EMPLOYMENT AGREEMENT made as of the 1st day of January, 1998
by and between ARROW ELECTRONICS, INC., a New York corporation
with its principal office at 00 Xxx Xxxxx, Xxxxxxxx, Xxx Xxxx
00000 (the "Company"), and XXXXXX X. XXXXXXX, residing at 0000
Xxxxx Xxxxx Xxxx, Xxx Xxxxxx, Xxxxxxxxxxx 00000 (the
"Executive").
WHEREAS, the Executive is now and has been employed by the
Company as an Executive Vice President, with the responsibilities
and duties of a principal executive officer of the Company;
WHEREAS, the Company and the Executive wish to provide for
the continued employment of the Executive as an employee of the
Company and for him to continue to render services to the Company
on the terms set forth in, and in accordance with the provisions
of, this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties agree as follows:
1. Employment and Duties.
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a) Employment. The Company hereby employs the
Executive for the Employment Period defined in Paragraph 3, to
perform such duties for the Company, its subsidiaries and
affiliates and to hold such offices as may be specified from time
to time by the Company's Board of Directors, subject to the
following provisions of this Agreement. The Executive hereby
accepts such employment.
b) Duties and Responsibilities. It is contemplated
that the Executive will be an Executive Vice President of the
Company but the Board of Directors shall have the right to adjust
the duties, responsibilities and title of the Executive as the
Board of Directors may from time to time deem to be in the
interests of the Company (provided, however, that they remain
commensurate with his duties and responsibilities as they exist
on the date hereof). If the Board of Directors does not either
continue the Executive in the office of Executive Vice President
or elect him to some other principal executive office
satisfactory to the Executive, the Executive shall have the right
to decline to give further service to the Company and shall have
the rights and obligations which would accrue to him under
Paragraph 8 if he were discharged without cause. If the
Executive decides to exercise such right to decline to give
further service, he shall within thirty days after such action or
omission by the Board of Directors give written notice to the
Company stating his objection and the action he thinks necessary
to correct it, and he shall permit the Company to have a thirty
day period in which to correct its action or omission. If the
Company makes a correction satisfactory to the Executive, the
Executive shall be obligated to continue to serve the Company.
If the Company does not make such a correction, the Executive's
rights and obligations under Paragraph 8 shall accrue at the
expiration of such thirty day period.
c) Time Devoted to Duties. The Executive shall
devote substantially all of his normal business time and efforts to the
business of the Company, its subsidiaries and its affiliates, the
amount of such time to be sufficient, in his discretion, to
permit him diligently and faithfully to serve and endeavor to
further their interests to the best of his ability. Subject to
the foregoing, it is expressly agreed and understood that the
Executive may participate in various civic and philanthropic
activities, may serve on boards of directors and committees of
not-for-profit organizations of the Executive's choice, and,
consistent with the policies of the Company, may serve as a
member of one or more corporate boards of directors (unless the
Company's Board of Directors concludes that such service would be
inappropriate or not in the best interests of the Company).
d) Location of Office. The Company shall not require
the Executive to locate his office more than fifty miles from his
current residence address, without his prior written consent. In
the event that, during the Employment Period, the Executive
elects to relocate his current residence so as to reduce the
burden of commuting, the Company shall provide him with the
maximum amount of relocation assistance and support offered to
senior executives who relocate their residences at the Company's
request.
2. Compensation.
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a) Monetary Remuneration and Benefits. During the
Employment Period, the Company shall pay to the Executive for all
services rendered by him in any capacity:
i. a minimum base salary of $425,000 per year
(payable in accordance with the Company's then
prevailing practices, but in no event less
frequently than in equal monthly installments), subject
to increase from time to time in the sole discretion of
the Board of Directors of the Company, except that
such salary shall be increased annually by a
percentage at least equal to the average percentage
increase granted to all salaried employees of the
Company; and provided further that, should the
Company institute a company-wide pay cut/furlough
program, such salary may be decreased by up to 15%,
but only for as long as said company-wide program is
in effect;
ii. such additional compensation by way of
salary or bonus or fringe benefits as the Board of
Directors of the Company in its sole discretion shall
authorize or agree to pay, payable on such terms and
conditions as it shall determine; and
iii. such employee benefits that are made
available by the Company to its other principal
executives.
b) Annual Incentive Payment. The Executive shall
participate in the Company's Management Incentive Plan (or such
successor or replacement plan or program in which the Company's
principal executives, other than the Chief Executive Officer,
generally participate) and shall have a targeted incentive
thereunder of not less than $220,000 per annum; provided,
however, that the Executive's actual incentive payment in any
year shall be measured by the Company's performance against goals
established for that year and that such performance may produce
an incentive payment ranging from one-half to twice the targeted
amount.
