UNITED STATES

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WAhQWOeBA5duddHYnEyn4JUnL9tj5rHidynfpdVoZ9gK0Y5UPv3roVc4N98NZo7c v+VY+0+MIzoMap8WQYOp7Q== 0000007536-02-000015.txt : 20020813 0000007536-02-000015.hdr.sgml : 20020813 20020812174639 ACCESSION NUMBER: 0000007536-02-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARROW ELECTRONICS INC CENTRAL INDEX KEY: 0000007536 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 111806155 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04482 FILM NUMBER: 02727745 BUSINESS ADDRESS: STREET 1: 25 HUB DR CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 5163911300 10-Q 1 arw10q2_02.htm FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002 UNITED STATES

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-4482

ARROW ELECTRONICS, INC.

(Exact name of Registrant as specified in its charter)

New York			11-1806155
(State or other jurisdiction of			(I.R.S. Employer
incorporation or organization)			Identification Number)


25 Hub Drive, Melville, New York			11747
(Address of principal executive			(Zip Code)
Offices)


Registrant's telephone number,
including area code			(516) 391-1300

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Common stock, $1 par value: 100,433,678 shares outstanding at August 2, 2002.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands except per share data)
(Unaudited)

	Six Months Ended						Three Months Ended
	June 30,						June 30,

		2002			2001			2002			2001

Sales	$	3,687,856		$	5,452,364		$	1,843,317		$	2,355,745


Costs and expenses:
Cost of products sold		3,053,736			4,525,985			1,523,729			1,966,790
Selling, general and administrative
expenses		509,348			606,447			257,158			290,469
Depreciation and amortization		34,310			58,169			16,639			29,585
Severance costs		5,375			-			5,375			-
Integration charges		-			9,375			-			-

		3,602,769			5,199,976			1,802,901			2,286,844


Operating income		85,087			252,388			40,416			68,901

Equity in earnings (losses) of affiliated
companies		966			(1,393	)		813			(997	)

Interest expense, net		82,072			120,072			40,830			54,479


Earnings before income taxes and minority
interest		3,981			130,923			399			13,425

Provision for income taxes		1,404			53,260			33			7,435


Earnings before minority interest		2,577			77,663			366			5,990

Minority interest		(84	)		(263	)		(210	)		(294	)


Earnings from continuing operations		2,661			77,926			576			6,284

Income (loss) from discontinued
operations, net of taxes (including
loss from disposal of $6,120, net of
tax benefit of $4,114, in 2002)		(5,911	)		707			(6,610	)		670


Earnings (loss) before cumulative effect
of change in accounting principle		(5,250	)		78,633			(6,034	)		6,954

Cumulative effect of change in accounting
principle		(603,709	)		-			-			-


Net income (loss)	$	(606,959	)	$	78,633		$	(6,034	)	$	6,954


Net income (loss) per basic and diluted
share:

Income from continuing operations	$	.03		$	.79		$	.01		$	.06
Income (loss) from discontinued operations		(.06	)		.01			(.07	)		.01
Cumulative effect of change in accounting
principle		(6.06	)		-			-			-


Net income (loss) per basic share	$	(6.09	)	$	.80		$	(.06	)	$	.07


Income from continuing operations	$	.03		$	.74		$	.01		$	.06
Income (loss) from discontinued operations		(.06	)		.01			(.07	)		.01
Cumulative effect of change in accounting
principle		(6.06	)		-			-			-


Net income (loss) per diluted share	$	(6.09	)	$	.75		$	(.06	)	$	.07

Average number of shares outstanding:
Basic		99,667			97,957			99,813			98,006

Diluted		99,667			113,017			99,813			99,580

See accompanying notes.

ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)

		June 30,		December 31			,
		2002		2001

	(Unaudited		)
ASSETS

Current assets:
Cash and short-term investments	$	909,102			$	556,861
Accounts receivable, net		1,403,031				1,389,882
Inventories		1,248,989				1,372,797
Prepaid expenses and other assets		65,104				52,892
Assets from discontinued operations		-				98,954

Total current assets		3,626,226				3,471,386

Property, plant and equipment at cost:
Land		42,648				42,288
Buildings and improvements		174,533				164,111
Machinery and equipment		366,625				347,170

		583,806				553,569

Less accumulated depreciation and
amortization		(289,150	)			(252,374	)


		294,656				301,195

Investments in affiliated companies		36,292				32,917

Cost in excess of net assets of
companies acquired, net of amortization
($190,940 in 2001)		757,255				1,224,283

Other assets		349,632				326,024

Assets from discontinued operations		-				3,179


	$	5,064,061			$	5,358,984

See accompanying notes.

ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)

		June 30,		December 31				,
		2002			2001

	(Unaudited		)

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable	$	867,032				$	641,454
Accrued expenses		383,657					342,670
Short-term borrowings		10,475					37,289
Liabilities from discontinued operations		-					25,572

Total current liabilities		1,261,164					1,046,985

Long-term debt		2,458,574					2,441,983

Other liabilities		107,937					103,555

Shareholders' equity:
Common stock, par value $1:
Authorized - 160,000,000 shares
Issued - 103,868,002 shares in 2002
and 103,856,024 shares in 2001		103,868					103,856
Capital in excess of par value		523,392					524,299
Retained earnings		916,125					1,523,084
Foreign currency translation adjustment		(196,896	)				(259,694	)


		1,346,489					1,891,545
Less: Treasury stock (3,445,650 shares in 2002
and 3,998,063 shares in 2001), at cost		(92,165	)				(106,921	)
Unamortized employee stock awards		(12,838	)				(12,363	)
Other		(5,100	)				(5,800	)


		1,236,386					1,766,461


	$	5,064,061				$	5,358,984

See accompanying notes.

ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)

	Six Months Ended
	June 30,

		2002			2001
Cash flows from operating activities:
Net income (loss)	$	(606,959	)	$	78,633
Income (loss) from discontinued operations, net		(5,911	)		707

Net income (loss) from continuing operations		(601,048	)		77,926
Adjustments to reconcile net income (loss) to net
cash provided by (used for) operations:
Minority interest		(84	)		(263	)
Depreciation and amortization		41,540			65,106
Accretion of discount on convertible debentures		14,278			9,782
Equity in (earnings) losses of affiliated companies		(966	)		1,393
Deferred income taxes		(6	)		(43,640	)
Severance costs, net of taxes		3,214			-
Integration charge, net of taxes		-			5,719
Cumulative effect of change in accounting principle		603,709			-
Change in assets and liabilities, net of effects of
acquired businesses:
Accounts receivable		85,689			681,130
Inventories		174,423			688,625
Prepaid expenses and other assets		(6,808	)		(4,902	)
Accounts payable		195,523			(740,825	)
Accrued expenses		9,312			(55,818	)
Other		(32,768	)		(8,567	)

Net cash provided by operating activities		486,008			675,666


Cash flows from investing activities:
Acquisition of property, plant and equipment, net		(21,440	)		(36,283	)
Proceeds from sale of discontinued operations		37,087			-
Cash consideration paid for acquired business		(110,335	)		-
Investments		(2,724	)		(15,509	)

Net cash used for investing activities		(97,412	)		(51,792	)


Cash flows from financing activities:
Change in short-term borrowings		(55,309	)		(496,154	)
Change in credit facilities		13,071			112,928
Change in long-term debt		(17,873	)		(894,468	)
Proceeds from convertible debentures		-			670,883
Proceeds from exercise of stock options		8,323			1,985
Sale of accounts receivable under securitization program		-			251,737
Repayment under securitization program		-			(252,865	)

Net cash used for financing activities		(51,788	)		(605,954	)


Effect of exchange rate changes on cash		15,433			(4,372	)


Net increase in cash and short-term investments		352,241			13,548

Cash and short-term investments at beginning of period		556,861			55,546

Cash and short-term investments at end of period	$	909,102		$	69,094


Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes	$	31,633		$	46,753
Interest		72,787			112,999

See accompanying notes.

ARROW ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002
(Unaudited)

Note A -- Basis of Presentation

The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States and reflect all adjustments, consisting only of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position and results of operations at and for the periods presented. Such financial statements do not include all the information or footnotes necessary for a complete presentation and, accordingly, should be read in conjunction with the company's audited consolidated financial statements for the year ended December 31, 2001 and the notes thereto, which include significant accounting policies and estimates. The results of operations for the interim periods are not necessarily indicative of results for the full year.

Note B -- Impact of Recently Issued Accounting Standards

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement No. 143, "Accounting for Asset Retirement Obligations," which addresses the financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the related asset retirement costs. Statement No. 143 requires that the fair value of a liability for an asset retirement obligation be recorded in the period incurred and the related asset retirement costs be capitalized. The company is required to adopt Statement No. 143 in the first quarter of 2003 and has not yet completed its evaluation of the effect thereof, if any, on its consolidated financial position and results of operations.

In April 2002, the FASB issued Statement No. 145, "Recission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." For most companies, Statement No. 145 will require gains and losses on the extinguishment of debt to be classified as income or loss from continuing operations rather than as an extraordinary item as previously required. Extraordinary treatment will be required for certain extinguishments as provided in APB Opinion No. 30. This Statement also amends Statement No. 13 to require that certain modifications to capital leases be treated as a sale-leaseback and to modify the accounting for sub-leases when the original lessee remains a secondary obligor. The company is required to adopt Statement No. 145 in the first quarter of 2003. On August 8, 2002, the company repurchased $250,000,000 of its 6.45% senior notes at a price of 104.65 percent of the principal amount. As the company is only required to adopt Statement No. 145 as of the first quarter of 200 3, the premium paid and deferred financing costs written-off upon the repurchase of this debt, aggregating approximately $11,000,000, net of the related tax effect, will be recognized as an extraordinary loss in the company's consolidated statement of operations in the third quarter of 2002.

In June 2002, the FASB issued Statement No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." Statement No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. The company is required to adopt Statement No. 146 in the first quarter of 2003. The impact of adoption thereof is not expected to be material to the company's consolidated financial position and results of operations.

