or continuing his employment until the March 31 effective date of the termination of this Agreement, and in either event Danielson shall be entitled to receive all of the payments and benefits as provided in Section 7.04 hereof; provided, however, that in the event Danielson elects to continue his employment with the Company subsequent to the March 31 effective date of the termination of this Agreement, for a period of three (3) months thereafter Danielson shall have the right to terminate his employment with the Company and any such termination shall be deemed to be a termination of employment without Cause as set forth above. 7.02 CHANGE OF CONTROL. Within one (1) year of a Change of Control of the Company, as defined in paragraph 18.02, Danielson shall have the right to terminate his employment with the Company and there shall be paid or provided to Danielson, his dependents, beneficiaries and estate, as liquidated damages or severance pay, or both, the following: (a) The compensation provided for in paragraph 4.01(a)(i) above for the month in which termination shall have occurred at the rate being paid at the time of termination; and an amount equal to his then current monthly base salary times twenty-four (24) plus $110,000. Such amount shall be paid to Danielson in one payment, immediately upon termination. Danielson shall also receive any incentive compensation payable for the fiscal quarter in which the Period of Employment shall be deemed to have terminated due to Change of Control, plus the balance of any incentive compensation due Danielson for any prior fiscal quarters in accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii) above. (b) For two (2) years following the date of termination, Danielson, his dependents, beneficiaries and estate, shall continue to be entitled to all benefits provided pursuant to paragraph 5.02 hereof which are payable pursuant to the terms of the applicable plan or practice, and service credit for benefits under all employee benefit plans of the Company, including, without limitation, the Company's Profit Sharing Plan referred to in paragraph 5.02 above, upon the same basis as immediately prior to termination and, to the extent that such benefits or service credit for benefits shall not be payable or provided under any such plans to Danielson, his dependents, beneficiaries and estate, by reason of his no longer being an employee of the Company as the result of termination, or any such plan, program or arrangement is discontinued or the benefits thereunder are 5 8 materially reduced, the Company shall itself arrange to provide to Danielson, his dependents, beneficiaries and estate benefits substantially similar to those which Danielson, his dependents and beneficiaries were entitled to receive under such plans, programs and arrangements immediately prior to termination. Any termination by the Company within the period of one hundred eighty (180) days prior to the execution of a letter of intent or a definitive agreement which could lead to a Change of Control and the closing of the transaction actually resulting in the Change of Control, as defined in paragraph 18.02, shall be deemed to be a termination under this paragraph 7.02. An election by Danielson to terminate his employment under the provisions of this paragraph 7.02 shall not be deemed a voluntary termination of employment by Danielson under paragraph 7.03 of this Agreement or any plan or practice of the Company. 7.03 FOR CAUSE OR VOLUNTARY TERMINATION. For the purpose of any provision of this Agreement, the termination of Danielson's employment shall be deemed to have been for "Cause" only if: (a) termination of his employment shall have been the result of Danielson's conviction of any of the following: (i) embezzlement; (ii) misappropriation of money or other property of the Company; or (iii) any felony; or (b) there has been a breach by Danielson during the Period of Employment of the provisions of paragraph 3.03 above, relating to devotion of full time to the affairs of the Company, Section 8 relating to Competition, Section 9 relating to Confidential Information, or Section 10 relating to Noninterference, and such breach results in demonstrable significant injury to the Company, and with respect to any alleged breach of paragraph 3.03 hereof, Danielson shall have failed to remedy such breach within thirty (30) days from his receipt of written notice from the Company. If Danielson's employment is terminated by the Company for Cause, or if Danielson shall voluntarily terminate his employment with the Company, Danielson shall be entitled to the compensation provided for in paragraph 4.01(a)(i) through the date of such termination. Danielson shall not be entitled to any additional compensation or benefits (except for any vested benefits), and shall continue to be bound by the provisions of Section 8 of this Agreement (relating to Competition), the provisions of Section 9 of this Agreement (relating to Confidential Information), and the provisions of Section 10 (relating to Noninterference). 7.04 WITHOUT CAUSE. Subject to compliance by Danielson with the provisions of Section 8 of this Agreement (relating to Competition), the provisions of Section 9 of this Agreement (relating to Confidential Information), and the provisions of Section 10 of this Agreement (relating to Noninterference), if the Company shall terminate Danielson's employment without Cause, there shall be paid or provided to Danielson, his dependents, beneficiaries and estate, as liquidated damages or severance pay, or both, (i) the compensation provided for in paragraph 4.01(a)(i) above for the month in which termination shall have occurred at the rate being paid at the time of such termination, and 6 9 (ii) the amount (the "Payment Amount") per month equal to 1/12th of the total of (A) his current annual base salary plus (B) $110,000. Such Payment Amount shall be paid to Danielson or, in case of his prior death, to his legal representative or estate, in monthly installments at the end of each month commencing with the month next following that in which such termination shall have occurred, and continuing for a period of twelve (12) months. Danielson shall also receive any incentive compensation payable for the fiscal quarter in which the Period of Employment shall be deemed to have been terminated without Cause, plus the balance of any incentive compensation due Danielson for any prior fiscal quarters in accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii) above, plus any benefits provided pursuant to paragraph 5.02 hereof which are payable pursuant to the terms of the applicable plan or practice. In the event the Company fails to make such payments when due, then the remaining payments shall become due and payable immediately. 7.05 Arbitration. In the event that Danielson's employment shall be terminated by the Company during the Period of Employment or the Company shall withhold payments or provision of benefits because Danielson is alleged to be engaged in activities prohibited by Sections 8, 9 or 10 of this Agreement or for any other reason, Danielson shall have the right, in addition to all other rights and remedies provided by law, at his election either to seek arbitration in the metropolitan area of Cleveland, Ohio, under the rules of the American Arbitration Association by serving a notice to arbitrate upon the Company or to institute a judicial proceeding, in either case within one hundred and twenty (120) days after having received notice of termination of his employment. 