Exhibit 10(aa)
EMPLOYMENT AGREEMENT
BETWEEN
PIONEER-STANDARD ELECTRONICS, INC.
AND
XXXXXX XXXXX
Effective April 1, 2002
TABLE OF CONTENTS
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PAGE
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Employment....................................................................1
Period of Employment..........................................................1
Position, Duties, Responsibilities............................................2
Compensation and Perquisites..................................................3
Employee Benefit Plans........................................................3
Effect of Death or Disability.................................................4
Termination...................................................................5
General..............................................................5
Change in Control....................................................5
For Cause or Voluntary Termination Without a Good Reason.............7
Without Cause or Voluntary Termination for a Good Reason.............8
Arbitration..........................................................9
Non-Competition, Confidential Information and Non-Interference................9
Withholding..................................................................11
Notices......................................................................11
General Provisions...........................................................11
Amendment or Modification; Waiver............................................13
Severability.................................................................13
Successors to the Company....................................................13
Operation of Agreement.......................................................13
Enforcement Costs............................................................15
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT between PIONEER-STANDARD ELECTRONICS, INC., an
Ohio corporation (the "Company"), and XXXXXX XXXXX ("Rhein"), dated January 29,
2002, effective April 1, 2002.
W I T N E S S E T H:
WHEREAS: Rhein currently serves the Company as its President and Chief
Operating Officer pursuant to an Employment Agreement, dated as of April 26,
2000, between Rhein and the Company (the "2000 Agreement");
WHEREAS: It is desired that Rhein be promoted to the position of Chief
Executive Officer of the Company as of April 1, 2002 and that he continue to
serve as the Company's President;
WHEREAS: In view of such change in title and the increased duties and
responsibilities to be assumed by Rhein in connection therewith, the Company and
Rhein desire to replace the 2000 Agreement with a new Employment Agreement in
order to reflect the terms and conditions of Rhein's employment as Chief
Executive Officer and President;
WHEREAS: A new Employment Agreement containing such modified terms is
deemed necessary at the present time to meet the need for a continued strong
management;
WHEREAS: Together with other officers of the Company, Rhein has been
responsible for the success of the business of the Company.
NOW, THEREFORE, it is hereby agreed by and between the Company and
Rhein as follows:
1. EMPLOYMENT
The Company hereby agrees to continue to employ Rhein, and
Rhein hereby agrees to remain in the employ of the Company, for the
period set forth in Section 2 hereof (the "Period of Employment"), in
the position and with the duties and responsibilities set forth in
Section 3 hereof, and upon the other terms and conditions hereinafter
stated.
2. PERIOD OF EMPLOYMENT
For purposes of this Agreement, the Period of Employment,
subject only to the provisions of Section 6 hereof, shall continue for
a one-year period from the effective date hereof and thereafter on a
year-to-year basis (i) subject to termination of this Agreement by the
Company effective as of the next anniversary of the effective date
hereof following written notice of termination, which notice must be
given to Rhein no
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later than February 1 of the Company's then current fiscal year, or
(ii) until the earlier termination of Rhein's employment as set forth
in Section 7 hereof.
3. POSITION, DUTIES, RESPONSIBILITIES
3.01 CHIEF EXECUTIVE OFFICER AND PRESIDENT. During the Period of
Employment, Rhein shall serve as Chief Executive Officer and President
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. Rhein'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 BOARD MEMBERSHIP. It is further contemplated that at all times
during the Period of Employment Rhein shall serve and continue to serve
as a member of its Board of Directors. In the event that Rhein's
employment is terminated for any reason as provided in Section 7
hereof, Rhein agrees that he shall immediately submit his written
resignation as a member of the Board of Directors of the Company, which
may choose to either accept or reject such resignation.
3.03 ATTENTION TO DUTIES. Throughout the Period of Employment, Rhein
shall devote his full time and undivided attention during normal
business hours to the business and affairs of the Company, except for
reasonable vacations afforded the Company's executive officers and
except for illness or incapacity, but nothing in this Agreement shall
preclude Rhein from devoting reasonable time required for serving as a
director or member of an advisory committee of any organization
involving no conflict of interest with the interests of the Company,
from engaging in charitable and community activities, and from managing
his personal affairs, provided that such activities do not materially
interfere with the regular performance of his duties and
responsibilities under this Agreement.