Note C -- Goodwill and Other Intangible Assets

	For the Six				For the Three
	Months Ended				Months Ended
	June 30,				June 30,

		2002		2001		2002		2001

Earnings from continuing
operations, as reported	$	2,661	$	77,926	$	576	$	6,284
Add: Goodwill amortization from
continuing operations, net of tax		-		20,314		-		10,078

Adjusted earnings from continuing
operations	$	2,661	$	98,240	$	576	$	16,362

Basic earnings per share from
continuing operations, as reported	$	.03	$	.79	$	.01	$	.06
Add: Goodwill amortization, from
continuing operations, net of tax		-		.21		-		.10

Adjusted basic earnings per share
from continuing operations	$	.03	$	1.00	$	.01	$	.16


Diluted earnings per share from
continuing operations, as reported	$	.03	$	.74	$	.01	$	.06
Add: Goodwill amortization from
continuing operations, net of tax		-		.18		-		.10

Adjusted diluted earnings per share
from continuing operations	$	.03	$	.92	$	.01	$	.16

In addition, on a proforma basis adjusting for the amortization of goodwill, income before cumulative effect of change in accounting principle and net income would have been $98,947,000 ($1.01 per basic share and $.93 per diluted share) and $17,032,000 ($.17 per basic and diluted share) for the six and three months ended June 30, 2001, respectively.

As required under the transitional accounting provisions of Statement No. 142, the company completed the two steps required to identify and measure goodwill impairment for each reporting unit as of January 1, 2002. The first step involved identifying all reporting units with carrying values (including goodwill) in excess of fair value. The identified reporting units from the first step were then measured for impairment by comparing the fair value of the reporting unit, determined by reference to comparable businesses using a weighted average EBITDA multiple, with the carrying amount of the goodwill. Those reporting units having a carrying value exceeding the fair value were identified as being fully impaired, and the company fully wrote down those assets. For reporting units with potential impairment, the company obtained an independent appraisal of the fair value of the assets and liabilities of the unit and wrote down the goodwill to its implied fair value accordingly. No other impairment indicators have a risen since January 1, 2002.

In determining a reporting unit, the company looked to its current reporting structure at the date of adoption and allocated goodwill to the reporting units. In most cases, the goodwill was identifiable to specific acquisitions, so the allocation was direct. The following were determined to be the reporting units of the company: (i) North America Components, (ii) North America Computer Products, (iii) on an individual country basis for Europe Components, (iv) on an individual country basis for Europe Computer Products, (v) South America, and (vi) Asia.

As a result of the evaluation process discussed above the company recorded an impairment charge of $603,709,000, which was recorded as a cumulative effect of a change in accounting principle at January 1, 2002. Accordingly, the first quarter's results have been modified to include this charge as required under the transitional rules of Statement No. 142. The following table presents the carrying amount of goodwill, allocated to reportable segments, for the periods presented (in thousands):

	Electronic			Computer
	Components			Products		Total


Carrying value at December 31, 2001		$902,093		$322,190		$1,224,283

Cumulative effect of change in
accounting principle		(281,519	)	(322,190	)	(603,709	)
Additions		110,335		-		110,335
Other (principally foreign currency
translation)		26,346		-		26,346

Carrying value at June 30, 2002		$757,255		$ -		$ 757,255

The following table reflects the impact of the cumulative effect of change in accounting principle on the reported results for the company's first quarter ended March 31, 2002 (in thousands):

Net income from continuing operations	$ 2,085
Net income from discontinued operations	699
Cumulative effect of change in accounting principle	(603,709	)

Net loss, as adjusted	$(600,925	)

Net loss per share, as adjusted:
Basic	$ (6.04	)
Diluted	$ (6.04	)

The company does not have any other intangibles subject to valuation under Statement No. 142.

Note D -- Discontinued Operations

In May 2002, the company sold substantially all of the assets of Gates/Arrow, a business unit within the company's North American Computer Product Group that sells commodity computer products such as printers, monitors, other peripherals, and software to value-added resellers in North America. On May 31, 2002, the company completed the sale of this business unit to Synnex Information Technologies, Inc. for estimated cash proceeds of $44,700,000, subject to price adjustments, of which $37,087,000 has been collected as of June 30, 2002. The remaining amount due is payable in two increments: 50 percent due 90 days after closing and the remaining 50 percent due 180 days after closing. The assets sold consisted primarily of accounts receivable, inventories, and property and equipment. The buyer also assumed certain liabilities.

The disposition of the Gates/Arrow operations represents a disposal of a "component of an entity" as defined in Statement No. 144. Accordingly, the company's financial statements have been presented to reflect Gates/Arrow as a discontinued operation for all periods. Its assets and liabilities have been segregated from continuing operations in the accompanying consolidated balance sheet, and its operating results are segregated and reported as discontinued operations in the accompanying consolidated statement of operations, and related notes.

In connection with the sale of Gates/Arrow, the company recorded a loss on disposal of $6,120,000, net of the related tax benefit of $4,114,000. The loss consists approximately of the following:

Personnel related	$	1,250,000
Facilities		3,144,000
Professional fees		599,000
Write-down of asset carrying value		3,000,000
Other		2,241,000

	$	10,234,000

The personnel costs are due to the termination of 88 people employed by the Gates/Arrow business and 57 warehouse personnel of the North American Computer Products Group due to reduced activity levels as a result of the sale of Gates/Arrow. The facilities costs are principally related to vacated warehouse space no longer required due to reduced activity levels as a result of the sale of Gates/Arrow. The write-down of assets was to adjust the carrying value of the assets sold to the value agreed to under the terms of the contract of sale.

The utilization of these charges as of June 30, 2002 is as follows (in thousands):

	Personnel		Professional	Asset
	Costs	Facilities	Fees	Write-down	Other	Total


Original accrual	$1,250	$3,144	$599	$3,000	$2,241	$10,234
2002 payments	257	2	70	-	92	421
2002 non-cash	-	-	-	2,000	-	2,000

June 2002 balance	$ 993	$3,142	$529	$1,000	$2,149	$ 7,813

Operating results of Gates/Arrow for the six and three months ended June 30, are as follows (in thousands):

	For the Six						For the Three
	Months Ended						Months Ended
	June 30,						June 30,

		2002(a)			2001		2002(a	)		2001

Net sales	$	180,534		$	333,510	$	72,822		$	154,382

Income (loss) from discontinued
operations, net of taxes
(including loss from disposal of
$6,120, net of tax benefit of
$4,114, in 2002)	$	(5,911	)	$	707	$	(6,610	)	$	670

(a) Operating results for the six and three months ended June 30, 2002
includes five and two months of activity, respectively.

The following is a summary of the net assets as of December 31, 2001 (in thousands):

Accounts receivable	$	68,676
Inventories		30,278
Property, plant and equipment, net		3,179

Assets from discontinued operations	$	102,133


Accounts payable		23,909
Accrued expenses		1,663

Liabilities from discontinued operations	$	25,572

Note E -- Accounts Receivable

Accounts receivable consists of the following (in thousands):

		June 30,		December 31					,
		2002			2001


Accounts receivable	$	790,897				$	744,864
Retained interest in securitized
accounts receivable		678,934					725,988
Allowance for doubtful accounts		(66,800	)				(80,970	)

	$	1,403,031				$	1,389,882

In March 2002, the company renewed its one-year, $750,000,000 asset securitization program (the "program") under which it sells, on a revolving basis, an individual interest in a pool of its trade accounts receivable. Under the program, the company sells receivables and retains a subordinated interest and servicing rights to those receivables. At June 30, 2002 and December 31, 2001, there were no receivables sold to and held by third parties under the program, and, as such, the company had no indebtedness outstanding under this program. In the event that the company had sold receivables to third parties under the program at June 30, 2002 and December 31, 2001, those receivables would not have been recorded on the company's balance sheet and the related financing provided by the program would not be reflected as indebtedness on the company's balance sheet.

During March 2001, the company sold $251,737,000 of outstanding trade accounts receivable, which was subsequently repurchased during the second quarter of 2001 for $252,865,000. Upon the initial sale, the company recognized a loss of $1,700,000 and removed the sold assets from the balance sheet, reduced previously established allowance for uncollectible accounts and recognized the present value of future net cash flow related to the assets sold. The present value amount was recorded in accounts receivable and represented the company's retained interests. The key assumptions used in measuring the fair value of the retained interests upon the initial sale were as follows:

Coupon rate of 5.19%

Estimated future uncollectible accounts 6.3%

Coverage life of trade accounts receivable of 48 days

Upon the repurchase, all costs related to the program were expensed as incurred in the quarter ended June 30, 2001. Those expenses included servicing, interest, uncollectible accounts, facility and program fees. Servicing fees received by the company approximated the market value of servicing and thus no servicing asset or liability was recorded.

Note F -- Acquisitions/Dispositions

During the second quarter of 2002, the company purchased additional shares in Marubun Corporation increasing its ownership interest from 5.4 percent to 8.4 percent, increased its holdings in IR Electronic, a distributor in Slovenia, to 100 percent, and acquired an additional 10.6 percent interest in Ally, Inc., increasing the company's ownership from 75 percent to 85.6 percent. The aggregate cost of these acquisitions was approximately $5,422,000.

The company, in connection with certain acquisitions, may be required to make future payments that are contingent upon the acquired businesses' earnings and, in certain instances, the achievement of operating goals. During the second quarter of 2002, the company made such payments aggregating $108,470,000 in connection with three acquisitions, which have been capitalized as cost in excess of net assets of companies acquired. The company may be contractually required to make these types of payments in the future. Based on the performance of those businesses, for which contingent payments remain open as of June 30, 2002, the company currently estimates such payments to be approximately $15,000,000.

In May 2002, the company sold its interest in VCE Virtual Chip Exchange, Inc. for $3,250,000.

Note G -- Severance Costs

During the second quarter of 2002, the company's chief executive officer resigned. As a result, the company recorded severance costs totalling $3,214,000 (net of the related tax effect) principally based on the terms of his employment agreement. Included therein, are provisions principally related to salary continuation, retirement benefits and the vesting of restricted stock and options.

Note H -- Integration and Restructuring Charges

During the first quarter of 2001, the company recorded an integration charge of $9,375,000 ($5,719,000 net of the related tax effect) associated with the acquisition of Wyle Electronics and Wyle Systems. In connection with this integration, approximately 240 positions, largely performing duplicate functions were eliminated.

