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                                                                     EXHIBIT 4.1

                         INDYMAC MORTGAGE HOLDINGS, INC.
                            2000 STOCK INCENTIVE PLAN

     1.   Purpose of Plan. The purpose of this 2000 Stock Incentive Plan
("Plan") of IndyMac Mortgage Holdings, Inc., a Delaware corporation (the
"Company"), is to enable the Company and any of its subsidiaries or affiliates
to attract, retain and motivate their employees, consultants, agents, officers
and directors by providing incentives related to equity interests in and the
financial performance of the Company.

     2.   Persons Eligible Under Plan. Any person, including any director of the
Company or any of its subsidiaries or affiliates, who is an officer or employee
of the Company or any of its subsidiaries or affiliates or an individual who
performs services for the Company or any of its subsidiaries or affiliates of a
nature similar to those performed by officers or employees, such as consultants
and agents (any of the foregoing, an "Employee") shall be eligible to be
considered for the grant of an Award (as defined in Section 5 below) or Awards
under Section 5 of this Plan. Members of the Board of Directors of the Company
(the "Board"), and members of the boards of directors of any of the Company's
subsidiaries or affiliates who are not officers or employees of the Company or
any of its subsidiaries or affiliates ("Non-Employee Directors") shall be
eligible to receive Awards under this Plan only in the form of nonqualified
stock options granted automatically under the provisions of Section 10 of this
Plan ("Director Options").

     3.   Stock Subject to Plan.

          (a)  ISO Limit. The maximum number of Common Shares, $0.01 par value
     per share, of the Company (the "Common Shares") that may be issued pursuant
     to options intended to qualify as incentive stock options ("Incentive Stock
     Options") under Section 422 of the Internal Revenue Code of 1986, as
     amended (the "Code"), granted under this Plan is 5,000,000, and provided
     further that, except as otherwise provided herein, the aggregate Fair
     Market Value (as defined in Section 10) of Common Shares with respect to
     which options intended to qualify as Incentive Stock Options are
     exercisable for the first time by any individual during any calendar year
     shall not exceed the limit, if any, set forth in Section 422(d) of the Code
     or any successor provision thereto. For purposes of this subsection (a),
     the Fair Market Value (as defined in Section 10) of any Common Shares shall
     be determined as of the time the Incentive Stock Option with respect to the
     Common Shares is granted. Pursuant to Section 422(a)(2) of the Code, only
     employees (as that term is used in Section 422(a)(2) of the Code) of the
     Company or the Company's wholly-owned subsidiaries may receive options
     intended to qualify as Incentive Stock Options under this Plan.

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               (b)  Aggregate/Individual Share Limit.

                    (i)  The maximum number of Common Shares that may be issued
               pursuant to all Awards (including Incentive Stock Options, as set
               forth in subsection (a) above) granted under this Plan, other
               than Common Shares that are issued pursuant to Awards and
               subsequently reacquired by the Company pursuant to the terms and
               conditions of such Awards ("Reacquired Common Shares"), is
               5,000,000, subject to adjustment as provided in or pursuant to
               Section 6 or 10 hereof (such maximum number, as so adjusted,
               shall be referred to as the "Share Limit").

                    (ii) Notwithstanding anything contained herein to the
               contrary, the aggregate number of Common Shares subject to
               options, stock appreciation rights, and awards of restricted
               stock granted during any calendar year to any individual shall be
               limited to 1,000,000.

               (c)  Share Reservation. No Award may be granted under this Plan
          unless, on the date of grant, the sum of (i) the maximum number of
          Common Shares issuable at any time pursuant to such Award, plus (ii)
          the number of Common Shares that have previously been issued pursuant
          to Awards granted under this Plan, other than Reacquired Common Shares
          available for reissue, plus (iii) the maximum number of Common Shares
          that may be issued at any time after such date of grant pursuant to
          Awards that are outstanding on such date, does not exceed the Share
          Limit. Common Shares distributed under the Plan may be treasury
          shares, authorized but unissued shares or shares purchased in the open
          market for this purpose.

               (d)  Reissue of Awards and Common Shares. Awards payable in cash
          or Common Shares that are forfeited or for any reason are not so paid
          under this Plan, as well as Common Shares subject to Awards that
          expire or for any reason are terminated and are not issued or
          constitute Reacquired Common Shares, shall again be available for
          subsequent Awards under the Plan.

               (e)  Fractional Shares/Minimum Issue. Fractional share interests
          shall be disregarded, but may be accumulated. No fewer than 100 Common
          Shares may be purchased on exercise of any option granted under this
          Plan ("Option") at one time unless the number purchased is the total
          number at the time available for purchase under the Option.

               (f)  Privileges of Stock Ownership. Except as otherwise expressly
          authorized by this Plan, an Award recipient shall not be entitled to
          any privilege of stock ownership as to any Common Shares subject to an
          Option granted under this Plan prior to the satisfaction of all
          conditions to the valid exercise of the Option.

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     4.   Administration of Plan.

          (a)  The Committee. Except for the provisions of Section 10 (which to
     the maximum extent feasible shall be self-effectuating), this Plan shall be
     administered by a committee of the Board (the "Committee") consisting of
     two or more directors, each of whom is a "Non-Employee Director," as such
     term is defined in Rule 16b-3 under the Securities Exchange Act of 1934, as
     amended (the "Exchange Act"), and an "Outside Director," as such term is
     defined for purposes of Section 162(m) of the Code.

          (b)  Powers of the Committee. Subject to the express provisions of
     this Plan, the Committee shall be authorized and empowered to do all things
     necessary or desirable in connection with the administration of this Plan
     including, without limitation, the following:

               (i)  adopt, amend and rescind rules and regulations relating to
          this Plan;

               (ii) determine which persons meet the requirements of Section 2
          hereof for eligibility under this Plan and to which of such eligible
          persons, if any, Awards will be granted hereunder;

               (iii) grant Awards to eligible persons and determine the terms
          and conditions thereof, including, but not limited to, the number of
          Common Shares issuable pursuant thereto, the time not more than ten
          (10) years after the date of an Award at which time the Award shall
          expire or (if not vested) terminate, and the conditions upon which
          Awards become exercisable or vest or shall expire or terminate, and
          the consideration, if any, to be paid upon receipt, exercise or
          vesting of Awards;

               (iv) determine whether, and the extent to which, adjustments are
          required pursuant to Section 6 hereof;

               (v)  interpret and construe this Plan and the terms and
          conditions of any Award granted under Section 5, whether before or
          after the date set forth in Section 7; and

               (vi) determine the circumstances under which, consistent with the
          provisions of Section 7, any outstanding Award under Section 5 may be
          amended;

     which authority (except as to clauses (ii) and (iii) above) shall remain in
     effect so long as any Award remains outstanding under this Plan.

          (c)  Specific Committee Responsibility and Discretion Regarding
     Awards. Subject to the express provisions of this Plan, the Committee, in
     its sole

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     and absolute discretion, shall determine all of the terms and conditions of
     each Award granted under Section 5 of this Plan, which terms and conditions
     may include, subject to such limitations as the Committee may from time to
     time impose, among other things, provisions that:

               (i)  permit the recipient of such Award, including any recipient
          who is a director or officer of the Company, to pay the purchase price
          of the Common Shares or other property issuable pursuant to such
          Award, or such recipient's tax withholding obligation upon such
          issuance or in respect of such Award or Shares, in whole or in part,
          by any one or more of the following:

                    (A)  the delivery of previously owned shares of capital
               stock of the Company (including shares acquired as or pursuant to
               Awards) then having been owned by the recipient for at least six
               (6) months (or such other period required under applicable law)
               or the delivery of other property, or

                    (B)  the delivery of a promissory note, under any applicable
               financing plan or on such other terms and conditions, as in
               either case authorized by the Committee, consistent with
               applicable law;

               (ii) accelerate the receipt of benefits pursuant to such Award
          upon the occurrence of specified events, including, without
          limitation, a change of control of the Company, an acquisition of a
          specified percentage of the voting power of the Company, the
          dissolution or liquidation of the Company, a sale of substantially all
          of the property and assets of the Company or an event of the type
          described in Section 6 hereof, or pursuant to the provisions of an
          employment contract not inconsistent with the terms of this Plan, or
          in other circumstances or upon the occurrence of other events as
          deemed appropriate by the Committee;

               (iii) qualify such Award as an Incentive Stock Option;

               (iv) extend the exercisability or term of any or all such
          outstanding Awards, change the price of any or all such outstanding
          Awards or otherwise change previously imposed terms and conditions, in
          the specified events described in clause (ii) above or in other
          circumstances or upon the occurrence of other events as deemed
          appropriate by the Committee, in each case subject to Section 7;

               (v)  authorize the conversion, succession or substitution of
          outstanding Awards under Section 5 upon the occurrence of any event of
          the type described in Section 6, or in other circumstances or upon the
          occurrence of other events as deemed appropriate by the Committee;
          and/or

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               (vi) provide for automatic grants of Awards or successive Awards.

          (d)  Binding Determinations. Any action taken by, or inaction of, the
     Company, the Board or the Committee relating or pursuant to this Plan shall
     be within the absolute discretion of that entity or body and shall be
     conclusive and binding upon all persons. No member of the Board or officer
     of the Company shall be liable for any such action or inaction of the
     entity or body, of another person or, except in circumstances involving bad
     faith, of himself or herself.

          (e)  Reliance on Experts. In making any determination or in taking or
     not taking any action under this Plan, the Board and the Committee may
     obtain and may rely upon the advice of experts, including professional
     advisors to the Company. No director, officer or agent of the Company shall
     be liable for any such action or determination taken or made or omitted in
     good faith.

          (f)  Delegation. The Committee may delegate ministerial,
     non-discretionary functions to individuals who are officers or employees of
     the Company. The Committee also may delegate to certain officer(s) of the
     Company the authority to grant Awards pursuant to Section 5 of the Plan,
     provided that such delegation is set forth in writing and includes all
     applicable limitations and parameters to such Awards, and provided further
     that such Awards are subsequently ratified by the Committee.

