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Exhibit 10.3
Execution Copy
EMPLOYMENT AGREEMENT
BETWEEN
PIONEER-STANDARD ELECTRONICS, INC.
AND
GREGORY T. GESWEIN
April 27, 1999
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Table of Contents
Page
Employment........................................................................................................1
Period of Employment..............................................................................................1
Position, Duties, Responsibilities................................................................................1
Compensation, Compensation Plans, Perquisites.....................................................................2
Employee Benefit Plans............................................................................................3
Effect of Death or Disability.....................................................................................4
Termination.......................................................................................................5
General..................................................................................................5
Change in Control........................................................................................5
For Cause or Voluntary Termination.......................................................................7
Without Cause............................................................................................8
Arbitration..............................................................................................9
Competition.......................................................................................................9
Confidential Information..........................................................................................9
Noninterference..................................................................................................10
Remedy...........................................................................................................10
Withholding......................................................................................................10
Notices..........................................................................................................11
General Provisions...............................................................................................11
Amendment or Modification; Waiver................................................................................12
Severability.....................................................................................................13
Successors to the Company........................................................................................13
Operation of Agreement...........................................................................................13
Enforcement Costs................................................................................................13
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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT between PIONEER-STANDARD ELECTRONICS,
INC., an Ohio corporation (the "Company"), and Gregory T. Geswein ("Geswein"),
dated April 27, 1999.
W I T N E S S E T H:
WHEREAS: The Company desires to retain the services of Geswein
as Senior Vice President and Chief Financial Officer, and Geswein desires to
render his services to the Company in such capacities; and
WHEREAS, The Company and Geswein desire to set forth their
mutual understanding regarding the terms of Geswein's employment with the
Company; and
WHEREAS: The Company deems this Agreement necessary at the
present time to meet the need to retain strong management;
NOW, THEREFORE, it is hereby agreed by and between the Company
and Geswein as follows:
1. Employment
The Company hereby agrees to employ Geswein, and Geswein
hereby agrees to remain in the employ of the Company, for the period
set forth in Section 2 below (the "Period of Employment"), in the
position and with the duties and responsibilities set forth in Section
3 below, and upon the other terms and conditions hereinafter stated.
2. Period of Employment
For the purposes of this Agreement, the Period of Employment,
subject only to the provisions of Section 6 below (relating to Death or
Disability), shall continue from the date hereof until April 1, 2000
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 Geswein no later than February 1 of the
Company's then current fiscal year, or (ii) until the earlier
termination of employment as set forth in Section 7.
3. Position, Duties, Responsibilities
3.01 During the Period of Employment, Geswein shall serve as Senior
Vice President and Chief Financial 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 Geswein 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 Geswein 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.
3.03 Geswein's office shall be located at the corporate offices of the
Company, and Geswein shall not be required to locate his office
elsewhere without his prior written consent, nor shall he be required
to be absent therefrom on travel status or otherwise more than a total
of sixty (60) days in any calendar year nor more than fifteen (15)
consecutive days at any one time.
4. Compensation, Compensation Plans, Perquisites
4.01 (a) For all services rendered by Geswein 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, Geswein shall be
paid as compensation:
(i) A base salary, payable not less often than
monthly, at the rate of $25,000 per month,
with such increases in such rate as may be
awarded from time to time by the Board of
Directors of the Company or the Compensation
Committee, as applicable;
(ii) (A) A cash incentive compensation payment
equal to the product of 40/100 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% 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
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
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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 Geswein 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 Geswein the balance of any
amount due Geswein 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); provided, however, for the fiscal
year ending March 31, 2000, Geswein shall be
entitled to receive incentive compensation
in an aggregate amount of no less than
$100,000 unless Geswein is terminated for
Cause or voluntarily terminates his
employment prior to March 31, 2000.
(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 Geswein.
4.02 During the Period of Employment Geswein 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 Geswein shall be entitled to
perquisites, including without limitation, an office, secretarial staff
and clerical staff, and to fringe benefits comparable to those enjoyed
by the other executive officers of the Company, as well as to
reimbursement, upon proper accounting, of reasonable business expenses
and disbursements incurred by him in the course of his duties.