c) Supplemental Executive Retirement Plan. The
Executive shall continue to participate in the Company's Unfunded
Pension Plan for Selected Executives; provided, however, that the
Executive's initial date of participation in such plan shall be
deemed to be May 1, 1971 for purposes of calculating his
retirement benefit and all other matters thereunder.
d) Automobile. During the Employment Period, the
Company will pay the Executive a monthly automobile allowance of
$1,200.
e) Vacation. During the Employment Period, the
Executive will be given four weeks vacation with full pay each
year, to be taken at the Executive's discretion; provided,
however, that the Executive will use his best efforts to ensure
that such vacation does not unduly interfere with the operation
and performance of the business of the Company, its subsidiaries
or its affiliates.
f) Expenses. During the Employment Period, the Company
agrees to reimburse the Executive, upon the submission of
appropriate vouchers, for out-of-pocket expenses (including,
without limitation, expenses for travel, lodging and
entertainment) incurred by the Executive in the course of his
duties hereunder.
g) Office and Staff. The Company will provide the
Executive with an office, secretary and such other facilities as
may be reasonably required for the proper discharge of his duties
hereunder.
h) Indemnification. The Company agrees to indemnify
the Executive for any and all liabilities to which he may be
subject as a result of his employment hereunder (and as a result
of his service as an officer or director of the Company, or as an
officer or director of any of its subsidiaries or affiliates), as
well as the costs of any legal action brought or threatened
against him as a result of such employment, to the fullest extent
permitted by law.
i) Participation in Plans. Notwithstanding any other
provision of this Agreement, the Executive shall have the right
to participate in any and all of the plans or programs made
available by the Company (or its subsidiaries, divisions or
affiliates) to, or for the benefit of, executives (including the
annual stock option and restricted stock grant programs) or
employees in general, on a basis consistent with other senior
executives.
3. The Employment Period.
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The "Employment Period", as used in the Agreement, shall
mean the period beginning as of the date hereof and terminating
on the last day of the calendar month in which the first of the
following occurs:
a) the death of the Executive;
b) the disability of the Executive as determined in
accordance with Paragraph 4 hereof and subject to the provisions
thereof;
c) the termination of the Executive's employment by the
Company for cause in accordance with Paragraph 6 hereof; or
d) January 1, 2001; provided, however, that, unless
sooner terminated as otherwise provided herein, the Employment
Period shall automatically be extended for one or more twelve
(12) month periods beyond the then scheduled expiration date
thereof unless between the 18th and 12th month preceding such
scheduled expiration date either the Company or the Executive
gives the other written notice of its or his election not to have
the Employment Period so extended.
The Executive shall have the right to terminate the Employment
Period on six months' written notice to the Company upon the
happening of any of the following events if such event has not
been approved by the Board of Directors of the Company:
1) a merger or consolidation with another corporation;
2) a sale of all or substantially all the assets of the
Company; or
3) acquisition of more than fifty percent of the voting
stock of the Company by another entity, individual or
united group.
If the Executive exercises such right, the Employment
Period shall terminate on the date specified in his notice to the
Company provided the date is six months or more after the date
such notice is given.
4. Disability.
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The Company has a disability benefit program now in
effect for certain of its executive employees including the
Executive. During the Employment Period the Company will
continue to maintain in effect for the Executive such benefit
program or one granting benefits to the Executive at least equal
to those provided by the current Disability Income Agreement
dated November 1, 1982 between the Company and the Executive
entered into pursuant to such program. If at any time during the
Employment Period the Executive shall become disabled as defined
under the terms of the disability benefit program applicable to
the Executive, the Employment Period shall terminate on the last
day of the month in which such disability is determined. Until
such termination of the Employment Period, the Company shall
continue to pay to the Executive, until the commencement of the
disability payments, his base salary and any additional
compensation authorized by the Company's Board of Directors, and
shall continue during such interim period to provide the
Executive with the remuneration and benefits provided for in
accordance with Paragraph 2 hereof and the insurance required by
Paragraph 7 hereof, all without delay, diminution or proration of
any kind whatsoever, and his medical benefits and life insurance
shall remain in full force. After termination of the Employment
Period as a result of the disability of the Executive, the
medical benefits covering the Executive and his family shall
remain in place (subject to the eligibility requirements and
other conditions continued in the underlying plan, as described
in the Company's employee benefits manual, and subject to the
requirement that the Executive continue to pay the "employee
portion" of the cost thereof), and the Executive's life insurance
policy under the Management Insurance Program shall be
transferred to him, as provided in the related agreement, subject
to the obligation of the Executive to pay the premiums therefor.
