Supplemental Executive Retirement Plan

2/3/2010 10-K Ex. I

 

EX-10.K.I 2 y74529exv10wkwi.htm EX-10.K.I: EMPLOYMENT AGREEMENT

Exhibit 10(k)(i)

     EMPLOYMENT AGREEMENT (the “Agreement”) made as of the 30th day of December 2008 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 MICHAEL J. LONG, residing at 45590 Coal Creek Drive, Parker, CO 80138 (the “Executive”).

     WHEREAS, the Executive has been employed by the Company as President and Chief Operating Officer, with the responsibilities and duties of an executive officer of the Company under an Employment Agreement dated as of January 1, 2001 (the “Old Agreement”); and

     WHEREAS, the Old Agreement contains provisions that do not comply with section 409A of the Internal Revenue Code of 1986, as amended, and applicable regulations thereunder (“409A”) and other provisions that are obsolete; and

     WHEREAS, the Company and Executive wish to novate the Old Agreement and to replace it with this Agreement;

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

     1. Employment and Duties.

          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 President and Chief Operating Officer of the Company, 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 President and Chief Operating Officer).

          If the Board of Directors does not either continue the Executive in the office of President and Chief Operating Officer 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.

          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 $330,000 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 $270,000 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.

          c) Supplemental Executive Retirement Plan. The Executive shall continue to participate in the Company’s Unfunded Pension Plan for Selected Executives (the “SERP”). The timing of payment under the SERP shall be in accordance with its terms.

          d) Automobile. During the Employment Period, the Company will pay the Executive a monthly automobile allowance of $800. Such allowance shall cease when the Executive’s employment with the Company terminates for any reason.

          e) Expenses. During the Employment Period, the Company agrees to reimburse the Executive, upon the submission of appropriate vouchers, for out-of-pocket

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expenses (including, without limitation, expenses for travel, lodging and entertainment) incurred by the Executive in the course of his duties hereunder in accordance with its expense reimbursement policy. Any reimbursement that is taxable to Executive shall be paid no later than the end of the year following the year in which it is incurred.

          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 restricted stock grant programs) or employees in general, on a basis consistent with other senior executives.

     3. The Employment Period.

          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) December 31, 2010; 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.

          For purposes of this Agreement, the Executive will be deemed “disabled” if he is absent from work because he is incapacitated due to an accident or physical or mental impairment, and one of the following conditions is also satisfied: (i) Executive is expected to return to his duties with the Company within 6 months after the beginning of his absence or (ii)

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Executive is unable to perform his duties or those of a substantially similar position of employment due to a medically-determinable physical or mental impairment which can be expected to result in death or last for a continuous period of not less than 6 months. If the Executive is absent on account of being disabled (as defined in the preceding sentence), during such absence 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. Unless terminated earlier in accordance with Paragraph 3a), c) or d), the Employment Period shall end on the 180th consecutive day of his disability absence, and Executive’s compensation under Paragraph 2 shall immediately cease, except the medical benefits covering the Executive and his family shall remain in place (subject to the eligibility requirements and other conditions contained 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 the Executive is determined to be capable of performing his duties before being absent for 180 consecutive days (and before 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.

          In the event of any malfeasance, willful misconduct, active fraud or gross negligence by the Executive in connection with his employment hereunder, or a breach by the executive of any of the Company’s policies, 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.

     6. Termination Without Cause.

          In the event that the Company discharges the Executive without cause, the Executive shall be entitled to the following compensation during the remainder of the Employment Period (the length of which shall be determined under Paragraph 3d) unless sooner terminated by Executive’s disability or death): (i) the salary provided in Paragraph 2a), payable in accordance with the usual payroll schedule, (ii) two-thirds of the targeted incentive provided in Paragraph 2b) for each year during the Employment Period (or, on a pro rata basis, portion of a year), payable on the normal payment date(s) for such incentive, (iii) the vesting of any restricted stock awards and the immediate exercisability of any stock options which would have

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vested or become exercisable during the Employment Period, and (iv) continued participation in the Company’s medical plan under the same terms and conditions as an active employee, with eligibility for continuation coverage for Executive and his eligible dependents under the plan’s COBRA provisions at the end of the Employment Period at Executive’s own expense. However, participation in the Company’s 401(k) plan, ESOP and all welfare and fringe benefit plans (other than the medical plan) will cease on the Executive’s last day of active work, subject to any conversion rights generally available to former employees. 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 the Executive is a “specified employee” for purposes of 409A, no deferred compensation (including without limitation salary continuation payments in accordance with clause (i) above) payable at separation from service that is not exempt from application of 409A as a short term deferral or separation pay will be paid to Executive during the 6-month period immediately following the day he ceases active work for the Company, and any such payments otherwise due during such 6-month period shall be paid on the first business day following completion of such 6-month period along with simple interest at the six-month Treasury rate in effect at the beginning of such 6-month period.

     7. Non-Competition; Trade Secrets.

          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,

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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. 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.

          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

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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.

     9. Separability.

          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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     10. Specific Performance.

