-----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, BLIiFQumG0C/L0P7iPaLjRBOj730BaVsMYUvHvYeNFcm0QlBeXGUo4MVrRsv8KuY IfXh78VysD7hUi6+86Jkkw== 0000899243-99-000164.txt : 19990208 0000899243-99-000164.hdr.sgml : 19990208 ACCESSION NUMBER: 0000899243-99-000164 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19981226 FILED AS OF DATE: 19990205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KENT ELECTRONICS CORP CENTRAL INDEX KEY: 0000793024 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 741763541 STATE OF INCORPORATION: TX FISCAL YEAR END: 0328 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09520 FILM NUMBER: 99522474 BUSINESS ADDRESS: STREET 1: 1111 GILLINGHAM LN CITY: SUGAR LAND STATE: TX ZIP: 77478 BUSINESS PHONE: 2812434000 MAIL ADDRESS: STREET 1: 1111 GILLINGHAM LN CITY: SUGAR LAND STATE: TX ZIP: 77478 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 26, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________________ to _______________________ Commission file number 0-14643 KENT ELECTRONICS CORPORATION Exact name of registrant as specified in its charter) Texas 74-1763541 - -------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1111 Gillingham Lane, Sugar Land, Texas 77478 - ------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (281) 243-4000 - --------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. 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 stock, as of the latest practicable date. At February 1, 1999, 27,962,842 shares of common stock, no par value, were outstanding. KENT ELECTRONICS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands)
December 26, March 28, 1998 1998 ------------- ---------- (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents (including temporary investments of $198,662 at December 26 and $174,325 at March 28).......................... $202,211 $179,907 Trading securities, net.......................... --- 29,946 Accounts receivable, less allowance of $1,296 at December 26 and $1,207 at March 28.......... 107,958 106,132 Inventories Materials and purchased products............... 113,282 112,964 Work in process................................ 5,886 2,128 -------- -------- 119,168 115,092 Other............................................ 14,001 5,754 -------- -------- Total current assets......................... 443,338 436,831 PROPERTY AND EQUIPMENT Land............................................. 8,168 8,761 Buildings........................................ 43,627 42,766 Equipment, furniture and fixtures................ 121,052 109,079 Leasehold improvements........................... 2,664 2,657 -------- -------- 175,511 163,263 Less accumulated depreciation and amortization (46,671) (36,577) -------- -------- 128,840 126,686 DEFERRED INCOME TAXES................................. 18 93 OTHER ASSETS.......................................... 12,965 12,193 COST IN EXCESS OF NET ASSETS ACQUIRED, less accumulated amortization of $3,204 at December 26 and $2,856 at March 28............... 15,559 15,907 -------- -------- $600,720 $591,710 ======== ========
The accompanying notes are an integral part of these statements. Page 2 of 16 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
December 26, March 28, 1998 1998 ------------- ---------- (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable.................................. $ 44,918 $ 49,178 Accrued compensation.............................. 11,323 11,193 Other accrued liabilities......................... 12,952 7,032 Income taxes...................................... --- 2,946 -------- -------- Total current liabilities..................... 69,193 70,349 LONG-TERM DEBT......................................... 207,000 207,000 LONG-TERM LIABILITIES.................................. 2,394 1,792 STOCKHOLDERS' EQUITY Preferred stock, $1 par value per share; authorized 2,000,000 shares; none issued........ --- --- Common stock, no par value; authorized 60,000,000 shares; 28,012,842 shares issued and 27,962,842 shares outstanding at December 26 and 27,230,640 shares issued and 27,180,640 shares outstanding at March 28 65,131 55,457 Additional paid-in capital........................ 117,431 117,189 Retained earnings................................. 140,548 140,900 -------- -------- 323,110 313,546 Less common stock in treasury - at cost, 50,000 shares................................... (977) (977) -------- -------- 322,133 312,569 -------- -------- $600,720 $591,710 ======== ========
The accompanying notes are an integral part of these statements. Page 3 of 16 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited - In thousands, except per share data)
Thirteen Weeks Ended Thirty-Nine Weeks Ended ----------------------------- ----------------------------- December 26, December 27, December 26, December 27, 1998 1997 1998 1997 ----------- ------------ ----------- ------------ Net sales....................................... $ 155,424 $ 177,426 $ 459,981 $ 496,993 Cost of sales................................... 131,715 137,276 385,833 384,076 ---------- --------- --------- --------- Gross profit............................... 23,709 40,150 74,148 112,917 Selling, general and administrative expenses.... 25,434 23,875 75,439 67,087 ---------- --------- --------- --------- Operating profit (loss).................... (1,725) 16,275 (1,291) 45,830 Other income (expense) Interest expense........................... (2,575) (2,559) (7,723) (2,697) Other - net................................ 2,754 3,032 8,432 3,987 ---------- --------- --------- --------- Earnings (loss) before income taxes...... (1,546) 16,748 (582) 47,120 Income taxes.................................... (607) 6,620 (230) 18,612 ---------- --------- --------- --------- NET EARNINGS (LOSS)...................... $ (939) $ 10,128 $ (352) $ 28,508 ========== ========= ========= ========= Earnings (loss) per common share: Basic...................................... $ (.03) $ .38 $ (.01) $ 1.08 ========== ========= ========= ========= Diluted.................................... $ (.03) $ .36 $ (.01) $ 1.01 ========== ========= ========= ========= Weighted average shares: Basic...................................... 27,916 26,664 27,577 26,450 ========== ========= ========= ========= Diluted.................................... 27,916 28,374 27,577 28,145 ========== ========= ========= =========
The accompanying notes are an integral part of these statements. Page 4 of 16 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - In thousands)
Thirty-Nine Weeks Ended ---------------------------- December 26, December 27, 1998 1997 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net earnings...................................... $ (352) $ 28,508 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation and amortization................... 10,995 8,387 Provision for losses on accounts receivable..... 89 295 (Gain) loss on sale of property and equipment (340) 4 Stock option expense............................ 242 360 Loss on sale of trading securities.............. 327 84 Net sales (purchases) of trading securities..... 29,619 (30,000) Change in assets and liabilities Increase in accounts receivable................ (1,915) (34,631) Increase in inventories........................ (4,076) (15,764) Increase in other.............................. (8,247) (692) Decrease in deferred income taxes.............. 75 75 Increase in other assets....................... (772) (7,193) Increase (decrease) in accounts payable........ (4,260) 19,233 Increase in accrued compensation............... 130 2,397 Increase in other accrued liabilities.......... 5,920 3,694 Decrease in income taxes....................... (2,946) (2,345) Increase in long-term liabilities.............. 602 545 ------- -------- Total adjustments............................. 25,443 (55,551) ------- -------- Net cash provided (used) by operating activities................................... 25,091 (27,043)
(Continued) Page 5 of 16 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - In thousands)
Thirty-Nine Weeks Ended ---------------------------- December 26, December 27, 1998 1997 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures............................... $(14,948) $(36,338) Proceeds from sale of property and equipment....... 2,487 5 -------- -------- Net cash used by investing activities............ (12,461) (36,333) CASH FLOWS FROM FINANCING ACTIVITIES Increase in long-term debt......................... --- 207,000 Issuance of common stock........................... 4,148 4,707 Tax effect of common stock issued upon exercise of employee stock options......................... 5,526 7,218 -------- -------- Net cash provided by financing activities....... 9,674 218,925 -------- -------- NET INCREASE IN CASH................................. 22,304 155,549 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD..... 179,907 25,050 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD........... $202,211 $180,599 ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for Interest............. $ 4,658 $ --- Income taxes........................................ $ 5,308 $ 13,857
The accompanying notes are an integral part of these statements. Page 6 of 16 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Accounting Policies The consolidated balance sheet as of December 26, 1998, and the consolidated statements of earnings and cash flows for the thirteen and thirty-nine week periods ended December 26, 1998 and December 27, 1997, have been prepared by the Company without audit. In the opinion of management, the financial statements include all adjustments necessary for a fair presentation. All adjustments made were of a normal recurring nature. Interim results are not necessarily indications of results for a full year. For further financial information, refer to the audited financial statements of the Company and notes thereto for the fiscal year ended March 28, 1998, included in the Company's Form 10-K for that period. Earnings Per Share Basic earnings per common share is computed using the weighted average number of shares outstanding. Diluted earnings per common share is computed using the weighted average number of shares outstanding adjusted for the incremental shares attributed to outstanding options to purchase common stock. Incremental shares of 1.7 million for both the thirteen and thirty-nine week periods ended December 27, 1997 were used in the calculation of diluted earnings per common share. Incremental shares of 0.4 million and 0.5 million were not used in the calculation of diluted earnings per common share for the thirteen and thirty- nine week periods ended December 26, 1998, respectively, since the effect of their inclusion would be antidilutive. The calculation of earnings per share does not include approximately 4.2 million shares issuable upon conversion of the 4 1/2% Convertible Subordinated Notes due 2004 because inclusion of such shares would be antidilutive. Page 7 of 16 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Net sales for the thirteen and thirty-nine week periods ended December 26, 1998 decreased $22.0 million, or 12.4%, and $37.0 million, or 7.4%, compared to the same periods a year ago. The decrease reflected a decline in orders in the Company's contract manufacturing division from computer and semiconductor capital equipment sectors. For the quarter, net sales increased $7.9 million, or 5.4% when compared to the second quarter ended September 26, 1998. The sequential increase resulted primarily from higher sales volume in the Company's contract manufacturing division than in the second quarter. Gross profit decreased $16.4 million, or 40.9%, for the thirteen weeks and $38.8 million, or 34.3%, for the thirty-nine weeks compared to the corresponding periods a year ago. For the thirteen week period, gross profit as a percentage of sales declined to 15.3% compared to 22.6% in the corresponding period last year. For the thirty-nine week period, the gross profit percentage was 16.1%, down from 22.7% reported in the comparable period of the previous year. The decrease in gross profit was primarily due to plant and equipment under- utilization in the Company's contract manufacturing facilities, the ramp up of new contract manufacturing customers, product mix changes and continued pricing pressures. Gross profit increased $4.4 million, or 22.5%, from the quarter ended September 26, 1998. In addition, the gross profit percentage increased from 13.1% in the second fiscal quarter. The sequential increase was a result of increased plant and equipment utilization and improved operating efficiencies in the Company's contract manufacturing operations in the third quarter as compared to the second quarter. Selling, general and administrative ("SG&A") expenses increased $1.6 million, or 6.5%, and $8.4 million, or 12.4%, for the thirteen and thirty-nine week periods, respectively, when compared to the same periods last year. As a percentage of sales, SG&A expenses increased to 16.4% from 13.5% in the thirteen week period and to 16.4% from 13.5% in the thirty-nine week period, Page 8 of 16 compared to the corresponding periods a year ago. The increase in SG&A expenses was primarily due to costs associated with the ramp-up of new customers in the contract manufacturing division and expenses necessary to support the Company's existing operations. The Company continues to focus on cost containment and expense reduction initiatives, aligning the cost structure with current revenues that enable the Company to reduce the impact of current business conditions on profit margins. SG&A expenses as a percentage of sales declined from 17.2% in the quarter ended September 26, 1998. The sequential decrease as a percentage of sales was a result of the Company's cost containment efforts. Interest expense for the thirty-nine week period ended December 26, 1998 increased $5.0 million when compared to the prior year period due to interest on the 4 1/2% Convertible Subordinated Notes due 2004 (the "Notes") issued in September and October 1997. Other-net consists principally of interest and dividend income generated by cash and cash equivalents and trading securities. The decrease in interest and dividend income for the thirteen week period compared to the corresponding period a year ago was primarily due to lower short-term interest rates. The increase in interest and dividend income for the thirty-nine week period resulted from investment of the net proceeds from the Notes. The Company reported a net loss $0.9 million for the thirteen week period ended December 26, 1998, compared to net earnings of $10.1 million in the corresponding period a year ago. For the thirty-nine week period, the net loss was $0.4 million compared to net earnings of $28.5 million last year. The decrease in net earnings for both the thirteen and thirty-nine week periods was primarily due to the decrease in net sales and the decrease in the gross profit percentage combined with an increase in SG&A expenses. Page 9 of 16 Liquidity and Capital Resources Working capital at December 26, 1998 was $374.1 million, an increase of $7.7 million, or 2.1%, since March 28, 1998. The increase was primarily due to growth in other current assets that resulted from an income tax receivable. Included in the Company's working capital at