     5.   Awards.

          (a)  Types of Awards. The Committee, on behalf of the Company, is
     authorized under this Plan to enter into any type of arrangement with an
     Employee that is not inconsistent with the provisions of this Plan and that
     by its terms, involves or might involve the issuance of (i) Common Shares,
     (ii) an option, warrant, convertible security, stock appreciation right or
     similar right with an exercise or conversion privilege at a fixed or
     variable price related to the Common Shares or other equity securities of
     the Company and/or the passage of time, the occurrence of one or more
     events, or the satisfaction of performance criteria or other conditions, or
     any combination of these variables, or any similar security contemplated by
     subsection (b) below, or (iii) any similar security with a value derived
     from the value of the Common Shares or other equity securities of the
     Company, all of which may or may not involve the payment of cash
     consideration, subject to subsection (e) below. The authorization of any
     such arrangement (including any benefits described in Section 5(e)) is
     referred to herein as the grant of an "Award". The date of grant may be at
     or after (but not before) the date the Committee authorizes the Award. All
     Awards shall be evidenced by a writing with a schedule memorializing the
     grant of the Award to the recipient and setting forth certain specifics
     with respect to the terms and conditions of the Award ("Award Memorandum").

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          (b)  Form of Awards. Awards are not restricted to any specified form
     or structure and may include, without limitation, sales or bonuses of
     stock, restricted stock, performance restricted stock, stock options,
     reload stock options, stock purchase warrants, other rights to acquire
     stock, securities convertible into or redeemable for stock, stock
     appreciation rights, limited stock appreciation rights, phantom stock,
     dividend equivalents, performance units or performance shares, and an Award
     may consist of one such security or benefit, or two or more of them in any
     combination or alternative. In addition, any Award that is intended to
     qualify as an Incentive Stock Option will automatically be converted into a
     non-qualified stock option to the extent that such Award does not satisfy
     any applicable requirement under Section 422 of the Code.

          (c)  Restricted Stock Awards. If expressly provided by the Committee,
     and without limiting subsection (b) above, Awards of restricted Common
     Shares ("Restricted Stock") may be made to the holder of any Option, based
     upon dividends or distributions that would have been received had the
     Common Shares covered by the Option been issued and outstanding on the
     applicable dividend record date. The terms and conditions of any such
     Awards of Restricted Stock shall be determined by the Committee and set
     forth in the applicable Award Memorandum.

          (d)  Time and Method of Exercise. Awards may be exercised in whole or
     in part at such time or times as shall be determined by the Committee and
     set forth in the applicable Award Memorandum. Awards shall be exercised in
     accordance with procedures established by the Committee, subject to Section
     4(c)(i) and any holding periods required under applicable law.

          (e)  Price; Consideration; Option Pricing Limit. Common Shares may be
     issued pursuant to an Award for any lawful consideration as determined by
     the Committee, including, without limitation, cash, Common Shares (valued
     at then Fair Market Value, as defined in Section 10), or services rendered
     by the recipient of such Award; provided that no Common Shares shall be
     issued for less than the minimum lawful consideration and no Option which
     is intended to be an Incentive Stock Option shall be granted with an
     exercise price that is less than the Fair Market Value (as defined in
     Section 10) of the underlying Common Shares on the date of grant.

          (f)  Effect of Termination of Service or Death; Change in Subsidiary
     Status. Subject to Section 4(c)(ii), and except as otherwise provided in
     the applicable Award Memorandum or otherwise specified or approved by the
     Committee, each Option and all other rights thereunder, to the extent not
     exercised (whether or not presently exercisable), shall terminate and
     become null and void at such time as the holder of such Option terminates
     service as an Employee, except that:

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               (i) if the holder terminates service as an Employee for a reason
          other than cause (as determined by the Committee in its sole
          discretion), death or permanent and total disability (as defined in
          clause (ii) below), the holder may at any time within a period of
          three months after such termination exercise such Option to the extent
          such Option was exercisable on the date of such termination;

               (ii) if the holder terminates service as an Employee by reason of
          permanent and total disability (within the meaning of Section 22(e)(3)
          of the Code), or if the holder becomes permanently and totally
          disabled within three months after termination described in clause
          (i), the holder may at any time within a period of twelve (12) months
          after such termination exercise such Option to the extent such Option
          was exercisable on the date of such termination; and

               (iii) if the holder terminates service as an Employee by reason
          of death, or within three months after a termination described in
          clauses (i) or (ii), then such Option may be exercised within a period
          of twelve (12) months after the holder's termination of service as an
          Employee, to the extent such Option was exercisable on the date of
          such termination;

     provided, however, that in no event may any such Option be exercised by any
     holder after its expiration date.

          Notwithstanding any of the foregoing provisions of this subsection
     (f), if the holder of an Option is an Employee of an entity which is a
     subsidiary or affiliate of the Company and such entity ceases to be such a
     subsidiary or affiliate of the Company, such event shall be deemed for
     purposes of this subsection (f) to be a termination of the holder's service
     as an Employee described in clause (i) above. Absence from work caused by
     military service or authorized sick leave shall not be considered a
     termination of service as an Employee for purposes of this subsection (f).

          (g)  Cash Awards; Loans. The Committee shall have the express
     authority to create, add or include a cash payment or benefit under this
     Plan, whether in lieu of, in addition to or as an Award or as a component
     of another type of Award, and to make or authorize loans to finance, or to
     otherwise accommodate the financing, acquisition or exercise of an Award or
     the satisfaction of any related tax liability.

          (h)  Transfer Restrictions. Unless otherwise permitted in the
     applicable Award Memorandum pursuant to the discretion of the Committee, no
     Award granted hereunder shall be transferable other than by will or the
     laws of descent and distribution or pursuant to a qualified domestic
     relations order.

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          (i)  Tax Withholding. Upon the issuance of Common Shares, the payment
     of cash or any other taxable event in respect of an Award under this Plan,
     such number of shares or amount of cash or other consideration, as the case
     may be, otherwise issuable or payable may be reduced by the amount
     necessary to satisfy the minimum applicable tax withholding requirements
     imposed on the Company or any of its subsidiaries or affiliates in respect
     of such Award or event, all to the extent and in such manner as the
     Committee may determine.

     6.   Adjustments and Acceleration.

          (a)  Adjustments. If (i) the outstanding securities of the class then
          subject to this Plan (the "outstanding shares") (A) are increased,
          decreased, exchanged or converted as a result of a stock split
          (including a split in the form of a stock dividend), reverse stock
          split, recapitalization, or similar event or (B) are exchanged for or
          converted into cash, property or a different number or kind of
          securities (or if cash, property or securities are distributed in
          respect of the outstanding shares), as a result of a reorganization,
          merger, consolidation, exchange, recapitalization, restructuring or
          reclassification, or (ii) substantially all of the property and assets
          of the Company are sold as an entirety, or (iii) the Company is
          liquidated and dissolved, then, the Committee (or, in the case of
          Director Options, the Board) shall, in such manner and to such extent
          (if any) as is equitable and appropriate, make proportionate
          adjustments in (x) the number and type of shares or other securities
          or cash or other property that may be acquired pursuant to Options and
          other Awards previously granted under this Plan (and, where
          applicable, the exercise price thereof so as to maintain the same
          aggregate exercise price), (y) the maximum number and type of shares
          or other securities, cash, or property that may be issued or delivered
          pursuant to Options (including Incentive Stock Options and Director
          Options) and other Awards thereafter granted under this Plan, and (z)
          such other terms as necessarily are affected by such event. In the
          case of an extraordinary distribution, merger, reorganization,
          consolidation, combination, sale of assets, exchange or spin off, the
          Committee (or the Board, in the case of Director Options) may make
          provisions for a substitution or exchange of any or all outstanding
          Options or other Awards or rights (or for the securities, cash or
          property deliverable upon exercise of such outstanding Options or
          other Awards or rights), based upon the distribution or consideration
          payable to holders of the Common Shares of the Company upon or in
          respect of such event.

          (b)  Acceleration.

               (i)  The Committee, in the exercise of its reasonable discretion,
          may, but need not, make an affirmative determination in light of all
          circumstances surrounding a transaction or group of related
          transactions that a "Change in Control" for purposes of this Plan will
          either occur or

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          not occur. In making any such determination, the Committee shall give
          due consideration, without limitation, to the likely effect of such
          transaction(s) on the makeup of the shareholder base, the Board and
          the senior management of the Company. If the Committee does not
          exercise the right to make this affirmative determination with respect
          to a specific transaction or group of related transactions, then, with
          respect thereto, a "Change in Control" shall be deemed to occur for
          purposes of this Plan upon the occurrence of any one of the following
          events:

                    (A)  An acquisition (other than directly from the Company)
               of any common stock or other "Voting Securities" (as hereinafter
               defined) of the Company by any "Person" (as the term person is
               used for purposes of Sections 13(d) or 14(d) of the Exchange Act,
               immediately after which such Person has "Beneficial Ownership"
               (within the meaning of Rule 13d-3 under the Exchange Act) of
               twenty five percent (25%) or more of the then outstanding shares
               of the Company's common stock or the combined voting power of the
               Company's then outstanding Voting Securities; provided, however,
               that in determining whether a Change in Control has occurred,
               Voting Securities which are acquired in a "Non-Control
               Acquisition" (as hereinafter defined) shall not constitute an
               acquisition which would cause a Change in Control. For purposes
               of this Plan, (1) "Voting Securities" shall mean the Company's
               outstanding voting securities entitled to vote generally in the
               election of directors and (2) a "Non-Control Acquisition" shall
               mean an acquisition by (a) an employee benefit plan (or a trust
               forming a part thereof) maintained by (x) the Company, or, (y)
               any corporation or other Person of which a majority of its voting
               power or its voting equity securities or equity interest is
               owned, directly or indirectly, by the Company (for purposes of
               this definition, a "Subsidiary"), (b) the Company or any of its
               Subsidiaries, or (c) any Person in connection with a "Non-Control
               Transaction" (as hereinafter defined);

