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 MICHAEL
J. LONG, residing at 45590 Coal Creek Drive, Parker, CO 80138 (the
“Executive”).
WHEREAS,
the Executive has been employed by the Company as President and
Chief Operating Officer, with the responsibilities and duties of an
executive officer of the Company under an Employment Agreement
dated as of January 1, 2001 (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, 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 President and Chief Operating Officer of the
Company, but the Board of Directors shall have the right to adjust
the duties, responsibilities, and title of the Executive as the
Board of Directors may from time to time deem to be in the
interests of the Company (provided, however, that during the
Employment Period, without the consent of the Executive, he shall
not be assigned any titles, duties or responsibilities which, in
the aggregate, represent a material diminution in, or are
materially inconsistent with, his prior title, duties, and
responsibilities as President and Chief Operating
Officer).
If
the Board of Directors does not either continue the Executive in
the office of President and Chief Operating Officer or elect him to
some other executive office satisfactory to the Executive, the
Executive shall have the right to decline to give further service
to the Company and shall have the rights and obligations which
would accrue to him under Paragraph 6 if he were discharged
without cause. If the Executive decides to exercise such right to
decline to give further service, he shall within forty-five days
after such action or omission by the Board of Directors give
written notice to the Company stating his objection and the action
he thinks necessary to correct it, and he shall permit the Company
to have a forty-five day period in which to correct its action or
omission. If the Company makes a correction satisfactory to the
Executive, the Executive shall be obligated to continue to serve
the Company. If the Company does not make such a correction, the
Executive’s rights and obligations under Paragraph 6
shall accrue at the expiration of such forty-five day
period.
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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.
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 $330,000 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 $270,000 per annum;
provided, however, that the Executive’s actual incentive
payment in any year shall be measured by the Company’s
performance against goals established for that year and that such
performance may produce an incentive payment ranging from none to
twice the targeted amount. The Executive’s incentive payment
for any year will be appropriately pro-rated to reflect a partial
year of employment.
c)
Supplemental Executive Retirement Plan . The Executive shall
continue to participate in the Company’s Unfunded Pension
Plan for Selected Executives (the “SERP”). The timing
of payment under the SERP shall be in accordance with its
terms.
d)
Automobile . During the Employment Period, the Company will
pay the Executive a monthly automobile allowance of $800. 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 the
Executive for any and all liabilities to which he may be subject as
a result of his employment hereunder (and as a result of his
service as an officer or director of the Company, or as an officer
or director of any of its subsidiaries or affiliates), as well as
the costs of any legal action brought or threatened against him as
a result of such employment, to the fullest extent permitted by
law.
h)
Participation in Plans . Notwithstanding any other provision
of this Agreement, the Executive shall have the right to
participate in any and all of the plans or programs made available
by the Company (or it subsidiaries, divisions or affiliates) to, or
for the benefit of, executives (including the annual stock option
and restricted stock grant programs) or employees in general, on a
basis consistent with other senior executives.
3.
The Employment Period .
The
“Employment Period,” as used in the Agreement, shall
mean the period beginning as of the date hereof and terminating on
the last day of the calendar month in which the first of the
following occurs:
a)
the death of the Executive;
b)
the disability of the Executive as determined in accordance with
Paragraph 4 hereof and subject to the provisions
thereof;
c)
the termination of the Executive’s employment by the Company
for cause in accordance with Paragraph 5 hereof; or
d)
December 31, 2010; provided, however, that, unless sooner
terminated as otherwise provided herein, the Employment Period
shall automatically be extended for one or more twelve
(12) month periods beyond the then scheduled expiration date
thereof unless between the 18th and 12th month preceding such
scheduled expiration date either the Company or the Executive gives
the other written notice of its or his election not to have the
Employment Period so extended.
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)
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Executive
is unable to perform his duties or those of a substantially similar
position of employment due to a medically-determinable physical or
mental impairment which can be expected to result in death or last
for a continuous period of not less than 6 months. If the
Executive is absent on account of being disabled (as defined in the
preceding sentence), during such absence the Company shall continue
to pay to the Executive his base salary, any additional
compensation authorized by the Company’s Board of Directors,
and other remuneration and benefits provided in accordance with
Paragraph 2 hereof, all without delay, diminution or proration
of any kind whatsoever (except that his remuneration hereunder
shall be reduced by the amount of any payments he may otherwise
receive as a result of his disability pursuant to a disability
program provided by or through the Company), and his medical
benefits and life insurance shall remain in full force. Unless
terminated earlier in accordance with Paragraph 3a), c) or d),
the Employment Period shall end on the 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 the Executive is determined to be capable of
performing his duties before being absent for 180 consecutive days
(and before expiration of the Employment Period), the Executive
shall be entitled to resume employment with the Company under the
terms of this Agreement for the then remaining balance of the
Employment Period.
5.
Termination for Cause .
In
the event of any malfeasance, willful misconduct, active fraud or
gross negligence by the Executive in connection with his employment
hereunder, or a breach by the executive of any of the
Company’s policies, the Company shall have the ri
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