December 26, 1998 are investments of $198.7 million, a decrease of $5.6 million since March 28, 1998. The Company's investment strategy is low-risk and short-term, keeping the funds readily available to meet capital requirements as they arise in the normal course of business. At December 26, 1998, funds were invested in institutional money market funds, which are compatible with the Company's stated investment strategy. The Company intends to apply its capital resources to expand its business by establishing or acquiring similar distribution and manufacturing operations in geographic areas that are attractive to the Company, by acquiring new facilities and by enlarging or improving existing facilities. In addition to the capital required to purchase existing businesses or to fund start-up operations, the expansion of the Company's operations at both new and existing locations will require greater levels of capital to finance the purchase of additional equipment, increased levels of inventory and greater accounts receivable. The Company believes that current resources including funds generated from operations should be sufficient to meet its current capital requirements. Year 2000 Statement The Year 2000 Issue results from computer hardware and software systems that were not designed to distinguish between centuries and may not accommodate some or all dates beyond the year 1999. Therefore, computer hardware and software systems will need to be modified prior to the year 2000 in order to remain functional. Page 10 of 16 State of Readiness and Costs to Address Year 2000 Issues: The Company has substantially completed a comprehensive inventory of its systems, equipment and facilities. The Company's business information technology (IT) systems include business applications, computing hardware and software and related networking equipment and software. Non-IT systems are primarily embedded technology such as microcontrollers, used in its facilities and the manufacture or distribution of the Company's products. As a result of the Company's strategic migration to new application systems that began in 1995, substantially all of the Company's IT systems use hardware and software platforms that the vendors have represented to be Year 2000 compliant. In addition, the majority of the Company's non-IT systems are Year 2000 compliant. In general, the Company expects to resolve any remaining Year 2000 Issues through planned upgrades or replacements of its IT and non-IT systems, equipment and facilities that have been deemed to be critical to the business operations. The Company is primarily using internal resources to remediate or upgrade and test these systems for Year 2000 compliance. Based on the information currently available, the Company estimates that the costs of planned upgrades or replacements of facility and equipment systems will not exceed $500 thousand. This estimate assumes that the Company will not incur significant Year 2000 related costs on behalf of its suppliers, customers or third parties. In addition, the Company is monitoring Year 2000 compliance efforts of suppliers, service providers and other entities with which it has a business relationship. Until the assessments of these third parties are complete, the Company cannot state with certainty whether it has, or will have, significant Year 2000 Issues. Furthermore, as the Company is relying, in large measure, on statements made by such third parties in order to prepare those assessments, the lack of responsiveness or accuracy in such statements could materially affect those assessments. As a result, the Company cannot predict the potential consequences if these or other third parties or their products are not Year 2000 compliant. Risks of Year 2000 Issues and Contingency Plans: While the Company believes its efforts to address the Year 2000 Issues will be successful in avoiding any material adverse effect on the Company's operations Page 11 of 16 or financial condition, it recognizes that a most reasonably likely worst case Year 2000 scenario would be the failure of a third party or a component of the infrastructure, including national banking systems, electrical power, transportation facilities, communication systems and governmental activities to conduct their respective operations after 1999 such that the Company's ability to obtain, manufacture and distribute its products and services would be limited for a period of time. If this were to occur, it would likely cause temporary financial losses and inability to provide products and services to customers. The Company continues to assess the Year 2000 Issues relating to its physical plant and equipment, products, suppliers and customers. The Company is starting its contingency planning for critical operational areas that might be affected by the Year 2000 Issues if compliance by the Company is delayed and/or if third parties with which the Company has a business relationship fail to achieve Year 2000 compliance. In certain cases, especially third party infrastructure failures, there may be no practical alternative course of action available to the Company. Risks Relating to Forward-Looking Statements The Company is including the following cautionary statements to secure the protection of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for all forward-looking statements made by the Company in this Quarterly Report on Form 10-Q. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or trends, and may contain the words "should," "will" or words or phrases of similar meaning. In addition, the forward-looking statements speak only of the Company's view as of the date the statement was made, and the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof. Forward-looking statements involve risks and uncertainties which could cause actual results, performance or trends to differ materially from those expressed in the forward-looking statements. The Company believes that all forward- looking statements made by it have a reasonable basis, but there can Page 12 of 16 be no assurance that management's expectations, beliefs or projections as expressed in the forward-looking statements will actually occur or prove to be correct. Factors that could cause actual results to differ materially from those discussed in the forward-looking statements include, but are not limited to, the factors discussed under the caption "Risks of Year 2000 Issues and Contingency Plans" above and under the caption "Risks Relating to Forward- Looking Statements" in the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 1998. PART II - OTHER INFORMATION Items 1, 2, 3, 4 and 5 are not applicable and have been omitted. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 10.1 - Amendment No. 2 to Employment Agreement between Kent Electronics Corporation, Morrie K. Abramson and Rolaine S. Abramson dated November 10, 1998. 10.2 - Severance Agreement between Kent Electronics Corporation and Terrence M. Hunt dated November 10, 1998. 10.3 - Severance Agreement between Kent Electronics Corporation and Larry D. Olson dated November 10, 1998. 10.4 - Severance Agreement between Kent Electronics Corporation and Frank M. Billone dated November 11, 1998. 10.5 - Severance Agreement between Kent Electronics Corporation and Stephen J. Chapko dated November 11, 1998. 10.6 - Severance Agreement between Kent Electronics Corporation and Richard J. Hightower dated November 11, 1998. 10.7 - Severance Agreement between Kent Electronics Corporation and Mark A. Zerbe dated November 11, 1998. 11 - Statement re computation of per share earnings. 27 - Financial Data Schedule (b) Reports on Form 8-K: Not applicable. Page 13 of 16 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. KENT ELECTRONICS CORPORATION --------------------------------- (Registrant) Date: February 5, 1999 By: /s/ Morrie K. Abramson ----------------------------- -------------------------------- Morrie K. Abramson Chairman of the Board and Chief Executive Officer (Principal Executive Officer) Date: February 5, 1999 By: /s/ Stephen J. Chapko ----------------------------- --------------------------------- Stephen J. Chapko Executive Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer) Date: February 5, 1999 By: /s/ David D. Johnson ---------------------------- --------------------------------- David D. Johnson Vice President, Corporate Controller (Principal Accounting Officer) Page 14 of 16 EXHIBIT INDEX Exhibit numbers are in accordance with the Exhibit Table in Item 601 of Regulation S-K
Exhibit No. Exhibit Description Sequential Page No. - ----------- ---------------------- ------------------- 10.1 Amendment No. 2 to Employment Agreement between Kent Electronics Corporation, -- Morrie K. Abramson and Rolaine S. Abramson dated November 10, 1998. 10.2 Severance Agreement between Kent Electronics Corporation and Terrence M. Hunt -- dated November 10, 1998. 10.3 Severance Agreement between Kent Electronics Corporation and Larry D. Olson -- dated November 10, 1998. 10.4 Severance Agreement between Kent Electronics Corporation and Frank M. Billone -- dated November 11, 1998. 10.5 Severance Agreement between Kent Electronics Corporation and Stephen J. Chapko -- dated November 11, 1998. 10.6 Severance Agreement between Kent Electronics Corporation and Richard J. -- Hightower dated November 11, 1998. 10.7 Severance Agreement between Kent Electronics Corporation and Mark A. Zerbe -- dated November 11, 1998. 11 Statement re computation of per share 16 earnings 27 Financial Data Schedule --
Page 15 of 16 EX-10.1 2 EMPLOYMENT AGREEMENT/ABRAMSON EXHIBIT 10.1 AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT This Amendment No. 2 to Employment Agreement (this "Amendment") is entered into by and among Morrie K. Abramson ("Employee"), Rolaine S. Abramson and Kent Electronics Corporation, a Texas corporation (the "Company"), as of November 10, 1998. WHEREAS, Employee and the Company entered into the Employment Agreement dated as of January 3, 1996 (as amended, the "Employment Agreement"), WHEREAS, pursuant to an Amendment No. 1 to Employment Agreement dated as of August 18, 1997, the Employment Agreement was amended and Rolaine S. Abramson was added as a party thereto, WHEREAS, capitalized terms not otherwise defined herein shall have the meanings given to them in the Employment Agreement, and WHEREAS, the parties to the Employment Agreement desire to amend the Employment Agreement further to provide for certain benefits to Employee upon the termination of Employee's employment by the Company following a Change in Control, NOW, THEREFORE, in order to encourage Employee to remain in the employ of the Company beyond the minimum Term of Employment under the Employment Agreement, and in consideration of Employee's past and anticipated future service to the Company, the mutual agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. The parties hereby amend Section 3 of the Employment Agreement to read in its entirety as follows: 3. Term. Subject to the provisions for earlier termination provided herein, the term of this Agreement and the term of Employee's employment by the Company shall continue uninterrupted until March 31, 2001 and Employee's employment by the Company shall continue uninterrupted thereafter on a month to month basis until termination by either party upon at least thirty days' written notice to the other party ("Term of Employment"). 2. The parties hereby amend Section 4.1(b) of the Employment Agreement to read in its entirety as follows: (b) Upon a Change in Control (as defined below), the Company shall establish a "rabbi trust" for the benefit of Employee into which there shall be contributed by the Company cash in an amount sufficient to satisfy the Company's obligations to pay the Employee the amounts to which he is entitled under Section 6.1(d)(iii). Any instruments establishing such rabbi trust shall in all respects be satisfactory in form and substance to Employee and his counsel. 3. The parties hereby amend Section 6.1(d)(ii) of the Employment Agreement to read in its entirety as follows: (ii) If prior to a Change in Control Employee is discharged without Just Cause or resigns for Good Reason, Employee, or his spouse, estate or otherwise designated beneficiary, as the case may be, shall be entitled to the following: (1) a cash lump sum payment equal to all compensation and benefits due Employee pursuant to Section 4.1 as of the date of discharge or resignation, including the bonus for the period of his employment prior to the discharge or resignation (all cash compensation to be based on annual cash compensation of not less than $950,000 per year, irrespective of the time at which such cash compensation is otherwise payable) annualized on a reasonable basis acceptable to Employee; however, if at the end of such year it is determined that Employee's annual compensation would have been higher than the annualized amount used to calculate this payment, the Company shall pay Employee an amount in a cash lump sum equal to a proportionate share in the increase based on his period of employment during the year in which Employee was discharged or resigned; plus (2) a cash lump sum payment equal to the compensation pursuant to Section 4.1 which would be received by Employee for the remainder of the Term of Employment (using annual compensation of $950,000 per year or, if higher, the highest annual amount of Employee's compensation or annualized compensation calculated as described in Section 6(d)(ii)(1) in any year (including the year in which Employee terminates) during which this Agreement was in force). The entire lump sum amount shall be paid concurrent with any discharge or within 3 business days of the date of any resignation. Employee shall have no duty to mitigate or attempt to mitigate his damages. Employee's other compensation and benefits under this Agreement, including without limitation those provided pursuant to Sections 4.4 and 4.5, shall not be impaired or otherwise adversely affected by termination of Employee's employment. 4. The parties hereby amend Section 6.1(d) of the Employment Agreement to add the following new subsection 6.1(d)(iii), which shall read in its entirety as follows: (iii) If Employee's employment is terminated after a Change in Control (even if for Just Cause or without Good Reason), Employee, or his spouse, estate or otherwise designated beneficiary, as the case may be, shall be entitled to the following: (1) a cash lump sum payment equal to all the compensation and benefits due Employee pursuant to Section 4.1 as of the date of discharge or resignation, including the bonus for the period of his employment prior to the discharge or resignation 2 (all cash compensation to be based on annual cash compensation of not less than $950,000 per year, irrespective of the time at which such cash compensation is otherwise payable) annualized on a reasonable basis acceptable to Employee; however, if at the end of such year it is determined that Employee's annual compensation would have been higher than the annualized amount used to calculate this payment, the Company shall pay Employee an amount in a cash lump sum equal to a proportionate share in the increase based on his period of employment during the year in which Employee was discharged or resigned; plus (2) a cash lump sum payment equal to the product of five times the annual compensation pursuant to Section 4.1 which would be received by Employee (using annual compensation of $950,000 per year or, if higher, the highest annual amount of Employee's compensation or annualized compensation calculated as described in Section 6(d)(iii)(1) in any year (including the year in which Employee terminates) during which this Agreement was in force). The entire lump sum amount shall be paid concurrent with any discharge or within 3 business days of the date of any resignation. Employee shall have no duty to mitigate or attempt to mitigate his damages. Employee's other compensation and benefits under this Agreement, including without limitation those provided pursuant to Sections 4.4 and 4.5, shall not be impaired or otherwise adversely affected by termination of Employee's employment. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above. /s/ Morrie K. Abramson ------------------------------------- Morrie K. Abramson /s/ Rolaine S. Abramson ------------------------------------- Rolaine S. Abramson KENT ELECTRONICS CORPORATION By: /s/ Larry D. Olson ---------------------------------- Larry D. Olson President and Chief Operating Officer 3 EX-10.2 3 SEVERANCE AGREEMENT/HUNT EXHIBIT 10.2 SEVERANCE AGREEMENT THIS SEVERANCE AGREEMENT (the "Agreement"), is entered into as of November 10, 1998, by and between Kent Electronics Corporation, a Texas corporation (the "Company"), and Terrence M. Hunt (the "Officer"). WHEREAS, the Compensation Committee (the "Committee") of the Company's Board of Directors (the "Company Board") has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication of the Officer, notwithstanding the possibility, threat or occurrence of a Change in Control (as defined herein) of the Company; and WHEREAS, the Committee believes that it is imperative to diminish the inevitable distraction of the Officer by virtue of the personal uncertainties and risks created by a pending or threatened Change in Control, to encourage the Officer's full attention and dedication to the Company currently and in the event of any threatened or pending Change in Control, and to provide the Officer with compensation arrangements upon a Change in Control which provide the Officer with individual financial security and which are competitive with those of other corporations. NOW, THEREFORE, in consideration of the premises and the agreements herein contained, the receipt and sufficiency of which are hereby acknowledged, the Company and Officer hereby agree as follows: 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings (the singular includes the plural, unless the context clearly indicates otherwise): (a) A "Change in Control" shall be deemed to have occurred on the earliest of the following dates: (i) The date any entity or person (including a "group" within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, or any comparable successor provisions) shall have become the beneficial owner of, or shall have obtained voting control over, twenty percent (20%) or more of the then outstanding common shares of the Company; (ii) (1) The date the stockholders of the Company approve a definitive agreement to sell or otherwise dispose of substantially all the assets of the Company, or to merge or consolidate the Company with or into another corporation, in which the Company is not the continuing or surviving corporation or pursuant to which any common shares of the Company would be converted into cash, securities or other property of another corporation, other than a merger of the Company in which holders of common shares immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger as immediately before, or (2) the date the Company enters into a binding agreement to sell or otherwise transfer (including without limitation by merger or consolidation) to one or more unaffiliated entities or persons not less than a majority of the outstanding capital stock of the Company; or (iii) The date upon which, during any period of two consecutive years, individuals who at the beginning of such period constitute the Company Board cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company's stockholders, of each new Company Board member was approved by a vote of at least three-fourths of the Company Board members then still in office who were Company Board members at the beginning of such period. (a) "Change in Control Date" shall be the date on which a Change in Control occurs. (b) "Code" shall mean the Internal Revenue Code of 1986, as amended. (c) "Termination Date" shall mean the date on which Officer's employment with the Company is terminated, by either the Company or the Officer. 2. BENEFITS UPON CHANGE IN CONTROL. If, at any time after a Change in Control, Officer's employment with the Company is terminated (for any reason, including but not limited to death or retirement, and whether with or without cause and whether by the Officer or the Company), the Company shall be required to provide the following benefits to Officer: (a) The Company shall pay to the Officer in a lump sum in cash, concurrently with the Termination Date if the Company discharges the Officer and within three (3) business days of the Termination Date if the Officer resigns, the aggregate of the following amounts: (i) a cash lump sum payment equal to all the cash compensation due Officer pursuant to the terms of his employment by the Company as of the date of discharge or resignation, including the bonus for the period of his employment prior to the discharge or resignation annualized on a reasonable basis acceptable to Officer; however, if at the end of such year it is determined that Officer's annual compensation for the year in which his discharge resignation falls would have been higher than the annualized amount used to calculate this payment, the Company shall pay Officer an amount in a cash lump sum equal to a proportionate share in the increase based on his period of employment during the year in which Officer was discharged or resigned; and (ii) a cash lump sum payment equal to the highest amount of Officer's annual cash compensation (including without limitation, salary, bonus and any 2 deferrals of salary or bonus) or annualized compensation calculated as described in Section 2(a)(i) during the five years preceding or the year of the Change in Control). (b) In addition to the cash benefits payable pursuant to Section 2(a) hereof, all stock options, restricted stock awards and similar awards granted to Officer by the Company shall immediately vest on the Termination Date, notwithstanding any existing vesting schedule or other terms set forth in any plan or agreement governing the term of such stock options, restricted stock awards and similar awards. 3. REQUIREMENT OF BONUS PAYMENT IN CERTAIN CIRCUMSTANCES. (a) In the event that Officer is deemed to have received an excess parachute payment (as such term is defined in Section 280G(b) of the Code) which is subject to the excise taxes (the "Excise Taxes") imposed by Section 4999 of the Code in respect of any payment of compensation to Officer from the Company pursuant to this Agreement, in whatever form, the Company shall make the Bonus Payment (as defined below) to Officer promptly after the date on which Officer received or is deemed to have received any excess parachute payments. (b) The term "Bonus Payment" means a cash payment in an amount equal to the sum of (i) all Excise Taxes payable by Officer, plus (ii) all additional Excise Taxes and federal or state income taxes to the extent such taxes are imposed in respect of the Bonus Payment, such that Officer shall be in the same after-tax position and shall have received the same benefits that he would have received if the Excise Taxes had not been imposed. For purposes of calculating any income taxes attributable to the Bonus Payment, Officer shall be deemed for all purposes to be paying income taxes at the highest marginal federal income tax rate, taking into account any applicable surtaxes and other generally applicable taxes which have the effect of increasing the marginal federal income tax rate and, if applicable, at the highest marginal state income tax rate to which the Bonus Payment and Officer are subject. An example of the calculation of the Bonus Payment is set forth below: Assume that the Excise Tax rate is 20%, that the highest federal marginal income tax rate is 40% and that Officer is not subject to state income taxes. Assume that Officer has received an excess parachute payment in the amount of $500,000, on which $100,000 in Excise Taxes are payable. The amount of the required Bonus Payment would be $250,000. The Bonus Payment of $250,000, less Excise Taxes of $50,000 (20% of $250,000) and income taxes of $100,000 (40% of $250,000), leaves the Officer with $100,000, the amount of the Excise Taxes payable in respect of the excess parachute payment. (c) Officer agrees to cooperate reasonably with the Company to minimize the amount of the excess parachute payments, including without limitation assisting the Company in establishing that some or all of the payments received by Officer contingent on a change described in Section 280G(b)(2)(A)(i) of the Code are reasonable compensation for personal services actually rendered by Officer before the date of such change or to be rendered by Officer on or after the date of such change. In the event that the Company is 3 able to establish that the amount of the excess parachute payments is less than originally anticipated by Officer, Officer shall refund to the Company any excess Bonus Payment to the extent not required to pay Excise Taxes or income taxes (including those incurred in respect of the payment of the Bonus Payment). Notwithstanding the foregoing, Officer shall not be required to take any actions which his tax advisor advises him in writing (i) is improper or (ii) exposes Officer to material personal liability, and Officer may require the Company to deliver to Officer an indemnification agreement in form and substance satisfactory to Officer as a condition to taking any action required by this Section 3. (d) The Company shall make any payment required to be made under this Agreement in cash and on demand. Any payment required to be paid by the Company under this Agreement which is not paid within five days of receipt by the Company of Officer's demand therefor shall thereafter be deemed delinquent, and the Company shall pay to Officer immediately upon demand interest at the highest nonusurious rate per annum allowed by applicable law from the date such payment becomes delinquent to the date of payment of such delinquent sum. (e) In the event that there is any change to the Code which results in the recodification of Section 280G or Section 4999 of the Code, or in the event that either such section of the Code is amended, replaced or supplemented by other provisions of the Code of similar import ("Successor Provisions"), then this Agreement shall be applied and enforced with respect to such new Code provisions in a manner consistent with the intent of the parties as expressed herein, which is to assure that Officer is in the same after-tax position and has received the same benefits that he would have been in and received if any taxes imposed by Section 4999 or any Successor Provisions had not been imposed. 4. FULL SETTLEMENT. The Company's obligations to perform hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Officer. In no event shall the Officer be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Officer under any of the provisions of this Agreement. The Company agrees to pay, to the fullest extent permitted by law, all legal fees and expenses which the Officer may incur as a result of any contest by the Company or others of the validity or the enforceability of, or liability under, any provision of this Agreement. 5. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Officer's continuing or future participation in any benefit, bonus, incentive or other plans, programs, policies or practices provided by the Company or any of its subsidiaries and for which the Officer may qualify, nor shall anything herein limit or otherwise affect such rights as the Officer may have under any stock option, restricted stock or other agreements with the Company or any of its subsidiaries. Amounts which are vested benefits or which the Officer is otherwise entitled to receive under any plan, policy, practice or program of the Company or any of its subsidiaries on the Change in Control Date shall be payable in accordance with such plan, policy, practice or program. 4 6. FUNDING. The Company shall pay the benefits under this Agreement out of its general assets pursuant to the terms of this Agreement. There shall be no special fund out of which benefits shall be paid, nor shall the Officer be required to make a contribution as a condition of receiving benefits. 7. TAX WITHHOLDING. The Company may withhold or cause to be withheld from any benefits payable under this Agreement all federal, state, city or other taxes that are required by any law or governmental regulation or ruling. 8. NOTICES. Any notice required or desired to be given under this Agreement or other communications relating to this Agreement shall be in writing and delivered personally or mailed, return receipt requested, to the party concerned at the address set forth below: If to the Company: Kent Electronics Corporation 1111 Gillingham Lane Sugar Land, Texas 77478 If to Officer: At his residence address as maintained by the Company in the regular course of its business for payroll purposes. 9. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the parties hereto with respect to severance payments and supersedes any prior agreement, arrangement or understanding, whether oral or written, between the Company and Officer concerning severance payments. 10. CHOICE OF LAW. This Agreement shall be governed by, and enforced according to, the laws of the State of Texas. The invalidity of any provision shall be automatically reformed to the extent permitted by applicable law and shall not affect the enforceability of the remaining provisions hereof. Officer hereby waives any objection which he may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement brought in the District Court of Harris County, State of Texas, or in the United States District Court for the Southern District of Texas, and hereby further waives any claims that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. 11. ASSIGNMENT. The rights and obligations under this Agreement of the Company and Officer may not be assigned, except that the Company may, at its option, assign one or more of its rights or obligations under this Agreement to any of its subsidiaries or affiliates, or in connection with a transfer of all or substantially all of the assets or stock of the Company or a merger or consolidation of the Company with and into another corporation or other entity, provided that in each case the Company shall remain responsible for its obligation hereunder. 12. COUNTERPARTS. This Agreement may be executed in several identical counterparts, and by the parties hereto on separate counterparts, and each counterpart, when so executed and 5 delivered, shall constitute an original instrument, and all such separate counterparts shall constitute but one and the same instrument. 