8. Competition ----------- There shall be no obligation on the part of the Company to make any further payments provided for in paragraph 7.04 above if Danielson shall, during the one (1) year following termination of Danielson's employment for any reason except Change of Control as described in paragraph 7.02, engage in Competition with the Company as hereinafter defined. The word "Competition" for purposes of this Section 8 and any other provision of this Agreement shall mean taking any employment or consulting position with or control of one of the Company's top twenty-five (25) competitors as listed in the most current issue at the date of termination of Electronic Buyer's News and/or ELECTRONIC NEWS; provided, however, that in no event shall ownership of less than 5% of the outstanding capital stock entitled to vote for the election of directors of a corporation with a class of equity securities held of record by more than 500 persons be deemed Competition with the Company within the meaning of this Section 8. 7 10 9. Confidential Information ------------------------ 9.01 Except for information which is already in the public domain, or which is publicly disclosed by persons other than Danielson, or which is required by law or court order to be disclosed, or information given to Danielson by a third party not bound by any obligation of confidentiality, Danielson shall at all times during and after his employment with the Company hold in strictest confidence any and all confidential information within his knowledge and which is material to the business of the Company (whether acquired prior to or during his employment with the Company) concerning the inventions, products, processes, methods of distribution, customers, services, business, suppliers or trade secrets of the Company, except that Danielson may, in connection with the performance of his duties to the Company, divulge confidential information to the directors, officers, employees and shareholders of the Company and to the advisors, accountants, attorneys or lenders of the Company or such other individuals as deemed prudent in the course of business to carry out the responsibilities and duties of his position. Such confidential information includes, without limitation, financial information, sales information, price lists, marketing data, the identity and lists of actual and potential customers and technical information, all to the extent that such information is not intended by the Company for public dissemination. 9.02 Danielson also agrees that upon leaving the Company's employ he will not take with him, without the prior written consent of an officer authorized to act in the matter by the Board of Directors of the Company, any Company document, contract, internal financial or management reports, customers list, product list, price list, catalog, employee list, procedures, software, MIS data, drawing, blueprint, specification or other document of the Company, its subsidiaries, affiliates and divisions, which is of a confidential nature relating to the Company, its subsidiaries, affiliates and divisions, or, without limitation, relating to its or their methods of purchase or distribution, or any description of any trade secret, formulae or secret processes. 10. Noninterference --------------- Except for Change of Control as described in paragraph 7.02, Danielson shall not, at any time during or within one (1) year after his employment is terminated with the Company, without the prior written consent of the Company, directly or indirectly, induce or attempt to induce any employee, agent or other representative or associate of the Company to terminate his or her relationship with the Company, or in any way directly or indirectly interfere with such a relationship or any relationship between the Company and any of its top fifty (50) suppliers or top two hundred fifty (250) customers, both in terms of the Company's sales volume, provided that purchasing goods from a supplier to the Company or making a sale to any of the Company's customers shall not be deemed to be interference. 8 11 11. Remedy ------ Danielson acknowledges that Sections 8, 9 and 10 hereof were negotiated at arms length and are required for the fair and reasonable protection of the Company. Danielson and the Company further acknowledge and agree that a breach of those obligations and agreements will result in irreparable and continuing damage to the Company for which there will be no adequate remedy at law and, therefore, Danielson and the Company agree that in the event of any breach of said obligations and agreements the Company, and its successors and assigns, shall be entitled to injunctive relief and such other and further relief, including monetary damages, as is proper in the circumstances. It is further agreed that the running of the periods provided above in Sections 8 and 10, shall be tolled during any period which Danielson shall be adjudged to have been in violation of any of his obligations under such Sections. 12. Withholding ----------- Anything to the contrary notwithstanding, all payments required to be made by the Company hereunder to Danielson or his estate or beneficiaries, shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation. In lieu of withholding such amounts, the Company may accept other provisions to the end that it has sufficient funds to pay all taxes required by law to be withheld in respect of such payments or any of them. 13. Notices ------- All notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be sufficiently given if and when mailed in the continental United States by registered or certified mail or personally delivered to the party entitled thereto at the address stated below or to such changed address as the addressee may have given by a similar notice: To the Company: Pioneer-Standard Electronics, Inc. 4800 East 131st Street Cleveland, Ohio 44105 Attention: Secretary or Assistant Secretary To Danielson: Robert E. Danielson 16631 Munn Road Auburn, Ohio 44023 14. General Provisions ------------------ 14.01 There shall be no right of set-off or counter claim, in respect of any claim, debt or obligation, against payments to Danielson, his dependents, beneficiaries or estate provided for in this Agreement. 9 12 14.02 No right or interest to or in any payments shall be assignable by Danielson; provided, however, that this provision shall not preclude him from designating one or more beneficiaries to receive any amount that may be payable after his death and shall not preclude the legal representative of his estate from assigning any right hereunder to the person or persons entitled thereto under his will or, in the case of intestacy, to the person or persons entitled thereto under the laws of intestacy applicable to his estate. The term "beneficiaries" as used in this Agreement shall mean a beneficiary or beneficiaries so designated to receive any such amount or, if no beneficiary has been so designated, the legal representative of Danielson's estate. 