          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 any of them may have.

     11. Miscellaneous.

          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 December 30, 2008 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 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

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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:

 

 

 

 

 

 

 

Michael J. Long
45590 Coal Creek
Parker, CO 80138

 

 

 

 

 

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.

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          IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

 

 

 

 

 

ARROW ELECTRONICS, INC.
 

 

 

By:  

/s/ Peter S. Brown  

 

 

 

Peter S. Brown 

 

 

 

Senior Vice President & General Counsel 

 

 

 

THE EXECUTIVE
 

 

 

/s/ Michael J. Long  

 

 

Michael J. Long 

 

 

 

 

 

 

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EX-10.I 4 v172660_ex10i.htm

Exhibit 10(i)

 

ARROW ELECTRONICS, INC.

 

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

(as amended and restated effective January 1, 2009)

 

 

 


 

 

Table of Contents

 

 

 

Page

 

 

 

 

ARTICLE I

Normal and Early Retirement Benefits

 

2

 

 

 

 

ARTICLE II

Payment of Benefits

 

5

 

 

 

 

ARTICLE III

Amendment, Termination, or Curtailment of Benefits

 

11

 

 

 

 

ARTICLE IV

Definitions

 

14

 

 

 

 

ARTICLE V

Miscellaneous

 

18

 

 

ii


 

 

ARROW ELECTRONICS, INC.

 

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

(as amended and restated effective January 1, 2009)

 

INTRODUCTION

 

Purpose of Plan.  The Arrow Electronics, Inc. Supplemental Executive Retirement Plan (“SERP”) is an unfunded retirement plan for a select group of employees designated as SERP participants by the Arrow Board of Directors (including the Compensation Committee of the Board) and who have been so notified in writing.  References below to “you” and the like are to the participants who have been so notified.  The SERP is administered by Arrow’s Management Pension and Investment Oversight Committee or its delegees, subject to the ultimate authority of the Board.

 

Section 409A Compliance. In order to ensure continued compliance with the Federal income tax laws applicable to nonqualified deferred compensation, the Company, without formal amendment of the plan document for the SERP, made such changes in operation of the SERP as it deemed necessary or advisable for the period from January 1, 2005 to December 31, 2008 by reason of the enactment of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), taking into account Notice 2005-1 and other guidance thereunder (“Regulations”).  The Plan was amended, generally effective as of December 31, 2008, (i) to require all benefits under the SERP, other than “Grandfathered Benefits” described below,” be payable only at a time and manner compliant with Section 409A and the Regulations and (ii) to require that all offsets be determined under an objective and nondiscretionary formula not under the control of the Participant and not subject to Company discretion within the meaning of Treas. Reg. § 1.409A-3(i).  By this further restatement, the SERP is amended to set forth more definitively the benefit formula effective as of January 1, 2009.  In no case will a Participant’s benefit be less than the benefit accrued under the “old Plan” as of December 31, 2008.

 

 

 


 

 

Table of Contents

 

Page

 

Grandfathered Benefits.”  If you met the requirements for retirement under the SERP (including disability retirement) on December 31, 2004, your accrued benefit at that date, calculated under the terms of the Plan in effect on October 3, 2004 based solely on service and compensation up to December 31, 2004 and in accordance with provisions of the Regulations defining benefits earned and vested on December 31, 2004, is a “Grandfathered Benefit” and will be payable in accordance with the terms of the SERP in effect on October 3, 2004.  The provisions of the Plan set forth below apply to all benefits hereunder in excess of the Grandfathered Benefits, hereinafter referred to as “Section 409A Benefits.”

 

Construction.  The SERP is intended to comply and shall at all times be administered in accordance with the provisions of Section 409A and the Regulations.  Any ambiguities in the language of the SERP shall be resolved, and any terms not otherwise defined shall be construed, in a manner compliant with, Section 409A and the Regulations.  To the maximum extent permitted by law, no provision of the SERP inconsistent with Section 409A or the Regulations shall be valid or given any effect whatever.

 

ARTICLE I

 

Normal and Early Retirement Benefits

 

1.1          Normal Retirement Date.  Your normal retirement date is the date on which you reach age 60, except as the Board may otherwise specify in written notice to you (which notice shall be part of the SERP).

 

1.2          Early Retirement Date.  Your early retirement date is the date on which your combined years of age and service equal at least 72 and you are at least age 55, or if applicable, such other date as the Board may specify in written notice to you (which notice shall be part of the SERP).  Fractional years of age and service shall be combined in determining eligibility for early retirement (or any similar determination).

 

 

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Page

 

1.3          Retirement Income Target.  In the letter continuing your participation in the SERP as amended and restated effective December 31, 2008, or admitting you to participation if you were not previously a participant (which “participation letter” shall be part of the SERP), the Board will specify the retirement income target that will be used to determine your retirement pension under the SERP, subject where applicable to the Other Benefits Formula Offset and Assumed Social Security Offset to be applied as set forth below.  Your retirement income target may be expressed either as a fixed dollar amount or as an “income replacement percentage” applied to your Final Average Compensation, and your retirement income based thereon shall be based on your Years of SERP Participation.