3.04 OFFICE. Throughout the Period of Employment, Rhein's office shall
be located at the corporate offices of the Company, and Rhein shall not
be required to locate his office elsewhere without his prior written
consent, nor shall he be required to be absent therefrom on travel
status or otherwise more than a total of sixty (60) days in any
calendar year nor more than fifteen (15) consecutive days at any one
time.
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4. COMPENSATION AND PERQUISITES
4.01 COMPENSATION.
(a) For all services rendered by Rhein in any capacity during
the Period of Employment, including, without limitation,
services as an executive officer, director or member of any
committee of the Company or of any subsidiary, division or
affiliate thereof, Rhein shall be entitled as compensation to
the following:
(i) A base salary, payable not less often than
monthly, at the rate of $52,083.34 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) Participation in the Company's 2000 Annual
Incentive Plan or its successor (the "Annual
Incentive Plan") in accordance with the
provisions of such plan as in effect as of
the date of this Agreement and as may be
amended from time to time, provided, that
such Annual Incentive Plan, including any
Performance Goals and Participation
Percentage applicable to Rhein thereunder,
shall provide Rhein with a target annual
incentive bonus of at least 100% of his base
compensation; provided further, that for the
Company's fiscal year ending March 31, 2003,
such bonus shall not be less than $312,500
(payable under this Agreement if not payable
under the Annual Incentive Plan) and shall
not exceed $700,000; provided finally, that
no amendment or supplement to the Annual
Incentive Plan applicable to Rhein may be
effected without his prior written consent.
(b) Any increase in salary, incentive compensation or other
form of compensation shall in no way diminish any other
obligation of the Company under this Agreement, unless
specifically agreed to in writing by Rhein.
4.02 PERQUISITES. During the Period of Employment, Rhein shall be
entitled to perquisites, including without limitation, an office,
secretarial staff and clerical staff, and to fringe benefits comparable
to those enjoyed by the other elected 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 BENEFIT PLANS. Rhein, his dependents, beneficiaries and estate
shall be entitled to all payments and benefits and service credit for
benefits during the Period of Employment to which executive officers of
the Company, their dependents and beneficiaries are entitled as the
result of the employment of such executive officers
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during the Period of Employment under the terms of employee plans and
practices of the Company, including, without limitation, the Company's
Retirement Plan, its Benefit Equalization Plan, its Supplemental
Executive Retirement Plan, its group life insurance plan, its
accidental death and dismemberment insurance, its 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.
5.02 STOCK PLANS. Rhein shall be eligible to participate in the
Company's 1991 Stock Option Plan and 2000 Stock Incentive Plan (which,
together with any successor stock option plan or plans as may be in
effect from time to time, are referred to herein as the "Option Plan");
provided, however, that the grant of any stock options under any Option
Plan shall be at the sole discretion of the Compensation Committee of
the Board of Directors of the Company. The Company has granted Rhein
stock options at an option price equal to the fair market value of the
Company's Common Shares at the date of grant. The terms and conditions
of exercise of options shall be as is set forth in Rhein's Stock Option
Agreements (the "Option Agreements") with the Company; provided,
however, that in the event of a Change in Control as defined in Section
15.02 hereof, then notwithstanding the provisions of said Option
Agreements, all options (including those granted to him under the 1982
Incentive Stock Option Plan, the 1991 Stock Option Plan, the 2000 Stock
Incentive Plan or any successor stock option plan or plans) shall
immediately be 100% vested and Rhein shall have the immediate right of
exercise with respect to all options and the underlying Common Shares
covered by said Option Agreements. In the event that Rhein is
discharged or resigns his employment during the one (1) year period
following a Change in Control as defined in Section 15.02 hereof, Rhein
shall have the period of one (1) year after the date of such
termination or resignation (or such longer period as may be specified
in the Option Agreement) or the remainder of the term of such options,
whichever is shorter, to exercise his options, and any such exercise
shall be irrevocable.
