EMPLOYMENT
AGREEMENT (the “Agreement”) made as of the 30
th
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 PETER S. BROWN,
residing at 808 Court North Drive, Melville, NY 11747 (the
“Executive”).
WHEREAS,
the Company desires to continue to employ the Executive as Senior
Vice President, General Counsel and Secretary, with the
responsibilities and duties of a principal executive officer of the
Company;
WHEREAS,
the Executive has been working for the Company under an Employment
Agreement dated as of December 13, 2002 (the “Old
Agreement”);
WHEREAS,
the Old Agreement contains certain 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 the 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 . The Executive will be Senior
Vice President, General Counsel and Secretary of the Company and
shall report directly to the Chief Executive Officer (the
“CEO”), 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 Senior Vice President, General Counsel and
Secretary reporting directly to the CEO).
If
the Board of Directors (i) fails to continue the Executive in
the offices of Senior Vice President, General Counsel and Secretary
(or in some other principal executive office satisfactory to the
Executive) or (ii) changes the Executive’s reporting
relationship such that he no longer reports directly to the CEO,
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.
d)
Location of Office . The Company shall not require the
Executive to locate his office outside the New York metropolitan
area without his consent.
e)
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. The
Executive’s vacation time for any year will be appropriately
pro-rated to reflect a partial year of employment.
a)
Monetary Remuneration and Benefits . Effective
September 1, 2002 and through 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 $450,000 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 Management Incentive Plan (or such
alternative, successor, or replacement plan or program in which the
Company’s executives, other than the CEO, generally
participate) and shall have a targeted incentive thereunder of not
less than $175,000 per annum; provided, however, that the
Executive’s actual incentive payment in any year shall be
measured by the Company’s
2
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
participate in the Company’s Unfunded Pension Plan for
Selected Executives (the “SERP”), at an accrual rate as
prescribed in the SERP, but no less than 2.5% per year from his
date of hire (which for avoidance of doubt shall provide him with
an annual minimum aggregate retirement benefit from all
Company-furnished sources of approximately $200,000 per year
assuming retirement at age 60). 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.
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;
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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) 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
c
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