In the event that, notwithstanding such a determination of
disability, the Executive is determined not to be totally and
permanently disabled and such disability payments cease prior to
January 1, 2001, the Executive shall be entitled to resume
employment with the Company under the terms of this agreement for
the then remaining balance of the Employment Period.
5. Parachute Payments.
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There is currently an agreement between the Executive
and the Company dated June 1, 1988 relating to the rights of the
parties in the event of a "change in control" of the Company as
therein defined, which is comparable to similar agreements
between the Company and certain other principal executive
officers. At no time during the Employment Period shall the
terms and conditions applicable to the Executive in the event of
a change of control (including the basis on which the Executive
may become entitled to compensation or benefits in connection
with such a change) be less favorable than the most favorable
terms and conditions applicable to any other principal executive
officer of the Company.
6. Termination for Cause.
---------------------
In the event of any malfeasance, willful misconduct,
active fraud or gross negligence by the Executive in connection
with his employment hereunder, the Company shall have the right
to terminate the Employment Period by giving the Executive notice
in writing of the reason for such proposed termination. If the
Executive shall not have corrected such conduct to the
satisfaction of the Company within thirty days after such notice,
the Employment Period shall terminate and the Company shall have
no further obligation to the Executive hereunder but the
restriction on the Executive's activities contained in Paragraph
9 and the obligations of the Executive contained in Paragraph
10(b) and 10(c) shall continue in effect as provided therein.
7. Death Benefit.
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The Executive is a participant in the Company's
Management Insurance Program. During the Employment Period, the
Company will continue to maintain in effect for the Executive
such Program or some other form of life insurance providing the
Executive's estate or named beneficiary a benefit upon the
Executive's death at least equal to the net after-tax benefit
provided by the Management Insurance Program.
8. Termination Without Cause.
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In the event that the Company discharges the Executive
without cause, the Executive shall be entitled to the salary
provided in Paragraph 2, the full vesting of any restricted stock
awards and the immediate exercisability of any stock options, as
well as his rights under Paragraphs 4 and 7, for the full
Employment Period (which, in that event, shall continue until
January 1, 2001 unless sooner terminated by the Executive's
disability or death), and the Company shall have no right to set
off payments due the Executive with any amounts he may earn from
gainful employment elsewhere. It is expressly agreed and
understood that the Executive shall be under no obligation to
seek such employment. The provisions of Paragraph 9 restricting
the Executive's activities and Executive's obligations under
Paragraph 10(b) and 10(c) shall continue in effect. The
provisions of this Paragraph 8 shall not act to limit the
Executive's ability to recover damages from the Company for
breaching this Agreement by terminating the Employment Period
without cause, except as otherwise permitted by Paragraph 3.
9. Non-Competition; Trade Secrets.
------------------------------
During the Employment Period and for a period of two
years after the termination of the Employment Period, the
Executive will not, directly or indirectly:
a) Disclosure of Information. Use, attempt to use,
disclose or otherwise make known to any person or entity (other
than to the Board of Directors of the Company or otherwise in the
course of the business of the Company, its subsidiaries or
affiliates and except as may be required by applicable law):
i. any knowledge or information, including,
without limitation, lists of customers or suppliers,
trade secrets, know-how, inventions, discoveries,
processes and formulae, as well as all data and records
pertaining thereto, which he may acquire in the course of
his employment, in any manner which may be detrimental to
or cause injury or loss to the Company, its subsidiaries or
affiliates; or
ii. any knowledge or information of a confidential
nature (including all unpublished matters) relating to,
without limitation, the business, properties, accounting,
books and records, trade secrets or memoranda of the Company,
its subsidiaries or affiliates, which he now knows or may
come to know in any manner which may be detrimental to or
cause injury or loss to the Company its subsidiaries or affiliates.
b) Non-Competition. Engage or become interested in the
United States, Canada or Mexico (whether as an owner,
shareholder, partner, lender or other investor, director,
officer, employee, consultant or otherwise) in the business of
distributing electronic parts, components, supplies or systems,
or any other business that is competitive with the principal
business or businesses then conducted by the Company, its
subsidiaries or affiliates (provided, however, that nothing
contained herein shall prevent the Executive from acquiring or
owning less than 1% of the issued and outstanding capital stock
or debentures of a corporation whose securities are listed on the
New York Stock Exchange, American Stock Exchange, or the National
Association of Securities Dealers Automated Quotation System, if
such investment is otherwise permitted by the Company's Human
Resource and Conflict of Interest policies);
c) Solicitation. Solicit or participate in the
solicitation of any business of any type conducted by the
Company, its subsidiaries or affiliates, during said term or
thereafter, from any person, firm or other entity which was or at
the time is a supplier or customer, or prospective supplier or
customer, of the Company, its subsidiaries or affiliates; or
d) Employment. Employ or retain, or arrange to have
any other person, firm or other entity employ or retain, or
otherwise participate in the employment or retention of, any
person who was an employee or consultant of the Company, its
subsidiaries or affiliates, at any time during the period of
twelve consecutive months immediately preceding such employment
or retention.
