Document:

EX-10.J

 

	 	 	 
	ARROW ELECTRONICS, INC.

	 	FORM 10-K – EXHIBIT 10(j)

ARROW ELECTRONICS, INC.

EXECUTIVE DEFERRED COMPENSATION PLAN

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE I PURPOSE
AND DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 
	 

	 	1.1 Purpose
	 	 	1	 
	 

	 	1.2 Definitions
	 	 	1	 
	 
	 	 	 	 	 	 
	ARTICLE II
PARTICIPATION	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE III DEFERRAL
ELECTIONS	 	 	7	 
	 
	 	 	 	 	 	 
	 

	 	3.1 Elections to Defer Compensation
	 	 	7	 
	 

	 	3.2 Time and Form of Election
	 	 	7	 
	 

	 	3.3 Additional Deferral Requirements
	 	 	8	 
	 
	 	 	 	 	 	 
	ARTICLE IV
PARTICIPANT ACCOUNTS	 	 	9	 
	 
	 	 	 	 	 	 
	 

	 	4.1 Deferral Accounts
	 	 	9	 
	 

	 	4.2 Fund Elections
	 	 	10	 
	 

	 	4.3 Adjustment of Fund Subaccounts
	 	 	10	 
	 

	 	4.4 Company Contribution Account
	 	 	11	 
	 

	 	4.5 Adjustment of Company Stock Accounts
	 	 	11	 
	 
	 	 	 	 	 	 
	ARTICLE V
DISTRIBUTIONS	 	 	12	 
	 
	 	 	 	 	 	 
	 

	 	5.1 Retirement or Disability
	 	 	12	 
	 

	 	5.2 Termination Prior to Retirement (or Disability)
	 	 	13	 
	 

	 	5.3 Distribution With Scheduled Withdrawal Date
	 	 	13	 
	 

	 	5.4 Distribution on Death
	 	 	14	 
	 

	 	5.5 Hardship Distribution
	 	 	15	 
	 

	 	5.6 Inability to Locate Participant
	 	 	15	 
	 

	 	5.7 Payment to Incompetent
	 	 	15	 
	 

	 	5.8 Doubt as to Right to Payment
	 	 	16	 
	 

	 	5.9 Termination of Employment
	 	 	16	 
	 
	 	 	 	 	 	 
	ARTICLE VI
ADMINISTRATION	 	 	17	 
	 
	 	 	 	 	 	 
	 

	 	6.1 Committee
	 	 	17	 
	 

	 	6.2 Powers and Duties of the Committee
	 	 	17	 
	 

	 	6.3 Delegation of Authority; Appointment of Agents
	 	 	18	 
	 

	 	6.4 Information
	 	 	18	 
	 

	 	6.5 Compensation, Expenses and Indemnity
	 	 	18	 
	 

	 	6.6 Disputes
	 	 	19	 
	 

	 	6.7 Liability, Limited; Indemnification
	 	 	20	 
	 
	 	 	 	 	 	 
	ARTICLE VII
MISCELLANEOUS	 	 	21	 
	 
	 	 	 	 	 	 
	 

	 	7.1 Unsecured General Creditor
	 	 	21	 
	 

	 	7.2 Restriction Against Assignment
	 	 	21	 

(i)

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 

	 	7.3 Withholding
	 	 	21	 
	 

	 	7.4 Amendment, Modification, Suspension or Termination
	 	 	21	 
	 

	 	7.5 Governing Law
	 	 	22	 
	 

	 	7.6 Data
	 	 	22	 
	 

	 	7.7 Receipt or Release
	 	 	22	 
	 

	 	7.8 Limitation of Rights and Employment Relationship
	 	 	22	 
	 

	 	7.9 Separability
	 	 	23	 
	 

	 	7.10 Headings
	 	 	23	 
	 

	 	7.11 Usage
	 	 	23	 
	 

	 	7.12 Grantor Trust Agreement/Change of Control
	 	 	23	 
	 
	 	 	 	 	 	 
	ARTICLE VIII SPECIAL
PROVISIONS FOR DIRECTORS	 	 	24	 
	 
	 	 	 	 	 	 
	 

	 	8.1 2004 Election
	 	 	24	 
	 

	 	8.2 Evergreen Election
	 	 	24	 
	 

	 	8.3 No Annual Minimum
	 	 	24	 
	 

	 	8.4 Form of Election
	 	 	24	 
	 

	 	8.5 Lump Sum Distribution on Termination of Service
	 	 	24	 
	 

	 	8.6 In-Service Distributions limited to Board-approved Hardship Distributions
	 	 	24	 

(ii)

 

ARROW ELECTRONICS, INC.

EXECUTIVE DEFERRED COMPENSATION PLAN

          ARROW ELECTRONICS, INC., a New York corporation having its principal offices at 50 Marcus
Drive, Melville, New York 11747 (the “Company”), hereby adopts this Executive Deferred Compensation
Plan for the benefit of a select group of management or highly compensated employees as described
herein and its non-employee directors, effective October 1, 2004.

ARTICLE I

PURPOSE AND DEFINITIONS

     1.1 Purpose. The purpose of this Plan is to provide an added incentive to the hiring
and retention of the services of the senior level of management personnel whose responsibilities
contribute most significantly to the success of the Company’s business and operations and a select
group of other highly compensated employees who have been determined to make a similar
contribution, as well as a similar incentive for the Company’s non-employee directors.

     1.2 Definitions. Whenever the following words and phrases are used in this Plan with
the first letter capitalized, they shall have the meanings specified below unless the context
clearly requires otherwise.

          (a) “Account” or “Accounts” shall mean all of such accounts as are specifically authorized for
inclusion in this Plan.

          (b) “Base Salary” shall mean a Participant’s base salary from the Company, excluding
commissions, bonuses or other incentive pay and all other remuneration for services rendered to the
Company, determined before deducting any salary reduction contributions to a plan described in any
of section 125 (relating to “cafeteria plans”), section 132(f)(4) (relating to “qualified
transportation fringe” benefits), or section 401(k) of the Code.

          (c) “Beneficiary” or “Beneficiaries” shall mean the person or persons, including a trustee,
personal representative or other fiduciary, last designated in writing by a Participant in

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accordance with procedures established by the Committee to receive the benefits specified
hereunder in the event of the Participant’s death, subject to the following:

               (i) No beneficiary designation shall become effective until it is filed with the Committee.

               (ii) Any designation shall be revocable at any time through a written instrument filed by the
Participant with the Committee with or without the consent of the previous Beneficiary.

               (iii) No designation of a Beneficiary other than the Participant’s spouse (including any
change or revocation of a prior designation that has the effect of designating a Beneficiary other
than such spouse) shall be valid unless consented to in writing by such spouse. Notwithstanding the
foregoing, the Committee may in its sole discretion waive the requirement of spousal consent if the
Participant is legally separated, if the Committee is satisfied that the spouse cannot be located,
or the Committee has been provided with a court order showing that the Participant was abandoned by
the spouse.

               (iv) If no designation of beneficiary has been made in accordance with the foregoing, or if
there is no surviving designated primary or alternate Beneficiary, then the Participant’s surviving
spouse shall be the Beneficiary. If there is no surviving spouse to receive any benefits payable
in accordance with the preceding sentence, the duly appointed and currently acting personal
representative of the Participant’s estate (which shall include either the Participant’s probate
estate or living trust) shall be the Beneficiary. In any case where there is no such personal
representative of the Participant’s estate duly appointed and acting in that capacity within 90
days after the Participant’s death (or such extended period as the Committee determines is
reasonably necessary to allow such personal representative to be appointed, but not to exceed 180
days after the Participant’s death), then “Beneficiary” shall mean the person or persons who can
verify by affidavit or court order to the satisfaction of the Committee that they are legally
entitled to receive the benefits specified hereunder.

               (v) In the event any amount is payable under the Plan to a minor, payment shall not be made to
the minor, but instead be paid (A) to that person’s living parent(s) to act as custodian, (B) if
that person’s parents are then divorced, and one parent is the sole custodial parent, to such
custodial parent, or (C) if no parent of that person is then living, to a custodian selected by the
Committee to hold the funds for the minor under the Uniform Transfers or Gifts to Minors Act in
effect in the jurisdiction in

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which the minor resides. If no parent is living and the Committee decides not to select
another custodian to hold the funds for the minor, then payment shall be made to the duly appointed
and currently acting guardian of the estate for the minor or, if no guardian of the estate for the
minor is duly appointed and currently acting within 60 days after the date the amount becomes
payable, payment shall be deposited with the court having jurisdiction over the estate of the
minor.

