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Exhibit 10.1
Execution Copy
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
BETWEEN
PIONEER-STANDARD ELECTRONICS, INC.
AND
JAMES L. BAYMAN
April 27, 1999
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Table of Contents
Page
Employment........................................................................................................1
Period of Employment..............................................................................................1
Position, Duties, Responsibilities................................................................................2
Compensation, Compensation Plans, Perquisites.....................................................................3
Employee Benefit Plans............................................................................................5
Effect of Death or Disability.....................................................................................5
Termination.......................................................................................................6
General..................................................................................................6
Change in Control........................................................................................6
For Cause or Voluntary Termination.......................................................................7
Without Cause............................................................................................8
Arbitration..............................................................................................8
Competition.......................................................................................................9
Confidential Information..........................................................................................9
Noninterference..................................................................................................10
Remedy...........................................................................................................10
Withholding......................................................................................................10
Notices..........................................................................................................10
General Provisions...............................................................................................11
Amendment or Modification; Waiver................................................................................12
Severability.....................................................................................................12
Successors to the Company........................................................................................13
Operation of Agreement...........................................................................................13
Enforcement Costs................................................................................................13
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AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT between
PIONEER-STANDARD ELECTRONICS, INC., an Ohio corporation (the "Company"), and
JAMES L. BAYMAN ("Bayman"), dated April 27, 1999, effective April 1, 1999.
W I T N E S S E T H:
WHEREAS: The Company and Bayman have given consideration to an
employment agreement providing for the services of Bayman as Chairman and Chief
Executive Officer; and
WHEREAS: This Agreement is deemed necessary at the present
time to meet the need for a continued strong management without substantial
change; and
WHEREAS: Together with other officers of the Company, Bayman
has been responsible for the success of the business of the Company;
NOW, THEREFORE, it is hereby agreed by and between the Company
and Bayman as follows:
1. Employment
The Company hereby agrees to continue to employ Bayman, and
Bayman hereby agrees to remain in the employ of the Company, for the
period set forth in Section 2 below (the "Period of Employment"), in
the position and with the duties and responsibilities set forth in
Section 3 below, and upon the other terms and conditions hereinafter
stated.
2. Period of Employment
For purposes of this Agreement, the Period of Employment shall
consist of the Period of Full Time Employment and the Period of
Transition as described in this Section 2 as follows:
(a) For the purposes of this Agreement, the Period of
Full Time Employment shall continue for a three-year period
from the effective date hereof, subject to (i) the provisions
of Section 6 below (relating to Death or Disability); (ii) the
earlier termination of employment as set forth in Section 7;
and (iii) the commencement of the Period of Transition
pursuant to Section 2(c).
(b) For purposes of this Agreement, the Period of
Transition shall continue for a three-year period from the
termination of the Period of Full Time Employment, subject to
(i) the provisions of Section 6 below (relating to Death or
Disability) and (ii) the earlier termination of employment as
set forth in Section 7.
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(c) Not later than the February 1 next preceding the
second anniversary of this Agreement, Bayman may elect to
commence the Period of Transition effective on the second
anniversary of this Agreement. The Period of Transition shall
be a period of reduced employment responsibilities designed to
ensure Bayman's availability and support in the transition
from Bayman to his successor as Chairman and Chief Executive
Officer of the Company.
3. Position, Duties, Responsibilities
3.01 During the Period of Full Time Employment, Bayman shall serve as
Chairman and Chief Executive Officer of the Company and shall have the
responsibility for all of the operations of the Company including the
authority, power and duties with regard to his position as may from
time to time be assigned by the Board of Directors of the Company.
Bayman's duties will include the supervision and direction of the
corporate professional staff and the strategic direction of the
Company's operations. He shall at all times during such period have the
authority, power and duties of the person charged with the general
management of the business and affairs of the areas assigned to him
with authority to manage and direct all operations and affairs of those
areas and to employ and discharge all employees thereof, reporting and
being responsible only to the Board of Directors of the Company.
