(PIONEER STANDARD LOGO)
Exhibit 10(dd)
CHANGE OF CONTROL AGREEMENT
THIS CHANGE OF CONTROL AGREEMENT by and between Pioneer-Standard
Electronics, Inc., an Ohio corporation (the "Company"), and Xxxxxxx X. Xxxxxx
(the "Employee"), is dated as of the 25th day of February, 2000.
WITNESSETH:
WHEREAS, the Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Employee,
notwithstanding the possibility, threat, or occurrence of a Change of Control
(as defined below) of the Company; and
WHEREAS, the Board believes it is imperative to diminish the
inevitable distraction of the Employee by virtue of the personal uncertainties
and risks created by a pending or threatened Change of Control, to encourage the
Employee's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and to provide the
Employee with compensation arrangements upon a Change of Control which provide
the Employee with individual financial security and which are competitive with
those of other corporations;
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
Section 1. Effective Date and Change of Control.
1.1 (a) Effective Date. This Agreement shall become effective only
upon the "Effective Date," which shall be the first date during the "Change of
Control Period" (as defined in Section 1.1(b)) on which a Change of Control (as
defined in Section 1.2) occurs. Until such time, the Employee shall have no
rights against the Company and the Company shall not have any obligations to the
Employee under or by virtue of this Agreement. Anything in this Agreement to the
contrary notwithstanding, if the Employee's employment with the Company is
terminated prior to the date on which a Change of Control occurs, and it is
reasonably demonstrated that such termination (1) was at the request of a third
party who has taken steps reasonably calculated to effect a Change of Control or
(2) otherwise arose in connection with or anticipation of a Change of Control,
then for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination.
(b) The "Change of Control Period" is the period commencing on the
date hereof and ending on the first anniversary of such date; provided, however,
that commencing on the date one (1) year after the date hereof, and on each
annual anniversary of such date (such date and each annual anniversary thereof
is hereinafter referred to as the "Renewal Date"), the Change of Control Period
shall be automatically extended so as to terminate one (1) year from such
Renewal Date, unless the Company shall give written notice to the Employee at
least sixty (60) days prior to the Renewal Date that the Change of Control
Period shall not be so extended and that this Agreement shall terminate upon the
Renewal Date; provided, however, that such notice may not be given at any time
during the nine (9) month period following the Effective Date.
1.2 Change of Control. For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) The acquisition by any person, entity or "group," within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934 (the "Exchange Act") (excluding, for this purpose, the Company or its
Subsidiaries, The Pioneer Stock Benefit Trust, or any employee benefit plan of
the Company or its Subsidiaries which acquires beneficial ownership of voting
securities of the Company), of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of either the then
outstanding Common Shares or the combined voting power of the Company's then
outstanding voting securities entitled to vote generally in the election of
directors; or
(b) Individuals who, as of the date hereof, constitute the
Board (as of the date hereof the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any person becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the Directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member of the Incumbent
Board; or
(c) Approval by the shareholders of the Company of a
reorganization, merger, consolidation, in each case, with respect to which
persons who were the shareholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own more
than 80% of the combined voting power entitled to vote generally in the election
of directors of the reorganized, merged or consolidated company's then
outstanding voting securities, or a liquidation or dissolution of the Company or
of the sale of all or substantially all of the assets of the Company.
Section 2. Termination of Employment.
2.1 Termination by the Company.
(a) Company's Right to Terminate. Subject to (i) the Company's
obligations under Section 3.1 hereof subsequent to the Effective Date, or (ii)
under any written employment agreement between the Company and the Employee, the
Employee's employment with the Company may be terminated at any time without
Cause.
(b) Cause. The Company may terminate the Employee's employment for
"Cause." For purposes of this Agreement, "Cause" means (i) an act or acts of
personal dishonesty taken by the Employee and intended to result in personal
enrichment of the Employee at the expense of the Company or (ii) the conviction
of the Employee of a felony.
2.2 Termination by the Employee.
The Employee's employment with the Company (i) shall automatically
terminate upon death and (ii) may be voluntarily terminated by the Employee at
any time for any reason, in the Employee's sole discretion.
2.3 Transfers. Transfer of the Employee among the Company and
affiliated entities at least 80% directly or indirectly owned by the Company
("Subsidiaries") shall not be deemed to be a termination of employment.
2.4 Notice of Termination.
Any termination by the Company or by the Employee shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 8(d) of this Agreement. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) in the case
of a termination for Cause, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated, and (iii) if the date of
termination is other than the date of receipt of such notice, specifies the date
of termination (which date shall be not more than fifteen (15) days after the
giving of such notice).