13. MODIFICATION. This Agreement may be modified only by written agreement signed by Officer and by the President or Secretary of the Company. The failure to insist upon compliance with any provision hereof shall not be deemed a waiver of such provision or any other provision hereof. IN WITNESS WHEREOF, the undersigned parties have executed this Agreement effective as of the date first written above. KENT ELECTRONICS CORPORATION By: /s/ Morrie K. Abramson ------------------------------------ Morrie K. Abramson Chairman of the Board and Chief Executive Officer /s/ Terrence M. Hunt ------------------------------------ Terrence M. Hunt 6 EX-10.3 4 SEVERANCE AGREEMENT/OLSON EXHIBIT 10.3 SEVERANCE AGREEMENT THIS SEVERANCE AGREEMENT (the "Agreement"), is entered into as of November 10, 1998, by and between Kent Electronics Corporation, a Texas corporation (the "Company"), and Larry D. Olson (the "Officer"). WHEREAS, the Compensation Committee (the "Committee") of the Company's Board of Directors (the "Company Board") has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication of the Officer, notwithstanding the possibility, threat or occurrence of a Change in Control (as defined herein) of the Company; and WHEREAS, the Committee believes that it is imperative to diminish the inevitable distraction of the Officer by virtue of the personal uncertainties and risks created by a pending or threatened Change in Control, to encourage the Officer's full attention and dedication to the Company currently and in the event of any threatened or pending Change in Control, and to provide the Officer with compensation arrangements upon a Change in Control which provide the Officer with individual financial security and which are competitive with those of other corporations. NOW, THEREFORE, in consideration of the premises and the agreements herein contained, the receipt and sufficiency of which are hereby acknowledged, the Company and Officer hereby agree as follows: 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings (the singular includes the plural, unless the context clearly indicates otherwise): (a) A "Change in Control" shall be deemed to have occurred on the earliest of the following dates: (i) The date any entity or person (including a "group" within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, or any comparable successor provisions) shall have become the beneficial owner of, or shall have obtained voting control over, twenty percent (20%) or more of the then outstanding common shares of the Company; (ii) (1) The date the stockholders of the Company approve a definitive agreement to sell or otherwise dispose of substantially all the assets of the Company, or to merge or consolidate the Company with or into another corporation, in which the Company is not the continuing or surviving corporation or pursuant to which any common shares of the Company would be converted into cash, securities or other property of another corporation, other than a merger of the Company in which holders of common shares immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger as immediately before, or (2) the date the Company enters into a binding agreement to sell or otherwise transfer (including without limitation by merger or consolidation) to one or more unaffiliated entities or persons not less than a majority of the outstanding capital stock of the Company; or (iii) The date upon which, during any period of two consecutive years, individuals who at the beginning of such period constitute the Company Board cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company's stockholders, of each new Company Board member was approved by a vote of at least three-fourths of the Company Board members then still in office who were Company Board members at the beginning of such period. (a) "Change in Control Date" shall be the date on which a Change in Control occurs. (b) "Code" shall mean the Internal Revenue Code of 1986, as amended. (c) "Termination Date" shall mean the date on which Officer's employment with the Company is terminated, by either the Company or the Officer. 2. BENEFITS UPON CHANGE IN CONTROL. If, at any time after a Change in Control, Officer's employment with the Company is terminated (for any reason, including but not limited to death or retirement, and whether with or without cause and whether by the Officer or the Company), the Company shall be required to provide the following benefits to Officer: (a) The Company shall pay to the Officer in a lump sum in cash, concurrently with the Termination Date if the Company discharges the Officer and within three (3) business days of the Termination Date if the Officer resigns, the aggregate of the following amounts: (i) a cash lump sum payment equal to all the cash compensation due Officer pursuant to the terms of his employment by the Company as of the date of discharge or resignation, including the bonus for the period of his employment prior to the discharge or resignation annualized on a reasonable basis acceptable to Officer; however, if at the end of such year it is determined that Officer's annual compensation for the year in which his discharge resignation falls would have been higher than the annualized amount used to calculate this payment, the Company shall pay Officer an amount in a cash lump sum equal to a proportionate share in the increase based on his period of employment during the year in which Officer was discharged or resigned; and (ii) a cash lump sum payment equal to the product of two times the highest amount of Officer's annual cash compensation (including without limitation, 2 salary, bonus and any deferrals of salary or bonus) or annualized compensation calculated as described in Section 2(a)(i) during the five years preceding or the year of the Change in Control). (b) In addition to the cash benefits payable pursuant to Section 2(a) hereof, all stock options, restricted stock awards and similar awards granted to Officer by the Company shall immediately vest on the Termination Date, notwithstanding any existing vesting schedule or other terms set forth in any plan or agreement governing the term of such stock options, restricted stock awards and similar awards. 3. REQUIREMENT OF BONUS PAYMENT IN CERTAIN CIRCUMSTANCES. (a) In the event that Officer is deemed to have received an excess parachute payment (as such term is defined in Section 280G(b) of the Code) which is subject to the excise taxes (the "Excise Taxes") imposed by Section 4999 of the Code in respect of any payment of compensation to Officer from the Company pursuant to this Agreement, in whatever form, the Company shall make the Bonus Payment (as defined below) to Officer promptly after the date on which Officer received or is deemed to have received any excess parachute payments. (b) The term "Bonus Payment" means a cash payment in an amount equal to the sum of (i) all Excise Taxes payable by Officer, plus (ii) all additional Excise Taxes and federal or state income taxes to the extent such taxes are imposed in respect of the Bonus Payment, such that Officer shall be in the same after-tax position and shall have received the same benefits that he would have received if the Excise Taxes had not been imposed. For purposes of calculating any income taxes attributable to the Bonus Payment, Officer shall be deemed for all purposes to be paying income taxes at the highest marginal federal income tax rate, taking into account any applicable surtaxes and other generally applicable taxes which have the effect of increasing the marginal federal income tax rate and, if applicable, at the highest marginal state income tax rate to which the Bonus Payment and Officer are subject. An example of the calculation of the Bonus Payment is set forth below: Assume that the Excise Tax rate is 20%, that the highest federal marginal income tax rate is 40% and that Officer is not subject to state income taxes. Assume that Officer has received an excess parachute payment in the amount of $500,000, on which $100,000 in Excise Taxes are payable. The amount of the required Bonus Payment would be $250,000. The Bonus Payment of $250,000, less Excise Taxes of $50,000 (20% of $250,000) and income taxes of $100,000 (40% of $250,000), leaves the Officer with $100,000, the amount of the Excise Taxes payable in respect of the excess parachute payment. (c) Officer agrees to cooperate reasonably with the Company to minimize the amount of the excess parachute payments, including without limitation assisting the Company in establishing that some or all of the payments received by Officer contingent on a change described in Section 280G(b)(2)(A)(i) of the Code are reasonable compensation for personal services actually rendered by Officer before the date of such change or to be 3 rendered by Officer on or after the date of such change. In the event that the Company is able to establish that the amount of the excess parachute payments is less than originally anticipated by Officer, Officer shall refund to the Company any excess Bonus Payment to the extent not required to pay Excise Taxes or income taxes (including those incurred in respect of the payment of the Bonus Payment). Notwithstanding the foregoing, Officer shall not be required to take any actions which his tax advisor advises him in writing (i) is improper or (ii) exposes Officer to material personal liability, and Officer may require the Company to deliver to Officer an indemnification agreement in form and substance satisfactory to Officer as a condition to taking any action required by this Section 3. (d) The Company shall make any payment required to be made under this Agreement in cash and on demand. Any payment required to be paid by the Company under this Agreement which is not paid within five days of receipt by the Company of Officer's demand therefor shall thereafter be deemed delinquent, and the Company shall pay to Officer immediately upon demand interest at the highest nonusurious rate per annum allowed by applicable law from the date such payment becomes delinquent to the date of payment of such delinquent sum. (e) In the event that there is any change to the Code which results in the recodification of Section 280G or Section 4999 of the Code, or in the event that either such section of the Code is amended, replaced or supplemented by other provisions of the Code of similar import ("Successor Provisions"), then this Agreement shall be applied and enforced with respect to such new Code provisions in a manner consistent with the intent of the parties as expressed herein, which is to assure that Officer is in the same after-tax position and has received the same benefits that he would have been in and received if any taxes imposed by Section 4999 or any Successor Provisions had not been imposed. 4. FULL SETTLEMENT. The Company's obligations to perform hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Officer. In no event shall the Officer be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Officer under any of the provisions of this Agreement. The Company agrees to pay, to the fullest extent permitted by law, all legal fees and expenses which the Officer may incur as a result of any contest by the Company or others of the validity or the enforceability of, or liability under, any provision of this Agreement. 5. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Officer's continuing or future participation in any benefit, bonus, incentive or other plans, programs, policies or practices provided by the Company or any of its subsidiaries and for which the Officer may qualify, nor shall anything herein limit or otherwise affect such rights as the Officer may have under any stock option, restricted stock or other agreements with the Company or any of its subsidiaries. Amounts which are vested benefits or which the Officer is otherwise entitled to receive under any plan, policy, practice or program of the Company or any of its subsidiaries on the Change in Control Date shall be payable in accordance with such plan, policy, practice or program. 4 6. FUNDING. The Company shall pay the benefits under this Agreement out of its general assets pursuant to the terms of this Agreement. There shall be no special fund out of which benefits shall be paid, nor shall the Officer be required to make a contribution as a condition of receiving benefits. 7. TAX WITHHOLDING. The Company may withhold or cause to be withheld from any benefits payable under this Agreement all federal, state, city or other taxes that are required by any law or governmental regulation or ruling. 8. NOTICES. Any notice required or desired to be given under this Agreement or other communications relating to this Agreement shall be in writing and delivered personally or mailed, return receipt requested, to the party concerned at the address set forth below: If to the Company: Kent Electronics Corporation 1111 Gillingham Lane Sugar Land, Texas 77478 If to Officer: At his residence address as maintained by the Company in the regular course of its business for payroll purposes. 9. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the parties hereto with respect to severance payments and supersedes any prior agreement, arrangement or understanding, whether oral or written, between the Company and Officer concerning severance payments. 10. CHOICE OF LAW. This Agreement shall be governed by, and enforced according to, the laws of the State of Texas. The invalidity of any provision shall be automatically reformed to the extent permitted by applicable law and shall not affect the enforceability of the remaining provisions hereof. Officer hereby waives any objection which he may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement brought in the District Court of Harris County, State of Texas, or in the United States District Court for the Southern District of Texas, and hereby further waives any claims that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. 11. ASSIGNMENT. The rights and obligations under this Agreement of the Company and Officer may not be assigned, except that the Company may, at its option, assign one or more of its rights or obligations under this Agreement to any of its subsidiaries or affiliates, or in connection with a transfer of all or substantially all of the assets or stock of the Company or a merger or consolidation of the Company with and into another corporation or other entity, provided that in each case the Company shall remain responsible for its obligation hereunder. 12. COUNTERPARTS. This Agreement may be executed in several identical counterparts, and by the parties hereto on separate counterparts, and each counterpart, when so executed and 5 delivered, shall constitute an original instrument, and all such separate counterparts shall constitute but one and the same instrument. 