The Executive will promptly furnish in writing to the
Company, its subsidiaries or affiliates, any information
reasonably requested by the Company (including any third party
confirmations) with respect to any activity or interest the
Executive may have in any business.
Except as expressly herein provided, nothing contained
herein is intended to prevent the Executive, at any time after
the termination of the Employment Period, from either (i) being
gainfully employed or (ii) exercising his skills and abilities
outside of such geographic areas, provided in either case the
provisions of this Agreement are complied with.
10. Preservation of Business.
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a) General. During the Employment Period and subject
to Paragraph 1(c) hereof, the Executive will use his best efforts
to advance the business and organization of the Company, its
subsidiaries and affiliates, to keep available to the Company,
its subsidiaries and affiliates, the services of present and
future employees and to advance the business relations with its
suppliers, distributors, customers and others.
b) Patents and Copyrights, etc. The Executive agrees,
without additional compensation, to make available to the Company
all knowledge possessed by him relating to any methods,
developments, inventions, processes, discoveries and/or
improvements (whether patented, patentable or unpatentable) which
concern in any way the business of the Company, it subsidiaries
or affiliates, whether acquired by the Executive before or during
his employment or retention hereunder.
Any methods, developments, inventions, processes,
discoveries and/or improvements (whether patented, patentable or
unpatentable) which the Executive may conceive of or make,
related directly or indirectly to the business or affairs of the
Company, its subsidiaries or affiliates, or any part thereof,
during the Employment Period, shall be and remain the property of
the Company. The Executive agrees promptly to communicate and
disclose all such methods, developments, inventions, processes,
discoveries and/or improvements to the Company and to execute and
deliver to it any instruments deemed necessary by the Company to
effect the disclosure and assignment thereof to it. The
Executive also agrees, on request and at the expense of the
Company, to execute patent applications and any other instruments
deemed necessary by the Company for the prosecution of such
patent applications or the acquisition of Letters Patent in the
United States or any other country and for the assignment to the
Company of any patents which may be issued. The Company shall
indemnify and hold the Executive harmless from any and all costs,
expenses, liabilities or damages sustained by the Executive by
reason of having made such patent application or being granted
such patents.
Any writings or other materials written or produced by
the Executive or under his supervision (whether alone or with
others and whether or not during regular business hours), during
the Employment Period which are related, directly or indirectly,
to the business or affairs of the Company, its subsidiaries or
affiliates, or are capable of being used therein, and the
copyright thereof, common law or statutory, including all
renewals and extensions, shall be and remain the property of the
Company. The Executive agrees promptly to communicate and
disclose all such writings or materials to the Company and to
execute and deliver to it any instruments deemed necessary by the
Company to effect the disclosure and assignment thereof to it.
The Executive further agrees, on request and at the expense of
the Company, to take any and all action deemed necessary by the
Company to obtain copyrights or other protections for such
writings or other materials or to protect the Company's right,
title and interest therein. The Company shall indemnify and hold
the Executive harmless from any and all costs, expenses,
liabilities or damages sustained by the Executive by reason of
the Executive's compliance with the Company's request.
c) Return of Documents. Upon the termination of
the Employment Period, including any termination of employment
described in Paragraph 8 and any termination of employment
described in Paragraph 1(b), the Executive will promptly return
to the Company all copies of information protected by Paragraph
9(a) hereof or pertaining to matters covered by subparagraph (b)
of this Paragraph 10 which are in his possession, custody or
control, whether prepared by him or others.
11. Separability.
------------
The Executive agrees that the provisions of
Paragraphs 9 and 10 hereof constitute independent and separable
covenants which shall survive the termination of the Employment
Period and which shall be enforceable by the Company notwithstanding
any rights or remedies the Executive may have under any other
provisions hereof. The Company agrees that the provisions of
Paragraphs 4, 7 and 8 hereof constitute independent and separable
covenants which shall survive the termination of the Employment
Period and which shall be enforceable by the Executive
notwithstanding any rights or remedies the Company may have under
any other provisions hereof.