 

1.4          Retirement Benefit Based on Income Replacement Percentage.  If your retirement income target is based on an income replacement percentage, your participation letter will specify the income replacement percentage assigned to you for purposes of (i) your normal retirement pension payable on retirement at or after your normal retirement date, and (ii) the early retirement pension that would be payable to you on early retirement at first date of eligibility for retirement and at each later age at which you may be eligible for early retirement, with the percentage applicable at intervening ages being determined on similar principles.  Your SERP normal or early retirement pension will then be calculated by multiplying your Final Average Compensation by your applicable income replacement percentage and then subtracting (i)) the actuarial equivalent of your Other Benefits Formula Offset as of your actual date of retirement, calculated based on the Plan Actuarial Assumptions, and (ii) your Assumed Social Security Offset.

 

1.5          Other Benefits Formula Offset. The Other Benefits Formula Offset is the sum of

 

 

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 (a)           an amount equal to the aggregate employer contributions to the Arrow Electronics Stock Ownership Plan and its predecessors, and the Arrow Electronics Savings Plan including its predecessors (excluding participant elective contributions and voluntary rollovers) taken into account in determining the offset for defined contribution plan benefits under the Plan in effect prior to January 1, 2009, increased by interest at an annual rate of 7% credited and compounded annually to December 31, 2008, as definitively determined and recorded in the records of the Committee  as of December 31, 2008, plus

 

(b)           3% of the compensation limit applicable under section 401(a)(17) of the Code for each calendar year beginning on or after January 1, 2009 and ending with the calendar year in which you retire (whether early, or at or after your normal retirement date), provided that such limit shall be prorated for such last year based on the number of completed months therein ending prior to your date of retirement, increased by interest at an annual rate of 7% credited and compounded annually from December 31, 2008 to your retirement date

 

1.6          Assumed Social Security Offset.  Your Assumed Social Security Offset shall be a monthly amount equal to fifty percent (50%) of your Assumed Primary Insurance Amount at age 62 or later date of actual retirement

 

1.7          Retirement Benefit in a Fixed Dollar Amount.  If your income replacement target is determined as a fixed dollar amount, the letter advising you of your participation in the SERP will set forth the amount payable on retirement at or after your normal retirement and at each age on which you may be eligible for early retirement.

 

 

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ARTICLE II

 

Payment of Benefits

 

Section 409A Benefits shall be payable only upon your (i) Separation from Service after reaching a retirement date hereunder, (ii) suffering a Change in Control Termination or (iii) upon your Disability as herein defined.  If you separate from service under any other circumstances, the SERP provides no benefit to you or your beneficiary.

 

2.1          Separation from Service.  The terms “retirement” or “termination of employment” and similar phrases as used in the SERP shall, as applicable, refer to separation from service within the meaning of the Regulations, other than by reason of death, determined by reference to the presumptive rule of Treasury Reg. § 1.409A-1(h)(l)(ii) (under which a reasonable expectation of a permanent reduction in the level of service to no more than 20% of the average level during the prior 36-month or other applicable period is presumed to result in a separation from service), and determined by treating Arrow and all Subsidiaries as single employer.  In addition:

 

(a)           Subsidiary Change in Control Event.  If you are employed by a Subsidiary and are affected by a Subsidiary Change which occurs after you have reached early or normal retirement date, distribution shall thereupon be made to you under the rules herein provided in the event of a Separation from Service, except that no six-month delay shall be required by reason of your being a specified employee.

 

(b)           Leaves, etc.  Your employment relationship shall be treated as continuing while you are on military leave, sick leave, or other bona fide leave of absence (such as temporary employment by the government) if the period of such leave does not exceed six months, or if longer, so long as your right to reemployment with the Company is provided either by statute or by contract.  If the period of leave exceeds six months your right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate immediately following such six-month period.

 

(c)           Separation incident to sale of a division or other substantial assets.  Notwithstanding the foregoing, a separation from service shall not occur for purposes of the SERP to the extent that the Committee determines otherwise in accordance with Treas. Reg. § 1.409A-1(h)(4).

 

 

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(d)           Coordination with employment agreements.  In the event that you have an employment agreement with the Company that defines termination of employment or separation from service in a manner consistent with the Regulations, that definition shall govern for purpose of the SERP unless its application would for any reason (such as effectively an impermissible change in the time of payment of benefits) be inconsistent with the Regulations.

 

2.2          Normal Retirement Benefit.  If you separate from service on or after your normal retirement date, you will receive a normal retirement pension calculated as provided in Article I based on (a) your retirement income target, Final Average Compensation (if such target is based on an income replacement percentage), Years of SERP Participation and/or other relevant such factors set forth in your participation letter as of your normal retirement date and (b) if your retirement income target is based on an income replacement percentage, your Other Benefits Formula Offset and Assumed Social Security Offset at your actual retirement date  Your normal retirement pension will commence on the first day of the month following your separation from service, or if you are a specified employee as of the date of such separation from service, on the first day of the seventh month following your separation from service.  No adjustment in your retirement income target shall be made by reason of the delay in commencement of your benefit between your normal retirement date and date of actual retirement.