3.02 It is further contemplated that at all times during the Period of
Full Time Employment, Bayman shall serve and continue to serve as a
member of its Board of Directors. In the event that Bayman's employment
is terminated for any reason as provided in paragraph 7 below, Bayman
agrees that he shall immediately submit his written resignation as a
member of the Board of Directors of the Company, which may choose to
either accept or reject such resignation.
3.03 Throughout the Period of Full Time Employment, Bayman shall devote
his full time and undivided attention during normal business hours to
the business and affairs of the Company, except for reasonable
vacations afforded the Company's executive officers and except for
illness or incapacity, but nothing in this Agreement shall preclude
Bayman from devoting reasonable time required for serving as a director
or member of an advisory committee of any organization involving no
conflict of interest with the interests of the Company, from engaging
in charitable and community activities, and from managing his personal
affairs, provided that such activities do not materially interfere with
the regular performance of his duties and responsibilities under this
Agreement.
3.04 Throughout the Period of Full Time Employment, Bayman's office
shall be located at the corporate offices of the Company, and Bayman
shall not be required to locate his office elsewhere without his prior
written consent, nor shall he be required to be absent therefrom on
travel status or otherwise more than a total of sixty (60) days in any
calendar year nor more than fifteen (15) consecutive days at any one
time. Upon the commencement of the Period of Transition, Bayman's
office shall be relocated to an
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appropriate office which shall be mutually acceptable to Bayman and his
successor as Chairman and Chief Executive Officer.
3.05 Throughout the Period of Transition, Bayman:
(a) shall serve in an advisory capacity to the Chairman and
Chief Executive Officer and shall perform such tasks as shall be
reasonably requested of him from time to time by the Chairman and Chief
Executive Officer;
(b) shall make himself available to serve as a nominee for
election by the shareholders as a Director of the Company if so
requested by the Compensation Committee and, if he is elected and does
so serve, shall receive no additional compensation for his services as
Director; and
(c) shall devote no more than five (5) days per month during
normal business hours to the business affairs of the Company as
requested from time to time by the Chairman and Chief Executive
Officer, except for illness or incapacity, but nothing in this
Agreement shall preclude Bayman from serving as a director or member of
an advisory committee of any organization involving no conflict of
interest with the interests of the Company, from engaging in charitable
and community activities, and from managing his personal affairs,
provided that such activities do not materially interfere with the
regular performance of his duties and responsibilities under this
Agreement.
4. Compensation, Compensation Plans, Perquisites
4.01 (a) For all services rendered by Bayman in any capacity during the
Period of Full Time Employment, including without limitation, services
as an executive officer, director or member of any committee of the
Company or of any subsidiary, division or affiliate thereof, Bayman
shall be paid as compensation:
(i) A base salary, payable not less often than
monthly, at the rate of $41,667 per month,
with such increases in such rate as may be
awarded from time to time by the Board of
Directors of the Company or the Compensation
Committee, as applicable;
(ii) A cash incentive compensation payment equal
to the product of 8/10 of 1% of the sum of
the "actual operating income" of the
Company, multiplied by the ratio of the
Company's "actual return on capital" to
20.4% or such other standard as may
hereafter be predetermined by the
Compensation Committee of the Company, which
standard the Compensation Committee may
later revise, as appropriate, to adjust for
acquisitions, investments or other
significant capital investments made by the
Company during the fiscal year. 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
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defined as the Company's "actual operating
income" divided by the sum of its
interest-bearing debt, plus equity (the
denominator shall be calculated for each
fiscal year as the average of such amounts
as at the end of each of the Company's four
(4) fiscal quarters). All amounts used to
calculate the incentive compensation payment
shall reflect the operations of the Company
and its consolidated subsidiaries and
affiliates and shall be calculated in
conformity with generally accepted
accounting principles. The Company shall
calculate the incentive compensation payment
for each fiscal year on a quarterly basis
and shall pay Bayman the incentive
compensation amount based on such quarterly
calculation at the end of each of the first
three (3) fiscal quarters. After April 1 and
before June 16 of the next fiscal year, and
after audited financial statements are
available to the Company, the Company shall
pay Bayman the balance of any amount due
Bayman based on the calculation of the
incentive compensation amount for the fiscal
year less payments made for the first three
(3) fiscal quarters, which payment shall be
vested in the event of termination by reason
of Death or disability (Section 6), Change
in 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) For all services rendered by Bayman in any capacity during
the Period of Transition, Bayman shall be paid as compensation
a base salary, payable not less often than monthly, at a rate
of $110,000 per year, with such increases in such rate or may
be awarded from time to time by the Chief Executive Officer of
the Company.
