Exhibit 10.1
EMPLOYMENT AGREEMENT
made as of the 1st day of February, 2007 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 Company
desires to employ the
Executive,
and the
Executive desires to
be employed by the
Company, as a Senior
Vice President,
Human Resources, with the responsibilities and duties of an
executive officer of
the Company; and
WHEREAS, the Company
and the Executive wish
to provide for the employment
of the Executive as an employee of the Company and for him 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 agreement pertaining to the Executive's
employment by
the Company, written or oral, 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
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.
-1-
<PAGE>
(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").
-2-
<PAGE>
(d) Automobile.
While the Executive is actively working for the
Company, 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, 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) Mortgage
Subsidy. To assist you with your move to
New York, the
Company will
provide you with a
3-year mortgage
subsidy. This subsidy will
provide you with the following financial support: Year 1: $24,000.00; Year 2:
$18,000.00; Year 3:
$12,000.00.
This mortgage subsidy
is paid directly to the
mortgage provider and
is designed to offset your monthly mortgage payment for a
three-year period, so long as you remain an employee of the
Company. It is
also
subject to standard withholdings.
3. The
Employment Period.
The
"Employment
Period," as used in
the Agreement, shall
mean the period
beginning March 12,
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
-3-
<PAGE>
(d) March 31, 2009; 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.
4.
Disability.
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 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.
-4-
<PAGE>
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 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 ceases
active employment and for each succeeding year (or, on a pro