6. EFFECT OF DEATH OR DISABILITY
6.01 DEATH. In the event of the death of Rhein during the Period of
Employment, the Period of Employment shall be deemed to have ended as
of the close of business on the last day of the month in which death
shall have occurred, and his legal representative shall be entitled to
(i) the compensation provided for in Section 4.01(a)(i) hereof for the
month in which death shall take place at the rate being paid at the
time of death, (ii) an incentive cash bonus amount equal to his earned
incentive cash bonus under the Annual Incentive Plan (or, if
applicable, any predecessor annual incentive plan or arrangement) for
the immediately preceding fiscal year, pro rated through the last date
of the Period of Employment, and (iii) any benefits provided pursuant
to Section 5.01 hereof which are payable pursuant to the terms of the
applicable plan or practice.
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6.02 DISABILITY.
(a) The term "Disability," as used in this Agreement, shall mean
an illness or accident which prevents Rhein from performing his
duties under this Agreement for a period of six (6) consecutive
months. The Period of Employment shall be deemed to have ended as
of the close of business on the last day of such six (6) month
period but without prejudice to any payments due Rhein during such
six (6) month period or pursuant to any disability plan or
disability insurance policy.
(b) In the event of the Disability of Rhein during the Period of
Employment, Rhein shall be entitled to (i) the compensation
provided for in Section 4.01(a)(i) hereof 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) an
incentive cash bonus equal to his earned incentive cash bonus
under the Annual Incentive Plan (or, if applicable, any
predecessor annual incentive plan or arrangement) for the
immediately preceding fiscal year, pro rated through the last date
of the Period of Employment, and (iii) any benefits provided
pursuant to Section 5.01 hereof which are payable pursuant to the
terms of the applicable plan or practice, except that Rhein 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 Section 6.02 shall
be reduced by any payments which Rhein may be paid for the same
period under any disability plan of the Company or of any
subsidiary or affiliate thereof.
7. TERMINATION
7.01 GENERAL. The Company may terminate Rhein's employment with or
without Cause, and Rhein may voluntarily terminate his employment, at
any time during the Period of Employment, subject to the provisions of
this Section 7. The termination of this Agreement by the Company
pursuant to Section 2(i) hereof shall be deemed to be a termination of
employment without Cause as set forth in Section 7.04 hereof. In the
event that this Agreement is to be terminated pursuant to Section 2(i)
hereof, upon receipt of the notice of termination Rhein shall have the
option of either leaving the Company at any time prior to the March 31
effective date of the termination of this Agreement or continuing his
employment until such effective date, and in either event Rhein shall
be entitled to receive all of the payments and benefits as provided in
Section 7.04 hereof; provided, however, that in the event Rhein elects
to continue his employment with the Company subsequent to the March 31
effective date of the termination of this Agreement, for a period of
three (3) months thereafter Rhein shall have the right to terminate his
employment with the Company and any such termination shall be deemed to
be a termination of employment without Cause as set forth above.
7.02 CHANGE IN CONTROL. If, during the one (1) year period following a
Change in Control of the Company as defined in Section 15.02 hereof,
Rhein is discharged or
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voluntarily resigns his employment, there shall be paid or provided to
Rhein, his dependents, beneficiaries and estate, as liquidated damages
or severance pay, or both, the following:
(a) (i) The compensation provided for in Section
4.01(a)(i) hereof for the month in which
termination shall have occurred at the rate being
paid at the time of termination; plus
(ii) An incentive cash bonus calculated based upon his
earned incentive cash bonus under the Annual
Incentive Plan for the immediately preceding
fiscal year, pro rated for the then current
fiscal year through his date of termination; plus
(iii) An amount equal to the product of thirty-six (36)
times his monthly base salary at the rate being
paid at the time of termination; plus
(iv) An amount equal to his earned incentive cash
bonus under the Annual Incentive Plan (or, if
applicable, any predecessor annual incentive plan
or arrangement) for the three (3) previously
completed fiscal years.
Such amounts shall be paid to Rhein in one payment immediately
upon his termination of employment.
(b) For the three (3) year period following the date of his
termination of employment, Rhein, his dependents, beneficiaries
and estate, shall continue to be entitled to all benefits provided
pursuant to Section 5.01 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 Retirement Plan,
Supplemental Executive Retirement Plan and Benefit Equalization
Plan referred to in Section 5.01 hereof, upon the same basis as
immediately prior to termination and, to the extent that such
benefits or service credit for benefits shall not be payable or
provided under any such plans to Rhein, his dependents,
beneficiaries and estate, by reason of his no longer being an
employee of the Company as the result of termination, or any such
plan, program or arrangement is discontinued or the benefits
thereunder are materially reduced, the Company shall provide
Rhein, his dependents, beneficiaries and estate, as appropriate, a
benefit or payment which places Rhein, his dependents,
beneficiaries and estate in at least as good of an economic
position (taking into account the favorable economic, tax and
legal characteristics customary for such plans, policies or
arrangements) as if the benefit which such persons were entitled
to receive under such plans, programs and arrangements immediately
prior to termination had been paid.