(c) Any increase in salary, incentive compensation or other
form of compensation shall in no way diminish any other
obligation of the Company under this Agreement, unless
specifically agreed to in writing by Bayman.
4.02 During the Period of Employment, Bayman shall be and continue to
be a full participant in the Company's Employees' Profit Sharing Plan
or any equivalent successor plan that may be adopted by the Company.
4.03 During the Period of Employment, Bayman shall be entitled to
perquisites, including without limitation, an office, secretarial staff
and clerical staff, and to fringe benefits comparable to those enjoyed
by the 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.
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5. Employee Benefit Plans
5.01 The compensation, together with other matters provided for in
Section 4 above, is in addition to the benefits provided for in this
Section 5.
5.02 Bayman, his dependents, beneficiaries and estate shall be entitled
to all payments and benefits and service credit for benefits during the
Period of Employment to which executive officers of the Company, their
dependents and beneficiaries are entitled as the result of the
employment of such executive officers during the Period of Employment
under the terms of employee plans and practices of the Company,
including, without limitation, the Company's retirement program
consisting of its Employees' Profit Sharing Plan, its group life
insurance plan, its accidental death and dismemberment insurance,
disability, medical and health and welfare plans, any key person
individual life and disability policies, automobile expense
reimbursement, club membership fees and dues, and other present or
equivalent successor plans and practices of the Company, its
subsidiaries and divisions, for which other executive officers, their
dependents and beneficiaries are eligible, and to all payments or other
benefits under any such plan or practice after the Period of Employment
as a result of participation in such plan or practice during the Period
of Employment.
5.03 Bayman shall be eligible to participate in the Company's 1991
Stock Option Plan (which, together with any successor stock option plan
or plans that may be adopted by the Company, is referred to herein as
the "Option Plan"); provided, however, that the grant of any stock
options ("Options") under any Option Plan shall be at the sole
discretion of the Compensation Committee of the Board of Directors of
the Company. The Company has granted Bayman stock options at an option
price equal to the fair market value of the Company's Common Shares at
the date of grant. The terms and conditions of exercise of Options
shall be as is set forth in Bayman's Stock Option Agreements (the
"Option Agreements") with the Company; provided, however, that in the
event of a Change in Control, as defined in paragraph 18.02 below, then
notwithstanding the provisions of said Option Agreements, all options
(including those granted to him under the 1982 Incentive Stock Option
Plan and the 1991 Stock Option Plan) shall immediately be 100% vested
and Bayman shall have the immediate right of exercise with respect to
all Options and the underlying Common Shares covered by said Option
Agreements. In the event that Bayman's employment is terminated as a
result of a Change in Control, as defined in paragraph 18.02 below,
Bayman shall have the period of one (1) year after the date of such
termination to exercise his Options or the remainder of the term of
such Options, whichever is shorter, and any such exercise shall be
irrevocable.
6. Effect of Death or Disability
6.01 In the event of the death of Bayman during the Period of
Employment, the Period of Employment shall be deemed to have ended as
of the close of business on the last day of the month in which death
shall have occurred, and his legal representative shall be entitled to
(i) the compensation provided for in paragraph 4.01(a)(i) or paragraph
4.01(b) above, whichever is applicable, for the month in which death
shall take place at the rate
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being paid at the time of death, (ii) any incentive compensation
payable for the fiscal quarter in which the Period of Employment shall
be deemed to have terminated due to death, plus the balance of any
incentive compensation due Bayman for any prior fiscal quarters in
accordance with, and payable at the times set forth in, paragraph
4.01(a)(ii) above, if applicable, and (iii) any benefits provided
pursuant to paragraph 5.02 hereof which are payable pursuant to the
terms of the applicable plan or practice.
