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Exhibit 10.3
EMPLOYMENT AGREEMENT
BETWEEN
PIONEER-STANDARD ELECTRONICS, INC.
AND
ROBERT E. DANIELSON
July 29, 1997
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TABLE OF CONTENTS
EMPLOYMENT........................................................................................................1
PERIOD OF EMPLOYMENT..............................................................................................1
POSITION, DUTIES, RESPONSIBILITIES................................................................................1
COMPENSATION, COMPENSATION PLANS, PERQUISITES....................................................................2
EMPLOYEE BENEFIT PLANS............................................................................................3
EFFECT OF DEATH OR DISABILITY.....................................................................................4
TERMINATION.......................................................................................................5
GENERAL........................................................................................................5
CHANGE OF CONTROL..............................................................................................5
FOR CAUSE OR VOLUNTARY TERMINATION.............................................................................6
WITHOUT CAUSE..................................................................................................6
ARBITRATION....................................................................................................7
COMPETITION.......................................................................................................7
CONFIDENTIAL INFORMATION..........................................................................................8
NONINTERFERENCE...................................................................................................8
REMEDY............................................................................................................9
WITHHOLDING.......................................................................................................9
NOTICES...........................................................................................................9
GENERAL PROVISIONS................................................................................................9
AMENDMENT OR MODIFICATION; WAIVER................................................................................10
SEVERABILITY.....................................................................................................11
SUCCESSORS TO THE COMPANY........................................................................................11
OPERATION OF AGREEMENT...........................................................................................11
ENFORCEMENT COSTS................................................................................................11
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EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT between PIONEER-STANDARD ELECTRONICS,
INC., an Ohio corporation (the "Company"), and ROBERT E. DANIELSON
("Danielson"), dated July 29, 1997, to be effective April 1, 1997.
W I T N E S S E T H:
WHEREAS: The Company and Danielson have given consideration to
an employment agreement providing for the services of Danielson as Senior Vice
President and Chief Information Officer; and
WHEREAS: This Agreement is deemed necessary at the present
time to meet the need for a continued strong management without substantial
change; and
WHEREAS: Together with other officers of the Company,
Danielson has been responsible for the success of the business of the Company;
NOW, THEREFORE, it is hereby agreed by and between the Company
and Danielson as follows:
1. Employment
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The Company hereby agrees to continue to employ Danielson, and
Danielson hereby agrees to remain in the employ of the Company, for the
period set forth in Section 2 below (the "Period of Employment"), in
the position and with the duties and responsibilities set forth in
Section 3 below, and upon the other terms and conditions hereinafter
stated.
2. Period of Employment
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For the purposes of this Agreement, the Period of Employment, subject
only to the provisions of Section 6 below (relating to Death or
Disability), shall continue for a one-year period from the effective
date hereof and thereafter on a year-to-year basis (i) subject to
termination of this Agreement by the Company effective as of the next
anniversary of the effective date hereof following written notice of
termination, which notice must be given to Danielson no later than
February 1 of the Company's then current fiscal year, or (ii) until the
earlier termination of employment as set forth in Section 7.
3. Position, Duties, Responsibilities
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3.01 During the Period of Employment, Danielson shall serve as Senior
Vice President and Chief Information Officer of the Company reporting
to the Chief Executive Officer of the Company and shall have the
authority, power, and duties with regard to his position as may from
time to time be assigned by the Chief Executive Officer or the Board of
Directors of the Company.
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3.02 Throughout the Period of Employment Danielson shall devote his
full time and undivided attention during normal business hours to the
business and affairs of the Company, except for reasonable vacations
afforded the Company's executive officers and except for illness or
incapacity, but nothing in this Agreement shall preclude Danielson from
devoting reasonable time required for serving as a director or member
of an advisory committee of any organization involving no conflict of
interest with the interests of the Company, from engaging in charitable
and community activities, and from managing his personal investments,
provided that such activities do not materially interfere with the
regular performance of his duties and responsibilities under this
Agreement.