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Any termination of Rhein's employment which either is (x) a
termination by the Company other than for Cause or (y) a voluntary
resignation by Rhein after the occurrence of an event which would
constitute Good Reason under Section 15.03 hereof, which termination or
resignation occurs within the period commencing on the commencement
date of a tender offer for the Company's Common Shares, the execution
of a letter of intent or the execution of a definitive agreement which,
in each case, could reasonably be expected to lead to a Change in
Control as defined in Section 15.02 hereof, and ending on either (A)
the date of the Change in Control resulting from such tender offer or
the consummation of the transaction contemplated by such letter of
intent or such definitive agreement, as the case may be, or (B) the
date as of which the Board of Directors determines in good faith that
such tender offer has been withdrawn or has reached a final conclusion
not resulting in a Change in Control or the transaction contemplated by
such letter of intent or such definitive agreement is not to be
consummated or if consummated, will not lead to a Change in Control, as
the case may be, shall be deemed to be a termination under this Section
7.02.
An election by Rhein to terminate his employment under the
provisions of this Section 7.02 shall not be deemed a voluntary
termination of employment by Rhein under Section 7.03 hereof. Further,
an election by Rhein to terminate his employment under the provisions
of subsection (y) of this Section 7.02 shall not be deemed to be a
voluntary termination of employment for a Good Reason under Section
7.04 hereof.
7.03 FOR CAUSE OR VOLUNTARY TERMINATION WITHOUT A GOOD REASON. For the
purpose of any provision of this Agreement, the termination of Rhein's
employment shall be deemed to have been for Cause only if:
(a) termination of his employment shall have been the result of
Rhein's conviction of any of the following offenses, provided that
such offense results in material economic harm to the Company or
has a materially adverse effect on the Company's operations,
property or business relationships: (i) misappropriation of money
or other property of the Company or (ii) any felony;
(b) there has been a breach by Rhein during the Period of
Employment of the provisions of Section 3.03 hereof relating to
devotion of full time to the affairs of the Company or any
provision of Section 8 hereof, and such breach results in
demonstrable significant injury to the Company, and with respect
to any alleged breach of Section 3.03 hereof, Rhein shall have
failed to remedy such breach within thirty (30) days after his
receipt of written notice from the Company; or
(c) there has been a substantial and continued failure or refusal
to perform under this Agreement which Rhein shall have failed to
remedy within thirty (30) days after his receipt of written notice
from the Company.
If Rhein's employment is terminated by the Company for Cause,
or if Rhein shall voluntarily terminate his employment with the Company
without a Good Reason as defined in Section 15.03 hereof, Rhein shall
be entitled to the compensation provided for
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in Section 4.01(a)(i) hereof through the date of such termination.
Rhein shall not be entitled to any additional compensation or benefits
(except for any vested benefits), and shall continue to be bound by the
provisions of Section 8 hereof.
