EX-10.1



 







Exhibit 10.1



AMENDED EMPLOYMENT AGREEMENT made as of the 17th day of May 2006 by and between ARROW ELECTRONIC
EMEASA INC., a Delaware Corporation with its principal office at 50, Marcus Drive, Melville, New
York, 11747 (the “Company”) and GERMANO FANELLI, residing at 14, Via F.lli Bressan, 20126 Milan,
Italy (the “Executive”)



WHEREAS an employment agreement was entered into by and between the Company and the Executive on
the 1st day of January 2004 and is still effective between the parties (the “Employment
Agreement”); and



WHEREAS the Company and the Executive wish to amend the Employment Agreement to reflect certain
changes which they have agreed upon in relation to some of the terms and conditions reflected in
the Employment Agreement; and



WHEREAS the Executive wishes to accept the Employment offered by the Company as amended by this
amended employment agreement (the “Amended Employment Agreement”) in order to render services to
the Company on the terms set forth in, and in accordance with the provisions of, this Amended
Employment Agreement.



NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, the
parties agree as follows:



1. New Employment Period and Executive’s position



The Company and the Executive agree that the Employment Period, as defined in the Employment
Agreement, will come to an end, other than for the reasons set out in letters (a), (b) and (c),
of Section 3 of the Employment Agreement, on June 30, 2008 (the “New Employment Period”) on the
understanding, however, that the Executive will discharge his duties during the New Employment
Period in the manner and in the capacity described below.





	(i)	 	until December 31, 2006, on a full-time basis, holding the position as President of
EMEASA; and






	(ii)	 	between January 1 and December 31, 2007, as either President or Chairman of EMEASA,
as determined by the Company, on a part-time basis, by devoting up to an average of three
days out of five working days per week as required by the Company (for the avoidance of
doubt, (i) the Executive will be able to spread over a period of thirty days his
part-time involvement, in his sole discretion, provided that, by so doing, he will be
able to discharge his duties to the reasonable satisfaction of the Company and (ii) the
extent of the Executives activities and involvement in the business during this period
and the January 1 through June 30, 2008 period, and whether or not the Executive has an
office at the Company’s




4









 






	 	 	facilities during such periods, shall be determined by the Company in its sole
discretion); and






	(iii)	 	from January 1 through June 30, 2008 as Chairman of EMEASA , on the same part-time
basis as set out in (ii) above.




The Company and the Executive recognize that it is essential that for all relevant purposes the
Executive shall continue to be employed as a subordinate executive employee by any designated
company belonging to the Arrow Group of Companies, during the New Employment Period, in order not
to jeopardize in any manner the Executive’s pension benefits.



2. Compensation




     a) Monetary Remuneration and Benefits. During the New Employment Period, the Company
shall pay to the Executive for all services rendered by him in any capacity the compensation and
benefits specified in the term sheet attached hereto as Exhibit A (the “New Term Sheet”), as
amended in respect of the term sheet attached as Exhibit A to the Employment Agreement.


3. Non-Competition; Trade Secrets





	3.1	 	Section 7.b (iv) of the Employment Agreement is hereby amended to read as follows: “If the
Company decides to exercise its right pursuant to this paragraph 7(b) to require the Executive
to extend his non-competition obligation beyond termination of his work relationship with the
Company, the Company agrees to pay the Executive, in consideration thereof and contingent on
his adherence to the terms of such obligations set forth herein, an amount equal to 80% of the
sum of: (i) his annual base salary, (ii) his average annual bonus, including his Net Special
Bonus, for the past three years of employment (or if less than three years, such lesser number
of years) for each year of such non-competition obligation (as adjusted for any period less
than one year) payable in equal monthly installments during such term of non-competition".






	3.2	 	Section 7.e of the Employment Agreement is amended to read as follows: “Disclosure. 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 that the Executive may have in any business which is at
the time of the investment, or thereafter becomes, a customer or supplier of the Company or
any of the Company’s subsidiaries or affiliates or which, at the time of the investment, or
thereafter, competes with the business of the Company or any of the Company’s subsidiaries
or affiliates.