14.03 No right, benefit or interest hereunder, shall be subject to anticipation, alienation, sale, assignment, encumbrance, charge, pledge, hypothecation, or set-off in respect of any claim, debt or obligation, or to execution, attachment, levy or similar process, or assignment by operation of law. Any attempt, voluntary or involuntary, to effect any action specified in the immediately preceding sentence shall, to the full extent permitted by law, be null, void and of no effect. 14.04 In the event of Danielson's death or a judicial determination of his incompetence, reference in this Agreement to Danielson shall be deemed, where appropriate, to refer to his legal representative or, where appropriate, to his beneficiary or beneficiaries. 14.05 The titles to sections in this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the title of any section. 14.06 This Agreement shall be binding upon and shall inure to the benefit of (a) Danielson and, subject to the provisions of paragraphs 14.02 and 14.03, his heirs and legal representatives, and (b) the Company and its successors as provided in Section 17 hereof. 15. Amendment or Modification; Waiver --------------------------------- No provision of this Agreement may be amended or waived unless such amendment or waiver is authorized by the Board of Directors of the Company or the Compensation Committee thereof and is agreed to in writing, signed by Danielson and by an officer of the Company thereunto duly authorized by either the Board of Directors or the Compensation Committee. Except as otherwise specifically provided in this Agreement, no waiver by either party hereto of any breach by the other party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of a subsequent breach of such condition or provision or a waiver of a similar or dissimilar provision or condition at the same or at any prior or subsequent time. 10 13 16. Severability ------------ In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions and portions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law. 17. Successors to the Company ------------------------- Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the Company and any successor of the Company, including, without limitation, any corporation which acquires directly or indirectly all or substantially all of the assets or capital stock of the Company whether by merger, consolidation, sale or otherwise (and such successor shall thereafter be deemed the Company for the purposes of this Agreement), but shall not otherwise be assignable by the Company. 18. Operation of Agreement ---------------------- 18.01 This Agreement is effective April 1, 1997, and shall supersede any prior employment arrangement or agreement between Danielson and the Company, which shall be deemed to be terminated and null and void except for any vested rights to receive compensation under paragraph 4.01(a)(ii) thereof. 18.02 For the purpose of this Agreement, the term "Change in Control" of the Company shall mean a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 as in effect on the date of this Agreement; provided that, without limitation, such a change in control shall be deemed to have occurred if and when (a) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes a beneficial owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities, or (b) during any period of twelve (12) consecutive months, commencing before or after the date of this Agreement, individuals who, at the beginning of such twelve (12) month period were directors of the Company for whom Danielson, as a shareholder, shall have voted, cease for any reason to constitute at least a majority of the Board of Directors of the Company. 19. Enforcement Costs ----------------- The Company is aware that upon the occurrence of a Change in Control the Board of Directors or a shareholder of the Company may then cause or attempt to cause the Company to refuse to comply with its obligations under this Agreement, or may cause or attempt to cause the Company to institute, or may institute, litigation seeking to have this Agreement declared unenforceable, or may take, or attempt to take, other action to deny 11 14 Danielson the benefits intended under this Agreement. In these circumstances, the purpose of this Agreement could be frustrated. It is the intent of the Company that Danielson not be required to incur the expenses associated with the enforcement of his rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to Danielson hereunder, nor be bound to negotiate any settlement of his rights hereunder under threat of incurring such expenses. Accordingly, if following a Change in Control it should appear to Danielson that the Company has failed to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any litigation or other legal action designed to deny, diminish or to recover from, Danielson the benefits intended to be provided to Danielson hereunder, and that Danielson has complied with all of his obligations under this Agreement, the Company irrevocably authorizes Danielson from time to time to retain counsel of his choice at the expense of the Company as provided in this Section 19, to represent Danielson in connection with the initiation or defense of any litigation or other legal action, whether by or against the Company or any Director, officer, shareholder or other person affiliated with the Company, in any jurisdiction. Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the Company irrevocably consents to Danielson entering into an attorney-client relationship with such counsel, and in that connection the Company and Danielson agree that a confidential relationship shall exist between Danielson and such counsel. The reasonable fees and expenses of counsel selected from time to time by Danielson as hereinabove provided shall be paid or reimbursed to Danielson by the Company on a regular, periodic basis upon presentation by Danielson of a statement or statements prepared by such counsel in accordance with its customary practices, up to a maximum aggregate amount of $500,000. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. ATTEST: PIONEER-STANDARD ELECTRONICS, INC. /s/ Colleen M. Simon By /s/ James L. Bayman - --------------------------------- ------------------------------------------ James L. Bayman, Chairman and Chief Executive Officer ATTEST: /s/ Patricia M. Pope /s/ Robert E. Danielson - ---------------------------------- ------------------------------------------- Robert E. Danielson 12 EX-10.4 6 EXHIBIT 10.4 1 Exhibit 10.4 EMPLOYMENT AGREEMENT BETWEEN PIONEER-STANDARD ELECTRONICS, INC. AND JOHN V. GOODGER July 29, 1997 2