               (vi) If a designated Beneficiary as determined under the forgoing cannot be located within two
years following the date as of the Participant’s death, such Beneficiary shall be treated as having
predeceased the Participant, for purposes of the forgoing.

          (d) “Board of Directors” or “Board” shall mean the Board of Directors of Company, or any duly
authorized committee thereof.

          (e) “Code” shall mean the Internal Revenue Code of 1986, as amended.

          (f) “Committee” shall mean the Committee appointed to administer the Plan in accordance with
Article VI.

          (g) “Company” shall mean Arrow Electronics, Inc., a New York corporation, or any successor
thereof that adopts this Plan.

          (h) “Company Contribution Account” shall mean the bookkeeping account maintained by the
Committee for each Participant that is credited with an amount equal to the Make-up Contribution
Amount, if any, credited to such Participant.

          (i) “Company Stock” shall mean common stock of the Company having a par value of $1.00 per
share, or any other common stock into which it may be reclassified.

          (j) “Company Stock Account” shall mean, as applicable, (i) a Plan Year Account within a
Participant’s Deferral Account established to reflect deferrals of a Performance Share Award, or
(ii) a Plan Year Account established within a Participant’s Company Contribution Account, which in
either case shall be deemed invested in Company Stock.

          (k) “Compensation” for any Plan Year shall mean, as applicable, Base Salary or Director Fees
payable in such Plan Year, Incentive Compensation earned in such Plan Year (whether payable during
such Year or the following Year), and Performance Share Awards in respect of which

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distribution of Company Stock would be made in the Plan Year next following, determined in
each case without regard to any deferral in respect thereof under this Plan.

          (l) “Deferral Account” shall mean the bookkeeping account maintained by the Committee for each
Participant that is credited with (i) amounts equal to the portion of the Participant’s Base
Salary, Incentive Compensation or Director Fees that he or she elects to defer, as adjusted for
earnings and losses from the deemed investment of such amounts pursuant to Article IV, and (ii) the
number of shares of Company Stock represented by any Performance Share Award credited to the
Participant, increased by the number of additional such shares representing deemed reinvestment of
dividends or other increments on shares previously so credited.

          (m) “Director” means a non-employee director of the Company.

          (n) “Director Fees” means all Board and committee meeting fees payable to a Director, and any
annual retainer payable for a Plan Year beginning after the Effective Date, determined in each case
before reduction for amounts deferred under the Plan. Director Fees do not include expense
reimbursements, incentive stock awards or any form of noncash compensation or benefits.

          (o) “Disability” shall mean the Participant’s inability to perform each and every duty of his
or her occupation or position of employment due to illness or injury as determined in the sole and
absolute discretion of the Committee.

          (p) “Distributable Amount” shall mean the balance in the Participant’s Deferral Account and
vested balance in his or her Company Contribution Account (if any).

          (q) “Effective Date” shall be October 1, 2004.

          (r) “Eligible Employee” for any Plan Year shall mean an employee who is a member of a select
group of “management or highly compensated employees” within the meaning of sections 201, 301 and
401 of ERISA that is selected for eligibility by the Committee.

          (s) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

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          (t) “Fund” shall mean an investment fund that the Committee elected to use as a basis for
determining the adjustments to be made to a Participant’s Deferral Account in accordance with
Section 4.2.

          (u) “Fund Subaccount” shall mean a subaccount established pursuant to Section 4.2 to account
for amounts whose Interest Adjustment is determined to particular Fund.

          (v) “Hardship Distribution” shall mean a severe financial hardship to the Participant
resulting from a sudden and unexpected illness or accident of the Participant or of his or her
spouse or dependent (as defined in section 152(a) of the Code), loss of a Participant’s property
due to casualty, or other similar or extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant. The circumstances that would constitute an
unforeseeable emergency will depend upon the facts of each case, but, in any case, a Hardship
Distribution may not be made to the extent that such hardship is or may be relieved (i) through
reimbursement or compensation by insurance or otherwise, (ii) by liquidation of the Participant’s
assets, to the extent the liquidation of assets would not itself cause severe financial hardship,
or (iii) by cessation of deferrals under this Plan.

          (w) “Incentive Compensation” shall mean commissions and bonuses or other incentive
compensation provided for under a commission, bonus or incentive arrangement (other than
arrangements for Performance Share Awards) approved for inclusion in this Plan by the Committee.

          (x) “Interest Adjustment” shall mean, for each Fund in which a Participant’s Account is deemed
invested pursuant to Section 4.2, an amount equal to the net gain or loss on the assets of such
Fund.

          (y) “Make-up Contribution Amount” shall mean such amount, if any, as the Company may credit to
a Participant for a Plan Year to make up for a reduction in contributions that would be made for
the benefit of the Participant under the Arrow Electronics Stock Ownership Plan but for the
Participant’s deferral election under this Plan for such Year, as provided in Section 4.4.

          (z) “Participant” shall mean any Eligible Employee or Director who becomes a Participant in
this Plan in accordance with Article II..

          (aa) “Plan” shall be the Arrow Electronics, Inc. Executive Deferred Compensation Plan
established effective October 1, 2004, as from time to time in effect.

5

 

          (bb) “Performance Share Award” shall mean the number of bookkeeping units expressed in the
form of Company Stock, if any, that the Company awards to an Eligible Employee based on his
performance measured over a period of three or more years, pursuant to an arrangement approved for
inclusion in this Plan by the Committee.

          (cc) “Plan Year” or “Year” shall mean the short plan year October 1, 2004 to December 31, 2004
and thereafter January 1 to December 31.

          (dd) “Plan Year Account” shall mean an Account for a Participant reflecting all deferrals by
the Participant for a particular Plan Year and/or all Make-up Contribution Amounts credited to the
Participant for such Plan Year (if any).

          (ee) “Retirement” shall mean normal or early retirement under the terms of the Arrow
Electronics Stock Ownership Plan (i.e., after reaching age 65, or age 60 with at least 10 years of
service as defined in such Plan) or retirement under the Arrow Electronics, Inc. Supplemental
Executive Retirement Plan.

          (ff) “Scheduled Withdrawal Date” shall mean the distribution date elected by the Participant
for an in-service withdrawal from his Plan Year Accounts for one or more Plan Years in accordance
with Section 5.3(a).

          (gg) “Trust” shall mean any rabbi trust that the Company in its sole discretion may establish
to assist in meeting the Company’s obligations under the Plan.

          (hh) “Trustee” shall mean the trustee of the Trust.

6

 

ARTICLE II

PARTICIPATION

          An Eligible Employee or Director shall become a Participant in the Plan by completing all
forms as required by the Committee (which may, in the discretion of the Committee, include an
application for a variable life insurance policy referenced in Section 4.2(a)).

ARTICLE III

DEFERRAL ELECTIONS

     3.1 Elections to Defer Compensation. An Eligible Employee or Director shall be
entitled to defer Compensation in accordance with and subject to the conditions of this Article
III, by filing with the Committee a deferral election in such form and at such time and in such
manner as the Committee shall prescribe.

     3.2 Time and Form of Election. An election to defer any applicable category of
Compensation for a Plan Year (or portion thereof) may be made as a whole percentage of such
Compensation, as such a percentage up to a specified whole dollar limit, or as a fixed dollar
amount not in excess of the maximum percentage deferral permitted. The time for making any such
election shall be as follows:

          (a) Elections for the Plan Year ending December 31, 2004. An Eligible Employee on the
Effective Date may elect, by election duly filed with (and received by) the Committee on or before
September 24, 2004, to defer a portion of his or her (i) Base Salary for the period October 1, 2004
to December 31, 2004 and (ii) Incentive Compensation earned in such period (such as regularly
monthly commissions or quarterly true-ups in respect thereof earned in such period, whether payable
during such period or in 2005, and bonuses or other commissions based on performance during a
period ending December 31, 2004 which do not become determinable until December 31, 2004 or vested
and payable until 2005).

          (b) Elections for Plan Years 2005 or later. An individual who is an Eligible Employee
or Director as of the first day of any Plan Year beginning after the Effective Date may elect to
defer his or her Base Salary, Incentive Compensation, or Director Fees (as applicable) for such
Plan Year, by election duly filed with the Committee no later than December 1 of the immediately
preceding Plan Year.