                    (B)  The individuals who as of March 1, 2000 are members of
               the Board (the "Incumbent Board") cease for any reason to
               constitute at least two-thirds of the members of the Board;
               provided, however, that if the election, or nomination for
               election by the Company's common stockholders, of any new
               director was approved by a vote of at least two-thirds of the
               Incumbent Board, such new director shall, for purposes of this
               Plan, be considered as a member of the Incumbent Board; provided
               further, however, that no individual shall be considered a member
               of the Incumbent Board if such individual initially assumed
               office as a result of either an actual or threatened "Election
               Contest" (as described in Rule 14a-11 under the Exchange Act) or
               other actual or threatened

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               solicitation of proxies or consents by or on behalf of a Person
               other than the Board (a "Proxy Contest") including by reason of
               any agreement intended to avoid or settle any Election Contest or
               Proxy Contest; or

                    (C)  The consummation of: (1) A merger, consolidation or
               reorganization involving the Company, unless such merger,
               consolidation or reorganization is a "Non-Control Transaction." A
               "Non-Control Transaction" shall mean a merger, consolidation or
               reorganization of the Company where: (a) the stockholders of the
               Company, immediately before such merger, consolidation or
               reorganization, own directly or indirectly immediately following
               such merger, consolidation or reorganization, at least seventy
               percent (70%) of the combined voting power of the outstanding
               Voting Securities of the corporation resulting from such merger,
               consolidation or reorganization (the "Surviving Corporation") in
               substantially the same proportion as their ownership of the
               Voting Securities immediately before such merger, consolidation
               or reorganization; (b) the individuals who were members of the
               Incumbent Board immediately prior to the execution of the
               agreement providing for such merger, consolidation or
               reorganization constitute at least two-thirds of the members of
               the board of directors of the Surviving Corporation, or in the
               event that, immediately following the consummation of such
               transaction, a corporation beneficially owns, directly or
               indirectly, a majority of the Voting Securities of the Surviving
               Corporation, the board of directors of such corporation; and (c)
               no Person other than (w) the Company, (x) any Subsidiary, (y) any
               employee benefit plan (or any trust forming a part thereof)
               maintained by the Company, the Surviving Corporation, or any
               Subsidiary, or (z) any Person who, immediately prior to such
               merger, consolidation or reorganization had Beneficial Ownership
               of twenty-five percent (25%) or more of the then outstanding
               Voting Securities or common stock of the Company, has Beneficial
               Ownership of twenty-five percent (25%) or more of the combined
               voting power of the Surviving Corporation's then outstanding
               Voting Securities or its common stock;

                         (2)  A complete liquidation or dissolution of the
                    Company,

                         (3)  The sale or other disposition of all or
                    substantially all of the assets of the Company to any Person
                    (other than a transfer to a Subsidiary); or

                    (D)  or any other occurrence or state of facts, whether
               similar or dissimilar to the foregoing, that is determined by the

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               Committee to constitute a change in control of the management or
               policies of the Company.

               Notwithstanding the foregoing provisions of this Section 6(b)(i),
          a Change in Control shall not be deemed to occur solely because any
          Person (the "Subject Person") acquired Beneficial Ownership of more
          than the permitted amount of the then outstanding common stock or
          Voting Securities as a result of the acquisition of common stock or
          Voting Securities by the Company which, by reducing the number of
          shares of common stock or Voting Securities then outstanding,
          increases the proportional number of shares Beneficially Owned by the
          Subject Persons; provided, however, that if a Change in Control would
          occur (but for the operation of this sentence) as a result of the
          acquisition of common stock or Voting Securities by the Company, and
          after such share acquisition by the Company, the Subject Person
          becomes the Beneficial Owner of any additional common stock or Voting
          Securities which increases the percentage of the then outstanding
          common stock or Voting Securities Beneficially Owned by the Subject
          Person, then a Change in Control shall occur.

               (i) Except as otherwise provided in Section 10(j), prior to a
          Change in Control, the Committee may determine in respect of Awards
          held by Employees that upon or in anticipation of the occurrence of
          the Change in Control benefits under Awards shall be accelerated only
          for a limited period of time, which period of time shall not be less
          than a period of time reasonably necessary to realize the benefits of
          such acceleration nor more than one year after the Change in Control.
          If such a determination is not made, then (subject to the last
          sentence of this clause) upon the occurrence of a Change in Control
          and without further action by the Board or the Committee, (A) each
          Option and stock appreciation right shall become immediately
          exercisable, (B) performance Restricted Stock shall immediately vest
          free of restrictions, and (C) each performance share Award shall
          become payable to the Employee. The Committee may override the
          limitations on acceleration in this Section 6(b)(ii) by express
          provision in the Award Memorandum or otherwise, and may accord any
          holder of an Award a right to refuse any acceleration, whether
          pursuant to the Award Memorandum or otherwise, in such circumstances
          as the Committee may approve. Any acceleration of Awards shall comply
          with any applicable regulatory and financial accounting requirements,
          including without limitation Section 422 of the Code.

               (ii) Any Awards that are (or but for a holder's rejection of
          acceleration would have been) accelerated under this Section 6 and
          that are not exercised or vested prior to a dissolution of the Company
          or a reorganization event described in Section 6(a) that the Company
          does not survive shall terminate, provided that if provision has been
          made,

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          consistent with the terms hereof, for the substitution, exchange or
          other settlement of Awards, such Awards shall be substituted,
          exchanged or otherwise settled in accordance with such provision.

               (iii) Any Awards that are (or but for the holder's rejection of
          the acceleration would have been) accelerated that are not exercised
          or vested prior to an abandonment or termination of a transaction
          subject to shareholder approval that triggered the Change in Control
          (as evidenced by public announcement, Board resolution, execution of
          documents terminating the transaction, or other action or document
          objectively confirming such abandonment or termination), shall be
          restored to their prior status (except for the effects of the passage
          of time) as if no Change in Control had occurred.

     7.   Amendment and Termination of Plan.

          (a)  No Award shall be granted under this Plan after March 1, 2010.
     Although Common Shares may be issued after March 1, 2010 pursuant to Awards
     granted prior to such date, no Common Shares otherwise shall be issued
     under this Plan after such date. Notwithstanding the foregoing, any Award
     granted prior to such date may vest or be amended after such date in any
     manner that would have been permitted prior to such date, except that
     (except as provided herein) no such amendment shall increase the number of
     shares subject to or comprising such Award, or extend the final expiration
     date of the Award or reduce (below the Fair Market Value (as defined in
     Section 10) on the date of the amendment) the exercise price of or under
     such Award.

          (b)  The Board may, without shareholder approval, at any time and from
     time to time, suspend, discontinue or amend this Plan in any respect
     whatsoever, except that no such amendment shall impair any rights under any
     Award theretofore made under the Plan without the consent of the holder of
     such Award. Furthermore, and except as and to the extent otherwise
     permitted by the provisions hereof, no such amendment shall, without
     shareholder approval, cause the Plan to cease to satisfy any applicable
     condition of Rule 16b-3 under the Exchange Act or cause any Award under the
     Plan to cease to qualify for any applicable exception under Section 162(m)
     of the Code.

     8.   Effective Date of Plan: Shareholder Approval. This Plan shall be
     effective as of March 1, 2000, the date upon which it was approved by the
     Board; provided, however, that no Common Shares may be issued under this
     Plan until it has been approved by the affirmative votes of the holders of
     a majority of the Common Shares of the Company present, or represented, and
     entitled to vote at a meeting duly held in accordance with applicable law.

                                       12
<PAGE>   13

     9.   Legal Issues.

          (a)  Compliance and Choice of Law: Severability. This Plan, the
     granting and vesting of Awards under this Plan and the issuance and
     delivery of Common Shares and/or the payment of money under this Plan or
     under Awards granted hereunder are subject to compliance with all
     applicable federal and state laws, rules and regulations (including but not
     limited to state and federal securities law and federal margin
     requirements) and to such approvals by any listing, regulatory or
     governmental authority as may, in the opinion of counsel for the Company,
     be necessary or advisable in connection therewith. Any securities delivered
     under this Plan shall be subject to such restrictions as the Company may
     deem necessary or desirable to assure compliance with all applicable legal
     requirements. This Plan, the Awards, all documents evidencing Awards and
     all other related documents shall be governed by, and construed in
     accordance with, the laws of the State of Delaware. If any provision shall
     be held by a court of competent jurisdiction to be invalid and
     unenforceable, the remaining provisions of this Plan (subject to Section
     9(b)) shall continue in effect.

          (b)  Plan Construction. It is the intent of the Company that this Plan
     and Awards hereunder satisfy and be interpreted in a manner that in the
     case of recipients who are or may become persons subject to Section 16 of
     the Exchange Act satisfies the applicable requirements of Rule 16b-3 under
     the Exchange Act so that such persons will be entitled to the benefits of
     Rule 16b-3 or other exemptive rules under Section 16 of the Exchange Act
     and will not be subjected to avoidable liability thereunder. If any
     provision of this Plan or of any Award would otherwise frustrate or
     conflict with the intent expressed above, that provision to the extent
     possible shall be interpreted and deemed amended so as to avoid such
     conflict, but to the extent of any remaining irreconcilable conflict with
     such intent as to such persons in the circumstances, such provision shall
     be deemed inoperative.

          (c)  Non-Exclusivity of Plan. Nothing in this Plan shall limit or be
     deemed to limit the authority of the Board or the Committee to grant awards
     or authorize any other compensation, with or without reference to the
     Common Shares, under any other plan or authority.

     10.  Non-Employee Director Options

          (a)  Participation. Awards relating to the Common Shares authorized
     under this Plan shall be made under this Section 10 only to Non-Employee
     Directors.

          (b)  Certain Definitions. The following definitions shall apply to
     this Section 10:

                                       13
<PAGE>   14

               (i) "Business Day" shall mean any day, other than Saturday,
          Sunday or any statutory holiday in the state of California.

               (ii) "Director Option" shall mean an Option granted to a
          Non-Employee Director pursuant to this Section 10.

               (iii) "Disability" shall mean a "permanent and total disability"
          within the meaning of Section 22(e)(3) of the Code.