3.03 Danielson's office shall be located at the corporate offices of
the Company, and Danielson shall not be required to locate his office
elsewhere without his prior written consent, nor shall he be required
to be absent therefrom on travel status or otherwise more than a total
of sixty (60) days in any calendar year nor more than fifteen (15)
consecutive days at any one time.
4. Compensation, Compensation Plans, Perquisites
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4.01 (a) For all services rendered by Danielson in any capacity during
the Period of Employment, including without limitation, services as an
executive officer, director or member of any committee of the Company
or of any subsidiary, division or affiliate thereof, Danielson shall be
paid as compensation:
(i) A base salary, payable not less often than monthly,
at the rate of $18,333 per month, with such increases
in such rate as may be awarded from time to time by
the Board of Directors of the Company;
(ii) A cash incentive compensation payment equal to the
product of 20/100 of 1% of the sum of the "actual
operating income" of the Company, multiplied by the
ratio of the Company's "actual return on capital" to
20.4%. The term "actual operating income" shall be
defined as the income before income tax (state and
federal income tax) and interest expense. The term
"actual return on capital" shall be defined as the
Company's "actual operating income" divided by the
sum of its interest-bearing debt, plus equity (the
denominator shall be calculated for each fiscal year
as the average of such amounts as at the end of each
of the Company's four (4) fiscal quarters). All
amounts used to calculate the incentive compensation
payment shall reflect the operations of the Company
and its consolidated subsidiaries and affiliates and
shall be calculated in conformity with generally
accepted accounting principles. The Company shall
calculate the incentive compensation payment for each
fiscal year on a quarterly basis and at the end of
each of the first three (3) fiscal quarters shall pay
Danielson the incentive compensation amount based on
such
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quarterly calculation. After April 1 and before June
16 of the next fiscal year, and after audited
financial statements are available to the Company,
the Company shall pay Danielson the balance of any
amount due Danielson based on the calculation of the
incentive compensation amount for the fiscal year
less payments made for the first three (3) fiscal
quarters, which payment shall be vested in the event
of termination by reason of Death or disability
(Section 6), Change of Control, (Section 7.02), or
without Cause (Section 7.04), but shall be forfeited
in the event of termination for Cause or voluntary
termination (Section 7.03).
(b) Any increase in salary, incentive compensation or
other form of compensation shall in no way diminish
any other obligation of the Company under this
Agreement, unless specifically agreed to in writing
by Danielson.
4.02 During the Period of Employment Danielson shall be and continue to
be a full participant in the Company's Employees' Profit Sharing Plan
or any equivalent successor plan that may be adopted by the Company.
4.03 During the Period of Employment Danielson shall be entitled to
perquisites, including without limitation, an office, secretarial staff
and clerical staff, and to fringe benefits comparable to those enjoyed
by the other executive officers of the Company, as well as to
reimbursement, upon proper accounting, of reasonable business expenses
and disbursements incurred by him in the course of his duties.
5. Employee Benefit Plans
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5.01 The compensation, together with other matters provided for in
Section 4 above, is in addition to the benefits provided for in this
Section 5.
5.02 Danielson, his dependents, beneficiaries and estate shall be
entitled to all payments and benefits and service credit for benefits
during the Period of Employment to which other executive officers of
the Company, their dependents and beneficiaries are entitled as the
result of the employment of such executive officers during the Period
of Employment under the terms of employee plans and practices of the
Company, including, without limitation, the Company's retirement
program consisting of its Employees' Profit Sharing Plan, its group
life insurance plan, its accidental death and dismemberment insurance,
disability, medical and health and welfare plans, any key person
individual life and disability policies, automobile expense
reimbursement, club membership fees and dues, and other present or
equivalent successor plans and practices of the Company, its
subsidiaries and divisions, for which other executive officers, their
dependents and beneficiaries are eligible, and to all payments or other
benefits under any such plan or practice after the Period of Employment
as a result of participation in such plan or practice during the Period
of Employment.
