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 50 Marcus Drive, Melville, New York 11747 (the “Company”), and PAUL J. REILLY,...
Exhibit 10(k)(iii)
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 XXXX X. XXXXXX, residing at 00 Xxxxxxx Xxxx,
Xxxxxx Xxxx, Xxx Xxxx 00000 (the “Executive”).
WHEREAS, the Executive has been employed by the Company as Senior Vice President and Chief
Financial Officer, with the responsibilities and duties of an executive officer of the Company,
under an Employment Agreement dated as of January 14, 2003 (the “Old Agreement”);
WHEREAS, the Old Agreement contains 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 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, 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 Chief Financial 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 prior 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 executive office satisfactory to
the Executive, the Executive shall have the right to decline to give further service to the Company
and shall have the rights and obligations which would accrue to him under Paragraph 6 if he were
discharged without cause. If the Executive decides to exercise such right to decline to give
further service, he shall within forty-five days after such action or omission by the Board of
Directors give written notice to the Company stating his objection and the action he thinks
necessary to correct it, and he shall permit the Company to have a forty-five day period in which
to correct its action or omission. If the Company makes a correction satisfactory to the
Executive, the Executive shall be obligated to continue to serve the Company. If the Company
does not make such a correction, the Executive’s rights and obligations under Paragraph 6
shall accrue at the expiration of such forty-five day period.
c) Time Devoted to Duties. The Executive shall devote all of his normal business time
and efforts to the business of the Company, its subsidiaries and its affiliates, the amount of such
time to be sufficient, in the reasonable judgment of the Board of Directors, to permit him
diligently and faithfully to serve and endeavor to further their interests to the best of his
ability.
2. Compensation.
a) Monetary Remuneration and Benefits. During the Employment Period, the Company
shall pay to the Executive for all services rendered by him in any capacity:
i. a minimum base salary 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 if the Board of Directors of the Company
in its sole discretion so determines; provided that, should the company institute a
company-wide pay cut/furlough program, such salary may be decreased by up to 15%,
but only for as long as said company-wide program is in effect;
ii. such additional compensation by way of salary or bonus or fringe benefits
as the Board of Directors of the Company in its sole discretion shall authorize or
agree to pay, payable on such terms and conditions as it shall determine; and
iii. such employee benefits that are made available by the Company to its other
executives generally.
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 $150,000 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 continue to
participate in the Company’s Unfunded Pension Plan for Selected Executives (the “SERP”). 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.
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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;
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
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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 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 under Paragraph 3d) unless sooner terminated by 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, (iii) the vesting of any
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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. 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 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.
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b) Non-Competition. Engage or become interested in the United States, Canada or
Mexico (whether as an owner, shareholder, partner, lender or other investor, director, officer,
employee, consultant or otherwise) in the business of distributing electronic parts, components,
supplies or systems, or any other business that is competitive with the principal business or
businesses then conducted by the Company, its subsidiaries or affiliates (provided, however, that
nothing contained herein shall prevent the Executive from acquiring or owning less than 1% of the
issued and outstanding capital stock or debentures of a corporation whose securities are listed on
the New York Stock Exchange, American Stock Exchange, or the National Association of Securities
Dealers Automated Quotation System, if such investment is otherwise permitted by the Company’s
Human Resource and Conflict of Interest policies);
c) Solicitation. Solicit or participate in the solicitation of any business of any
type conducted by the Company, its subsidiaries or affiliates, during said term or thereafter, from
any person, firm or other entity which was or at the time is a supplier or customer, or prospective
supplier or customer, of the Company, its subsidiaries or affiliates; or
d) Employment. Employ or retain, or arrange to have any other person, firm or other
entity employ or retain, or otherwise participate in the employment or retention of, any person who
was an employee or consultant of the Company, its subsidiaries or affiliates, at any time during
the period of twelve consecutive months immediately preceding such employment or retention.
The Executive will promptly furnish in writing to the Company, its subsidiaries or affiliates,
any information reasonably requested by the Company (including any third party confirmations) with
respect to any activity or interest the Executive may have in any business.
Except as expressly herein provided, nothing contained herein is intended to prevent the
Executive, at any time after the termination of the Employment Period, from either (i) being
gainfully employed or (ii) exercising his skills and abilities outside of such geographic areas,
provided in either case the provisions of this Agreement are complied with.
