EMPLOYMENT AGREEMENT made as of the 1st day of July, 2000 by and between
ARROW ELECTRONICS, INC., a New York corporation with its principal office at
00 Xxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "Company"), and XXXXXXX X.
XXXXXXX, residing at 000 Xxxxxx Xxxx, Xxxx Xxxxxx Xxxxxx, Xxx Xxxx 00000 (the
"Executive").
WHEREAS, the Executive is now and has been employed by the Company as
President and Chief Operating Officer, with the responsibilities and duties
of a principal executive officer of the Company; and
WHEREAS, the Company wishes to provide for the continued employment of
the Executive as President and Chief Executive Officer of the Company after
the date of this Employment Agreement (the "Agreement"); 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 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 the President and Chief Executive 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
President and Chief Executive Officer). If the Board of Directors does not
either continue the Executive in the office of President and Chief Executive
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 8 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 8 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 $700,000 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 Chief Executive Officer 1999 Performance Bonus Plan, as amended
(or any alternative, successor, or replacement plan or program), and shall
have a targeted incentive thereunder equal to his annual base salary;
provided, however, that the Executive's actual incentive payment in any year
shall be measured by the Company's performance against goals established by
the Board of Directors for that year and that such performance may produce an
incentive payment ranging from none to any maximum established under such
plan or by the Board of Directors of the Company. 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"), which shall provide him with an annual minimum
benefit of $300,000 per year upon retirement at age 60.
d) 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.
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 6 hereof; or
d) December 31, 2003; provided, however, that, if either the
Company or the Executive does not give the other at least twelve months
notice of its intention to permit this Agreement to expire on the then
scheduled termination date of the Employment Period (unless sooner terminated
as otherwise provided herein), the Employment Period shall automatically be
extended for one or more additional twelve month periods beyond the then
scheduled expiration date thereof.
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 continued in the
underlying plan, as described in the Company's employee benefits manual, and
subject to the requirement that the Executive continue to pay the "employee
portion" of the cost thereof), and the Executive's life insurance policy
under the Management Insurance Program shall be transferred to him, as
provided in the related agreement, subject to the obligation of the Executive
to pay the premiums therefor.
In the event that, notwithstanding such a determination of
disability, the Executive is determined not to be totally and permanently
disabled prior to the then scheduled expiration of the Employment Period, the
Executive shall be entitled to resume employment with the Company under the
terms of this Agreement for the then remaining balance of the Employment
Period.
5. Parachute Payments.
There is currently an agreement between the Executive and the
Company dated September 1, 1997 relating to the rights of the parties in the
event of a "change of control" of the Company as therein defined, which is
comparable to similar agreements between the Company and certain other
principal executive officers. At no time during the Employment Period shall
the terms and conditions applicable to the Executive in the event of a change
of control (including the basis on which the Executive may become entitled to
compensation or benefits in connection with such a change) be less favorable
than the terms and conditions applicable to such other principal executive
officers of the Company.
6. 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 9 and the obligations of the Executive
contained in Paragraph 10(b) and 10(c) shall continue in effect as provided
therein.
7. Death Benefit.
The Executive is a participant in the Company's Management Insurance
Program. During the Employment Period, the Company will continue to maintain
in effect for the Executive such program or some other form of life insurance
providing the Executive's estate or named beneficiary a benefit upon the
Executive's death at least equal to the net after-tax benefit provided by the
Management Insurance Program.
8. 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 his base salary in place of the 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
termination date unless sooner terminated by the Executive's disability or
death), and the Company shall have no right to set off payments due the
Executive with any amounts he may earn from gainful employment elsewhere. It
is expressly agreed and understood that the Executive shall be under no
obligation to seek such employment. The provisions of Paragraph 9
restricting the Executive's activities and Executive's obligations under
Paragraph 10(b) and 10(c) shall continue in effect. The provisions of this
Paragraph 8 shall not act to limit the Executive's ability to recover damages
from the Company for breaching this Agreement by terminating the Employment
Period without cause, except as otherwise permitted by Paragraph 3.
9. 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, Mexico, Europe, or Asia (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.
10. 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 8 or
Paragraph 1(b), the Executive will promptly return to the Company all copies
of information protected by Paragraph 9(a) hereof or pertaining to matters
covered by subparagraph (b) of this Paragraph 10 which are in his possession,
custody or control, whether prepared by him or others.
11 Separability.
The Executive agrees that the provisions of Paragraphs 9 and 10
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
Paragraphs 4, 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 Executive notwithstanding any rights or remedies the
Company may have under any other provisions hereof.
12. 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), 4, 7, and 8 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), 4, 7, and 8 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.
13. 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:
Xxxxxxx X. Xxxxxxx
000 Xxxxxx Xxxx
Xxxx Xxxxxx Xxxxxx, 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 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/ Xxxxxx X. Xxxxxxx
------------------------ ------------------------
Secretary Executive Vice President
THE EXECUTIVE
/s/ Xxxxxxx X. Xxxxxxx
------------------------
Xxxxxxx X. Xxxxxxx