5.03 Danielson shall be eligible to participate in the Company's 1991
Stock Option Plan (which, together with any successor stock option plan
or plans that may be adopted by the Company, is referred to herein as
the "Option Plan"); provided, however, that the
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grant of any stock options ("Options") under any Option Plan shall be
at the sole discretion of the Compensation Committee of the Board of
Directors of the Company. The terms and conditions of exercise of
Options granted to Danielson shall be as is set forth in the Stock
Option Agreements (the "Option Agreements") with the Company entered
into by Danielson in connection with such Option grants; provided,
however, that in the event of a Change in Control, as defined in
paragraph 18.02 below, then notwithstanding the provisions of said
Option Agreements, all Options shall immediately be 100% vested and
Danielson shall have the immediate right of exercise with respect to
all Options and the underlying Common Shares covered by said Option
Agreements. In the event that Danielson's employment is terminated as a
result of a Change in Control, as defined in paragraph 18.02 below,
Danielson shall have the period of one (1) year after the date of such
termination to exercise his Options or the remainder of the term of
such Options, whichever is shorter, and any such exercise shall be
irrevocable.
6. Effect of Death or Disability
-----------------------------
In the event of the death of Danielson during the Period of
Employment, the Period of Employment shall be deemed to have ended as
of the close of business on the last day of the month in which death
shall have occurred, and his legal representative shall be entitled to
(i) the compensation provided for in paragraph 4.01(a)(i) above for the
month in which death shall take place at the rate being paid at the
time of death, (ii) any incentive compensation payable for the fiscal
quarter in which the Period of Employment shall be deemed to have
terminated due to death, plus the balance of any incentive compensation
due Danielson for any prior fiscal quarters in accordance with, and
payable at the times set forth in, paragraph 4.01(a)(ii) above, and
(iii) any benefits provided pursuant to paragraph 5.02 hereof which are
payable pursuant to the terms of the applicable plan or practice.
(a) The term "Disability," as used in this Agreement, shall
mean an illness or accident which prevents Danielson from
performing his duties under this Agreement for a period of
three (3) consecutive months. The Period of Employment shall
be deemed to have ended as of the close of business on the
last day of such three (3) month period but without prejudice
to any payments due Danielson during such three (3) month
period or pursuant to any disability insurance policy.
(b) In the event of the Disability of Danielson during the
Period of Employment, Danielson shall be entitled to (i) the
compensation provided for in paragraph 4.01(a)(i) above, at
the rate being paid at the time of the commencement of
Disability, for the period of such Disability but not in
excess of three (3) months, (ii) any incentive compensation
payable for the fiscal quarter in which the Period of
Employment shall be deemed to have terminated due to
Disability, plus the balance of any incentive compensation due
Danielson for any prior fiscal quarters in accordance with,
and payable at the times set forth in, paragraph 4.01(a)(ii)
above, and (iii) any benefits provided pursuant to paragraph
5.02 hereof which are payable pursuant to the terms of the
applicable plan or practice.
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(c) The amount of any payments due under this paragraph 6.02
shall be reduced by any payments to which Danielson may be
paid for the same period under any disability plan of the
Company or of any subsidiary or affiliate thereof.
7. Termination
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7.01 GENERAL. The Company may terminate Danielson with or without cause
at any time during the Period of Employment, subject to the provisions
of this Section 7. The termination of this Agreement by the Company
pursuant to Section 2(i) hereof shall be deemed to be a termination of
employment without Cause as set forth in Section 7.04 hereof. In the
event that this Agreement is to be terminated pursuant to Section 2(i)
hereof, upon receipt of the notice of termination Danielson shall have
the option of either leaving the Company at any time thereafter or
continuing his employment until the March 31 effective date of the
termination of this Agreement, and in either event Danielson shall be
entitled to receive all of the payments and benefits as provided in
Section 7.04 hereof; provided, however, that in the event Danielson
elects to continue his employment with the Company subsequent to the
March 31 effective date of the termination of this Agreement, for a
period of three (3) months thereafter Danielson shall have the right to
terminate his employment with the Company and any such termination
shall be deemed to be a termination of employment without Cause as set
forth above.
