-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P8SOCGsWyYgFV9iMsfvVHQFFSmAmEF9h4AT+Uhukg3nyFhZdHlaPVpZCWz9BrItm NWWgc6hupR2Iu7PxIbG5yQ== 0000950130-96-003902.txt : 19961016 0000950130-96-003902.hdr.sgml : 19961016 ACCESSION NUMBER: 0000950130-96-003902 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19961015 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NU HORIZONS ELECTRONICS CORP CENTRAL INDEX KEY: 0000718074 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 112621097 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08798 FILM NUMBER: 96642988 BUSINESS ADDRESS: STREET 1: 6000 NEW HORIZONS BLVD CITY: AMITYVILLE STATE: NY ZIP: 11701 BUSINESS PHONE: 5162266000 MAIL ADDRESS: STREET 2: 6000 NEW HORIZONS BLVD CITY: AMITYVILLE STATE: NY ZIP: 11701 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended Commission file number August 31, 1996 1-8798 - --------------------- ----------------------- Nu Horizons Electronics Corp. -------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 11-2621097 - -------------------------------------- ------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6000 New Horizons Blvd., Amityville, New York 11701 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (516) 226-6000 ---------------------------------------------------------------------------- (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X --- NO ___ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Common Stock - Par Value $.0066 8,732,299 ------------------------------- ------------------- Class Outstanding Shares NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES ---------------------------------------------- INDEX ----- Page(s) PART I. Financial Information: ITEM 1. Financial Statements Consolidated Condensed Balance Sheets - August 31, 1996 (unaudited) and February 29, 1996 3. Consolidated Condensed Statements of Income (unaudited) - Six Months and Three Months Ended August 31, 1996 and 1995 4. Consolidated Condensed Statements of Cash Flows (unaudited) - Six Months Ended August 31, 1996 and 1995 5. - 6. Notes to Interim Consolidated Condensed Financial Statements (unaudited) 7. - 8. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9. - 12. PART II. Other Information ITEM 4. Submission of Matters to a Vote of Security Holders 13. ITEM 6. Exhibits and Reports on Form 8-K 14. SIGNATURES 15. INDEX TO EXHIBITS 16. Exhibit 10.15 - Employment and Change of Control Agreements dated September 13, 1996, between the Company and Irving Lubman Exhibit 10.16 - Employment and Change of Control Agreements dated September 13, 1996, between the Company and Arthur Nadata Exhibit 10.17 - Employment and Change of Control Agreements dated September 13, 1996, between the Company and Richard Schuster Exhibit 11 - Statement re: Computation of Per Share Earnings (See Notes to Consolidated Financial Statements - Note 5) Exhibit 27 - Financial Data Schedule 2 PART 1. FINANCIAL INFORMATION ITEM 1. Financial Statements NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES ---------------------------------------------- CONSOLIDATED CONDENSED BALANCE SHEETS ------------------------------------- -ASSETS- -------- AUGUST FEBRUARY 31, 1996 29, 1996 ----------- ---------- (Unaudited) CURRENT ASSETS: Cash (including time deposits) $ 2,561,058 $ 874,267 Accounts receivable-net of allowance for doubtful accounts of $1,811,619 and $1,509,802 for August 31, 1996 and February 29, 1996, respectively 29,170,975 30,005,182 Inventories 39,697,232 36,808,915 Prepaid expenses and other current assets 2,509,020 1,013,923 ----------- ----------- TOTAL CURRENT ASSETS 73,938,285 68,702,287 PROPERTY, PLANT AND EQUIPMENT - NET (Note 2) 3,188,667 3,439,804 OTHER ASSETS Cost in excess of net assets acquired-net 1,987,718 2,066,180 Other assets 1,336,798 1,251,315 ----------- ----------- $80,451,468 $75,459,586 =========== =========== -LIABILITIES AND SHAREHOLDERS' EQUITY- -------------------------------------- CURRENT LIABILITIES: Accounts payable $ 7,379,722 $ 7,898,757 Accrued expenses 3,887,664 2,254,878 Current portion of long-term debt 327,799 373,930 Income taxes 446,420 220,288 Other current liabilities 70,722 - ----------- ----------- TOTAL CURRENT LIABILITIES 12,112,327 10,747,853 ----------- ----------- LONG TERM LIABILITIES: Deferred income taxes 205,479 115,577 Revolving credit line (Note 3) 16,900,000 17,300,000 Long-term debt 561,298 678,453 Subordinated convertible notes (Note 4) 7,059,000 9,000,000 ----------- ----------- 24,725,777 27,094,030 ----------- ----------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred stock, $1 par value, 1,000,000 shares authorized; none issued or outstanding; - - Common stock, $.0066 par value, 20,000,000 shares authorized; 8,732,299 and 8,423,137 shares issued and outstanding for August 31, 1996 and February 29, 1996, respectively 57,633 55,593 Additional paid-in capital 18,938,984 16,821,502 Retained earnings 24,966,622 21,160,458 ----------- ----------- 43,963,239 38,037,553 Less: loan to ESOP 349,875 419,850 ----------- ----------- 43,613,364 37,617,703 ----------- ---------- $80,451,468 $75,459,586 =========== =========== See notes to interim consolidated condensed financial statements 3 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES ---------------------------------------------- CONSOLIDATED CONDENSED STATEMENTS OF INCOME ------------------------------------------- (Unaudited) FOR THE SIX MONTHS ENDED FOR THE THREE MONTHS ENDED ------------------------ -------------------------- AUGUST AUGUST AUGUST AUGUST 31, 1996 31, 1995 31, 1996 31, 1995 ------------ ----------- ----------- ---------- NET SALES $108,455,584 $94,807,858 $50,783,044 $50,091,805 ------------ ----------- ----------- ----------- COSTS AND EXPENSES: Cost of sales 84,158,299 72,600,251 39,411,875 38,192,979 Operating expenses 17,109,122 14,487,541 8,735,173 7,360,793 Interest expense 809,292 934,661 376,163 481,277 Interest income (8,053) (2,534) (8,053) (424) ------------ ----------- ----------- ----------- 102,068,660 88,019,919 48,515,158 46,034,625 ------------ ----------- ----------- ----------- INCOME BEFORE PRO- VISION FOR INCOME TAXES 6,386,924 6,787,939 2,267,886 4,057,180 Provision for income taxes 2,580,760 2,750,934 916,658 1,651,272 ------------ ----------- ----------- ----------- NET INCOME $ 3,806,164 $ 4,037,005 $ 1,351,228 $ 2,405,908 ============= =========== =========== =========== NET INCOME PER SHARE (Note 5): Primary $.42 $.51 $.15 $.30 ==== ==== ==== ==== Fully diluted $.38 $.43 $.14 $.25 ==== ==== ==== ==== See notes to interim consolidated condensed financial statements 4 Page 1 of 2 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES ---------------------------------------------- CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS -----------------------------------------------
FOR THE SIX MONTHS ENDED --------------------------------------------- AUGUST 31, 1996 AUGUST 31, 1995 ---------------------- ------------------- (Unaudited) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS: Cash flows from operating activities: Cash received from customers $ 109,050,291 $ 88,638,864 Cash paid to suppliers and employees (101,974,282) (89,527,433) Interest received 8,053 2,534 Interest paid (809,292) (934,661) Income taxes paid (4,067,073) (1,859,826) ------------- ------------ Net cash provided by (used in) operating activities 2,207,697 (3,680,522) ------------- ------------ Cash flows from investing activities: Capital expenditures (136,142) (609,605) Purchase of stock for ESOP - (559,800) ------------- ------------ Net cash (used in) investing activities (136,142) (1,169,405) ------------- ------------ Cash flows from financing activities: Borrowings under revolving credit line 18,600,000 25,800,000 Repayments under revolving credit line (19,000,000) (18,950,000) Principal payments of long-term debt (163,286) (169,535) Proceeds from exercise of stock options 178,522 17,850 ------------- ------------ Net cash (used in) provided by financing activities (384,764) 6,698,315 ------------- ------------ Net increase in cash and cash equivalents 1,686,791 1,848,388 Cash and cash equivalents, beginning of year 874,267 498,919 ------------- ------------ Cash and cash equivalents, end of period $ 2,561,058 $ 2,347,307 ============= ============
See notes to interim consolidated condensed financial statements 5 Page 2 of 2 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES ---------------------------------------------- CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED) -----------------------------------------------------------
FOR THE SIX MONTHS ENDED --------------------------------------------- AUGUST 31, 1996 AUGUST 31, 1995 ---------------------- ------------------- (Unaudited) RECONCILIATION OF NET INCOME TO NET CASH FROM OPERATING ACTIVITIES: Net income $ 3,806,164 $ 4,037,005 ----------- ------------ Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 593,783 555,169 Contribution to ESOP 69,975 69,975 Bad debt provision 239,500 523,750 Changes in assets and liabilities: Decrease (increase) in accounts receivable 594,707 (6,168,994) (Increase) in inventories (2,888,317) (6,884,083) (Increase) decrease in prepaid expenses and other current assets (1,495,097) 378,830 (Increase) in other assets (213,525) (209,226) Increase in accounts payable and accrued expenses 1,184,473 3,485,126 Increase in income taxes 226,132 140,711 Increase in deferred income taxes 89,902 391,215 ----------- ------------ Total adjustments (1,598,467) ( 7,717,527) ----------- ------------ Net cash provided by (used in) operating activities $ 2,207,697 $ (3,680,522) ============ ============
See notes to interim consolidated condensed financial statements 6 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES ------------------------------------------------ NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS ------------------------------------------------------------ (unaudited) 1. In the opinion of management, the accompanying unaudited interim consolidated condensed financial statements of Nu Horizons Electronics Corp. (the "Company") and its subsidiaries (Nu Horizons/Merit Electronics Corp., NIC Components Corp., Nu Horizons International Corp. and Nu Visions Manufacturing, Inc.) contain all adjustments necessary to present fairly the Company's financial position as of August 31, 1996 and February 29, 1996 and the results of its operations for the six and three month periods ended August 31, 1996 and 1995 and cash flows for the six month periods ended August 31, 1996 and 1995. The accounting policies followed by the Company are set forth in Note 2 to the Company's consolidated financial statements included in its Annual Report on Form 10-K for the year ended February 29, 1996, which is incorporated herein by reference. Specific reference is made to this report for a description of the Company's securities and the notes to consolidated financial statements included therein. The results of operations for the six and three month periods ended August 31, 1996 are not necessarily indicative of the results to be expected for the full year. 2. PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment consists of the following: AUGUST FEBRUARY 31, 1996 29, 1996 ---------- ---------- Land $ 266,301 $ 266,301 Building and improvements 1,756,762 1,747,930 Furniture, fixtures and office equipment 2,082,409 2,037,183 Computer equipment 2,360,666 2,278,582 Assets held under capitalized leases 919,834 919,834 ---------- ---------- 7,385,972 7,249,830 Less: accumulated depreciation and amortization 4,197,305 3,810,026 ---------- ---------- $3,188,667 $3,439,804 ========== ========== 3. BANK LINE OF CREDIT: In February, 1988 the Company entered into a revolving credit agreement, as amended, with its bank which provides for a $25,000,000 unsecured revolving line of credit at the bank's prime rate with payments of interest only through April 8, 2000. Direct borrowings under the line of credit were $16,900,000 at August 31, 1996 and $17,300,000 at February 29, 1996. 