               (iv) "Fair Market Value" on a specified date shall mean (A) if
          the Common Shares are listed or admitted to trade on a national
          securities exchange, the average of the high and low reported sales
          prices of the Common Shares on the Composite Tape on such date, as
          published in the Western Edition of The Wall Street Journal, on the
          principal national securities exchange on which the Common Shares are
          so listed or admitted to trade, or, if there is no trading of the
          Shares on such date, then the average of the high and low reported
          sales prices of the Common Shares as quoted on such Composite Tape on
          the next preceding date on which there is trading in such Shares; (B)
          if the Common Shares are not listed or admitted to trade on a national
          securities exchange, the average of the high and low reported prices
          for the Common Shares on such date, as furnished by the National
          Association of Securities Dealers, Inc. ("NASD") through the NASDAQ
          National Market Reporting System (or a similar organization, if the
          NASD is no longer reporting such information); (C) if the Common
          Shares are not listed or admitted to trade on a national securities
          exchange and are not reported on the National Market Reporting System,
          the arithmetic mean between the bid and asked prices for the Shares on
          such date, as furnished by the NASD or a similar organization; or (D)
          if the Common Shares are not listed or admitted to trade on a national
          securities exchange nor reported on the National Market Reporting
          System and if bid and asked prices for the stock are not furnished by
          the NASD or a similar organization, the value as established by the
          Board at such time for purposes of this Plan.

               (v) "Retirement" shall mean retirement or resignation as a
          director after at least five (5) years service as a director.

          (c)  Annual Awards. On the same date as the annual grant of Awards to
     Employees pursuant to this Plan in each calendar year after 2000 during the
     term of the Plan, there shall be granted to each Non-Employee Director then
     in office nonqualified stock options to purchase the number of Common
     Shares equal to 0.025% of the issued and outstanding Common Shares of the
     Company (excluding any Common Shares held in treasury by the Company) as of
     the end of the preceding fiscal year.

                                       14
<PAGE>   15

          (d)  Minimum Number of Shares. Notwithstanding anything to the
     contrary contained herein, a Non-Employee Director shall not receive
     Options for less than 7,500 Common Shares pursuant to this Section 10 in
     any calendar year.

          (e)  Purchase Price. The exercise price for Shares under any Director
     Option shall be equal to 100% of the Fair Market Value of a Common Share on
     the date the Director Option is granted. The exercise price for Shares
     under any Director Option may be modified by a separate vote of the members
     of the Board who are officers of the Company, as well as the full Board;
     provided, that the modified exercise price shall be no less than 100% of
     the Fair Market Value of a Common Share on the date the exercise price of
     the Director Option is modified. The exercise price of any option granted
     under this Section 10 shall be paid in full at the time of each purchase in
     cash equivalent or in Common Shares valued at their Fair Market Value on
     the date of exercise of such option, or partly in such shares and partly in
     cash, provided that any such Common Shares used in payment shall have been
     owned by the Non-Employee Director at least six months prior to the date of
     exercise.

          (f)  Option Period and Exercisability. Each Director Option granted
     under this Section 10 shall become fully exercisable, in whole or in part,
     on the first anniversary of the grant date. Each option granted under this
     Section 10 and all rights or obligations thereunder shall expire on the
     earlier of the tenth anniversary of the date of grant or the liquidation or
     dissolution of the Company and shall be subject to earlier termination as
     provided below.

          (g)  Termination of Directorship. If a Non-Employee Director's
     services as a member of the Board, or as a member of the board of directors
     of a subsidiary or affiliate of the Company, terminate by reason of death,
     Disability or Retirement, an option granted pursuant to this Section 10
     then held by such Non-Employee Director shall immediately become and shall
     remain exercisable for one year after the date of such termination or until
     the expiration of the stated term of such option, whichever first occurs.
     If a Non-Employee Director's services as a member of the Board, or as a
     member of the board of directors of a subsidiary or affiliate of the
     Company, terminate for any other reason (other than Cause), any option
     granted pursuant to this Section 10 which is not then exercisable shall
     terminate and any such option which is then exercisable may be exercised
     for three months after the date of such termination or until the expiration
     of the stated term, which ever first occurs. If a Non-Employee Director is
     terminated for Cause, all Director Options granted to such Non-Employee
     Director shall be forfeited and shall no longer be exercisable, effective
     on the date of such termination for Cause. For purposes of this Section 10,
     "Cause" shall mean, with respect to any Non-Employee Director, termination
     on account of any act of (i) fraud or intentional misrepresentation, (ii)
     embezzlement, misappropriation or conversion of assets or opportunities of
     the Company or any subsidiary or affiliate, or (iii) conviction of a
     felony.

                                       15
<PAGE>   16

          (h)  Adjustments. The provisions of this Section 10 and Director
     Options granted hereunder shall be subject to Section 6. If there shall
     occur any event described in Section 6(a), then in addition to the matters
     contemplated thereby, the Board shall, in such manner and to such extent
     (if any) as is appropriate and equitable, proportionately adjust the dollar
     amounts set forth elsewhere in this Section 10.

          (i)  Loans. Subject to the requirements of applicable law, the Board
     may authorize loans to Non-Employee Directors to finance the exercise of
     Awards; provided, however, that no loan shall be made to any Non-Employee
     Director to finance the exercise of an Award made under this Section 10
     unless (i) such loan is made pursuant to a full recourse promissory note,
     and (ii) such loan, if secured by Common Shares (whether issuable under the
     Award in question or otherwise), is made in compliance with Regulation G of
     the Federal Reserve Board.

          (j)  Acceleration Upon a Change in Control. Upon the occurrence of a
     Change in Control referred to in Section 6(b), each Director Option granted
     under this Section 10 shall become immediately exercisable in full subject
     to the terms thereof. To the extent that any Director Option granted under
     this Section 10 is not exercised prior to (i) a dissolution of the Company
     or (ii) a merger or other corporate event that the Company does not
     survive, and no provision is (or consistent with the provisions of Section
     9 or 10 can be) made for the assumption, conversion, substitution or
     exchange of the option, the Director Option shall terminate upon the
     occurrence of such event.

          (k)  Other Provisions. The provisions of Sections 3(e)-(f), 5(h) and 7
     through 9 are incorporated herein by this reference.

          (l)  Grant of Options to Newly Elected Non-Employee Directors. Upon
     the election of a newly elected Non-Employee Director, there shall be
     granted automatically (without any action by the Committee or the Board) a
     nonqualified stock option (the grant date of which shall be the date of
     such election) to each newly elected Non-Employee Director as follows: (i)
     if the Non-Employee Director is elected within six months of the date on
     which the most recent Director Options were granted to existing
     Non-Employee Directors, a non-qualified stock option to purchase the same
     number of Common Shares for which the most recent Director Options were
     granted to existing Non-Employee Directors, and (ii) if the Non-Employee
     Director is elected more than six months following the date on which the
     most recent Director Options were granted to existing Non-Employee
     Directors, but prior to the date in the following calendar year on which
     Director Options are granted to existing Non-Employee Directors, a
     non-qualified stock option to purchase one-half the number of Common Shares
     for which the most recent Director Options were granted to existing
     Non-Employee Directors.

                                       16
<PAGE>   17

                                Amendments to the
                            2000 Stock Incentive Plan
             (Adopted by the Board of Directors on October 17, 2000)

1.   Section 4(c)(iv) of the 2000 Stock Incentive Plan ("2000 Plan") shall be
     deleted in its entirety and replaced with the following:

               "(iv) extend the exercisability or term of any or all such
          outstanding Awards or otherwise change previously imposed terms and
          conditions, in the specified events described in clause (ii) above, or
          in other circumstances or upon the occurrence of other events as
          deemed appropriate by the Committee, in each case subject to Section
          7;"

2.   Section 5(f)(iii) of the 2000 Plan shall be deleted in its entirety and
     replaced with the following:

               "(iii) if the holder terminates service as an Employee by reason
          of death, or if such death occurs within three months after a
          termination described in clauses (i) or (ii), then such Option may be
          exercised within a period of twelve (12) months after the holder's
          termination of services as an Employee, to the extent such Option was
          exercisable on the date of such termination;"

3.   To correct the error in Section 6(b) of the 2000 Plan whereby there exist
     two subparagraphs enumerated as "(i)", the second such subparagraph shall
     be renumbered (ii) and the subparagraphs currently numbered (ii) and (iii)
     shall be renumbered (iii) and (iv).

4.   The second sentence of Section 7(a) of the 2000 Plan shall be deleted in
     its entirety and replaced with the following:

          "Notwithstanding the foregoing, any Award granted prior to such date
          may vest or be amended after such date in any manner that would have
          been permitted prior to such date, except that no such amendment shall
          increase the number of shares subject to or comprising such Award,
          extend the final expiration date of the Award or reduce the exercise
          price of or under such Award."

5.   The second sentence of Section 10(e) of the 2000 Plan shall be deleted in
     its entirety.

                                       17<PAGE>   1
                                                                  Exhibit 10.1

                                                                  EXECUTION COPY
                                                                  --------------

                              EMPLOYMENT AGREEMENT

                                     BETWEEN

                       PIONEER-STANDARD ELECTRONICS, INC.

                                       AND

                                 JAMES L. BAYMAN

                                                                  April 26, 2000

<PAGE>   2

                                TABLE OF CONTENTS
                                -----------------

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----

<S>                                                                                                              <C>
Employment........................................................................................................1

Period of Employment..............................................................................................1

Position, Duties, Responsibilities................................................................................2

Compensation, Compensation Plans,  Perquisites....................................................................3

Employee Benefit Plans............................................................................................4

Effect of Death or Disability.....................................................................................5

Termination.......................................................................................................6

         General..................................................................................................6

         Change in Control........................................................................................6

         For Cause or Voluntary Termination.......................................................................7

         Without Cause............................................................................................8

         Arbitration..............................................................................................9

Non-Competition, Confidential Information and Non-Interference....................................................9

Withholding......................................................................................................11

Notices..........................................................................................................11

General Provisions...............................................................................................12

Amendment or Modification; Waiver................................................................................13

Severability.....................................................................................................13

Successors to the Company........................................................................................13

Operation of Agreement...........................................................................................14

Enforcement Costs................................................................................................15
</TABLE>

<PAGE>   3

                              EMPLOYMENT AGREEMENT
                              --------------------

         EMPLOYMENT AGREEMENT between PIONEER-STANDARD ELECTRONICS, INC., an
Ohio corporation (the "Company"), and JAMES L. BAYMAN ("Bayman"), dated April
26, 2000, effective April 1, 2000.