Section 3. Obligations of the Company upon Termination.
3.1 Without Cause or Voluntary Termination. If, at any time prior to
the date that is twelve (12) months subsequent to the Effective Date, the
Employee's employment with the Company shall be terminated either (i) by the
Company without Cause, or (ii) by the Employee voluntarily for any reason:
(a) the Company shall pay to the Employee within thirty (30) days
of the date of termination a lump sum amount equal to twenty-four (24) times the
greater of the Employee's (i) highest monthly base salary paid or payable by the
Company during the twelve (12) month period immediately preceding the Effective
Date, or (ii) the highest monthly salary paid or payable by the Company at any
time from the ninety (90) day period preceding the Effective Date through the
date of termination (the "Highest Base Salary"); and
(b) the Company shall pay to the Employee within thirty (30) days
of the date of termination a lump sum amount equal to the greater of (i) four
(4) times the highest aggregate amount of incentive compensation paid or payable
by the Company to the Employee during any six (6) consecutive months of the
twelve (12) month period immediately preceding the Effective Date under any and
all incentive compensation plan(s) of the Company in effect at such time; or
(ii) four (4) times the highest aggregate amount of incentive compensation paid
or payable by the Company to the Employee during any six (6) consecutive months
of the twelve (12) month period preceding the date of termination under any and
all incentive compensation plan(s) of the Company in effect at such time; and
(c) the Company shall pay to the Employee within thirty (30) days
of the date of termination a lump sum amount equal to twenty-four (24) times the
monthly amount paid or payable to Employee by the Company as an auto allowance
as in effect immediately preceding the Effective Date; and
(d) a cash payment equal to the amount of excise taxes (i.e., the
"excise tax gross-up payment") which the Employee would be 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 the Employee under this section 3.1(d) shall be increased by the
aggregate of the amount of federal, state and local income and excise taxes for
which the Employee will be liable on account of the cash payment to be made
under this section 3.1(d), such that the Employee will receive the excise tax
gross-up payment net of all income and excise taxes imposed on the Employee 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 the Employee'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 section 3.1(d) 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 the
Employee. In the event that the Employee 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 the Employee's payment under this section 3.1(d), the Company or its
successor shall indemnify the Employee for such additional excise taxes plus any
additional taxes, income taxes, interest and penalties resulting from the
additional excise taxes and the indemnity hereunder; and
(e) for the twenty-four (24) month period following the date of
termination (the "Benefits Continuation Period"), the Company shall continue to
provide health insurance and retirement benefits to the Employee and/or the
Employee's family at least equal to those which would have been provided to them
if the Employee's employment had not been terminated, in accordance with the
most favorable plans, practices, programs or policies of the Company and its
Subsidiaries during the ninety (90) day period immediately preceding the
Effective Date or, if more favorable to the Employee, as in effect at any time
thereafter with respect to other key employees and their families, and for
purposes of eligibility for retirement benefits pursuant to such plans,
practices, programs and policies, the Employee shall be considered to have
remained employed until the end of the Benefits Continuation Period and to have
retired on the last day of such period. Notwithstanding the foregoing, the
Employee shall have no right to participate in any incentive compensation plan
of the Company subsequent to the date of termination; and
(f) if it would be illegal to provide the benefits under such
plans, practices, programs or policies referred to in Section 3.1(d) above due
to, among other things, nondiscrimination rules or tax qualification rules
applicable to such plans, practices, programs or policies, then the Company will
be deemed to be in compliance with this Agreement if it provides such Employee
with a comparable substitute therefor, provided the Employee and the Employee's
dependents are placed thereby in the same or a better economic position than if
the Company provided such benefits through its then existing plans, practices,
programs or policies.
3.2 Cause. If the Employee's employment shall be terminated for Cause,
this Agreement shall terminate without further obligations of the Company to the
Employee hereunder.
3.3 Death. If the Employee's employment is terminated by reason of the
Employee's death, this Agreement shall terminate without further obligations of
the Company to the Employee other than those obligations accrued or earned and
vested (if applicable) by the Employee as of the date of death.
Section 4. Disputes.
It is the intent of the parties hereto that the following dispute
resolution procedure shall apply hereunder:
(a) No payments or benefits need be paid hereunder except upon the
Notice of Termination provided for in Section 2.4 hereof or, if the Company does
not give such a Notice, upon a written application of the Employee or other
person claiming thereunder to the person specified in Section 8(d) hereof,
provided such claim may be made in general terms only specifying the basis for
the claim, and that it is made under this Agreement, without enumerating each
benefit claimed.