7 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES ---------------------------------------------- NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS ------------------------------------------------------------ (unaudited) 4. SUBORDINATED CONVERTIBLE NOTES: In a private placement completed on August 31, 1994, the Company issued $15 million principal amount of Subordinated Convertible Notes, which are due in $5,000,000 increments on August 31, 2000, 2001 and 2002. The notes are subordinate in right of payment to all existing and future senior indebtedness of the Company. The notes bear interest at 8.25%, payable quarterly on November 15, February 15, May 15 and August 15. The notes are convertible into shares of common stock at a conversion price of $9.00 per share. The cost of issuing these notes was $521,565 and is being amortized over the life of the notes. As of August 31, 1996, $7,941,000 of the notes have been converted into 882,333 shares of common stock and $7,059,000 principal amount of subordinated convertible notes remained outstanding. 5. NET INCOME PER SHARE: Net income per share has been computed on the basis of the weighted average number of common shares and common equivalent shares outstanding during each period presented. Fully diluted earnings per share has been computed assuming conversion of all dilutive stock options. The following average shares were used in the computation of primary and fully diluted earnings per share: Six Months Ended Three Months Ended August 31, August 31, ---------------- ------------------ 1996 1995 1996 1995 ---- ---- ---- ---- Primary 9,060,321 7,950,562 8,974,574 8,009,707 Fully diluted 10,428,359 10,323,729 10,428,359 10,339,609 All per share amounts have been retroactively restated as a result of stock dividends and a three for two stock split. A detailed computation of earnings per common share appears in Exhibit 11 of this Form 10-Q. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ----------------------------------------------------------- AND RESULTS OF OPERATIONS: -------------------------- Introduction: ------------- Nu Horizons Electronics Corp. (the "Company") and its wholly-owned subsidiaries, Nu Horizons/Merit Electronics Corp. ("Merit"), NIC Components Corp. ("NIC") and Nu Horizons International Corp. ("International"), are engaged in the distribution of high technology active and passive electronic components to a wide variety of original equipment manufacturers ("OEM's") of electronic products. Active components distributed by the Company include semiconductor products such as memory chips, microprocessors, digital and linear circuits, microwave/RF and fiberoptic components, transistors and diodes. Passive components distributed by NIC, principally to OEM's and other distributors nationally, consist of a high technology line of chip and leaded components including capacitors, resistors and related networks. Nu Visions Manufacturing, Inc. ("NUV") located in Springfield, Massachusetts, another subsidiary of the Company, is a contract assembler of circuit boards, harnesses and related electromechanical devices for various OEM's. The financial information presented herein includes: (i) Consolidated condensed balance sheets as of August 31, 1996 and February 29, 1996; (ii) Consolidated condensed statements of income for the six and three month periods ended August 31, 1996 and 1995 and (iii) Consolidated condensed statements of cash flows for the six month periods ended August 31, 1996 and 1995. Results of Operations: ---------------------- Sales for the six month period ended August 31, 1996 were $108,455,584 as compared to $94,807,858 for the comparable period of the prior year, an increase of approximately $13,648,000 or 14%. However, approximately $12,956,000 or 95% of the six month increase relates to the first fiscal quarter of 1997, ended May 31, 1996, as compared to the first fiscal quarter of 1996, ended May 31, 1995. Sales for the three month period ended May 31, 1996 were a record $57,672,540 as compared to $44,716,053 for the comparable period of the prior year, an increase of approximately 29%. Management attributes the increase in sales for that period to the following sales categories: Approximately $2,006,000 or 16% of the overall increase resulted from incremental sales generated by the West Coast distribution group which consists of the San Jose, Irvine, Los Angeles and San Diego branches. Approximately $934,000 or 7% of the increase was generated by the Nu Visions Manufacturing subsidiary. The balance of the increase, approximately $10,016,000 or 77% resulted from incremental sales generated by the core distribution business through greater market penetration and overall strength in the electronic industry at that time. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ----------------------------------------------------------- AND RESULTS OF OPERATIONS (Continued): -------------------------------------- Results of Operations (Continued): ---------------------------------- Sales for the three month period ended August 31, 1996 were $50,783,044 as compared to $50,091,805 for the comparable period of the prior year, a nominal increase of approximately $691,000. Sales for the three month period ended August 31, 1996 were $6,889,496 less than for the immediately preceding quarter ended May 31, 1996. Management attributes this reduction in sales entirely to the core semiconductor distribution business which experienced excess inventory levels at the semiconductor manufacturing (supplier) level which resulted in reduced unit pricing and lower overall sales volume. Management believes that this situation is temporary and is now in the process of correction; however, no assurance can be given in this regard. Gross profit margins for the three and six months ended August 31, 1996 were 22.4% and 22.4% as compared to 23.8% and 23.4% for the comparable periods of the prior year. Management attributes this lower profit margin primarily to a general downward correction of selling prices in the marketplace, for both semiconductors and passive components, during the periods ended August 31, 1996 and a greater volume of larger orders at lower gross profit margins. Operating expenses have increased from approximately $14,488,000 for the six months ended August 31, 1995 to approximately $17,109,000 for the six months ended August 31, 1996, an increase of 18% or approximately $2,621,000. For the three months ended August 31, 1995 as compared to the three months ended August 31, 1996 operating expenses increased from approximately $7,361,000 to $8,735,000, an increase of 19%, or approximately $1,374,000. The dollar increases in operating expenses were due to increases in the following expense categories: Approximately $2,525,000 or 96% of the increase for the six month period and approximately $994,000 or 72% of the increase for the three month period, were for personnel related costs - commissions, salaries, travel, fringe benefits. These increases were required to produce the increased sales in the first quarter and planned increased sales levels in the second quarter which did not materialize as discussed above. The remaining increases of approximately $96,000 and $380,000 for the six and three month periods respectively are a result of increases in various other operating expenses. 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ----------------------------------------------------------- AND RESULTS OF OPERATIONS (Continued): -------------------------------------- Results of Operations (Continued): ---------------------------------- Interest expense decreased from approximately $935,000 for the six months ended August 31, 1995 to approximately 809,000 for the six months ended August 31, 1996 as the interest on higher levels of bank debt was more than offset by the lower amount of outstanding subordinated convertible debt (see Note 4 of the Consolidated Financial Statements). The increase in bank debt was primarily due to an increase in borrowings, resulting from an increase in the Company's accounts receivable and inventory levels, required to support the increased sales volume in the current six month period. INTEREST EXPENSE ---------------- FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED -------------------------- ------------------------ AUGUST AUGUST AUGUST AUGUST 31, 1996 31, 1995 31, 1996 31, 1995 --------- --------- --------- --------- Revolving Bank Credit $ 230,571 $ 171,902 $ 491,514 $ 315,905 Sub. Convert. Notes 145,592 309,375 317,778 618,756 --------- --------- --------- --------- Total Interest Expense $ 376,163 $ 481,277 $ 809,292 $ 934,661 ========= ========= ========= ========= Net income for the six month period ended August 31, 1996 was $3,806,164 or $.38 per share fully diluted as compared to $4,037,005 or $.43 per share fully diluted for the six month period ended August 31, 1995. Net income for the three month period ended August 31, 1996 was $1,351,228 or $.14 per share fully diluted as compared to $2,405,908 or $.25 per share fully diluted for the corresponding period of the prior year. The decreases in earnings is primarily due to lower gross profit margins and higher expenses net of lower interest expense for the periods. Liquidity and Capital Resources: -------------------------------- At August 31, 1996 the Company's current ratio was 6.1:1 as compared to 6.4:1 at the fiscal year ended February 29, 1996. Working capital increased from approximately $57,954,000 as of February 29, 1996 to approximately $61,826,000 at August 31, 1996 while cash increased from February 29, 1996 to August 31, 1996 by approximately $1,687,000. The primary reasons for the increase in both working capital and the current ratio was the increase in cash and an increase in inventories financed primarily through long term debt during the current period. These increases were required to support the increased sales activity over the six month period. In February 1988, the Company entered into an unsecured revolving line of credit agreement, as amended, which provides for maximum borrowings of $25,000,000 at the bank's prime rate with payments of interest only through April 8, 2000. At August 31, 1996 $16,900,000 was outstanding under this line of credit as compared to $17,300,000 at February 29, 1996. 