                              W I T N E S S E T H:

         WHEREAS: Bayman has been providing services to the Company as Chairman
and Chief Executive Officer pursuant to an Amended and Restated Employment
Agreement dated April 27, 1999, effective April 1, 1999, between Bayman and the
Company (the "1999 Agreement");

         WHEREAS: The Company and Bayman desire to replace the 1999 Agreement
with a new Employment Agreement in order to reflect certain modifications to the
terms and conditions of Bayman's employment as Chairman and Chief Executive
Officer;

         WHEREAS: A new Employment Agreement containing such modified terms is
deemed necessary at the present time to meet the need for a continued strong
management without substantial change;

         WHEREAS: Together with other officers of the Company, Bayman has been
responsible for the success of the business of the Company.

         NOW, THEREFORE, it is hereby agreed by and between the Company and
Bayman as follows:

1.       Employment
         ----------

                  The Company hereby agrees to continue to employ Bayman, and
         Bayman hereby agrees to remain in the employ of the Company, for the
         period set forth in Section 2 hereof (the "Period of Employment"), in
         the position and with the duties and responsibilities set forth in
         Section 3 hereof, and upon the other terms and conditions hereinafter
         stated.

2.       Period of Employment
         --------------------

                  For purposes of this Agreement, the Period of Employment shall
         consist of the Period of Full Time Employment and the Period of
         Transition as described in this Section 2 as follows:

                           (a) For the purposes of this Agreement, the Period of
                  Full Time Employment shall continue for a two-year period from
                  the effective date hereof, subject to (i) the provisions of
                  Section 6 hereof; (ii) the earlier termination of

                                       1
<PAGE>   4

                  employment as set forth in Section 7 hereof; and (iii) the
                  commencement of the Period of Transition pursuant to Section
                  2(c) hereof.

                           (b) For purposes of this Agreement, the Period of
                  Transition shall continue for a three-year period from the
                  termination of the Period of Full Time Employment, subject to
                  (i) the provisions of Section 6 hereof and (ii) the earlier
                  termination of employment as set forth in Section 7 hereof.

                           (c) Not later than the February 1 next preceding the
                  first anniversary of this Agreement, Bayman may elect to
                  commence the Period of Transition effective on the first
                  anniversary of this Agreement. The Period of Transition shall
                  be a period of reduced employment responsibilities designed to
                  ensure Bayman's availability and support in the transition
                  from Bayman to his successor as Chairman and Chief Executive
                  Officer of the Company.

3.       Position, Duties, Responsibilities
         ----------------------------------

         3.01 CHIEF EXECUTIVE OFFICER. During the Period of Full Time
         Employment, Bayman shall serve as Chairman and Chief Executive Officer
         of the Company and shall have the responsibility for all of the
         operations of the Company including the authority, power and duties
         with regard to his position as may from time to time be assigned by the
         Board of Directors of the Company. Bayman's duties will include the
         supervision and direction of the corporate professional staff and the
         strategic direction of the Company's operations. He shall at all times
         during such period have the authority, power and duties of the person
         charged with the general management of the business and affairs of the
         areas assigned to him with authority to manage and direct all
         operations and affairs of those areas and to employ and discharge all
         employees thereof, reporting and being responsible only to the Board of
         Directors of the Company.

         3.02 BOARD MEMBERSHIP. It is further contemplated that at all times
         during the Period of Full Time Employment, Bayman shall serve and
         continue to serve as a member of its Board of Directors. In the event
         that Bayman's employment is terminated for any reason as provided in
         Section 7 hereof, Bayman agrees that he shall immediately submit his
         written resignation as a member of the Board of Directors of the
         Company, which may choose to either accept or reject such resignation.

         3.03 ATTENTION TO DUTIES. Throughout the Period of Full Time
         Employment, Bayman shall devote his full time and undivided attention
         during normal business hours to the business and affairs of the
         Company, except for reasonable vacations afforded the Company's
         executive officers and except for illness or incapacity, but nothing in
         this Agreement shall preclude Bayman from devoting reasonable time
         required for serving as a director or member of an advisory committee
         of any organization involving no conflict of interest with the
         interests of the Company, from engaging in charitable and community
         activities, and from managing his personal affairs, provided that such
         activities do not materially interfere with the regular performance of
         his duties and responsibilities under this Agreement.

                                       2
<PAGE>   5

         3.04 OFFICE. Throughout the Period of Full Time Employment, Bayman's
         office shall be located at the corporate offices of the Company, and
         Bayman shall not be required to locate his office elsewhere without his
         prior written consent, nor shall he be required to be absent therefrom
         on travel status or otherwise more than a total of sixty (60) days in
         any calendar year nor more than fifteen (15) consecutive days at any
         one time. Upon the commencement of the Period of Transition, Bayman's
         office shall be relocated to an appropriate office which shall be
         mutually acceptable to Bayman and his successor as Chairman and Chief
         Executive Officer.

         3.05 PERIOD OF TRANSITION. Throughout the Period of Transition, Bayman:

                  (a) shall serve in an advisory capacity to the Chairman and
         Chief Executive Officer and shall perform such tasks as shall be
         reasonably requested of him from time to time by the Chairman and Chief
         Executive Officer;

                  (b) shall make himself available to serve as a nominee for
         election by the shareholders as a Director of the Company if so
         requested by the Compensation Committee and, if he is elected and does
         so serve, shall receive no additional compensation for his services as
         Director; and

                  (c) shall devote no more than five (5) days per month during
         normal business hours to the business affairs of the Company as
         requested from time to time by the Chairman and Chief Executive
         Officer, except for illness or incapacity, but nothing in this
         Agreement shall preclude Bayman from serving as a director or member of
         an advisory committee of any organization involving no conflict of
         interest with the interests of the Company, from engaging in charitable
         and community activities, and from managing his personal affairs,
         provided that such activities do not materially interfere with the
         regular performance of his duties and responsibilities under this
         Agreement.

4.       Compensation and Perquisites
         ----------------------------

         4.01     COMPENSATION.

                  (a) For all services rendered by Bayman in any capacity during
                  the Period of Full Time Employment, including, without
                  limitation, services as an executive officer, director or
                  member of any committee of the Company or of any subsidiary,
                  division or affiliate thereof, Bayman shall be entitled as
                  compensation to the following:

                        (i)         A base salary, payable not less often than
                                    monthly, at the rate of $50,000 per month,
                                    with such increases in such rate as may be
                                    awarded from time to time by the Board of
                                    Directors of the Company or the Compensation
                                    Committee, as applicable; and

                                       3
<PAGE>   6

                       (ii)         Participation in the Company's 2000 Annual
                                    Incentive Plan (the "Annual Incentive Plan")
                                    in accordance with the provisions of such
                                    plan as in effect as of the date of this
                                    Agreement and as may be amended from time to
                                    time, conditioned upon and subject to
                                    Bayman's prior written consent to any such
                                    amendment as shall apply to him.

                  (b) For all services rendered by Bayman in any capacity during
                  the Period of Transition, Bayman shall be paid as compensation
                  a base salary, payable not less often than monthly, at a rate
                  of $110,000 per year, with such increases in such rate as may
                  be awarded from time to time by the Chief Executive Officer of
                  the Company.

                  (c) Any increase in salary, incentive compensation or other
                  form of compensation shall in no way diminish any other
                  obligation of the Company under this Agreement, unless
                  specifically agreed to in writing by Bayman.

         4.02 PERQUISITES. During the Period of Employment, Bayman shall be
         entitled to perquisites, including without limitation, an office,
         secretarial staff and clerical staff, and to fringe benefits comparable
         to those enjoyed by the elected executive officers of the Company, as
         well as to reimbursement, upon proper accounting, of reasonable
         business expenses and disbursements incurred by him in the course of
         his duties.

5.       Employee Benefit Plans
         ----------------------

         5.01 BENEFIT PLANS. Bayman, his dependents, beneficiaries and estate
         shall be entitled to all payments and benefits and service credit for
         benefits during the Period of Employment to which executive officers of
         the Company, their dependents and beneficiaries are entitled as the
         result of the employment of such executive officers during the Period
         of Employment under the terms of employee plans and practices of the
         Company, including, without limitation, the Company's Retirement Plan,
         its Benefit Equalization Plan, its group life insurance plan, its
         accidental death and dismemberment insurance, its disability, medical
         and health and welfare plans, any key person individual life and
         disability policies, automobile expense reimbursement, club membership
         fees and dues, and other present or equivalent successor plans and
         practices of the Company, its subsidiaries and divisions, for which
         other executive officers, their dependents and beneficiaries are
         eligible except for the Supplemental Executive Retirement Plan, and to
         all payments or other benefits under any such plan or practice after
         the Period of Employment as a result of participation in such plan or
         practice during the Period of Employment.

         5.02 STOCK PLANS. Bayman shall be eligible to participate in the
         Company's 1991 Stock Option Plan and 2000 Stock Incentive Plan (which,
         together with any successor stock option plan or plans as may be in
         effect from time to time, are referred to herein as the "Option Plan");
         provided, however, that the grant of any stock options ("Options")
         under any Option Plan shall be at the sole discretion of the
         Compensation Committee of the

                                       4
<PAGE>   7

         Board of Directors of the Company. The Company has granted Bayman stock
         options at an option price equal to the fair market value of the
         Company's Common Shares at the date of grant. The terms and conditions
         of exercise of Options shall be as is set forth in Bayman's Stock
         Option Agreements (the "Option Agreements") with the Company; provided,
         however, that in the event of a Change in Control as defined in Section
         15.02 hereof, then notwithstanding the provisions of said Option
         Agreements, all options (including those granted to him under the 1982
         Incentive Stock Option Plan, the 1991 Stock Option Plan and the 2000
         Stock Incentive Plan) shall immediately be 100% vested and Bayman shall
         have the immediate right of exercise with respect to all Options and
         the underlying Common Shares covered by said Option Agreements. In the
         event that Bayman is discharged or resigns his employment during the
         one (1) year period following a Change in Control as defined in Section
         15.02 hereof, Bayman shall have the period of one (1) year after the
         date of such termination or resignation (or such longer period as may
         be specified in the Option Agreement) or the remainder of the term of
         such Options, whichever is shorter, to exercise his Options, and any
         such exercise shall be irrevocable. Bayman shall also be entitled to
         participate in the Company's 1999 Restricted Stock Plan.