Table of Contents Page Employment........................................................................................................1 Period of Employment..............................................................................................1 Compensation, Compensation Plans, Perquisites....................................................................2 Employee Benefit Plans............................................................................................3 Effect of Death or Disability.....................................................................................4 Termination.......................................................................................................5 General..................................................................................................5 Change of Control........................................................................................5 For Cause or Voluntary Termination.......................................................................6 Without Cause............................................................................................7 Arbitration..............................................................................................7 Competition.......................................................................................................8 Confidential Information..........................................................................................8 Noninterference...................................................................................................9 Remedy............................................................................................................9 Withholding.......................................................................................................9 Notices...........................................................................................................9 General Provisions...............................................................................................10 Amendment or Modification; Waiver................................................................................11 Severability.....................................................................................................11 Successors to the Company........................................................................................11 Operation of Agreement...........................................................................................11 Enforcement Costs................................................................................................12
3 EMPLOYMENT AGREEMENT -------------------- EMPLOYMENT AGREEMENT between PIONEER-STANDARD ELECTRONICS, INC., an Ohio corporation (the "Company"), and JOHN V. GOODGER ("Goodger"), dated July 29, 1997, to be effective April 1, 1997. W I T N E S S E T H: WHEREAS: The Company and Goodger have given consideration to an employment agreement providing for the services of Goodger as Vice President, Treasurer and Assistant Secretary; and WHEREAS: This Agreement is deemed necessary at the present time to meet the need for a continued strong management without substantial change; and WHEREAS: Together with other officers of the Company, Goodger has been responsible for the success of the business of the Company; NOW, THEREFORE, it is hereby agreed by and between the Company and Goodger as follows: 1. Employment ---------- The Company hereby agrees to continue to employ Goodger, and Goodger hereby agrees to remain in the employ of the Company, for the period set forth in Section 2 below (the "Period of Employment"), in the position and with the duties and responsibilities set forth in Section 3 below, and upon the other terms and conditions hereinafter stated. 2. Period of Employment --------------------- For the purposes of this Agreement, the Period of Employment, subject only to the provisions of Section 6 below (relating to Death or Disability), shall continue for a one-year period from the effective date hereof and thereafter on a year-to-year basis (i) subject to termination of this Agreement by the Company effective as of the next anniversary of the effective date hereof following written notice of termination, which notice must be given to Goodger no later than February 1 of the Company's then current fiscal year, or (ii) until the earlier termination of employment as set forth in Section 7. 3. Position, Duties, Responsibilities ----------------------------------- 3.01 During the Period of Employment, Goodger shall serve as Vice President, Treasurer and Assistant Secretary of the Company reporting to the Chief Executive Officer of the Company and shall have the authority, power, and duties with regard to his 4 position as may from time to time be assigned by the Chief Executive Officer or the Board of Directors of the Company. 3.02 Throughout the Period of Employment Goodger shall devote his full time and undivided attention during normal business hours to the business and affairs of the Company, except for reasonable vacations afforded the Company's executive officers and except for illness or incapacity, but nothing in this Agreement shall preclude Goodger from devoting reasonable time required for serving as a director or member of an advisory committee of any organization involving no conflict of interest with the interests of the Company, from engaging in charitable and community activities, and from managing his personal investments, provided that such activities do not materially interfere with the regular performance of his duties and responsibilities under this Agreement. 3.03 Goodger's office shall be located at the corporate offices of the Company, and Goodger shall not be required to locate his office elsewhere without his prior written consent, nor shall he be required to be absent therefrom on travel status or otherwise more than a total of sixty (60) days in any calendar year nor more than fifteen (15) consecutive days at any one time. 4. Compensation, Compensation Plans, Perquisites ---------------------------------------------- 4.01 (a) For all services rendered by Goodger in any capacity during the Period of Employment, Goodger shall be paid as compensation: (i) A base salary, payable not less often than monthly, at the rate of $12,500 per month, with such increases in such rate as may be awarded from time to time by the Board of Directors of the Company; (ii) A cash incentive compensation payment equal to the product of 15/100 of 1% of the sum of the "actual operating income" of the Company, multiplied by the ratio of the Company's "actual return on capital" to 20.4%. The term "actual operating income" shall be defined as the income before income tax (state and federal income tax) and interest expense. The term "actual return on capital" shall be defined as the Company's "actual operating income" divided by the sum of its interest-bearing debt, plus equity (the denominator shall be calculated for each fiscal year as the average of such amounts as at the end of each of the Company's four (4) fiscal quarters). All amounts used to calculate the incentive compensation payment, shall reflect the operations of the Company and its consolidated subsidiaries and affiliates and shall be calculated in conformity with generally accepted accounting principles. The Company shall calculate the incentive 2 5 compensation payment for each fiscal year on a quarterly basis and at the end of each of the first three (3) fiscal quarters shall pay Goodger the incentive compensation amount based on such quarterly calculation. After April 1 and before June 16 of the next fiscal year, and after audited financial statements are available to the Company, the Company shall pay Goodger the balance of any amount due Goodger based on the calculation of the incentive compensation amount for the fiscal year less payments made for the first three (3) fiscal quarters, which payment shall be vested in the event of termination by reason of Death or disability (Section 6), Change of Control, (Section 7.02), or without Cause (Section 7.04), but shall be forfeited in the event of termination for Cause or voluntary termination (Section 7.03). (b) Any increase in salary, incentive compensation or other form of compensation shall in no way diminish any other obligation of the Company under this Agreement, unless specifically agreed to in writing by Goodger. 