          (c) New Mid-Year Eligibles. An individual who first becomes an Eligible Employee or
Director as of a date other than the first day of Plan Year may elect, by election duly filed with
the Committee within the thirty (30) day period commencing on such date, to defer his or her Base
Salary, Incentive Compensation or Director Fees, as the case may be, earned for the portion of such
Plan Year after the date of such election

          (d) Deferral of Performance Shares. An individual who is eligible for a Performance
Share Award may, by election duly filed with the Committee no later than December 1 of the second
Plan Year preceding the Plan Year in which shares of Company Stock would otherwise be delivered in
respect of such Award, elect to defer receipt of such shares.

7

 

     3.3 Additional Deferral Requirements.

          (a) Maximum Deferral. The maximum amount of Compensation which an Eligible Employee or
Director may elect to defer for a Plan Year (or portion thereof following the date of election, in
the case of a mid-year election pursuant to Section 3.2(c)) shall be 80% of his or her Base Salary,
and 100% of his or her Incentive Compensation, Performance Share Awards or Director Fees for such
Plan Year (or portion thereof).

          (b) $5,000 Minimum Deferral. A deferral election with respect to a Plan Year shall be
given effect only if the aggregate resulting deferrals in respect of all Compensation for such Plan
Year is at least $5,000 ($1,250 for the short Plan Year ending December 31, 2004). In the case of a
mid-year election described in Section 3.2(c), such $5,000 minimum shall be prorated based on the
portion of the Year following the date of election. If the Committee determines that such minimum
is not met after taking into the account the amount of Incentive Compensation and Performance Share
Awards (as well as any Base Salary) that the Participant elected to defer for any Plan Year, any
balance credited to the Participant’s Plan Year Account for such Plan Year as of the end of the
month in which such determination is made shall be promptly distributed to the Participant, and the
Company shall have no further obligation to the Participant in respect of such Plan Year.

          (c) Limitation to Satisfy Withholding Requirements. The total amount deferred by a
Participant shall be limited in such manner as the Committee may determine in its discretion to be
necessary or advisable in order to satisfy applicable Social Security tax (including Medicare),
income tax and other legal withholding requirements and to implement reductions in pay or other
deductions elected by the Participant or otherwise required under any employee benefit plan of the
Company.

          (d) Continued Eligible Employee Status Required for Contingent Compensation. A
deferral election by an Eligible Employee with respect to Incentive Compensation or a Performance
Share Award shall not be given effect unless the individual remains an Eligible Employee at the
date that payment of the Incentive Compensation (or distribution of Common Stock in respect of the
Performance Share Award) would be otherwise be made.

8

 

ARTICLE IV

PARTICIPANT ACCOUNTS

     4.1 Deferral Accounts.

          (a) Establishment of Plan Year Accounts. The Committee shall establish and maintain a
Deferral Account for each Participant under the Plan, which shall be subdivided into a separate
Plan Year Account for each Plan Year with respect to which the Participant elected to defer
Compensation hereunder.

               (i) Subdivision into Fund Subaccounts. Each Plan Year Account shall be further
divided into separate subaccounts (“Fund Subaccounts”), each of which corresponds to a Fund elected
by the Participant pursuant to Section 4.2(b), and in the case of Participant who defers a
Performance Share Award, a Company Stock Account.

               (ii) Subaccounts for Different Deferral Categories. The Committee may in its
discretion authorize Participants to make different elections for the portion of a Plan Year
Account derived from each category of Compensation deferred for the Plan Year involved, either with
respect to the Fund used to determine the Investment Adjustment for such portion of the Plan Year
Account, or the distribution option applicable to such portion under Article V, or both, as the
Committee may determine in its discretion. The Committee shall establish and maintain such
subaccounts within each Plan Year Account and each Fund Subaccount thereunder as may be necessary
or desirable to give effect to such different elections.

          (b) Deferrals Credited to Fund Subaccounts. No later than the fifth business day
after amounts are withheld and deferred from a Participant’s Compensation for a Plan Year, the
Committee shall credit each Fund Subaccount within the Participant’s Plan Year Account for that
Year with an amount equal to the Compensation (or portion thereof in whole percentages) so withheld
and deferred (other than Performance Share Awards ) that the Participant has elected to be deemed
invested in the Fund associated with such Subaccount.

          (c) Company Stock Accounts. A Company Stock Account shall be established within a
Participant’s Deferral Account for each Plan Year (if any) in which the Participant defers a
Performance Share Award. Such Company Stock Account shall be credited with the number of shares of
Company

9

 

Stock to which such deferral election applies no later than the close of the month in which
shares of Company Stock would have been delivered to the Participant but for such deferral.

          (d) Deferral Account Fully Vested. A Participant shall be 100% vested in his or her
Deferral Account at all times.

     4.2 Fund Elections.

          (a) Committee Selection of Available Funds. The Committee shall select from time to
time, in its sole and absolute discretion, commercially available investment funds, which may
either be free-standing or components of variable life insurance policies, to serve as Funds in
which a Participant may deem his or her Deferral Account invested pursuant to Section 4.2(b) and
(c) below. The investment return (positive or negative) calculated by the Committee and its
recordkeeper for each such investment fund shall be used to determine the Interest Adjustment to be
credited or charged (as the case may be) to the portion of the Participant’s Account deemed
invested in the corresponding Fund

          (b) Designation of Fund for Deemed Investment of Current Deferrals. Each Participant
shall designate, in accordance with procedures prescribed by the Committee, the Fund (or Funds,
which shall be designated in whole percentage increments) in which his or her deferrals for each
Plan Year will be deemed to be invested for purposes of determining the Interest Adjustment to be
credited or charged with respect thereto

          (c) Designation of Fund for Deemed Investment of Plan Year Account Balances. In
accordance with procedures prescribed by the Committee, a Participant may change each of the Fund
allocations monthly while employed or after Retirement or Disability. Separate changes may be made
for the Participant’s Plan Year Account for each Plan Year. Changes made by the 25th of
the month will be effective the first business day of the following month

          (d) Default Rule. If no valid designation of a Fund is in effect for a Participant’s
Account or any portion thereof, the money market type of investment fund shall be deemed elected
with respect thereto.

     4.3 Adjustment of Fund Subaccounts. Each business day, each Fund Subaccount within a
Participant’s Deferral Account (i) shall be credited or charged (the case may be) with (i) an
amount determined by multiplying the balance credited to such Subaccount as of the prior day, plus
deferrals

10

 

credited that day to such Subaccount, by the Interest Adjustment for the Fund to which such
Subaccount relates, (ii) shall be credited with any transfer to such Fund Subaccount from another
such Subaccount, and charged with any transfer from such Fund Subaccount to another such
Subaccount, and (iii) shall be charged with the amount of any payments therefrom under the Plan.

     4.4 Company Contribution Account.

          (a) ESOP-based Make-up Contribution. If and to the extent that a Participant’s
deferral election hereunder for a Plan Year reduces the amount of the Participant’s “Compensation”
as defined in the Arrow Electronics Stock Ownership Plan (ESOP) for such Plan Year, the Participant
shall be credited with a Make-up Contribution Amount for such Plan Year equal to the number of
additional shares of Company Stock that would have been credited to the Participant’s account under
the ESOP for such Year if his or her Compensation had not been so reduced.

          (b) Credit to Plan Year Account. The Committee shall establish and maintain a Company
Contribution Account for each Participant who is credited with a Make-up Contribution Amount under
Section 4.4(a). Such Account shall constitute a Company Stock Account and be subdivided into a
separate Plan Year Account for each Plan Year with respect to which the Participant is credited
with a Make-up Contribution Amount.

          (c) Vesting. A Participant’s Company Contribution Account shall vest (or be
forfeited, and where applicable reinstated upon reemployment) under the same terms that would apply
had such amounts been part of the Participant’s account under the ESOP.

     4.5 Adjustment of Company Stock Accounts. Each Company Stock Account established
under Section 4.1(c) or 4.4(b) shall thereafter be credited with the number of shares of additional
Company Stock that the Committee determines would be purchasable with the amount of any dividends
or other distributions concurrently be made in respect of Company Stock, be appropriately adjusted
for any other transaction affecting Company Stock in such manner as the Committee shall determine,
and shall be charged with the number of shares included in any distribution under the Plan in
respect of such Account.

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ARTICLE V

DISTRIBUTIONS

     5.1 Retirement or Disability.

          (a) Immediate Lump Sum Payment. Upon a Participant’s Retirement or Disability, his or
her Distributable Amount as of the last day of the month in which such event occurs shall be paid
to the Participant in a single lump sum as soon as practicable, except as otherwise provided in
Section 5.1(b), (c) and /or (d) below.