6.       Effect of Death or Disability
         -----------------------------

         6.01 DEATH. In the event of the death of Bayman during the Period of
         Employment, the Period of Employment shall be deemed to have ended as
         of the close of business on the last day of the month in which death
         shall have occurred, and his legal representative shall be entitled to
         (i) the compensation provided for in Section 4.01(a)(i) or Section
         4.01(b) hereof, whichever is applicable, for the month in which death
         shall take place at the rate being paid at the time of death, (ii) an
         incentive cash bonus amount equal to his earned incentive cash bonus
         under the Annual Incentive Plan (or, if applicable, any predecessor
         annual incentive plan or arrangement) for the immediately preceding
         fiscal year, pro rated through the last date of the Period of
         Employment, and (iii) any benefits provided pursuant to Section 5.01
         hereof which are payable pursuant to the terms of the applicable plan
         or practice.

         6.02     Disability.
                  ----------

                  (a) The term "Disability," as used in this Agreement, shall
                  mean an illness or accident which prevents Bayman from
                  performing his duties under this Agreement for a period of six
                  (6) consecutive months. The Period of Employment shall be
                  deemed to have ended as of the close of business on the last
                  day of such six (6) month period but without prejudice to any
                  payments due Bayman during such six (6) month period or
                  pursuant to any disability plan or disability insurance
                  policy.

                  (b) In the event of the Disability of Bayman during the Period
                  of Employment, Bayman shall be entitled to (i) the
                  compensation provided for in Section 4.01(a)(i) or Section
                  4.01(b) hereof, whichever is applicable, at the rate being
                  paid at the time of the commencement of Disability, for the
                  period of such

                                       5
<PAGE>   8

                  Disability but not in excess of six (6) months, (ii) an
                  incentive cash bonus equal to his earned incentive cash bonus
                  under the Annual Incentive Plan (or, if applicable, any
                  predecessor annual incentive plan or arrangement) for the
                  immediately preceding fiscal year, pro rated through the last
                  date of the Period of Employment, and (iii) any benefits
                  provided pursuant to Section 5.01 hereof which are payable
                  pursuant to the terms of the applicable plan or practice,
                  except that Bayman shall not be subject to the payment cap
                  provided for by the Company's short-term disability plan.

                  (c) The amount of any payments due under this Section 6.02
                  shall be reduced by any payments which Bayman may be paid for
                  the same period under any disability plan of the Company or of
                  any subsidiary or affiliate thereof.

7.       Termination
         -----------

         7.01 GENERAL. The Company may terminate Bayman's employment with or
         without Cause, and Bayman may voluntarily terminate his employment, at
         any time during the Period of Employment, subject to the provisions of
         this Section 7.

         7.02 CHANGE IN CONTROL. If, during the one (1) year period following a
         Change in Control of the Company as defined in Section 15.02 hereof,
         Bayman is discharged or voluntarily resigns his employment, there shall
         be paid or provided to Bayman, his dependents, beneficiaries and
         estate, as liquidated damages or severance pay, or both, the following:

                  (a)       (i)     The compensation provided for in Section
                                    4.01(a)(i) or Section 4.01(b) hereof,
                                    whichever is applicable, for the month in
                                    which termination shall have occurred at the
                                    rate being paid at the time of termination;
                                    plus

                           (ii)     An incentive cash bonus calculated based
                                    upon his earned incentive cash bonus under
                                    the Annual Incentive Plan for the
                                    immediately preceding fiscal year, pro rated
                                    for the then current fiscal year through his
                                    date of termination; plus

                          (iii)     An amount equal to the product of thirty-six
                                    (36) times his monthly base salary at the
                                    rate being paid at the time of termination;
                                    plus

                           (iv)     An amount equal to his earned incentive cash
                                    bonus under the Annual Incentive Plan (or,
                                    if applicable, any predecessor annual
                                    incentive plan or arrangement) for the three
                                    (3) previously completed fiscal years.

                  Such amounts shall be paid to Bayman in one payment
                  immediately upon his termination of employment.

                                       6
<PAGE>   9

                  (b) For the three (3) year period following the date of his
                  termination of employment, Bayman, his dependents,
                  beneficiaries and estate, shall continue to be entitled to all
                  benefits provided pursuant to Section 5.01 hereof which are
                  payable pursuant to the terms of the applicable plan or
                  practice, and service credit for benefits under all employee
                  benefit plans of the Company, including, without limitation,
                  the Company's Retirement Plan and Benefit Equalization Plan
                  referred to in Section 5.01 hereof, upon the same basis as
                  immediately prior to termination and, to the extent that such
                  benefits or service credit for benefits shall not be payable
                  or provided under any such plans to Bayman, his dependents,
                  beneficiaries and estate, by reason of his no longer being an
                  employee of the Company as the result of termination, or any
                  such plan, program or arrangement is discontinued or the
                  benefits thereunder are materially reduced, the Company shall
                  provide Bayman, his dependents, beneficiaries and estate, as
                  appropriate, a benefit or payment which places Bayman, his
                  dependents, beneficiaries and estate in at least as good of an
                  economic position (taking into account the favorable economic,
                  tax and legal characteristics customary for such plans,
                  policies or arrangements) as if the benefit to which such
                  persons were entitled to receive under such plans, programs
                  and arrangements immediately prior to termination had been
                  paid.

                  Any termination of Bayman's employment which either is (x) a
         termination by the Company other than for Cause or (y) a voluntary
         resignation by Bayman after the occurrence of an event which would
         constitute Good Reason under Section 15.03 hereof, which termination or
         resignation occurs within the period commencing on the commencement
         date of a tender offer for the Company's Common Shares, the execution
         of a letter of intent or the execution of a definitive agreement which,
         in each case, could reasonably be expected to lead to a Change in
         Control as defined in Section 15.02 hereof, and ending on either (A)
         the date of the Change in Control resulting from such tender offer or
         the consummation of the transaction contemplated by such letter of
         intent or such definitive agreement, as the case may be, or (B) the
         date as of which the Board of Directors determines in good faith that
         such tender offer has been withdrawn or has reached a final conclusion
         not resulting in a Change in Control or the transaction contemplated by
         such letter of intent or such definitive agreement is not to be
         consummated or if consummated, will not lead to a Change in Control, as
         the case may be, shall be deemed to be a termination under this Section
         7.02.

                  An election by Bayman to terminate his employment under the
         provisions of this Section 7.02 shall not be deemed a voluntary
         termination of employment by Bayman under Section 7.03 hereof. Further,
         an election by Bayman to terminate his employment under the provisions
         of subsection (y) of this Section 7.02 shall not be deemed to be a
         voluntary termination of employment for a Good Reason under Section
         7.04 hereof.

         7.03 FOR CAUSE OR VOLUNTARY TERMINATION WITHOUT A GOOD REASON. For the
         purpose of any provision of this Agreement, the termination of Bayman's
         employment shall be deemed to have been for Cause only if:

                                       7
<PAGE>   10

                  (a) termination of his employment shall have been the result
                  of Bayman's conviction of any of the following offenses,
                  provided that such offense results in material economic harm
                  to the Company or has a materially adverse effect on the
                  Company's operations, property or business relationships: (i)
                  misappropriation of money or other property of the Company or
                  (ii) any felony;

                  (b) there has been a breach by Bayman during the Period of
                  Employment of the provisions of Section 3.03 hereof relating
                  to devotion of full time to the affairs of the Company or any
                  provision of Section 8 hereof, and such breach results in
                  demonstrable significant injury to the Company, and with
                  respect to any alleged breach of Section 3.03 hereof, Bayman
                  shall have failed to remedy such breach within thirty (30)
                  days after his receipt of written notice from the Company; or

                  (c) there has been a substantial and continued failure or
                  refusal to perform under this Agreement which Bayman shall
                  have failed to remedy within thirty (30) days after his
                  receipt of written notice from the Company.

                  If Bayman's employment is terminated by the Company for Cause,
         or if Bayman shall voluntarily terminate his employment with the
         Company without a Good Reason as defined in Section 15.03 hereof,
         Bayman shall be entitled to the compensation provided for in Section
         4.01(a)(i) or Section 4.01(b) hereof, whichever is applicable, through
         the date of such termination. Bayman shall not be entitled to any
         additional compensation or benefits (except for any vested benefits),
         and shall continue to be bound by the provisions of Section 8 hereof.

         7.04 WITHOUT CAUSE OR VOLUNTARY TERMINATION FOR A GOOD REASON. Subject
         to compliance by Bayman with the provisions of Section 8 hereof, if the
         Company shall terminate Bayman's employment without Cause or if Bayman
         shall voluntarily terminate his employment for a Good Reason as defined
         in Section 15.03 hereof, there shall be paid or provided to Bayman, his
         dependents, beneficiaries and estate, as liquidated damages or
         severance pay, or both, (i) the compensation provided for in Section
         4.01(a)(i) or Section 4.01(b) hereof, whichever is applicable, for the
         month in which termination shall have occurred at the rate being paid
         at the time of such termination; (ii) an incentive cash bonus
         calculated based upon his earned incentive cash bonus under the Annual
         Incentive Plan for the immediately preceding fiscal year, pro rated for
         the then current fiscal year through his date of termination; and (iii)
         the amount (the "Payment Amount") per month equal to 1/24th of (A)
         twenty-four (24) times his monthly base salary at the rate being paid
         at the time of termination PLUS (B) an amount equal to his earned
         incentive cash bonus under the Annual Incentive Plan (or, if
         applicable, any predecessor annual incentive plan or arrangement) for
         the two (2) previously completed fiscal years. Such Payment Amount
         shall be paid to Bayman or, in case of his prior death, to his legal
         representative or estate, in monthly installments at the end of each
         month commencing with the month next following that in which such
         termination shall have occurred, and continuing for a period of
         twenty-four (24) months. Bayman, his dependents, beneficiaries and
         estate shall also receive, for the twenty-four (24) month period

