EX-10(HH)



 


Exhibit 10(hh)


CHANGE OF CONTROL AGREEMENT



     THIS CHANGE OF CONTROL AGREEMENT by and between Pioneer-Standard
Electronics, Inc., an Ohio corporation (the “Company”), and Martin F. Ellis
(the “Employee”), is dated as of the 30th day of June, 2003.



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) any material breach
this Agreement, or of Employee’s duties or responsibilities in the course of
his/her employment; (ii) 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; (iii) intentional misconduct that materially injures
the Company, monetarily or otherwise; or (iv) 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.



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     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 for Good Reason. 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 for Good Reason, as provided in Section
3.4, below:



          (a) the Company shall pay to the Employee within thirty (30) days of the
date of termination a lump sum amount equal to twelve (12) 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 annual incentive plan
(“AIP”) target applicable to Employee at the time of termination; and



          (c) the Company shall pay to the Employee within thirty (30) days of the
date of termination a lump sum amount equal to twelve (12) 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) for the twelve (12) 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



          (e) 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



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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.



     3.4. Good Reason. As used herein, “Good Reason” shall mean (a) any
material adverse change in Employee’s responsibilities (b) substantial
reduction in annual target compensation; or (c) any requirement that Employee
relocate to a facility that is more than 50 miles from his current location.
If the Employee claims that he is terminating his employment for Good Reason,
then the Employee may, within 30 days of the event constituting Good Reason,
give written notice to the Company of the Employee’s intent to terminate his
employment for Good Reason. If the event which the Employee claims to
constitute Good reason is not cured within 30 days following the date of such
notice (the “Cure Period”), the Employee shall have 10 days following the Cure
Period to invoke his right to terminate his employment for Good Reason. If the
Employee fails to provide timely written notice, or if Employee fails to
terminate his employment within 10 days following the Cure Period, then the
Employee’s right to terminate employment for Good Reason with respect to such
event shall be permanently waived.



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



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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, any Employment Agreement 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.



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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:
	 	 
	

	 	 
	

	 	(Employee Name & Address)
	 
	 
	If to the Company:
	 	 
	

	 	Pioneer-Standard Electronics,
Inc.

6065 Parkland Blvd.

Mayfield Heights, OH 44124
	 
	

	 	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. This
Agreement replaces and supercedes any prior agreement 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
or upon the Employee’s ceasing to be an Appointed Officer of the Company, in
each case prior to the Effective Date, there shall be no further rights under
this Agreement.



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     IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
day and year first above written.



	 	 
	 	/s/ Martin F. Ellis



Martin F. Ellis
	 	PIONEER-STANDARD ELECTRONICS, INC
	 
	 	By: /s/ Arthur Rhein



Arthur Rhein

President & CEO








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