The utilization of all of the company's integration, realignment, and restructuring reserves are as follows (in thousands):

	Personnel				Customer	IT		Asset
	Costs		Facilities		Termination	and Other		Write-down		Total


December 2000 balance	$16,922		$41,040		$ -	$19,290		$8,134		$85,386
Additions	19,989		9,749		38,800	23,093		151,692		243,323
Reversals	-		11,814		-	500		-		12,314
2001 payments	26,315		8,729		-	14,536		898		50,478
2001 non-cash usage	-		578		14,600	5,977		83,278		104,433
Foreign currency
translation	50		282		-	(377	)	101		56

December 2001 balance	10,646		29,950		24,200	20,993		75,751		161,540
2002 payments	6,603		2,105		-	5,812		217		14,737
2002 non-cash usage	-		-		14,132	-		48,324		62,456
Foreign currency
translation	(137	)	(255	)	-	(49	)	(78	)	(519	)

June 2002 balance	$ 3,906		$27,590		$10,068	$15,132		$27,132		$83,828

Included in the column "Asset Write-down" are valuation reserves of $53,000,000 related to the companies internet investments and $97,475,000 related to inventories.

Note I -- Earnings per Share

The following table sets forth the calculation of basic and diluted earnings per share (in thousands except per share data):

	For the Six					For the Three
	Months Ended					Months Ended
	June 30,					June 30,

		2002(a)			2001(b)		2002(a	)		2001
Earnings from continuing operations
used for basic earnings per share	$	2,661		$	77,926	$	576		$	6,284
Interest on convertible debentures,
net of tax		-			5,761		-			-

Adjusted earnings from continuing
operations		2,661			83,687		576			6,284
Income (loss) from discontinued
operations, net of tax		(5,911	)		707		(6,610	)		670


Adjusted income (loss) before
cumulative effect of change in
accounting principle		(3,250	)		84,394		(6,034	)		6,954

Cumulative effect of change in
accounting principle		(603,709	)		-		-			-


Adjusted net income (loss)	$	(606,959	)	$	84,394	$	(6,034	)	$	6,954


Weighted average shares outstanding
for basic earnings per share		99,667			97,957		99,813			98,006
Net effect of dilutive stock options
and restricted stock awards		-			2,119		-			1,574
Net effect of convertible debentures		-			12,941		-			-


Weighted average shares outstanding
for diluted earnings per share		99,667			113,017		99,813			99,580


Net income (loss) per basic and
diluted share:

Income from continuing operations	$	.03		$	.79	$	.01		$	.06
Income (loss) from discontinued
operations		(.06	)		.01		(.07	)		.01
Cumulative effect of change in
accounting principle		(6.06	)		-		-			-

Net income(loss) per basic share	$	(6.09	)	$	.80	$	(.06	)	$	.07


Income from continuing operations	$	.03		$	.74	$	.01		$	.06
Income(loss) from discontinued
operations		(.06	)		.01		(.07	)		.01
Cumulative effect of change in
accounting principle		(6.06	)		-		-			-

Net income(loss) per diluted
share (c)	$	(6.09	)	$	.75	$	(.06	)	$	.07

(a) Excluding the severance costs, net income and net income per share from
    continuing operations for the six and three months ended June 30, 2002,
    would have been $5,875,000 and $.06, and $3,790,000, and $.04,
    respectively.

(b) Excluding the integration charge, net income and net income per share from
    continuing operations on a basic and diluted basis would have been
    $83,645,000, $.85, and $.79, respectively, for the six months ended June
    30, 2001.

(c) Earnings per share on a diluted basis for the six and three months ended
    June 30, 2002 exclude the effect of 18,242,000 shares related to
    convertible debentures. In addition, the effect of options to purchase
    1,347,000 and 5,400,000 shares, respectively, of common stock were
    outstanding but excluded from the computation because the average exercise
    price of the options was greater than the average market price of the
    shares. The impact of such common stock equivalents are excluded from the
    calculation of earnings per share on a diluted basis as their effect is
    anti-dilutive.

Note J -- Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the aggregate change in shareholders' equity excluding changes in ownership interests. The components of comprehensive income (loss) are as follows (in thousands):

	For the Six						For the Three
	Months Ended						Months Ended
	June 30,						June 30,

		2002			2001				2002			2001

Net income (loss)	$	(606,959	)	$	78,633			$	(6,034	)	$	6,954
Foreign currency translation
adjustments (a)		62,798			(45,021	)			64,021			10,907
Unrealized gain (loss) on
securities		700			-				(300	)		-

Comprehensive income (loss)(b)(c)	$	(543,461	)	$	33,612			$	57,687		$	17,861

(a) The foreign currency translation adjustments have not been tax effected as
investments in foreign affiliates are deemed to be permanent.

(b) Excluding the severance costs of $5,375,000 ($3,214,000 net of the
    related tax effect), comprehensive loss would have been $540,247,000 and
    $60,901,000 for the six and three months ended June 30, 2002,
    respectively.

(c) Excluding the integration charge of $9,375,000 ($5,719,000 net of the
related tax effect), comprehensive income would have been $39,331,000 for
the six months ended June 30, 2001.

Note K -- Segment and Geographic Information

The company is engaged in the distribution of electronic components to original equipment manufacturers and computer products to value-added resellers. As a result of the company's philosophy of maximizing operating efficiencies through the centralization of certain functions, selected fixed assets and related depreciation, as well as borrowings and prior to 2002, goodwill amortization, are not directly attributable to the individual operating segments. Computer products includes North American Computer Products together with UK Microtronica, Nordic Microtronica, ATD (in Iberia), and Arrow Computer Products (in France).

Revenue and operating income, by segment, are as follows (in thousands):

	For the Six							For the Three
	Months Ended							Months Ended
	June 30,							June 30,

		2002(a)			2001(b)				2002(a)			2001
Revenue:
Electronic Components	$	2,689,646		$	4,275,460		$		1,340,379		$	1,787,687
Computer Products		998,210			1,176,904				502,938			568,058

Consolidated	$	3,687,856		$	5,452,364		$		1,843,317		$	2,355,745


Operating income (loss):
Electronic Components	$	100,410		$	307,728		$		50,342		$	92,684
Computer Products		24,802			15,820				12,968			8,340
Corporate		(40,125	)		(71,160	)			(22,894	)		(32,123	)

Consolidated	$	85,087		$	252,388		$		40,416		$	68,901

(a) Excluding the severance costs of $5,375,000, operating income would have
been $90,462,000 and $45,791,000 for the six and three months ended June
30, 2002, respectively.

(b) Excluding the integration charge of $9,375,000, operating income would
have been $261,763,000 for the six months ended June 30, 2001.

Total assets, by segment, are as follows (in thousands):

		June 30,	December 31			,
		2002	2001


Electronic Components	$	3,064,742		$	3,767,595
Computer Products		483,270			929,240
Corporate		1,516,049			662,149

Consolidated	$	5,064,061		$	5,358,984

Revenues, by geographic area, are as follows (in thousands):

	For the Six				For the Three
	Months Ended				Months Ended
	June 30,				June 30,

		2002		2001			2002		2001

Americas	$	2,149,187	$	3,247,520		$	1,096,099	$	1,385,441
Europe		1,211,525		1,717,810			585,840		737,986
Asia/Pacific		327,144		487,034			161,378		232,318

Consolidated	$	3,687,856	$	5,452,364		$	1,843,317	$	2,355,745

Total assets, by geographic area, are as follows (in thousands):

		June 30,	December 31			,
		2002			2001


Americas	$	3,136,038		$	3,253,575
Europe		1,616,268			1,771,137
Asia/Pacific		311,755			334,272

Consolidated	$	5,064,061		$	5,358,984

Note L -- Subsequent Event

On August 8, 2002, the company repurchased $250,000,000 of its 6.45% senior notes, due in November 2003, at a price of 104.65 percent of the principal amount. The premium paid and deferred financing costs written-off upon the repurchase of this debt, aggregated approximately $11,000,000, net of the related tax effect, will be recognized as an extraordinary loss in the company's consolidated statement of operations in the third quarter of 2002. As a result of this transaction net interest expense will be reduced by approximately $21,000,000 from the date of the repurchase through the original maturity date, if current interest rates remain the same.

In August 2002, the company entered into a series of interest rate swaps (the "swaps"), with third parties, with an aggregate notional amount of $250,000,000 million in order to hedge the change in fair value of the company's 8.7% senior debentures, due 2005, related to fluctuations in interest rates. These contracts are classified as fair value hedges and mature in October 2005. The swaps modify the company's interest rate exposure by effectively converting the fixed 8.7% senior debentures issued in October 2000 to a floating rate based on the six-month U.S. dollar LIBOR plus a spread through their maturities.

In July 2002, the company sold its investment in Mediagrif Interactive Technologies, Inc. for $3,714,000.

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.

Sales

Consolidated sales for the first six months and second quarter of 2002 decreased 32.4 percent and 21.8 percent, respectively, compared with the year-earlier periods. This decline was principally due to a 37.1 percent and 25 percent decrease in sales of electronic components for the first six months and second quarter of 2002, respectively, principally as a result of continued lower volume from telecommunications and networking customers and the large contract manufacturers that serve them reflecting the continued low levels of business activity in those industries. Since the beginning of the economic downturn in our industry, the company's operating groups that service these customers have experienced the greatest absolute decline in sales levels. Sales have declined by 60.5 percent and 47.2 percent to such customers for the first six months and second quarter of 2002, respectively, compared with the year-earlier period. In addition, contributing to the decline is lower demand in the company's core OE M businesses due to the weakened, general economic conditions worldwide. Historically, in our industry, Europe has trailed the business cycles experienced in North America by six to nine months; however, the company believes, the decline in activity levels in Europe, should be less than in North America due to the fact that sales to telecommunication and networking customers and the contract manufacturers that serve them is a lower percentage of total business activity in Europe, than it is in North America. Computer product sales declined 15.2 percent and 11.5 percent for the first six months and second quarter of 2002, respectively, compared with the year-earlier periods. Beginning in mid-2001, the company's computer products businesses implemented a new strategy which focused less on sales volume and placed more emphasis on profitability. While sales of computer products declined compared with the first six months and second quarter of 2002, operating income increased by 56.8 percent and 55.5 percent for the first six months and second quarter of 2002 as compared with the year-earlier periods, respectively. In the first six months and second quarter of 2002, sales of low margin microprocessors (a product segment not considered a part of the company's core business) decreased by approximately 31.7 percent and 32.9 percent, respectively, compared with the year-earlier periods. Sales declined in Asia/Pac principally due to the termination of a single large customer engagement. Lastly, the translation of the financial statements of the company's international operations into U.S. dollars resulted in increased revenues of $2.4 million and $26.9 million for the first six months and second quarter of 2002, respectively, because of a weakening U.S. dollar compared with the year-earlier periods.