7.02 CHANGE OF CONTROL. Within one (1) year of a Change of Control of
the Company, as defined in paragraph 18.02, Danielson shall have the
right to terminate his employment with the Company and there shall be
paid or provided to Danielson, his dependents, beneficiaries and
estate, as liquidated damages or severance pay, or both, the following:
(a) The compensation provided for in paragraph 4.01(a)(i)
above for the month in which termination shall have occurred
at the rate being paid at the time of termination; and an
amount equal to his then current monthly base salary times
twenty-four (24) plus $110,000. Such amount shall be paid to
Danielson in one payment, immediately upon termination.
Danielson shall also receive any incentive compensation
payable for the fiscal quarter in which the Period of
Employment shall be deemed to have terminated due to Change of
Control, plus the balance of any incentive compensation due
Danielson for any prior fiscal quarters in accordance with,
and payable at the times set forth in, paragraph 4.01(a)(ii)
above.
(b) For two (2) years following the date of termination,
Danielson, his dependents, beneficiaries and estate, shall
continue to be entitled to all benefits provided pursuant to
paragraph 5.02 hereof which are payable pursuant to the terms
of the applicable plan or practice, and service credit for
benefits under all employee benefit plans of the Company,
including, without limitation, the Company's Profit Sharing
Plan referred to in paragraph 5.02 above, upon the same basis
as immediately prior to termination and, to the extent that
such benefits or service credit for benefits shall not be
payable or provided under any such plans to Danielson, his
dependents, beneficiaries and estate, by reason of his no
longer being an employee of the Company as the result of
termination, or any such plan, program or arrangement is
discontinued or the benefits thereunder are
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materially reduced, the Company shall itself arrange to
provide to Danielson, his dependents, beneficiaries and estate
benefits substantially similar to those which Danielson, his
dependents and beneficiaries were entitled to receive under
such plans, programs and arrangements immediately prior to
termination.
Any termination by the Company within the period of one
hundred eighty (180) days prior to the execution of a letter of intent
or a definitive agreement which could lead to a Change of Control and
the closing of the transaction actually resulting in the Change of
Control, as defined in paragraph 18.02, shall be deemed to be a
termination under this paragraph 7.02. An election by Danielson to
terminate his employment under the provisions of this paragraph 7.02
shall not be deemed a voluntary termination of employment by Danielson
under paragraph 7.03 of this Agreement or any plan or practice of the
Company.
7.03 FOR CAUSE OR VOLUNTARY TERMINATION. For the purpose of any
provision of this Agreement, the termination of Danielson's employment
shall be deemed to have been for "Cause" only if:
(a) termination of his employment shall have been the result
of Danielson's conviction of any of the following: (i)
embezzlement; (ii) misappropriation of money or other property
of the Company; or (iii) any felony; or
(b) there has been a breach by Danielson during the Period of
Employment of the provisions of paragraph 3.03 above, relating
to devotion of full time to the affairs of the Company,
Section 8 relating to Competition, Section 9 relating to
Confidential Information, or Section 10 relating to
Noninterference, and such breach results in demonstrable
significant injury to the Company, and with respect to any
alleged breach of paragraph 3.03 hereof, Danielson shall have
failed to remedy such breach within thirty (30) days from his
receipt of written notice from the Company.
If Danielson's employment is terminated by the Company for
Cause, or if Danielson shall voluntarily terminate his employment with
the Company, Danielson shall be entitled to the compensation provided
for in paragraph 4.01(a)(i) through the date of such termination.
Danielson shall not be entitled to any additional compensation or
benefits (except for any vested benefits), and shall continue to be
bound by the provisions of Section 8 of this Agreement (relating to
Competition), the provisions of Section 9 of this Agreement (relating
to Confidential Information), and the provisions of Section 10
(relating to Noninterference).