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ----------------------------------------------------------- AND RESULTS OF OPERATIONS (Continued): -------------------------------------- Liquidity and Capital Resources: -------------------------------- In a private placement completed on August 31, 1994, the Company issued $15 million principal amount of Subordinated Convertible Notes, which are due in $5,000,000 increments on August 31, 2000, 2001 and 2002. The notes are subordinate in right of payment to all existing and future senior indebtedness of the Company. The notes bear interest at 8.25%, payable quarterly on November 15, February 15, May 15 and August 15. The notes are convertible into shares of common stock at a conversion price of $9.00 per share. The cost of issuing these notes was $521,565 and is being amortized over the life of the notes. The Company has registered, under the Securities Act of 1933, for the resale by the holders thereof, 117,666 shares of common stock, representing the number of shares of common stock obtainable by such holders upon conversion of 15% of the outstanding principal amount of such notes. As of August 31, 1996, $7,941,000 of the notes have been converted into 882,333 shares of common stock and $7,059,000 principal amount of subordinated convertible notes remained outstanding. No assurance can be given that the notes will be converted or that the shares of common stock underlying the notes will be sold by the holders thereof. The Company has experienced an overall shortfall in operating cash flow in six of its last eight fiscal quarters primarily due to the approximately fifty-six percent increase in sales for the last fiscal year and the forty-one percent increase in sales in fiscal 1995. As a result of this sales growth the Company has been required to finance increased levels of accounts receivable and inventory which exceed the amounts that can be supported by operating cash flows. The shortfall in operating cash flow has been supplemented through the issuance of the subordinated convertible notes and the utilization of the unsecured bank credit line as described above. The Company anticipates that its capital resources provided by its bank line of credit will be sufficient to meet its financing requirements during that period . Inflationary Impact: -------------------- Since the inception of operations, inflation has not significantly affected the operating results of the Company. However, inflation and changing interest rates have had a significant effect on the economy in general and therefore could affect the operating results of the Company in the future. Except for historical information contained herein, the matters set forth above are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ from those in the forward-looking statements. Potential risks and uncertainties include such factors as the level of business and consumer spending for electronic products, the amount of sales of the Company's products, the competitive environment within the electronics industry, the ability of the Company to continue to expand its operations, the level of costs incurred in connection with the Company's expansion efforts and the financial strength of the Company's customers and suppliers. Investors are also directed to consider other risks and uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission. 12 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings There are no material legal proceedings against the Company or in which any of their property is subject. ITEM 2. Changes in Securities None ITEM 3. Defaults upon Senior Securities None ITEM 4. Submission of Matters to a Vote of Security Holders (a) The Registrant held its Annual Meeting of Stockholders on September 13, 1996. The following proposals were adopted by the votes indicated. (b)(c)(1) Two directors were elected at the Annual Meeting to serve until the Annual Meeting of Stockholders in 1999, in addition to the five other Directors, Herbert Gardner, Paul Durando, David Siegel, Richard Schuster and Harvey Blau, whose term of office continued after the meeting. The names of these Directors and votes cast in favor of their election and shares withheld are as follows: NAME VOTES FOR VOTES WITHHELD ---- --------- -------------- Irving Lubman 7,110,334 350,631 Arthur Nadata 7,110,634 350,331 VOTED VOTED FOR AGAINST ABSTAINED ----- ------- --------- (2) Approval to amend the Company's 1994 Stock Option Plan to increase the authorized shares of Common Stock of the Company available thereunder from 600,0000 to 1,100,000 3,270,193 557,470 63,060 (3) Approval of the Employment Agreement between the Company and Irving Lubman, the Company's Chairman of the Board and Chief Executive Officer 3,763,182 240,957 139,981 (4) Approval of the Employment Agreement between the Company and Arthur Nadata, the Company's President and Treasurer 3,771,107 232,844 140,169 (5) Approval of the Employment Agreement between the Company and Richard Schuster, the Company's Vice President and Secretary 3,785,066 218,530 140,524 13 PART II. OTHER INFORMATION ITEM 5. Other Information None ITEM 6. Exhibits and Reports: (a) Exhibits: 10.15 Employment and Change of Control Agreements dated September 13, 1996, between the Company and Irving Lubman 10.16 Employment and Change of Control Agreements dated September 13, 1996, between the Company and Arthur Nadata 10.17 Employment and Change of Control Agreements dated September 13, 1996, between the Company and Richard Schuster 11. See Exhibit 11 and Notes to Financial Statements, Note 5, regarding computation of per share earnings 27. Financial Data Schedule (b) Reports on Form 8-K None 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Nu Horizons Electronics Corp. ----------------------------- Registrant /s/ Arthur Nadata ---------------------------------------- Date: October 14, 1996 Arthur Nadata, President and Chief Executive Officer /s/ Paul Durando ---------------------------------------- Date: October 14, 1996 Paul Durando, Vice President-Finance and Chief Financial Officer 15 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- EXHIBIT INDEX to FORM 10-Q FOR THE FISCAL QUARTER ENDED AUGUST 31, 1996 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 --------------------- NU HORIZONS ELECTRONICS CORP. (Exact Name of Registrant as Specified in Its Charter) EXHIBIT NUMBER DESCRIPTION ---------------------------------------------------------------------- 10.15 Employment and Change of Control Agreements Dated September 13, 1996, Between the Company and Irving Lubman 10.16 Employment and Change of Control Agreements Dated September 13, 1996, Between the Company and Arthur Nadata 10.17 Employment and Change of Control Agreements Dated September 13, 1996, Between the Company and Richard Schuster 11 Computation of Per Share Earnings 27 Financial Data Schedule EX-10.15 2 EMPLOYMENT AGREEMENT--IRVING LUBMAN EXHIBIT 10.15 EMPLOYMENT AGREEMENT -------------------- EMPLOYMENT AGREEMENT made as of the 13th day of September, 1996 by and between NU HORIZONS ELECTRONICS CORP., a Delaware corporation (hereinafter the "Company") and IRVING LUBMAN, residing at 329 Pepperidge Road, Hewlett Harbor, New York 11557 (hereinafter called the "Employee"). W I T N E S S E T H: WHEREAS, the Company desires to enter into an Employment Agreement with Employee to supersede the Employee's current Employment Agreement between the Company and the Employee; and WHEREAS, Employee desires to enter into an Employment Agreement with the Company. NOW, THEREFORE, it is agreed as follows: 1. PRIOR AGREEMENTS SUPERSEDED. This Agreement supersedes any employment --------------------------- or consulting agreements, oral or written, entered into between Employee and the Company prior to the date of this Agreement. 2. RETENTION OF SERVICES. The Company hereby retains the services of --------------------- Employee, and Employee agrees to furnish such services, upon the terms and conditions hereinafter set forth. 3. TERM. Subject to earlier termination on the terms and conditions ---- hereinafter provided, the term of this Agreement shall be for a continually renewing five (5) year term so that Employee's unexpired term of employment shall always be at least five (5) years from any notice of termination of his employment without cause from the Company. 4. DUTIES AND EXTENT OF SERVICES DURING PERIOD OF EMPLOYMENT. --------------------------------------------------------- During the term of employment, Employee shall be employed as Chairman of the Board of Directors of the Company. In such capacity, Employee agrees that he shall serve the Company under the direction of the Board of Directors of the Company to the best of his ability, shall perform all duties incident to his offices on behalf of the Company and shall perform such other duties as may from time to time be assigned to him by the Board of Directors of the Company. Employee shall also serve in similar capacities of such of the subsidiary corporations of the Company as may be selected by the Board of Directors and shall be entitled to such additional compensation therefor as may be determined by the Board of Directors of the Company. Notwithstanding the foregoing, it is understood and agreed that the duties of Employee during the period of employment shall not be inconsistent with (i) his position and title as a Senior Executive of the Company; or (ii) with those duties ordinarily performed by a comparable executive officer. The Company shall not require Employee to be employed in any location other than New York City and Long Island, New York, unless he consents in writing to such location. 5. REMUNERATION. (a) During the period of employment, Employee shall be ------------- entitled to receive the following compensation for his services: (i) The Company shall pay to Employee a salary at the rate of $226,545 per annum, payable in weekly installments, or in such other manner as shall be agreeable to the Company and Employee. (ii) In addition to his salary, Employee shall receive an increment in an amount equal to the cumulative cost of living on $226,545 as reported in the "Consumer Price Index, New 2 York Northeastern New Jersey, all items" published by the United States Department of Labor, Bureau of Labor Statistics (using January 1996 as the base date for computation). Such cost of living increment with respect to the aforesaid salary of Employee shall be made semi- annually as follows: A. With respect to the first six months of each fiscal year of the Company during the period of employment, such increment shall be calculated and payable cumulatively on or before the first day of the eighth month of such fiscal year; and B. With respect to the last six months of each fiscal year of the Company during the period of employment, such increment shall be calculated and payable cumulatively on or before the first day of the second month of the following fiscal year of the Company. The first calculation shall be made on or before September 15, 1997 with respect to the period September 13, 1996 through September 15, 1997. If Employee's employment shall terminate during any six-month period referred to in this subparagraph 5(ii), then the cost of living increment provided for herein shall be prorated accordingly. (iii) Not later than one hundred twenty (120) days after the end of the fiscal year of the Company and each subsequent fiscal year of the Company ending during the period of employment, the Company shall pay to Employee, as incentive compensation, an amount equal to THREE AND ONE-THIRD (3-1/3%) PERCENT of the Consolidated Pretax Earnings of the Company. For purposes hereof, the term "Consolidated Pretax Earnings" of the Company shall mean, with respect to any fiscal year, the consolidated income, if any, of the Company for such fiscal year as set forth in the audited, consolidated financial statements 3 of the Company and its subsidiaries included in its Annual Report to Stockholders for such fiscal year, before deduction of taxes based on income or of the incentive compensation to be paid to Employee for such fiscal year under this Agreement. 