Form of Executive Change in Control Retention Agreement, as adopted September 13, 2023, and effective August 7, 2023, prospectively
Exhibit 10(b)
EXECUTIVE CHANGE IN CONTROL RETENTION AGREEMENT
(as adopted September 13, 2023, and effective August 7, 2023, prospectively)
THIS AGREEMENT by and between Arrow Electronics, Inc., a New York corporation (the “Company”), and EXECUTIVE_NAME (the “Executive”) is made as of EFFECTIVE_DATE (the “Effective Date”).
WHEREAS, the Company recognizes that, as is the case with many publicly-held corporations, the possibility of a change in control of the Company exists and that such possibility, and the uncertainty and questions which it may raise among key personnel, may result in the departure or distraction of key personnel to the detriment of the Company and its stockholders; and
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that appropriate steps should be taken to reinforce and encourage the continued employment and dedication of the Company’s key personnel without distraction from the possibility of a change in control of the Company and related events and circumstances.
NOW, THEREFORE, as an inducement for and in consideration of Executive remaining in its employ, the Company agrees that Executive shall receive the severance benefits set forth in this Agreement in the event Executive’s employment with the Company is terminated under the circumstances described below.
1. | Key Definitions. |
As used herein, the following terms shall have the following respective meanings.
provided, that a transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially similar proportions by the Persons who hold the Company’s securities immediately before such transaction.
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2.Employment Status; Termination Following Change in Control.
2.1Term of Agreement; Not an Employment Contract. The term of this Agreement shall begin on the Effective Date and shall continue in effect, with respect to a Change in Control Date that occurs during Executive’s period of employment with the Company, and for such periods following any such Change in Control Date as expressly provided herein. Executive acknowledges that this Agreement does not constitute a contract of employment or impose on the Company any obligation to retain Executive as an employee and that this Agreement does not prevent Executive from terminating employment at any time. If Executive’s employment with the Company terminates for any reason and subsequently a Change in Control shall occur, Executive shall not be entitled to any benefits hereunder except as otherwise provided pursuant to Section 1.4.
2.2Termination of Employment.
(a)If the Change in Control Date occurs, any termination of Executive’s employment by the Company or by Executive within twenty-four (24) months following the Change in Control Date (other than due to the death of Executive) shall be communicated by a written notice to the other party hereto (the “Notice of Termination”), given in accordance with Section 7. Any Notice of Termination shall: (i) indicate the specific termination provision (if any) of this Agreement relied upon by the party giving such notice, (ii) to the extent applicable, set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated and (iii) specify the Date of Termination (as defined below). The effective date of an employment termination (the “Date of Termination”) shall be the close of business on the date specified in the Notice of Termination (which date may not be less than fifteen (15) days or more than thirty (30) days after the date of delivery of such Notice of Termination), in the case of a termination other than one due to Executive’s Disability, or the date of Executive’s death, as the case may be. In the event the Company fails to satisfy the requirements of Section 2.2(a) regarding a Notice of Termination, the purported termination of Executive’s employment pursuant to such Notice of Termination shall not be effective for purposes of this Agreement.
(b)The failure by Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of Executive or the Company, respectively, hereunder or preclude Executive or the Company, respectively, from asserting any such fact or circumstance in enforcing Executive’s or the Company’s rights hereunder.
(c)Any Notice of Termination for Cause given by the Company must be given within ninety (90) days of the occurrence of the event(s) or circumstance(s) which constitute(s) Cause. Prior to any Notice of Termination for Cause being given (and prior to any termination for Cause being effective), Executive shall be entitled to a hearing before the Board at which Executive may, at Executive’s election, be represented by counsel and at which Executive shall have a reasonable opportunity to be heard. Such hearing shall be held on not less than fifteen (15) days prior written notice to Executive stating the Board’s intention to terminate Executive for Cause and stating in detail the particular event(s) or circumstance(s) which the Board believes constitutes Cause for termination.
(d)Any Notice of Termination for Good Reason given by Executive must be given within ninety (90) days of the occurrence of the event(s) or circumstance(s) which constitute(s) Good Reason.
3.Benefits to Executive.