4.02 During the Period of Employment Goodger shall be and continue to be a full participant in the Company's Employees' Profit Sharing Plan or any equivalent successor plan that may be adopted by the Company. 4.03 During the Period of Employment Goodger shall be entitled to perquisites, including without limitation, an office, secretarial staff and clerical staff, and to fringe benefits comparable to those enjoyed by the other executive officers of the Company, as well as to reimbursement, upon proper accounting, of reasonable business expenses and disbursements incurred by him in the course of his duties. 5. Employee Benefit Plans ---------------------- 5.01 The compensation, together with other matters provided for in Section 4 above, is in addition to the benefits provided for in this Section 5. 5.02 Goodger, his dependents, beneficiaries and estate shall be entitled to all payments and benefits and service credit for benefits during the Period of Employment to which other executive officers of the Company, their dependents and beneficiaries are entitled as the result of the employment of such executive officers during the Period of Employment under the terms of employee plans and practices of the Company, including, without limitation, the Company's retirement program consisting of its Employees' Profit Sharing Plan, its group life insurance plan, its accidental death and dismemberment insurance, disability, medical and health and welfare plans, any key person individual life and disability policies, automobile expense reimbursement, club membership fees and dues, and other present or equivalent successor plans and practices of the Company, its subsidiaries and divisions, for which other executive officers, their dependents and beneficiaries are eligible, and to all payments or other benefits under any such plan or 6 practice after the Period of Employment as a result of participation in such plan or practice during the Period of Employment. 5.03 Goodger shall be eligible to participate in the Company's 1991 Stock Option Plan (which, together with any successor stock option plan or plans that may be adopted by the Company, is referred to herein as the "Option Plan"); provided, however, that the grant of any stock options ("Options") under any Option Plan shall be at the sole discretion of the Compensation Committee of the Board of Directors of the Company. The Company has granted Goodger stock options at an option price equal to the fair market value of the Company's Common Shares at the date of grant. The terms and conditions of exercise of Goodger's Options shall be as is set forth in Goodger's Stock Option Agreements (the "Option Agreements") with the Company; provided, however, that in the event of a Change in Control, as defined in paragraph 18.02 below, then notwithstanding the provisions of said Option Agreements, all options (including those granted to him under the 1982 Incentive Stock Option Plan and the 1991 Stock Option Plan) shall immediately be 100% vested and Goodger shall have the immediate right of exercise with respect to all Options and the underlying Common Shares covered by said Option Agreements. In the event that Goodger's employment is terminated as a result of a Change in Control, as defined in paragraph 18.02 below, Goodger shall have the period of one (1) year after the date of such termination to exercise his Options or the remainder of the term of such Options, whichever is shorter, and any such exercise shall be irrevocable. 6. Effect of Death or Disability ----------------------------- 6.01 In the event of the death of Goodger during the Period of Employment, the Period of Employment shall be deemed to have ended as of the close of business on the last day of the month in which death shall have occurred, and his legal representative shall be entitled to (i) the compensation provided for in paragraph 4.01(a)(i) above for the month in which death shall take place at the rate being paid at the time of death, (ii) any incentive compensation payable for the fiscal quarter in which the Period of Employment shall be deemed to have terminated due to death, plus the balance of any incentive compensation due Goodger for any prior fiscal quarters in accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii) above, and (iii) any benefits provided pursuant to paragraph 5.02 hereof which are payable pursuant to the terms of the applicable plan or practice. 6.02 (a) The term "Disability," as used in this Agreement, shall mean an illness or accident which prevents Goodger from performing his duties under this Agreement for a period of three (3) consecutive months. The Period of Employment shall be deemed to have ended as of the close of business on the last day of such three (3) month period but without prejudice to any payments due Goodger during such three (3) month period or pursuant to any disability insurance policy. (b) In the event of the Disability of Goodger during the Period of Employment, Goodger shall be entitled to (i) the compensation provided for in 4 7 paragraph 4.01(a)(i) above, at the rate being paid at the time of the commencement of Disability, for the period of such Disability but not in excess of three (3) months, (ii) any incentive compensation payable for the fiscal quarter in which the Period of Employment shall be deemed to have terminated due to Disability, plus the balance of any incentive compensation due Goodger for any prior fiscal quarters in accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii) above, and (iii) any benefits provided pursuant to paragraph 5.02 hereof which are payable pursuant to the terms of the applicable plan or practice. (c) The amount of any payments due under this paragraph 6.02 shall be reduced by any payments to which Goodger may be paid for the same period under any disability plan of the Company or of any subsidiary or affiliate thereof. 