EMPLOYMENT AGREEMENT made as of the 1st day of January 2001 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 XXXXXXX
X. XXXX, residing at 000 Xxxxxx Xxxx Xxxxx, Xxxxx, Xxxxx Xxxxxxxx 00000 (the
"Executive").
WHEREAS, the Executive is now and has been employed by the Company as a
Vice President, with the responsibilities and duties of an executive officer
of the Company; and
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 Employment Agreement (the
"Agreement");
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties agree as follows:
1. Employment and Duties.
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 a 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 during the Employment
Period, without the consent of the Executive, he shall not be assigned any
titles, duties or responsibilities which, in the aggregate, represent a
material diminution in, or are materially inconsistent with, his prior title,
duties, and responsibilities as a Vice President).
If the Board of Directors does not either continue the Executive
in the office of Vice President or elect him to some other 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 6 if he were discharged
without cause. If the Executive decides to exercise such right to decline to
give further service, he shall within forty-five 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 forty-five 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 6 shall accrue at the expiration of such forty-
five day period.
c) Time Devoted to Duties. The Executive shall devote 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
the reasonable judgment of the Board of Directors, to permit him diligently
and faithfully to serve and endeavor to further their interests to the best
of his ability.
2. Compensation.
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 per year in the amount set forth on
Exhibit A to this Agreement (payable in accordance with the Company's then
prevailing practices, but in no event less frequently than in equal monthly
installments), subject to increase if the Board of Directors of the Company
in its sole discretion so determines; provided 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 executives.
b) Annual Incentive Payment. The Executive shall participate in the
Company's Management Incentive Plan (or such alternative, successor, or
replacement plan or program in which the Company's principal operating
executives, other than the Chief Executive Officer, generally participate)
and shall have a targeted incentive thereunder of not less than the amount
per annum set forth on Exhibit A to this Agreement; 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 none to twice the
targeted amount. The Executive's incentive payment for any year will be
appropriately pro-rated to reflect a partial year of employment.
c) Supplemental Executive Retirement Plan. The Executive shall
continue to participate in the Company's Unfunded Pension Plan for Selected
Executives (the "SERP").
d) Automobile. During the Employment Period, the Company will pay
the Executive a monthly automobile allowance of $800.
e) 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.
f) 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.
g) 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.
h) 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 it
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.
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 5 hereof; or
d) December 31, 2003; 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.
4. Disability.
For purposes of this Agreement, the Executive will be deemed
"disabled" upon the earlier to occur of (i) his becoming disabled as defined
under the terms of the disability benefit program applicable to the
Executive, if any, and (ii) his absence from his duties hereunder on a full-
time basis for one hundred eighty (180) consecutive days as a result of his
incapacity due to accident or physical or mental illness. If the Executive
becomes disabled (as defined in the preceding sentence), 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 his base salary, any additional
compensation authorized by the Company's Board of Directors, and any other
remuneration and benefits provided in accordance with Paragraph 2, all
without delay, diminution or proration of any kind whatsoever (except that
his remuneration hereunder shall be reduced by the amount of any payments he
may otherwise receive as a result of his disability pursuant to a disability
program provided by or through the Company), 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 contained 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 prior to the then scheduled expiration of the Employment Period, 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. 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, or a breach by the executive of any of the Company's policies, 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 7 and the obligations of the Executive contained in Paragraphs 8(b)
and 8(c) shall continue in effect as provided therein.
6. Termination Without Cause.
In the event that the Company discharges the Executive without
cause, the Executive shall be entitled to the salary provided in Paragraph
2(a), two-thirds of the targeted incentive provided in Paragraph 2(b), the
vesting of any restricted stock awards and the immediate exercisability of
any stock options, as well as his rights under Paragraph 4, which would have
vested or become exercisable during the full Employment Period (which, in
that event, shall continue until December 31, 2003 unless sooner terminated
by the Executive's disability or death). Any amounts payable to the
Executive under this Paragraph 6 shall be reduced by the amount of the
Executive's earnings from other employment (which the Executive shall have an
affirmative duty to seek; provided, however, that the Executive shall not be
obligated to accept a new position which is not reasonably comparable to his
employment with the Company).
7. Non-Competition; Trade Secrets.
During the Employment Period and for a period of one year 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.
8. Preservation of Business.
a) General. During the Employment Period, 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, its
subsidiaries or affiliates, whether acquired by the Executive before or
during his employment 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 applications 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 6, the
Executive will promptly return to the Company all copies of information
protected by Paragraph 7(a) hereof or pertaining to matters covered by
subparagraph (b) of this Paragraph 8 which are in his possession, custody or
control, whether prepared by him or others.
9. Separability.
The Executive agrees that the provisions of Paragraphs 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
Company notwithstanding any rights or remedies the Executive may have under
any other provisions hereof. The Company agrees that the provisions of
Paragraph 6 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.
10. 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, its subsidiaries and affiliates will be irreparably
damaged if the provisions 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 Paragraph 6 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 Paragraph 6 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.
11. Miscellaneous.
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.
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.
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 or 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:
Xxxxxxx X. Xxxx
000 Xxxxxx Xxxx Xxxxx
Xxxxx, Xxxxx Xxxxxxxx 00000
ii. if to the Company to:
Arrow Electronics, Inc.
00 Xxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Executive Vice 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/ Xxxxxx X. Xxxxxxx
---------------------- ------------------------
Secretary Executive Vice President
THE EXECUTIVE
/s/ Xxxxxxx X. Xxxx
-------------------------
Xxxxxxx X. Xxxx
EXHIBIT A to EMPLOYMENT AGREEMENT with XXXXXXX X. XXXX
DATED: JANUARY 2001
Minimum base salary for purposes
of Paragraph (2) (a) (i) $330,000
? Minimum targeted incentive for purposes
of Paragraph (2) (b) $270,000
