EMPLOYMENT AGREEMENT made as of the 1st day of March, 1999 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 XXX X. XXXX, residing
at 0000 Xxxxxxxxx Xxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000 (the "Executive").
WHEREAS, the Company wishes to employ the Executive as Senior Vice
President and 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 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
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 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.
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 $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. The foregoing notwithstanding, it is specifically agreed that the
Executive's incentive for the portion of the Employment Period ending December
31, 1999 shall be not less than $60,000.
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 $90,000 per
year upon retirement at age 63 and $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, 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 6th 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. If the Company does not give the Executive at least twelve
months notice of its intention to permit this Agreement to expire on the then
scheduled expiration date thereof (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 (provided, however,
that, if so extended, the Employment Period shall terminate upon the Executive's
acceptance of employment with another entity).
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 Paragraph 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 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. 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:
Xxx X. Xxxx
0000 Xxxxxxxxx Xxxxx Xxxxx
Xxxxxx, Xxxxxxxx 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/ Xxx X. Xxxx
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