6.02 (a) The term "Disability," as used in this Agreement, shall
mean an illness or accident which prevents Bayman from
performing his duties under this Agreement for a period of six
(6) consecutive months. The Period of Employment shall be
deemed to have ended as of the close of business on the last
day of such six (6) month period but without prejudice to any
payments due Bayman during such six (6) month period or
pursuant to any disability insurance policy.
(b) In the event of the Disability of Bayman during the Period
of Employment, Bayman shall be entitled to (i) the
compensation provided for in paragraph 4.01(a)(i) or paragraph
4.01(b) above, whichever is applicable, at the rate being paid
at the time of the commencement of Disability, for the period
of such Disability but not in excess of six (6) months, (ii)
any incentive compensation payable for the fiscal quarter in
which the Period of Employment shall be deemed to have
terminated due to Disability, plus the balance of any
incentive compensation due Bayman for any prior fiscal
quarters in accordance with, and payable at the times set
forth in, paragraph 4.01(a)(ii) above, if applicable, and
(iii) any benefits provided pursuant to paragraph 5.02 hereof
which are payable pursuant to the terms of the applicable plan
or practice, except that Bayman shall not be subject to the
payment cap provided for by the Company's short-term
disability plan.
(c) The amount of any payments due under this paragraph 6.02
shall be reduced by any payments to which Bayman may be paid
for the same period under any disability plan of the Company
or of any subsidiary or affiliate thereof.
7. Termination
7.01 GENERAL. The Company may terminate Bayman with or without cause at
any time during the Period of Employment, subject to the provisions of
this Section 7.
7.02 CHANGE IN CONTROL. Within one (1) year of a Change in Control of
the Company, as defined in paragraph 18.02, Bayman shall have the right
to terminate his employment with the Company and there shall be paid or
provided to Bayman, his dependents, beneficiaries and estate, as
liquidated damages or severance pay, or both, the following:
(a) The compensation provided for in paragraph 4.01(a)(i) or
paragraph 4.01(b) above, whichever is applicable, above for
the month in which termination shall have occurred at the rate
being paid at the time of termination; and an
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amount equal to his previous thirty six (36) months of base
salary plus an amount equal to the earned incentive cash bonus
referred to in paragraph 4.01(a)(ii) above for the three (3)
previously completed fiscal years. Such amount shall be paid
to Bayman in one payment, immediately upon termination. Bayman
shall also receive any incentive compensation payable for the
fiscal quarter in which the Period of Employment shall be
deemed to have terminated due to Change in Control, plus the
balance of any incentive compensation due Bayman for any prior
fiscal quarters in accordance with, and payable at the times
set forth in, paragraph 4.01(a)(ii) above.
(b) For three (3) years following the date of termination,
Bayman, his dependents, beneficiaries and estate, shall
continue to be entitled to all benefits provided pursuant to
paragraph 5.02 hereof which are payable pursuant to the terms
of the applicable plan or practice, and service credit for
benefits under all employee benefit plans of the Company,
including, without limitation, the Company's Profit Sharing
Plan referred to in paragraph 5.02 above, upon the same basis
as immediately prior to termination and, to the extent that
such benefits or service credit for benefits shall not be
payable or provided under any such plans to Bayman, his
dependents, beneficiaries and estate, by reason of his no
longer being an employee of the Company as the result of
termination, or any such plan, program or arrangement is
discontinued or the benefits thereunder are materially
reduced, the Company shall itself arrange to provide to
Bayman, his dependents, beneficiaries and estate benefits
substantially similar to those which Bayman, his dependents
and beneficiaries were entitled to receive under such plans,
programs and arrangements immediately prior to termination.
