EMPLOYMENT AGREEMENT made as of the 1st day of September,
1997 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. XXXXXXX, residing
at 000 Xxxx Xxxxxx, Xxxxxx, Xxx Xxxxxxxxx 00000 (the
"Executive").
WHEREAS, the Company wishes to employ the Executive as
Executive Vice President and Chief Operating 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.
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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 Executive Vice President and Chief
Operating Officer 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 title,
duties, and responsibilities as Executive Vice President and
Chief Operating Officer). If the Board of Directors does not
either continue the Executive in the office of Executive Vice
President and Chief Operating 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 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.
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 at the rate of $400,000
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 principal operating executives, other than the
Chief Executive Officer, generally participate) and shall have a
targeted incentive thereunder of not less than $350,000 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 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"), which shall provide
him with an annual minimum benefit of $125,000 per year upon
retirement at age 60.
d) Automobile. During the Employment Period, the
Company will pay the Executive a monthly automobile allowance of
$1,000.
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 (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 5 hereof; or
d) September 1, 2000; provided, however, that, if the
Company does not give the Executive at least twelve months notice
of its intention to permit this Agreement to expire on September
1, 2000 (unless sooner terminated as otherwise provided herein),
the Employment Period shall automatically be extended for one or
more months beyond the scheduled expiration date thereof to give
the Executive the benefit of twelve months notice of termination.
4. Disability.
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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.
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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
7 and the obligations of the Executive contained in Paragraph
8(b) and 8(c) shall continue in effect as provided therein.
6. 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(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 September 1, 2000 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 7 restricting the Executive's activities and
Executive's obligations under Paragraph 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.
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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.
8. Preservation of Business.
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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, 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 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.
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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.
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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 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.
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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. 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.
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:
Xxxxxxx X. Xxxxxxx
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxxxxxxx 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/Xxxxx Xxxxx By:/s/Xxxxxx X. Xxxxxxx
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Assistant Secretary Executive Vice President
THE EXECUTIVE
/s/Xxxxxxx X. Xxxxxxx
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