3.1Compensation. If the Change in Control Date occurs and Executive’s employment with the Company terminates within twenty-four (24) months following the Change in Control Date, Executive shall be entitled to the following benefits:
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(a)Termination Without Cause or for Good Reason. If Executive’s employment with the Company is terminated by the Company (other than for Cause, Disability, or death) or by Executive for Good Reason within twenty-four (24) months following the Change in Control Date, then Executive shall be entitled to the following benefits:
(i)the Company shall pay to Executive a lump-sum cash payment on the Release Effective Date in the aggregate of the following amounts:
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(b)Resignation without Good Reason; Termination for Cause or by Reason of Death or Disability. If Executive voluntarily terminates Executive’s employment with the Company within twenty-four (24) months following the Change in Control Date, excluding a termination for Good Reason, or if Executive’s employment with the Company is terminated by reason of Executive’s death or Disability within twenty-four (24) months following the Change in Control Date, then the Company shall (i) pay Executive (or Executive’s estate, if applicable), a lump sum cash payment within thirty (30) days after the Date of Termination, in an amount equal to the Accrued Obligations and (ii) timely pay or provide to Executive the Other Benefits.
3.2Equity Compensation. For the avoidance of doubt, in addition to the rights and benefits otherwise provided under this Agreement, Executive shall be entitled to all rights and benefits set forth under any of the Company’s equity compensation plans (and applicable award agreements), including upon a Change in Control, which shall be governed by the terms and conditions of such plans and award agreements.
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3.3Parachute Payments. Notwithstanding anything in this Agreement to the contrary, in the event it shall be determined that any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the “Code”)) to or for the benefit of Executive, whether paid or payable pursuant to this Agreement (including, without limitation, the accelerated vesting of any equity or incentive awards held by Executive) or otherwise would be subject to the excise tax imposed by Section 4999 of the Code, then Executive shall be entitled to receive (A) the greatest amount so that no portion the payments shall be an excess parachute payment (the “Limited Amount”), or (B) if the amount of payments otherwise paid or provided (without regard to clause (A)) reduced by all taxes applicable thereto (including, for the avoidance of doubt, the excise tax imposed by Section 4999 of the Code) would be greater than the Limited Amount reduced by all taxes applicable thereto, then the amount of payments shall be the amount otherwise payable. Any reductions described in the preceding sentence shall be done in the manner that is least economically disadvantageous to Executive. Where the decision to cut back between two amounts is economically equivalent, but the amounts are payable at different times, the amounts will be reduced on a pro rata basis.
3.4Compliance with Section 409A.
(a)Six Month Delay for Specified Employees. If any payment, compensation or other benefit provided to Executive in connection with Executive’s employment termination is determined, in whole or in part, to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and Executive is a specified employee as defined in Section 409A(2)(B)(i), no part of such payments shall be paid before the day that is six (6) months plus one (1) day after Executive’s employment is terminated (the “New Payment Date”). The aggregate of any payments that otherwise would have been paid to Executive during the period between the date of termination and the New Payment Date shall be paid to Executive in a lump sum on such New Payment Date. Thereafter, any payments that remain outstanding as of the day immediately following the New Payment Date shall be paid without delay over the time period originally scheduled, in accordance with the terms of this Agreement.
(b) Compliance. To the extent applicable, it is intended that this Agreement comply with the provisions of Section 409A of the Code, so as to prevent inclusion in gross income of any amounts payable or benefits provided hereunder in a taxable year that is prior to the taxable year or years in which such amounts or benefits would otherwise actually be distributed, provided or otherwise made available to Executive. This Agreement shall be construed, administered, and governed in a manner consistent with this intent. If and to the extent that any payment or benefit under this Agreement is determined by the Company to constitute “non-qualified deferred compensation” subject to Section 409A of the Code and is payable to Executive by reason of Executive’s termination of employment, then such payment or benefit shall be made or provided to Executive only upon a “separation from service” as defined for purposes of Section 409A of the Code. Each severance payment under this Agreement will be considered a “separate payment” and not one of a series of payments for purposes of Section 409A of the Code. In no event will the Company or its affiliates be liable for any additional tax, interest, or penalties that may be imposed on Executive under Section 409A of the Code or any damages for failing to comply with Section 409A of the Code.
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3.5Mitigation. Executive shall not be required to mitigate the amount of any payment or benefits provided for in this Section 3 by seeking other employment or otherwise. Further, the amount of any payment or benefits provided for in this Section 3 shall not be reduced by any compensation earned by Executive as a result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by Executive to the Company or otherwise.
3.6Release.
(a)As a condition precedent to receiving the payments and benefits as provided in Section 3.1, Executive agrees to execute (and not revoke) a general release of claims (the “Release”), in the form attached as Exhibit A hereto. If Executive fails to execute and deliver the Release, or revokes the Release, Executive agrees that Executive shall not be entitled to receive the payments and benefits described in Section 3.1. For purposes of this Agreement, the Release shall be considered to have been executed by Executive if it is signed by Executive’s legal representative in the case of legal incompetence or on behalf of Executive’s estate in the case of Executive’s death.