Any termination by the Company within the period of one
hundred eighty (180) days prior to the execution of a letter of intent
or a definitive agreement which could lead to a Change in Control and
the closing of the transaction actually resulting in the Change in
Control, as defined in paragraph 18.02, shall be deemed to be a
termination under this paragraph 7.02. An election by Bayman to
terminate his employment under the provisions of this paragraph 7.02
shall not be deemed a voluntary termination of employment by Bayman
under paragraph 7.03 of this Agreement or any plan or practice of the
Company.
7.03 FOR CAUSE OR VOLUNTARY TERMINATION. For the purpose of any
provision of this Agreement, the termination of Bayman's employment
shall be deemed to have been for Cause only if:
(a) termination of his employment shall have been the result
of Bayman's conviction of any of the following: (i)
embezzlement; (ii) misappropriation of money or other property
of the Company; or (iii) any felony; or
(b) there has been a breach by Bayman during the Period of
Employment of the provisions of paragraph 3.03 above, relating
to devotion of full time to the affairs of the Company,
Section 8 relating to Competition, Section 9 relating to
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Confidential Information, or Section 10 relating to
Noninterference, and such breach results in demonstrable
significant injury to the Company, and with respect to any
alleged breach of paragraph 3.03 hereof, Bayman shall have
failed to remedy such breach within thirty (30) days from his
receipt of written notice from the Company.
If Bayman's employment is terminated by the Company for Cause,
or if Bayman shall voluntarily terminate his employment with the
Company, Bayman shall be entitled to the compensation provided for in
paragraph 4.01(a)(i) or paragraph 4.01(b), whichever is applicable,
through the date of such termination. Bayman shall not be entitled to
any additional compensation or benefits (except for any vested
benefits), and shall continue to be bound by the provisions of Section
8 of this Agreement (relating to Competition), the provisions of
Section 9 of this Agreement (relating to Confidential Information), and
the provisions of Section 10 (relating to Noninterference).
7.04 WITHOUT CAUSE. Subject to compliance by Bayman with the provisions
of Section 8 of this Agreement (relating to Competition), the
provisions of Section 9 of this Agreement (relating to Confidential
Information), and the provisions of Section 10 of this Agreement
(relating to Noninterference), if the Company shall terminate Bayman's
employment without Cause, there shall be paid or provided to Bayman,
his dependents, beneficiaries and estate, as liquidated damages or
severance pay, or both, (i) the compensation provided for in paragraph
4.01(a)(i) or paragraph 4.01(b) above, whichever is applicable, for the
month in which termination shall have occurred at the rate being paid
at the time of such termination, and (ii) the amount (the "Payment
Amount") per month equal to 1/24th of (A) the total of his previous
twenty-four (24) months of base salary plus (B) an amount equal to the
earned incentive cash bonus referred to in paragraph 4.01(a)(ii) above,
if applicable, for the two (2) previously completed fiscal years. Such
Payment Amount shall be paid to Bayman or, in case of his prior death,
to his legal representative or estate, in monthly installments at the
end of each month commencing with the month next following that in
which such termination shall have occurred, and continuing for a period
of twenty-four (24) months. Bayman shall also receive any incentive
compensation payable for the fiscal quarter in which the Period of
Employment shall be deemed to have been terminated without Cause, plus
the balance of any incentive compensation due Bayman for any prior
fiscal quarters in accordance with, and payable at the times set forth
in, paragraph 4.01(a)(ii) above, if applicable, 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 Bayman's employment shall be
terminated by the Company during the Period of Employment or the
Company shall withhold payments or provision of benefits because Bayman
is alleged to be engaged in activities prohibited by Sections 8, 9 or
10 of this Agreement or for any other reason, Bayman shall have the
right, in addition to all other rights and remedies provided by law, at
his election either to seek arbitration in the metropolitan area of
Cleveland, Ohio, under the rules of the
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American Arbitration Association by serving a notice to arbitrate upon
the Company or to institute a judicial proceeding, in either case
within one hundred and twenty (120) days after having received notice
of termination of his employment.