7.04 WITHOUT CAUSE. Subject to compliance by Danielson with the
provisions of Section 8 of this Agreement (relating to Competition),
the provisions of Section 9 of this Agreement (relating to Confidential
Information), and the provisions of Section 10 of this Agreement
(relating to Noninterference), if the Company shall terminate
Danielson's employment without Cause, there shall be paid or provided
to Danielson, his dependents, beneficiaries and estate, as liquidated
damages or severance pay, or both, (i) the compensation provided for in
paragraph 4.01(a)(i) above for the month in which termination shall
have occurred at the rate being paid at the time of such termination,
and
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(ii) the amount (the "Payment Amount") per month equal to 1/12th of the
total of (A) his current annual base salary plus (B) $110,000. Such
Payment Amount shall be paid to Danielson or, in case of his prior
death, to his legal representative or estate, in monthly installments
at the end of each month commencing with the month next following that
in which such termination shall have occurred, and continuing for a
period of twelve (12) months. Danielson shall also receive any
incentive compensation payable for the fiscal quarter in which the
Period of Employment shall be deemed to have been terminated without
Cause, plus the balance of any incentive compensation due Danielson for
any prior fiscal quarters in accordance with, and payable at the times
set forth in, paragraph 4.01(a)(ii) above, plus any benefits provided
pursuant to paragraph 5.02 hereof which are payable pursuant to the
terms of the applicable plan or practice. In the event the Company
fails to make such payments when due, then the remaining payments shall
become due and payable immediately.
7.05 Arbitration. In the event that Danielson's employment shall be
terminated by the Company during the Period of Employment or the
Company shall withhold payments or provision of benefits because
Danielson is alleged to be engaged in activities prohibited by Sections
8, 9 or 10 of this Agreement or for any other reason, Danielson shall
have the right, in addition to all other rights and remedies provided
by law, at his election either to seek arbitration in the metropolitan
area of Cleveland, Ohio, under the rules of the American Arbitration
Association by serving a notice to arbitrate upon the Company or to
institute a judicial proceeding, in either case within one hundred and
twenty (120) days after having received notice of termination of his
employment.
8. Competition
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There shall be no obligation on the part of the Company to
make any further payments provided for in paragraph 7.04 above if
Danielson shall, during the one (1) year following termination of
Danielson's employment for any reason except Change of Control as
described in paragraph 7.02, engage in Competition with the Company as
hereinafter defined. The word "Competition" for purposes of this
Section 8 and any other provision of this Agreement shall mean taking
any employment or consulting position with or control of one of the
Company's top twenty-five (25) competitors as listed in the most
current issue at the date of termination of Electronic Buyer's News
and/or ELECTRONIC NEWS; provided, however, that in no event shall
ownership of less than 5% of the outstanding capital stock entitled to
vote for the election of directors of a corporation with a class of
equity securities held of record by more than 500 persons be deemed
Competition with the Company within the meaning of this Section 8.
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9. Confidential Information
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9.01 Except for information which is already in the public domain, or
which is publicly disclosed by persons other than Danielson, or which
is required by law or court order to be disclosed, or information given
to Danielson by a third party not bound by any obligation of
confidentiality, Danielson shall at all times during and after his
employment with the Company hold in strictest confidence any and all
confidential information within his knowledge and which is material to
the business of the Company (whether acquired prior to or during his
employment with the Company) concerning the inventions, products,
processes, methods of distribution, customers, services, business,
suppliers or trade secrets of the Company, except that Danielson may,
in connection with the performance of his duties to the Company,
divulge confidential information to the directors, officers, employees
and shareholders of the Company and to the advisors, accountants,
attorneys or lenders of the Company or such other individuals as deemed
prudent in the course of business to carry out the responsibilities and
duties of his position. Such confidential information includes, without
limitation, financial information, sales information, price lists,
marketing data, the identity and lists of actual and potential
customers and technical information, all to the extent that such
information is not intended by the Company for public dissemination.
9.02 Danielson also agrees that upon leaving the Company's employ he
will not take with him, without the prior written consent of an officer
authorized to act in the matter by the Board of Directors of the
Company, any Company document, contract, internal financial or
management reports, customers list, product list, price list, catalog,
employee list, procedures, software, MIS data, drawing, blueprint,
specification or other document of the Company, its subsidiaries,
affiliates and divisions, which is of a confidential nature relating to
the Company, its subsidiaries, affiliates and divisions, or, without
limitation, relating to its or their methods of purchase or
distribution, or any description of any trade secret, formulae or
secret processes.