6. EMPLOYEE BENEFITS; EXPENSES. (a) During the period of employment, --------------------------- the Company shall continue to provide at its expense, life insurance to Employee in the face amount of $1,000,000. (b) During the period of employment, Employee shall be eligible to participate in the Company's stock option and stock purchase plans to the extent determined in the sole discretion of the Board of Directors of the Company or a committee thereof. (c) During the period of employment, Employee shall be furnished with office space and facilities commensurate with his position and adequate for the performance of his duties; he shall be provided with the perquisites customarily associated with the position of a Senior Executive of the Company; and he shall be entitled to regular vacations during each year of not less than four weeks in the aggregate. Any such vacation time not used by Employee in any one year shall accumulate to his benefit in the succeeding years and, to the extent not previously used as of the termination of the period of employment, Employee shall be paid in cash in lieu of such unused vacation. (d) It is contemplated that during the period of employment, Employee may be required to incur out-of-pocket expenses in connection with the performance of his services hereunder, including expenses incurred for travel and business entertainment. Accordingly, the Company shall pay, or reimburse Employee for all out-of-pocket expenses reasonably incurred by Employee in the performance of his duties hereunder in accordance with the usual procedures of the 4 Company. Notwithstanding the foregoing, in recognition that Employee will be required during the term of this Agreement to do a considerable amount of local driving in connection with his services hereunder, the Company shall provide Employee with the use of a suitable automobile and all expenses incidental throughout the term of this Agreement. (e) All benefits to Employee specifically provided for herein shall be in addition to, and shall not diminish, (i) such other benefits and/or compensation as may hereafter be granted to or afforded to Employee by the Board of Directors of the Company, (ii) any rights which Employee may have or may acquire under any hospitalization, life insurance, pension, profit sharing, incentive compensation or other present or future employee benefit plan or plans of the Company; and (iii) all medical reimbursement up to $5,000 per annum for all medical expenses not covered by Company plans. (f) In the event of the death of Employee during the course of his employment hereunder, the Company shall continue to pay to Employee's widow, or to such other person or persons as may be designated by Employee in his Will, or to his Estate in the event of Employee's intestacy, one-half (1/2) of the compensation to which Employee is entitled pursuant to paragraph 5 hereunder for the balance of the period covered by this Agreement. 7. DISABILITY. If Employee, during the period of employment, becomes ---------- unable for nine consecutive months or more, due to ill health or other incapacity, to perform his services hereunder, the Company may thereafter, upon at least 90 days' written notice to Employee, place him on disability status. After such action by the Company, Employee shall continue to receive one-half (1/2) of the sum of the last salary paid to Employee under paragraph 5(a)(i) and (ii) hereof and any 5 increment thereto payable under paragraph 5(a)(iii) hereof until the end of the period of employment or until his disability ends. 8. CONFIDENTIAL INFORMATION. Employee recognizes and acknowledges that ------------------------ confidential information of various kinds, including marketing analysis and product development information are valuable, special and unique assets of its business. Accordingly, Employee will not, during the term of this Agreement, except in the performance of his services hereunder, disclose any such confidential information to any individual or entity for any reason or purpose whatsoever and will not use any such confidential information for his own benefit. The provisions of this paragraph 8 will not apply to information available in trade or other publications, information known to Employee at the time he entered the employ of the Company, and information which presently is or shall become available without committing a tortious act. 9. NON-COMPETITION. Employee agrees that, during the term of this --------------- Agreement, he will not, without the prior written approval of the Board of Directors of the Company, directly or indirectly, through any other individual or entity, (a) become an officer or employee of, or render any services, including consulting services, to, any competitor of the Company, (b) solicit, raid, entice or induce any customer of the Company to cease purchasing goods or services from the Company or to become a customer of any competitor of the Company, and Employee will not approach any customer for any such purpose or authorize the taking of any such actions by any other individual or entity, or (c) solicit, raid, entice or induce any employee of the Company, and Employee will not approach any such employee for any such purpose or authorize the taking of any such action by any other individual or entity. However, nothing contained in this paragraph 9 shall be construed as preventing Employee from investing his assets in such form or manner as will not 6 require him to become an officer or employee of, or render any services (in- cluding consulting services) to, any competitor of the Company. 10. TERMINATION FOR CAUSE. (a) The Company recognizes that, for a --------------------- period of several years during which Employee has been employed and/or associated with the Company, the Company has been intimately familiar with the ability, competence and judgment of Employee, which are acknowledged to be of the highest caliber. Accordingly, the Company and Employee agree that Employee's services hereunder may be terminated by the Company for an act of moral turpitude materially adversely affecting the financial interest of the Company. (b) If the Company terminates Employee's employment hereunder for any reason other than as set forth in paragraph 10(a) hereof, Employee's compensation shall continue to be paid to him as provided in paragraph 5 hereunder for the remainder of the term of this Agreement. Employee shall have no duty to mitigate the Company's damages hereunder. Therefore, no deduction shall be made by the Company for any compensation earned by Employee from other employment or for monies or property otherwise received by Employee subsequent to such termination of his employment hereunder. Employee and the Company acknowledge that the foregoing provisions of this paragraph 10(b) are reasonable and are based upon the facts and circumstances of the parties at the time of entering into this Agreement, and with due regard to future expectations. 11. CONSOLIDATION OR MERGER. In the event of any consolidation or ----------------------- merger of the Company into or with any other corporation during the term of this Agreement, or the sale of all or substantially all of the assets of the Company to another corporation during the term of this Agreement, such successor corporation shall assume this Agreement and become obligated to 7 perform all of the terms and provisions hereof applicable to the Company, and Employee's obligations hereunder shall continue in favor of such successor corporation. 12. NOTICES. Any notice to be given to the Company hereunder shall ------- be deemed sufficient if addressed to the Company in writing and delivered or mailed by certified or registered mail to its offices at 6000 New Horizons Blvd., Amityville, New York 11701, or such other address as the Company may hereafter designate. Any notice to be given to Employee hereunder shall be delivered or mailed by certified or registered mail to him at: 329 Pepperidge Road, Hewlett Harbor, New York 11557, or such other address as he may hereafter designate. 13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon ---------------------- and inure to the benefit of the successors and assigns of the Company, unless clearly inapplicable, reference herein to the Company shall be deemed to include any such successor. In addition, this Agreement shall be binding upon and inure to the benefit of the Employee and his heirs, executors, legal repre-sentatives and assigns; provided, however, that the obligations of Employee hereunder may not be delegated without the prior written approval of the Board of Directors of the Company. 14. AMENDMENTS. This Agreement may not be altered, modified, ---------- amended or terminated except by a written instrument signed by each of the parties hereto. 15. APPLICABLE LAW. This Agreement shall be governed by, construed -------------- and enforced in accordance with the laws of the State of New York, without regard to conflicts of laws. 8 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. NU HORIZONS ELECTRONICS CORP. By: ----------------------------- Name Title: -------------------------------- IRVING LUBMAN,EMPLOYEE 9 AGREEMENT --------- AGREEMENT made as of the 13th day of September, 1996 by and between NU HORIZONS ELECTRONICS CORP., a Delaware corporation (hereinafter called the "Company") and IRVING LUBMAN, residing at 329 Pepperidge Road, Hewlett Harbor, New York 11557 (hereinafter called the "Employee"). W I T N E S S E T H: WHEREAS, the Company desires to continue to employ the Employee, and the Company acknowledges that its entering into this agreement is a condition to the Employee's willingness to continue such employment; and WHEREAS, Employee desires to continue to be employed by the Company, and the Employee acknowledges that his entering into this agreement is a condition to the Company's willingness to continue such employment; NOW, THEREFORE, it is agreed as follows: 1. CHANGE OF CONTROL. (a) In the event there shall be a change in the ----------------- present control of the Company as hereinafter defined, or in any person directly or indirectly presently controlling the Company, as hereinafter defined, Employee shall have the option, exercisable within six (6) months of his becoming aware of such event, to terminate his employment by the Company pursuant to the Employment Agreement dated September 13, 1996 between the Company and the Employee forthwith. Upon such termination, Employee shall have the right to immediately receive as a lump sum payment an amount equal to, subject to Section 1(b) below, three (3) times the average of the total annual compensation paid by the Company to Employee, with respect to the five fiscal years of the Company prior to the change of control, minus $100.00. (b) The payment to be made pursuant to Section 1(a) above shall be made by the Company to the Employee in an amount (net of the Federal and State income tax thereon computed at the marginal regular Federal and State income tax rates of the Employee in the tax year in which this payment is made and also net of any excise, penalty or other similar tax) which shall cause the net after tax amount (calculated as provided in the foregoing parenthetical clause) received by the Employee with respect to the payment made under Section 1(a) to be equal to the amount set forth in Section 1(a) above, at the time of such payment and without consideration for the time value of money. (c) For purposes of this Agreement, a change in control of the Company, or in any person directly or indirectly controlling the Company, shall mean: 10 (i) A change in control as such term is presently defined in Regulation 240.12b-2 under the Securities Exchange Act of 1934 ("Exchange Act); or (ii) if any "person" (as such term is used in Sectiom 13(d) and 14(d) of the Exchange Act) other than the Company or any "person" who on the date of this Agreement is a director or officer of the Company, becomes the "beneficial owner" (as defined in Rule 13(d)-3 under the Exchange Act), directly or indirectly, of securities of the Company representing fifteen (15%) percent of the voting power of the Company's then outstanding securities; or (iii) if during any period of two (2) consecutive years during the term of this Agreement, individuals who at the beginning of such period constitute the Board of Directors cease for any reason to constitute at least a majority thereof. 