8. Competition
There shall be no obligation on the part of the Company to
make any further payments provided for in paragraph 7.04 above if
Bayman shall, during the two (2) years following termination of
Bayman's employment for any reason except Change in Control as
described in paragraph 7.02, engage in Competition with the Company as
hereinafter defined. The word "Competition" for purposes of this
Section 8 and any other provision of this Agreement shall mean taking
any employment or consulting position with or control of one of the
Company's top twenty-five (25) competitors as listed in the most
current issue at the date of termination of Electronic Buyer's News
and/or Electronic News; provided, however, that in no event shall
ownership of less than 5% of the outstanding capital stock entitled to
vote for the election of directors of a corporation with a class of
equity securities held of record by more than 500 persons be deemed
Competition with the Company within the meaning of this Section 8.
9. Confidential Information
9.01 Except for information which is already in the public domain, or
which is publicly disclosed by persons other than Bayman, or which is
required by law or court order to be disclosed, or information given to
Bayman by a third party not bound by any obligation of confidentiality,
Bayman shall at all times during and after his employment with the
Company hold in strictest confidence any and all confidential
information within his knowledge and which is material to the business
of the Company (whether acquired prior to or during his employment with
the Company) concerning the inventions, products, processes, methods of
distribution, customers, services, business, suppliers or trade secrets
of the Company, except that Bayman may, in connection with the
performance of his duties to the Company, divulge confidential
information to the directors, officers, employees and shareholders of
the Company and to the advisors, accountants, attorneys or lenders of
the Company or such other individuals as deemed prudent in the course
of business to carry out the responsibilities and duties of his
position, or as required by law. Such confidential information
includes, without limitation, financial information, sales information,
price lists, marketing data, the identity and lists of actual and
potential customers and technical information, all to the extent that
such information is not intended by the Company for public
dissemination.
9.02 Bayman also agrees that upon leaving the Company's employ he will
not take with him, without the prior written consent of an officer
authorized to act in the matter by the Board of Directors of the
Company, any Company document, contract, internal financial or
management reports, customers list, product list, price list, catalog,
employee list, procedures, software, MIS data, drawing, blueprint,
specification or other document of the Company, its subsidiaries,
affiliates and divisions, which is of a confidential nature relating to
the Company, its subsidiaries, affiliates and divisions, or, without
limitation,
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relating to its or their methods of purchase or distribution, or any
description of any trade secret, formulae or secret processes.
10. Noninterference
Except for Change in Control as described in paragraph 7.02,
Bayman shall not, at any time during or within two (2) years after his
employment is terminated with the Company, without the prior written
consent of the Company, directly or indirectly, induce or attempt to
induce any employee, agent or other representative or associate of the
Company to terminate his or her relationship with the Company, or in
any way directly or indirectly interfere with such a relationship or
any relationship between the Company and any of its top fifty (50)
suppliers or top two hundred fifty (250) customers, both in terms of
the Company's sales volume, provided that purchasing goods from a
supplier to the Company or making a sale to any of the Company's
customers shall not be deemed to be interference.
11. Remedy
Bayman acknowledges that Sections 8, 9 and 10 hereof were
negotiated at arms length and are required for the fair and reasonable
protection of the Company. Bayman and the Company further acknowledge
and agree that a breach of those obligations and agreements will result
in irreparable and continuing damage to the Company for which there
will be no adequate remedy at law and, therefore, Bayman and the
Company agree that in the event of any breach of said obligations and
agreements the Company, and its successors and assigns, shall be
entitled to injunctive relief and such other and further relief,
including monetary damages, as is proper in the circumstances. It is
further agreed that the running of the periods provided above in
Sections 8 and 10, shall be tolled during any period which Bayman shall
be adjudged to have been in violation of any of his obligations under
such Sections.