 

 

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2.3          Early Retirement Benefit.

 

(a)            Based on Percentage of Final Average Compensation. If you retire early and your SERP pension is based on a percentage of Final Average Compensation, your benefit will be calculated in the same manner as a normal retirement pension, but your income replacement percentage will be reduced based on the Early Payment Discount Assumption to reflect the fact that your pension is beginning before normal retirement. If your Years of SERP Participation at early retirement are fewer than the maximum number of Years of SERP Participation assumed in determining your normal retirement pension, your early retirement pension  will be  further reduced on a pro-rata basis based on the ratio of your actual Years of SERP Participant to such maximum The letter admitting you to participation in the SERP will set forth the percentage of your Final Average Compensation that would be payable to you on early retirement at each whole age from your first date of eligibility for retirement to you’re your normal retirement date. Your actual SERP early retirement benefit will then be calculated by multiplying your Final Average Compensation at your early retirement date by the reduced income replacement percentage as so determined and subtracting the Other Benefits Formula Offset and Assumed Social Security Offset.

 

(b)           Based on Fixed Dollar Amount. If your retirement income target is determined as a fixed dollar amount, the letter advising you of your participation in the SERP will set forth the amount payable on retirement at each date on which you may be eligible for early retirement. Because the amount is “fixed” rather than based on a percentage of Final Average Compensation, the Other Benefits Formula Offset and Assumed Social Security Offset will not apply

 

(c)           Time of Commencement. If you separate from service on or after your early retirement date and prior to your normal retirement date, you will be entitled to an early retirement pension calculated as provided in Article I based on your Final Average Compensation, Years of SERP Participation, and/or other relevant factors set forth in your participation letter, as of your date of separation from service.  Payment of your early retirement pension will commence on the first day of the month following your separation from service or, if you are a specified employee on the date of such separation from service, on the first day of the seventh month following your separation from service.

 

 

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2.4          Six-month delay.  If distribution becomes due under the SERP based on the separation from service of a Participant who is a specified employee as of the date of such event, such distribution shall be not be made until the first day of the seventh month after the date of separation, in an amount actuarially increased to reflect such delay based on the Plan Actuarial Assumptions.

 

Choice of Form of Benefit

 

Normal Form of Pension – Single Life Annuity with 60-month Guarantee

 

Under the normal form of pension, SERP pension payments are payable for your life only.  However, if you die after your pension payments begin but before you have received 60 monthly payments, then monthly payments will continue to your Beneficiary in the same amount you received prior to your death, until a total of 60 payments have been made.  No benefits are payable under the SERP if you die before your pension payments begin.  The Other Benefits Formula Offset and Assumed Social Security Offset described above are calculated assuming the normal form of payment.

 

Optional Joint and 50% or 66-2/3% Surviving Spouse Annuity

 

Under this optional form of pension, your monthly pension will still be payable for your lifetime, but in an actuarially reduced amount calculated based on the Plan Actuarial Assumptions and without the guarantee of 60 monthly payments The surviving spouse’s pension will be equal to either 50% or 66-2/3% of the reduced monthly benefit you were receiving, whichever you elect.

 

 

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Your election to take a surviving spouse pension must be made before your pension begins and cannot be changed after the pension begins.  If you elect this benefit form, no benefits will be payable after the death of both you and your spouse.  If you start to receive a reduced monthly pension under this form and your spouse then dies before you, you will continue to receive the reduced benefit for the remainder of your life.  If you start to receive a reduced monthly pension under this form and you then die before your spouse, 50% or 66-2/3% of the reduced benefit (as you elected) will be paid to your surviving spouse for the remainder of his or her life.

 

Your "spouse" for purposes of the above means and is limited to the individual to whom you are legally married on your retirement date.  For example, that spouse may become entitled to the survivorship pension under this option even if the marriage should later end by divorce; and a new spouse whom you marry after a divorce, or after your "spouse" as defined above may die, will not be entitled to benefits under this optional form.

 

Your election of an optional benefit form can be revoked by you (without the consent of your spouse or any other person) at any time prior to the date as of which payment is to begin, but not thereafter.  If you elect a Joint and Surviving Spouse Annuity and your spouse dies (or you become divorced) before your retirement, your election will automatically be revoked and your benefit will then be payable in the normal form.

 

 

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Early Payment Upon Certain Events

 

Change in Control Termination

 

(1)           If there is a Change in Control of Arrow, and within 24 months after such Change in Control you separate from service either (a) involuntarily other than for Cause or Disability or (b) voluntarily for Good Reason, your separation from service is considered to be a “Change in Control Termination.”  For this purpose, “Change of Control of Arrow” shall mean a change in control event as defined in the Regulations that also qualifies as a “Change in Control” under the definition contained in Arrow’s standard form of change in control agreement, and “Cause” shall have the meaning given in such agreement.  If the definition in Arrow's standard form of such agreement shall subsequently be revised or there shall cease to be a standard form of such agreement, the definition in the prior sentence shall continue to govern for purposes of this Agreement unless the Committee shall otherwise direct and the change in such definition is permitted to be given effect under the Regulations.