13. MODIFICATION. This Agreement may be modified only by written agreement signed by Officer and by the President or Secretary of the Company. The failure to insist upon compliance with any provision hereof shall not be deemed a waiver of such provision or any other provision hereof. IN WITNESS WHEREOF, the undersigned parties have executed this Agreement effective as of the date first written above. KENT ELECTRONICS CORPORATION By: /s/ Morrie K. Abramson ------------------------------------------------- Morrie K. Abramson Chairman of the Board and Chief Executive Officer /s/ Larry D. Olson ------------------------------------------------- Larry D. Olson 6 EX-10.4 5 SEVERANCE AGREEMENT/BILLONE EXHIBIT 10.4 SEVERANCE AGREEMENT THIS SEVERANCE AGREEMENT (the "Agreement"), is entered into as of November 11, 1998, by and between Kent Electronics Corporation, a Texas corporation (the "Company"), and Frank M. Billone (the "Officer"). WHEREAS, the Company's Board of Directors (the "Company Board") and the Compensation Committee of the Company Board (the "Committee") have determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication of the Officer, notwithstanding the possibility, threat or occurrence of a Change in Control (as defined herein) of the Company; and WHEREAS, the Company Board believes that it is imperative to diminish the inevitable distraction of the Officer by virtue of the personal uncertainties and risks created by a pending or threatened Change in Control, to encourage the Officer's full attention and dedication to the Company currently and in the event of any threatened or pending Change in Control, and to provide the Officer with compensation arrangements upon a Change in Control which provide the Officer with individual financial security and which are competitive with those of other corporations. NOW, THEREFORE, in consideration of the premises and the agreements herein contained, the receipt and sufficiency of which are hereby acknowledged, the Company and Officer hereby agree as follows: 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings (the singular includes the plural, unless the context clearly indicates otherwise): (a) A "Change in Control" shall be deemed to have occurred on the earliest of the following dates: (i) The date any entity or person (including a "group" within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, or any comparable successor provisions) shall have become the beneficial owner of, or shall have obtained voting control over, twenty percent (20%) or more of the then outstanding common shares of the Company; (ii) (1) The date the stockholders of the Company approve a definitive agreement to sell or otherwise dispose of substantially all the assets of the Company, or to merge or consolidate the Company with or into another corporation, in which the Company is not the continuing or surviving corporation or pursuant to which any common shares of the Company would be converted into cash, securities or other property of another corporation, other than a merger of the Company in which holders of common shares immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger as immediately before, or (2) the date the Company enters into a binding agreement to sell or otherwise transfer (including without limitation by merger or consolidation) to one or more unaffiliated entities or persons not less than a majority of the outstanding capital stock of the Company; or (iii) The date upon which, during any period of two consecutive years, individuals who at the beginning of such period constitute the Company Board cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company's stockholders, of each new Company Board member was approved by a vote of at least three-fourths of the Company Board members then still in office who were Company Board members at the beginning of such period. (a) "Change in Control Date" shall be the date on which a Change in Control occurs. (b) "Code" shall mean the Internal Revenue Code of 1986, as amended. (c) "Termination Date" shall mean the date on which Officer's employment with the Company is terminated, by either the Company or the Officer. 2. BENEFITS UPON CHANGE IN CONTROL. If, at any time after a Change in Control, Officer's employment with the Company is terminated (for any reason, including but not limited to death or retirement, and whether with or without cause and whether by the Officer or the Company), the Company shall be required to provide the following benefits to Officer: (a) The Company shall pay to the Officer in a lump sum in cash, concurrently with the Termination Date if the Company discharges the Officer and within three (3) business days of the Termination Date if the Officer resigns, the aggregate of the following amounts: (i) a cash lump sum payment equal to all the cash compensation due Officer pursuant to the terms of his employment by the Company as of the date of discharge or resignation, including the bonus for the period of his employment prior to the discharge or resignation annualized on a reasonable basis acceptable to Officer; however, if at the end of such year it is determined that Officer's annual compensation for the year in which his discharge resignation falls would have been higher than the annualized amount used to calculate this payment, the Company shall pay Officer an amount in a cash lump sum equal to a proportionate share in the increase based on his period of employment during the year in which Officer was discharged or resigned; and (ii) a cash lump sum payment equal to the highest amount of Officer's annual cash compensation (including without limitation, salary, bonus and any 2 deferrals of salary or bonus) or annualized compensation calculated as described in Section 2(a)(i) during the five years preceding or the year of the Change in Control). (b) In addition to the cash benefits payable pursuant to Section 2(a) hereof, all stock options, restricted stock awards and similar awards granted to Officer by the Company shall immediately vest on the Termination Date, notwithstanding any existing vesting schedule or other terms set forth in any plan or agreement governing the term of such stock options, restricted stock awards and similar awards. 3. REQUIREMENT OF BONUS PAYMENT IN CERTAIN CIRCUMSTANCES. (a) In the event that Officer is deemed to have received an excess parachute payment (as such term is defined in Section 280G(b) of the Code) which is subject to the excise taxes (the "Excise Taxes") imposed by Section 4999 of the Code in respect of any payment of compensation to Officer from the Company pursuant to this Agreement, in whatever form, the Company shall make the Bonus Payment (as defined below) to Officer promptly after the date on which Officer received or is deemed to have received any excess parachute payments. (b) The term "Bonus Payment" means a cash payment in an amount equal to the sum of (i) all Excise Taxes payable by Officer, plus (ii) all additional Excise Taxes and federal or state income taxes to the extent such taxes are imposed in respect of the Bonus Payment, such that Officer shall be in the same after-tax position and shall have received the same benefits that he would have received if the Excise Taxes had not been imposed. For purposes of calculating any income taxes attributable to the Bonus Payment, Officer shall be deemed for all purposes to be paying income taxes at the highest marginal federal income tax rate, taking into account any applicable surtaxes and other generally applicable taxes which have the effect of increasing the marginal federal income tax rate and, if applicable, at the highest marginal state income tax rate to which the Bonus Payment and Officer are subject. An example of the calculation of the Bonus Payment is set forth below: Assume that the Excise Tax rate is 20%, that the highest federal marginal income tax rate is 40% and that Officer is not subject to state income taxes. Assume that Officer has received an excess parachute payment in the amount of $500,000, on which $100,000 in Excise Taxes are payable. The amount of the required Bonus Payment would be $250,000. The Bonus Payment of $250,000, less Excise Taxes of $50,000 (20% of $250,000) and income taxes of $100,000 (40% of $250,000), leaves the Officer with $100,000, the amount of the Excise Taxes payable in respect of the excess parachute payment. (c) Officer agrees to cooperate reasonably with the Company to minimize the amount of the excess parachute payments, including without limitation assisting the Company in establishing that some or all of the payments received by Officer contingent on a change described in Section 280G(b)(2)(A)(i) of the Code are reasonable compensation for personal services actually rendered by Officer before the date of such change or to be rendered by Officer on or after the date of such change. In the event that the Company is 3 able to establish that the amount of the excess parachute payments is less than originally anticipated by Officer, Officer shall refund to the Company any excess Bonus Payment to the extent not required to pay Excise Taxes or income taxes (including those incurred in respect of the payment of the Bonus Payment). Notwithstanding the foregoing, Officer shall not be required to take any actions which his tax advisor advises him in writing (i) is improper or (ii) exposes Officer to material personal liability, and Officer may require the Company to deliver to Officer an indemnification agreement in form and substance satisfactory to Officer as a condition to taking any action required by this Section 3. (d) The Company shall make any payment required to be made under this Agreement in cash and on demand. Any payment required to be paid by the Company under this Agreement which is not paid within five days of receipt by the Company of Officer's demand therefor shall thereafter be deemed delinquent, and the Company shall pay to Officer immediately upon demand interest at the highest nonusurious rate per annum allowed by applicable law from the date such payment becomes delinquent to the date of payment of such delinquent sum. (e) In the event that there is any change to the Code which results in the recodification of Section 280G or Section 4999 of the Code, or in the event that either such section of the Code is amended, replaced or supplemented by other provisions of the Code of similar import ("Successor Provisions"), then this Agreement shall be applied and enforced with respect to such new Code provisions in a manner consistent with the intent of the parties as expressed herein, which is to assure that Officer is in the same after-tax position and has received the same benefits that he would have been in and received if any taxes imposed by Section 4999 or any Successor Provisions had not been imposed. 4. FULL SETTLEMENT. The Company's obligations to perform hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Officer. In no event shall the Officer be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Officer under any of the provisions of this Agreement. The Company agrees to pay, to the fullest extent permitted by law, all legal fees and expenses which the Officer may incur as a result of any contest by the Company or others of the validity or the enforceability of, or liability under, any provision of this Agreement. 5. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Officer's continuing or future participation in any benefit, bonus, incentive or other plans, programs, policies or practices provided by the Company or any of its subsidiaries and for which the Officer may qualify, nor shall anything herein limit or otherwise affect such rights as the Officer may have under any stock option, restricted stock or other agreements with the Company or any of its subsidiaries. Amounts which are vested benefits or which the Officer is otherwise entitled to receive under any plan, policy, practice or program of the Company or any of its subsidiaries on the Change in Control Date shall be payable in accordance with such plan, policy, practice or program. 4 6. FUNDING. The Company shall pay the benefits under this Agreement out of its general assets pursuant to the terms of this Agreement. There shall be no special fund out of which benefits shall be paid, nor shall the Officer be required to make a contribution as a condition of receiving benefits. 7. TAX WITHHOLDING. The Company may withhold or cause to be withheld from any benefits payable under this Agreement all federal, state, city or other taxes that are required by any law or governmental regulation or ruling. 8. NOTICES. Any notice required or desired to be given under this Agreement or other communications relating to this Agreement shall be in writing and delivered personally or mailed, return receipt requested, to the party concerned at the address set forth below: If to the Company: Kent Electronics Corporation 1111 Gillingham Lane Sugar Land, Texas 77478 If to Officer: At his residence address as maintained by the Company in the regular course of its business for payroll purposes. 9. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the parties hereto with respect to severance payments and supersedes any prior agreement, arrangement or understanding, whether oral or written, between the Company and Officer concerning severance payments. 10. CHOICE OF LAW. This Agreement shall be governed by, and enforced according to, the laws of the State of Texas. The invalidity of any provision shall be automatically reformed to the extent permitted by applicable law and shall not affect the enforceability of the remaining provisions hereof. Officer hereby waives any objection which he may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement brought in the District Court of Harris County, State of Texas, or in the United States District Court for the Southern District of Texas, and hereby further waives any claims that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. 11. ASSIGNMENT. The rights and obligations under this Agreement of the Company and Officer may not be assigned, except that the Company may, at its option, assign one or more of its rights or obligations under this Agreement to any of its subsidiaries or affiliates, or in connection with a transfer of all or substantially all of the assets or stock of the Company or a merger or consolidation of the Company with and into another corporation or other entity, provided that in each case the Company shall remain responsible for its obligation hereunder. 12. COUNTERPARTS. This Agreement may be executed in several identical counterparts, and by the parties hereto on separate counterparts, and each counterpart, when so executed and 5 delivered, shall constitute an original instrument, and all such separate counterparts shall constitute but one and the same instrument. 