2. CONSOLIDATION OR MERGER. In the event of any consolidation or merger ----------------------- of the Company into or with any other corporation during the term of this Agreement, or the sale of all or substantially all of the assets of the Company to another corporation, person or entity during the term of this Agreement, such successor corporation shall assume this Agreement and become obligated to perform all of the terms and provisions hereof applicable to the Company, and Employee's obligations hereunder shall continue in favor of such successor corporation. 3. NOTICES. Any notice to be given to the Company hereunder shall be ------- deemed sufficient if addressed to the Company in writing and delivered or mailed by certified or registered mail to its offices at 6000 New Horizons Boulevard, Amityville, New York 11701, or such other address as the Company may hereafter designate. Any notice to be given to Employee hereunder shall be delivered or mailed by certified or registered mail to him at: 11 Clearmeadow Court, Woodbury, New York 11797 or such other address as he may hereafter designate. 4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and ---------------------- inure to the benefit of the successors and assigns of the Company, and unless clearly inapplicable, all references herein to the Company shall be deemed to include any such successor. In addition, this Agreement shall be binding upon and inure to the benefit of the Employee and his heirs, executors, legal representatives and assigns; provided, however, that the obligations of Employee hereunder may not be delegated without the prior written approval of the Board of Directors of the Company. 5. AMENDMENTS. This Agreement may not be altered, modified, amended or ---------- terminated except by a written instrument signed by each of the parties hereto. 6. APPLICABLE LAW. This Agreement shall be governed by, construed and -------------- enforced in accordance with the laws of the State of New York, without regard to conflicts of laws. 11 7. NO RIGHT TO EMPLOYMENT. This Agreement shall not be construed to ----------------------- grant to the Employee any right to continue to be employed by the Company. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. NU HORIZONS ELECTRONICS CORP. By: --------------------------- Arthur Nadata President --------------------------- Irving Lubman 12 EX-10.16 3 EMPLOYMENT AGREEMENT--ARTHUR NADATA EXHIBIT 10.16 EMPLOYMENT AGREEMENT -------------------- EMPLOYMENT AGREEMENT made as of the 13th day of September, 1996 by and between NU HORIZONS ELECTRONICS CORP., a Delaware corporation (hereinafter the "Company") and ARTHUR NADATA, residing at 25 Northcote Drive, Melville, New York 11747 (hereinafter called the "Employee"). W I T N E S S E T H: WHEREAS, the Company desires to enter into an Employment Agreement with Employee to supersede the Employee's current Employment Agreement between the Company and the Employee; and WHEREAS, Employee desires to enter into an Employment Agreement with the Company. NOW, THEREFORE, it is agreed as follows: 1. PRIOR AGREEMENTS SUPERSEDED. This Agreement supersedes any employment --------------------------- or consulting agreements, oral or written, entered into between Employee and the Company prior to the date of this Agreement. 2. RETENTION OF SERVICES. The Company hereby retains the services of --------------------- Employee, and Employee agrees to furnish such services, upon the terms and conditions hereinafter set forth. 3. TERM. Subject to earlier termination on the terms and conditions ---- hereinafter provided, the term of this Agreement shall be for a continually renewing five (5) year term so that Employee's unexpired term of employment shall always be at least five (5) years from any notice of termination of his employment without cause from the Company. 4. DUTIES AND EXTENT OF SERVICES DURING PERIOD OF ---------------------------------------------- EMPLOYMENT. ---------- During the term of employment, Employee shall be employed as President of the Company. In such capacity, Employee agrees that he shall serve the Company under the direction of the Board of Directors of the Company to the best of his ability, shall perform all duties incident to his offices on behalf of the Company and shall perform such other duties as may from time to time be assigned to him by the Board of Directors of the Company. Employee shall also serve in similar capacities of such of the subsidiary corporations of the Company as may be selected by the Board of Directors and shall be entitled to such additional compensation therefor as may be determined by the Board of Directors of the Company. Notwithstanding the foregoing, it is understood and agreed that the duties of Employee during the period of employment shall not be inconsistent with (i) his position and title as a Senior Executive of the Company; or (ii) with those duties ordinarily performed by a comparable executive officer. The Company shall not require Employee to be employed in any location other than New York City and Long Island, New York, unless he consents in writing to such location. 5. REMUNERATION. (a) During the period of employment, Employee shall be ------------- entitled to receive the following compensation for his services: (i) The Company shall pay to Employee a salary at the rate of $226,545 per annum, payable in weekly installments, or in such other manner as shall be agreeable to the Company and Employee. (ii) In addition to his salary, Employee shall receive an increment in an amount equal to the cumulative cost of living on $226,545 as reported in the "Consumer Price Index, New 2 York Northeastern New Jersey, all items" published by the United States Department of Labor, Bureau of Labor Statistics (using January 1996 as the base date for computation). Such cost of living increment with respect to the aforesaid salary of Employee shall be made semi- annually as follows: A. With respect to the first six months of each fiscal year of the Company during the period of employment, such increment shall be calculated and payable cumulatively on or before the first day of the eighth month of such fiscal year; and B. With respect to the last six months of each fiscal year of the Company during the period of employment, such increment shall be calculated and payable cumulatively on or before the first day of the second month of the following fiscal year of the Company. The first calculation shall be made on or before September 15, 1997 with respect to the period September 13, 1996 through September 15, 1997. If Employee's employment shall terminate during any six-month period referred to in this sub- paragraph 5(ii), then the cost of living increment provided for herein shall be prorated accordingly. (iii) Not later than one hundred twenty (120) days after the end of the fiscal year of the Company and each subsequent fiscal year of the Company ending during the period of employment, the Company shall pay to Employee, as incentive compensation, an amount equal to THREE AND ONE-THIRD (3-1/3%) PERCENT of the Consolidated Pretax Earnings of the Company. For purposes hereof, the term "Consolidated Pretax Earnings" of the Company shall mean, with respect to any fiscal year, the consolidated income, if any, of the Company for such fiscal year as set forth in the audited, consolidated financial statements 3 of the Company and its subsidiaries included in its Annual Report to Stockholders for such fiscal year, before deduction of taxes based on income or of the incentive compensation to be paid to Employee for such fiscal year under this Agreement. 6. EMPLOYEE BENEFITS; EXPENSES. (a) During the period of employment, --------------------------- the Company shall continue to provide at its expense, life insurance to Employee in the face amount of $1,000,000. (b) During the period of employment, Employee shall be eligible to participate in the Company's stock option and stock purchase plans to the extent determined in the sole discretion of the Board of Directors of the Company or a committee thereof. (c) During the period of employment, Employee shall be furnished with office space and facilities commensurate with his position and adequate for the performance of his duties; he shall be provided with the perquisites customarily associated with the position of a Senior Executive of the Company; and he shall be entitled to regular vacations during each year of not less than four weeks in the aggregate. Any such vacation time not used by Employee in any one year shall accumulate to his benefit in the succeeding years and, to the extent not previously used as of the termination of the period of employment, Employee shall be paid in cash in lieu of such unused vacation. (d) It is contemplated that during the period of employment, Employee may be required to incur out-of-pocket expenses in connection with the performance of his services hereunder, including expenses incurred for travel and business entertainment. Accordingly, the Company shall pay, or reimburse Employee for all out-of-pocket expenses reasonably incurred by Employee in the performance of his duties hereunder in accordance with the usual procedures of the 4 Company. Notwithstanding the foregoing, in recognition that Employee will be required during the term of this Agreement to do a considerable amount of local driving in connection with his services hereunder, the Company shall provide Employee with the use of a suitable automobile and all expenses incidental throughout the term of this Agreement. (e) All benefits to Employee specifically provided for herein shall be in addition to, and shall not diminish, (i) such other benefits and/or compensation as may hereafter be granted to or afforded to Employee by the Board of Directors of the Company, (ii) any rights which Employee may have or may acquire under any hospitalization, life insurance, pension, profit sharing, incentive compensation or other present or future employee benefit plan or plans of the Company; and (iii) all medical reimbursement up to $5,000 per annum for all medical expenses not covered by Company plans. (f) In the event of the death of Employee during the course of his employment hereunder, the Company shall continue to pay to Employee's widow, or to such other person or persons as may be designated by Employee in his Will, or to his Estate in the event of Employee's intestacy, one-half (1/2) of the compensation to which Employee is entitled pursuant to paragraph 5 hereunder for the balance of the period covered by this Agreement. 