EXHIBIT 10.1
EMPLOYMENT AGREEMENT made as of the 12th day of September 2005 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 J.
EDWARD COLEMAN, residing at 1829 Hidden Point Road, Annapolis, MD 21409 (the
"Executive").
WHEREAS, the Company wishes to employ the Executive as Senior Vice
President and President of North American Computer Products, with the
responsibilities and duties of an officer of the Company; and
WHEREAS, the Executive wishes to accept such employment and to render
services to the Company on the terms set forth in, and in accordance with the
provisions of, this Employment Agreement (the "Agreement");
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties agree as follows:
1. Employment and Duties.
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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 of the Company and President of
North American Computer Products, 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 President of North American Computer Products).
If the Board of Directors does not either continue the Executive in
the office of Senior Vice President and President of North American Computer
Products 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.
2. Compensation.
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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 $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.
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c) Supplemental Executive Retirement Plan. The Executive shall
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 performance share programs) or employees in general, on
a basis consistent with other senior executives.
3. The Employment Period.
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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) September 11, 2007; 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.
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4. Disability.
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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.
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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 7 and the obligations of the Executive contained in Paragraphs 8(b)
and 8(c) shall continue in effect as provided therein.
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6. Termination Without Cause.
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In the event that the Company discharges the Executive without cause,
the Executive shall be entitled to the salary provided in Paragraph 2(a),
two-thirds of the targeted incentive provided in Paragraph 2(b), the vesting of
any restricted stock awards, performance shares and the immediate exercisability
of any stock options, as well as his rights under Paragraph 4, which would have
vested, been earned or become exercisable during the full Employment Period
(which, in that event, shall continue until the then scheduled expiration of the
Employment Period unless sooner terminated by the Executive's disability or
death). Any Amounts payable to the Executive under this Paragraph 6 shall be
reduced by the amount of the Executive's earnings from other employment (which
the Executive shall have an affirmative duty to seek; provided, however, that
the Executive shall not be obligated to accept a new position which is not
reasonably comparable to his employment with the Company).
7. Non-Competition; Trade Secrets.
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During the Employment Period and for a period of one year after the
termination of the Employment Period, the Executive will not, directly or
indirectly:
a) Disclosure of Information. Use, attempt to use, disclose or
otherwise make known to any person or entity (other than to the Board of
Directors of the Company or otherwise in the course of the business of the
Company, its subsidiaries or affiliates and except as may be required by
applicable law):
i. any knowledge or information, including, without limitation, lists
of customers or suppliers, trade secrets, know-how, inventions,
discoveries, processes and formulae, as well as all data and records
pertaining thereto, which he may acquire in the course of his employment,
in any manner which may be detrimental to or cause injury or loss to the
Company, its subsidiaries or affiliates; or
ii. any knowledge or information of a confidential nature (including
all unpublished matters) relating to, without limitation, the business,
properties, accounting, books and records, trade secrets or memoranda of
the Company, its subsidiaries or affiliates, which he now knows or may come
to know in any manner which may be detrimental to or cause injury or loss
to the Company, its subsidiaries or affiliates.
b) Non-Competition. Engage or become interested in the United States,
Canada or Mexico (whether as an owner, shareholder, partner, lender or other
investor, director, officer, employee, consultant or otherwise) in the
business of distributing electronic parts, components, supplies or systems, or
any other business that is competitive with the principal business or businesses
then conducted by the Company, its subsidiaries or affiliates (provided,
however, that nothing contained herein shall prevent the Executive from
acquiring or owning less than 1% of the issued and outstanding capital stock or
debentures of a corporation whose securities are listed on the New York Stock
Exchange, American Stock Exchange, or the National Association of Securities
Dealers Automated Quotation System, if such investment is otherwise permitted by
the Company's Human Resource and Conflict of Interest policies);
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c) Solicitation. Solicit or participate in the solicitation of any
business of any type conducted by the Company, its subsidiaries or affiliates,
during said term or thereafter, from any person, firm or other entity which was
or at the time is a supplier or customer, or prospective supplier or customer,
of the Company, its subsidiaries or affiliates; or
d) Employment. Employ or retain, or arrange to have any other person,
firm or other entity employ or retain, or otherwise participate in the
employment or retention of, any person who was an employee or consultant of the
Company, its subsidiaries or affiliates, at any time during the period of twelve
consecutive months immediately preceding such employment or retention.