8. Preservation of Business.
a) General. During the Employment Period, the Executive will use his best efforts to
advance the business and organization of the Company, its subsidiaries and affiliates, to keep
available to the Company, its subsidiaries and affiliates, the services of present and future
employees and to advance the business relations with its suppliers, distributors, customers and
others.
b) Patents and Copyrights, etc. The Executive agrees, without additional
compensation, to make available to the Company all knowledge possessed by him relating to any
methods, developments, inventions, processes, discoveries and/or improvements (whether patented,
patentable or unpatentable) which concern in any way the business of the Company, its subsidiaries
or affiliates, whether acquired by the Executive before or during his employment hereunder.
Any methods, developments, inventions, processes, discoveries and/or improvements (whether
patented, patentable or unpatentable) which the Executive may conceive
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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 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.
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10. Specific Performance.
The Executive acknowledges that (i) the services to be rendered under the provisions of this
Agreement and the obligations of the Executive assumed herein are of a special, unique and
extraordinary character; (ii) it would be difficult or impossible to replace such services and
obligations; (iii) the Company, its subsidiaries and affiliates will be irreparably damaged if the
provisions hereof are not specifically enforced; and (iv) the award of monetary damages will not
adequately protect the Company, its subsidiaries and affiliates in the event of a breach hereof by
the Executive. The Company acknowledges that (i) the Executive will be irreparably damaged if the
provisions of Paragraph 6 hereof are not specifically enforced and (ii) the award of monetary
damages will not adequately protect the Executive in the event of a breach thereof by the Company.
By virtue thereof, the Executive agrees and consents that if he violates any of the provisions of
this Agreement, and the Company agrees and consents that if it violates any of the provisions of
Paragraph 6 hereof, the other party, in addition to any other rights and remedies available under
this Agreement or otherwise, shall (without any bond or other security being required and without
the necessity of proving monetary damages) be entitled to a temporary and/or permanent injunction
to be issued by a court of competent jurisdiction restraining the breaching party from committing
or continuing any violation of this Agreement, or any other appropriate decree of specific
performance. Such remedies shall not be exclusive and shall be in addition to any other remedy
which any of them may have.
11. Miscellaneous.
a) Entire Agreement; Amendment. This Agreement constitutes the whole employment
agreement between the parties and may not be modified, amended or terminated except by a written
instrument executed by the parties hereto. It is specifically agreed and understood, however, that
the provisions of that certain letter agreement dated as of December 30, 2008 granting to the
Executive extended separation benefits in the event of a change in control of the Company shall
survive and shall not be affected hereby. 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
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upon strict adherence to any term of this Agreement on any occasion shall not operate or be
construed as a waiver of the right to insist upon strict adherence to that term or any other term
of this Agreement on that or any other occasion.
d) Provisions Overly Broad. In the event that any term or provision of this Agreement
shall be deemed by a court of competent jurisdiction to be overly broad in scope, duration or area
of applicability, the court considering the same shall have the power and hereby is authorized and
directed to modify such term or provision to limit such scope, duration or area, or all of them, so
that such term or provision is no longer overly broad and to enforce the same as so limited.
Subject to the foregoing sentence, in the event any provision of this Agreement shall be held to be
invalid or unenforceable for any reason, such invalidity or unenforceability shall attach only to
such provision and shall not affect or render invalid or unenforceable any other provision of this
Agreement.
e) Notices. Any notice permitted or required hereunder shall be in writing and shall
be deemed to have been given on the date of delivery or, if mailed by registered or certified mail,
postage prepaid, on the date of mailing:
| i. | if to the Executive to: | ||
| Xxxx X. Xxxxxx 00 Xxxxxxx Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000 |
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| ii. | if to the Company to: | ||
| Arrow Electronics, Inc. 00 Xxxxxx Xxxxx Xxxxxxxx, Xxx Xxxx 00000 Attention: Xxxxx X. Xxxxx Senior Vice President and General Counsel |
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/ Xxxxx X. Xxxxx | |||
| Xxxxx X. Xxxxx | ||||
| Senior Vice President and General Counsel | ||||
| THE EXECUTIVE |
||||
| /s/ Xxxx X. Xxxxxx | ||||
| Xxxx X. Xxxxxx | ||||
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