7. Termination ----------- 7.01 GENERAL. The Company may terminate Goodger with or without cause at any time during the Period of Employment, subject to the provisions of this Section 7. The termination of this Agreement by the Company pursuant to Section 2(i) hereof shall be deemed to be a termination of employment without Cause as set forth in Section 7.04 hereof. In the event that this Agreement is to be terminated pursuant to Section 2(i) hereof, upon receipt of the notice of termination Goodger shall have the option of either leaving the Company at any time thereafter or continuing his employment until the March 31 effective date of the termination of this Agreement, and in either event Goodger shall be entitled to receive all of the payments and benefits as provided in Section 7.04 hereof; provided, however, that in the event Goodger elects to continue his employment with the Company subsequent to the March 31 effective date of the termination of this Agreement, for a period of three (3) months thereafter Goodger shall have the right to terminate his employment with the Company and any such termination shall be deemed to be a termination of employment without Cause as set forth above. 7.02 CHANGE OF CONTROL. Within one (1) year of a Change of Control of the Company, as defined in paragraph 18.02, Goodger shall have the right to terminate his employment with the Company and there shall be paid or provided to Goodger, his dependents, beneficiaries and estate, as liquidated damages or severance pay, or both, the following: (a) The compensation provided for in paragraph 4.01(a)(i) above for the month in which termination shall have occurred at the rate being paid at the time of termination; and an amount equal to his previous twenty four (24) months of base salary plus an amount equal to the earned incentive cash bonus referred to in paragraph 4.01(a)(ii) above for the two (2) previously completed fiscal years. Such amount shall be paid to Goodger in one payment, immediately upon termination. Goodger shall also receive any incentive compensation payable for the fiscal quarter in which the Period of Employment shall be deemed to have terminated due to Change of Control, plus the balance of any incentive 5 8 compensation due Goodger for any prior fiscal quarters in accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii) above. (b) For two (2) years following the date of termination, Goodger, his dependents, beneficiaries and estate, shall continue to be entitled to all benefits provided pursuant to paragraph 5.02 hereof which are payable pursuant to the terms of the applicable plan or practice, and service credit for benefits under all employee benefit plans of the Company, including, without limitation, the Company's Profit Sharing Plan referred to in paragraph 5.02 above, upon the same basis as immediately prior to termination and, to the extent that such benefits or service credit for benefits shall not be payable or provided under any such plans to Goodger, his dependents, beneficiaries and estate, by reason of his no longer being an employee of the Company as the result of termination, or any such plan, program or arrangement is discontinued or the benefits thereunder are materially reduced, the Company shall itself arrange to provide to Goodger, his dependents, beneficiaries and estate benefits substantially similar to those which Goodger, his dependents and beneficiaries were entitled to receive under such plans, programs and arrangements immediately prior to termination. Any termination by the Company within the period of one hundred eighty (180) days prior to the execution of a letter of intent or a definitive agreement which could lead to a Change of Control and the closing of the transaction actually resulting in the Change of Control, as defined in paragraph 18.02, shall be deemed to be a termination under this paragraph 7.02. An election by Goodger to terminate his employment under the provisions of this paragraph 7.02 shall not be deemed a voluntary termination of employment by Goodger under paragraph 7.03 of this Agreement or any plan or practice of the Company. 7.03 FOR CAUSE OR VOLUNTARY TERMINATION. For the purpose of any provision of this Agreement, the termination of Goodger's employment shall be deemed to have been for Cause only if: (a) termination of his employment shall have been the result of Goodger's conviction of any of the following: (i) embezzlement; (ii) misappropriation of money or other property of the Company; or (iii) any felony; or (b) there has been a breach by Goodger during the Period of Employment of the provisions of paragraph 3.03 above, relating to devotion of full time to the affairs of the Company, Section 8 relating to Competition, Section 9 relating to Confidential Information, or Section 10 relating to Noninterference, and such breach results in demonstrable significant injury to the Company, and with respect to any alleged breach of paragraph 3.03 hereof, Goodger shall have failed to remedy such breach within thirty (30) days from his receipt of written notice from the Company. 6 9 If Goodger's employment is terminated by the Company for Cause, or if Goodger shall voluntarily terminate his employment with the Company, Goodger shall be entitled to the compensation provided for in paragraph 4.01(a)(i) through the date of such termination. Goodger shall not be entitled to any additional compensation or benefits (except for any vested benefits), and shall continue to be bound by the provisions of Section 8 of this Agreement (relating to Competition), the provisions of Section 9 of this Agreement (relating to Confidential Information), and the provisions of Section 10 (relating to Noninterference). 7.04 WITHOUT CAUSE. Subject to compliance by Goodger with the provisions of Section 8 of this Agreement (relating to Competition), the provisions of Section 9 of this Agreement (relating to Confidential Information), and the provisions of Section 10 of this Agreement (relating to Noninterference), if the Company shall terminate Goodger's employment, without Cause, there shall be paid or provided to Goodger, his dependents, beneficiaries and estate, as liquidated damages or severance pay, or both, (i) the compensation provided for in paragraph 4.01(a)(i) above for the month in which termination shall have occurred at the rate being paid at the time of such termination, and (ii) the amount (the "Payment Amount") per month equal to 1/24th of (A) the total of his previous twenty-four (24) months of base salary plus (B) an amount equal to the earned incentive cash bonus referred to in paragraph 4.01(a)(ii) above for the two (2) previously completed fiscal years. Such Payment Amount shall be paid to Goodger or, in case of his prior death, to his legal representative or estate, in monthly installments at the end of each month commencing with the month next following that in which such termination shall have occurred, and continuing for a period of six (6) months. Goodger shall also receive any incentive compensation payable for the fiscal quarter in which the Period of Employment shall be deemed to have been terminated without Cause, plus the balance of any incentive compensation due Goodger for any prior fiscal quarters in accordance with, and payable at the times set forth in, paragraph 4.01(a)(ii) above, plus any benefits provided pursuant to paragraph 5.02 hereof which are payable pursuant to the terms of the applicable plan or practice. In the event the Company fails to make such payments when due, then the remaining payments shall become due and payable immediately. 