The Executive will promptly furnish in writing to the Company, its
subsidiaries or affiliates, any information reasonably requested by the
Company (including any third party confirmations) with respect to any activity
or interest the Executive may have in any business.
Except as expressly herein provided, nothing contained herein is
intended to prevent the Executive, at any time after the termination of the
Employment Period, from either (i) being gainfully employed or (ii) exercising
his skills and abilities outside of such geographic areas, provided in either
case the provisions of this Agreement are complied with.
8. Preservation of Business.
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a) General. During the Employment Period, the Executive will use his
best efforts to advance the business and organization of the Company, its
subsidiaries and affiliates, to keep available to the Company, its subsidiaries
and affiliates, the services of present and future employees and to advance the
business relations with its suppliers, distributors, customers and others.
b) Patents and Copyrights, etc. The Executive agrees, without
additional compensation, to make available to the Company all knowledge
possessed by him relating to any methods, developments, inventions, processes,
discoveries and/or improvements (whether patented, patentable or unpatentable)
which concern in any way the business of the Company, its subsidiaries or
affiliates, whether acquired by the Executive before or during his employment
hereunder.
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Any methods, developments, inventions, processes, discoveries and/or
improvements (whether patented, patentable or unpatentable) which the Executive
may conceive of or make, related directly or indirectly to the business or
affairs of the Company, its subsidiaries or affiliates, or any part thereof,
during the Employment Period, shall be and remain the property of the Company.
The Executive agrees promptly to communicate and disclose all such methods,
developments, inventions, processes, discoveries and/or improvements to the
Company and to execute and deliver to it any instruments deemed necessary by the
Company to effect the disclosure and assignment thereof to it. The Executive
also agrees, on request and at the expense of the Company, to execute patent
applications and any other instruments deemed necessary by the Company for the
prosecution of such patent applications or the acquisition of Letters Patent in
the United States or any other country and for the assignment to the Company of
any patents which may be issued. The Company shall indemnify and hold the
Executive harmless from any and all costs, expenses, liabilities or damages
sustained by the Executive by reason of having made such patent applications or
being granted such patents.
Any writings or other materials written or produced by the Executive
or under his supervision (whether alone or with others and whether or not
during regular business hours), during the Employment Period which are related,
directly or indirectly, to the business or affairs of the Company, its
subsidiaries or affiliates, or are capable of being used therein, and the
copyright thereof, common law or statutory, including all renewals and
extensions, shall be and remain the property of the Company. The Executive
agrees promptly to communicate and disclose all such writings or materials to
the Company and to execute and deliver to it any instruments deemed necessary by
the Company to effect the disclosure and assignment thereof to it. The Executive
further agrees, on request and at the expense of the Company, to take any and
all action deemed necessary by the Company to obtain copyrights or other
protections for such writings or other materials or to protect the Company's
right, title and interest therein. The Company shall indemnify and hold the
Executive harmless from any and all costs, expenses, liabilities or damages
sustained by the Executive by reason of the Executive's compliance with the
Company's request.
c) Return of Documents. Upon the termination of the Employment Period,
including any termination of employment described in Paragraph 6, the
Executive will promptly return to the Company all copies of information
protected by Paragraph 7(a) hereof or pertaining to matters covered by
subparagraph (b) of this Paragraph 8 which are in his possession, custody or
control, whether prepared by him or others.
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9. Separability.
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The Executive agrees that the provisions of Paragraphs 7 and 8 hereof
constitute independent and separable covenants which shall survive the
termination of the Employment Period and which shall be enforceable by the
Company notwithstanding any rights or remedies the Executive may have under any
other provisions hereof. The Company agrees that the provisions of Paragraph 6
hereof constitute independent and separable covenants which shall survive the
termination of the Employment Period and which shall be enforceable by the
Executive notwithstanding any rights or remedies the Company may have under any
other provisions hereof.
