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EMPLOYMENT AGREEMENT

Employee Retention Agreement

EMPLOYMENT AGREEMENT | Document Parties: ARROW ELECTRONICS INC You are currently viewing:
This Employee Retention Agreement involves

ARROW ELECTRONICS INC

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Title: EMPLOYMENT AGREEMENT
Governing Law: New York     Date: 2/26/2009
Industry: Electronic Instr. and Controls     Sector: Technology

EMPLOYMENT AGREEMENT, Parties: arrow electronics inc
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Exhibit 10(k)(vi)

          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 JOHN P. McMAHON, residing 6 Whistler Lane, Southborough, Massachusetts 01772 (the “Executive”).

          WHEREAS, the Executive, has been employed by the Company, as a Senior Vice President, Human Resources, with the responsibilities and duties of an executive officer of the Company under an Employment Agreement dated as of February 1 st , 2007 (the “Old Agreement”); and

          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 and 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 a Senior Vice President, Human Resources, 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 a Senior Vice President, Human Resources).

          If the Board of Directors does not either continue the Executive in the office of a Senior Vice President, Human Resources, 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 $375,000 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 $225,000 per year, provided, however, that the Executive’s actual incentive payment for 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 200% of the targeted amount. The Executive’s incentive payment for any year will be appropriately pro-rated to reflect a partial year of employment.

          (c) Supplemental Executive Retirement Plan . The Executive shall participate in the Company’s Unfunded Pension Plan for Selected Executives (the “SERP”). The timing of payment under the SERP shall be in accordance with its terms.

          (d) Automobile . While the Executive is actively working for the Company, 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.

          (e) Expenses . During the Employment Period, the Company agrees to reimburse the Executive, upon the submission of appropriate vouchers, for out-of-pocket

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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, defend and hold harmless 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.

          (i) Rental Subsidy . To assist you with your move to New York, the Company will provide you with a two-year rental subsidy in the amount of $3,083 per month commencing April 2008 and continuing through March 2010, payable on the first day of each month.

3. The Employment Period .

          The “Employment Period,” as used in the Agreement, shall mean the period beginning March 19, 2007 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.

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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 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 3(a), (c) or (d), the Employment Period shall end on the 180 th 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, 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 8 and the obligations of the Executive contained in Paragraphs 9(b) and 9(c) shall continue in effect as provided therein.

6. Termination Without Cause .

          In the event that the Company discharges the Executive without cause prior to the expiration of the Employment Period, the Executive’s post-discharge compensation and benefits

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will be as follows, subject to the Executive’s execution of a release as set forth in Paragraph 7 below:

          (a) The Executive will be placed on inactive or “RA” status beginning on the day following his last day of active work and ending on the earliest of (i) the date the Employment Period was scheduled to expire, (ii) the day the Executive begins employment for a person or entity other than the Company, or (iii) the day the Executive fails to observe any provision of this Agreement, including his obligations under Paragraphs 8 and 9 (the “RA Period”), during which time he will be paid the salary provided in subparagraph 2(a) on the same schedule as if he still were an active employee (less the customary deductions), subject to any required delay described in subparagraph (c) below;

          (b) The Executive will be paid an amount equal to two-thirds of the targeted incentive provided in Paragraph 2(b) for the year in which he ce


 
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