 

(2)           If you incur a “Change in Control Termination” after attaining age 50 and prior to either your early retirement date or normal retirement date, then except as otherwise provided in paragraph 3 below, you will receive your Section 409A Benefit accrued to your date of termination in the form of a normal retirement pension beginning on the first day of the month coincident with or next following the date you attain age 60, calculated based on your Years of SERP Participation as of your date of termination as if your date of termination were an early retirement hereunder but without any discount for early payment.

 

(3)           If you were a participant in the SERP and had attained age 50 and completed 15 years of SERP participation prior to January 1, 2002, and thereafter incur a “Change in Control Termination,” paragraph 2 above will not apply and you will receive beginning on the first day of the month following the termination (in addition to any Grandfathered Benefit payable),  the greater of (i) the normal retirement benefit you would have received under the terms of the SERP as in effect on December 31, 2001 based on your aggregate service to December 31, 2008, less the amount of any Grandfathered Benefit payable, or (ii) your Section 409A Benefit calculated based on your Years of SERP Participation as of your termination date as if your termination were an early retirement hereunder and reduced for payment prior to normal retirement date based on the Early Payment Discount Assumption,  in lieu of any other benefit under the Plan.

 

 

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Disability.

 

If you incur Disability prior to either your early retirement date or normal retirement date or change of control termination, your Section 409A Benefit accrued to your date of Disability, calculated based on your Years of SERP Participation as if your Disability were an early retirement hereunder and reduced for payment. Prior to normal retirement date based on the Early Payment Discount Assumption, will be become payable on the first day of the month following your normal retirement date; provided, that any SERP pension payments will be reduced by the full amount of any disability benefits you receive for the same period that are attributable to Company contributions.  “Disability” for purposes hereof shall mean the Participant’s inability to perform each and every duty of his or her occupation or position of employment as a result of a medically determinable physical or mental impairment that can be expected to result in death or to last for a continuous period of not less than 12 months, provided that the Participant by reason thereof either (a) is unable to engage in any substantial gainful activity or (b) receives income replacement benefits for a period of not less than 3 months under an accident and health plan maintained by the Employer or a Subsidiary.  Notwithstanding the foregoing, a determination of total disability by the Social Security Administration shall be conclusive proof of Disability.

 

ARTICLE III

 

Amendment, Termination, or Curtailment of Benefits

 

Period of participation.  Your participation in the SERP begins on the date designated by the Board.  The Board may act at any time to end your participation or to suspend your accrual of additional benefits or modify on a prospective basis the formula for determining your benefits hereunder.

 

 

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Amendment or Termination.  The Board reserves the right to amend or terminate the SERP at any time.  However, no such action may adversely change any benefit you (or your spouse or beneficiary) are currently receiving, or in any other case, reduce the amount of your benefit accrued under the Plan as of the date of such action or adversely affect the right of the participant (and the participant’s beneficiary or surviving spouse, if applicable) to receive payment in respect of such amount upon completion by the participant of the conditions precedent to entitlement to a retirement pension as they exist under the terms of the SERP in effect immediately prior to such action, and at the time and on the terms then in effect, except with your consent.  A termination of the Plan shall not cause the acceleration of payments under the Plan unless the Committee determines, after consultation with counsel, that the terms and conditions of such termination are within exceptions provided by applicable regulations to the general Section 409A prohibition against acceleration.  Notwithstanding anything herein to the contrary, the Board shall have the right and power to adopt any and all such amendments to the SERP as it shall deem necessary or advisable to ensure compliance with Section 409A and the Regulations, including amendments with retroactive effect.

 

Termination of SERP Benefits/Effect of Competition

 

When you become eligible for SERP payments, your annual SERP pension will be paid to you in monthly installments.  Payments will end with the payment for the month in which you die, except for any benefits payable to your beneficiary on your death before receiving at least 60 monthly payments, if your pension was payable in the normal form described above (or for any surviving pension to your spouse, if your pension was paid as a surviving spouse pension as described above), or earlier if you compete with Arrow, as defined below.

 

 

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You compete with Arrow if, directly or indirectly, alone, as an employee, agent, independent contractor, lender, consultant, owner, partner or joint venturer, or as an officer, director, or stockholder of any corporation, or otherwise, are employed by, participate in, are engaged in, or are connected with any person or entity which is engaged in a business of the type and character engaged in, and competitive with that conducted by Arrow.  Ownership of 3% or less of the stock or other securities of a corporation, the stock of which is listed on a national securities exchange or is quoted on the NASDAQ National Market, will not constitute a violation of this provision, so long as you do not in fact have the power to control, or direct the management of, or are not otherwise associated with, such corporation.