7.04 WITHOUT CAUSE OR VOLUNTARY TERMINATION FOR A GOOD REASON. Subject
to compliance by Rhein with the provisions of Section 8 hereof, if the
Company shall terminate Rhein's employment without Cause or if Rhein
shall voluntarily terminate his employment for a Good Reason as defined
in Section 15.03 hereof, there shall be paid or provided to Rhein, his
dependents, beneficiaries and estate, as liquidated damages or
severance pay, or both, (i) the compensation provided for in Section
4.01(a)(i) for the month in which termination shall have occurred at
the rate being paid at the time of such termination; (ii) an incentive
cash bonus calculated based upon his earned incentive cash bonus under
the Annual Incentive Plan for the immediately preceding fiscal year,
pro rated for the then current fiscal year through his date of
termination; and (iii) the amount (the "Payment Amount") per month
equal to 1/24th of (A) twenty-four (24) times his monthly base salary
at the rate being paid at the time of termination PLUS (B) an amount
equal to his earned incentive cash bonus under the Annual Incentive
Plan (or, if applicable, any predecessor annual incentive plan or
arrangement) for the two (2) previously completed fiscal years. Such
Payment Amount shall be paid to Rhein or, in case of his prior death,
to his legal representative or estate, in monthly installments at the
end of each month commencing with the month next following that in
which such termination shall have occurred, and continuing for a period
of twenty-four (24) months. Rhein, his dependents, beneficiaries and
estate shall also receive, for the twenty-four (24) month period
following such termination, all benefits provided pursuant to Section
5.01 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 Retirement Plan, Benefit Equalization Plan and Supplemental
Executive Retirement Plan referred to in Section 5.01 hereof, upon the
same basis as immediately prior to termination and, to the extent that
such benefits or service credit for benefits shall not be payable or
provided under any such plans to Rhein, his dependents, beneficiaries
and estate, by reason of his no longer being an employee of the Company
as the result of termination, or any such plan, program or arrangement
is discontinued or the benefits thereunder are materially reduced, the
Company shall provide Rhein, his dependents, beneficiaries and estate,
as appropriate, a benefit or payment which places Rhein, his
dependents, beneficiaries and estate in at least as good of an economic
position (taking into account the favorable economic, tax and legal
characteristics customary for such plans, policies or arrangements) as
if the benefit to which such persons were entitled to receive under
such plans, programs and arrangements immediately prior to termination
had been paid. In the event the Company fails to make such payments
when due, then the remaining payments shall become due and payable
immediately. Rhein shall be under no obligation to seek other
employment, but without otherwise limiting the purposes or effect of
this Section 7.04, any amounts payable to Rhein pursuant to Section
7.04(iii) hereof shall be reduced by any amounts which Rhein actually
receives from another employer during the twenty-four (24) month period
following the date of his termination without Cause, and any benefits
payable to Rhein or his dependents pursuant to this Section 7.04 by
reason of any "welfare benefit
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plan" of the Company (as the term "welfare benefit plan" is defined in
Section 3(1) of the Employee Retirement Income Security Act of 1974, as
amended) or perquisites shall be reduced to the extent comparable
benefits or perquisites (or the cash equivalent thereof) are actually
received by Rhein or his dependents from another employer during such
period. Notwithstanding any provision in this Section 7.04 to the
contrary, all obligations of the Company and Rhein's right to any
payment or benefit under this Section 7.04 shall cease upon Rhein's
breach of any provision of Section 8 hereof.
7.05 ARBITRATION. In the event that Rhein's employment shall be
terminated by the Company during the Period of Employment or the
Company shall withhold payments or provision of benefits because Rhein
is alleged to be engaged in activities prohibited by Section 8 hereof
or for any other reason, Rhein 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
Commercial Arbitration 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. NON-COMPETITION, CONFIDENTIAL INFORMATION AND NON-INTERFERENCE
8.01 NON-COMPETITION. During the Period of Employment and the two (2)
year period following the termination of his employment (except in the
case of a voluntary or involuntary termination of employment within one
(1) year after a Change in Control), Rhein shall not become an officer,
director, joint venturer, employee, consultant or five percent (5%)
shareholder (directly or indirectly), or promote or assist (financially
or otherwise), any entity which competes with any business in which the
Company or any of its affiliates are engaged as of the date of such
termination of employment. Rhein understands that the foregoing
restrictions may limit his ability to engage in certain business
pursuits during the period provided for herein, but acknowledges that
he will receive sufficiently higher remuneration and other benefits
from the Company hereunder than he would otherwise receive to justify
such restriction. Rhein acknowledges that he understands the effect of
the provisions of this Section 8.01, and that he has had reasonable
time to consider the effect of these provisions, and that he was
encouraged to and had an opportunity to consult an attorney with
respect to these provisions.
8.02 CONFIDENTIAL INFORMATION. Except for information which is already
in the public domain, or which is publicly disclosed by persons other
than Rhein, or which is required by law or court order to be disclosed,
or information given to Rhein by a third party not bound by any
obligation of confidentiality, Rhein shall at all times during and
after his employment with the Company hold in strictest confidence any
and all confidential information within his knowledge and which is
material to the business of the Company (whether acquired prior to or
during his employment with the Company) concerning the inventions,
products, processes, methods of distribution, customers, services,
business, suppliers or trade secrets of the Company, except that Rhein
may, in connection with the performance of his duties to the Company,
divulge confidential information to the directors, officers, employees
and shareholders of the Company and to the advisors,
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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.
