Arrow Electronics, Inc. Supplemental Executive Retirement Plan

Arrow Electronics, Inc.
Supplemental Executive Retirement Plan
(as amended effective January 1, 2002)


This document sets forth the terms of the Arrow Supplemental Executive Retirement Plan ("SERP"), as amended effective January 1, 2002. The SERP is an unfunded retirement plan for a select group of employees designated as SERP participants by the Arrow Board of Directors (including the Compensation Committee of the Board) and who have been so notified in writing. Effective July 17, 2002, the SERP is administered by Arrow's Pension and Investment Oversight Committee or its delegees, subject to the ultimate authority of the Board.

Retirement Benefits

Normal Retirement . The SERP provides a normal retirement pension if you retire at or after your "normal retirement date," which, except as the Board may otherwise specify in written notice to you, is the date you reach age 60 .

Early Retirement . The SERP also provides an early retirement pension in a reduced amount, should you retire before your normal retirement date but after (i) your combined years of age and service equal at least 72 and you are at least age 55, or (ii) if applicable, such other date as the Board may specify in written notice to you.

Fractional years of age and service may be combined in determining eligibility for early retirement (or any similar determination).

Normal Retirement Benefit

Retirement Income Target . In the letter admitting you to participation in the SERP, the Board will specify the retirement income target that will be used to determine your normal retirement pension under the SERP. Your retirement income target may be expressed either as a fixed dollar amount or as an "income replacement percentage" applied to your Final Average Compensation. For this purpose your " Final Average Compensation " will generally be your highest average annual Performance Based Compensation (base salary plus targeted incentive compensation) for any three calendar years (which need not be consecutive) in the last five consecutive calendar years ending prior to your retirement. However, if your compensation and responsibilities are materially reduced in the twenty-four months preceding your retirement date (as determined by the Committee), reference will be made instead to the last five consecutive calendar years ending before the date such reduction became effe ctive.

Percentage of Final Average Compensation . A retirement income target based on a percentage of your Final Average Compensation represents the retirement income intended to be provided from all Company sources. The portion of that income payable under the SERP is determined only after taking into account the retirement income assumed to be available from Company contributions to its broad-based "qualified" retirement plans and to Social Security.

If your retirement income target is based on such a percentage, your SERP normal retirement pension will be calculated by multiplying your Final Average Compensation by the income replacement percentage assigned to you and then subtracting the amount of retirement income estimated by the Committee to be available from

(i) Company contributions to the Arrow Electronics Savings Plan ("Savings Plan") and Arrow Electronics Stock Ownership Plan ("ESOP"), exclusive of your own elective or rollover contributions, and

(ii) the one-half of your Social Security benefits provided by employer contributions, as estimated by the Committee.

Offsets for assumed ESOP and Savings Plan retirement income . The amount subtracted under clause (i) above will be the pension equivalent of the total of the following amounts:

1. Contributions made for you to the ESOP or as matching contributions to the Savings Plan, determined by assuming that you make the maximum elective contributions to the Savings Plan eligible for matching, whether or not you actually contribute that amount. For any period that records of actual contributions are not reasonably available, the Committee may make reasonable estimates of the amount of such contributions, and such estimates will be conclusive and binding for all purposes of the Plan.

2. Assumed earnings on such contributions at the rate of 7% compounded annually to your retirement date. Assumed earnings on contributions will be measured from the date that the Committee treats them as contributed to the Plan (which need not be the date of actual contribution) and without regard to any in-service withdrawals you make prior to your retirement date.

To calculate this offset, the total of the foregoing amounts as of your retirement date will be converted into a monthly income based on assumptions as to interest and mortality adopted by the Committee from time to time. Unless and until otherwise determined by the Committee, the interest rate assumed will be 7% and the mortality assumption will be based on the applicable mortality table in effect under section 417(e)(3)(A) of the Code (the "Applicable Mortality Table"), which as of January 1, 2002 is that set forth in Revenue Ruling 2001-62.

In determining the pension equivalent of contributions to the ESOP and the Savings Plan, contributions by both Arrow and its subsidiaries or their predecessors will be included, as will contributions to (a) prior plans of Arrow (or its subsidiaries or their predecessors) and (b) plans later merged into the ESOP or Savings Plan or their predecessors (such as plans of acquired companies). Contributions to any other separate plan and not transferred to the Savings Plan may also be taken into account in the discretion of the Committee. However, participants' elective contributions and voluntary rollovers will not be included.

Social Security Offset . Where your normal retirement pension under the SERP is based on a percentage of your Final Average Compensation, the amount calculated as described above will also be reduced or offset by one-half of the amount of your Social Security benefit as estimated by the Committee. If you are under age 62 when your SERP pension begins, the offset will be based on your projected age 62 benefit and will apply when your pension starts, even though you are not eligible to receive Social Security benefits. If you retire after reaching age 62, the offset will be the amount of your estimated Social Security benefit at your retirement date. The Committee in either case may adopt reasonable assumptions on advice of its actuarial consultant in order to calculate your estimated Social Security benefit.