5. Employee Benefit Plans
5.01 The compensation, together with other matters provided for in
Section 4 above, is in addition to the benefits provided for in this
Section 5.
5.02 Geswein, 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,
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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 Geswein 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 Geswein 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 Geswein's
Options shall be as is set forth in Geswein'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 below,
then notwithstanding the provisions of said Option Agreements, all
options (including those granted to him under the 1991 Stock Option
Plan) shall immediately be 100% vested and Geswein 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 Geswein's employment is terminated as a result of a Change
in Control, as defined in paragraph 18 below, Geswein 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 Geswein 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 Geswein for any prior fiscal quarters in accordance with, and
payable at the times set forth in, paragraph 4.01(a)(ii) above, and
(iii) any benefits provided pursuant to paragraph 5.02 hereof which are
payable pursuant to the terms of the applicable plan or practice.
6.02 (a) The term "Disability," as used in this Agreement, shall
mean an illness or accident which prevents Geswein from
performing his duties under this Agreement for a period of six
(6) consecutive months. The Period of
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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 Geswein during such six
(6) month period or pursuant to any disability insurance
policy.
(b) In the event of the Disability of Geswein during the
Period of Employment, Geswein shall be entitled to (i) the
compensation provided for in paragraph 4.01(a)(i) above, at
the rate being paid at the time of the commencement of
Disability, for the period of such Disability but not in
excess of six (6) months, (ii) any incentive compensation
payable for the fiscal quarter in which the Period of
Employment shall be deemed to have terminated due to
Disability, plus the balance of any incentive compensation due
Geswein 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, except that Geswein 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 Geswein 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 Geswein 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 Geswein 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 Geswein shall be
entitled to receive all of the payments and benefits as provided in
Section 7.04 hereof; provided, however, that in the event Geswein
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 Geswein 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 IN CONTROL. Within one (1) year of a Change in Control of
the Company, as defined in paragraph 18, Geswein shall have the right
to terminate his employment with the Company and there shall be paid or
provided to Geswein, his dependents, beneficiaries and estate, as
liquidated damages or severance pay, or both, the following:
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(a) (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 termination; and
(ii) (A) if such termination shall occur on or before
March 31, 2000, an amount equal to thirty six (36) times his
monthly base salary then in effect plus $300,000;
(B) if such termination shall occur on or
after April 1, 2000 but before April 1, 2001, (x) an amount
equal to the aggregate base salary paid or payable to Geswein
from the commencement of his employment with the Company
through the most recent completed month; plus (y) an amount
equal to his monthly base salary then in effect multiplied by
the difference obtained by subtracting the number of complete
months for which Geswein has been employed by the Company from
thirty six (36); plus (z) an amount equal to three (3) times
his earned incentive compensation bonus referred to in
paragraph 4.01(a)(ii) above for the fiscal year ending March
31, 2000;
(C) if such termination shall occur on or
after April 1, 2001 but before April 1, 2002, (x) an amount
equal to the aggregate base salary paid or payable to Geswein
from the commencement of his employment with the Company
through the most recent completed month; plus (y) an amount
equal to his monthly base salary then in effect multiplied by
the difference obtained by subtracting the number of complete
months for which Geswein has been employed by the Company from
thirty six (36); plus (z) an amount equal to the sum of (X)
his earned incentive cash bonus referred to in paragraph
4.01(a)(ii) above for the fiscal year ending March 31, 2000
and (Y) two (2) times his earned incentive cash bonus referred
to in paragraph 4.01(a)(ii) above for the fiscal year ending
March 31, 2001; or
(D) if such termination shall occur on or
after April 1, 2002, an 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.
