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 PAUL J. REILLY,
residing at 21 Osborne Road, Garden City, New York 11530 (the
“Executive”).
WHEREAS,
the Executive has been employed by the Company as Senior Vice
President and Chief Financial Officer, with the responsibilities
and duties of an executive officer of the Company, under an
Employment Agreement dated as of January 14, 2003 (the
“Old Agreement”);
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 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 prior 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 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.
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 $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 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 $150,000 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 $850. Such
allowance shall cease when the Executive’s employment with
the Company terminates for any reason.
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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 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
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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 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, the Company shall have the right to terminate
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