Based on Fixed Dollar Amount. If your income replacement target is determined as a fixed dollar amount, the letter advising you of your participation in the SERP will set forth the amount payable on retirement at or after your normal retirement date. Because the amount is "fixed" rather than based on a percentage of Final Average Compensation, there will be no offsets or reductions for the retirement income estimated to be available from the Savings Plan, ESOP, or Social Security.

Early Retirement Benefit

Based on Percentage of Final Average Compensation . If you retire early and your SERP pension is based on a percentage of Final Average Compensation, your benefit will be calculated in the same manner as a normal retirement pension, but your income replacement percentage will be reduced, reflecting the fact that your pension is beginning earlier and at a time when you may have fewer years of SERP participation than on normal retirement. The letter admitting you to participation in the SERP will set forth the percentage of your Final Average Compensation that would be payable to you on early retirement at each integral age beginning at your first date of eligibility for retirement (with the percentage applicable other ages being determined on similar principles). Your actual SERP early retirement benefit will then be calculated by multiplying your Final Average Compensation at your early retirement date by the reduced percentage applicable and subtracting (i) the above-described pension equivalent of Company contributions to the ESOP and Savings Plan determined as of your early retirement date and (ii) one-half of your age 62 Social Security benefit as estimated by the Committee.

Based on Fixed Dollar Amount . If your income replacement target is determined as a fixed dollar amount, the letter advising you of your participation in the SERP will set forth the amount payable on retirement at each date on which you may be eligible for early retirement. Because the amount is "fixed" rather than based on a percentage of Final Average Compensation, there will be no offsets or reductions for the retirement income estimated to be available from the Savings Plan, ESOP, or Social Security.

Retirement

You may begin your retirement on or after your earliest permitted retirement date. You retire from Arrow by advising Arrow in writing, with as much notice as possible (and not less than four months), that you wish to terminate your employment to begin retirement on a particular date. Your retirement date will then be the first day of the month following your termination, and your monthly SERP pension payment will begin on that date.

A transfer to an Arrow subsidiary or affiliate (as determined by the Committee) will not be treated as a retirement until you are no longer employed by Arrow or any of its subsidiaries or affiliates.

Normal Form of Pension

Under the normal form of pension, SERP pension payments are payable for your life only. However, if you die after your pension payments begin but before you have received 60 monthly payments, then monthly payments will continue to your beneficiary in the same amount you received prior to your death, until a total of 60 payments have been made. No benefits are payable under the SERP if you die before your pension payments begin.

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

Under this optional form of pension, your monthly pension will still be payable for your lifetime, but in an actuarially reduced amount, and without the guarantee of 60 monthly payments. The actuarial reduction will be in the amount that the Committee determines, based on the advice of its actuarial consultant, is necessary to provide a monthly survivorship pension to your spouse for his or her lifetime. The interest rate assumption used to make such actuarial reduction will be the applicable interest rate under section 417(e)(3)(A) of the Code for December prior to the calendar year in which the SERP pension is to begin, and the mortality assumption will be that set forth in the Applicable Mortality Table (as defined on page 3 above).

The surviving spouse's pension will be equal to either 50% or 66-2/3% of the reduced monthly benefit you were receiving, whichever you elect. The reduction needed to provide the 66-2/3% survivor benefit will, of course, be somewhat greater than that needed to provide a 50% survivor benefit.

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

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

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

Change in Control Termination

1. If you have an employment or other agreement that gives you additional benefits in the event of the termination of your employment for certain reasons following a change in the ownership or control of Arrow, and within 24 months after such change your employment ends either (a) involuntarily other than for Cause or Disability or (b) voluntarily by you for Good Reason (as each of those capitalized terms is defined in such agreement), then your termination is considered to be a "Change in Control Termination".

2. If you incur a "Change in Control Termination", then except as provided in the immediately succeeding paragraph, you will receive SERP pension payments beginning on the first day of the month coincident with or next following the date you attain age 60, in an amount (your "new Plan normal retirement benefit") calculated based on the retirement income target applicable at your normal retirement date, applied (if such target is expressed as an income replacement percentage) based on your Final Average Compensation, the assumed pension equivalent of relevant ESOP and Savings Plan contributions as of your termination date, and estimated age 62 Social Security benefit as of such termination date.

3. In the event that you become eligible for benefits under the preceding sentence and are eligible for an early retirement benefit as of the date of your Change in Control Termination, (i) your early retirement benefit will commence in the amount and form of payment determined under this SERP without regard to the preceding sentence, and (ii) effective as of the first day of the month coincident with or next following your attainment of age 60, the amount thus payable in such form will be increased to the amount payable in that form after taking into account such preceding sentence. Such increase shall not alter the form in which your SERP pension is paid, which shall remain the form in which your early retirement benefit was payable. If you should die before such increase becomes effective, any survivor ...