EMPLOYMENT AGREEMENT made as of the 15th day of April
1996 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 XXXXXXXX, residing at
00 Xxx Xxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 (the "Executive").
WHEREAS, the Company wishes to employ the Executive as
a Senior Vice President and its Chief Financial Officer, with
the responsibilities and duties of a principal executive officer
of the Company; and
WHEREAS, the Executive wishes to accept such
employment and 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 the duties for the Company, its subsidiaries, and its
affiliates and to hold the offices 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 a Senior Vice President and the Chief Financial Officer of
the Company, reporting to the Company's chief executive officer.
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 and Chief
Financial Officer. If the Board of Directors does not either
continue the Executive in the office of Senior Vice President
and Chief Financial Officer 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 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 receiving written notice of 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 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 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 more than fifty miles
from New York, New York, without his prior written consent.
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 at the rate of
$350,000 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 if the Board
of Directors of the Company in its sole
discretion so determines;
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 $200,000 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. The foregoing notwithstanding, it is
specifically agreed that the Executive's incentive for the
portion of the Employment Period ending December 31, 1996 shall
be $200,000.
c) Supplemental Executive Retirement Plan. The
Executive shall participate in the Company's Unfunded Pension
Plan for Selected Executives, which shall provide him with a
benefit of $100,000 per year (the "SERP") at the normal
retirement age of 60. It is expressly agreed and understood
that, if the Company terminates the Executive's employment
without cause prior to his reaching age 60, or if his employment
terminates as a result of disability pursuant to Paragraph 4, he
shall receive an annual benefit under the SERP at age 60 in
accordance with the following schedule:
Age Annual Benefit
55 $50,000
56 $55,000
57 $60,000
58 $70,000
59 $85,000
The Executive shall receive no retirement benefit under the SERP
if he resigns before December 31, 2000 (other than pursuant to
Paragraphs 1(b) or 6) or if the Company terminates his
employment for cause.
d) Automobile. During the Employment Period, the
Company will pay the Executive a monthly automobile allowance of
$850.
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 its subsidiaries, divisions or
affiliates) to, or for the benefit of, executives or employees
in general, on a basis consistent with other senior executives.
3. The Employment Period.
The "Employment Period," as used in this 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 and subject to the provisions
thereof;
c) the termination of the Executive's employment by
the Company for cause in accordance with Paragraph 5; or
d) December 31, 2000; 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 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 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 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 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
during the Employment Period (which, for the purposes of this
Paragraph 6, shall include any extensions pursuant to Paragraph
3(d) and any notice requirements set forth therein) without
cause, the Executive shall be entitled to continuation of the
salary provided in Paragraph 2(a), two-thirds of the targeted
incentive provided in Paragraph 2(b), all benefits (including
health and life insurance) enjoyed by the Executive at the time
of such termination, the other benefits in that certain letter
dated February 6, 1996, the full vesting of any restricted stock
awards and the immediate exercisability of any stock options,
all for the full Employment Period (which, in that event, shall
continue until the then scheduled expiration of the Employment
Period unless sooner terminated by the Executive's disability or
death) and the SERP benefit at age 60 contemplated by Paragraph
2(c) if the Executive had remained in the employ of the Company
for the full Employment Period. 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 a 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)
during the same period, and the non-cash benefits provided
hereunder shall cease at such time as they are replaced by
similar or equal benefits from the Executive's new employer.
The provisions of Paragraph 7 restricting the Executive's
activities and the Executive's obligations under Paragraphs 8(b)
and 8(c) shall continue in effect. The provisions of this
Paragraph 6 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.
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, 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 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
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, the
letter agreement dated February 5, 1996, and that certain letter
agreement dated as of the date hereof granting to the Executive
extended separation benefits in the event of a change in control
of the Company constitute 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.
All other agreements between the parties pertaining to the
employment or remuneration of the Executive 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. No such assignment shall release the Company of its
obligations hereunder.
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) Arbitration. In the event of any dispute between
the parties hereto arising out of or relating to this Agreement
or the employment relationship between the Company and the
Executive (except any dispute with respect to Paragraph 7 or 8
hereof), such dispute shall be settled by arbitration in New
York, New York in accordance with the commercial arbitration
rules then obtaining of the American Arbitration Association,
except that there shall be one arbitrator selected with respect
to any such arbitration proceeding. Judgment upon the award
rendered may be entered in any court having jurisdiction
thereof. In the event any arbitration proceeding is instituted,
the arbitrator shall be authorized to assess the costs thereof
to the party, or allocate the costs between the parties, after
taking into account the arbitrator's view as to which party
prevails in such proceeding; provided, however, that costs shall
be assessed or allocated to the Executive only if the arbitrator
concludes that the position asserted by the Executive is largely
or principally without merit. Notwithstanding anything herein
to the contrary, if any dispute arises between the parties under
Paragraph 7 or 8, the Company shall not be required to arbitrate
such dispute or claim but shall have the right to institute
judicial proceedings in any court of competent jurisdiction with
respect to such dispute or claim. If such judicial proceedings
are instituted, the parties agree that such proceedings shall
not be stayed or delayed pending the outcome of any arbitration
proceeding hereunder.
e) Provisions Overly Broad. In the event that any
term or provision of this Agreement shall be deemed by an
arbitrator having jurisdiction under clause (d) above or a court
of competent jurisdiction as the case may be to be overly broad
in scope, duration or area of applicability, the arbitrator or
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.
f) 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 Xxxxxxxx
00 Xxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
ii. if to the Company to:
Arrow Electronics, Inc.
00 Xxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Executive Vice President
Either party may, by notice to the other, change his or its
address for notice hereunder.
g) 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.
By: /s/ Xxxxx Xxxxx By: /s/ Xxxxxx X. Xxxxxxx
-------------------- ---------------------------
Name: Xxxxx Xxxxx Name: Xxxxxx X. Xxxxxxx
Title: Assistant Secretary Title: Executive Vice President
and Chief Financial Officer
THE EXECUTIVE
By: /s/ Xxxxxx Xxxxxxxx
----------------------
Name: Xxxxxx Xxxxxxxx
