EMPLOYMENT AGREEMENT made as of the 5th day of November 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
XXXX X. XXXXXX, residing at 0000 Xxxxxxxxx Xxx, Xxx Xxxxx, Xxxxxxxxxx
00000 (the "Executive").
WHEREAS, the Company wishes to employ the Executive as Vice President
and Chief Information Officer, with the responsibilities and duties of an
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
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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
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Executive will be Vice President and Chief Information 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 Vice President and Chief Information Officer).
If the Board of Directors does not either continue the Executive in the
office of Vice President and Chief Information Officer or elect him to some
other 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
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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) Vacation. During the Employment Period, the Executive will be given
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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.
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a) Monetary Remuneration and Benefits. During the Employment Period,
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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 $360,000 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 compensation executives generally.
b) Annual Incentive Payment. The Executive shall participate in the
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Company's Management Incentive Compensation 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 $180,000 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.
It is expressly agreed and understood that the Executive's incentive hereunder
shall not be less than the targeted incentive set forth above for the years
2001 and 2002 (subject to proration for a partial year of service as provided
herein).
c) Supplemental Executive Retirement Plan. The Executive shall
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participate in the Company's Unfunded Pension Plan for Selected Executives
(the "SERP"), which shall provide him with an aggregate annual minimum
retirement benefit from all relevant sources (including, without limitation,
social security, the SERP, the Arrow Electronics Savings Plan, and the
Arrow Employee Stock Ownership Plan) in an amount equal to twenty-five
percent (25%) of the Executive's final average compensation (as defined
in the SERP) upon retirement at age 60.
d) Automobile. During the Employment Period, the Company will
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pay the Executive a monthly automobile allowance of $850.
e) Expenses. During the Employment Period, the Company agrees to
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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
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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
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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
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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
officers.
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) December 31, 2003; 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.
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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 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.
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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,
or a breach by the Executive of any of the Company's policies, 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.
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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 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.
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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
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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
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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
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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
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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
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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
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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
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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 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.
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a) Entire Agreement; Amendment. This Agreement constitutes the
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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
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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
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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
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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
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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
0000 Xxxxxxxxx Xxx
Xxx Xxxxx, XX 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
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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:
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Executive Vice President
THE EXECUTIVE
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Xxxx X. Xxxxxx