          (b) Scheduled Withdrawals in Process. A Plan Year Account that has become payable in
installments prior to the date of such Retirement or Disability pursuant to an election under
Section 5.3 shall continue to be so paid.

          (c) Installment Option for Amounts Over $50,000. In the event that a
Participant’s Distributable Amount determined under Section 5.1(a), exclusive of amounts that have
beome payable in installments as described in Section 5.1(b), shall exceed fifty thousand ($50,000)
dollars, payment of such Distributable Amount may be made in substantially equal annual
installments (each reflecting adjustments under Sections 4.3 and 4.5 since the preceding payment)
commencing as soon as practicable following the end of the month of his or her Retirement or
Disability, and payable as of March 1 of each subsequent calendar year (based on the balance of the
Participant’s Accounts on the last day of the preceding February), over such number of years not to
exceed as twenty (20) as the Participant shall have previously elected. Such an election may be
made at the time of the Participant’s initial deferral election under this Plan, or at any later
date more than twelve months prior to the date that payment would otherwise be made in a lump sum,
but such a later election shall be given effect only if applies to all Plan Accounts (other than
those that previously became payable in installments described in Section 5.1(b)) and does not
result in any acceleration of payments.

          (d) Deferred Payment Option for Amounts Exceeding $50,000. Payment of the
Distributable Amount of a Participant upon Retirement or Disability (or the commencement of
installment payments in the case of a Distributable Amount exceeding $50,000) may be deferred at
the election of the Participant to such date, not later than the first day of the month following
his seventieth (70th ) birthday, as the Participant may elect. Such an election may made (i) at the
time of the

12

 

Participant’s initial deferral election under the Plan or (ii) at any later date more than
twelve months prior to the date that payment would otherwise be made or begin, but an election at
such a later date shall be given effect only if applies to all Plan Accounts, other than those that
previously became payable in installments described Section 5.1(b), and postpones rather than
accelerates the payment (or payment commencement) date.

          (e) Extension of Elected Payout Period. A Participant may modify the form of benefit
that he or she has previously elected to substitute an installment form of payment for a lump sum,
or to extend the period over which installments may be paid, provided such modification occurs at
least one (1) year before the date of the Participant’s Retirement or Disability. In no event shall
an installment form previously elected be converted into a lump sum payment, or shall a subsequent
election shorten the installment payout period.

     5.2 Termination Prior to Retirement (or Disability). In the event that a
Participant’s employment with the Company terminates other than by reason of Retirement or
Disability, his entire Distributable Amount as of the last day of the month in which such event
occurs, including any amounts credited to Plan Year Accounts previously payable in installments,
shall be paid to the Participant in a lump sum distribution as soon as practicable after such date.

     5.3 Distribution With Scheduled Withdrawal Date.

          (a) Election of In-Service Withdrawal Date. A Participant may elect a Scheduled
Withdrawal Date with respect to any one or more of his or her Plan Year Accounts, within both his
Deferral Account and Company Contribution Account, for a Plan Year (the “Deferral Year”) at the
time of his or her initial deferral election with respect to such Deferral Year. A Scheduled
Withdrawal Date shall be any March 1 of any Plan Year beginning at least two years from the last
day of such Deferral Year. A Participant may extend the Scheduled Withdrawal Date for any such
Deferral Year, provided that the election of such extension is filed with the Committee at least
one year before the previous Scheduled Withdrawal Date and is for a period of not less than five
years from such previous Scheduled Withdrawal Date. No more than one such extension shall be
permitted for any Deferral Year.

          (b) Termination of Employment Before Completion of In-Service Distributions. In the
event that a Participant terminates employment with Company for any reason or dies before
distribution in respect of his or her Plan Year Accounts having such a Scheduled Withdrawal Date is
made or

13

 

completed, the balance of the Participant’s Distributable Amount associated with such
Scheduled Withdrawal Date as of the last day of the month in which such event occurs, shall be paid
in a lump sum on or as soon as practicable after the first day of the month following such
termination or death, unless (i) such termination of employment is on account of Retirement or
Disability and (ii) payment of installments has previously commenced with respect to such Scheduled
Withdrawal Date, in which event such installment payments shall continue as provided in Section
5.1(b).

          (c) Payment at Scheduled Withdrawal Date. If a Participant reaches a Scheduled
Withdrawal Date while in the employ of the Company, his or her Distributable Amount for all Plan
Year Accounts having such Scheduled Withdrawal Date shall be paid in a single lump sum, based on
the balance of such Amount as of the last day of the February immediately preceding such Scheduled
Withdrawal Date, unless such Distributable Amount exceeds $25,000 and the Participant’s election of
such Scheduled Withdrawal Date directed that the Distributable Amount be paid in substantially
equal annual installments (each reflecting adjustments under Sections 4.3 and 4.5 since the
preceding payment) over a period of two to five years as specified in such election.

          (d) Application to Company Contribution Accounts. A Scheduled Withdrawal Date elected
by a Participant for a Deferral Year shall, except as otherwise determined by the Committee in its
discretion, apply to all of his or her Plan Year Accounts for such Year, including Plan Year
Accounts within his or her Company Contribution Account; provided that any portion of such Plan
Year Accounts that is not vested at such Scheduled Withdrawal Date shall be payable in a lump sum
as of the March 1 immediately following the date of vesting, or as of the first of the month
following the Participant’s termination of employment if earlier (or, if applicable as part of the
Distributable Amount payable in installments upon Retirement or Disability pursuant to Section
5.1(c)).

     5.4 Distribution on Death. If a Participant dies while employed by the Company, or
after his Retirement or other termination of employment but prior to the completion of all payments
in respect of his or her Accounts under the Plan, the total undistributed balance of such Accounts
shall be paid to his or her Beneficiary in a lump sum. Payment by the Company pursuant to any
unrevoked and valid Beneficiary designation under Section 1.2(c), or to the person or persons
entitled thereto under Section 1.2(c) in the absence of such a designation, shall terminate any and
all liability of the Company with respect thereto.

14

 

     5.5 Hardship Distribution. A Participant shall be permitted to elect a Hardship
Distribution from his or her vested Accounts, subject to the following restrictions:

          (a) The election to take a Hardship Distribution shall be made by filing a form provided by
and filed with Committee prior to the end of any calendar month.

          (b) The Committee shall have made a determination that the requested distribution constitutes
a Hardship Distribution as defined in Section 1.2(v).

          (c) The amount determined by the Committee as a Hardship Distribution shall be paid in a
single cash lump sum as soon as practicable after the end of the calendar month in which the
Hardship Distribution election is made and approved by the Committee.

          (d) If a Participant receives a Hardship Distribution, the Participant will be ineligible to
participate in the Plan for the balance of the Plan Year and the following Plan Year.

     5.6 Inability to Locate Participant. In the event that the Committee is unable to
locate a Participant within two years following the date as of which payment in respect of the
Participant’s Accounts is to be made hereunder, the amount the allocated to the Participant’s
Accounts hereunder shall be forfeited. If, after such forfeiture, the Participant or Beneficiary
later claims such benefit, such benefit shall be reinstated without interest or earnings.

     5.7 Payment to Incompetent. If any Participant or Beneficiary entitled to benefits
under the Plan shall be legally incompetent, or in the sole judgment of the Committee is considered
by reason of physical or mental condition to be unable to give a valid receipt therefor, such
benefits may be paid in one or more of the following ways, as the Committee in its sole discretion
s hall determine:

          (a) To the legal representatives of the Participant or Beneficiary;

          (b) Directly to such Participant or Beneficiary;

          (c) To the spouse or guardian of such Participant or Beneficiary or such other person found by
the Committee, in its sole judgment, to have assumed the care of such Participant or Beneficiary.

If a Beneficiary is a minor, payment of such benefits shall be made as described in Section
1(c)(v).

15

 

          Payment to any person in accordance with these provisions will, to the extent of the payment,
discharge the Company, and none of the foregoing or the Committee will be required to see to the
proper application of any such payment. Without in any manner limiting these provisions, in the
event that any amount is payable hereunder to any incompetent Participant or Beneficiary described
above, the Committee may in its discretion utilize the procedures described in Section 5.8.