                                       8
<PAGE>   11

         following such termination, all benefits provided pursuant to Section
         5.01 hereof which are payable pursuant to the terms of the applicable
         plan or practice, and service credit for benefits under all employee
         benefit plans of the Company, including, without limitation, the
         Company's Retirement Plan and Benefit Equalization Plan referred to in
         Section 5.01 hereof, upon the same basis as immediately prior to
         termination and, to the extent that such benefits or service credit for
         benefits shall not be payable or provided under any such plans to
         Bayman, his dependents, beneficiaries and estate, by reason of his no
         longer being an employee of the Company as the result of termination,
         or any such plan, program or arrangement is discontinued or the
         benefits thereunder are materially reduced, the Company shall provide
         Bayman, his dependents, beneficiaries and estate, as appropriate, a
         benefit or payment which places Bayman, his dependents, beneficiaries
         and estate in at least as good of an economic position (taking into
         account the favorable economic, tax and legal characteristics customary
         for such plans, policies or arrangements) as if the benefit to which
         such persons were entitled to receive under such plans, programs and
         arrangements immediately prior to termination had been paid. In the
         event the Company fails to make such payments when due, then the
         remaining payments shall become due and payable immediately. Bayman
         shall be under no obligation to seek other employment, but without
         otherwise limiting the purposes or effect of this Section 7.04, any
         amounts payable to Bayman pursuant to Section 7.04(iii) hereof shall be
         reduced by any amounts which Bayman actually receives from another
         employer during the twenty-four (24) month period following the date of
         his termination without Cause, and any benefits payable to Bayman or
         his dependents pursuant to this Section 7.04 by reason of any "welfare
         benefit plan" of the Company (as the term "welfare benefit plan" is
         defined in Section 3(1) of the Employee Retirement Income Security Act
         of 1974, as amended) or perquisites shall be reduced to the extent
         comparable benefits or perquisites (or the cash equivalent thereof) are
         actually received by Bayman or his dependents from another employer
         during such period. Notwithstanding any provision in this Section 7.04
         to the contrary, all obligations of the Company and Bayman's right to
         any payment or benefit under this Section 7.04 shall cease upon
         Bayman's breach of any provision of Section 8 hereof.

         7.05 ARBITRATION. In the event that Bayman's employment shall be
         terminated by the Company during the Period of Employment or the
         Company shall withhold payments or provision of benefits because Bayman
         is alleged to be engaged in activities prohibited by Section 8 hereof
         or for any other reason, Bayman shall have the right, in addition to
         all other rights and remedies provided by law, at his election either
         to seek arbitration in the metropolitan area of Cleveland, Ohio, under
         the Commercial Arbitration Rules of the American Arbitration
         Association by serving a notice to arbitrate upon the Company or to
         institute a judicial proceeding, in either case within one hundred and
         twenty (120) days after having received notice of termination of his
         employment.

8.       Non-Competition, Confidential Information and Non-Interference
         --------------------------------------------------------------

         8.01 NON-COMPETITION. During the Period of Employment and the two (2)
         year period following the termination of his employment (except in the
         case of a voluntary or involuntary termination of employment within one
         (1) year after a Change in Control),

                                       9
<PAGE>   12

         Bayman shall not become an officer, director, joint venturer, employee,
         consultant or five percent (5%) shareholder (directly or indirectly),
         or promote or assist (financially or otherwise), any entity which
         competes with any business in which the Company or any of its
         affiliates are engaged as of the date of such termination of
         employment. Bayman understands that the foregoing restrictions may
         limit his ability to engage in certain business pursuits during the
         period provided for herein, but acknowledges that he will receive
         sufficiently higher remuneration and other benefits from the Company
         hereunder than he would otherwise receive to justify such restriction.
         Bayman acknowledges that he understands the effect of the provisions of
         this Section 8(a), and that he has had reasonable time to consider the
         effect of these provisions, and that he was encouraged to and had an
         opportunity to consult an attorney with respect to these provisions.

         8.02 CONFIDENTIAL INFORMATION. Except for information which is already
         in the public domain, or which is publicly disclosed by persons other
         than Bayman, or which is required by law or court order to be
         disclosed, or information given to Bayman by a third party not bound by
         any obligation of confidentiality, Bayman shall at all times during and
         after his employment with the Company hold in strictest confidence any
         and all confidential information within his knowledge and which is
         material to the business of the Company (whether acquired prior to or
         during his employment with the Company) concerning the inventions,
         products, processes, methods of distribution, customers, services,
         business, suppliers or trade secrets of the Company, except that Bayman
         may, in connection with the performance of his duties to the Company,
         divulge confidential information to the directors, officers, employees
         and shareholders of the Company and to the advisors, accountants,
         attorneys or lenders of the Company or such other individuals as deemed
         prudent in the course of business to carry out the responsibilities and
         duties of his position, or as required by law. Such confidential
         information includes, without limitation, financial information, sales
         information, price lists, marketing data, the identity and lists of
         actual and potential customers and technical information, all to the
         extent that such information is not intended by the Company for public
         dissemination.

                  Bayman also agrees that upon leaving the Company's employ he
         will not take with him, without the prior written consent of an officer
         authorized to act in the matter by the Board of Directors of the
         Company, any Company document, contract, internal financial or
         management reports, customers list, product list, price list, catalog,
         employee list, procedures, software, MIS data, drawing, blueprint,
         specification or other document of the Company, its subsidiaries,
         affiliates and divisions, which is of a confidential nature relating to
         the Company, its subsidiaries, affiliates and divisions, or, without
         limitation, relating to its or their methods of purchase or
         distribution, or any description of any trade secret, formulae or
         secret processes.

         8.03. NONINTERFERENCE. Bayman shall not, at any time during the Period
         of Employment or within the two (2) year period after his employment is
         terminated with the Company (except in the case of a voluntary or
         involuntary termination of employment within one (1) year after a
         Change in Control), without the prior written consent of the Company,
         directly or indirectly, induce or attempt to induce any employee, agent
         or other representative or associate of the Company to terminate his or
         her employment,

                                       10
<PAGE>   13

         representation or other relationship with the Company, or in any way
         directly or indirectly interfere with any relationship between the
         Company and its suppliers or customers.

         8.04. REMEDY. Bayman acknowledges that Sections 8.01, 8.02 and 8.03
         hereof were negotiated at arms length and are required for the fair and
         reasonable protection of the Company. Nevertheless, if any aspect of
         these restrictions is found to be unreasonable or otherwise
         unenforceable by a court of competent jurisdiction, the Company and
         Bayman intend for such restrictions to be modified by such court so as
         to be reasonable and enforceable and, as so modified by the court, to
         be fully enforced. Bayman and the Company further acknowledge and agree
         that a breach of those obligations and agreements will result in
         irreparable and continuing damage to the Company for which there will
         be no adequate remedy at law and, therefore, Bayman and the Company
         agree that in the event of any breach of said obligations and
         agreements the Company, and its successors and assigns, shall be
         entitled to injunctive relief and such other and further relief,
         including monetary damages, as is proper in the circumstances. It is
         further agreed that the running of the periods provided in Sections
         8.01 and 8.03 hereof shall be tolled during any period which Bayman
         shall be adjudged to have been in violation of any of his obligations
         under such Sections.

9.       Withholding
         -----------

                  Anything to the contrary notwithstanding, all payments
         required to be made by the Company hereunder to Bayman or his estate or
         beneficiaries, shall be subject to the withholding of such amounts, if
         any, relating to tax and other payroll deductions as the Company may
         reasonably determine it should withhold pursuant to any applicable law
         or regulation. In lieu of withholding such amounts, the Company may
         accept other provisions to the end that it has sufficient funds to pay
         all taxes required by law to be withheld in respect of such payments or
         any of them.

10.      Notices
         -------

                  All notices, requests, demands and other communications
         provided for by this Agreement shall be in writing and shall be
         sufficiently given if and when mailed in the continental United States
         by registered or certified mail or personally delivered to the party
         entitled thereto at the address stated herein or to such changed
         address as the addressee may have given by a similar notice:

                  To the Company:     Pioneer-Standard Electronics, Inc.
                                      6065 Parkland Boulevard
                                      Mayfield Heights, Ohio 44124
                                      Attention: Secretary or
                                                 Assistant Secretary

                                       11
<PAGE>   14

                  To Bayman:          James L. Bayman
                                      1760 County Line Road
                                      Gates Mills, OH 44040

11.      General Provisions
         ------------------

         11.01 NO SET-OFF OR COUNTER CLAIM. There shall be no right of set-off
         or counter claim, in respect of any claim, debt or obligation, against
         payments to Bayman, his dependents, beneficiaries or estate provided
         for in this Agreement.

         11.02 BENEFICIARY. No right or interest to or in any payments shall be
         assignable by Bayman; provided, however, that this provision shall not
         preclude him from designating one or more beneficiaries to receive any
         amount that may be payable after his death and shall not preclude the
         legal representative of his estate from assigning any right hereunder
         to the person or persons entitled thereto under his will or, in the
         case of intestacy, to the person or persons entitled thereto under the
         laws of intestacy applicable to his estate. The term "beneficiaries" as
         used in this Agreement shall mean a beneficiary or beneficiaries so
         designated to receive any such amount or, if no beneficiary has been so
         designated, the legal representative of Bayman's estate.

         11.03 ASSIGNMENT. No right, benefit or interest hereunder, shall be
         subject to anticipation, alienation, sale, assignment, encumbrance,
         charge, pledge, hypothecation, or set-off in respect of any claim, debt
         or obligation, or to execution, attachment, levy or similar process, or
         assignment by operation of law. Any attempt, voluntary or involuntary,
         to effect any action specified in the immediately preceding sentence
         shall, to the full extent permitted by law, be null, void and of no
         effect.

         11.04 LEGAL REPRESENTATIVE. In the event of Bayman's death or a
         judicial determination of his incompetence, reference in this Agreement
         to Bayman shall be deemed, where appropriate, to refer to his legal
         representative or, where appropriate, to his beneficiary or
         beneficiaries.

         11.05 HEADINGS. The titles to sections in this Agreement are intended
         solely for convenience and no provision of this Agreement is to be
         construed by reference to the title of any section.