13. MODIFICATION. This Agreement may be modified only by written agreement signed by Officer and by the President or Secretary of the Company. The failure to insist upon compliance with any provision hereof shall not be deemed a waiver of such provision or any other provision hereof. IN WITNESS WHEREOF, the undersigned parties have executed this Agreement effective as of the date first written above. KENT ELECTRONICS CORPORATION By: /s/ Morrie K. Abramson --------------------------------------- Morrie K. Abramson Chairman of the Board and Chief Executive Officer /s/ Frank M. Billone --------------------------------------- Frank M. Billone 6 EX-10.5 6 SEVERANCE AGREEMENT/CHAPKO EXHIBIT 10.5 SEVERANCE AGREEMENT THIS SEVERANCE AGREEMENT (the "Agreement"), is entered into as of November 11, 1998, by and between Kent Electronics Corporation, a Texas corporation (the "Company"), and Stephen J. Chapko (the "Officer"). WHEREAS, the Company's Board of Directors (the "Company Board") and the Compensation Committee of the Company Board (the "Committee") have determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication of the Officer, notwithstanding the possibility, threat or occurrence of a Change in Control (as defined herein) of the Company; and WHEREAS, the Company Board believes that it is imperative to diminish the inevitable distraction of the Officer by virtue of the personal uncertainties and risks created by a pending or threatened Change in Control, to encourage the Officer's full attention and dedication to the Company currently and in the event of any threatened or pending Change in Control, and to provide the Officer with compensation arrangements upon a Change in Control which provide the Officer with individual financial security and which are competitive with those of other corporations. NOW, THEREFORE, in consideration of the premises and the agreements herein contained, the receipt and sufficiency of which are hereby acknowledged, the Company and Officer hereby agree as follows: 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings (the singular includes the plural, unless the context clearly indicates otherwise): (a) A "Change in Control" shall be deemed to have occurred on the earliest of the following dates: (i) The date any entity or person (including a "group" within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, or any comparable successor provisions) shall have become the beneficial owner of, or shall have obtained voting control over, twenty percent (20%) or more of the then outstanding common shares of the Company; (ii) (1) The date the stockholders of the Company approve a definitive agreement to sell or otherwise dispose of substantially all the assets of the Company, or to merge or consolidate the Company with or into another corporation, in which the Company is not the continuing or surviving corporation or pursuant to which any common shares of the Company would be converted into cash, securities or other property of another corporation, other than a merger of the Company in which holders of common shares immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger as immediately before, or (2) the date the Company enters into a binding agreement to sell or otherwise transfer (including without limitation by merger or consolidation) to one or more unaffiliated entities or persons not less than a majority of the outstanding capital stock of the Company; or (iii) The date upon which, during any period of two consecutive years, individuals who at the beginning of such period constitute the Company Board cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company's stockholders, of each new Company Board member was approved by a vote of at least three-fourths of the Company Board members then still in office who were Company Board members at the beginning of such period. (a) "Change in Control Date" shall be the date on which a Change in Control occurs. (b) "Code" shall mean the Internal Revenue Code of 1986, as amended. (c) "Termination Date" shall mean the date on which Officer's employment with the Company is terminated, by either the Company or the Officer. 2. BENEFITS UPON CHANGE IN CONTROL. If, at any time after a Change in Control, Officer's employment with the Company is terminated (for any reason, including but not limited to death or retirement, and whether with or without cause and whether by the Officer or the Company), the Company shall be required to provide the following benefits to Officer: (a) The Company shall pay to the Officer in a lump sum in cash, concurrently with the Termination Date if the Company discharges the Officer and within three (3) business days of the Termination Date if the Officer resigns, the aggregate of the following amounts: (i) a cash lump sum payment equal to all the cash compensation due Officer pursuant to the terms of his employment by the Company as of the date of discharge or resignation, including the bonus for the period of his employment prior to the discharge or resignation annualized on a reasonable basis acceptable to Officer; however, if at the end of such year it is determined that Officer's annual compensation for the year in which his discharge resignation falls would have been higher than the annualized amount used to calculate this payment, the Company shall pay Officer an amount in a cash lump sum equal to a proportionate share in the increase based on his period of employment during the year in which Officer was discharged or resigned; and (ii) a cash lump sum payment equal to the highest amount of Officer's annual cash compensation (including without limitation, salary, bonus and any 2 deferrals of salary or bonus) or annualized compensation calculated as described in Section 2(a)(i) during the five years preceding or the year of the Change in Control). (b) In addition to the cash benefits payable pursuant to Section 2(a) hereof, all stock options, restricted stock awards and similar awards granted to Officer by the Company shall immediately vest on the Termination Date, notwithstanding any existing vesting schedule or other terms set forth in any plan or agreement governing the term of such stock options, restricted stock awards and similar awards. 3. REQUIREMENT OF BONUS PAYMENT IN CERTAIN CIRCUMSTANCES. (a) In the event that Officer is deemed to have received an excess parachute payment (as such term is defined in Section 280G(b) of the Code) which is subject to the excise taxes (the "Excise Taxes") imposed by Section 4999 of the Code in respect of any payment of compensation to Officer from the Company pursuant to this Agreement, in whatever form, the Company shall make the Bonus Payment (as defined below) to Officer promptly after the date on which Officer received or is deemed to have received any excess parachute payments. (b) The term "Bonus Payment" means a cash payment in an amount equal to the sum of (i) all Excise Taxes payable by Officer, plus (ii) all additional Excise Taxes and federal or state income taxes to the extent such taxes are imposed in respect of the Bonus Payment, such that Officer shall be in the same after-tax position and shall have received the same benefits that he would have received if the Excise Taxes had not been imposed. For purposes of calculating any income taxes attributable to the Bonus Payment, Officer shall be deemed for all purposes to be paying income taxes at the highest marginal federal income tax rate, taking into account any applicable surtaxes and other generally applicable taxes which have the effect of increasing the marginal federal income tax rate and, if applicable, at the highest marginal state income tax rate to which the Bonus Payment and Officer are subject. An example of the calculation of the Bonus Payment is set forth below: Assume that the Excise Tax rate is 20%, that the highest federal marginal income tax rate is 40% and that Officer is not subject to state income taxes. Assume that Officer has received an excess parachute payment in the amount of $500,000, on which $100,000 in Excise Taxes are payable. The amount of the required Bonus Payment would be $250,000. The Bonus Payment of $250,000, less Excise Taxes of $50,000 (20% of $250,000) and income taxes of $100,000 (40% of $250,000), leaves the Officer with $100,000, the amount of the Excise Taxes payable in respect of the excess parachute payment. (c) Officer agrees to cooperate reasonably with the Company to minimize the amount of the excess parachute payments, including without limitation assisting the Company in establishing that some or all of the payments received by Officer contingent on a change described in Section 280G(b)(2)(A)(i) of the Code are reasonable compensation for personal services actually rendered by Officer before the date of such change or to be rendered by Officer on or after the date of such change. In the event that the Company is 3 able to establish that the amount of the excess parachute payments is less than originally anticipated by Officer, Officer shall refund to the Company any excess Bonus Payment to the extent not required to pay Excise Taxes or income taxes (including those incurred in respect of the payment of the Bonus Payment). Notwithstanding the foregoing, Officer shall not be required to take any actions which his tax advisor advises him in writing (i) is improper or (ii) exposes Officer to material personal liability, and Officer may require the Company to deliver to Officer an indemnification agreement in form and substance satisfactory to Officer as a condition to taking any action required by this Section 3. (d) The Company shall make any payment required to be made under this Agreement in cash and on demand. Any payment required to be paid by the Company under this Agreement which is not paid within five days of receipt by the Company of Officer's demand therefor shall thereafter be deemed delinquent, and the Company shall pay to Officer immediately upon demand interest at the highest nonusurious rate per annum allowed by applicable law from the date such payment becomes delinquent to the date of payment of such delinquent sum. (e) In the event that there is any change to the Code which results in the recodification of Section 280G or Section 4999 of the Code, or in the event that either such section of the Code is amended, replaced or supplemented by other provisions of the Code of similar import ("Successor Provisions"), then this Agreement shall be applied and enforced with respect to such new Code provisions in a manner consistent with the intent of the parties as expressed herein, which is to assure that Officer is in the same after-tax position and has received the same benefits that he would have been in and received if any taxes imposed by Section 4999 or any Successor Provisions had not been imposed. 4. FULL SETTLEMENT. The Company's obligations to perform hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Officer. In no event shall the Officer be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Officer under any of the provisions of this Agreement. The Company agrees to pay, to the fullest extent permitted by law, all legal fees and expenses which the Officer may incur as a result of any contest by the Company or others of the validity or the enforceability of, or liability under, any provision of this Agreement. 5. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Officer's continuing or future participation in any benefit, bonus, incentive or other plans, programs, policies or practices provided by the Company or any of its subsidiaries and for which the Officer may qualify, nor shall anything herein limit or otherwise affect such rights as the Officer may have under any stock option, restricted stock or other agreements with the Company or any of its subsidiaries. Amounts which are vested benefits or which the Officer is otherwise entitled to receive under any plan, policy, practice or program of the Company or any of its subsidiaries on the Change in Control Date shall be payable in accordance with such plan, policy, practice or program. 4 6. FUNDING. The Company shall pay the benefits under this Agreement out of its general assets pursuant to the terms of this Agreement. There shall be no special fund out of which benefits shall be paid, nor shall the Officer be required to make a contribution as a condition of receiving benefits. 7. TAX WITHHOLDING. The Company may withhold or cause to be withheld from any benefits payable under this Agreement all federal, state, city or other taxes that are required by any law or governmental regulation or ruling. 8. NOTICES. Any notice required or desired to be given under this Agreement or other communications relating to this Agreement shall be in writing and delivered personally or mailed, return receipt requested, to the party concerned at the address set forth below: If to the Company: Kent Electronics Corporation 1111 Gillingham Lane Sugar Land, Texas 77478 If to Officer: At his residence address as maintained by the Company in the regular course of its business for payroll purposes. 9. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the parties hereto with respect to severance payments and supersedes any prior agreement, arrangement or understanding, whether oral or written, between the Company and Officer concerning severance payments. 10. CHOICE OF LAW. This Agreement shall be governed by, and enforced according to, the laws of the State of Texas. The invalidity of any provision shall be automatically reformed to the extent permitted by applicable law and shall not affect the enforceability of the remaining provisions hereof. Officer hereby waives any objection which he may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement brought in the District Court of Harris County, State of Texas, or in the United States District Court for the Southern District of Texas, and hereby further waives any claims that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. 11. ASSIGNMENT. The rights and obligations under this Agreement of the Company and Officer may not be assigned, except that the Company may, at its option, assign one or more of its rights or obligations under this Agreement to any of its subsidiaries or affiliates, or in connection with a transfer of all or substantially all of the assets or stock of the Company or a merger or consolidation of the Company with and into another corporation or other entity, provided that in each case the Company shall remain responsible for its obligation hereunder. 12. COUNTERPARTS. This Agreement may be executed in several identical counterparts, and by the parties hereto on separate counterparts, and each counterpart, when so executed and 5 delivered, shall constitute an original instrument, and all such separate counterparts shall constitute but one and the same instrument. 