7. DISABILITY. If Employee, during the period of employment, becomes ---------- unable for nine consecutive months or more, due to ill health or other incapacity, to perform his services hereunder, the Company may thereafter, upon at least 90 days' written notice to Employee, place him on disability status. After such action by the Company, Employee shall continue to receive one-half (1/2) of the sum of the last salary paid to Employee under paragraph 5(a)(i) and (ii) hereof and any 5 increment thereto payable under paragraph 5(a)(iii) hereof until the end of the period of employment or until his disability ends. 8. CONFIDENTIAL INFORMATION. Employee recognizes and acknowledges that ------------------------ confidential information of various kinds, including marketing analysis and product development information are valuable, special and unique assets of its business. Accordingly, Employee will not, during the term of this Agreement, except in the performance of his services hereunder, disclose any such confidential information to any individual or entity for any reason or purpose whatsoever and will not use any such confidential information for his own benefit. The provisions of this paragraph 8 will not apply to information available in trade or other publications, information known to Employee at the time he entered the employ of the Company, and information which presently is or shall become available without committing a tortious act. 9. NON-COMPETITION. Employee agrees that, during the term of this --------------- Agreement, he will not, without the prior written approval of the Board of Directors of the Company, directly or indirectly, through any other individual or entity, (a) become an officer or employee of, or render any services, including consulting services, to, any competitor of the Company, (b) solicit, raid, entice or induce any customer of the Company to cease purchasing goods or services from the Company or to become a customer of any competitor of the Company, and Employee will not approach any customer for any such purpose or authorize the taking of any such actions by any other individual or entity, or (c) solicit, raid, entice or induce any employee of the Company, and Employee will not approach any such employee for any such purpose or authorize the taking of any such action by any other individual or entity. However, nothing contained in this paragraph 9 shall be construed as preventing Employee from investing his assets in such form or manner as will not 6 require him to become an officer or employee of, or render any services (in- cluding consulting services) to, any competitor of the Company. 10. TERMINATION FOR CAUSE. (a) The Company recognizes that, for a --------------------- period of several years during which Employee has been employed and/or associated with the Company, the Company has been intimately familiar with the ability, competence and judgment of Employee, which are acknowledged to be of the highest caliber. Accordingly, the Company and Employee agree that Employee's services hereunder may be terminated by the Company for an act of moral turpitude materially adversely affecting the financial interest of the Company. (b) If the Company terminates Employee's employment hereunder for any reason other than as set forth in paragraph 10(a) hereof, Employee's compensation shall continue to be paid to him as provided in paragraph 5 hereunder for the remainder of the term of this Agreement. Employee shall have no duty to mitigate the Company's damages hereunder. Therefore, no deduction shall be made by the Company for any compensation earned by Employee from other employment or for monies or property otherwise received by Employee subsequent to such termination of his employment hereunder. Employee and the Company acknowledge that the foregoing provisions of this paragraph 10(b) are reasonable and are based upon the facts and circumstances of the parties at the time of entering into this Agreement, and with due regard to future expectations. 11. CONSOLIDATION OR MERGER. In the event of any consolidation or ----------------------- merger of the Company into or with any other corporation during the term of this Agreement, or the sale of all or substantially all of the assets of the Company to another corporation during the term of this Agreement, such successor corporation shall assume this Agreement and become obligated to 7 perform all of the terms and provisions hereof applicable to the Company, and Employee's obligations hereunder shall continue in favor of such successor corporation. 12. NOTICES. Any notice to be given to the Company hereunder shall ------- be deemed sufficient if addressed to the Company in writing and delivered or mailed by certified or registered mail to its offices at 6000 New Horizons Blvd., Amityville, New York 11701, or such other address as the Company may hereafter designate. Any notice to be given to Employee hereunder shall be delivered or mailed by certified or registered mail to him at: 25 Northcote Drive, Melville, New York 11747, or such other address as he may hereafter designate. 13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon ---------------------- and inure to the benefit of the successors and assigns of the Company, unless clearly inapplicable, reference herein to the Company shall be deemed to include any such successor. In addition, this Agreement shall be binding upon and inure to the benefit of the Employee and his heirs, executors, legal repre-sentatives and assigns; provided, however, that the obligations of Employee hereunder may not be delegated without the prior written approval of the Board of Directors of the Company. 14. AMENDMENTS. This Agreement may not be altered, modified, ---------- amended or terminated except by a written instrument signed by each of the parties hereto. 15. APPLICABLE LAW. This Agreement shall be governed by, construed -------------- and enforced in accordance with the laws of the State of New York, without regard to conflicts of laws. 8 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. NU HORIZONS ELECTRONICS CORP. By: ___________________________ Name: Title: ------------------------------- ARTHUR NADATA, EMPLOYEE 9 AGREEMENT --------- AGREEMENT made as of the 13th day of September, 1996 by and between NU HORIZONS ELECTRONICS CORP., a Delaware corporation (hereinafter called the "Company") and ARTHUR NADATA, residing at 25 Northcote Drive, Melville, New York 11747 (hereinafter called the "Employee"). W I T N E S S E T H: WHEREAS, the Company desires to continue to employ the Employee, and the Company acknowledges that its entering into this agreement is a condition to the Employee's willingness to continue such employment; and WHEREAS, Employee desires to continue to be employed by the Company, and the Employee acknowledges that his entering into this agreement is a condition to the Company's willingness to continue such employment; NOW, THEREFORE, it is agreed as follows: 1. CHANGE OF CONTROL. (a) In the event there shall be a change in the ----------------- present control of the Company as hereinafter defined, or in any person directly or indirectly presently controlling the Company, as hereinafter defined, Employee shall have the option, exercisable within six (6) months of his becoming aware of such event, to terminate his employment by the Company pursuant to the Employment Agreement dated September 13, 1996 between the Company and the Employee forthwith. Upon such termination, Employee shall have the right to immediately receive as a lump sum payment an amount equal to, subject to Section 1(b) below, three (3) times the average of the total annual compensation paid by the Company to Employee, with respect to the five fiscal years of the Company prior to the change of control, minus $100.00. (b) The payment to be made pursuant to Section 1(a) above shall be made by the Company to the Employee in an amount (net of the Federal and State income tax thereon computed at the marginal regular Federal and State income tax rates of the Employee in the tax year in which this payment is made and also net of any excise, penalty or other similar tax) which shall cause the net after tax amount (calculated as provided in the foregoing parenthetical clause) received by the Employee with respect to the payment made under Section 1(a) to be equal to the amount set forth in Section 1(a) above, at the time of such payment and without consideration for the time value of money. (c) For purposes of this Agreement, a change in control of the Company, or in any person directly or indirectly controlling the Company, shall mean: 10 (i) A change in control as such term is presently defined in Regulation 240.12b-2 under the Securities Exchange Act of 1934 ("Exchange Act); or (ii) if any "person" (as such term is used in Sectiom 13(d) and 14(d) of the Exchange Act) other than the Company or any "person" who on the date of this Agreement is a director or officer of the Company, becomes the "beneficial owner" (as defined in Rule 13(d)-3 under the Exchange Act), directly or indirectly, of securities of the Company representing fifteen (15%) percent of the voting power of the Company's then outstanding securities; or (iii) if during any period of two (2) consecutive years during the term of this Agreement, individuals who at the beginning of such period constitute the Board of Directors cease for any reason to constitute at least a majority thereof. 2. CONSOLIDATION OR MERGER. In the event of any consolidation or merger ----------------------- of the Company into or with any other corporation during the term of this Agreement, or the sale of all or substantially all of the assets of the Company to another corporation, person or entity during the term of this Agreement, such successor corporation shall assume this Agreement and become obligated to perform all of the terms and provisions hereof applicable to the Company, and Employee's obligations hereunder shall continue in favor of such successor corporation. 3. NOTICES. Any notice to be given to the Company hereunder shall be ------- deemed sufficient if addressed to the Company in writing and delivered or mailed by certified or registered mail to its offices at 6000 New Horizons Boulevard, Amityville, New York 11701, or such other address as the Company may hereafter designate. Any notice to be given to Employee hereunder shall be delivered or mailed by certified or registered mail to him at: 11 Clearmeadow Court, Woodbury, New York 11797 or such other address as he may hereafter designate. 4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and ---------------------- inure to the benefit of the successors and assigns of the Company, and unless clearly inapplicable, all references herein to the Company shall be deemed to include any such successor. In addition, this Agreement shall be binding upon and inure to the benefit of the Employee and his heirs, executors, legal representatives and assigns; provided, however, that the obligations of Employee hereunder may not be delegated without the prior written approval of the Board of Directors of the Company. 5. AMENDMENTS. This Agreement may not be altered, modified, amended or ---------- terminated except by a written instrument signed by each of the parties hereto. 