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FORM 10-K – EXHIBIT
10(k)(xi)
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EMPLOYMENT
AGREEMENT made as of the 1st day of March, 2004 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 BRIAN P. McNALLY, residing at 37
Birmingham Drive, Northport, New York 11768_ (the
“Executive”).
WHEREAS, the
Executive is now and has been employed by the Company as Vice
President, with the responsibilities and duties of an executive
officer of the Company; and
WHEREAS, the
Company and the Executive wish to provide for the continued
employment of the Executive as an employee of the Company and for
him to continue to render services to the Company on the terms set
forth in, and in accordance with the provisions of, this Employment
Agreement (the “Agreement”) which Employment Agreement
shall supersede and replace any employment agreement entered into
prior to the date hereof;
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 a Vice President 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 a Vice
President).
If
the Board of Directors does not either continue the Executive in
the office of Vice President 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
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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 $335,000 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.
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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 $240,000 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”).
d)
Automobile . During the Employment Period, the Company will
pay the Executive a monthly automobile allowance of
$850.
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 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.
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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)
February 28, 2006; 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” 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 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. 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
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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 s
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