13. MODIFICATION. This Agreement may be modified only by written agreement signed by Officer and by the President or Secretary of the Company. The failure to insist upon compliance with any provision hereof shall not be deemed a waiver of such provision or any other provision hereof. IN WITNESS WHEREOF, the undersigned parties have executed this Agreement effective as of the date first written above. KENT ELECTRONICS CORPORATION By: /s/ Morrie K. Abramson ---------------------------------------- Morrie K. Abramson Chairman of the Board and Chief Executive Officer /s/ Stephen J. Chapko ---------------------------------------- Stephen J. Chapko 6 EX-10.6 7 SEVERANCE AGREEMENT/HIGHTOWER EXHIBIT 10.6 SEVERANCE AGREEMENT THIS SEVERANCE AGREEMENT (the "Agreement"), is entered into as of November 11, 1998, by and between Kent Electronics Corporation, a Texas corporation (the "Company"), and Richard J. Hightower (the "Officer"). WHEREAS, the Company's Board of Directors (the "Company Board") and the Compensation Committee of the Company Board (the "Committee") have determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication of the Officer, notwithstanding the possibility, threat or occurrence of a Change in Control (as defined herein) of the Company; and WHEREAS, the Company Board believes that it is imperative to diminish the inevitable distraction of the Officer by virtue of the personal uncertainties and risks created by a pending or threatened Change in Control, to encourage the Officer's full attention and dedication to the Company currently and in the event of any threatened or pending Change in Control, and to provide the Officer with compensation arrangements upon a Change in Control which provide the Officer with individual financial security and which are competitive with those of other corporations. NOW, THEREFORE, in consideration of the premises and the agreements herein contained, the receipt and sufficiency of which are hereby acknowledged, the Company and Officer hereby agree as follows: 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings (the singular includes the plural, unless the context clearly indicates otherwise): (a) A "Change in Control" shall be deemed to have occurred on the earliest of the following dates: (i) The date any entity or person (including a "group" within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, or any comparable successor provisions) shall have become the beneficial owner of, or shall have obtained voting control over, twenty percent (20%) or more of the then outstanding common shares of the Company; (ii) (1) The date the stockholders of the Company approve a definitive agreement to sell or otherwise dispose of substantially all the assets of the Company, or to merge or consolidate the Company with or into another corporation, in which the Company is not the continuing or surviving corporation or pursuant to which any common shares of the Company would be converted into cash, securities or other property of another corporation, other than a merger of the Company in which holders of common shares immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger as immediately before, or (2) the date the Company enters into a binding agreement to sell or otherwise transfer (including without limitation by merger or consolidation) to one or more unaffiliated entities or persons not less than a majority of the outstanding capital stock of the Company; or (iii) The date upon which, during any period of two consecutive years, individuals who at the beginning of such period constitute the Company Board cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company's stockholders, of each new Company Board member was approved by a vote of at least three-fourths of the Company Board members then still in office who were Company Board members at the beginning of such period. (a) "Change in Control Date" shall be the date on which a Change in Control occurs. (b) "Code" shall mean the Internal Revenue Code of 1986, as amended. (c) "Termination Date" shall mean the date on which Officer's employment with the Company is terminated, by either the Company or the Officer. 2. BENEFITS UPON CHANGE IN CONTROL. If, at any time after a Change in Control, Officer's employment with the Company is terminated (for any reason, including but not limited to death or retirement, and whether with or without cause and whether by the Officer or the Company), the Company shall be required to provide the following benefits to Officer: (a) The Company shall pay to the Officer in a lump sum in cash, concurrently with the Termination Date if the Company discharges the Officer and within three (3) business days of the Termination Date if the Officer resigns, the aggregate of the following amounts: (i) a cash lump sum payment equal to all the cash compensation due Officer pursuant to the terms of his employment by the Company as of the date of discharge or resignation, including the bonus for the period of his employment prior to the discharge or resignation annualized on a reasonable basis acceptable to Officer; however, if at the end of such year it is determined that Officer's annual compensation for the year in which his discharge resignation falls would have been higher than the annualized amount used to calculate this payment, the Company shall pay Officer an amount in a cash lump sum equal to a proportionate share in the increase based on his period of employment during the year in which Officer was discharged or resigned; and (ii) a cash lump sum payment equal to the highest amount of Officer's annual cash compensation (including without limitation, salary, bonus and any 2 deferrals of salary or bonus) or annualized compensation calculated as described in Section 2(a)(i) during the five years preceding or the year of the Change in Control). (b) In addition to the cash benefits payable pursuant to Section 2(a) hereof, all stock options, restricted stock awards and similar awards granted to Officer by the Company shall immediately vest on the Termination Date, notwithstanding any existing vesting schedule or other terms set forth in any plan or agreement governing the term of such stock options, restricted stock awards and similar awards. 3. REQUIREMENT OF BONUS PAYMENT IN CERTAIN CIRCUMSTANCES. (a) In the event that Officer is deemed to have received an excess parachute payment (as such term is defined in Section 280G(b) of the Code) which is subject to the excise taxes (the "Excise Taxes") imposed by Section 4999 of the Code in respect of any payment of compensation to Officer from the Company pursuant to this Agreement, in whatever form, the Company shall make the Bonus Payment (as defined below) to Officer promptly after the date on which Officer received or is deemed to have received any excess parachute payments. (b) The term "Bonus Payment" means a cash payment in an amount equal to the sum of (i) all Excise Taxes payable by Officer, plus (ii) all additional Excise Taxes and federal or state income taxes to the extent such taxes are imposed in respect of the Bonus Payment, such that Officer shall be in the same after-tax position and shall have received the same benefits that he would have received if the Excise Taxes had not been imposed. For purposes of calculating any income taxes attributable to the Bonus Payment, Officer shall be deemed for all purposes to be paying income taxes at the highest marginal federal income tax rate, taking into account any applicable surtaxes and other generally applicable taxes which have the effect of increasing the marginal federal income tax rate and, if applicable, at the highest marginal state income tax rate to which the Bonus Payment and Officer are subject. An example of the calculation of the Bonus Payment is set forth below: Assume that the Excise Tax rate is 20%, that the highest federal marginal income tax rate is 40% and that Officer is not subject to state income taxes. Assume that Officer has received an excess parachute payment in the amount of $500,000, on which $100,000 in Excise Taxes are payable. The amount of the required Bonus Payment would be $250,000. The Bonus Payment of $250,000, less Excise Taxes of $50,000 (20% of $250,000) and income taxes of $100,000 (40% of $250,000), leaves the Officer with $100,000, the amount of the Excise Taxes payable in respect of the excess parachute payment. (c) Officer agrees to cooperate reasonably with the Company to minimize the amount of the excess parachute payments, including without limitation assisting the Company in establishing that some or all of the payments received by Officer contingent on a change described in Section 280G(b)(2)(A)(i) of the Code are reasonable compensation for personal services actually rendered by Officer before the date of such change or to be rendered by Officer on or after the date of such change. In the event that the Company is 3 able to establish that the amount of the excess parachute payments is less than originally anticipated by Officer, Officer shall refund to the Company any excess Bonus Payment to the extent not required to pay Excise Taxes or income taxes (including those incurred in respect of the payment of the Bonus Payment). Notwithstanding the foregoing, Officer shall not be required to take any actions which his tax advisor advises him in writing (i) is improper or (ii) exposes Officer to material personal liability, and Officer may require the Company to deliver to Officer an indemnification agreement in form and substance satisfactory to Officer as a condition to taking any action required by this Section 3. (d) The Company shall make any payment required to be made under this Agreement in cash and on demand. Any payment required to be paid by the Company under this Agreement which is not paid within five days of receipt by the Company of Officer's demand therefor shall thereafter be deemed delinquent, and the Company shall pay to Officer immediately upon demand interest at the highest nonusurious rate per annum allowed by applicable law from the date such payment becomes delinquent to the date of payment of such delinquent sum. (e) In the event that there is any change to the Code which results in the recodification of Section 280G or Section 4999 of the Code, or in the event that either such section of the Code is amended, replaced or supplemented by other provisions of the Code of similar import ("Successor Provisions"), then this Agreement shall be applied and enforced with respect to such new Code provisions in a manner consistent with the intent of the parties as expressed herein, which is to assure that Officer is in the same after-tax position and has received the same benefits that he would have been in and received if any taxes imposed by Section 4999 or any Successor Provisions had not been imposed. 4. FULL SETTLEMENT. The Company's obligations to perform hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Officer. In no event shall the Officer be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Officer under any of the provisions of this Agreement. The Company agrees to pay, to the fullest extent permitted by law, all legal fees and expenses which the Officer may incur as a result of any contest by the Company or others of the validity or the enforceability of, or liability under, any provision of this Agreement. 5. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Officer's continuing or future participation in any benefit, bonus, incentive or other plans, programs, policies or practices provided by the Company or any of its subsidiaries and for which the Officer may qualify, nor shall anything herein limit or otherwise affect such rights as the Officer may have under any stock option, restricted stock or other agreements with the Company or any of its subsidiaries. Amounts which are vested benefits or which the Officer is otherwise entitled to receive under any plan, policy, practice or program of the Company or any of its subsidiaries on the Change in Control Date shall be payable in accordance with such plan, policy, practice or program. 4 6. FUNDING. The Company shall pay the benefits under this Agreement out of its general assets pursuant to the terms of this Agreement. There shall be no special fund out of which benefits shall be paid, nor shall the Officer be required to make a contribution as a condition of receiving benefits. 7. TAX WITHHOLDING. The Company may withhold or cause to be withheld from any benefits payable under this Agreement all federal, state, city or other taxes that are required by any law or governmental regulation or ruling. 8. NOTICES. Any notice required or desired to be given under this Agreement or other communications relating to this Agreement shall be in writing and delivered personally or mailed, return receipt requested, to the party concerned at the address set forth below: If to the Company: Kent Electronics Corporation 1111 Gillingham Lane Sugar Land, Texas 77478 If to Officer: At his residence address as maintained by the Company in the regular course of its business for payroll purposes. 9. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the parties hereto with respect to severance payments and supersedes any prior agreement, arrangement or understanding, whether oral or written, between the Company and Officer concerning severance payments. 10. CHOICE OF LAW. This Agreement shall be governed by, and enforced according to, the laws of the State of Texas. The invalidity of any provision shall be automatically reformed to the extent permitted by applicable law and shall not affect the enforceability of the remaining provisions hereof. Officer hereby waives any objection which he may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement brought in the District Court of Harris County, State of Texas, or in the United States District Court for the Southern District of Texas, and hereby further waives any claims that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. 11. ASSIGNMENT. The rights and obligations under this Agreement of the Company and Officer may not be assigned, except that the Company may, at its option, assign one or more of its rights or obligations under this Agreement to any of its subsidiaries or affiliates, or in connection with a transfer of all or substantially all of the assets or stock of the Company or a merger or consolidation of the Company with and into another corporation or other entity, provided that in each case the Company shall remain responsible for its obligation hereunder. 12. COUNTERPARTS. This Agreement may be executed in several identical counterparts, and by the parties hereto on separate counterparts, and each counterpart, when so executed and 5 delivered, shall constitute an original instrument, and all such separate counterparts shall constitute but one and the same instrument. 