7.05 ARBITRATION. In the event that Goodger's employment shall be terminated by the Company during the Period of Employment or the Company shall withhold payments or provision of benefits because Goodger is alleged to be engaged in activities prohibited by Sections 8, 9 or 10 of this Agreement or for any other reason, Goodger shall have the right, in addition to all other rights and remedies provided by law, at his election either to seek arbitration in the metropolitan area of Cleveland, Ohio, under the rules of the American Arbitration Association by serving a notice to arbitrate upon the Company or to institute a judicial proceeding, in either case within one hundred and twenty (120) days after having received notice of termination of his employment. 7 10 8. Competition ----------- There shall be no obligation on the part of the Company to make any further payments provided for in paragraph 7.04 above if Goodger shall, during the six (6) months following termination of Goodger's employment for any reason except Change of Control as described in paragraph 7.02, engage in Competition with the Company as hereinafter defined. The word "Competition" for purposes of this Section 8 and any other provision of this Agreement shall mean taking any employment or consulting position with or control of one of the Company's top twenty-five (25) competitors as listed in the most current issue at the date of termination of Electronic Buyer's News and/or Electronic News; provided, however, that in no event shall ownership of less than 5% of the outstanding capital stock entitled to vote for the election of directors of a corporation with a class of equity securities held of record by more than 500 persons be deemed Competition with the Company within the meaning of this Section 8. 9. Confidential Information ------------------------- 9.01 Except for information which is already in the public domain, or which is publicly disclosed by persons other than Goodger, or which is required by law or court order to be disclosed, or information given to Goodger by a third party not bound by any obligation of confidentiality, Goodger shall at all times during and after his employment with the Company hold in strictest confidence any and all confidential information within his knowledge and which is material to the business of the Company (whether acquired prior to or during his employment with the Company) concerning the inventions, products, processes, methods of distribution, customers, services, business, suppliers or trade secrets of the Company, except that Goodger may, in connection with the performance of his duties to the Company, divulge confidential information to the directors, officers, employees and shareholders of the Company and to the advisors, accountants, attorneys or lenders of the Company or such other individuals as deemed prudent in the course of business to carry out the responsibilities and duties of his position. Such confidential information includes, without limitation, financial information, sales information, price lists, marketing data, the identity and lists of actual and potential customers and technical information, all to the extent that such information is not intended by the Company for public dissemination. 9.02 Goodger also agrees that upon leaving the Company's employ he will not take with him, without the prior written consent of an officer authorized to act in the matter by the Board of Directors of the Company, any Company document, contract, internal financial or management reports, customers list, product list, price list, catalog, employee list, procedures, software, MIS data, drawing, blueprint, specification or other document of the Company, its subsidiaries, affiliates and divisions, which is of a confidential nature relating to the Company, its subsidiaries, affiliates and divisions, or, without limitation, relating to its or their methods of purchase or distribution, or any description of any trade secret, formulae or secret processes. 8 11 10. Noninterference --------------- Except for Change of Control as described in paragraph 7.02, Goodger shall not, at any time during or within six (6) months after his employment is terminated with the Company, without the prior written consent of the Company, directly or indirectly, induce or attempt to induce any employee, agent or other representative or associate of the Company to terminate his or her relationship with the Company, or in any way directly or indirectly interfere with such a relationship or any relationship between the Company and any of its top fifty (50) suppliers or top two hundred fifty (250) customers, both in terms of the Company's sales volume, provided that purchasing goods from a supplier to the Company or making a sale to any of the Company's customers shall not be deemed to be interference. 11. Remedy ------ Goodger acknowledges that Sections 8, 9 and 10 hereof were negotiated at arms length and are required for the fair and reasonable protection of the Company. Goodger and the Company further acknowledge and agree that a breach of those obligations and agreements will result in irreparable and continuing damage to the Company for which there will be no adequate remedy at law and, therefore, Goodger and the Company agree that in the event of any breach of said obligations and agreements the Company, and its successors and assigns, shall be entitled to injunctive relief and such other and further relief, including monetary damages, as is proper in the circumstances. It is further agreed that the running of the periods provided above in Sections 8 and 10, shall be tolled during any period which Goodger shall be adjudged to have been in violation of any of his obligations under such Sections. 12. Withholding ----------- Anything to the contrary notwithstanding, all payments required to be made by the Company hereunder to Goodger or his estate or beneficiaries, shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation. In lieu of withholding such amounts, the Company may accept other provisions to the end that it has sufficient funds to pay all taxes required by law to be withheld in respect of such payments or any of them. 13. Notices ------- All notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be sufficiently given if and when mailed in the continental United States by registered or certified mail or personally delivered to the party entitled thereto at the address stated below or to such changed address as the addressee may have given by a similar notice: 9 12 To the Company: Pioneer-Standard Electronics, Inc. 4800 East 131st Street Cleveland, Ohio 44105 Attention: Secretary or Chief Executive Officer [and President] To Goodger: John V. Goodger 104 Manor Brook Drive Chagrin Falls, Ohio 44022 14. General Provisions ------------------ 14.01 There shall be no right of set-off or counter claim, in respect of any claim, debt or obligation, against payments to Goodger, his dependents, beneficiaries or estate provided for in this Agreement. 