(b) Payment of any amounts described hereunder that are subject to the Release will begin on the sixtieth (60th) day following the Date of Termination (the “Release Effective Date”), with the first such payment to include any amounts attributable to payroll intervals occurring prior to such date, provided, however, that, to the extent that the payments are exempt from Section 409A, such exempt payments shall be made beginning with the first payroll date following the effectiveness of the Release.
4.Restrictive Covenants Agreement. In consideration of Executive’s employment by the Company and the rights and benefits of Employee provided by the Agreement, on the Effective Date, Employee will enter into the Restrictive Covenants Agreement in the form attached as Exhibit B hereto.
5.Dispute Resolution.
5.1Governing Law/Dispute Resolution. This Agreement shall be construed and governed in all respects according to the laws of the State of Colorado without regard to principles of conflict of laws. Any dispute or controversy arising under or in connection with this Agreement or Executive’s employment with the Company shall be settled exclusively by arbitration, conducted before a single arbitrator in Denver, Colorado in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association then in effect. The decision of the arbitrator will be final and binding upon the parties hereto. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The parties acknowledge and agree that in connection with any such arbitration and regardless of outcome, each party shall pay all of its own costs and expenses, including attorneys’ fees. Notwithstanding the foregoing, any action for injunctive relief under the Restrictive Covenants Agreement shall be settled exclusively by a state or Federal court located in the State of Colorado.
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5.2Expenses. Promptly upon request, but no later than ninety (90) days after the fees and expenses are incurred, the Company shall pay all reasonable legal fees and related expenses incurred by Executive in connection with the Agreement following a Change in Control of the Company including, without limitation, all such fees and expenses, if any, incurred in contesting or disputing any such termination, in seeking advice with respect to the matters set forth in Section 3.2 or in seeking to obtain or enforce any right or benefit provided by this Agreement.
6.Successors.
6.1Successor to Company. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain an assumption of this Agreement at or prior to the effectiveness of any succession shall be a breach of this Agreement and shall constitute Good Reason if Executive elects to terminate employment, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, “Company” shall mean the Company as defined above and any successor to its business or assets as aforesaid, which assumes and agrees to perform this Agreement, by operation of law or otherwise.
6.2Successor to Executive. This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If Executive should die while any amount would still be payable to Executive or Executive’s family hereunder if Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of Executive’s estate.
7.Notice. All notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid and addressed, to Executive at the address on record with the Company, or to the Company directed to the attention of the Chairman or the Board or the President of the Company, with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of a change of address shall be effective only upon receipt.
8.Miscellaneous.
8.1Severability. In the event that one or more provisions in this Agreement are deemed invalid, illegal, or unenforceable, the court making such determination shall modify the provisions to effect the original intent of the Parties to the maximum extent permissible, and the remaining provisions will continue in full force and effect. If any such provisions are deemed invalid, illegal, or unenforceable and cannot be reformed, those provisions shall be considered severable, and the remaining provisions will continue in full force and effect.
8.2Waivers. No waiver by Executive at any time of any breach of, or compliance with, any provision of this Agreement to be performed by the Company shall be deemed a waiver of that or any other provision at any subsequent time.
8.3Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original but both of which together shall constitute one and the same instrument.
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8.4Tax Withholding. Any payments provided for hereunder shall be paid net of any applicable tax withholding required under federal, state, or local law.
8.5Entire Agreement. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations, or warranties, whether oral or written, by any officer, employee, or representative of any party hereto in respect of the subject matter contained herein; and any prior agreement of the parties hereto in respect of the subject matter contained herein is hereby terminated and canceled.
8.6Amendments. This Agreement may be amended or modified only by a written instrument executed by both the Company and Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal as of the day and year first set forth above.
Arrow Electronics, INC.
Gretchen Zech
Senior Vice President, Chief Governance, Sustainability, and Human Resources Officer
EXECUTIVE:
________________________________________________________
EXECUTIVE_NAMEDATE
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EXHIBIT A
RELEASE
EXECUTIVE_NAME (“Executive”) hereby executes this Release of Claims (this “Release”) as of the date hereof, pursuant to the terms of the Executive Change in Control Retention Agreement of Arrow Electronics, Inc. (the “Company”), as in effect on the date hereof (the “Change in Control Agreement”). As of the date hereof, Executive and the Company have also entered into a Restrictive Covenants Agreement (the “Restrictive Covenants Agreement”) pursuant to the terms of the Change in Control Agreement.