Operating Income

The company recorded operating income of $85.1 million and $40.4 million in the first six months and second quarter of 2002, compared with operating income of $252.4 million and $68.9 million in the year-earlier periods. Included in operating income for the first six months of 2002 and second quarter is severance costs of $5.4 million associated with the resignation of the company's chief executive officer. Excluding these costs, operating income for the first six months and second quarter of 2002 would have been $90.5 million and $45.8 million. Included in operating income for the first six months of 2001 is an integration charge of $9.4 million associated with the acquisition of Wyle Electronics and Wyle Systems (collectively, "Wyle") and goodwill amortization of $23.5 million. Excluding the charge and goodwill amortization, operating income for the first six months and second quarter of 2001 would have been $285.2 and $80.5 million, respectively. The reduction in operating income is principally due to the decline in sales, offset, in part by a decrease in operating expenses.

Gross profit of $634.1 million and $319.6 million for the first six months and second quarter of 2002 decreased from $926.4 million and $389 million in the year-earlier periods principally due to the 32.4 percent and 21.8 percent declines in sales for the first six months and second quarter, respectively. The gross profit margins for the six months and quarter ended June 30, 2002 improved by 20 basis points and 80 basis points, respectively, when compared to the year-earlier periods. The increase in gross profit percentage is principally due to a change in the mix of sales, which is more heavily concentrated on the businesses serving core OEM customers that typically have higher margins and fewer sales to large accounts that typically have a lower gross profit percentage, and the computer products businesses' increasing focus on higher margin business.

Interest Expense

Interest expense of $82.1 million and $40.8 million in the first six months and second quarter of 2002 decreased from $120.1 million and $54.5 million in the year-earlier periods as a result of lower debt balances. During the past twelve months, free cash flow has totaled $2 billion, thereby permitting the company to reduce debt by $838 million and increase cash by $840 million.

Income Taxes

The company recorded an income tax provision at an effective tax rate of 35.3 percent and 8.3 percent for the first six months and second quarter of 2002, respectively, compared with a provision for taxes at an effective tax rate of 40.7 percent and 55.4 percent, respectively, in the comparable year-earlier periods. The company's effective tax rate is principally impacted by, among other factors, the statutory tax rates in the countries in which it operates and the related level of earnings generated by these operations.

Net Income

The company recorded a net loss of $607 million and $6 million in the first six months and second quarter of 2002, respectively, compared with net income of $78.6 million and $7 million, respectively, in the year-earlier periods. Included in the 2002 net income is a goodwill impairment charge and the loss on disposal of the Gates/Arrow commodity computer products business as discussed below.

The company recorded earnings from continuing operations of $2.7 million and $.6 million in the first six months and second quarter of 2002, respectively, compared with earnings from continuing operations of $77.9 million and $6.3 million, respectively, in the year-earlier periods. Excluding the previously mentioned severance costs, earnings from continuing operations would have been $5.9 million ($.06 per share) and $ 3.8 million ($.04 per share) in the first six months and second quarter of 2002, respectively. Excluding the integration charge and goodwill amortization, earnings from continuing operations for the first six months and second quarter of 2001 would have been $104.0 million ($1.06 and $.97 on a basic and diluted basis, respectively) and $16.4 million ($.17 and $.16 on a basic and diluted basis), respectively. The decrease in income from continuing operations is due to the significant reduction in sales offset, in part, by a decrease in operating expenses and interest expense.

The disposition of the Gates/Arrow operations represents a disposal of a "component of an entity" as defined in Statement No. 144. Accordingly, the company's financial statements have been presented to reflect Gates/Arrow as a discontinued operation for all periods. Its assets and liabilities have been segregated from continuing operations in the accompanying consolidated balance sheet, and its operating results are segregated and reported as discontinued operations in the accompanying consolidated statement of operations and related notes.

In connection with the sale of Gates/Arrow, the company recorded a loss on disposal of $6.1 million, net of the related tax benefit of $4.1 million. The loss consists of the following (in millions):

Personnel related	$	1.3
Facilities		3.1
Professional fees		.6
Write-down of asset carrying value		3.0
Other		2.2

	$	10.2

In June 2001, the FASB issued Statement No. 142, "Goodwill and Other Intangible Assets." This Statement, among other things, eliminates the amortization of goodwill and requires annual tests for determining impairment of goodwill. On January 1, 2002, the company adopted Statement No. 142, and accordingly discontinued the amortization of goodwill. As required under the transitional accounting provisions of Statement No. 142, the company completed the two steps required to identify and measure goodwill impairment for each reporting unit as of January 1, 2002. The first step involved identifying all reporting units with carrying values (including goodwill) in excess of fair value. The identified reporting units from the first step were then measured for impairment by comparing the fair value of the reporting unit, determined by reference to comparable businesses using a weighted average EBITDA multiple, with the carrying amount of the goodwill. Those reporting units having a carrying value exceeding the fair value were identified as being fully impaired, and the company fully wrote down those assets. For reporting units with potential impairment, the company obtained an independent appraisal of the fair value of the assets and liabilities of the unit and wrote down the goodwill to its implied fair value accordingly. No other impairment indicators have arisen since January 1, 2002.

In determining a reporting unit, the company looked to its current reporting structure at the date of adoption and allocated goodwill to the reporting units. In most cases, the goodwill was identifiable to specific acquisitions, so the allocation was direct. The following were determined to be the reporting units of the company: (i) North America Components, (ii) North America Computer Products, (iii) on an individual country basis for Europe Components, (iv) on an individual country basis for Europe Computer Products, (v) South America, and (vi) Asia.

As a result of the evaluation process discussed above the company recorded an impairment charge of $603.7 million, which was recorded as a cumulative effect of a change in accounting principle at January 1, 2002. Accordingly, the first quarter's results have been modified to include this charge as required under the transitional rules of Statement No. 142. The company does not have any other intangibles subject to valuation under Statement No. 142. If last year's first six months and second quarter results were restated to reflect the elimination of goodwill amortization, earnings would have increased by approximately $.21 and $.10 per share.

Severance Costs

During the second quarter of 2002, the company's chief executive officer resigned. As a result, the company recorded severance costs totalling $3.2 million (net of the related tax effect) principally based on the terms of his employment agreement. Included therein, are provisions principally related to salary continuation, retirement benefits and the vesting of restricted stock and options.

Integration Charge

During the first quarter of 2001, the company recorded an integration charge of $9.4 million ($5.7 net of the related tax effect) associated with the acquisition of Wyle. In connection with this integration, approximately 240 positions, largely performing duplicate functions, were eliminated. A summary of the integration charge is as follows (in millions):

Personnel	$	4.1
Facilities		1.5
Leasehold Improvements		1.1
MIS and miscellaneous		2.7

	$	9.4

Of the expected $8.2 million to be spent in cash, approximately $7.4 million was spent as of June 30, 2002.

Liquidity and Capital Resources

The company maintains a significant investment in accounts receivable and inventories. As a percentage of total assets, accounts receivable and inventories were approximately 52.4 percent and 51.6 percent at June 30, 2002 and December 31 2001, respectively. At June 30, 2002, cash and short-term investments increased to $909.1 million from $556.9 million at December 31, 2001.

One of the characteristics of the company's business is that in periods of revenue growth, investments in accounts receivable and inventories grow, and the company's need for financing increases. In the periods in which revenue declines, investments in accounts receivable and inventories generally decrease, generating cash.

The net amount of cash provided by the company's operating activities during the first six months of 2002 was $486 million, principally reflecting lower working capital requirements as a result of lower sales. In addition, the company was able to improve net working capital utilization during the period. The net amount of cash used for investing activities was $97.4 million, including $110.3 million for consideration paid to acquired businesses and $21.4 million for various capital expenditures offset, in part, by the $37.1 million of cash proceeds collected on the sale of Gates/Arrow. The net amount of cash used for financing activities was $51.8 million, primarily reflecting the repayment of short-term debt, offset, in part, by proceeds from the exercise of stock options.

The net amount of cash provided by the company's operating activities during the first six months of 2001 was $675.7 million, principally reflecting changes in working capital. The net amount of cash used for investing activities was $51.8 million, including $36.3 million for various capital expenditures. The net amount of cash used for financing activities was $606 million, primarily reflecting the repayment of short-term and long-term debt, offset, in part, by proceeds from the sale of convertible debentures.

The company's three-year revolving credit facility and the asset securitization program limit the incurrence of additional borrowings and require that working capital, net worth, and certain other financial ratios be maintained at designated levels. In addition, in the event that the company's credit rating is reduced to non-investment grade by either Standard & Poor's or Moody's Investors Service, Inc. the company would no longer be able to utilize its asset securitization program in its present form. At June 30, 2002, there were no amounts outstanding under the asset securitization program or the three-year revolving credit facility.

The company's credit rating is currently investment grade, though it has been notified by Standard & Poor's and Moody's Investors Service, Inc. that it has been placed on credit watch.

On August 8, 2002, the company repurchased $250 million of its 6.45% senior notes, due in November 2003, at a price of 104.65 percent of the principal amount. The premium paid and deferred financing costs written-off upon the repurchase of this debt, aggregated approximately $11 million, net of the related tax effect, will be recognized as an extraordinary loss in the company's consolidated statement of operations in the third quarter of 2002. As a result of this transaction net interest expense will be reduced by approximately $21 million from the date of the repurchase through the original maturity date, if current interest rates remain the same. After the affect of this transaction, the company will have in excess of $600 million in cash and unutilized credit facilities of $625 million and the asset securitization program of $750 million, aggregating available credit of $1.375 billion.