13. MODIFICATION. This Agreement may be modified only by written agreement signed by Officer and by the President or Secretary of the Company. The failure to insist upon compliance with any provision hereof shall not be deemed a waiver of such provision or any other provision hereof. IN WITNESS WHEREOF, the undersigned parties have executed this Agreement effective as of the date first written above. KENT ELECTRONICS CORPORATION By: /s/ Morrie K. Abramson ------------------------------------------ Morrie K. Abramson Chairman of the Board and Chief Executive Officer /s/ Richard J. Hightower -------------------------------------------- Richard J. Hightower 6 EX-10.7 8 SEVERANCE AGREEMENT/ZERBE EXHIBIT 10.7 SEVERANCE AGREEMENT THIS SEVERANCE AGREEMENT (the "Agreement"), is entered into as of November 11, 1998, by and between Kent Electronics Corporation, a Texas corporation (the "Company"), and Mark A. Zerbe (the "Officer"). WHEREAS, the Company's Board of Directors (the "Company Board") and the Compensation Committee of the Company Board (the "Committee") have determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication of the Officer, notwithstanding the possibility, threat or occurrence of a Change in Control (as defined herein) of the Company; and WHEREAS, the Company Board believes that it is imperative to diminish the inevitable distraction of the Officer by virtue of the personal uncertainties and risks created by a pending or threatened Change in Control, to encourage the Officer's full attention and dedication to the Company currently and in the event of any threatened or pending Change in Control, and to provide the Officer with compensation arrangements upon a Change in Control which provide the Officer with individual financial security and which are competitive with those of other corporations. NOW, THEREFORE, in consideration of the premises and the agreements herein contained, the receipt and sufficiency of which are hereby acknowledged, the Company and Officer hereby agree as follows: 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings (the singular includes the plural, unless the context clearly indicates otherwise): (a) A "Change in Control" shall be deemed to have occurred on the earliest of the following dates: (i) The date any entity or person (including a "group" within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, or any comparable successor provisions) shall have become the beneficial owner of, or shall have obtained voting control over, twenty percent (20%) or more of the then outstanding common shares of the Company; (ii) (1) The date the stockholders of the Company approve a definitive agreement to sell or otherwise dispose of substantially all the assets of the Company, or to merge or consolidate the Company with or into another corporation, in which the Company is not the continuing or surviving corporation or pursuant to which any common shares of the Company would be converted into cash, securities or other property of another corporation, other than a merger of the Company in which holders of common shares immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger as immediately before, or (2) the date the Company enters into a binding agreement to sell or otherwise transfer (including without limitation by merger or consolidation) to one or more unaffiliated entities or persons not less than a majority of the outstanding capital stock of the Company; or (iii) The date upon which, during any period of two consecutive years, individuals who at the beginning of such period constitute the Company Board cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company's stockholders, of each new Company Board member was approved by a vote of at least three-fourths of the Company Board members then still in office who were Company Board members at the beginning of such period. (a) "Change in Control Date" shall be the date on which a Change in Control occurs. (b) "Code" shall mean the Internal Revenue Code of 1986, as amended. (c) "Termination Date" shall mean the date on which Officer's employment with the Company is terminated, by either the Company or the Officer. 2. BENEFITS UPON CHANGE IN CONTROL. If, at any time after a Change in Control, Officer's employment with the Company is terminated (for any reason, including but not limited to death or retirement, and whether with or without cause and whether by the Officer or the Company), the Company shall be required to provide the following benefits to Officer: (a) The Company shall pay to the Officer in a lump sum in cash, concurrently with the Termination Date if the Company discharges the Officer and within three (3) business days of the Termination Date if the Officer resigns, the aggregate of the following amounts: (i) a cash lump sum payment equal to all the cash compensation due Officer pursuant to the terms of his employment by the Company as of the date of discharge or resignation, including the bonus for the period of his employment prior to the discharge or resignation annualized on a reasonable basis acceptable to Officer; however, if at the end of such year it is determined that Officer's annual compensation for the year in which his discharge resignation falls would have been higher than the annualized amount used to calculate this payment, the Company shall pay Officer an amount in a cash lump sum equal to a proportionate share in the increase based on his period of employment during the year in which Officer was discharged or resigned; and (ii) a cash lump sum payment equal to the highest amount of Officer's annual cash compensation (including without limitation, salary, bonus and any 2 deferrals of salary or bonus) or annualized compensation calculated as described in Section 2(a)(i) during the five years preceding or the year of the Change in Control). (b) In addition to the cash benefits payable pursuant to Section 2(a) hereof, all stock options, restricted stock awards and similar awards granted to Officer by the Company shall immediately vest on the Termination Date, notwithstanding any existing vesting schedule or other terms set forth in any plan or agreement governing the term of such stock options, restricted stock awards and similar awards. 3. REQUIREMENT OF BONUS PAYMENT IN CERTAIN CIRCUMSTANCES. (a) In the event that Officer is deemed to have received an excess parachute payment (as such term is defined in Section 280G(b) of the Code) which is subject to the excise taxes (the "Excise Taxes") imposed by Section 4999 of the Code in respect of any payment of compensation to Officer from the Company pursuant to this Agreement, in whatever form, the Company shall make the Bonus Payment (as defined below) to Officer promptly after the date on which Officer received or is deemed to have received any excess parachute payments. (b) The term "Bonus Payment" means a cash payment in an amount equal to the sum of (i) all Excise Taxes payable by Officer, plus (ii) all additional Excise Taxes and federal or state income taxes to the extent such taxes are imposed in respect of the Bonus Payment, such that Officer shall be in the same after-tax position and shall have received the same benefits that he would have received if the Excise Taxes had not been imposed. For purposes of calculating any income taxes attributable to the Bonus Payment, Officer shall be deemed for all purposes to be paying income taxes at the highest marginal federal income tax rate, taking into account any applicable surtaxes and other generally applicable taxes which have the effect of increasing the marginal federal income tax rate and, if applicable, at the highest marginal state income tax rate to which the Bonus Payment and Officer are subject. An example of the calculation of the Bonus Payment is set forth below: Assume that the Excise Tax rate is 20%, that the highest federal marginal income tax rate is 40% and that Officer is not subject to state income taxes. Assume that Officer has received an excess parachute payment in the amount of $500,000, on which $100,000 in Excise Taxes are payable. The amount of the required Bonus Payment would be $250,000. The Bonus Payment of $250,000, less Excise Taxes of $50,000 (20% of $250,000) and income taxes of $100,000 (40% of $250,000), leaves the Officer with $100,000, the amount of the Excise Taxes payable in respect of the excess parachute payment. (c) Officer agrees to cooperate reasonably with the Company to minimize the amount of the excess parachute payments, including without limitation assisting the Company in establishing that some or all of the payments received by Officer contingent on a change described in Section 280G(b)(2)(A)(i) of the Code are reasonable compensation for personal services actually rendered by Officer before the date of such change or to be rendered by Officer on or after the date of such change. In the event that the Company is 3 able to establish that the amount of the excess parachute payments is less than originally anticipated by Officer, Officer shall refund to the Company any excess Bonus Payment to the extent not required to pay Excise Taxes or income taxes (including those incurred in respect of the payment of the Bonus Payment). Notwithstanding the foregoing, Officer shall not be required to take any actions which his tax advisor advises him in writing (i) is improper or (ii) exposes Officer to material personal liability, and Officer may require the Company to deliver to Officer an indemnification agreement in form and substance satisfactory to Officer as a condition to taking any action required by this Section 3. (d) The Company shall make any payment required to be made under this Agreement in cash and on demand. Any payment required to be paid by the Company under this Agreement which is not paid within five days of receipt by the Company of Officer's demand therefor shall thereafter be deemed delinquent, and the Company shall pay to Officer immediately upon demand interest at the highest nonusurious rate per annum allowed by applicable law from the date such payment becomes delinquent to the date of payment of such delinquent sum. (e) In the event that there is any change to the Code which results in the recodification of Section 280G or Section 4999 of the Code, or in the event that either such section of the Code is amended, replaced or supplemented by other provisions of the Code of similar import ("Successor Provisions"), then this Agreement shall be applied and enforced with respect to such new Code provisions in a manner consistent with the intent of the parties as expressed herein, which is to assure that Officer is in the same after-tax position and has received the same benefits that he would have been in and received if any taxes imposed by Section 4999 or any Successor Provisions had not been imposed. 4. FULL SETTLEMENT. The Company's obligations to perform hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Officer. In no event shall the Officer be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Officer under any of the provisions of this Agreement. The Company agrees to pay, to the fullest extent permitted by law, all legal fees and expenses which the Officer may incur as a result of any contest by the Company or others of the validity or the enforceability of, or liability under, any provision of this Agreement. 5. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Officer's continuing or future participation in any benefit, bonus, incentive or other plans, programs, policies or practices provided by the Company or any of its subsidiaries and for which the Officer may qualify, nor shall anything herein limit or otherwise affect such rights as the Officer may have under any stock option, restricted stock or other agreements with the Company or any of its subsidiaries. Amounts which are vested benefits or which the Officer is otherwise entitled to receive under any plan, policy, practice or program of the Company or any of its subsidiaries on the Change in Control Date shall be payable in accordance with such plan, policy, practice or program. 4 6. FUNDING. The Company shall pay the benefits under this Agreement out of its general assets pursuant to the terms of this Agreement. There shall be no special fund out of which benefits shall be paid, nor shall the Officer be required to make a contribution as a condition of receiving benefits. 7. TAX WITHHOLDING. The Company may withhold or cause to be withheld from any benefits payable under this Agreement all federal, state, city or other taxes that are required by any law or governmental regulation or ruling. 8. NOTICES. Any notice required or desired to be given under this Agreement or other communications relating to this Agreement shall be in writing and delivered personally or mailed, return receipt requested, to the party concerned at the address set forth below: If to the Company: Kent Electronics Corporation 1111 Gillingham Lane Sugar Land, Texas 77478 If to Officer: At his residence address as maintained by the Company in the regular course of its business for payroll purposes. 9. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the parties hereto with respect to severance payments and supersedes any prior agreement, arrangement or understanding, whether oral or written, between the Company and Officer concerning severance payments. 10. CHOICE OF LAW. This Agreement shall be governed by, and enforced according to, the laws of the State of Texas. The invalidity of any provision shall be automatically reformed to the extent permitted by applicable law and shall not affect the enforceability of the remaining provisions hereof. Officer hereby waives any objection which he may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement brought in the District Court of Harris County, State of Texas, or in the United States District Court for the Southern District of Texas, and hereby further waives any claims that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. 11. ASSIGNMENT. The rights and obligations under this Agreement of the Company and Officer may not be assigned, except that the Company may, at its option, assign one or more of its rights or obligations under this Agreement to any of its subsidiaries or affiliates, or in connection with a transfer of all or substantially all of the assets or stock of the Company or a merger or consolidation of the Company with and into another corporation or other entity, provided that in each case the Company shall remain responsible for its obligation hereunder. 12. COUNTERPARTS. This Agreement may be executed in several identical counterparts, and by the parties hereto on separate counterparts, and each counterpart, when so executed and 5 delivered, shall constitute an original instrument, and all such separate counterparts shall constitute but one and the same instrument. 13. MODIFICATION. This Agreement may be modified only by written agreement signed by Officer and by the President or Secretary of the Company. The failure to insist upon compliance with any provision hereof shall not be deemed a waiver of such provision or any other provision hereof. IN WITNESS WHEREOF, the undersigned parties have executed this Agreement effective as of the date first written above. KENT ELECTRONICS CORPORATION By: /s/ Morrie K. Abramson ---------------------------- Morrie K. Abramson Chairman of the Board and Chief Executive Officer /s/ Mark A. Zerbe ---------------------------- Mark A. Zerbe 6 EX-11 9 COMPUTATION OF EARNINGS PER SHARE
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11 (In thousands, except per share data) For the Thirteen Weeks Ended For the Thirteen Weeks Ended December 26, 1998 December 27, 1997 -------------------------------- --------------------------------- Earnings Per-Share Per-Share (Loss) Shares Amount Earnings Shares Amount -------- ------ --------- -------- ------ --------- BASIC EARNINGS PER SHARE Net earnings (loss) $ (939) 27,916 $ (0.03) $ 10,128 26,664 $ 0.38 ======= ====== EFFECT OF DILUTIVE SECURITIES Excess of shares issuable upon exercise of stock options over shares deemed retired utilizing the treasury stock method - - - 1,710 ------ ------ -------- ------ DILUTED EARNINGS PER SHARE Net earnings (loss) plus assumed conversions $ (939) 27,916 $ (0.03) $ 10,128 28,374 $ 0.36 ====== ====== ======== ======== ====== ====== For the Thirty-Nine Weeks Ended For the Thirty-Nine Weeks Ended December 26, 1998 December 27, 1997 -------------------------------- --------------------------------- Per-Share Per-Share Earnings Shares Amount Earnings Shares Amount -------- ------ --------- -------- ------ --------- BASIC EARNINGS PER SHARE Net earnings (loss) $ (352) 27,577 $ (0.01) $ 28,508 26,450 $ 1.08 ======= ====== EFFECT OF DILUTIVE SECURITIES Excess of shares issuable upon exercise of stock options over shares deemed retired utilizing the treasury stock method - - - 1,695 ------ ------ -------- ------ DILUTED EARNINGS PER SHARE Net earnings (loss) plus assumed $ (352) 27,577 $ (0.01) $ 28,508 28,145 $ 1.01 conversions ====== ====== ======== ======== ====== ======
EX-27 10 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS APR-03-1999 DEC-26-1998 202,211 0 109,254 1,296 119,168 443,338 175,511 46,671 600,720 69,193 207,000 0 0 64,154 257,979 600,720 459,981 459,981 385,833 385,833 0 89 7,723 (582) (230) (352) 0 0 0 (352) (0.01) (0.01)
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