1.Executive Change in Control Agreement
Executive has been terminated from employment with the Company under circumstances that entitle Executive to certain rights and benefits under the Change in Control Agreement, subject to the terms of this Release. The rights and benefits of Executive under the Change in Control Agreement are in consideration of and subject to Executive’s execution, nonrevocation, and compliance with the terms of this Release.
2.Release of Claims by Executive
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BY EXECUTIVE’S SIGNATURE BELOW, EXECUTIVE ACKNOWLEDGES THAT:
[Signature page follows]
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IN WITNESS WHEREOF, Executive has acknowledged, executed, and delivered this Release as of _________________.
Arrow Electronics, INC.
____________________________
EXECUTIVE:
____________________________
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EXHIBIT B
Restrictive CovenantS Agreement
THIS RESTRICTIVE COVENANTS AGREEMENT (the “Agreement”) is made as of EFFECTIVE_DATE, (the “Effective Date”) by and between Arrow Electronics Inc. (the “Company”) and EXECUTIVE_NAME (“Executive”), pursuant to the terms of the Executive Change in Control Retention Agreement as in effect on the date hereof (the “Change in Control Agreement”).
WHEREAS, Executive acknowledges and recognizes the highly competitive nature of the business of the Company;
WHEREAS, Executive acknowledges that Executive has been and/or will be provided with access to the Company’s trade secrets and other confidential and proprietary information and will be provided with the opportunity to develop relationships with clients, prospective clients, employees, and other agents of the Company, which, in each case, Executive acknowledges and agrees constitutes valuable assets of the Company;
WHEREAS, in connection with Executive’s execution of the Change in Control Agreement, Executive agrees to be subject to the restrictive covenants as set forth in this Agreement;
NOW, THEREFORE, for good and valuable consideration, including Executive’s rights under the Change in Control Agreement, as of the Effective Date, the parties agree as follows:
1. | Restrictive Covenants. |
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2.Enforcement
3.Consideration. Executive acknowledges that Executive’s severance entitlements under the Change in Control Retention Agreement between the Company and Executive constitute valid consideration for the promises and commitments made in this Agreement.
4.General Terms
(a)Integration, Governing Law, Choice of Forum. This Agreement shall be construed and governed in all respects according to the laws of the State of Colorado without regard to principles of conflict of laws. Any action for injunctive relief under this Agreement shall be settled exclusively by a state or Federal court located in the State of Colorado. Any other dispute or controversy arising under or in connection with this Agreement or Executive’s employment with the Company shall be settled exclusively by arbitration, conducted before a single arbitrator in Denver, Colorado in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association then in effect. The decision of the arbitrator will be final and binding upon the parties hereto. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The parties acknowledge and agree that in connection with any such arbitration and regardless of the outcome, each party shall pay all of its own costs and expenses, including attorneys’ fees.
(b)Severability. In the event that one or more provisions in this Agreement are deemed invalid, illegal, or unenforceable, the court making such determination shall modify the provisions to effect the original intent of the Parties to the maximum extent permissible, and the remaining provisions will continue in full force and effect. If any such provisions are deemed invalid, illegal, or unenforceable and cannot be reformed, those provisions shall be considered severable, and the remaining provisions will continue in full force and effect.
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(c) Non-Assignment. This Agreement, and the rights and obligations hereunder, may not be assigned by the Company or Executive without written consent signed by the other party, provided that the Company may assign the Agreement to any successor that continues the business of the Company. This Agreement shall be binding upon and inure to the benefit of the respective successors and permitted assigns of the parties hereto.
(d) Headings. The headings in this Agreement are included for the convenience of reference only and shall not affect the interpretation of this Agreement.
(e)Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Executive have acknowledged, executed, and delivered this Agreement as of the date noted below.
Arrow Electronics, INC.
Gretchen Zech
Senior Vice President, Chief Governance, Sustainability, and Human Resources Officer
EXECUTIVE:
________________________________________________________
EXECUTIVE_NAMEDATE
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ADDENDUM
Colorado Revised Statutes § 24-34-407
Each Party to this Agreement expressly attests that this Agreement complies with Colorado Revised Statutes § 24-34-407(1).
Agreed, acknowledged, and accepted:
Arrow Electronics, INC.
__________________
Gretchen ZechDate
Senior Vice President, Chief Governance,
Sustainability, and Human Resources Officer
EXECUTIVE:
___________________________________________
EXECUTIVE NAMEDate
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