In August 2002, the company entered into a series of interest rate swaps (the "swaps"), with third parties, with an aggregate notional amount of $250 million in order to hedge the change in fair value of the company's 8.7% senior debentures, due 2005, related to fluctuations in interest rates. These contracts are classified as fair value hedges and mature in October 2005. The swaps modify the company's interest rate exposure by effectively converting the fixed 8.7% senior debentures issued in October 2000 to a floating rate based on the six-month U.S. dollar LIBOR plus a spread through their maturities.

The company, in connection with certain acquisitions, may be required to make future payments that are contingent upon the acquired businesses' earnings and, in certain instances, the achievement of operating goals. During the second quarter of 2002, the company made such payments aggregating $108.5 million in connection with three acquisitions, which have been capitalized as cost in excess of net assets of companies acquired. The company may be contractually required to make these types of payments in the future. Based on the performance of those businesses, for which contingent payments remain open as of June 30, 2002, the company currently estimates such payments to be approximately $15 million.

Information Relating to Forward-Looking Statements

This report includes forward-looking statements that are subject to certain risks and uncertainties which could cause actual results or facts to differ materially from such statements for a variety of reasons, including, but not limited to: industry conditions, changes in product supply, pricing, and customer demand, competition, other vagaries in the electronic components and computer products markets, and changes in relationships with key suppliers. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The company undertakes no obligation to update publicly or revise any of the forward-looking statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The company is exposed to market risk from changes in foreign currency exchange rates and interest rates.

The company, as a large international organization, faces exposure to adverse movements in foreign currency exchange rates. These exposures may change over time as business practices evolve and could have a material impact on the company's financial results in the future. The company's primary exposure relates to transactions in which the currency collected from customers is different from the currency utilized to purchase the product sold in Europe, the Asia/Pacific region, and Latin and South America. At the present time, the company hedges only those currency exposures for which natural hedges do not exist. Natural hedges exist when purchases and sales within a specific country are both denominated in the same currency and therefore no exposure exists to hedge with a foreign exchange contract. In Asia, for example, sales and purchases are primarily denominated in U.S. dollars, resulting in a "natural hedge". Natural hedges exist in most countries in which the company operates, although the percentage o f natural offsets vs. offsets which need to be hedged by foreign exchange contracts will vary from country to country. The translation of the financial statements of the non-North American operations is impacted by fluctuations in foreign currency exchange rates. Had the various average foreign currency exchange rates remained the same during the first six months of 2002 as compared with December 31, 2001, 2002 sales and operating income would have been $6 million and $.4 million lower, respectively, than the reported results. Sales and operating income would have fluctuated by approximately $11 million and $1 million, respectively if average foreign exchange rates had changed by one percentage point in 2002. This amount was determined by considering the impact of a hypothetical foreign exchange rate on the sales and operating income of the company's international operations.

The company's interest expense, in part, is sensitive to the general level of interest rates in the Americas, Europe, and the Asia/Pacific region. The company historically has managed its exposure to interest rate risk through the proportion of fixed rate and variable rate debt in its total debt portfolio. At June 30, 2002, as a result of significant generation of operating cash flow, the company had paid down nearly all of its variable rate debt with the net result being that approximately 99 percent of the company's debt was subject to fixed rates and 1 percent of its debt was subject to variable rates. Interest expense, net of interest income, would have fluctuated by approximately $4 million if average interest rates had changed by one percentage point during the first six months of 2002. This amount was determined by considering the impact of a hypothetical interest rate on the company's average variable rate of investments and outstanding borrowings. This analysis does not consider the effect of the level of overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, management could likely take actions to further mitigate any potential negative exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in the company's financial structure.

PART II. OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders.
           None

Item 6.  Exhibits and Reports on Form 8-K.

    (a)  Exhibits
           10(i) Consulting Agreement, dated as of June 3, 2002, between the
                  company and Stephen R. Kaufman

           10(ii) Amended and Restated Agreement, dated as of June 13, 2002,
                  between the company and Francis M. Scricco

    (b)  Reports on Form 8-K
           None

A certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, accompanies this report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ARROW ELECTRONICS, INC.

Date:  August 12, 2002                   By:/s/ Paul J. Reilly
                                            Paul J. Reilly
                                            Chief Financial Officer

Arrow Electronics, Inc.

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(18 U.S.C. Section 1350)

In connection with the Quarterly Report of Arrow Electronics, Inc (the "Company") on Form 10-Q for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Stephen P. Kaufman, Chief Executive Officer of the Company, certify, pursuant to the requirements of Section 906 of the Sarbanes-Oxley Act of 2002, (18 U.S.C. Sections 1350(a) and (b)), that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act");
and

(2) The information in the Report fairly presents, in all material
respects, the financial condition and results of operations of
the Company.

Dated: August 12, 2002

                                      By: /s/ Stephen P. Kaufman
                                          Stephen P. Kaufman
                                          Chief Executive Officer

Arrow Electronics, Inc.

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(18 U.S.C. Section 1350)

In connection with the Quarterly Report of Arrow Electronics, Inc (the "Company") on Form 10-Q for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Paul J. Reilly, Chief Financial Officer of the Company, certify, pursuant to the requirements of Section 906 of the Sarbanes-Oxley Act of 2002, (18 U.S.C. Sections 1350(a) and (b)), that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"); and

(2) The information in the Report fairly presents, in all material
respects, the financial condition and results of operations of
the Company.

Dated: August 12, 2002

                                      By: /s/ Paul J. Reilly
                                          Paul J. Reilly
                                          Chief Financial Officer

EX-10 3 ex10-i.htm CONSULTING AGREEMENT BETWEEN THE COMPANY AND STEPHEN R. KAUFMAN EMPLOYMENT AND POST-RETIREMENT CONSULTING AGREEMENT

CONSULTING AGREEMENT

This Consulting Agreement is entered into as of June 3, 2002 (the "Effective Date") by and between Arrow Electronics, Inc., a New York Corporation (the "Company"), and Stephen R. Kaufman (the "Consultant").

WHEREAS, the Consultant is currently serving as the Chairman of the Board of Directors of the Company (the "Board"), and has previously also served as the Chief Executive Officer of the Company, pursuant to the Employment Agreement, dated as of the 22nd day of February, 1995, as amended as of December 31, 2001 (the "Employment Agreement");

WHEREAS, the Consultant's "Employment Period" under the Employment Agreement (as amended) will terminate on July 31, 2002 or such later date as may be mutually agreed to in writing by the Company and the Consultant;

WHEREAS, the Company wishes to avail itself of the Consultant's knowledge, expertise and experience by hiring the Consultant as a consultant for a period of five years following the expiration of the Employment Period; and

WHEREAS, the Consultant is willing to serve as a consultant to the Company during such period upon the terms and conditions set forth below;

NOW THEREFORE, the Company and the Consultant agree as follows:

Consultancy and Board Service.

The Consultant agrees that, commencing on the date following the date on which the Consultant retires from the Company (the "Commencement Date") and continuing until the fifth anniversary thereof (the "Fifth Anniversary"), or such lesser period as provided for in Section 6 hereof (the "Consulting Period"), he shall provide to the Company and its subsidiaries consulting services and advice and shall participate in various external activities and events for the benefit of the Company, in each case commensurate with his status and experience, as reasonably requested from time to time upon reasonable prior notice by the Chief Executive Officer of the Company; provided, however, that during the period commencing on the Commencement Date and ending on the second anniversary of the Commencement Date or such earlier date as provided in Section 6 hereof (the "Initial Period"), the Consultant shall be available to provide services pursuant to this Agreement for up to 65 days per year and provided further, however, that during the period commencing on the second anniversary of the Commencement Date and ending on the Fifth Anniversary or such earlier date as provided in Section 6 hereof (the "Remaining Period"), the Consultant shall be available to provide services under this Agreement for up to 25 days per year.
The Company acknowledges and agrees that, except as provided in Section 4 hereof, the Consultant may provide consulting and other services to other companies in addition to the consulting services provided hereunder and, accordingly, the Company agrees that, except as provided in Section 4 hereof, the Consultant shall not be restricted in any manner whatsoever by this Agreement from providing services to any other person or entity and that the agreements set forth herein are entered into upon a non-exclusive basis.
The Consultant shall not, solely by virtue of the consulting services provided hereunder, be considered to be an officer or employee of the Company during the Consulting Period, and shall not have the power or authority to contract in the name of or bind the Company, except as may be expressly stated in a written delegation of such authority from the Board.

Compensation.

In consideration for the Consultant's provision of consulting services and compliance with his other obligations hereunder:

Consulting Fees. The Company shall pay the Consultant fees (the "Consulting Fees") at an annual rate of $500,000 per year during the Initial Period and at an annual rate of $300,000 per year (the "Remaining Term Rate") during the Remaining Period, which payments shall be made monthly in advance on the first business day of each month.

Additional Payments. As additional consideration for entering into this Agreement, the Consultant shall be paid (A) an annual benefit equal to $140,000, which benefit, except as otherwise provided in Section 6 hereof, shall be paid in substantially equal monthly installments commencing on the first day of the month following the month in which occurs the second anniversary of the Commencement Date and continuing through the month in which occurs the Consultant's death; and (B) an additional annual benefit equal to $143,000, which benefit, except as otherwise provided in Section 6 hereof, shall be paid in substantially equal monthly installments commencing on the first day of the month following the month in which occurs the Fifth Anniversary and continuing through the month in which occurs the Consultant's death. The payments described in this Section 2(a)(ii) shall be hereinafter referred to as the "Additional Payments". Within five days following the commencement of the Consulting Period, the Company shall cause an amount in cash equal to the present value of the Additional Payments to be deposited in the irrevocable trust established under the Grantor Trust Agreement, dated as of June 25, 1998, as it may be amended from time to time, or a similar irrevocable trust (the "Rabbi Trust"). Such present value shall be determined in accordance with the Actuarial Assumptions (as defined in Section 2(c) hereof). The Company shall determine, not less frequently than annually, whether the amounts so deposited, plus earnings thereon that remain in the Rabbi Trust, are at least equal to the then-present value of the Additional Payments and, to the extent necessary, shall deposit additional cash in the Rabbi Trust to ensure that result.

Expenses. During the Consulting Period, the Company shall reimburse the Consultant for such reasonable travel, lodging and other appropriate expenses incurred during the Consulting Period by the Consultant in the course or on account of rendering consulting services hereunder in accordance with, and subject to the terms and conditions of, the expense reimbursement policy applicable to expenses incurred by the Chief Executive Officer of the Company.