12. Withholding
Anything to the contrary notwithstanding, all payments
required to be made by the Company hereunder to Bayman or his estate or
beneficiaries, shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Company may
reasonably determine it should withhold pursuant to any applicable law
or regulation. In lieu of withholding such amounts, the Company may
accept other provisions to the end that it has sufficient funds to pay
all taxes required by law to be withheld in respect of such payments or
any of them.
13. Notices
All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be
sufficiently given if and when mailed in the continental United States
by registered or certified mail or personally delivered to the
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party entitled thereto at the address stated below or to such changed
address as the addressee may have given by a similar notice:
To the Company: Pioneer-Standard Electronics, Inc.
4800 East 131st Street
Cleveland, Ohio 44105
Attention: Secretary or
Assistant Secretary
To Bayman: James L. Bayman
2749 Cranlyn Road
Shaker Heights, Ohio 44122
14. General Provisions
14.01 There shall be no right of set-off or counter claim, in respect
of any claim, debt or obligation, against payments to Bayman, his
dependents, beneficiaries or estate provided for in this Agreement.
14.02 No right or interest to or in any payments shall be assignable by
Bayman; provided, however, that this provision shall not preclude him
from designating one or more beneficiaries to receive any amount that
may be payable after his death and shall not preclude the legal
representative of his estate from assigning any right hereunder to the
person or persons entitled thereto under his will or, in the case of
intestacy, to the person or persons entitled thereto under the laws of
intestacy applicable to his estate. The term "beneficiaries" as used in
this Agreement shall mean a beneficiary or beneficiaries so designated
to receive any such amount or, if no beneficiary has been so
designated, the legal representative of Bayman's estate.
14.03 No right, benefit or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge,
pledge, hypothecation, or set-off in respect of any claim, debt or
obligation, or to execution, attachment, levy or similar process, or
assignment by operation of law. Any attempt, voluntary or involuntary,
to effect any action specified in the immediately preceding sentence
shall, to the full extent permitted by law, be null, void and of no
effect.
14.04 In the event of Bayman's death or a judicial determination of his
incompetence, reference in this Agreement to Bayman shall be deemed,
where appropriate, to refer to his legal representative or, where
appropriate, to his beneficiary or beneficiaries.
14.05 The titles to sections in this Agreement are intended solely for
convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
14.06 This Agreement shall be binding upon and shall inure to the
benefit of (a) Bayman and, subject to the provisions of paragraphs
14.02 and 14.03, his heirs and legal representatives, and (b) the
Company and its successors as provided in Section 17 hereof.
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14.07 Bayman shall be entitled to a cash payment equal to the amount of
excise taxes (i.e., the "excise tax gross-up payment") which Bayman is
required to pay pursuant to Section 4999 of the Internal Revenue Code
of 1986, as amended ("Code"), as a result of any payments made by or on
behalf of the Company or any successor thereto resulting in an "excess
parachute payment" within the meaning of Section 280G(b) of the Code.
In addition to the foregoing, the cash payment due to Bayman under this
paragraph 14.07 shall be increased by the aggregate of the amount of
federal, state and local income and excise taxes for which Bayman will
be liable on account of the cash payment to be made under this
paragraph 14.07, such that Bayman will receive the excise tax gross-up
payment net of all income and excise taxes imposed on Bayman on account
of the receipt of the excise tax gross-up payment. The computation of
this payment shall be determined, at the expense of the Company, by an
independent accounting, actuarial or consulting firm selected by the
Company. Payment of the cash amount set forth above shall be made at
such time as the Company shall determine, in its sole discretion, but
in no event later than the date five (5) business days before the due
date, without regard to any extension, for filing Bayman's federal
income tax return for the calendar year which includes the date as of
which the aforementioned "excess parachute payments" are determined.
Notwithstanding the foregoing, there shall be no duplication of
payments by the Company under this paragraph 14.07 in respect of excise
taxes under Section 4999 of the Code to the extent the Company is
making cash payments in respect of such excise taxes for any other
arrangement with Bayman. In the event that Bayman is ultimately
assessed with excise taxes under Section 4999 of the Code as a result
of payments made by the Company or any successor thereto which exceed
the amount of excise taxes used in computing Bayman's payment under
this paragraph 14.07, the Company or its successor shall indemnify
Bayman for such additional excise taxes plus any additional excise
taxes, income taxes, interest and penalties resulting from the
additional excise taxes and the indemnity hereunder.