Rhein also agrees that upon leaving the Company's employ he
will not take with him, without the prior written consent of an officer
authorized to act in the matter by the Board of Directors of the
Company, any Company document, contract, internal financial or
management reports, customer list, product list, price list, catalog,
employee list, procedures, software, MIS data, drawing, blueprint,
specification or other document of the Company, its subsidiaries,
affiliates and divisions, which is of a confidential nature relating to
the Company, its subsidiaries, affiliates and divisions, or, without
limitation, relating to its or their methods of purchase or
distribution, or any description of any trade secret, formulae or
secret processes.
8.03. NONINTERFERENCE. Rhein shall not, at any time during the Period
of Employment or within the two (2) year period after his employment is
terminated with the Company (except in the case of a voluntary or
involuntary termination of employment within one (1) year after a
Change in Control), 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 employment, representation or other relationship with the Company,
or in any way directly or indirectly interfere with any relationship
between the Company and its suppliers or customers.
8.04. REMEDY. Rhein acknowledges that Sections 8.01, 8.02 and 8.03
hereof were negotiated at arms length and are required for the fair and
reasonable protection of the Company. Nevertheless, if any aspect of
these restrictions is found to be unreasonable or otherwise
unenforceable by a court of competent jurisdiction, the Company and
Rhein intend for such restrictions to be modified by such court so as
to be reasonable and enforceable and, as so modified by the court, to
be fully enforced. Rhein and the Company further acknowledge and agree
that a breach of those obligations and agreements will result in
irreparable and continuing damage to the Company for which there will
be no adequate remedy at law and, therefore, Rhein and the Company
agree that in the event of any breach of said obligations and
agreements the Company, and its successors and assigns, shall be
entitled to injunctive relief and such other and further relief,
including monetary damages, as is proper in the circumstances. It is
further agreed that the running of the periods provided in Sections
8.01 and 8.03 hereof shall be tolled during any period which Rhein
shall be adjudged to have been in violation of any of his obligations
under such Sections.
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9. WITHHOLDING
Anything to the contrary notwithstanding, all payments required
to be made by the Company hereunder to Rhein or his estate or
beneficiaries, shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Company may
reasonably determine it should withhold pursuant to any applicable law
or regulation. In lieu of withholding such amounts, the Company may
accept other provisions to the end that it has sufficient funds to pay
all taxes required by law to be withheld in respect of such payments or
any of them.
10. 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 herein or to such changed address as the
addressee may have given by a similar notice:
To the Company: Pioneer-Standard Electronics, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxxxx, Xxxx 00000
Attention: Secretary or
Assistant Secretary
To Rhein: Xxxxxx Xxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxxx Xxxxx, Xxxx 00000
11. GENERAL PROVISIONS
11.01 NO SET-OFF OR COUNTER CLAIM. There shall be no right of set-off
or counter claim, in respect of any claim, debt or obligation, against
payments to Rhein, his dependents, beneficiaries or estate provided for
in this Agreement.
11.02 BENEFICIARY. No right or interest to or in any payments shall be
assignable by Rhein; provided, however, that this provision shall not
preclude him from designating one or more beneficiaries to receive any
amount that may be payable after his death and shall not preclude the
legal representative of his estate from assigning any right hereunder
to the person or persons entitled thereto under his will or, in the
case of intestacy, to the person or persons entitled thereto under the
laws of intestacy applicable to his estate. The term "beneficiaries" as
used in this Agreement shall mean a beneficiary or beneficiaries so
designated to receive any such amount or, if no beneficiary has been so
designated, the legal representative of Rhein's estate.
11.03 ASSIGNMENT. No right, benefit or interest hereunder, shall be
subject to anticipation, alienation, sale, assignment, encumbrance,
charge, pledge, hypothecation, or
11
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.
11.04 LEGAL REPRESENTATIVE. In the event of Rhein's death or a judicial
determination of his incompetence, reference in this Agreement to Rhein
shall be deemed, where appropriate, to refer to his legal
representative or, where appropriate, to his beneficiary or
beneficiaries.