In addition, as consideration for entering into this Agreement, the Company shall pay the Consultant a special bonus of $350,000 promptly following commencement of the Consulting Period.
Within five days following the commencement of the Consulting Period, the Company shall cause an amount in cash equal to the aggregate present value of the Consultant's benefit (the "Pension Benefit") under the Company's Unfunded Pension Plan for Selected Executives, as it may be amended from time to time (the "SERP"), to be deposited in the Rabbi Trust. Such present value shall be determined in accordance with actuarial assumptions which are no less favorable to the Consultant than those used in connection with the SERP as in effect immediately prior to the Effective Date (the "Actuarial Assumptions"). The Company shall determine, not less frequently than annually, whether the amounts so deposited, plus earnings thereon that remain in the rabbi trust, are at least equal to the then-present value of the Pension Benefit and, to the extent necessary, shall deposit additional cash in the Rabbi Trust to ensure that result. The Company and the Consultant acknowledge that, as of the Effect ive Date, the annual benefit accrued by the Consultant pursuant to the SERP, payable in the form elected by the Consultant pursuant to the terms of the SERP, is $474,000. If, during the period beginning on the Commencement Date and ending on the Fifth Anniversary, the maximum replacement ratio used to calculate payments under the SERP with respect to the Chief Executive Officer or any other officer of the Company is increased above 45 percent, then all future payments to or in respect of the Consultant pursuant to the SERP shall be increased at the rate of $17,330 per year for each percentage point above 45 percent by which the maximum replacement ratio is increased.
Any unvested options to acquire stock of the Company held by the Consultant on the date which is immediately prior to the Commencement Date shall become fully vested and exercisable on such date, and the restrictions on any shares of restricted Company stock held by the Consultant on the date which is immediately prior to the Commencement Date shall lapse on such date.
During the Consulting Period, the Company shall provide the Consultant with accident insurance with respect to accidents which occur while the Consultant is on Company business.
Until the Consultant attains age 65, the Consultant shall be permitted to purchase health insurance under the Company's health insurance plans made available from time to time to its officers. Such continued coverage shall be conditioned on the Consultant's timely payment of the full cost of the coverage elected, which shall be the same amount that would be payable from time to time for that coverage if it were provided under Part 6 (Section 601 and following) of Subtitle B of Title I of the Employee Retirement Income Security Act of 1974, as amended from time to time (commonly known as "COBRA").
The compensation provided for under this Agreement during the Initial Period shall be in lieu of any fees to which the Consultant might otherwise have been entitled for serving as a member of the Board or any committee thereof. If the Consultant is a member of the Board and/or any committee thereof during the Remaining Period (or any portion thereof), he also shall be entitled to the same fees and benefits provided to other non-employee members of the Board.

Office Support; Other Benefits. During the Consulting Period, the Company shall provide the Consultant with (a) an office no less favorable than the executive offices of the Manhattan office of the Company and (b) a secretary whose qualifications are comparable to those of secretaries employed by senior executives in the Company, which secretary may elect to be an employee of the Company. In addition, during the Consulting Period, the Company shall provide the Consultant with such other facilities as may be reasonably required for the proper discharge of his duties hereunder, as reasonably determined from time to time by the Company's Chief Executive Officer; provided, however, that when traveling on behalf of the Company, including but not limited to travel to and from the Consultant's residences in Florida and Massachusetts, the Consultant shall be permitted to use Company aircraft on a basis no less favorable than that of the Chief Executive Officer of the Company.

Non-Competition, etc. During the Consulting Period and for a period of two years after the termination of the Consulting Period (one year in the case of Section 4(d) hereof), the Consultant shall not, directly or indirectly:

Disclosure of Information. Use, attempt to use, disclose or otherwise make known to any person or entity (other than to the Board 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 or consultancy, 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 detrim ental to or cause injury or loss to the Company its subsidiaries or affiliates.

Non-Competition. Engage or become interested in the United States, Canada or Mexico or anywhere else in the world (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 Consultant 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);

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 at the time is (or at any time during the preceding twelve months was) a supplier or customer, or prospective supplier or customer, of the Company, its subsidiaries or affiliates; or

Employment. Employ or retain, or arrange to have any other person, firm or other entity employ or retain, 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 Consultant shall 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 Consultant may have in any business, which business could reasonably be construed to be competitive with the principal business or businesses then conducted by the Company, its subsidiaries or affiliates.

If the business of the Company, its subsidiaries and/or its affiliates is expanded due to a merger, consolidation, acquisition of assets, reorganization or similar transaction, then for purposes of applying this Section 4, references to the business of the Company, its subsidiaries and its affiliates shall refer to the business as conducted immediately prior to any such transaction.

Indemnity. The Company shall indemnify the Consultant for any claim arising out of or in connection with the Consultant's service as a member of the Board, as having served as an officer or employee of the Company, as an officer or director of any of the Company's subsidiaries or as a consultant pursuant to the terms of this Agreement in the same manner and to the same extent as the Company or such subsidiary, as the case may be, indemnifies its then current directors, officers or employees as the case may be.

Termination of Consulting Period; Compensation Upon Termination.

Termination of Consulting Period. Notwithstanding anything in herein to the contrary, the Consulting Period shall terminate on the death or Disability of the Consultant, a termination of the Consultant's services by the Company for Cause or without Cause or a termination by the Consultant of his services for Good Reason or without Good Reason.

For purposes of this Agreement, "Cause" shall mean the Consultant's (A) willful and continued failure to perform substantially his duties hereunder, (B) gross negligence or serious misconduct, in either case that is materially injurious to the Company and its subsidiaries and affiliates, taken as a whole, (C) the Consultant's conviction for the commission of a felony other than a felony related to the operation of a motor vehicle or (D) the material breach by the Consultant of any provision of this Agreement. No act or failure to act by the Consultant shall be considered Cause unless the Company has given detailed written notice thereof to the Consultant and, where remedial action is feasible, he has failed to remedy the act or omission within thirty days after receiving such notice. No act, or failure to act, shall be considered "willful" unless done, or omitted to be done, by the Consultant in bad faith and without reasonable belief that his action or omission was in, or not opposed to, the best interests of the Company.
For purposes of this Agreement, "Disability" shall mean that the Consultant has been incapable of substantially fulfilling the positions, duties, responsibilities and obligations set forth in this Agreement because of physical, mental or emotional incapacity resulting from injury, sickness or disease for a period of (A) at least four consecutive months or (B) more than six months in any twelve month period.
For purposes of this Agreement, "Good Reason" shall mean (A) the Company's failure to obtain the express written assumption of this Agreement as provided in Section 9(c) hereof or (B) any other material breach of any provision of this Agreement by the Company. No breach pursuant to subsection (B) shall be considered Good Reason unless the Consultant has given detailed written notice thereof to the Company and, where remedial action is feasible, the Company has failed to remedy such breach within thirty days after receiving such notice.

Benefits Upon Any Termination of the Consulting Period. Upon any termination of the Consulting Period on or prior to the month in which occurs the Fifth Anniversary, the Company shall pay or cause to be paid to the Consultant (or, if applicable, the Consultant's beneficiary, as elected by the Consultant in accordance with such procedures as may be established by the Company from time to time (the "Beneficiary")): (i) within five business days following such termination, any compensation payable pursuant to Section 2 hereof that has been earned prior to the date of such termination and not yet paid (such payments, the "Accrued Amounts") and (ii) except in the case of a termination by reason of the Consultant's death, the Additional Payments, which Additional Payments shall be made at such times and in such amounts as such payments would have been made pursuant to Section 2(a)(ii) hereof had the Consulting Period not prematurely terminated.

Benefits Upon Termination by the Company without Cause or by the Consultant for Good Reason. If the Consulting Period is terminated on or prior to the Fifth Anniversary due to the termination of the Consultant's services (i) by the Company without Cause or (ii) by the Consultant for Good Reason, the Company shall pay or cause to be paid to the Consultant, within five business days following such termination, a lump sum cash payment equal to the Consulting Fees that would have been paid to the Consultant during the period beginning on the date of such termination and ending on the Fifth Anniversary.

Termination by the Company for Cause or by the Consultant without Good Reason. If the Consulting Period is terminated on or prior to the Fifth Anniversary due to the termination of the Consultant's services (i) by the Company for Cause or (ii) by the Consultant without Good Reason, the Consultant shall be entitled only to the Accrued Amounts and the Additional Payments in accordance with Section 6(b) hereof.

Benefits Upon Termination by Reason of Disability. If the Consulting Period is terminated on or prior to the Fifth Anniversary due to the Consultant's Disability, the Company shall pay or cause to be paid to the Consultant the Consulting Fees that would have been paid to the Consultant during the period beginning on the date of such termination and ending on the Fifth Anniversary, at such times and in such amounts as such payments would have been made pursuant to Section 2(a)(i) hereof had the Consulting Period not prematurely terminated.

Benefits Upon Termination by Reason of Death. If the Consulting Period terminates on or prior to the Fifth Anniversary due to the Consultant's death, the Company shall pay or cause to be paid to the Beneficiary within twenty business days following such termination, a lump sum payment equal to the Consulting Fees that the Consultant would have received during the one-year period beginning on the date of death had the Consulting Period not prematurely terminated.

Separability. The Consultant agrees that the provisions of Section 4 constitute independent and separable covenants which shall survive the termination of the Consulting Period and which shall be enforceable by the Company notwithstanding any rights or remedies the Consultant may have under any other provisions hereof. In addition, (a) any provisions which by their terms contemplate the making of payments or the taking of other actions following the termination of the Consulting Period shall survive the termination of the Consulting Period and (b) Section 5 hereof shall survive the termination of the Consulting Period.

Specific Performance. The Consultant acknowledges that (a) the services to be rendered under the provisions of this Agreement and the obligations of the Consultant assumed herein are of a special, unique and extraordinary character; (b) it would be difficult or impossible to replace such services and obligations; (c) the Company, its subsidiaries and affiliates will be irreparably damaged if the provision hereof are not specifically enforced; and (d) the award of monetary damages will not adequately protect the Company. its subsidiaries and affiliates in the event of a breach hereof by the Consultant. By virtue thereof, the Consultant agrees and consents that if he violates any of the provisions of this Agreement, in addition to any other rights and remedies available under this Agreement or otherwise, the Company 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 c ourt 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.