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

     5.9 Termination of Employment. A Participant shall not be treated as terminating
employment with the Company for purposes of this Plan by reason of a transfer to employment with a
subsidiary of the Company until such time as he or she is employed neither by the Company nor any
such subsidiary.

16

 

ARTICLE VI

ADMINISTRATION

     6.1 Committee. The Compensation Committee of the Board of Directors (“Compensation
Committee”) shall appoint a Management Pension Investment and Oversight Committee (the
“Committee”), which shall consist of not less than three persons to serve at the pleasure of the
Compensation Committee. Any vacancy on the Committee, arising for any reason whatsoever, shall be
filled by the Compensation Committee. The Committee shall hold meetings upon such notice, at such
place or places, at such time or times and in such manner (including meetings in which members may
participate through teleconferencing or similar means) as it may from time to time determine. A
majority of the members of the Committee at the time in office shall constitute a quorum for the
transaction of business, and action by a majority of those present at any meeting at which a quorum
is present shall constitute action by the Committee. The Committee may also act without a meeting
by instrument in writing signed by a majority of the members of the Committee, or by one or more
members to whom the Committee has previously delegated the authority to take such action. No
member of the Committee shall be entitled to act on or decide any matter relating specifically to
such member.

     6.2 Powers and Duties of the Committee. The Committee shall enforce the Plan in
accordance with its terms, shall be charged with the general administration of the Plan, and shall
have all powers and discretion necessary to accomplish its purposes, including, but not by way of
limitation, the following:

               (i) to select the Funds in accordance with Section 4.2(a) hereof;

               (ii) to construe and interpret the terms and provisions of this Plan;

               (iii) to determine any question arising in the administration, interpretation and application
of the Plan, including without limitation questions of fact and of construction;

               (iv) to make and publish such rules for the regulation of the Plan and procedures for the
administration of the Plan (including the making of elections thereunder) as are not inconsistent
with the terms hereof;

               (v) to compute and certify to the amount and kind of benefits payable to Participants and
their Beneficiaries;

17

 

               (vi) to maintain all records that may be necessary for the administration of the Plan;

               (vii) to correct defects, rectify errors, supply omissions, clarify ambiguities, and reconcile
inconsistencies to the extent it deems necessary or desirable to effectuate the Plan;

               (viii) to take all actions necessary for the administration of the Plan, including determining
whether to hold or discontinue any Policies held by the Company or any Trust; and

               (ix) to make a determination as to the rights of any person to a benefit and to afford any
person dissatisfied with such determination the right to an appeal.

          The determinations of the Committee shall be conclusive and binding on all persons to the
maximum extent permitted by law.

     6.3 Delegation of Authority; Appointment of Agents. The Committee may (i) allocate
any of its responsibilities, powers and discretion under the Plan to one or more members of the
Committee, and (ii) appoint a Plan administrator or any other agent, and delegate to them such
powers and duties in connection with the administration of the Plan as the Committee may from time
to time prescribe. The actions taken by any member or members of the Committee or any other such
persons in the exercise of responsibilities, powers and discretion delegated hereunder shall have
the same valid and binding effect under the Plan as action by the full Committee.

     6.4 Information. To enable the Committee to perform its functions, the Company shall
supply full and timely information to the Committee on all matters necessary for administration of
the Plan.

     6.5 Compensation, Expenses and Indemnity.

          (a) The members of the Committee shall serve without compensation for their services
hereunder.

          (b) The Committee is authorized at the expense of the Company to employ such legal counsel as
it may deem advisable to assist in the performance of its duties hereunder. Expenses and fees in
connection with the administration of the Plan shall be paid by the Company.

18

 

          (c) To the extent permitted by applicable state law, the Company shall indemnify and hold
harmless the Committee and each member thereof, the Board of Directors and any delegate of the
Committee who is an employee of the Company against any and all expenses, liabilities and claims,
including legal fees to defend against such liabilities and claims arising out of their discharge
in good faith of responsibilities under or incident to the Plan, other than expenses and
liabilities arising out of willful misconduct. This indemnity shall not preclude such further
indemnities as may be available under insurance purchased by the Company or provided by the Company
under any bylaw, agreement or otherwise, as such indemnities are permitted under state law.

     6.6 Disputes.

          (a) Claim. A person who believes that he or she is being denied a benefit to which he
or she is entitled under this Plan (hereinafter referred to as “Claimant”) must file a written
request for such benefit with the Company, setting forth his or her claim. The request must be
addressed to the President of the Company at its then principal place of business.

          (b) Claim Decision. Upon receipt of a claim, the Company shall advise the Claimant
that a reply will be forthcoming within ninety (90) days and shall, in fact, deliver such reply
within such period. The Company may, however, upon notice to the Claimant within such period,
extend the reply period for an additional ninety (90) days for special circumstances.

          If the claim is denied in whole or in part, the Company shall inform the Claimant in writing,
using language calculated to be understood by the Claimant, setting forth: (A) the specified reason
or reasons for such denial; (B) the specific reference to pertinent provisions of this Plan on
which such denial is based; (C) a description of any additional material or information necessary
for the Claimant to perfect his or her claim and an explanation of why such material or such
information is necessary; (D) appropriate information as to the steps to be taken if the Claimant
wishes to submit the claim for review; and (E) the time limits for requesting a review under
subsection (c).

          (c) Request For Review. Within sixty (60) days after the receipt by the Claimant of
the written opinion described above, the Claimant may request in writing that the Committee review
the determination of the Company. Such request must be addressed to the Secretary of the Company,
at its then principal place of business. The Claimant or his or her duly authorized representative
may, but need not, review the pertinent documents and submit issues and comments in writing for
consideration by the

19

 

Committee. If the Claimant does not request a review within such sixty (60) day period, he or
she shall be barred and estopped from challenging the Company’s determination.

          
     (d) Review of Decision. Within sixty (60) days after the Committee’s receipt of a
request for review, after considering all materials presented by the Claimant, the Committee will
inform the Participant in writing, in a manner calculated to be understood by the Claimant, the
decision setting forth the specific reasons for the decision containing specific references to the
pertinent provisions of this Plan on which the decision is based. If special circumstances require
that the sixty (60) day time period be extended, the Committee will so notify the Claimant before
the expiration of such period and will render the decision as soon as possible, but no later than
one hundred twenty (120) days after receipt of the request for review.

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

20

 

ARTICLE VII

MISCELLANEOUS

     7.1 Unsecured General Creditor. Participants and their Beneficiaries, heirs,
successors, and assigns shall have no legal or equitable rights, claims, or interest in any
specific property or assets of the Company or the Trust (if any). No assets of the Company or the
Trust shall be held in any way as collateral security for the fulfilling of the obligations of the
Company under this Plan. The Company’s obligation under the Plan shall be merely that of an
unfunded and unsecured promise of the Company to pay money in the future, and the rights of the
Participants and Beneficiaries shall be no greater than those of unsecured general creditors. It
is the intention of the Company that this Plan be unfunded for purposes of the Code and for
purposes of Title I of ERISA.

     7.2 Restriction Against Assignment. The Company shall pay all amounts payable
hereunder only to the person or persons designated by the Plan and not to any other person or
corporation. No part of a Participant’s Accounts shall be liable for the debts, contracts, or
engagements of any Participant, his or her Beneficiary, or successors in interest, nor shall a
Participant’s Accounts be subject to execution by levy, attachment, or garnishment or by any other
legal or equitable proceeding, nor shall any such person have any right to alienate, anticipate,
sell, transfer, commute, pledge, encumber, or assign any benefits or payments hereunder in any
manner whatsoever. If any Participant, Beneficiary or successor in interest is adjudicated
bankrupt or purports to anticipate, alienate, sell, transfer, commute, assign, pledge, encumber or
charge any distribution or payment from the Plan, voluntarily or involuntarily, the Committee, in
its discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit
of such Participant, Beneficiary or successor in interest in such manner as the Committee shall
direct.

     7.3 Withholding. There shall be deducted from each payment made under the Plan or any
other compensation payable by the Company to the Participant (or Beneficiary) all taxes which are
required to be withheld by the Company in respect to such payment or any other payment under this
Plan. The Company shall have the right to reduce any payment (or compensation) by the amount of
cash sufficient to provide the amount of said taxes.

     7.4 Amendment, Modification, Suspension or Termination. The Committee may amend,
modify, suspend or terminate the Plan in whole or in part, except that no amendment, modification,
suspension or termination shall have any retroactive effect to reduce any amounts allocated to a
Participant’s Accounts, or adversely affect his right to vest thereunder in accordance with the
Plan

21

 

provisions previously in effect. In the event that this Plan is terminated, the amounts
allocated to a Participant’s Accounts shall be distributed to the Participant or, in the event of
his or her death, his or her Beneficiary in a lump sum within thirty (30) days following the date
of Plan termination. 