15. Amendment or Modification; Waiver
No provision of this Agreement may be amended or waived unless
such amendment or waiver is authorized by the Board of Directors of the
Company or the Compensation Committee thereof and is agreed to in
writing, signed by Bayman and by an officer of the Company thereunto
duly authorized by either the Board of Directors or the Compensation
Committee. Except as otherwise specifically provided in this Agreement,
no waiver by either party hereto of any breach by the other party
hereto of any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of a subsequent breach of
such condition or provision or a waiver of a similar or dissimilar
provision or condition at the same or at any prior or subsequent time.
16. Severability
In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the
remaining provisions and portions of this
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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, 1999, and shall supersede
any prior employment arrangement or agreement, including the Employment
Agreement dated July 29, 1997, which was effective April 1, 1997, the
Amended and Restated Employment Agreement dated June 12, 1995, which
was effective April 3, 1995, and the Employment Agreement dated May 7,
1996, which was effective April 1, 1996 between Bayman and the Company,
which shall be deemed to be terminated and null and void except for any
vested rights to receive compensation under 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 Bayman, as a shareholder,
shall have voted, cease for any reason to constitute at least a
majority of the Board of Directors of the Company.
19. Enforcement Costs
The Company is aware that upon the occurrence of a Change in
Control the Board of Directors or a shareholder of the Company may then
cause or attempt to cause the Company to refuse to comply with its
obligations under this Agreement, or may cause or attempt to cause the
Company to institute, or may institute, litigation seeking to have this
Agreement declared unenforceable, or may take, or attempt to take,
other action to deny Bayman the benefits intended under this Agreement.
In these circumstances, the purpose of this Agreement could be
frustrated. It is the intent of the Company that Bayman not be
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required to incur the expenses associated with the enforcement of his
rights under this Agreement by litigation or other legal action because
the cost and expense thereof would substantially detract from the
benefits intended to be extended to Bayman hereunder, nor be bound to
negotiate any settlement of his rights hereunder under threat of
incurring such expenses. Accordingly, if following a Change in Control
it should appear to Bayman that the Company has failed to comply with
any of its obligations under this Agreement or in the event that the
Company or any other person takes any action to declare this Agreement
void or unenforceable, or institutes any litigation or other legal
action designed to deny, diminish or to recover from, Bayman, the
benefits intended to be provided to Bayman hereunder, and that Bayman
has complied with all of his obligations under this Agreement, the
Company irrevocably authorizes Bayman from time to time to retain
counsel of his choice at the expense of the Company as provided in this
Section 19, to represent Bayman in connection with the initiation or
defense of any litigation or other legal action, whether by or against
the Company or any Director, officer, shareholder or other person
affiliated with the Company, in any jurisdiction. Notwithstanding any
existing or prior attorney-client relationship between the Company and
such counsel, the Company irrevocably consents to Bayman entering into
an attorney-client relationship with such counsel, and in that
connection the Company and Bayman agree that a confidential
relationship shall exist between Bayman and such counsel. The
reasonable fees and expenses of counsel selected from time to time by
Bayman as hereinabove provided shall be paid or reimbursed to Bayman by
the Company on a regular, periodic basis upon presentation by Bayman of
a statement or statements prepared by such counsel in accordance with
its customary practices, up to a maximum aggregate amount of $500,000.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
ATTEST: PIONEER-STANDARD ELECTRONICS, INC.
/s/ Lawrence N. Schultz By /s/ Victor Gelb
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Victor Gelb, Chairman of the Compensation
Committee
ATTEST:
/s/ Nancy E. Hoyt /s/ James L. Bayman
- ---------------------------- -----------------------------------------
James L. Bayman
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