14.02 No right or interest to or in any payments shall be assignable by Goodger; provided, however, that this provision shall not preclude him from designating one or more beneficiaries to receive any amount that may be payable after his death and shall not preclude the legal representative of his estate from assigning any right hereunder to the person or persons entitled thereto under his will or, in the case of intestacy, to the person or persons entitled thereto under the laws of intestacy applicable to his estate. The term "beneficiaries" as used in this Agreement shall mean a beneficiary or beneficiaries so designated to receive any such amount or, if no beneficiary has been so designated, the legal representative of Goodger's estate. 14.03. No right, benefit or interest hereunder, shall be subject to anticipation, alienation, sale, assignment, encumbrance, charge, pledge, hypothecation, or set-off in respect of any claim, debt or obligation, or to execution, attachment, levy or similar process, or assignment by operation of law. Any attempt, voluntary or involuntary, to effect any action specified in the immediately preceding sentence shall, to the full extent permitted by law, be null, void and of no effect. 14.04. In the event of Goodger's death or a judicial determination of his incompetence, reference in this Agreement to Goodger shall be deemed, where appropriate, to refer to his legal representative or, where appropriate, to his beneficiary or beneficiaries. 14.05 The titles to sections in this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the title of any section. 14.06 This Agreement shall be binding upon and shall inure to the benefit of (a) Goodger and, subject to the provisions of paragraphs 14.02 and 14.03, his heirs and legal representatives, and (b) the Company and its successors as provided in Section 17 hereof. 10 13 15. Amendment or Modification; Waiver --------------------------------- No provision of this Agreement may be amended or waived unless such amendment or waiver is authorized by the Board of Directors of the Company or the Compensation Committee thereof and is agreed to in writing, signed by Goodger and by an officer of the Company thereunto duly authorized by either the Board of Directors or the Compensation Committee. Except as otherwise specifically provided in this Agreement, no waiver by either party hereto of any breach by the other party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of a subsequent breach of such condition or provision or a waiver of a similar or dissimilar provision or condition at the same or at any prior or subsequent time. 16. Severability ------------ In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions and portions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law. 17. Successors to the Company ------------------------- Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the Company and any successor of the Company, including, without limitation, any corporation which acquires directly or indirectly all or substantially all of the assets or capital stock of the Company whether by merger, consolidation, sale or otherwise (and such successor shall thereafter be deemed the Company for the purposes of this Agreement), but shall not otherwise be assignable by the Company. 18. Operation of Agreement ----------------------- 18.01 This Agreement is effective as of April 1, 1997, and shall supersede any prior employment arrangement or agreement, including the Amended and Restated Employment Agreement dated June 12, 1995, which was effective April 3, 1995, and the Employment Agreement dated May 7, 1996, which was effective April 1, 1996 between Goodger and the Company, which shall be deemed to be terminated and null and void except for any vested rights to receive compensation under Section 4.01(a)(ii) thereof. 18.02 For the purpose of this Agreement, the term "Change in Control" of the Company shall mean a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 as in effect on the date of this Agreement; provided that, without limitation, such a change in control shall be deemed to have occurred if and when (a) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes a beneficial owner, directly or indirectly, of 11 14 securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities, or (b) during any period of twelve (12) consecutive months, commencing before or after the date of this Agreement, individuals who, at the beginning of such twelve (12) month period were directors of the Company for whom Goodger, as a shareholder, shall have voted, cease for any reason to constitute at least a majority of the Board of Directors of the Company. 19. Enforcement Costs ------------------ The Company is aware that upon the occurrence of a Change in Control the Board of Directors or a shareholder of the Company may then cause or attempt to cause the Company to refuse to comply with its obligations under this Agreement, or may cause or attempt to cause the Company to institute, or may institute, litigation seeking to have this Agreement declared unenforceable, or may take, or attempt to take, other action to deny Goodger the benefits intended under this Agreement. In these circumstances, the purpose of this Agreement could be frustrated. It is the intent of the Company that Goodger not be required to incur the expenses associated with the enforcement of his rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to Goodger hereunder, nor be bound to negotiate any settlement of his rights hereunder under threat of incurring such expenses. Accordingly, if following a Change in Control it should appear to Goodger that the Company has failed to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any litigation or other legal action designed to deny, diminish or to recover from, Goodger, the benefits intended to be provided to Goodger hereunder, and that Goodger has complied with all of his obligations under this Agreement, the Company irrevocably authorizes Goodger from time to time to retain counsel of his choice at the expense of the Company as provided in this Section 19, to represent Goodger in connection with the initiation or defense of any litigation or other legal action, whether by or against the Company or any Director, officer, shareholder or other person affiliated with the Company, in any jurisdiction. Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the Company irrevocably consents to Goodger entering into an attorney-client relationship with such counsel, and in that connection the Company and Goodger agree that a confidential relationship shall exist between Goodger and such counsel. The reasonable fees and expenses of counsel selected from time to time by Goodger as hereinabove provided shall be paid or reimbursed to Goodger by the Company on a regular, periodic basis upon presentation by Goodger of a statement or statements prepared by such counsel in accordance with its customary practices, up to a maximum aggregate amount of $500,000. 12 15 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. ATTEST: PIONEER-STANDARD ELECTRONICS, INC. /s/ Colleen M. Simon By /s/ James L. Bayman - ------------------------------ ----------------------------------------- James L. Bayman, Chairman and Chief Executive Officer ATTEST: /s/ Carol J. Torre /s/ John V. Goodger - ------------------------------ ------------------------------------------ John V. Goodger -----END PRIVACY-ENHANCED MESSAGE-----