The amounts payable to Geswein under this
paragraph 7.02(a)(ii) shall be paid to Geswein in one payment,
immediately upon termination. Geswein 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 Geswein 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,
Geswein, 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
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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 Geswein, 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
Geswein, his dependents, beneficiaries and estate benefits
substantially similar to those which Geswein, 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, shall be deemed to be a
termination under this paragraph 7.02. An election by Geswein to
terminate his employment under the provisions of this paragraph 7.02
shall not be deemed a voluntary termination of employment by Geswein
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 Geswein's employment
shall be deemed to have been for "Cause" only if:
(a) termination of his employment shall have been the result
of Geswein'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 Geswein 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, Geswein shall have
failed to remedy such breach within thirty (30) days from his
receipt of written notice from the Company.
If Geswein's employment is terminated by the Company for
Cause, or if Geswein shall voluntarily terminate his employment with
the Company, Geswein shall be entitled to the compensation provided for
in paragraph 4.01(a)(i) through the date of such termination. Geswein
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
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Agreement (relating to Confidential Information), and the provisions of
Section 10 (relating to Noninterference).
7.04 WITHOUT CAUSE. Subject to compliance by Geswein 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 Geswein's
employment without Cause, there shall be paid or provided to Geswein,
his dependents, beneficiaries and estate, as liquidated damages or
severance pay, or both,
(i) the compensation provided for in paragraph
4.01(a)(i) above for the month in which termination shall have
occurred at the rate being paid at the time of such
termination, and
(ii) (A) if such termination shall occur on or before
March 31, 2000, an amount equal to 1/24th of the total of (x)
twenty-four (24) times his monthly base salary then in effect
plus (y) $200,000;
(B) if such termination shall occur on or
after April 1, 2000 but before April 1, 2001, an amount equal
to 1/24th of the total of (x) an amount equal to the aggregate
base salary paid or payable to Geswein from the commencement
of his employment with the Company through the most recent
completed month; plus (y) an amount equal to his monthly base
salary then in effect multiplied by the difference obtained by
subtracting the number of complete months for which Geswein
has been employed by the Company from twenty four (24); plus
(z) an amount equal to two (2) times his earned incentive
compensation bonus referred to in paragraph 4.01(a)(ii) above
for the previously completed fiscal year; or
(C) if such termination shall occur on or
after April 1, 2001, an amount equal to 1/24th of the total of
his previous twenty-four (24) months of base salary plus an
amount equal to the earned incentive cash bonus referred to in
paragraph 4.01(a)(ii) above for the two (2) previously
completed fiscal years.
The amount payable to Geswein under (A), (B)
or (C) of this paragraph 7.04(ii) shall hereinafter be
referred to as the "Payment Amount." Such Payment Amount shall
be paid to Geswein 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. Geswein
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 Geswein 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
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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 Geswein's employment shall be
terminated by the Company during the Period of Employment or the
Company shall withhold payments or provision of benefits because
Geswein is alleged to be engaged in activities prohibited by Sections
8, 9 or 10 of this Agreement or for any other reason, Geswein shall
have the right, in addition to all other rights and remedies provided
by law, at his election either to seek arbitration in the metropolitan
area of Cleveland, Ohio, under the rules of the American Arbitration
Association by serving a notice to arbitrate upon the Company or to
institute a judicial proceeding, in either case within one hundred and
twenty (120) days after having received notice of termination of his
employment.
8. Competition
There shall be no obligation on the part of the Company to
make any further payments provided for in paragraph 7.04 above if
Geswein shall, during the one (1) year following termination of
Geswein'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 Geswein, or which is
required by law or court order to be disclosed, or information given to
Geswein by a third party not bound by any obligation of
confidentiality, Geswein 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 Geswein 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
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customers and technical information, all to the extent that such
information is not intended by the Company for public dissemination.
9.02. Geswein also agrees that upon leaving the Company's employ he
will not take with him, without the prior written consent of an officer
authorized to act in the matter by the Board of Directors of the
Company, any Company document, contract, internal financial or
management reports, customers list, product list, price list, catalog,
employee list, procedures, software, MIS data, drawing, blueprint,
specification or other document of the Company, its subsidiaries,
affiliates and divisions, which is of a confidential nature relating to
the Company, its subsidiaries, affiliates and divisions, or, without
limitation, relating to its or their methods of purchase or
distribution, or any description of any trade secret, formulae or
secret processes.