10. Noninterference
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Except for Change of Control as described in paragraph 7.02,
Danielson shall not, at any time during or within one (1) year after
his employment is terminated with the Company, without the prior
written consent of the Company, directly or indirectly, induce or
attempt to induce any employee, agent or other representative or
associate of the Company to terminate his or her relationship with the
Company, or in any way directly or indirectly interfere with such a
relationship or any relationship between the Company and any of its top
fifty (50) suppliers or top two hundred fifty (250) customers, both in
terms of the Company's sales volume, provided that purchasing goods
from a supplier to the Company or making a sale to any of the Company's
customers shall not be deemed to be interference.
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11. Remedy
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Danielson acknowledges that Sections 8, 9 and 10 hereof were negotiated
at arms length and are required for the fair and reasonable protection
of the Company. Danielson and the Company further acknowledge and agree
that a breach of those obligations and agreements will result in
irreparable and continuing damage to the Company for which there will
be no adequate remedy at law and, therefore, Danielson and the Company
agree that in the event of any breach of said obligations and
agreements the Company, and its successors and assigns, shall be
entitled to injunctive relief and such other and further relief,
including monetary damages, as is proper in the circumstances. It is
further agreed that the running of the periods provided above in
Sections 8 and 10, shall be tolled during any period which Danielson
shall be adjudged to have been in violation of any of his obligations
under such Sections.
12. Withholding
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Anything to the contrary notwithstanding, all payments required to be
made by the Company hereunder to Danielson or his estate or
beneficiaries, shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Company may
reasonably determine it should withhold pursuant to any applicable law
or regulation. In lieu of withholding such amounts, the Company may
accept other provisions to the end that it has sufficient funds to pay
all taxes required by law to be withheld in respect of such payments or
any of them.
13. Notices
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All notices, requests, demands and other communications provided for by
this Agreement shall be in writing and shall be sufficiently given if
and when mailed in the continental United States by registered or
certified mail or personally delivered to the party entitled thereto at
the address stated below or to such changed address as the addressee
may have given by a similar notice:
To the Company: Pioneer-Standard Electronics, Inc.
4800 East 131st Street
Cleveland, Ohio 44105
Attention: Secretary or
Assistant Secretary
To Danielson: Robert E. Danielson
16631 Munn Road
Auburn, Ohio 44023
14. General Provisions
------------------
14.01 There shall be no right of set-off or counter claim, in respect
of any claim, debt or obligation, against payments to Danielson, his
dependents, beneficiaries or estate provided for in this Agreement.
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14.02 No right or interest to or in any payments shall be assignable by
Danielson; provided, however, that this provision shall not preclude
him from designating one or more beneficiaries to receive any amount
that may be payable after his death and shall not preclude the legal
representative of his estate from assigning any right hereunder to the
person or persons entitled thereto under his will or, in the case of
intestacy, to the person or persons entitled thereto under the laws of
intestacy applicable to his estate. The term "beneficiaries" as used in
this Agreement shall mean a beneficiary or beneficiaries so designated
to receive any such amount or, if no beneficiary has been so
designated, the legal representative of Danielson's estate.
14.03 No right, benefit or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge,
pledge, hypothecation, or set-off in respect of any claim, debt or
obligation, or to execution, attachment, levy or similar process, or
assignment by operation of law. Any attempt, voluntary or involuntary,
to effect any action specified in the immediately preceding sentence
shall, to the full extent permitted by law, be null, void and of no
effect.
14.04 In the event of Danielson's death or a judicial determination of
his incompetence, reference in this Agreement to Danielson shall be
deemed, where appropriate, to refer to his legal representative or,
where appropriate, to his beneficiary or beneficiaries.
14.05 The titles to sections in this Agreement are intended solely for
convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
14.06 This Agreement shall be binding upon and shall inure to the
benefit of (a) Danielson and, subject to the provisions of paragraphs
14.02 and 14.03, his heirs and legal representatives, and (b) the
Company and its successors as provided in Section 17 hereof.
