Common use of Extended Separation Benefits Clause in Contracts

Extended Separation Benefits. The Company maintains a broad-based program to shelter employees at all levels from any adverse consequences which might result from a change in control of the Company. A change in control is defined in the program to include such time that any person becomes the beneficial owner, directly or indirectly, of 30% or more of the combined voting power of the Company's voting securities or certain changes occur in the constitution of the Company's Board of Directors. Pursuant to a policy adopted by the Board of Directors in 1998, the period of salary continuation normally extended to employees whose employment is terminated as a result of a workforce reduction or reorganization (which period ranges from six to 24 weeks depending upon the length of service with the Company) is tripled if employment is terminated by the Company (other than for cause) as a result of a change in control. In addition to this policy, the Company has entered into employment agreements with certain management-level employees, pursuant to which among other matters, such employees will receive one year's compensation and continuation for up to one year of medical and life insurance benefits if their employment is terminated by the Company (other than for cause) within 12 months following a change in control. The Company also has agreements with a number of divisional and group vice presidents who are not executive officers, which provide such vice presidents with a multiple of their annualized includible compensation (as defined in the Internal Revenue Code) and continuation for up to three years of medical, life and other welfare benefits if their employment is terminated by the Company (other than for cause), if their responsibilities or base salaries are materially diminished, or if certain other adverse changes occur within 24 months following a change in control. Arrow’s executive officers have entered into employment and change of control agreements. Under the employment agreements, if the executive is terminated without cause, the executive will continue to receive, through the end of the then-remaining term of the agreement, all base salary and benefits (such as life, health, and disability insurance) and cause the immediate vesting of any unvested stock options which would have vested through the then-remaining term of the agreement. The executive is also entitled to certain restricted units or shares and, in some instances, performance units or shares. Under the change of control agreements, if the executive’s employment is terminated (i) without cause by Arrow or (ii) for good reason by the executive after a change in control, the eligible terminated executive is entitled to receive: (i) all unpaid salary through the date of termination (as defined in the employment agreement) and all earned and unpaid benefits and awards (including both cash and stock components); (ii) a lump-sum payment of 2.99 times the executive’s annualized includable compensation as defined in Internal Revenue Code Section 280G(d)(1); and (iii) continuation of coverage under the Company’s then current medical plan until the executive reaches 65 years of age (or otherwise becomes eligible for Medicare) or begins receiving equivalent benefits from a new employer. In addition, all stock options vest immediately and the executive may be entitled to restricted units or shares, and performance shares or shares. The amounts payable pursuant to such agreements to the executive officers and to the other vice presidents will be reduced, if necessary, to avoid excise tax under Section 4999 of the Code.

Extended Separation Benefits. The Company maintains a broad-based program to shelter employees at all levels from any adverse consequences which might result from a change in control of the Company. A change in control is defined in the program to include such time that any person becomes the beneficial owner, directly or indirectly, of 30% or more of the combined voting power of the Company's voting securities or certain changes occur in the constitution of the Company's Board of Directors. Pursuant to a policy adopted by the Board of Directors in 1998, the period of salary continuation normally extended to employees whose employment is terminated as a result of a workforce reduction or reorganization (which period ranges from six to 24 weeks depending upon the length of service with the Company) is tripled if employment is terminated by the Company (other than for cause) as a result of a change in control. In addition to this policy, the Company has entered into six-month to one-year employment agreements with certain approximately 300 management-level employees, pursuant to which among other matters, such employees will receive one year's compensation and continuation for up to one year of medical and life insurance benefits if their employment is terminated by the Company (other than for cause) within 12 months following a change in control. The Company also has agreements with a number of approximately 20 divisional and group vice presidents who are not executive officers, which provide such vice presidents with a multiple of two times their annualized includible compensation (as defined in the Internal Revenue Code) and continuation for up to three years of medical, life and other welfare benefits if their employment is terminated by the Company (other than for cause), if their responsibilities or base salaries are materially diminished, or if certain other adverse changes occur within 24 months following a change in control. Arrow’s Similar agreements provide the executive officers have entered into employment with three times their annualized includible compensation and change continuation for up to three years of control agreements. Under the employment agreements, their benefits if the executive is terminated without cause, the executive will continue to receive, through the end of the then-remaining term of the agreement, all base salary and benefits (such as life, health, and disability insurance) and cause the immediate vesting of any unvested stock options which would have vested through the then-remaining term of the agreement. The executive is also entitled to certain restricted units or shares and, in some instances, performance units or shares. Under the change of control agreements, if the executive’s their employment is terminated (i) without cause by Arrow or (ii) for good reason by the executive after Company (other than of cause approved by three-fourths of the directors then serving), if their responsibilities or base salaries are materially diminished, or if certain other adverse changes occur within 24 months following a change in control, the eligible terminated executive is entitled to receive: (i) all unpaid salary through the date of termination (as defined in the employment agreement) and all earned and unpaid benefits and awards (including both cash and stock components); (ii) a lump-sum payment of 2.99 times the executive’s annualized includable compensation as defined in Internal Revenue Code Section 280G(d)(1); and (iii) continuation of coverage under the Company’s then current medical plan until the executive reaches 65 years of age (or otherwise becomes eligible for Medicare) or begins receiving equivalent benefits from a new employer. In addition, all stock options vest immediately and the executive may be entitled to restricted units or shares, and performance shares or shares. The amounts payable pursuant to such agreements to the executive officers (other than Xx Xxxxxxx) and to the other vice presidents will be reduced, if necessary, to avoid excise tax under Section 4999 of the Code.