         11.06 BINDING EFFECT. This Agreement shall be binding upon and shall
         inure to the benefit of (a) Bayman and, subject to the provisions of
         Sections 11.02 and 11.03 hereof, his heirs and legal representatives,
         and (b) the Company and its successors as provided in Section 14
         hereof.

         11.07 EXCISE TAX GROSS UP. Bayman shall be entitled to a cash payment
         (the "Excise Tax Gross-Up Payment") equal to the amount of excise taxes
         which Bayman is required to pay pursuant to Section 4999 of the
         Internal Revenue Code of 1986, as amended ("Code"), as a result of any
         parachute payments as defined in Section 280G(b)(2)made by or on behalf
         of the Company or any successor thereto, under this Agreement or

                                       12
<PAGE>   15

         otherwise, resulting in an "excess parachute payment" as defined in
         Section 280G(b)(1) of the Code. In addition to the foregoing, the
         Excise Tax Gross-Up Payment due to Bayman under this Section 11.07
         shall be increased by the aggregate of the amount of federal, state and
         local income and excise taxes for which Bayman will be liable on
         account of the Excise Tax Gross-Up Payment to be made under this
         Section 11.07, such that Bayman will receive the Excise Tax Gross-Up
         Payment net of all income and excise taxes imposed on Bayman on account
         of the receipt of the Excise Tax Gross-Up Payment. The computation of
         the Excise Tax Gross-Up Payment shall be determined, at the expense of
         the Company, by an independent accounting, actuarial or consulting firm
         selected by the Company. Such Excise Tax Gross-Up Payment shall be made
         at such time as the Company shall determine, in its sole discretion,
         but in no event later than the date five (5) business days before the
         due date, without regard to any extension, for filing Bayman's federal
         income tax return for the calendar year for which it is determined that
         excise taxes are payable under Section 4999 of the Code.
         Notwithstanding the foregoing, there shall be no duplication of
         payments by the Company under this Section 11.07 in respect of excise
         taxes under Section 4999 of the Code to the extent the Company is
         making payments in respect of such excise taxes under any other
         arrangement with Bayman. In the event that Bayman is ultimately
         assessed with excise taxes under Section 4999 of the Code which exceed
         the amount of excise taxes used in computing Bayman's payment under
         this Section 11.07, the Company or its successor shall indemnify Bayman
         for such additional excise taxes plus any additional excise taxes,
         income taxes, interest and penalties resulting from the additional
         excise taxes and the indemnity hereunder.

12.      Amendment or Modification; Waiver
         ---------------------------------

                  No provision of this Agreement may be amended or waived unless
         such amendment or waiver is authorized by the Board of Directors of the
         Company or the Compensation Committee thereof and is agreed to in
         writing, signed by Bayman and by an officer of the Company thereunto
         duly authorized by either the Board of Directors or the Compensation
         Committee. Except as otherwise specifically provided in this Agreement,
         no waiver by either party hereto of any breach by the other party
         hereto of any condition or provision of this Agreement to be performed
         by such other party shall be deemed a waiver of a subsequent breach of
         such condition or provision or a waiver of a similar or dissimilar
         provision or condition at the same or at any prior or subsequent time.

13.      Severability
         ------------

                  In the event that any provision or portion of this Agreement
         shall be determined to be invalid or unenforceable for any reason, the
         remaining provisions and portions of this Agreement shall be unaffected
         thereby and shall remain in full force and effect to the fullest extent
         permitted by law.

14.      Successors to the Company
         -------------------------

                  Except as otherwise provided herein, this Agreement shall be
         binding upon and inure to the benefit of the Company and any successor
         of the Company, including,

                                       13
<PAGE>   16

         without limitation, any corporation which acquires directly or
         indirectly all or substantially all of the assets or capital stock of
         the Company whether by merger, consolidation, sale or otherwise (and
         such successor shall thereafter be deemed the Company for the purposes
         of this Agreement), but shall not otherwise be assignable by the
         Company.

15.      Operation of Agreement
         ----------------------

         15.01 EFFECTIVE DATE. This Agreement is effective April 1, 2000, and
         shall supersede any prior employment arrangement or agreement,
         including the 1999 Agreement, which shall be deemed to be terminated
         and null and void.

         15.02 CHANGE IN CONTROL. For the purpose of this Agreement, the term
         "Change in Control" of the Company shall mean a change in control of a
         nature that would be required to be reported in response to Item 6(e)
         of Schedule 14A of Regulation 14A promulgated under the Securities
         Exchange Act of 1934 as in effect on the date of this Agreement;
         provided that, without limitation, such a change in control shall be
         deemed to have occurred if and when (a) any "person" (as such term is
         used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
         1934), excluding The Pioneer Stock Benefit Trust, any employee benefit
         plan of the Company, any trust established under any employee benefit
         plan of the Company, or any trustee of any trust established under any
         employee benefit plan of the Company, is or becomes a beneficial owner,
         directly or indirectly, of securities of the Company representing
         twenty percent (20%) or more of the combined voting power of the
         Company's then outstanding securities, or (b) during any period of
         twelve (12) consecutive months, commencing before or after the date of
         this Agreement, individuals who, at the beginning of such twelve (12)
         month period were directors of the Company for whom Bayman, as a
         shareholder, shall have voted, cease for any reason to constitute at
         least a majority of the Board of Directors of the Company.

         15.03 GOOD REASON. For the purpose of this Agreement, "Good Reason"
         shall mean the occurrence of: (a) any reduction during the period of
         Full Time Employment in Bayman's position, authority or title; (b) any
         material reduction during the period of Full Time Employment in
         Bayman's responsibilities or duties for the Company; (c) any material
         adverse change or reduction in the aggregate perquisites, benefits and
         payments to which Bayman is entitled pursuant to Sections 4.02 and 5.01
         hereof; (d) any change in Bayman's reporting relationship; (e) any
         relocation of Bayman's principal place of work with the Company to a
         location that exceeds by fifty (50) miles the distance from the
         location of his residence at the time of such relocation of Bayman's
         principal place of work with the Company to 6065 Parkland Boulevard,
         Mayfield Heights, Ohio; or (f) the material breach or material default
         by the Company of any of its agreements or obligations under any
         provision of this Agreement, unless such breach or default is
         substantially cured within a reasonable period of time (hereby defined
         as thirty (30) days) after written notice advising the Company of the
         acts or omissions constituting such breach or default is actually
         received by the Company. As used in Section 15.03(c), an "adverse
         change or material reduction" in the aggregate perquisites, benefits
         and payments to which Bayman is entitled pursuant to Sections 4.02 and
         5.01 shall be

                                       14
<PAGE>   17

         deemed to result from any reduction or any series of reductions which,
         in the aggregate, exceeds five percent (5%) of the value of such
         perquisites, benefits and payments determined as of the date of this
         Agreement. If Bayman claims the existence of a Good Reason, he shall
         give written notice to the Company of the event constituting Good
         Reason not later than ninety (90) days following the later to occur of
         the occurrence of the event (e.g., the actual reduction in
         compensation, the scheduled date of relocation or the date of the
         breach) constituting Good Reason or his actual knowledge thereof. If
         the event which Bayman claims to be a Good Reason is not cured within
         thirty (30) days following the date of such notice, Bayman must resign
         within ten (10) days following the thirty (30) day cure period in order
         to invoke his right to resign for Good Reason. If no such timely
         resignation occurs or no such timely written notices are given,
         Bayman's right to resign for Good Reason with respect to such event
         shall be permanently waived.

16.      Enforcement Costs
         -----------------

                  The Company is aware that upon the occurrence of a Change in
         Control the Board of Directors or a shareholder of the Company may then
         cause or attempt to cause the Company to refuse to comply with its
         obligations under this Agreement, or may cause or attempt to cause the
         Company to institute, or may institute, litigation seeking to have this
         Agreement declared unenforceable, or may take, or attempt to take,
         other action to deny Bayman the benefits intended under this Agreement.
         In these circumstances, the purpose of this Agreement could be
         frustrated. It is the intent of the Company that Bayman not be required
         to incur the expenses associated with the enforcement of his rights
         under this Agreement by litigation or other legal action because the
         cost and expense thereof would substantially detract from the benefits
         intended to be extended to Bayman hereunder, nor be bound to negotiate
         any settlement of his rights hereunder under threat of incurring such
         expenses. Accordingly, if following a Change in Control it should
         appear to Bayman that the Company has failed to comply with any of its
         obligations under this Agreement or in the event that the Company or
         any other person takes any action to declare this Agreement void or
         unenforceable, or institutes any litigation or other legal action
         designed to deny, diminish or to recover from, Bayman, the benefits
         intended to be provided to Bayman hereunder, and that Bayman has
         complied with all of his obligations under this Agreement, the Company
         irrevocably authorizes Bayman from time to time to retain counsel of
         his choice at the expense of the Company as provided in this Section
         16, to represent Bayman in connection with the initiation or defense of
         any litigation or other legal action, whether by or against the Company
         or any Director, officer, shareholder or other person affiliated with
         the Company, in any jurisdiction. Notwithstanding any existing or prior
         attorney-client relationship between the Company and such counsel, the
         Company irrevocably consents to Bayman entering into an attorney-client
         relationship with such counsel, and in that connection the Company and
         Bayman agree that a confidential relationship shall exist between
         Bayman and such counsel. The reasonable fees and expenses of counsel
         selected from time to time by Bayman as herein provided shall be paid
         or reimbursed to Bayman by the Company on a regular, periodic basis
         upon presentation by Bayman of a statement or statements prepared by
         such counsel in accordance with its customary practices, up to a
         maximum aggregate amount of $500,000.

                                       15
<PAGE>   18

                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.

ATTEST:                             PIONEER-STANDARD ELECTRONICS, INC.

/s/ Nancy E. Hoyt                   By  /s/ Victor Gelb
-----------------------------         ------------------------------------------
                                      Victor Gelb, Chairman of the Compensation
                                      Committee

ATTEST:

/s/ Nancy E. Hoyt                     /s/ James L. Bayman
----------------------------          ------------------------------------------
                                      James L. Bayman

                                       16

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