15. Amendment or Modification; Waiver
---------------------------------
No provision of this Agreement may be amended or waived unless
such amendment or waiver is authorized by the Board of Directors of the
Company or the Compensation Committee thereof and is agreed to in
writing, signed by Danielson and by an officer of the Company thereunto
duly authorized by either the Board of Directors or the Compensation
Committee. Except as otherwise specifically provided in this Agreement,
no waiver by either party hereto of any breach by the other party
hereto of any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of a subsequent breach of
such condition or provision or a waiver of a similar or dissimilar
provision or condition at the same or at any prior or subsequent time.
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16. Severability
------------
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent
permitted by law.
17. Successors to the Company
-------------------------
Except as otherwise provided herein, this Agreement shall be binding
upon and inure to the benefit of the Company and any successor of the
Company, including, without limitation, any corporation which acquires
directly or indirectly all or substantially all of the assets or
capital stock of the Company whether by merger, consolidation, sale or
otherwise (and such successor shall thereafter be deemed the Company
for the purposes of this Agreement), but shall not otherwise be
assignable by the Company.
18. Operation of Agreement
----------------------
18.01 This Agreement is effective April 1, 1997, and shall supersede
any prior employment arrangement or agreement between Danielson and the
Company, which shall be deemed to be terminated and null and void
except for any vested rights to receive compensation under paragraph
4.01(a)(ii) thereof.
18.02 For the purpose of this Agreement, the term "Change in Control"
of the Company shall mean a change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934 as
in effect on the date of this Agreement; provided that, without
limitation, such a change in control shall be deemed to have occurred
if and when (a) any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes a
beneficial owner, directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's
then outstanding securities, or (b) during any period of twelve (12)
consecutive months, commencing before or after the date of this
Agreement, individuals who, at the beginning of such twelve (12) month
period were directors of the Company for whom Danielson, as a
shareholder, shall have voted, cease for any reason to constitute at
least a majority of the Board of Directors of the Company.
19. Enforcement Costs
-----------------
The Company is aware that upon the occurrence of a Change in
Control the Board of Directors or a shareholder of the Company may then
cause or attempt to cause the Company to refuse to comply with its
obligations under this Agreement, or may cause or attempt to cause the
Company to institute, or may institute, litigation seeking to have this
Agreement declared unenforceable, or may take, or attempt to take,
other action to deny
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Danielson the benefits intended under this Agreement. In these
circumstances, the purpose of this Agreement could be frustrated. It is
the intent of the Company that Danielson not be required to incur the
expenses associated with the enforcement of his rights under this
Agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended
to be extended to Danielson hereunder, nor be bound to negotiate any
settlement of his rights hereunder under threat of incurring such
expenses. Accordingly, if following a Change in Control it should
appear to Danielson that the Company has failed to comply with any of
its obligations under this Agreement or in the event that the Company
or any other person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation or other legal action
designed to deny, diminish or to recover from, Danielson the benefits
intended to be provided to Danielson hereunder, and that Danielson has
complied with all of his obligations under this Agreement, the Company
irrevocably authorizes Danielson from time to time to retain counsel of
his choice at the expense of the Company as provided in this Section
19, to represent Danielson in connection with the initiation or defense
of any litigation or other legal action, whether by or against the
Company or any Director, officer, shareholder or other person
affiliated with the Company, in any jurisdiction. Notwithstanding any
existing or prior attorney-client relationship between the Company and
such counsel, the Company irrevocably consents to Danielson entering
into an attorney-client relationship with such counsel, and in that
connection the Company and Danielson agree that a confidential
relationship shall exist between Danielson and such counsel. The
reasonable fees and expenses of counsel selected from time to time by
Danielson as hereinabove provided shall be paid or reimbursed to
Danielson by the Company on a regular, periodic basis upon presentation
by Danielson of a statement or statements prepared by such counsel in
accordance with its customary practices, up to a maximum aggregate
amount of $500,000.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ATTEST: PIONEER-STANDARD ELECTRONICS, INC.
/s/ Colleen M. Simon By /s/ James L. Bayman
- --------------------------------- ------------------------------------------
James L. Bayman, Chairman and Chief
Executive Officer
ATTEST:
/s/ Patricia M. Pope /s/ Robert E. Danielson
- ---------------------------------- -------------------------------------------
Robert E. Danielson
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