5









 










4. Surviving terms and conditions of the Employment Agreement



The Company and the Executive agree that the Employment Agreement and any and all of its terms and
provisions including those contained in the relevant Exhibits, shall survive the execution of this
Amended Employment Agreement with the only exception of the Term Sheet which is replaced by the New
Term Sheet and of those provisions of the Employment Agreement that have been expressly amended by
this Amended Employment Agreement or that have become inconsistent following the execution of this
Amended Employment Agreement as well as with the exception of those provisions which have already
been fully implemented by the Company and/or by the Executive on or before the date of execution of
this Amended Employment Agreement.



IN WITNESS WHEREOF, the parties have executed this Agreement together with Exhibit A (the “New Term
Sheet”), Exhibit B (Revised Profit Sharing Bonus Plan) and Exhibit B.1 (Germano Fanelli Profit
Sharing Plan) which form an integral and binding part of this Agreement, as of the day and year
first above written.




	 	 	 	 	 	 	 
	 	 	ARROW ELECTRONICS EMEASA, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	THE EXECUTIVE
	 
	 	 	 	 	 	 
	 	 	 
	 	 	Germano Fanelli






6









 





Germano Fanelli

Term Sheet




Exhibit A




Position: President, Arrow Electronics EMEASA

Effective Date: January 1, 2006




Annual Compensation:

(all amounts, unless otherwise expressly stated, gross of personal income withholding taxes and in

Euros)




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	2006	 	 	2007	 	 	2008	 	 	Total	 
	 	 	 	 	 	 	 	 	(six months)	 	 	 	 
	Base salary
	 	 	393,250	 	 	 	432,575	 	 	 	216,287.50	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	50% of actual target bonus paid in 2007	 	 	 	 
	Target bonus (100%)
	 	 	211,750	 	 	 	232,925	 	 	 	 	 	 	 	 	 
	Total gross
	 	 	605,000	 	 	 	665,500	 	 	 	 	 	 	 	 	 
	Net Special Bonus
	 	 	351,000	*	 	 	386,100	**	 	 	193,050	***	 	 	 	 





* Net Special Bonus of Euro 351,000 payable (net of any tax and/or social security withholdings or
dues) in four equal installments falling due on March 31, 2006; June 30, 2006; September 30, 2006
and November 30, 2006. For the avoidance of doubt it is agreed that this Net Special Bonus is by
way of implementation of the severance payment of equal amount provided for in Exhibit A to the
Employment Agreement under the heading “Severance Plans”.



** Payable (net of any tax and/or social security withholdings or dues) in four equal installments
falling due, respectively, on March 31, 2007; June 30, 2007; September 30, 2007 and November 30,
2007.



*** Payable (net of any tax and/or social security withholdings or dues) in two equal installments,
on Mach 31, 2008 and May 31, 2008, respectively.



Employment Terms: You will continue to be employed as a Dirigente employee of the Italian branch
office of Arrow Electronic EMEASA. In addition, you will retain Board Member (Consigliere di
Amministrazione) status in Arrow Holding South Europe (“AHSE”).



Base Salary and Annual Incentive: Your annual cash compensation in the proposed plan is set forth
above. Your actual annual bonus will be determined annually under the MICP Program and may range
from 0-200% of target depending on results.




7









 







Executive Equity Programs: During 2006 and 2007, you will participate in the Company’s current
Stock-Option Program and Performance Share Program or any replacement of such Programs in the
future. At the end of the New Employment Period, for the purposes of any stock-option program you
will be treated as a retired executive.




8









 








Germano Fanelli

Arrow Electronics EMEA & South America

Revised Profit Sharing Bonus Plan




Term Sheet




Exhibit B



The Plan is designed to reward the sustainable, long term growth in Europe over the three or more
years Germano Fanelli has managed and will manage the Region as provided for by the Employment
Agreement and by the Amended Employment Agreement, as applicable. The Plan is also intended to
reward Germano Fanelli for having identified and developed a suitable successor.




     Metrics Used:




	 	•	 	Operating Income: Baseline: Euro 117,000,000.00 (Euro 117M). Primary measure
to establish the profit sharing pool. . Germano Fanelli will earn 5% (five per cent) of
excess average operating income for the four year period 2004 — 2007 over this baseline.
	 
	 	•	 	EBIT: Baseline 5% (five per cent). For every 20 basis points deviation in
average EBIT for the four year period 2004 — 2007 from the baseline, either up or down, a
1.0% enhancement or reduction will be applied to the Plan Distribution paid in 2006, 2007,
2008. In all cases the maximum enhancement or reduction to the Plan Distribution from the
EBIT performance will be 15.0%.
	 
