EMPLOYMENT AGREEMENT made as of the 1st day of September, 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 XXXXX X. XXXXX, residing at 00 Xxxxxxxx Xxxxxx, Xxxxxx XX0 0XX Xxxxxxx
(the "Executive").
WHEREAS, the Company wishes to employ the Executive as Senior Vice
President and General Counsel, 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 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 Senior Vice President and General Counsel 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 Senior Vice President and General Counsel).
If the Board of Directors does not either continue the Executive
in the office of Senior Vice President and General Counsel 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 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. 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 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 Chief Executive Officer, 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 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 $75,000 per year upon retirement at age 60.
d) Automobile. During the Employment Period, the Company
----------
will pay the Executive a monthly automobile allowance of $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 (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, 2004; 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, 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 the then scheduled expiration of the Employment
Period 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 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.
------------------------
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.
------------
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, it subsidiaries and
affiliates will be irreparably damaged if the provision hereof are not
specifically enforced; and (iv) the award of monetary damages will not
adequately protect the Company, its subsidiaries and affiliates in the
event of a breach hereof by the Executive. The Company acknowledges
that (i) the Executive will be irreparably damaged if the provisions
of Paragraphs 1(b) 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) 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:
Xxxxx X. Xxxxx
00 Xxxxxxxx Xxxxxx
Xxxxxx XX0 0XX Xxxxxxx
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.
By:
--------------------- -------------------------
President Executive Vice President
THE EXECUTIVE
------------------------
Xxxxx X. Xxxxx
