Contract
Exhibit 10(k)(ii)
EMPLOYMENT AGREEMENT (the “Agreement”) made as of the 30th day of December, 2008 by
and between ARROW ELECTRONICS, INC., a New York corporation with its principal office at 00 Xxxxxx
Xxxxx, Xxxxxxxx, Xxx Xxxx 00000 (the “Company”), and XXXXX X. XXXXX, residing at 000 Xxxxx Xxxxx
Xxxxx, Xxxxxxxx, XX 00000 (the “Executive”).
WHEREAS, the Company desires to continue to employ the Executive as Senior Vice President,
General Counsel and Secretary, with the responsibilities and duties of a principal executive
officer of the Company;
WHEREAS, the Executive has been working for the Company under an Employment Agreement dated as
of December 13, 2002 (the “Old Agreement”);
WHEREAS, the Old Agreement contains certain provisions that do not comply with section 409A of
the Internal Revenue Code of 1986, as amended and applicable regulations thereunder (“409A”) and
other provisions that are obsolete; and
WHEREAS, the Company and the Executive wish to novate the Old Agreement and to replace it with
this 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 and 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. The Executive will be Senior Vice President, General
Counsel and Secretary of the Company and shall report directly to the Chief Executive Officer (the
“CEO”), 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 title, duties, and
responsibilities as Senior Vice President, General Counsel and Secretary reporting directly to the
CEO).
If the Board of Directors (i) fails to continue the Executive in the offices of Senior Vice
President, General Counsel and Secretary (or in some other principal executive office satisfactory
to the Executive) or (ii) changes the Executive’s reporting relationship such that he no longer
reports directly to the CEO, 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
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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.
d) Location of Office. The Company shall not require the Executive to locate his
office outside the New York metropolitan area without his consent.
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.
The Executive’s vacation time for any year will be appropriately pro-rated to reflect a partial
year of employment.
2. Compensation.
a) Monetary Remuneration and Benefits. Effective September 1, 2002 and through the
Employment Period, the Company shall pay to the Executive for all services rendered by him in any
capacity:
i. a minimum base salary at the rate of $450,000 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; 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
principal 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 executives, other than the CEO, generally participate) and shall have a targeted
incentive thereunder of not less than $175,000 per annum; provided, however, that the Executive’s actual incentive payment in any year shall be measured by the Company’s
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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 participate in the
Company’s Unfunded Pension Plan for Selected Executives (the “SERP”), at an accrual rate as
prescribed in the SERP, but no less than 2.5% per year from his date of hire (which for avoidance
of doubt shall provide him with an annual minimum aggregate retirement benefit from all
Company-furnished sources of approximately $200,000 per year assuming retirement at age 60). The
timing of payment under the SERP shall be in accordance with its terms.
d) Automobile. During the Employment Period, the Company will pay the Executive a
monthly automobile allowance of $850. Such allowance shall cease when the Executive’s employment
with the Company terminates for any reason.
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 in accordance with its expense reimbursement policy. Any
reimbursement that is taxable to Executive shall be paid no later than the end of the year
following the year in which it is incurred.
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;
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c) the termination of the Executive’s employment by the Company for cause in accordance with
Paragraph 5 hereof; or
(d) December 31, 2010; 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” if he is absent from
work because he is incapacitated due to an accident or physical or mental impairment, and one of
the following conditions is also satisfied: (i) Executive is expected to return to his duties with
the Company within 6 months after the beginning of his absence or (ii) Executive is unable to
perform his duties or those of a substantially similar position of employment due to a
medically-determinable physical or mental impairment which can be expected to result in death or
last for a continuous period of not less than 6 months. If the Executive is absent on account of
being disabled (as defined in the preceding sentence), during such absence the Company shall
continue to pay to the Executive his base salary, any additional compensation authorized by the
Company’s Board of Directors, and other remuneration and benefits provided in accordance with
Paragraph 2 hereof, 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. Unless terminated earlier
in accordance with Paragraph 3a), c) or d), the Employment Period shall end on the 180th
consecutive day of his disability absence, and Executive’s compensation under Paragraph 2 shall
immediately cease, except 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 the Executive is determined to be capable of performing his duties before
being absent for 180 consecutive days (and before 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, 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 or
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under the SERP 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 following compensation during the remainder of the Employment Period (the length of
which shall be determined pursuant to Paragraph 3d) unless sooner terminated by the Executive’s
disability or death) (i) the salary provided in Paragraph 2a) payable in accordance with the usual
payroll schedule, (ii) two thirds of the targeted incentive provided in Paragraph 2b) for each year
during the Employment Period (or on a pro rata basis, portion of a year) payable on the normal
payment date(s) for such incentive award(s), (iii) the vesting of any restricted stock awards and
the immediate exercisability of any stock options which would have vested or become exercisable
during the Employment Period, and (iv) continued participation in the Company’s medical plan under
the same terms and conditions as an active employee, with eligibility for continuation coverage for
Executive and his eligible dependents under the plan’s COBRA provisions at the end of the
Employment Period at Executive’s own expense. Additionally Executive shall be deemed vested in the
SERP benefit to the extent it would have accrued through the then scheduled expiration of the
Employment Period. However, participation in the Company’s 401(k) plan, ESOP and all welfare and
fringe benefit plans (other than the medical plan) will cease on the Executive’s last day of active
work, subject to any conversion rights generally available to former employees. 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).
Notwithstanding the foregoing, if the Executive is a “specified employee” for purposes of
409A, no deferred compensation (including without limitation salary continuation payments in
accordance with clause (i) above) payable at separation from service that is not exempt from
application of 409A as a short term deferral or separation pay will be paid to Executive during the
6-month period immediately following the day he ceases active work for the Company, and any such
payments otherwise due during such 6-month period shall be paid on the first business day following
completion of such 6-month period along with simple interest at the six-month Treasury rate in
effect at the beginning of such 6-month period.
| 7. | 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
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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 (or, in the case of the post-termination covenant, as of the date of termination)
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.
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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 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 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 affect 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, defend 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
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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 Paragraphs 1(b) and 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 Paragraphs 1(b) and 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) 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.
b) 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.
c) 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,
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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.
d) 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: |
Xxxxx X. Xxxxx
000 Xxxxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
000 Xxxxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
| ii. | if to the Company to: |
Arrow Electronics, Inc.
00 Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: President and Chief Executive Officer
00 Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: President and Chief Executive Officer
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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.
| ARROW ELECTRONICS, INC. |
||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Xxxx X. Xxxxxx | ||||
| Senior Vice President and Chief Financial Officer | ||||
| THE EXECUTIVE |
||||
| /s/ Xxxxx X. Xxxxx | ||||
| Xxxxx X. Xxxxx | ||||
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