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

     7.6 Data. Any Participant or Beneficiary entitled to benefits under the Plan must
furnish to the Committee such documents, evidence, or information as the Committee considers
necessary or desirable for the purpose of administering the Plan, or to protect the Committee; and
it is a condition of the Plan that each such Participant or Beneficiary must furnish promptly true
and complete data, evidence, or information and sign such documents as the Committee may require
before any benefits become payable under the Plan.

     7.7 Receipt or Release. Any payment to a Participant or the Participant’s Beneficiary
in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction
of all claims against the Committee and the Company. The Committee may require such Participant or
Beneficiary, as a condition of precedent to such payment, to execute a receipt and release to such
effect.

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

22

 

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

     7.10 Headings. Headings and subheadings in this Plan are inserted for convenience of
reference only and are not to be considered in the construction of the provisions hereof.

     7.11 Usage. Whenever applicable, the singular, when used in the Plan, will include
the plural.

     7.12 Grantor Trust Agreement/Change of Control. The powers, rights and duties of the
Trustee under any rabbi trust created for the purpose of assisting the Company in meeting its
obligations under the Plan shall, following a “Change of Control” as defined in the trust agreement
for such Trust, govern and prevail to the extent inconsistent with any of the provisions of the
Plan, including without limitation Plan provisions making the Committee’s determinations final and
binding. The Company shall make such contributions to such Trust as shall be required under the
terms of such trust agreement. Although the principal of the Trust and any earnings thereon shall
be held separate and apart from other funds of Company and shall be used exclusively for the uses
and purposes of Participants and Beneficiaries as set forth therein, neither the Participants nor
their Beneficiaries shall have any preferred claim on, or any beneficial ownership in, any assets
of the Trust prior to the time such assets are paid to the Participants or Beneficiaries as
benefits, and all rights created under this Plan shall be unsecured contractual rights of Plan
Participants and Beneficiaries against the Company. Any assets held in the Trust will be subject
to the claims of Company’s general creditors under federal and state law in the event of insolvency
as more fully provided in the trust agreement for the Trust.

23

 

ARTICLE VIII

SPECIAL PROVISIONS FOR DIRECTORS

               The following provisions of this Article VIII shall apply to the portion of this Plan
providing benefits for Directors:

     8.1 2004 Election. An individual who is a Director on the Effective Date may elect by
election duly filed with (and received by) the Committee on or before November 12, 2004, to defer
all or a portion of his or her Director Fees for meetings between such date and December 31, 2004.

     8.2 Evergreen Election. A Director’s deferral election for a Plan Year beginning on
or after January 1, 2005 shall apply to all subsequent Plan Years during which the Director is
eligible to participate in the Plan unless and to the extent such election is revoked and /or a new
and different is election is made by the Director no later than the December 1 prior to such
subsequent Plan Year.

     8.3 No Annual Minimum. Director deferral elections shall not be subject to any annual
minimum

     8.4 Form of Election. The Committee may in its discretion restrict the form of
deferral election for Directors to forms based on whole percentages only.

     8.5 Lump Sum Distribution on Termination of Service. References in the Plan to
“employment” and the like shall mean service as a Director. Payment of Plan benefits under the Plan
to a Director upon termination of such service shall be made only in the form of a lump sum
payment.

     8.6 In-Service Distributions limited to Board-approved Hardship Distributions.
Directors shall not be eligible to elect a Scheduled Withdrawal Date, and shall be eligible for
Hardship Distributions only upon approval of the Board of Directors.

          To evidence the adoption of this Arrow Electronics, Inc. Executive Deferred Compensation Plan,
the undersigned has, pursuant to direction of the Management Pension and Oversight Committee (under
authority given by the Compensation Committee the Board of Directors on July 27, 2004 to establish
the terms of the Plan offered to selected employees on September 2, 2004) and pursuant to direction
of such Compensation Committee at a meeting on September 21, 2004 (at which the special

terms applicable to non-employee directors were finally established) has executed this Plan
document effective as of October 1, 2004.

	 	 	 	 	 
	 

	 	/s/ Paul J Reilly
	 	 
	 

	 	 	 	 
	 

	 	Vice President and 

Chief Financial Officer	 	 

24EX-10.K.XI

 

	 	 	 	 	 
	ARROW ELECTRONICS, INC.

	 	 
	 	FORM 10-K – EXHIBIT 10(k)(xi)

     EMPLOYMENT AGREEMENT made as of the 1st day of March, 2004 by and between ARROW
ELECTRONICS, INC., a New York corporation with its principal office at 50 Marcus Drive, Melville,
New York 11747 (the “Company”), and BRIAN P. McNALLY, residing at 37 Birmingham Drive, Northport,
New York 11768_ (the “Executive”).

     WHEREAS, the Executive is now and has been employed by the Company as Vice President, with the
responsibilities and duties of an executive officer of the Company; and

     WHEREAS, the Company and the Executive wish to provide for the continued employment of the
Executive as an employee of the Company and for him to continue to render services to the Company
on the terms set forth in, and in accordance with the provisions of, this Employment Agreement (the
“Agreement”) which Employment Agreement shall supersede and replace any employment agreement
entered into prior to the date hereof;

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

     1. Employment and Duties.

          a) Employment. The Company hereby employs the Executive for the Employment Period
defined in Paragraph 3, to perform such duties for the Company, its subsidiaries and affiliates and
to hold such offices as may be specified from time to time by the Company’s Board of Directors,
subject to the following provisions of this Agreement. The Executive hereby accepts such
employment.

          b) Duties and Responsibilities. It is contemplated that the Executive will be a Vice
President of the Company, but the Board of Directors shall have the right to adjust the duties,
responsibilities, and title of the Executive as the Board of Directors may from time to time deem
to be in the interests of the Company (provided, however, that during the Employment Period,
without the consent of the Executive, he shall not be assigned any titles, duties or
responsibilities which, in the aggregate, represent a material diminution in, or are materially
inconsistent with, his prior title, duties, and responsibilities as a Vice President).

          If the Board of Directors does not either continue the Executive in the office of Vice
President or elect him to some other executive office satisfactory to the Executive, the Executive
shall have the right to decline to give further service to the Company and shall have the rights

- 1 -

 

and obligations which would accrue to him under Paragraph 6 if he were discharged without cause.
If the Executive decides to exercise such right to decline to give further service, he shall within
forty-five days after such action or omission by the Board of Directors give written notice to the
Company stating his objection and the action he thinks necessary to correct it, and he shall permit
the Company to have a forty-five day period in which to correct its action or omission. If the
Company makes a correction satisfactory to the Executive, the Executive shall be obligated to
continue to serve the Company. If the Company does not make such a correction, the Executive’s
rights and obligations under Paragraph 6 shall accrue at the expiration of such forty-five day
period.

          c) Time Devoted to Duties. The Executive shall devote all of his normal business time
and efforts to the business of the Company, its subsidiaries and its affiliates, the amount of such
time to be sufficient, in the reasonable judgment of the Board of Directors, to permit him
diligently
and faithfully to serve and endeavor to further their interests to the best of his ability.

     2. Compensation.

          a) Monetary Remuneration and Benefits. During the Employment Period, the Company
shall pay to the Executive for all services rendered by him in any capacity:

     i. a minimum base salary of $335,000 per year (payable in accordance with the Company’s
then prevailing practices, but in no event less frequently than in equal monthly installments),
subject to increase if the Board of Directors of the Company in its sole discretion so determines;
provided that, should the company institute a company-wide pay cut/furlough program, such salary
may be decreased by up to 15%, but only for as long as said company-wide program is in effect;

     ii. such additional compensation by way of salary or bonus or fringe benefits as the Board of
Directors of the Company in its sole discretion shall authorize or agree to pay, payable on such
terms and conditions as it shall determine; and

     iii. such employee benefits that are made available by the Company to its other executives
generally.