Miscellaneous

Entire Agreement; Amendment. This Agreement and the SERP constitute the whole agreement between the parties with respect to the subject matter hereof and may not be modified, amended or terminated except by a written instrument executed by the parties hereto. All other agreements between the parties pertaining to the employment or remuneration of the Consultant not specifically contemplated hereby or incorporated or merged herein are terminated and shall be of no further force or effect. Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall adversely affect the rights of the Consultant under any benefit plan, program or arrangement in which he is participating immediately prior to the commencement of the Consulting Period.

Certain Interim Events. If, prior to the commencement of the Consulting Period, the Company terminates the Consultant's employment without cause (as defined in the Employment Agreement), then for purposes of this Agreement, such termination shall be deemed to be a termination of the Consultant's services without Cause during the Consulting Period, and the Consultant shall be entitled to (i) the immediate payment of the amount set forth in Section 2(b) hereof and (ii) the payments and benefits to which he would be entitled upon such a termination, including but not limited to the benefits provided in Sections 2(c), 2(d), 2(f), 6(b), 6(c) and 9(f) hereof. If, prior to the commencement of the Consulting Period, the Consultant's employment terminates by reason of Disability, then for purposes of this Agreement, such termination shall be deemed to be a termination of the Consultant's services by reason of Disability during the Consulting Period, and the Consultant shall be entitled to (i) the immediate payment of the amount set forth in Section 2(b) hereof and (ii) the payments and benefits to which he would be entitled upon such a termination, including but not limited to the benefits provided in Sections 2(c), 2(d), 2(f), 6(b), 6(e) and 9(f) hereof. For purposes of this Section 9(b), references in Section 2(d) hereof to the Commencement Date shall be deemed instead to refer to the date on which occurs the termination of employment. If, between the Effective Date and the commencement of the Consulting Period, the Consultant dies while employed by the Company, this Agreement shall be null and void and of no effect.

Assignment. Except as stated below, this Agreement is not assignable by the Company without the written consent of the Consultant, or by the Consultant without the written consent of the Company, and 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 expressly assume this Agreement in writing and become obligated to perform all of the terms and conditions hereof, in which event the Consultant's obligations shall continue in favor of such other corporation or entity.

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 of any other term of this Agreement on that or any other occasion.

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.

Dispute Resolution; Legal Fees. Except as otherwise provided herein, all controversies, claims or disputes arising out of or related to this Agreement shall be settled in New York City, NY, under the rules of the American Arbitration Association then in effect, and judgment upon such award rendered by the arbitrator(s) may be entered in any court of competent jurisdiction. The costs of the arbitration shall be borne by the Company. Promptly following the Effective Date, the Company shall pay the reasonable legal fees and disbursements incurred by the Consultant in connection with the negotiation and preparation of this Agreement. In addition, the Company agrees to pay promptly as incurred, to the fullest extent permitted by law, all legal fees and expenses which the Consultant may reasonably incur as a result of any contest by the Company or the Consultant of the validity or enforceability of, or liability under, any provisions of this Agreement (including as a result of any contest initiated by t he Consultant concerning the amount of any payment due pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended; provided, however, that the Consultant shall be responsible for any such costs and expenses incurred in connection with any claim with respect to which the Consultant does not prevail in any material respect, and shall reimburse the Company for such amounts, together with interest thereon at the rate provided for in the preceding clause of this sentence.

Payments to Legal Representative. If the Consultant becomes legally incompetent, all payments hereunder that would otherwise be paid to the Consultant shall be paid to his legal representative.

No Mitigation. The Company agrees that, if the Consultant's service with the Company terminates during the Consulting Period, the Consultant is not required to seek other service or employment or to attempt in any way to reduce any amounts payable to the Consultant by the Company hereunder. Further, the amount of any payment or benefit provided for in this Agreement shall not be reduced by any compensation earned by the Consultant as the result of employment by or service with another company or other entity, by retirement benefits, by offset against any amount claimed to be owed by the Consultant to the Company, or otherwise.

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 third business day following the date of mailing:

if to the Consultant to, to him at his last known home address as reflected on the books and records of the Company.
if to the Company to:

                Arrow Electronics, Inc.
                25 Hub Drive
                Melville, New York 11747
                Attention: Senior Vice President and General Counsel;

provided, however, that either party may, by notice to the other, change his or its address for notice hereunder.

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.

ARROW ELECTRONICS, INC.

                                                       By:/s/ Robert E. Klatell
                                                           Name: Robert E. Klatell
                                                           Title: Executive Vice President

CONSULTANT

/s/ Stephen R. Kaufman

EX-10 4 ex10-ii.htm AMENDED AND RESTATED AGREEMENT BETWEEN THE COMPANY AND FRANCIS M. SCRICCO

AMENDED AND RESTATED AGREEMENT

THIS AMENDED AND RESTATED AGREEMENT, made as of the 13th day of June, 2002, by and between Arrow Electronics, Inc., a New York corporation (the "Corporation"), and Francis M. Scricco (the "Executive"), hereby amends and restates that certain Agreement, made as of the 10^th day of June, 2002, by and between the Corporation and the Executive.

WHEREAS, the Executive has served as President and Chief Executive Officer of the Corporation;

WHEREAS, the Executive and the Corporation have entered into an employment agreement dated as of the first day of July, 2000 (the "Employment Agreement"); and

WHEREAS, the Executive and the Corporation have agreed that the Executive will separate from employment with the Corporation on the terms and conditions set forth in this Agreement;

NOW, THEREFORE, in consideration of the foregoing, and of the mutual agreements herein contained, the Executive and the Corporation agree with each other as follows:

1. Resignation. The Executive hereby resigns from his positions as President and Chief Executive Officer of the Corporation and resigns his membership on the Board of Directors of the Corporation (the "Board"), and from any and all offices and directorships of any and all corporations and other entities controlling, controlled by or under common control with the Corporation (the "Affiliated Companies"), effective as of 3:45 P.M. on June 10, 2002 (the "Effective Date").

2. Continuing Payments and Benefits. In lieu of any other cash payments or benefits to which the Executive may be entitled under the Employment Agreement or otherwise, provided that the Executive shall not have revoked this Agreement pursuant to Section 4(g) hereof, the Executive shall receive the following:

(a) Separation Payments. During the period commencing on the Effective Date and continuing through June 30, 2004 (the "Term"), the Executive shall receive separation payments, payable in equal monthly installments, at an annualized rate of $1,333,333.

(b) Other Payments. In exchange for the surrender by the Executive on the Effective Date of employee stock options to purchase 23,000 shares of common stock, $1 par value ("Common Stock"), of the Corporation, which options were granted to the Executive under the Arrow Electronics, Inc. Stock Option Plan (the "Option Plan") on February 27, 2002, the Executive shall receive a payment of $200,000 upon the date of the expiration of the Revocation Period (as defined in Section 4(g); such date, the "Revocation Expiration Date"). In addition, the Executive shall receive a payment of $50,000 on the Revocation Expiration Date to be applied by the Executive to his transition costs and expenses at his discretion and with no obligation to account to the Corporation with respect to such costs and expenses.

(c) Stock Options. The Executive shall be entitled to retain and exercise all employee stock options ("Stock Options") heretofore granted to him under the Option Plan and listed in Schedule 1, in accordance with the terms and conditions of the Stock Options; provided, however, that (i) all Stock Options which were originally scheduled to become exercisable or "vest" on or prior to June 30, 2004 shall vest on the Revocation Expiration Date, (ii) all Stock Options that are vested or vest on the Revocation Expiration Date as aforesaid shall remain exercisable until the earlier of the expiration of their full terms or June 30, 2007, and (iii) no provision contained in any Stock Option which provides the Corporation with a right of first refusal to purchase the shares of Common Stock covered thereby shall be applicable after the Effective Date. For the avoidance of doubt, any Stock Options which were not originally scheduled to become exer cisable or vest on or prior to June 30, 2004 shall be forfeited as of the date hereof.

(d) Restricted Stock. (i) All shares of Common Stock (the "Restricted Stock") heretofore awarded to the Executive under the Arrow Electronics, Inc. Restricted Stock Plan (the "Restricted Stock Plan") and listed in Schedule 1 and which were originally scheduled to become free of restrictions or "vest" on or before June 30, 2004, shall vest on the Revocation Expiration Date; (ii) 4,705 shares of Restricted Stock which were originally scheduled to vest on February 21, 2005, shall vest on the Revocation Expiration Date; and (iii) no provisions contained in any Restricted Stock award which provide the Corporation with a right of first refusal to purchase the Restricted Stock shall be applicable after the Effective Date. For the avoidance of doubt, except as provided above, any shares of Restricted Stock that are not scheduled to become free of restrictions or vest on or before June 30, 2004 shall be forfeited and rescinded as of the date h ereof.

(e) Supplemental Executive Retirement Plan. Commencing at age 60, the Executive (or his surviving spouse, as the case may be) shall be entitled to receive an annual lifetime benefit as hereinafter provided, in accordance with the provisions of the Corporation's Unfunded Pension Plan for Selected Executives (the "SERP"). For the avoidance of doubt, the Executive (or his surviving spouse, as the case may be) shall be entitled to receive such benefit regardless of whether the SERP is amended or terminated after the Effective Date. Such benefit shall be in the form of a joint and 50% surviving spouse lifetime annuity as provided for in the SERP, with a $150,000 annual lifetime benefit payable to the Executive and a $75,000 annual lifetime benefit payable to the Executive's spouse for any period in which she survives him (regardless of the date of his death). The Executive hereby elects in accordance with the SERP the optional joint and 50 % surviving spouse lifetime annuity provided for in the SERP. Promptly after the Revocation Expiration Date, the Corporation will deposit in the rabbi trust which has been created pursuant to the SERP, with Wachovia Bank, as the trustee, for the benefit of the Executive (or his surviving spouse, as the case may be), in an account for the exclusive benefit of the Executive and the Corporation's creditors, an amount which is equal to the present value actuarially determined in accordance with the SERP, of the actuarially determined aggregate benefit payable to the Executive (or his surviving spouse, as the case may be) pursuant to the SERP as contemplated in this Subsection 2(e). As promptly as practicable, the Corporation shall take such further action as is necessary to entitle the Executive (or his surviving spouse, as the case may be) to the benefits contemplated in this Subsection 2(e).