 

The provision terminating SERP benefits if you compete with Arrow as described above will not be applicable if your payments are made on account of a Change In Control Termination as defined in Part II hereof, or if your termination of employment would constitute a Change In Control Termination except for your failure to have the 15 years of SERP participation required for individuals who became participants in the SERP prior to January 1, 2002.

 

Prior Plan Benefit Protected

 

If you were a participant in the SERP as in effect on December 31, 2001, your Section 409A Benefit, when added to your Grandfathered Benefit, will not be less than the amount you would have received under the SERP as in effect on December 31, 2001 as increased for service through December 31, 2008.  Any additional benefit provided under this paragraph shall be determined by treating references to retirement or termination of employment under such predecessor plan as meaning Separation from Service as defined herein and shall be payable in the time and manner provided for under this amended SERP upon Separation from Service with vested rights.

 

 

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ARTICLE IV

 

Definitions:

 

“Arrow” means Arrow Electronics, Inc., or any successor thereof by merger, consolidation, purchase of substantially all of its business and assets, or otherwise.

 

“Assumed Primary Insurance Amount” means the primary insurance amount calculated to be payable on a monthly basis on your attainment of age 62 or year of retirement if later (excluding any benefit payable on behalf of a spouse or other dependent) as provided under the Federal Social Security Act or any other similar applicable national benefit program as in effect on such date, determined on the following assumptions, notwithstanding facts to the contrary:

 

 

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(1)           Your salary history will begin with calendar year 1951 or the calendar year you attain age 22, whichever is later, and end with the calendar year preceding the later of the calendar year in which you attain age 62 or your calendar year of retirement, including years in which you were not employed by the Company (the “Salary History Period”);

 

(2)           If you retire prior to age 62, the Social Security wage base for each year until the year you attain age 62 will be assumed to be the Social Security wage base in effect in your year of retirement;

 

(3)           You will be deemed to have earned wages in excess of the Social Security Act wage base during each year of your Salary History Period.

 

(4)           You will be deemed to have been employed in the United States during each year of the Salary History Period.

 

“Board” means the Board of Directors of Arrow or any duly constituted committee thereof, including the Compensation Committee.

 

“Beneficiary” means your beneficiary is the person (including a trust, estate, foundation, or other entity) you designate (at such time and in such manner as the Committee shall authorize) to receive the death benefit (if any) payable upon death after commencing to receive benefits, and before receiving at least 60 payments.  If an individual is designated as beneficiary and dies prior to becoming entitled to benefits hereunder (or if no valid designation of beneficiary is in effect for any other reason), your beneficiary shall be your surviving spouse, if any, and otherwise shall be your estate unless otherwise provided in the beneficiary designation.

 

"Code" means the Internal Revenue Code of 1986, as it may be from time to time amended, or corresponding provisions of subsequent law.

 

 

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“Committee” means Arrow’s Management Pension and Investment Oversight Committee.

 

“Company” means Arrow and its Subsidiaries and their predecessors.

 

“Early Payment Discount Assumption” means interest credited and compounded annually at an annual rate of 7%.for each year (or fraction thereof in completed months) between your retirement date and your normal retirement date.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Final Average Compensation” means your highest average annual Performance Based Compensation (base salary plus targeted incentive compensation) for any three calendar years (which need not be consecutive) in the last five consecutive calendar years ending prior to your retirement (or such other period as the Board may specify), determined before reduction by any election to (i) make 401(k) contributions under the Arrow Electronics Savings Plan, (ii) defer compensation under any other elective deferred compensation plan, or (iii) pay the cost of health or other benefits with pre-tax contribution, and excluding all events payments made pursuant to stock appreciation rights, or otherwise pursuant to any plan for the grant of stock options, stock, or other stock rights.

 

“Plan Actuarial Assumptions” means interest at an annual rate of 7% compounded annually and the applicable mortality table in effect under section 417(e)(3)(A) of the Code in November prior to the calendar year in which payment is to begin.

 

“Specified Employee” means “specified employee” as determined in accordance with the procedures adopted by the Company in accordance with the Regulations for purposes of its nonqualified deferred compensation plans subject to Section 409A.

 

 

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“Subsidiary” means a subsidiary or affiliate that is a member of the same controlled group as Arrow within the meaning of section 414(b) or (c) of the Code.

 

“Subsidiary Change of Control Event” means a change in control event with respect to a Subsidiary within the meaning of the Regulations, pursuant to which Arrow ceases to have direct or indirect ownership of at least fifty-one percent (51%) of the value of the total equity or total combined voting power in respect of the Subsidiary.

 

“Years of SERP Participation” means your years of participation to your retirement date in the SERP as amended from time to time and in its predecessor plans, including the Unfunded Pension Plan for Selected Executives of Arrow Electronics, Inc. effective January 1, 1990. In addition, the determination of your income replacement percentage as set forth in the letter or notice your receive as described in Sections 1.3 and 1.4 may assume a minimum number of such years at your normal retirement date (which need not be the same as your projected years of service to normal retirement date). Years of SERP participation will be calculated in years and fractions of a year in completed months.  In cases where the Board concludes that special circumstances so warrant (such as, but not limited to, when an executive is hired from a prior employer and after taking into account benefits accrued and/or lost under the prior employer’s plans), you may be granted additional years of SERP participation.  Any such grant shall be evidenced by written notice to the affected participant.