- 2 -

 

          b) Annual Incentive Payment. The Executive shall participate in the Company’s
Management Incentive Plan (or such alternative, successor, or replacement plan or program in which
the Company’s principal operating executives, other than the Chief Executive Officer, generally
participate) and shall have a targeted incentive thereunder of not less than $240,000 per annum;
provided, however, that the Executive’s actual incentive payment in any year shall be measured by
the Company’s performance against goals established for that year and that such performance may
produce an incentive payment ranging from none to twice the targeted amount. The Executive’s
incentive payment for any year will be appropriately pro-rated to reflect a partial year of
employment.

          c) Supplemental Executive Retirement Plan. The Executive shall continue to
participate in the Company’s Unfunded Pension Plan for Selected Executives (the “SERP”).

          d) Automobile. During the Employment Period, the Company will pay the Executive a
monthly automobile allowance of $850.

          e) Expenses. During the Employment Period, the Company agrees to reimburse the
Executive, upon the submission of appropriate vouchers, for out-of-pocket expenses (including,
without limitation, expenses for travel, lodging and entertainment) incurred by the Executive in
the course of his duties hereunder.

          f) Office and Staff. The Company will provide the Executive with an office, secretary
and such other facilities as may be reasonably required for the proper discharge of his duties
hereunder.

          g) Indemnification. The Company agrees to indemnify the Executive for any and all
liabilities to which he may be subject as a result of his employment hereunder (and as a result of
his service as an officer or director of the Company, or as an officer or director of any of its
subsidiaries or affiliates), as well as the costs of any legal action brought or threatened against
him as a result of such employment, to the fullest extent permitted by law.

          h) Participation in Plans. Notwithstanding any other provision of this Agreement, the
Executive shall have the right to participate in any and all of the plans or programs made
available by the Company (or it subsidiaries, divisions or affiliates) to, or for the benefit of,
executives (including the annual stock option and restricted stock grant programs) or employees in
general, on a basis consistent with other senior executives.

- 3 -

 

     3. The Employment Period.

          The “Employment Period,” as used in the Agreement, shall mean the period beginning as of the
date hereof and terminating on the last day of the calendar month in which the first of the
following occurs:

          a) the death of the Executive;

          b) the disability of the Executive as determined in accordance with Paragraph 4 hereof and
subject to the provisions thereof;

          c) the termination of the Executive’s employment by the Company for cause in accordance with
Paragraph 5 hereof; or

          d) February 28, 2006; provided, however, that, unless sooner terminated as otherwise provided
herein, the Employment Period shall automatically be extended for one or more twelve (12) month
periods beyond the then scheduled expiration date thereof unless between the 18th and 12th month
preceding such scheduled expiration date either the Company or the Executive gives the other
written notice of its or his election not to have the Employment Period so extended.

     4. Disability.

          For purposes of this Agreement, the Executive will be deemed “disabled” upon the earlier to
occur of (i) his becoming disabled as defined under the terms of the disability benefit program
applicable to the Executive, if any, and (ii) his absence from his duties hereunder on a full-time
basis for one hundred eighty (180) consecutive days as a result of his incapacity due to accident
or physical or mental illness. If the Executive becomes disabled (as defined in the preceding
sentence), the Employment Period shall terminate on the last day of the month in which such
disability is determined. Until such termination of the Employment Period, the Company shall
continue to pay to the Executive his base salary, any additional compensation authorized by the
Company’s Board of Directors, and other remuneration and benefits provided in accordance with
Paragraph 2 hereof, all without delay, diminution or proration of any kind whatsoever (except that
his remuneration hereunder shall be reduced by the amount of any payments he may otherwise receive
as a result of his disability pursuant to a disability program provided by or through the Company),
and his medical benefits and life insurance shall remain in full force. After termination of the
Employment Period as a result of the disability of the Executive, the medical benefits covering the
Executive and his family shall remain in place (subject to the eligibility requirements and other
conditions continued in the underlying plan, as described in the Company’s employee benefits

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manual, and subject to the requirement that the Executive
continue to pay the “employee portion” of the cost thereof), and the Executive’s life insurance
policy under the Management Insurance Program shall be transferred to him, as provided in the
related agreement, subject to the obligation of the Executive to pay the premiums therefor.

          In the event that, notwithstanding such a determination of disability, the Executive is
determined not to be totally and permanently disabled prior to the then scheduled expiration of the
Employment Period, the Executive shall be entitled to resume employment with the Company under the
terms of this Agreement for the then remaining balance of the Employment Period.

     5. Termination for Cause.

          In the event of any malfeasance, willful misconduct, active fraud or gross negligence by the
Executive in connection with his employment hereunder, the Company shall have the right to
terminate the Employment Period by giving the Executive notice in writing of the reason for such
proposed termination. If the Executive shall not have corrected such conduct to the satisfaction
of the Company within thirty days after such notice, the Employment Period shall terminate and the
Company shall have no further obligation to the Executive hereunder but the restriction on the
Executive’s activities contained in Paragraph 7 and the obligations of the Executive contained in
Paragraphs 8(b) and 8(c) shall continue in effect as provided therein.

     6. Termination Without Cause.

          In the event that the Company discharges the Executive without cause, the Executive shall be
entitled to the salary provided in Paragraph 2(a), two-thirds of the targeted incentive provided in
Paragraph 2(b), the vesting of any restricted stock awards and the immediate exercisability of any
stock options, as well as his rights under Paragraph 4, which would have vested or become
exercisable during the full Employment Period (which, in that event, shall continue until the then
scheduled expiration of the Employment Period unless sooner terminated by the Executive’s
disability or death). Any Amounts payable to the Executive under this Paragraph 6 shall be reduced
by the amount of the Executive’s earnings from other employment (which the Executive shall have an
affirmative duty to seek; provided, however, that the Executive shall not be obligated to accept a
new position which is not reasonable comparable to his employment with the Company).

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     7. Non-Competition; Trade Secrets.

          During the Employment Period and for a period of one year after the termination of the
Employment Period, the Executive will not, directly or indirectly:

          a) Disclosure of Information. Use, attempt to use, disclose or otherwise make known
to any person or entity (other than to the Board of Directors of the Company or otherwise in the
course of the business of the Company, its subsidiaries or affiliates and except as may be required
by applicable law):

     i. any knowledge or information, including, without limitation, lists of customers or
suppliers, trade secrets, know-how, inventions, discoveries, processes and formulae, as well as all
data and records pertaining thereto, which he may acquire in the course of his employment, in any
manner which may be detrimental to or cause injury or loss to the Company, its subsidiaries or
affiliates; or

     ii. any knowledge or information of a confidential nature (including all unpublished matters)
relating to, without limitation, the business, properties, accounting, books and records, trade
secrets or memoranda of the Company, its subsidiaries or affiliates, which he now knows or may come
to know in any manner which may be detrimental to or cause injury or loss to the Company, its
subsidiaries or affiliates.

          b) Non-Competition. Engage or become interested in the United States, Canada or
Mexico (whether as an owner, shareholder, partner, lender or other investor, director, officer,
employee, consultant or otherwise) in the business of distributing electronic parts, components,
supplies or systems, or any other business that is competitive with the principal business or
businesses then conducted by the Company, its subsidiaries or affiliates (provided, however, that
nothing contained herein shall prevent the Executive from acquiring or owning less than 1% of the
issued and outstanding capital stock or debentures of a corporation whose securities are listed on
the New York Stock Exchange, American Stock Exchange, or the National Association of Securities
Dealers Automated Quotation System, if such investment is otherwise permitted by the Company’s
Human Resource and Conflict of Interest policies);

          c) Solicitation. Solicit or participate in the solicitation of any business of any
type conducted by the Company, its subsidiaries or affiliates, during said term or thereafter, from
any person, firm or other entity which was or at the time is a supplier or customer, or prospective
supplier or customer, of the Company, its subsidiaries or affiliates; or

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          d) Employment. Employ or retain, or arrange to have any other person, firm or other
entity employ or retain, or otherwise participate in the employment or retention of, any person who
was an employee or consultant of the Company, its subsidiaries or affiliates, at any time during
the period of twelve consecutive months immediately preceding such employment or retention.

               The Executive will promptly furnish in writing to the Company, its subsidiaries or affiliates,
any information reasonably requested by the Company (including any third party confirmations) with
respect to any activity or interest the Executive may have in any business.

               Except as expressly herein provided, nothing contained herein is intended to prevent the
Executive, at any time after the termination of the Employment Period, from either (i) being
gainfully employed or (ii) exercising his skills and abilities outside of such geographic areas,
provided in either case the provisions of this Agreement are complied with.

