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EXHIBIT 99
AMENDMENT TO EMPLOYMENT AGREEMENT
This amendment, dated September 20, 2000, between AVNET, INC., a New
York corporation with its principal place of business at 2211 South 47th Street,
Phoenix, Arizona 85034 (the "Company") and ROY VALLEE ("Vallee"), having offices
at 2211 South 47th Street, Phoenix, Arizona 85034.
WITNESSETH:
WHEREAS, the Company and Vallee entered into an Employment Agreement on
September 25, 1997 ("Employment Agreement"); and
WHEREAS, the parties desire to modify the Employment Agreement in
accordance with the provisions of this Amendment.
NOW, THEREFORE, the parties hereto agree that the following
changes shall be made to the Employment Agreement:
1. The "Term" of the Employment Agreement, as defined in paragraph
2 therein, shall be extended so that the "Termination Date" shall be June 27,
2003;
2. The word "fully" in the second line of paragraph 4(b) is
deleted;
3. With respect to a Year commencing after June 30, 2000, and
taking into consideration the fact that the Company's common stock is being
impacted in September, 2000 by a 2-for-1 stock split (thus constituting the
adjustment referred to and required under paragraph 4(b) of the Employment
Agreement, the provisions of paragraph 5 are modified in their entirety as
follows:
5. Compensation
(a) For all services to be rendered by Vallee and for all
covenants undertaken by him, the Company shall pay
and Vallee shall accept annual base compensation per
Year during the term hereof of Seven Hundred Fifty
Thousand Dollars ($750,000.00) payable in equal
biweekly installments (or in other installment
frequencies as may be used from time to time by the
Company to pay its other employees).
(b) In addition to annual base compensation, subject to
and contingent upon approval of this incentive
compensation with respect to the period from and
after June 29, 2001 by the Shareholders of the
Corporation at the Annual Meeting of Shareholders to
be held on November 20, 2000 (or at any adjournments
thereof), the Company shall pay a first
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incentive bonus to Vallee each Year during the term
of this Agreement calculated as the sum of the
following:
(i) Four Thousand Dollars ($4,000.00) for each
one-half cent ($.005) of Annual Earnings Per
Share over $1.50 and up to $2.00 in each Year
for which the first incentive bonus is to be
paid; and
(ii) Five Thousand Dollars ($5,000.00) for each
one-half cent ($.005) of Annual Earnings Per
Share over $2.00 and up to $2.50 in each Year
for which the first incentive bonus is to be
paid; and
(iii) Seven Thousand Dollars ($7,000.00) for each
one-half cent ($.005) of Annual Earnings Per
Share over $2.50 in each Year for which the
first incentive bonus is to be paid.
By way of example, consider the following
hypothetical circumstances:
(1) In the event Annual Earnings Per share were
determined in any applicable Year to be $1.45,
then Vallee would be entitled to no first
incentive bonus hereunder for that Year;
(2) In the event Annual Earnings Per Share were
determined in any applicable Year to be $2.25,
then Vallee would be entitled to $650,000 of
first incentive bonus hereunder for that Year
($4,000 times 100 plus $5,000 times 50); and
(3) In the event Annual Earnings Per Share were
determined in any applicable Year to be $2.75,
then Vallee would be entitled to $1,250,000 of
incentive bonus hereunder for that Year ($4,000
times 100 plus $5,000 times 100 plus $7,000
times 50).
(c) The final determination and payment of the first
incentive bonus shall be made by the Company to
Vallee not later than one hundred ninety (190) days
following the termination of each Year.
Notwithstanding the foregoing sentence, the Company
shall on a quarterly basis estimate the portion of
Annual Earnings Per Share which the Company has
earned during such fiscal quarter ("Interim Quarterly
Earnings") and shall, as soon as practicable after
the end of each fiscal quarter, pay to Vallee any
portion of the first incentive bonus which it
reasonably anticipates will be due to Vallee at the
end of the full Year.
By way of example:
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(1) If the Company were to determine at the end of
the first fiscal quarter of any Year that the
Company had Interim Quarterly Earnings of $.75
for that quarter, then it would pay to Vallee
the sum of $400,000 in respect of the first
incentive bonus as soon as practicable after
the end of such quarter. This amount is
determined by (A) taking the annualized
cumulative year to date Interim Quarterly
Earnings of $3.00 ($.75 x 4); (B) calculating
the resulting annualized first incentive bonus
thereon of $1,600,000 ($4,000 x 100; plus
$5,000 x 100 plus $7,000 x 100), (C) prorating
such amount for the portion of the Year that
elapsed (25%) and (D) subtracting any prior
quarterly estimates and payments in respect of
the first incentive bonus (none in this
example).