 

 

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ARTICLE V

 

Miscellaneous

 

5.1          Committee.

 

(a)           The Plan shall be administered by the Committee.  The Committee shall have the responsibility, power and discretion to make all determinations, including as to matters of fact and construction and interpretation of the SERP, authorized or required of it by the terms of the SERP or deemed useful in carrying out its responsibilities hereunder.  Except as the Compensation Committee of the Board may otherwise determine, all such determinations shall be final and binding on all persons.  No member of the Committee shall be entitled to act on or decide any matter relating specifically to such member.

 

(b)           The Committee shall have all powers and discretion necessary or helpful for purposes of administration of the SERP.  Without limiting the generality of the foregoing, the Committee shall have the power and discretion to determine the benefits to which any participant, beneficiary, or spouse is or may become entitled to under the SERP, and to adopt such rules and procedures as it deems advisable to carry out its responsibilities hereunder.

 

(c)           The Committee shall adopt procedures for applying for benefits and appealing a denial of benefits in accordance with applicable regulations under ERISA, under which the final determination of such appeal shall be made by the Compensation Committee of the Board.

 

(d)           The Committee may allocate any of its responsibilities, powers and discretion under the SERP to one or more members of the Committee and delegate any of such responsibilities, powers and discretion to persons not members of the Committee (alone or together with one or more members of the Committee).  The actions taken by any member or members of the Committee or any other such persons in the exercise of responsibilities, powers and discretion delegated hereunder shall have the same valid and binding effect under the SERP as action by the full Committee.

 

5.2          Direction to pay benefits.  All benefit payments under the SERP shall be upon and in accordance with the written directions of the Committee or its agent.

 

 

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5.3          Liability limited; indemnification.  The members of the Committee and each of them shall be free from all liability, joint and several, for their acts and conduct, and for the acts and conduct of any duly constituted agents.  Arrow shall indemnify and save them harmless from the effects and consequences of their acts and conduct in such official capacity except to the extent that such effects and consequences flow from their own willful misconduct.  Under no circumstances will members of the Committee be personally liable for the payment of SERP benefits.

 

5.4          Payment to incompetent.  If any participant, beneficiary, or spouse entitled to benefits under the SERP shall be legally incompetent (or shall be a minor), such benefits may be paid in one or more of the following ways, as the Committee in its sole discretion s hall determine:

 

(a)           To the legal representatives of the participant, beneficiary, or spouse;

 

(b)           Directly to such participant, beneficiary, or spouse;

 

(c)           To the spouse or guardian of such participant, beneficiary, or spouse or to the person with whom such participant, beneficiary, or spouse resides.

 

Payment to any person in accordance with these provisions will, to the extent of the payment, discharge Arrow, and none of the foregoing or the Committee will be required to see to the proper application of any such payment.  Without in any manner limiting these provisions, in the event that any amount is payable hereunder to any legally incompetent participant, beneficiary, or spouse, the Committee may in its discretion utilize the procedures described in the following section.

 

 

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5.5          Doubt as to right to payment.  If any doubt exists as to the right of any person to any benefits hereunder or the amount of time of payment of such benefits (including, without limitation, any case of doubt as to identity, or any case in which notice has been received from any person claiming any interest in amounts payable hereunder, or any case in which a claim from other persons may exist by reason of community property or similar laws), the Committee will be entitled, in its discretion, to direct that payment of such benefits be deferred until order of a court of competent jurisdiction, or to pay such sum into court in accordance with appropriate rules of law in such case then provided, or to make payment only upon receipt of a bond or similar indemnification (in such amount and in such form as is satisfactory to the Committee).

 

5.6          Withholding.  All payments under the SERP shall be subject to any applicable withholding requirements imposed by any tax or other law.

 

5.7          Source of payment.  All benefits under the SERP shall be paid by Arrow out of general assets, and any rights of a participant, beneficiary, or spouse under the SERP shall be mere unsecured contractual rights.  Arrow and the participants intend that any arrangements made to assist Arrow to meet obligations under the SERP shall be unfunded for tax purposes and for purposes of Title I of ERISA, and no trust, security, escrow, or similar account shall be established in connection with the SERP.  Arrow has, however, established a “rabbi trust” to assist in meeting its obligation to pay benefits under the SERP, and amounts paid from any such rabbi trust shall discharge the obligations of Arrow hereunder to the extent of the payments.  No participant, beneficiary, or spouse shall have a preferred claim on or beneficial ownership interest in the assets of such rabbi trust.  If a participant shall be employed by a subsidiary of Arrow, the subsidiary shall be jointly and severally liable with Arrow for the payment of benefits hereunder to that participant, and references to “Arrow” in the preceding provisions of this Section 5.7 shall include such subsidiary.

 

 

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5.8          Spendthrift clause.  Except as otherwise provided by law, no benefit, distribution, or payment under the SERP may be anticipated, assigned (either at law or in equity), alienated, or subject to attachment, garnishment, levy, execution, or other legal or equitable process.

