EXHIBIT 10.1
EMPLOYMENT AGREEMENT made as of the 17th day of March 2006 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 KONG, residing
at 15 Ardmore Park, Unit 2501, Singapore 259959 (the "Executive").
WHEREAS, the Company wishes to employ the Executive as Vice President and
President of Arrow Asia Pacific, 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. The Executive will be Vice President
of the Company and President of Arrow Asia Pacific, provided that 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 Vice President and President of Arrow Asia Pacific).
If the Board of Directors does not either continue the Executive in
the office of Vice President and President of Arrow Asia Pacific 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
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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.
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. For 2006, the Executive's incentive payment will be guaranteed at
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full-year target level if the Executive's start date is on or before April 1,
2006. Otherwise, the 2006 annual incentive will be guaranteed at target level,
pro-rated to reflect the portion of the April 1, 2006-December 31, 2006 period
during which the Executive was an employee.
c) Supplemental Executive Retirement Plan. The Executive shall
participate in the Company's Unfunded Pension Plan for Selected Executives (the
"SERP").
d) Expenses. During the Employment Period, the Company agrees to
reimburse the Executive, upon the submission of appropriate documentation, for
reasonable and necessary out-of-pocket expenses (including, without limitation,
expenses for travel, lodging and entertainment) incurred by the Executive in the
course of his duties hereunder.
e) 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.
f) 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.
g) 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 similarly situated executives.
h) Withholdings. All payments of compensation and benefits by the
Company shall be subject to all legally required and customary withholding.
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 upon the occurrence of
one of the following events:
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
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d) March 31, 2008; 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.
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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 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, 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 (i) any malfeasance, willful misconduct, fraud or
gross negligence by the Executive in connection with his employment hereunder or
(ii) any other willful or reckless misconduct by the Executive that, in the good
faith opinion of the company's Board of Directors, demonstrably and adversely
affects the company's business or reputation, 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
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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.
6. Termination Without Cause.
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In the event that the Company discharges the Executive without cause,
the Executive, upon execution and delivery of an irrevocable release of claims
against the Company and its subsidiaries and its directors, officers and
employees in a form prescribed by the Company, shall be entitled to (i) the
continued payment of the base salary provided in Paragraph 2(a) through the end
of the Employment Period, (ii) two-thirds of the targeted incentive provided in
Paragraph 2(b) for each calendar year in the Employment Period ending after the
Executive's date of termination (which shall be paid at the time bonuses are
paid to other executives for the applicable year(s)), and (iii) the vesting of
any restricted stock awards, performance shares and the immediate exercisability
of any stock options, which would have vested, been earned or become exercisable
during the full Employment Period. For the purpose of this Paragraph 6, the
Employment Period 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).
Notwithstanding the foregoing, if Executive is considered a "specified
employee" under section 409A of the Internal Revenue Code, payments of "deferred
compensation" (within the meaning of section 409A) scheduled to be made to
Executive under this Agreement or the Letter Agreement on account of his
termination of employment shall be delayed, but only to the extent necessary to
comply with section 409A of the Internal Revenue Code, for a period of six
months following Executive's termination of employment. Any such delayed
payments shall be paid together in a lump sum on the first business day
following the six-month anniversary of the termination of the Executive's
employment.
The provisions of Paragraph 8 restricting the Executive's activities
and the Executive's obligations under Paragraph 9(b) and 9(c) shall continue in
effect and the Company shall have no obligation to make the payments under this
Paragraph 6 (or to continue such payments) if the Executive is in material
breach of any of such provisions.
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7. Voluntary Termination by the Executive.
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If the Executive terminates his employment voluntarily (other than
pursuant to Paragraph 1(b)), the Employment Period shall terminate and the
Company shall have no further obligation to the Executive under this Agreement
(other than as required by law) 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.
8. Non-Competition; Trade Secrets.
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a) Disclosure of Information. During the Employment Period and
thereafter, the Executive will not, directly or indirectly, 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. 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, 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);
c) Solicitation. 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, solicit or participate in the solicitation of any
business of any type conducted by the Company, its subsidiaries or affiliates,
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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. 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, 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.
9. 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.
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
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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 property and records of the
Company, its subsidiaries and its affiliates, including without limitation, all
copies of information protected by Paragraph 8(a) hereof or pertaining to
matters covered by subparagraph (b) of this Paragraph 9 which are in his
possession, custody or control, whether prepared by him or others.
10. 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.
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11. 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 Paragraph 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 Paragraph 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 the Company or any of its subsidiaries or affiliates may
have.
12. 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.
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
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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:
Peter Kong
15 Ardmore Park
Unit 2501
Singapore 259959
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 by providing written notice to the other in accordance with this
provision.
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f) Choice of Law; Choice of Forum. 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 or where the parties are
located at the time a dispute arises. The parties consent and submit themselves
to the exclusive jurisdiction of the state and federal courts in New York over
any dispute arising out of or relating to this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
Attest: ARROW ELECTRONICS, INC.
/s/ Wayne Brody By: /s/ Peter S. Brown
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Assistant Secretary Peter S. Brown
Senior Vice President &
General Counsel
THE EXECUTIVE
/s/ Peter Kong
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Peter Kong
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