(2) In addition, if the Company were thereafter to
determine at the end of the second fiscal
quarter of such Year that the Company had
Interim Quarterly Earnings of $.40 for the
second quarter, then it would make no
additional payment to Vallee in respect of
first incentive bonus at the conclusion of the
second quarter since the estimated first
incentive bonus based upon the annualized
cumulative Interim Quarterly Earnings was less
than the amount determined after the end of the
first quarter. The first quarter's Interim
Quarterly Earnings of $.75 plus the second
quarter's Interim Quarterly Earnings of $.40
when aggregated equal $1.15. These earnings
when annualized (times 2), or $2.30, would
result in an annualized incentive of $700,000
($4,000 x 100; plus $5,000 x 60). Thus, the
first half payment of $350,000 would be less
than the $400,000 payment made in respect of
the first quarter.
(3) Thereafter, if the Company were to determine at
the end of the third fiscal quarter of such
Year that the Company had Interim Quarterly
Earnings of $0.65 for the third quarter, then
it would pay to Vallee the sum of $200,000 as
soon as practicable after the end of such
quarter. This would be the case since in these
examples (1), (2) and (3) the Company would
have had cumulative Interim Quarterly Earnings
of $1.80 for the three fiscal quarters ($.75 +
$.40 + $.65 = $1.80), and therefore an
annualized cumulative year to date Interim
Quarterly Earnings of $2.40 ($1.80 / 3 x 4)
which would result in a first incentive bonus
of $800,000 or a prorated amount of $600,000
for the first three quarters of the Year less
the amount paid to date.
At the conclusion of any Year, upon the actual determination
of Annual Earnings Per Share, a reconciliation of payments
shall be made and the
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Company shall pay to Vallee any additional amounts due;
similarly, Vallee shall remain obligated to repay to the
Company any overpayments received by him for the first
incentive bonus during such period.
(d) In addition to annual base compensation and the
first incentive bonus, subject to and contingent
upon approval of this incentive compensation with
respect to the period from and after June 29, 2001
by the Shareholders of the Corporation at the Annual
Meeting of Shareholders to be held on November 20,
2000 (or at any adjournments thereof), the Company
shall pay a second incentive bonus to Vallee each
Year during the term of this Agreement based upon
the Company's ROC for the Year, in the amount of
$10,000 for each one-tenth of a percent (0.10%) by
which the ROC exceeds eight percent (8.0%). Thus,
for example:
If the ROC is: Then the second incentive bonus is:
Less than 8.1% $0
9.5% $150,000
11.0% $300,000
12.1% $410,000
The final determination and payment of the second
incentive bonus shall be made by the Company to Vallee
not later than one hundred ninety (190) days following
the termination of each Year.
(e) For any period of less than a full Year, the amount
of such base compensation, first incentive bonus and
second incentive bonus payable hereunder shall bear
the same ratio to a full Year's base compensation
and incentive bonuses as the number of weekly
periods for which Vallee shall be entitled to such
compensation bears to the fifty-two (52) (or 53 as
the case may be) fiscal weeks in such Year. For
example, if Vallee's employment hereunder were for
any reason to terminate after 26 weeks of fiscal
2002, he would be entitled to 26/52 of his base pay
for that year (26/52 of $750,000 being $375,000) and
26/52 of the amount of the first and second
incentive bonuses, if any, that would have been due
for fiscal Year 2001 based upon Annual Earnings Per
Share and the ROC for the entire fiscal Year 2001.
Such incentive bonuses would be payable to Vallee
within the time required in Paragraph 5(c) and 5(d)
hereinabove.
(f) Except as specifically provided herein, including
but not limited to Paragraph 5(e) above, upon
termination of this Agreement pursuant to the terms
hereof prior to June 27, 2003, Vallee shall be
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entitled to receive only such compensation as had
accrued and was unpaid to the effective date of
termination.
(g) In addition to the compensation described above,
during the term of this Agreement Vallee shall be
entitled to the benefits currently made available by
the Company to its employees in general (such as
vacation and insurances) and to its executive
employees (such as a Company-provided automobile and
the Executive Life Insurance/Supplemental Retirement
Program) in accordance with the terms set therefor.
(h) With respect to the foregoing provisions of this
Paragraph 5, it is specifically agreed between
Vallee and the Company that if, as a result of a
business combination transaction (whether in the
form of a merger, consolidation, transfer of
substantial assets, or otherwise) in which the
Company has not been the acquiring and/or surviving
entity, it has become impractical or impossible to
compute the Annual Earnings Per Share and the ROC of
the Company (as above defined), then, in lieu of the
amounts otherwise provided for in this Paragraph 5
as the first incentive bonus and the second
incentive bonus, the annual rate of the base salary
payable to Vallee under Paragraph 5(a) above shall
be increased in each Year by an amount equal to the
highest aggregate incentive compensation paid to
Vallee by the Company (i.e., that is paid under
Paragraphs 5(b) and 5(d) of this Agreement or any
incentive compensation paid under Vallee's prior
employment contract with the Company, as the case
may be) in any one Year during the 3-Year period
completed most recently prior to the date of
consummation of such business combination
transaction.