(b) The Company must accept or reject the claim within thirty (30)
days.
(c) If the Company rejects the claim, it must do so in writing
specifying the reasons therefor.
(d) If the claimant disagrees with the Company's decision, or if the
Company fails to respond within such thirty (30) day period, appeal shall be to
a court of competent jurisdiction. Such appeal shall be on a fully de novo basis
and the decision of the Company denying benefits shall not be entitled to any
deference by such court.
Section 5. Exclusivity of Rights.
It is expressly understood and acknowledged by Employee that the
Company's obligations under Section 3 of this Agreement shall be in lieu of any
obligation on the part of the Company for payment of severance, salary,
incentive compensation, auto allowance, health and retirement benefits
(collectively, the "Severance Benefits") under any other Company plan, policy or
agreement (including but not limited to, the Non-Competition Agreeement between
Company and Employee, and the Company's severance policy) in the event of
termination of Employee's employment with the Company during the Change in
Control Period. Accordingly, the Employee acknowledges that he/she shall not be
entitled to Severance Benefits other than those set forth in Section 3, and
understands that his/her exclusive entitlement to Severance Benefits during the
Change in Control Period shall be as set forth in Section 3.
Except as provided in the foregoing paragraph of Section 5 hereof, and
subject thereto: (1) Nothing in this Agreement shall prevent or limit the
Employee's continuing or future participation in any benefit, bonus, incentive
or other plans, programs, policies or practices provided by the Company or any
of its Subsidiaries and for which the Employee may qualify, nor shall anything
herein limit or otherwise affect such rights as the Employee may have under any
stock option agreements with the Company or any of its Subsidiaries; (2) Amounts
which are vested benefits under any plan, policy, practice or program of the
Company or any of its Subsidiaries at or subsequent to the date of termination
shall be payable in accordance with such plan, policy, practice or program; and
(3) Employee shall be entitled to participate in any other plan, practice,
program or policy of either the Company or any successor to the Company referred
to in Section 7 hereof under which the Employee is entitled to participate by
law or by reason of being vested under such plan, practice, program or policy.
Section 6. Full Settlement.
Except as provided in this Section 6, the Company's obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Employee. In no event shall the Employee be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Employee under any of the provisions of this Agreement, nor shall any
amounts actually paid to the Employee by any person for services rendered prior
or subsequent to the date of termination reduce the Company's payment
obligations under Section 3.1 hereof. The Company agrees to pay, to the full
extent permitted by law, all legal fees and expenses which the Employee may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company or others of the validity or enforceability of, or liability
under, any provision of this Agreement, plus in each case interest at the
applicable Federal rate provided for in Section 7872(f)(2) of the Code.
Section 7. Successors.
(a) This Agreement is personal to the Employee and without the prior
written consent of the Company shall not be assignable by the Employee. This
Agreement shall inure to the benefit of and be enforceable by the Employee's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes this Agreement by operation of law, or otherwise.
Section 8. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio, without reference to
principles of conflict of laws.
(b) Captions. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
(c) Amendments. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors or legal representatives.
(d) Notices. All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Employee:
Xxxxxxx X. Xxxxxx
0000 X. Xxxxx Xxxx Xxxx
Xxxxxx, XX 00000
If to the Company:
Pioneer-Standard Electronics, Inc.
0000 Xxxx 000xx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(e) Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(f) Tax Withholding. The Company may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
(g) Non-waiver. The Employee's failure to insist upon strict
compliance with any provision hereof shall not be deemed to be a waiver of such
provision or any other provision thereof.
(h) Entire Agreement. This Agreement contains the entire understanding
of the Company and the Employee with respect to the subject matter hereof.
(i) Employee an "At Will" Employee. The Employee and the Company
acknowledge that the employment of the Employee by the Company is "at will,"
and, prior to the Effective Date, may be terminated by either the Employee or
the Company at any time with or without Cause without any obligation under or by
virtue of this Agreement. Upon a termination of the Employee's employment prior
to the Effective Date, there shall be no further rights under this Agreement.
IN WITNESS WHEREOF, the parties have hereunto set their hands as of
the day and year first above written.
/s/ Xxxxxxx X. Xxxxxx 2/29/00
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Employee Name
PIONEER-STANDARD ELECTRONICS, INC.
By: /s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx
President & COO