10. Noninterference
Except for Change in Control as described in paragraph 7.02,
Geswein shall not, at any time during or within one (1) year after his
employment is terminated with the Company, without the prior written
consent of the Company, directly or indirectly, induce or attempt to
induce any employee, agent or other representative or associate of the
Company to terminate his or her relationship with the Company, or in
any way directly or indirectly interfere with such a relationship or
any relationship between the Company and any of its top fifty (50)
suppliers or top two hundred fifty (250) customers, both in terms of
the Company's sales volume, provided that purchasing goods from a
supplier to the Company or making a sale to any of the Company's
customers shall not be deemed to be interference.
11. Remedy
Geswein 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. Geswein 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, Geswein 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 Geswein
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 Geswein 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
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regulation. In lieu of withholding such amounts, the Company may accept
other provisions to the end that it has sufficient funds to pay all
taxes required by law to be withheld in respect of such payments or any
of them.
13. Notices
All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be
sufficiently given if and when mailed in the continental United States
by registered or certified mail or personally delivered to the party
entitled thereto at the address stated below or to such changed address
as the addressee may have given by a similar notice:
To the Company: Pioneer-Standard Electronics, Inc.
4800 East 131st Street
Cleveland, Ohio 44105
Attention: Secretary or
Assistant Secretary
To Geswein: Gregory T. Geswein
10 Quail Ridge Drive
Bentleyville, Ohio 44022
14. General Provisions
14.01 There shall be no right of set-off or counter claim, in respect
of any claim, debt or obligation, against payments to Geswein, 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
Geswein; 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 Geswein'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.
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14.04 In the event of Geswein's death or a judicial determination of
his incompetence, reference in this Agreement to Geswein 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) Geswein 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.
14.07 Geswein shall be entitled to a cash payment equal to the amount
of excise taxes (i.e., the "excise tax gross-up payment") which Geswein
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 Geswein
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
Geswein will be liable on account of the cash payment to be made under
this paragraph 14.07, such that Geswein will receive the excise tax
gross-up payment net of all income and excise taxes imposed on Geswein
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
Geswein'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 Geswein. In the event that Geswein 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 Geswein's payment
under this paragraph 14.07, the Company or its successor shall
indemnify Geswein 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 Geswein 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
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Agreement, no waiver by either party hereto of any breach by the other
party hereto of any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of a subsequent
breach of such condition or provision or a waiver of a similar or
dissimilar provision or condition at the same or at any prior or
subsequent time.
16. Severability
In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the
remaining provisions and portions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest extent
permitted by law.
17. Successors to the Company
Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the Company and any successor
of the Company, including, without limitation, any corporation which
acquires directly or indirectly all or substantially all of the assets
or capital stock of the Company whether by merger, consolidation, sale
or otherwise (and such successor shall thereafter be deemed the Company
for the purposes of this Agreement), but shall not otherwise be
assignable by the Company.
18. Operation of Agreement
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 Geswein, 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 Geswein the benefits intended under this
Agreement. In these circumstances, the purpose
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of this Agreement could be frustrated. It is the intent of the Company
that Geswein 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 Geswein 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 Geswein 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, Geswein,
the benefits intended to be provided to Geswein hereunder, and that
Geswein has complied with all of his obligations under this Agreement,
the Company irrevocably authorizes Geswein from time to time to retain
counsel of his choice at the expense of the Company as provided in this
Section 19, to represent Geswein 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 Geswein entering into
an attorney-client relationship with such counsel, and in that
connection the Company and Geswein agree that a confidential
relationship shall exist between Geswein and such counsel. The
reasonable fees and expenses of counsel selected from time to time by
Geswein as hereinabove provided shall be paid or reimbursed to Geswein
by the Company on a regular, periodic basis upon presentation by
Geswein 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/ Carol J. Torre By /s/ James L. Bayman
- ---------------------------- -----------------------------------------
James L. Bayman, Chairman and Chief
Executive Officer
ATTEST:
/s/ Cathy Fedio /s/ Gregory T. Geswein
- ---------------------------- -----------------------------------------
Gregory T. Geswein
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