12. Specific Performance.
--------------------
The Executive acknowledges that (i) the services
to be rendered under the provisions of this Agreement and the
obligations of the Executive assumed herein are of a special,
unique and extraordinary character; (ii) it would be difficult or
impossible to replace such services and obligations; (iii) the
Company, it subsidiaries and affiliates will be irreparably
damaged if the provision hereof are not specifically enforced;
and (iv) the award of monetary damages will not adequately
protect the Company, its subsidiaries and affiliates in the event
of a breach hereof by the Executive. The Company acknowledges
that (i) the Executive will be irreparably damaged if the
provisions of Paragraphs 1(b), 4, 7 and 8 hereof are not
specifically enforced; and (ii) the award of monetary damages
will not adequately protect the Executive in the event of a
breach thereof by the Company. By virtue thereof, the Executive
agrees and consents that if he violates any of the provisions of
this Agreement, and the Company agrees and consents that if it
violates any of the provisions of Paragraphs 1(b), 4, 7 and 8
hereof, the other party, in addition to any other rights and
remedies available under this Agreement or otherwise, shall
(without any bond or other security being required and without
the necessity of proving monetary damages) be entitled to a
temporary and/or permanent injunction to be issued by a court of
competent jurisdiction restraining the breaching party from
committing or continuing any violation of this Agreement, or any
other appropriate decree of specific performance. Such remedies
shall not be exclusive and shall be in addition to any other
remedy which any of them may have.
13. Miscellaneous.
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a) Entire Agreement; Amendment. This Agreement
constitutes the whole employment agreement between the parties
and may not be modified, amended or terminated except by a
written instrument executed by the parties hereto. It is
specifically agreed and understood, however, that the provisions
of that certain letter agreement dated as of June 1, 1988
granting to the Executive extended separation benefits in the
event of a change in control of the Company, shall survive and
shall not be affected hereby. All other agreements between the
parties pertaining to the employment or remuneration of the
Executive not specifically contemplated hereby or incorporated or
merged herein are terminated and shall be of no further force or
effect.
b) Assignment. Except as stated below, this Agreement
is not assignable by the Company without the written consent of
the Executive, or by the Executive without the written consent of
the Company, and any purported assignment by either party of such
party's rights and/or obligations under this Agreement shall be
null and void; provided, however, that, notwithstanding the
foregoing, the Company may merge or consolidate with or into
another corporation, or sell all or substantially all of its
assets to another corporation or business entity or otherwise
reorganize itself, provided the surviving corporation or entity,
if not the Company, shall assume this Agreement and become
obligated to perform all of the terms and conditions hereof, in
which event the Executive's obligations shall continue in favor
of such other corporation or entity, subject however to the
provisions of Paragraph 3.
c) Waivers, etc. No waiver of any breach or
default hereunder shall be considered valid unless in writing, and no
such waiver shall be deemed a waiver of any subsequent breach or
default of the same or similar nature. The failure of any party
to insist upon strict adherence to any term of this Agreement on
any occasion shall not operate or be construed as a waiver of the
right to insist upon strict adherence to that term of any other
term of this Agreement on that or any other occasion.
d) Provisions Overly Broad. In the event that any
term or provision of this Agreement shall be deemed by a court of
competent jurisdiction to be overly broad in scope, duration or
area of applicability, the court considering the same shall have
the power and hereby is authorized and directed to modify such
term or provision to limit such scope, duration or area, or all
of them, so that such term or provision is no longer overly broad
and to enforce the same as so limited. Subject to the foregoing
sentence, in the event any provision of this Agreement shall be
held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall attach only to such
provision and shall not affect or render invalid or unenforceable
any other provision of this Agreement.
e) Notices. Any notice permitted or required hereunder
shall be in writing and shall be deemed to have been given on the
date of delivery or, if mailed by registered or certified mail,
postage prepaid, on the date of mailing:
i. if to the Executive to:
Xxxxxx X. Xxxxxxx
0000 Xxxxx Xxxxx Xxxx
Xxx Xxxxxx, Xxxxxxxxxxx 00000
ii. if to the Company to:
Arrow Electronics, Inc.
00 Xxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: President
Either party may, by notice to the other, change his or its
address for notice hereunder.
f) New York Law. This Agreement shall be
construed and governed in all respects by the internal laws of the State of
New York, without giving effect to principles of conflicts of
law.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
Attest: ARROW ELECTRONICS, INC.
/s/ Xxxxx Xxxxx By: /s/Xxxxxxx X. Xxxxxxx
----------------------- -------------------------
Assistant Secretary President
THE EXECUTIVE
/s/ Xxxxxx X. Xxxxxxx
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