11.05 HEADINGS. 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.
11.06 BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of (a) Rhein and, subject to the provisions of
Sections 11.02 and 11.03 hereof, his heirs and legal representatives,
and (b) the Company and its successors as provided in Section 14
hereof.
11.07 EXCISE TAX GROSS UP. Rhein shall be entitled to a cash payment
(the "Excise Tax Gross-Up Payment") equal to the amount of excise taxes
which Rhein is required to pay pursuant to Section 4999 of the Internal
Revenue Code of 1986, as amended ("Code"), as a result of any parachute
payments as defined in Section 280G(b)(2)made by or on behalf of the
Company or any successor thereto, under this Agreement or otherwise,
resulting in an "excess parachute payment" as defined in Section
280G(b)(1) of the Code. In addition to the foregoing, the Excise Tax
Gross-Up Payment due to Rhein under this Section 11.07 shall be
increased by the aggregate of the amount of federal, state and local
income and excise taxes for which Rhein will be liable on account of
the Excise Tax Gross-Up Payment to be made under this Section 11.07,
such that Rhein will receive the Excise Tax Gross-Up Payment net of all
income and excise taxes imposed on Rhein on account of the receipt of
the Excise Tax Gross-Up Payment. The computation of the Excise Tax
Gross-Up Payment shall be determined, at the expense of the Company, by
an independent accounting, actuarial or consulting firm selected by the
Company. Such Excise Tax Gross-Up Payment 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 Rhein's federal income tax return
for the calendar year for which it is determined that excise taxes are
payable under Section 4999 of the Code. Notwithstanding the foregoing,
there shall be no duplication of payments by the Company under this
Section 11.07 in respect of excise taxes under Section 4999 of the Code
to the extent the Company is making payments in respect of such excise
taxes under any other arrangement with Rhein. In the event that Rhein
is ultimately assessed with excise taxes under Section 4999 of the Code
which exceed the amount of excise taxes used in computing Rhein's
payment under this Section 11.07, the Company or its successor shall
indemnify Rhein 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.
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12. AMENDMENT OR MODIFICATION; WAIVER
No provision of this Agreement may be amended or waived unless
such amendment or waiver is authorized by the Board of Directors of the
Company or the Compensation Committee thereof and is agreed to in
writing, signed by Rhein and by an officer of the Company thereunto
duly authorized by either the Board of Directors or the Compensation
Committee. Except as otherwise specifically provided in this Agreement,
no waiver by either party hereto of any breach by the other party
hereto of any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of a subsequent breach of
such condition or provision or a waiver of a similar or dissimilar
provision or condition at the same or at any prior or subsequent time.
13. 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.
14. 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.
15. OPERATION OF AGREEMENT
15.01 EFFECTIVE DATE. This Agreement is effective April 1, 2002, and
shall supersede any prior employment arrangement or agreement,
including the 2000 Agreement, which shall be deemed to be terminated
and null and void. Notwithstanding the immediately preceding sentence
to the contrary, it is the intention of the parties that this Agreement
shall not result in the cancellation or diminution of any rights,
interests or obligations of either party accrued under the 2000
Agreement prior to April 1, 2002.
15.02 CHANGE IN CONTROL. For purposes 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), excluding The Pioneer Stock Benefit
13
Trust, any employee benefit plan of the Company, any trust established
under any employee benefit plan of the Company, or any trustee of any
trust established under any employee benefit plan of the Company,
becomes a beneficial owner, directly or indirectly, of securities of
the Company representing twenty percent (20%) or more of the combined
voting power of the Company's then outstanding securities, or (b)
during any period of twelve (12) consecutive months, commencing before
or after the date of this Agreement, individuals who, at the beginning
of such twelve (12) month period were directors of the Company for whom
Rhein, as a shareholder, shall have voted, cease for any reason to
constitute at least a majority of the Board of Directors of the
Company. In addition, a "Change in Control" shall be deemed to have
occurred if, at any time during the one (1) year period following the
first day on which Rhein shall hold the title of Chief Executive
Officer of the Company, such title shall be revoked or his duties or
obligations shall be materially inconsistent with the duties or
obligations of the Chief Executive Officer of the Company, unless such
revocation or assignation is due to Rhein's Disability, death,
termination of employment by the Company for Cause or voluntary
termination by Rhein without a Good Reason.