     8. Preservation of Business.

          a) General. During the Employment Period, the Executive will use his best efforts to
advance the business and organization of the Company, its subsidiaries and affiliates, to keep
available to the Company, its subsidiaries and affiliates, the services of present and future
employees and to advance the business relations with its suppliers, distributors, customers and
others.

          b) Patents and Copyrights, etc. The Executive agrees, without additional
compensation, to make available to the Company all knowledge possessed by him relating to any
methods, developments, inventions, processes, discoveries and/or improvements (whether patented,
patentable or unpatentable) which concern in any way the business of the Company, its subsidiaries
or affiliates, whether acquired by the Executive before or during his employment hereunder.

               Any methods, developments, inventions, processes, discoveries and/or improvements (whether
patented, patentable or unpatentable) which the Executive may conceive of or make, related directly
or indirectly to the business or affairs of the Company, its subsidiaries or affiliates, or any
part thereof, during the Employment Period, shall be and remain the property

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of the Company. The
Executive agrees promptly to communicate and disclose all such methods, developments, inventions,
processes, discoveries and/or improvements to the Company and to
execute and deliver to it any instruments deemed necessary by the Company to effect the disclosure
and assignment thereof to it. The Executive also agrees, on request and at the expense of the
Company, to execute patent applications and any other instruments deemed necessary by the Company
for the prosecution of such patent applications or the acquisition of Letters Patent in the United
States or any other country and for the assignment to the Company of any patents which may be
issued. The Company shall indemnify and hold the Executive harmless from any and all costs,
expenses, liabilities or damages sustained by the Executive by reason of having made such patent
applications or being granted such patents.

               Any writings or other materials written or produced by the Executive or under his supervision
(whether alone or with others and whether or not during regular business hours), during the
Employment Period which are related, directly or indirectly, to the business or affairs of the
Company, its subsidiaries or affiliates, or are capable of being used therein, and the copyright
thereof, common law or statutory, including all renewals and extensions, shall be and remain the
property of the Company. The Executive agrees promptly to communicate and disclose all such
writings or materials to the Company and to execute and deliver to it any instruments deemed
necessary by the Company to effect the disclosure and assignment thereof to it. The Executive
further agrees, on request and at the expense of the Company, to take any and all action deemed necessary by the Company to obtain copyrights or other protections for such writings or other
materials or to protect the Company’s right, title and interest therein. The Company shall
indemnify and hold the Executive harmless from any and all costs, expenses, liabilities or damages
sustained by the Executive by reason of the Executive’s compliance with the Company’s request.

          c) Return of Documents. Upon the termination of the Employment Period, including any
termination of employment described in Paragraph 6, the Executive will promptly return to the
Company all copies of information protected by Paragraph 7(a) hereof or pertaining to matters
covered by subparagraph (b) of this Paragraph 8 which are in his possession, custody or control,
whether prepared by him or others.

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     9. Separability.

          The Executive agrees that the provisions of Paragraphs 7 and 8 hereof constitute independent
and separable covenants which shall survive the termination of the Employment Period and which
shall be enforceable by the Company notwithstanding any rights or remedies the Executive may have
under any other provisions hereof. The Company agrees that the provisions of Paragraph 6 hereof
constitute independent and separable covenants which shall survive the termination of the
Employment Period and which shall be enforceable by the Executive notwithstanding any rights or
remedies the Company may have under any other provisions hereof.

     10. Specific Performance.

          The Executive acknowledges that (i) the services to be rendered under the provisions of this
Agreement and the obligations of the Executive assumed herein are of a special, unique and
extraordinary character; (ii) it would be difficult or impossible to replace such services and
obligations; (iii) the Company, its subsidiaries and affiliates will be irreparably damaged if the
provisions hereof are not specifically enforced; and (iv) the award of monetary damages will not
adequately protect the Company, its subsidiaries and affiliates in the event of a breach hereof by
the Executive. The Company acknowledges that (i) the Executive will be irreparably damaged if the
provisions of Paragraphs 6 hereof are not specifically enforced and (ii) the award of monetary
damages will not adequately protect the Executive in the event of a breach thereof by the Company.
By virtue thereof, the Executive agrees and consents that if he violates any of the provisions of
this Agreement, and the Company agrees and consents that if it violates any of the provisions of
Paragraphs 6 hereof, the other party, in addition to any other rights and remedies available under
this Agreement or otherwise, shall (without any bond or other security being required and without
the necessity of proving monetary damages) be entitled to a temporary and/or permanent injunction
to be issued by a court of competent jurisdiction restraining the breaching party from committing
or continuing any violation of this Agreement, or any other appropriate decree of specific
performance. Such remedies shall not be exclusive and shall be in addition to any other remedy
which any of them may have.

     11. Miscellaneous.

          a) Entire Agreement; Amendment. This Agreement constitutes the whole employment
agreement between the parties

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and may not be modified, amended or terminated except by a written instrument executed by the
parties hereto. It is

specifically agreed and understood, however, that the provisions of that certain letter agreement
dated as of June 1, 2004 granting to the Executive extended separation benefits in the event of a
change in control of the Company shall survive and shall not be affected hereby. All other
agreements between the parties pertaining to the employment or remuneration of the Executive not
specifically contemplated hereby or incorporated or merged herein are terminated and shall be of no
further force or effect.

          b) Assignment. Except as stated below, this Agreement is not assignable by the
Company without the written consent of the Executive, or by the Executive without the written
consent of the Company, and any purported assignment by either party of such party’s rights and/or
obligations under this Agreement shall be null and void; provided, however, that, notwithstanding
the foregoing, the Company may merge or consolidate with or into another corporation, or sell all
or substantially all of its assets to another corporation or business entity or otherwise
reorganize itself, provided the surviving corporation or entity, if not the Company, shall assume
this Agreement and become obligated to perform all of the terms and conditions hereof, in which
event the Executive’s obligations shall continue in favor of such other corporation or entity.

          c) Waivers, etc. No waiver of any breach or default hereunder shall be considered
valid unless in writing, and no such waiver shall be deemed a waiver of any subsequent breach or
default of the same or similar nature. The failure of any party to insist upon strict adherence to
any term of this Agreement on any occasion shall not operate or be construed as a waiver of the
right to insist upon strict adherence to that term or any other term of this Agreement on that or
any other occasion.

          d) Provisions Overly Broad. In the event that any term or provision of this Agreement
shall be deemed by a court of competent jurisdiction to be overly broad in scope, duration or area
of applicability, the court considering the same shall have the power and hereby is authorized and
directed to modify such term or provision to limit such scope, duration or area, or all of them, so
that such term or provision is no longer overly broad and to enforce the same as so limited.
Subject to the foregoing sentence, in the event any provision of this Agreement shall be held to be
invalid or unenforceable for any reason, such invalidity or unenforceability shall attach only to
such provision and shall not affect or render invalid or unenforceable any other provision of this
Agreement.

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          e) Notices. Any notice permitted or required hereunder shall be in writing and shall
be deemed to have been given on the date of delivery or, if mailed by registered or certified mail,
postage prepaid, on the date of mailing:

	 	 	 	 	 	 	 
	 

	 	i.
	 	if to the Executive to:	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Brian P. McNally	 	 
	 

	 	 	 	37 Birmingham Drive	 	 
	 

	 	 	 	Northport, New York 11768	 	 
	 
	 	 	 	 	 	 
	 

	 	ii.
	 	if to the Company to:	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Arrow Electronics, Inc.	 	 
	 

	 	 	 	50 Marcus Drive	 	 
	 

	 	 	 	Melville, New York 11747	 	 
	 

	 	 	 	Attention: Peter S. Brown	 	 
	 

	 	 	 	                 Senior Vice President and	 	 
	 

	 	 	 	                   General Counsel
	 	 

Either party may, by notice to the other, change his or its address for notice hereunder.

          f) New York Law. This Agreement shall be construed and governed in all respects by
the internal laws of the State of New York, without giving effect to principles of conflicts of
law.

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

	 	 	 	 	 	 	 	 	 
	Attest:	 	 	 	ARROW ELECTRONICS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	/s/
Wayne Brody

	 	 	 	By: /s/ Peter S. Brown	 
	
 

	 	 	 	 	 	 	 	 
	Assistant Secretary

	 	 	 	 	 	Peter S. Brown	 	 
	 

	 	 	 	 	 	Senior Vice President &	 	 
	 

	 	 	 	 	 	     General Counsel	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	THE EXECUTIVE	 	 
	 
	 	 	 	/s/ B.P. McNally	 	 	 	 
	 	 	 	 	Brian P. McNally	 	 

- 11 -

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