6. APPLICABLE LAW. This Agreement shall be governed by, construed and -------------- enforced in accordance with the laws of the State of New York, without regard to conflicts of laws. 11 7. NO RIGHT TO EMPLOYMENT. This Agreement shall not be construed to ----------------------- grant to the Employee any right to continue to be employed by the Company. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. NU HORIZONS ELECTRONICS CORP. By: -------------------------------- Richard Schuster Vice President ------------------------------------ Arthur Nadata 12 EX-10.17 4 EMPLOYMENT--RICHARD SCHUSTER EXHIBIT 10.17 EMPLOYMENT AGREEMENT -------------------- EMPLOYMENT AGREEMENT made as of the 13th day of September, 1996 by and between NU HORIZONS ELECTRONICS CORP., a Delaware corporation (hereinafter the "Company") and RICHARD SCHUSTER, residing at 11 Clearmeadow Court, Woodbury, New York 11797 (hereinafter called the "Employee"). W I T N E S S E T H: WHEREAS, the Company desires to enter into an Employment Agreement with Employee to supersede the Employee's current Employment Agreement between the Company and the Employee; and WHEREAS, Employee desires to enter into an Employment Agreement with the Company. NOW, THEREFORE, it is agreed as follows: 1. PRIOR AGREEMENTS SUPERSEDED. This Agreement supersedes any employment --------------------------- or consulting agreements, oral or written, entered into between Employee and the Company prior to the date of this Agreement. 2. RETENTION OF SERVICES. The Company hereby retains the services of --------------------- Employee, and Employee agrees to furnish such services, upon the terms and conditions hereinafter set forth. 3. TERM. Subject to earlier termination on the terms and conditions ---- hereinafter provided, the term of this Agreement shall be for a continually renewing five (5) year term so that Employee's unexpired term of employment shall always be at least five (5) years from any notice of termination of his employment without cause from the Company. 4. DUTIES AND EXTENT OF SERVICES DURING PERIOD OF ---------------------------------------------- EMPLOYMENT. ---------- During the term of employment, Employee shall be employed as Vice President of the Company. In such capacity, Employee agrees that he shall serve the Company under the direction of the Board of Directors of the Company to the best of his ability, shall perform all duties incident to his offices on behalf of the Company and shall perform such other duties as may from time to time be assigned to him by the Board of Directors of the Company. Employee shall also serve in similar capacities of such of the subsidiary corporations of the Company as may be selected by the Board of Directors and shall be entitled to such additional compensation therefor as may be determined by the Board of Directors of the Company. Notwithstanding the foregoing, it is understood and agreed that the duties of Employee during the period of employment shall not be inconsistent with (i) his position and title as a Senior Executive of the Company; or (ii) with those duties ordinarily performed by a comparable executive officer. The Company shall not require Employee to be employed in any location other than New York City and Long Island, New York, unless he consents in writing to such location. 5. REMUNERATION. (a) During the period of employment, Employee shall be ------------- entitled to receive the following compensation for his services: (i) The Company shall pay to Employee a salary at the rate of $226,545 per annum, payable in weekly installments, or in such other manner as shall be agreeable to the Company and Employee. (ii) In addition to his salary, Employee shall receive an increment in an amount equal to the cumulative cost of living on $226,545 as reported in the "Consumer Price Index, New 2 York Northeastern New Jersey, all items" published by the United States Department of Labor, Bureau of Labor Statistics (using January 1996 as the base date for computation). Such cost of living increment with respect to the aforesaid salary of Employee shall be made semi- annually as follows: A. With respect to the first six months of each fiscal year of the Company during the period of employment, such increment shall be calculated and payable cumulatively on or before the first day of the eighth month of such fiscal year; and B. With respect to the last six months of each fiscal year of the Company during the period of employment, such increment shall be calculated and payable cumulatively on or before the first day of the second month of the following fiscal year of the Company. The first calculation shall be made on or before September 15, 1997 with respect to the period September 13, 1996 through September 15, 1997. If Employee's employment shall terminate during any six-month period referred to in this sub- paragraph 5(ii), then the cost of living increment provided for herein shall be prorated accordingly. (iii) Not later than one hundred twenty (120) days after the end of the fiscal year of the Company and each subsequent fiscal year of the Company ending during the period of employment, the Company shall pay to Employee, as incentive compensation, an amount equal to THREE AND ONE-THIRD (3-1/3%) PERCENT of the Consolidated Pretax Earnings of the Company. For purposes hereof, the term "Consolidated Pretax Earnings" of the Company shall mean, with respect to any fiscal year, the consolidated income, if any, of the Company for such fiscal year as set forth in the audited, consolidated financial statements 3 of the Company and its subsidiaries included in its Annual Report to Stockholders for such fiscal year, before deduction of taxes based on income or of the incentive compensation to be paid to Employee for such fiscal year under this Agreement. 6. EMPLOYEE BENEFITS; EXPENSES. (a) During the period of employment, --------------------------- the Company shall continue to provide at its expense, life insurance to Employee in the face amount of $1,000,000. (b) During the period of employment, Employee shall be eligible to participate in the Company's stock option and stock purchase plans to the extent determined in the sole discretion of the Board of Directors of the Company or a committee thereof. (c) During the period of employment, Employee shall be furnished with office space and facilities commensurate with his position and adequate for the performance of his duties; he shall be provided with the perquisites customarily associated with the position of a Senior Executive of the Company; and he shall be entitled to regular vacations during each year of not less than four weeks in the aggregate. Any such vacation time not used by Employee in any one year shall accumulate to his benefit in the succeeding years and, to the extent not previously used as of the termination of the period of employment, Employee shall be paid in cash in lieu of such unused vacation. (d) It is contemplated that during the period of employment, Employee may be required to incur out-of-pocket expenses in connection with the performance of his services hereunder, including expenses incurred for travel and business entertainment. Accordingly, the Company shall pay, or reimburse Employee for all out-of-pocket expenses reasonably incurred by Employee in the performance of his duties hereunder in accordance with the usual procedures of the 4 Company. Notwithstanding the foregoing, in recognition that Employee will be required during the term of this Agreement to do a considerable amount of local driving in connection with his services hereunder, the Company shall provide Employee with the use of a suitable automobile and all expenses incidental throughout the term of this Agreement. (e) All benefits to Employee specifically provided for herein shall be in addition to, and shall not diminish, (i) such other benefits and/or compensation as may hereafter be granted to or afforded to Employee by the Board of Directors of the Company, (ii) any rights which Employee may have or may acquire under any hospitalization, life insurance, pension, profit sharing, incentive compensation or other present or future employee benefit plan or plans of the Company; and (iii) all medical reimbursement up to $5,000 per annum for all medical expenses not covered by Company plans. (f) In the event of the death of Employee during the course of his employment hereunder, the Company shall continue to pay to Employee's widow, or to such other person or persons as may be designated by Employee in his Will, or to his Estate in the event of Employee's intestacy, one-half (1/2) of the compensation to which Employee is entitled pursuant to paragraph 5 hereunder for the balance of the period covered by this Agreement. 7. DISABILITY. If Employee, during the period of employment, becomes ---------- unable for nine consecutive months or more, due to ill health or other incapacity, to perform his services hereunder, the Company may thereafter, upon at least 90 days' written notice to Employee, place him on disability status. After such action by the Company, Employee shall continue to receive one-half (1/2) of the sum of the last salary paid to Employee under paragraph 5(a)(i) and (ii) hereof and any 5 increment thereto payable under paragraph 5(a)(iii) hereof until the end of the period of employment or until his disability ends. 8. CONFIDENTIAL INFORMATION. Employee recognizes and acknowledges that ------------------------ confidential information of various kinds, including marketing analysis and product development information are valuable, special and unique assets of its business. Accordingly, Employee will not, during the term of this Agreement, except in the performance of his services hereunder, disclose any such confidential information to any individual or entity for any reason or purpose whatsoever and will not use any such confidential information for his own benefit. The provisions of this paragraph 8 will not apply to information available in trade or other publications, information known to Employee at the time he entered the employ of the Company, and information which presently is or shall become available without committing a tortious act. 9. NON-COMPETITION. Employee agrees that, during the term of this --------------- Agreement, he will not, without the prior written approval of the Board of Directors of the Company, directly or indirectly, through any other individual or entity, (a) become an officer or employee of, or render any services, including consulting services, to, any competitor of the Company, (b) solicit, raid, entice or induce any customer of the Company to cease purchasing goods or services from the Company or to become a customer of any competitor of the Company, and Employee will not approach any customer for any such purpose or authorize the taking of any such actions by any other individual or entity, or (c) solicit, raid, entice or induce any employee of the Company, and Employee will not approach any such employee for any such purpose or authorize the taking of any such action by any other individual or entity. However, nothing contained in this paragraph 9 shall be construed as preventing Employee from investing his assets in such form or manner as will not 6 require him to become an officer or employee of, or render any services (in- cluding consulting services) to, any competitor of the Company. 