	 	•	 	Return on Working Capital: Baseline 19%. For every 40 basis points deviation in
average ROWC for the four year period 2004 — 2007 from the baseline, either up or down, a
1.0% enhancement or reduction will be applied to the Plan Distribution payable in 2006,
2007 and 2008. In all cases the maximum enhancement or reduction to the Plan Distribution
from the ROWC performance will be 15.0%





     Exclusions:



     The Plan will exclude any of the following items deemed by the Company to have a material effect:




	 	1.	 	Financial impact from changes in interest, tax, and currency rates
	 
	 	2.	 	Financial impact from changes in reserves on Arrow Europe financial
statements
	 
	 	3.	 	Financial impact attributable to changes in capitalization structure
	 
	 	4.	 	Financial impacts attributed specifically to an acquisition or
divestiture, with the only exception of: (i) profits or losses deriving from the
Disway (Distar + Holz) acquisition which will be taken into account in their
entirety and, (ii) losses amounting to Euro 4,400,000 (Euro 4,4M) due to additional
wage taxes paid in central Europe in financial year 2005 which will be entirely
disregarded.





9









 





	 	5.	 	Financial impact brought on by changes in accounting methodologies or
changes in the methodologies used to calculate corporate allocations and expenses
for 2007 from those employed in the 2006 budget
	 
	 	6.	 	Other changes approved at a Arrow Corporate or global level of similar
nature and impact





Maximum Benefit:



Total maximum payout under the Plan is Euro 5,000,000 (Euro 5M). (Refer to page attached as
Exhibit B.1 for additional detail.)



Minimum Benefit:



Minimum payout under this Plan is as follows:





	(i)	 	Euro 334,000.00 for 2004 and 2005 to be paid as an advance payment in two equal
installments of Euro 167,000.00 each, payable on June 30, 2006 and November 30, 2006,
respectively.
	 
	(ii)	 	Euro 251,000.00 for 2006 to be paid as follows: Euro 126,000.00 on or before June 30,
2007 and Euro 125,000.00 on or before September 30, 2007, respectively.
	 
	(iii)	 	Euro 251,000.00 for 2007 (or such greater amount as will become due based on the
applicable formula for the determination of the long-term bonus) to be paid on or before
May 31, 2008.




For the avoidance of doubt it is agreed that:





	 	1.	 	In case of voluntary termination by the Executive as a result of a change in
the Executive’s reporting line or the departure from Arrow Electronic’s, Inc. of
William Mitchell and Dan Duval as provided in Paragraph 1(b)(ii) of the Employment
Agreement, the Executive will be entitled to receive the minimum pay out of Euro
836,000.00 prorated to the actual length of his employment up to the effective date
of termination.
	 
	 	2.	 	In case of termination of the employment by the Company without cause,
Germano Fanelli will be entitled to receive the greater of (i) the minimum of Euro
836,000.00 pay out in its entirety or (ii) if the termination becomes effective
after December 31, 2006, the Profit Sharing Bonus calculated in accordance with the
Profit Sharing Plan taking into account the difference between the Base Line and
the average of 2004, 2005 and 2006. This will apply also in the case of termination
of the employment due to the disability of the Executive if it first arises after
December 31, 2006.
	 
	 	3.	 	The Executive shall not be entitled to any payment under this Plan in respect of 2008.




10









 











Exhibit B.1




Germano Fanelli




     Profit Sharing Plan



Term Sheet




	 	 	 
	Operating Income — Europe

“Baseline”

Euro 117,000,000

(Euro 117M)
	 	Assuming no adjustments for EBIT and ROWC,

for each Euro 20,000,000 (Euro 20M) of

Incremental average of Operating Income over

“Baseline” during the 2004, 2005, 2006 and 2007

financial years

Pay out = Euro 1 million
	 
	Minimum Payout	 	Maximum Payout
	 
	 
	Euro 836,000.00	 	Assuming no adjustments for EBIT and ROWC, if

the 2004, 2005, 2006 and 2007 financial years

Average Operating Profit is

3 Euro 217,000,000 (Euro 217M)

Total Payment = Euro 5,000,000 (5M)









11