Nothing contained in this Paragraph 5 shall be deemed to
preclude the Company from, and Vallee is entering into
this Agreement with the understanding that the Company
will from time to time consider and take action with
respect to, (A) granting or awarding to Vallee additional
items of compensation including (but not limited to)
bonuses, incentive stock, stock options, stock purchase
agreements, phantom stock awards, and participations in
profit-sharing arrangements, in each case whether a plan
of general or limited applicability or personal to
Vallee, or (B) paying, reimbursing or providing to Vallee
such perquisites to the functions of the office of
Chairman of the Board and Chief Executive Officer of the
Company (and to the performance of his services in such
office under this Agreement) as may from time to time be
determined by the Company and accepted by Vallee.
4. The date of "June 29, 2001" in paragraphs 6(a),
6(a)(i) and 10(a) shall be changed to "June 27, 2003".
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5. Paragraph 6(c) shall be deleted and replaced with the
following:
(c) Termination by Vallee in Certain Circumstances.
Notwithstanding any other provisions hereof, if,
prior to June 27, 2003, there is a Change of Control
as defined in paragraph 6(d) below, then the Company
agrees that Vallee shall have the right, upon at
least 90 days' prior written notice to the Company,
to terminate this Agreement, such termination to be
effective on the date specified in the notice of
termination but in no event prior to the first
anniversary of the Change of Control; and the
provisions of Paragraph 9 hereinbelow (giving the
Company the right to engage Vallee as a consultant)
shall not be applicable.
6. A new subparagraph (d) of paragraph 6 shall be added
as follows:
(d) Termination After Change of Control. If, within 24
months following a Change of Control (as hereinafter
defined), the Company or its successor terminates
Vallee's employment without cause or by Constructive
Termination (as defined below), Vallee will be paid,
in lieu of any other rights under this Agreement, in
a lump sum payment, an amount equal to 2.99 times
the sum of (i) his annual salary for the year in
which such termination occurs and (ii) his incentive
compensation equal to the average of such incentive
compensation for the highest two of the last five
full fiscal years. All unvested stock options shall
accelerate and vest in accordance with the early
vesting provisions under such plans and all
incentive stock program shares allocated but not yet
delivered will be accelerated so as to be
immediately deliverable. Vallee shall receive his
accrued and unpaid salary and any accrued and unpaid
pro rata bonus (assuming target payout) through the
date of termination, and Vallee will continue to
participate in the medical, dental, life, disability
and automobile benefits in which Vallee is then
participating for a period of two years from the
date of termination.
In the event that Vallee is deemed to have received an
excess parachute payment (as such term is defined in
Section 280G(b) of the Internal Revenue Code of 1986, as
amended (the "Code")) which is subject to excise taxes
("Excise Taxes") imposed by Section 4999 of the Code with
respect to compensation paid to Vallee pursuant to this
Agreement, the Company shall make an additional payment
equal to the sum of (i) all Excise Taxes payable by
Vallee plus (ii) any additional Excise Tax or federal or
state income taxes imposed with respect to the payments.
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"Change of Control" means the happening of any of the
following events:
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person"), of
beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 50%
or more of either (A) the then outstanding shares
of common stock of the Company or (B) the combined
voting power of the then outstanding voting
securities of the Company entitled to vote
generally in the election of directors; provided,
however, that the following acquisitions shall not
constitute a Change of Control under this
subsection (i): (w) any transaction which is
authorized by the Board of Directors of the
Company as constituted prior to the effective date
of the transaction, (x) any acquisition directly
from the Company (excluding an acquisition by
virtue of the exercise of a conversion privilege),
(y) any acquisition by the Company, or (z) any
acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the
Company or any corporation controlled by the
Company; or
(ii) Individuals who, as of the effective date hereof,
constitute the Board of Directors (the "Incumbent
Board") cease for any reason to constitute at
least a majority of the Board; provided, however,
that any individual becoming a director subsequent
to the effective date hereof whose election, or
nomination for election by the Company's
stockholders, was approved by a vote of at least a
majority of the directors then comprising the
Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board,
but excluding, for this purpose, any such
individual whose initial assumption of office
occurs as a result of either an actual or
threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(iii) Approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company
or the sale or other disposition of all or
substantially all of the assets of the Company.
"Constructive Termination", which for purposes of this
Agreement shall include each of the following:
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(i) a material diminution of Vallee's
responsibilities, including, without limitation,
title and reporting relationship;
(ii) relocation of Vallee's office greater than 50
miles without the consent of Vallee;
(iii) a material reduction in Vallee's compensation and
benefits received hereunder; or
(iv) Vallee no longer serves on the Board of Directors
of the Company.
7. All other provisions of the Employment Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
AVNET, INC.
By: /s/ Raymond Sadowski
Raymond Sadowski
Senior Vice President and
Chief Financial Officer
/s/ Roy Vallee
Roy Vallee
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