10. TERMINATION FOR CAUSE. (a) The Company recognizes that, for a --------------------- period of several years during which Employee has been employed and/or associated with the Company, the Company has been intimately familiar with the ability, competence and judgment of Employee, which are acknowledged to be of the highest caliber. Accordingly, the Company and Employee agree that Employee's services hereunder may be terminated by the Company for an act of moral turpitude materially adversely affecting the financial interest of the Company. (b) If the Company terminates Employee's employment hereunder for any reason other than as set forth in paragraph 10(a) hereof, Employee's compensation shall continue to be paid to him as provided in paragraph 5 hereunder for the remainder of the term of this Agreement. Employee shall have no duty to mitigate the Company's damages hereunder. Therefore, no deduction shall be made by the Company for any compensation earned by Employee from other employment or for monies or property otherwise received by Employee subsequent to such termination of his employment hereunder. Employee and the Company acknowledge that the foregoing provisions of this paragraph 10(b) are reasonable and are based upon the facts and circumstances of the parties at the time of entering into this Agreement, and with due regard to future expectations. 11. CONSOLIDATION OR MERGER. In the event of any consolidation or merger ----------------------- of the Company into or with any other corporation during the term of this Agreement, or the sale of all or substantially all of the assets of the Company to another corporation during the term of this Agreement, such successor corporation shall assume this Agreement and become obligated to 7 perform all of the terms and provisions hereof applicable to the Company, and Employee's obligations hereunder shall continue in favor of such successor corporation. 12. NOTICES. Any notice to be given to the Company hereunder shall ------- be deemed sufficient if addressed to the Company in writing and delivered or mailed by certified or registered mail to its offices at 6000 New Horizons Blvd., Amityville, New York 11701, or such other address as the Company may hereafter designate. Any notice to be given to Employee hereunder shall be delivered or mailed by certified or registered mail to him at: 11 Clear Meadow Court, Woodbury, New York 11797, or such other address as he may hereafter designate. 13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon ---------------------- and inure to the benefit of the successors and assigns of the Company, unless clearly inapplicable, reference herein to the Company shall be deemed to include any such successor. In addition, this Agreement shall be binding upon and inure to the benefit of the Employee and his heirs, executors, legal repre-sentatives and assigns; provided, however, that the obligations of Employee hereunder may not be delegated without the prior written approval of the Board of Directors of the Company. 14. AMENDMENTS. This Agreement may not be altered, modified, amended or ---------- terminated except by a written instrument signed by each of the parties hereto. 15. APPLICABLE LAW. This Agreement shall be governed by, construed -------------- and enforced in accordance with the laws of the State of New York, without regard to conflicts of laws. 8 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. NU HORIZONS ELECTRONICS CORP. By: ------------------------------ Name: Title: ---------------------------------- RICHARD SCHUSTER, EMPLOYEE 9 AGREEMENT --------- AGREEMENT made as of the 13th day of September, 1996 by and between NU HORIZONS ELECTRONICS CORP., a Delaware corporation (hereinafter called the "Company") and RICHARD SCHUSTER, residing at 11 Clearmeadow Court, Woodbury, New York 11797 (hereinafter called the "Employee"). W I T N E S S E T H: WHEREAS, the Company desires to continue to employ the Employee, and the Company acknowledges that its entering into this agreement is a condition to the Employee's willingness to continue such employment; and WHEREAS, Employee desires to continue to be employed by the Company, and the Employee acknowledges that his entering into this agreement is a condition to the Company's willingness to continue such employment; NOW, THEREFORE, it is agreed as follows: 1. CHANGE OF CONTROL. (a) In the event there shall be a change in the ----------------- present control of the Company as hereinafter defined, or in any person directly or indirectly presently controlling the Company, as hereinafter defined, Employee shall have the option, exercisable within six (6) months of his becoming aware of such event, to terminate his employment by the Company pursuant to the Employment Agreement dated September 13, 1996 between the Company and the Employee forthwith. Upon such termination, Employee shall have the right to immediately receive as a lump sum payment an amount equal to, subject to Section 1(b) below, three (3) times the average of the total annual compensation paid by the Company to Employee, with respect to the five fiscal years of the Company prior to the change of control, minus $100.00. (b) The payment to be made pursuant to Section 1(a) above shall be made by the Company to the Employee in an amount (net of the Federal and State income tax thereon computed at the marginal regular Federal and State income tax rates of the Employee in the tax year in which this payment is made and also net of any excise, penalty or other similar tax) which shall cause the net after tax amount (calculated as provided in the foregoing parenthetical clause) received by the Employee with respect to the payment made under Section 1(a) to be equal to the amount set forth in Section 1(a) above, at the time of such payment and without consideration for the time value of money. (c) For purposes of this Agreement, a change in control of the Company, or in any person directly or indirectly controlling the Company, shall mean: 10 (i) A change in control as such term is presently defined in Regulation 240.12b-2 under the Securities Exchange Act of 1934 ("Exchange Act); or (ii) if any "person" (as such term is used in Sectiom 13(d) and 14(d) of the Exchange Act) other than the Company or any "person" who on the date of this Agreement is a director or officer of the Company, becomes the "beneficial owner" (as defined in Rule 13(d)-3 under the Exchange Act), directly or indirectly, of securities of the Company representing fifteen (15%) percent of the voting power of the Company's then outstanding securities; or (iii) if during any period of two (2) consecutive years during the term of this Agreement, individuals who at the beginning of such period constitute the Board of Directors cease for any reason to constitute at least a majority thereof. 2. CONSOLIDATION OR MERGER. In the event of any consolidation or merger ----------------------- of the Company into or with any other corporation during the term of this Agreement, or the sale of all or substantially all of the assets of the Company to another corporation, person or entity during the term of this Agreement, such successor corporation shall assume this Agreement and become obligated to perform all of the terms and provisions hereof applicable to the Company, and Employee's obligations hereunder shall continue in favor of such successor corporation. 3. NOTICES. Any notice to be given to the Company hereunder shall be ------- deemed sufficient if addressed to the Company in writing and delivered or mailed by certified or registered mail to its offices at 6000 New Horizons Boulevard, Amityville, New York 11701, or such other address as the Company may hereafter designate. Any notice to be given to Employee hereunder shall be delivered or mailed by certified or registered mail to him at: 11 Clearmeadow Court, Woodbury, New York 11797 or such other address as he may hereafter designate. 4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and ---------------------- inure to the benefit of the successors and assigns of the Company, and unless clearly inapplicable, all references herein to the Company shall be deemed to include any such successor. In addition, this Agreement shall be binding upon and inure to the benefit of the Employee and his heirs, executors, legal representatives and assigns; provided, however, that the obligations of Employee hereunder may not be delegated without the prior written approval of the Board of Directors of the Company. 5. AMENDMENTS. This Agreement may not be altered, modified, amended or ---------- terminated except by a written instrument signed by each of the parties hereto. 6. APPLICABLE LAW. This Agreement shall be governed by, construed and -------------- enforced in accordance with the laws of the State of New York, without regard to conflicts of laws. 11 7. NO RIGHT TO EMPLOYMENT. This Agreement shall not be construed to ----------------------- grant to the Employee any right to continue to be employed by the Company. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. NU HORIZONS ELECTRONICS CORP. By: ____________________________ Arthur Nadat President ____________________________ Richard Schuster 12 EX-11 5 COMPUTATIONS OF EARNINGS EXHIBIT 11 NU HORIZONS ELECTRONICS CORP. COMPUTATION OF EARNINGS PER COMMON SHARE ---------------------------------------- (Unaudited)
FOR THE SIX MONTHS ENDED FOR THE THREE MONTHS ENDED ------------------------ -------------------------- AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, 1996 1995 1996 1995 ------------ ----------- ------------ ----------- PRIMARY EARNINGS: - ----------------- NET INCOME $ 3,806,164 $ 4,037,005 $ 1,351,228 $ 2,405,908 =========== =========== =========== =========== WEIGHTED AVERAGE SHARES: Common shares outstanding 8,732,299 7,739,631 8,732,299 7,740,511 Common share equivalents 328,022 210,931 242,275 269,196 ----------- ----------- ----------- ----------- Weighted average number of common shares and common share equivalents outstanding 9,060,321 7,950,562 8,974,574 8,009,707 =========== =========== =========== =========== PRIMARY EARNINGS PER COMMON SHARE $.42 $.51 $.15 $.30 =========== =========== =========== =========== FULLY DILUTED EARNINGS: - --------------------- Net Income $ 3,806,164 $ 4,037,005 $ 1,351,228 $ 2,405,908 Net (after tax) interest expense related to convertible debt 187,489 365,062 85,900 182,531 ---------- ----------- ----------- ----------- NET INCOME AS ADJUSTED $ 3,993,653 $ 4,402,067 $ 1,437,128 $ 2,588,439 =========== =========== =========== =========== SHARES: Weighted average number of common shares and common share equivalents outstanding 9,060,321 7,950,562 8,974,574 8,009,707 Additional options not included above 583,705 706,501 669,452 663,236 Assuming conversion of convertible debt 784,333 1,666,666 784,333 1,666,666 ---------- ----------- ----------- ----------- Weighted average number of common shares outstanding as adjusted 10,428,359 10,323,729 10,428,359 10,339,609 =========== ============ =========== =========== FULLY DILUTED EARNINGS PER COMMON SHARE $.38 $.43 $.14 $.25 ==== ==== ==== ====
EX-27 6 FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SECOND QUARTER ENDED AUGUST 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS. 6-MOS FEB-28-1997 MAR-01-1996 AUG-31-1996 2,561,058 0 30,982,594 1,811,619 39,697,232 73,938,285 7,385,972 4,197,305 80,451,468 12,112,327 0 57,633 0 0 43,555,731 80,451,468 108,455,584 108,455,584 84,158,299 84,158,299 0 239,500 809,292 6,386,924 2,580,760 3,806,164 0 0 0 3,806,164 .42 .38
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