 

5.9          Reimbursement of legal expenses.  In the event that any dispute shall arise between a participant and Arrow relating to rights under the SERP, and it is determined by agreement between the parties, or by a final judgment of a court of competent jurisdiction that is no longer subject to appeal, that the participant has been substantially successful in such dispute, reasonable legal fees and disbursements of the participant in connection with such dispute shall be paid by Arrow.

 

5.10        Usage.  Whenever applicable, the singular, when used in the SERP, will include the plural.

 

5.11        Data.  Any participant, beneficiary, or spouse entitled to benefits under the SERP must furnish to the Committee such documents, evidence, or information as the Committee considers necessary or desirable for the purpose of administering the SERP.

 

5.12        Separability.  If any provision of the SERP is held invalid or unenforceable, its invalidity or unenforceability will not affect other provisions of the SERP, and the SERP will be construed and enforced as if such provision had not been included therein.

 

5.13        Captions.  The captions contained herein are inserted only as a matter of convenience and for reference and in no way define, limit, enlarge, or describe the scope or intent of the SERP; nor shall they, in any way, affect the SERP or the construction of any provision thereof.

 

 

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5.14        Name.  The SERP may be known as the Arrow Electronics, Inc. Supplemental Executive Retirement Plan

 

5.15        Governing law.  The SERP is intended to constitute an unfunded plan of deferred compensation for a select group of management or highly compensated employees, within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and no individual shall be eligible to participate in the SERP unless he is a member of such a group.  If an individual formerly so eligible ceases to be a member of such a group, his participation and accrual of additional benefits shall be suspended, but benefits previously accrued shall not be reduced thereby.  Except to the extent preempted by federal law, the SERP shall be construed and governed in all respects according to the laws of the State of New York, where it is adopted, without regard to principles of conflict of laws.

 

5.16        Right of discharge reserved.  The establishment of the SERP shall not be construed to confer upon an employee or participant any legal right to be retained in the employ of Arrow or give any employee or any other person any right to benefits, except to the extent expressly provided hereunder.  All employees will remain subject to discharge to the same extent as if the SERP had never been adopted, and may be treated without regard to the effect such treatment might have upon them under the SERP.

 

5.17        Grantor trust agreement/change of control.  The powers, rights and duties of the Trustee under any rabbi trust created for the purpose of assisting Arrow in meeting its obligations under the SERP shall, following a “Change of Control” as defined in the trust agreement for such Trust, govern and prevail to the extent inconsistent with any of the provisions of the SERP, including without limitation SERP provisions making the Committee’s determinations final and binding (except as determined by the Compensation Committee of the Board), and provisions giving the Committee power and discretion to invoke the procedures described in Sections 5.4 and 5.5, to make the determinations and give directions with respect to the payment of benefits as provided in Section 5.2 above, including adopting a claims procedure as described in Section 5.1(c).  Arrow shall make such contributions to such Trust as shall be required under the terms of such trust agreement, including, without limitation, such contributions as may be required thereunder upon an individual participant’s retirement or disability, or as may be required with respect to all participants upon any Potential Change of Control or Change of Control as such terms are defined in such trust agreement.

 

 

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5.18        Relationship to other agreements.  In the event that an employment or other agreement with a participant substitutes a different or modified benefit formula or other provisions for the income replacement target or certain other provisions of the SERP, the benefits of such participants under the SERP shall be determined based on the provisions of such agreement to the extent consistent with Section 409A or the Regulations.

 

5.19        Acceleration Generally Prohibited.  No acceleration of payments under the SERP shall be permitted except as authorized by the Regulations.  Without limiting the generality of the foregoing:

 

(1)          Ethics or conflict of interest requirements.  Distribution may be accelerated as may be necessary to comply with ethics or conflict of interest requirements in accordance with Treasury Reg. § 1.409A-3(j)(4)(iii).

 

(2)          Payment of employment taxes.  Distribution may be accelerated in order to pay the Federal Insurance Contributions Act (FICA) tax imposed under section 3101, section 3121(a) and section 3121(v)(2) of the Code on deferrals under the SERP (the “FICA Amount”), Federal, state, local or foreign wage withholding taxes on the FICA Amount, and additional wage withholding taxes attributable to the pyramiding of wages subject to withholding and taxes.  Acceleration shall be permitted under this paragraph (2)  only to the extent that Committee determines that such tax obligations cannot be readily met from other sources, and the total payment under this paragraph (2) shall not exceed the aggregate of the FICA Amount and related income tax withholding.

 

 

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To evidence the adoption of this amended and restated Arrow Electronics, Inc. Supplemental Executive Retirement Plan, the undersigned has, pursuant to direction of the Management Pension and Investment Oversight Committee, under authority given by the Compensation Committee the Board of Directors, has executed this Plan document this 10th day of December, 2009, effective as of January 1, 2009.

 

/s/ Peter S. Brown

 Senior Vice President and General Counsel

 

 

 

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