10. Specific Performance.
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The Executive acknowledges that (i) the services to be rendered under
the provisions of this Agreement and the obligations of the Executive
assumed herein are of a special, unique and extraordinary character; (ii) it
would be difficult or impossible to replace such services and obligations; (iii)
the Company, its subsidiaries and affiliates will be irreparably damaged if the
provisions hereof are not specifically enforced; and (iv) the award of monetary
damages will not adequately protect the Company, its subsidiaries and affiliates
in the event of a breach hereof by the Executive. The Company acknowledges that
(i) the Executive will be irreparably damaged if the provisions of Paragraphs 6
hereof are not specifically enforced and (ii) the award of monetary damages will
not adequately protect the Executive in the event of a breach thereof by the
Company. By virtue thereof, the Executive agrees and consents that if he
violates any of the provisions of this Agreement, and the Company agrees and
consents that if it violates any of the provisions of Paragraphs 6 hereof, the
other party, in addition to any other rights and remedies available under this
Agreement or otherwise, shall (without any bond or other security being required
and without the necessity of proving monetary damages) be entitled to a
temporary and/or permanent injunction to be issued by a court of competent
jurisdiction restraining the breaching party from committing or continuing any
violation of this Agreement, or any other appropriate decree of specific
performance. Such remedies shall not be exclusive and shall be in addition to
any other remedy which any of them may have.
11. Miscellaneous.
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a) Entire Agreement; Amendment. This Agreement constitutes the whole
employment agreement between the parties and may not be modified, amended or
terminated except by a written instrument executed by the parties hereto. It is
specifically agreed and understood, however, that the provisions of that certain
letter agreement dated as of September 12, 2005 granting to the Executive
extended separation benefits in the event of a change in control of the Company
shall survive and shall not be affected hereby. All other agreements between the
parties pertaining to the employment or remuneration of the Executive not
specifically contemplated hereby or incorporated or merged herein are terminated
and shall be of no further force or effect.
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b) Assignment. Except as stated below, this Agreement is not
assignable by the Company without the written consent of the Executive, or
by the Executive without the written consent of the Company, and any purported
assignment by either party of such party's rights and/or obligations under this
Agreement shall be null and void; provided, however, that, notwithstanding the
foregoing, the Company may merge or consolidate with or into another
corporation, or sell all or substantially all of its assets to another
corporation or business entity or otherwise reorganize itself, provided the
surviving corporation or entity, if not the Company, shall assume this Agreement
and become obligated to perform all of the terms and conditions hereof, in which
event the Executive's obligations shall continue in favor of such other
corporation or entity.
c) Waivers, etc. No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature. The failure
of any party to insist upon strict adherence to any term of this Agreement on
any occasion shall not operate or be construed as a waiver of the right to
insist upon strict adherence to that term or any other term of this Agreement
on that or any other occasion.
d) Provisions Overly Broad. In the event that any term or provision of
this Agreement shall be deemed by a court of competent jurisdiction to be
overly broad in scope, duration or area of applicability, the court considering
the same shall have the power and hereby is authorized and directed to modify
such term or provision to limit such scope, duration or area, or all of them, so
that such term or provision is no longer overly broad and to enforce the same as
so limited. Subject to the foregoing sentence, in the event any provision of
this Agreement shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall attach only to such provision and shall not
affect or render invalid or unenforceable any other provision of this Agreement.
e) Notices. Any notice permitted or required hereunder shall be in
writing and shall be deemed to have been given on the date of delivery or, if
mailed by registered or certified mail, postage prepaid, on the date of mailing:
i. if to the Executive to:
J. Edward Coleman
1829 Hidden Point Road
Annapolis, MD 21409
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ii. if to the Company to:
Arrow Electronics, Inc.
50 Marcus Drive
Melville, New York 11747
Attention: Peter S. Brown
Senior Vice President and
General Counsel
Either party may, by notice to the other, change his or its address for notice
hereunder.
f) New York Law. This Agreement shall be construed and governed in all
respects by the internal laws of the State of New York, without giving effect to
principles of conflicts of law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
Attest: ARROW ELECTRONICS, INC.
- ------------------------ By: --------------------------
Assistant Secretary Peter S. Brown
Senior Vice President &
General Counsel
THE EXECUTIVE
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J. Edward Coleman
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