15.03 GOOD REASON. For the purpose of this Agreement, "Good Reason"
shall mean the occurrence of: (a) any reduction in Rhein's position,
authority or title; (b) any material reduction in Rhein's
responsibilities or duties for the Company; (c) any material adverse
change or reduction in the aggregate perquisites, benefits and payments
to which Rhein is entitled pursuant to Sections 4.02 and 5.01 hereof;
(d) any change in Rhein's reporting relationship; (e) any relocation of
Rhein's principal place of work with the Company to a location that
exceeds by fifty (50) miles the distance from the location of his
residence at the time of such relocation of Rhein's principal place of
work with the Company to 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxx Xxxxxxx,
Xxxx; or (f) the material breach or material default by the Company of
any of its agreements or obligations under any provision of this
Agreement, unless such breach or default is substantially cured within
a reasonable period of time (hereby defined as thirty (30) days) after
written notice advising the Company of the acts or omissions
constituting such breach or default is actually received by the
Company. As used in Section 15.03(c), an "adverse change or material
reduction" in the aggregate perquisites, benefits and payments to which
Rhein is entitled pursuant to Sections 4.02 and 5.01 shall be deemed to
result from any reduction or any series of reductions which, in the
aggregate, exceeds five percent (5%) of the value of such perquisites,
benefits and payments determined as of the date of this Agreement. If
Rhein claims the existence of a Good Reason, he shall give written
notice to the Company of the event constituting Good Reason not later
than ninety (90) days following the later to occur of the occurrence of
the event (e.g., the actual reduction in compensation, the scheduled
date of relocation or the date of the breach) constituting Good Reason
or his actual knowledge thereof. If the event which Rhein claims to be
a Good Reason is not cured within thirty (30) days following the date
of such notice, Rhein must resign within ten (10) days following the
thirty (30) day cure period in order to invoke his right to resign for
Good Reason. If no such timely resignation occurs or no such timely
written notices are given, Rhein's right to resign for Good Reason with
respect to such event shall be permanently waived.
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16. ENFORCEMENT COSTS
The Company is aware that upon the occurrence of a Change in
Control the Board of Directors or a shareholder of the Company may then
cause or attempt to cause the Company to refuse to comply with its
obligations under this Agreement, or may cause or attempt to cause the
Company to institute, or may institute, litigation seeking to have this
Agreement declared unenforceable, or may take, or attempt to take,
other action to deny Rhein the benefits intended under this Agreement.
In these circumstances, the purpose of this Agreement could be
frustrated. It is the intent of the Company that Rhein not be required
to incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action because the
cost and expense thereof would substantially detract from the benefits
intended to be extended to Rhein hereunder, nor be bound to negotiate
any settlement of his rights hereunder under threat of incurring such
expenses. Accordingly, if following a Change in Control it should
appear to Rhein that the Company has failed to comply with any of its
obligations under this Agreement or in the event that the Company or
any other person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation or other legal action
designed to deny, diminish or to recover from, Rhein, the benefits
intended to be provided to Rhein hereunder, and that Rhein has complied
with all of his obligations under this Agreement, the Company
irrevocably authorizes Rhein from time to time to retain counsel of his
choice at the expense of the Company as provided in this Section 16, to
represent Rhein in connection with the initiation or defense of any
litigation or other legal action, whether by or against the Company or
any Director, officer, shareholder or other person affiliated with the
Company, in any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to Rhein entering into an attorney-client
relationship with such counsel, and in that connection the Company and
Rhein agree that a confidential relationship shall exist between Rhein
and such counsel. The reasonable fees and expenses of counsel selected
from time to time by Rhein as herein provided shall be paid or
reimbursed to Rhein by the Company on a regular, periodic basis upon
presentation by Rhein of a statement or statements prepared by such
counsel in accordance with its customary practices, up to a maximum
aggregate amount of $500,000.
15
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
ATTEST: PIONEER-STANDARD ELECTRONICS, INC.
/s/ Xxxxxxxx X. Xxxxxxx By /s/ Xxxxx X. Xxxxxx
----------------------------- ------------------------------------------
Xxxxx X. Xxxxxx, Chairman of the Board and
Chief Executive Officer
ATTEST:
/s/ Xxxxxxxx X. Xxxxxxx /s/ Xxxxxx Xxxxx
----------------------------- ------------------------------------------
Xxxxxx Xxxxx
00