(f) Other Benefits. During the Term, the Executive, his spouse and their eligible dependents (as defined in, and to the extent permitted by, the applicable plan), as the case may be, shall be entitled to participate in or be covered under all medical, dental and other health plans and programs of the Corporation (the "Health Benefit Plans") at such levels of participation and benefits as were available to the Executive and his spouse and dependents under the Health Benefit Plans as of the Effective Date. Without limiting the generality of the foregoing, from time to time during the Term, the Executive shall be permitted to elect or eliminate any coverage for any spouse or dependents that may be available under any Health Benefit Plan, subject to the terms and conditions of such Health Benefit Plan.

(g) Expenses and Perquisites.

(i) The Executive shall be entitled to prompt reimbursement for all business expenses incurred by him prior to the Effective Date, in accordance with the policies and procedures of the Corporation.

(ii) The Corporation shall promptly pay the amount of $65,000 to the Law Offices of Joseph E. Bachelder (the "Law Firm") in satisfaction of all legal fees and other expenses incurred by the Law Firm in connection with the negotiation of the Executive"s separation from employment with the Corporation and the preparation of this Agreement, subject to the Law Firm providing the Corporation with appropriate documentation of such fees and expenses.

(iii) The Corporation agrees to reimburse the Executive for the reasonable costs incurred by the Executive in connection with obtaining and maintaining an appropriate office, including appropriate furnishings, equipment and utilities, and secretarial services, at a location in the Cold Spring Harbor, New York area selected by the Executive, from September 3, 2002 through September 3, 2003. The amounts provided for above shall be paid promptly upon the request of the Executive which is accompanied by appropriate documentation thereof.

3. Indemnification

(a) The Corporation agrees that if the Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he was a director, officer or employee of the Corporation or was serving at the request of the Corporation as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is the Executive's alleged action in an official capacity while serving as a director, officer, member, employee or agent (a "Proceeding"), the Executive shall be indemnified and held harmless by the Corporation to the fullest extent legally permitted or authorized by the Corporation's certificate of incorporation or bylaws or resolutions of the Board (in each case as in effect on the Effecti ve Date) or, if greater, by the laws of the State of New York, against all cost, expense, liability and loss (including, without limitation, attorneys' fees and expenses, judgments, fines, ERISA excise taxes or other liabilities or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive in connection therewith, and such indemnification shall continue as to the Executive even though he has ceased to be a director, officer, member, employee or agent of the Corporation or other entity and shall inure to the benefit of the Executive's heirs, executors and administrators; provided, however, that the Corporation shall have no obligation to indemnify or hold harmless the Executive if a judgment or other final adjudication adverse to the Executive establishes that his acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled. Any requests for indemnification shall be made by the Executive in writing to the Corporation and such requests shall be handled in the manner provided therefor by the bylaws of the Corporation. Notwithstanding the foregoing, in the event that the Corporation's certificate of incorporation or its bylaws or the laws of the State of New York are amended to provide greater protections to the indemnified party, the Executive shall be entitled to the benefit of such amendments. The Corporation shall advance to the Executive all reasonable costs and expenses incurred by him in connection with a Proceeding within 20 calendar days after the receipt by the Corporation of a written request for such advance. Such request shall include an undertaking by the Executive to repay the amount of such advance if it shall ultimately be determined that he is not entitled to be indemnified against such costs and expenses.

(b) The Corporation shall cause the Executive to continue to be covered, until the sixth anniversary of the Effective Date, by the policies of directors' and officers' liability insurance maintained by the Corporation for directors and senior officers generally as in effect from time to time; provided, that if there is any claim affecting the Executive outstanding and unresolved as of such sixth anniversary, such insurance shall be continued in respect of such claim until final disposition thereof.

4. Acknowledgment and Release.

(a) The Corporation for and on behalf of itself, its Affiliated Companies, and the directors, officers, agents, consultants and assigns of the Corporation and its Affiliated Companies (collectively, "Corporation Released Parties") hereby unconditionally and forever waives, discharges and releases any common law, statutory or other complaint, claim, demand, obligation, liability or cause of action that the Corporation or any Corporation Released Party has, may have had or now has against the Executive or his dependents, heirs, legal representatives, administrators, agents, executors, successors and assigns (collectively, the "Executive Released Parties") arising out of or relating to the Executive's employment, or termination thereof, with the Corporation, or his serving in any capacity in respect of the Corporation or any of the Affiliated Companies, whether known or unknown, in law or in equity, including, but not limited to, any complaint, claim, demand, obligation, liability or cause of action arising under any federal, state or local law or ordinance, tort, contract, or breach of public policy theory, or alleged violation of any other legal, contractual or fiduciary obligation. Anything herein to the contrary notwithstanding, nothing herein shall release any Executive Released Party from any claims or damages based on (i) any right or claim the Corporation may have pursuant to this Agreement, (ii) any right or claim that arises out of conduct of the Executive occurring after the Effective Date, (iii) any right the Corporation may have to obtain contribution as permitted by law in the event of entry of judgment against it as a result of any act or failure to act for which the Corporation and the Executive are jointly liable, or (iv) any criminal conduct by the Executive.

(b) The Executive for himself and on behalf of any Executive Released Party hereby unconditionally and forever waives, discharges and releases any common law, statutory or other complaint, claim, demand, obligation, liability or cause of action that the Executive or any Executive Released Party has, may have had or now has against the Corporation or any Corporation Released Party arising out of or relating to the Executive's employment, or termination thereof, with the Corporation, or his serving in any capacity in respect of the Corporation or any of the Affiliated Companies, whether known or unknown, in law or in equity, including, but not limited to, any complaint, claim, demand, obligation, liability or cause of action regarding any severance benefit which but for this Agreement might have been due the Executive under any previous agreement executed by and between the Corporation or any Affiliated Companies and the Executive, and any com plaint, claim, demand, obligation, liability or cause of action arising out of his employment, or termination thereof, with the Corporation under the Age Discrimination in Employment Act of 1967 ("ADEA," a law which prohibits termination on the basis of age), as amended (including the Older Workers Benefit Protection Act); the National Labor Relations Act, as amended; the Civil Rights Act of 1991; 42 U.S.C. 1981, as amended; the Americans with Disabilities Act of 1990; Title VII of the Civil Rights Act of 1964, as amended; the Employee Retirement Income Security Act of 1974, as amended (except for any claim which cannot be waived by law); the New York State Human Rights Act, the New York State Labor Laws; and any other federal, state and local laws. Anything herein to the contrary notwithstanding, nothing herein shall release the Corporation or any Corporation Released Party from any claims or damages based on (i) any right or claim the Executive may have pursuant to this Agreement, (ii) any right or claim that arises out of conduct occurring after the Effective Date, (iii) any right that the Executive may have to benefits or entitlements under the Health Benefit Plans, the SERP, the Stock Options, and the awards with respect to the Restricted Stock, as contemplated in Section 2 of this Agreement, (iv) any right that the Executive may have to benefits or entitlements under any other qualified pension plans and any conversion or continuation rights under any other welfare plans of which the Executive was a participant as of the Effective Date, or (v) any right the Executive may have to obtain contribution as permitted by law in the event of entry of judgment against him as a result of any act or failure to act for which the Executive and the Corporation are jointly liable.

(c) As of the Effective Date, the Executive and the Corporation acknowledge that they have not filed or assigned to any other party any complaint, charge, claim or proceeding against each other or any Corporation Released Party or Executive Released Party before any local, state or federal agency, court or other body relating to any claims released herein (each individually a "Section 4 Proceeding"). The Executive and the Corporation represent that they are not aware of any basis on which such a Section 4 Proceeding could reasonably be instituted.

(d) (i) The Executive (A) acknowledges that he will not initiate or cause to be initiated on his behalf any Section 4 Proceedings and will not participate in any Section 4 Proceeding, in each case, except as required by law; and (B) waives any right he may have to benefit in any manner from any relief (whether monetary or otherwise) arising out of any Section 4 Proceeding, including any Proceeding conducted by the Equal Employment Opportunity Commission ("EEOC"). Further, the Executive understands that by entering into this Agreement, he will be limiting the availability of certain remedies that he might have against the Corporation and limiting also his ability to pursue certain claims released herein against the Corporation Released Parties.

(ii) Notwithstanding the foregoing, nothing in this Section 4 shall prevent the Executive from (A) initiating or causing to be initiated on his behalf any complaint, charge, claim or proceeding against the Corporation before the EEOC or any court of competent jurisdiction challenging the validity of the waiver of his claims under ADEA contained in Section 4 of this Agreement (but no other portion of such waiver); or (B) initiating or participating in an investigation or proceeding conducted by the EEOC with respect to ADEA. Notwithstanding the foregoing, if the Executive exercises any right with respect to ADEA under Section 4 of this Agreement, the Corporation shall have all of the defenses that would otherwise have been available to it in the absence of this Agreement.

(e) The Corporation (i) acknowledges that it will not initiate or cause to be initiated on its behalf any Section 4 Proceedings and will not participate in any Section 4 Proceeding, in each case, except as required by law; and (ii) waives any right it may have to benefit in any manner from any relief (whether monetary or otherwise) arising out of any Section 4 Proceeding. Further, the Corporation understands that by entering into this Agreement, it will be limiting the availability of certain remedies that it might have against the Executive and limiting also its ability to pursue certain claims released herein against the Executive Released Parties.

(f) THE EXECUTIVE ACKNOWLEDGES THAT HE HAS BEEN GIVEN AND HAS WAIVED THE OPPORTUNITY TO CONSIDER THIS AGREEMENT FOR AT LEAST 21 DAYS, THAT HE HAS READ THIS AGREEMENT CAREFULLY, HAS BEEN ADVISED BY THE CORPORATION TO, AND HAS IN FACT, CONSULTED AN ATTORNEY, AND FULLY UNDERSTANDS THAT BY SIGNING BELOW HE IS GIVING UP CERTAIN RIGHTS WHICH HE MAY HAVE, TO SUE OR ASSERT A CLAIM AGAINST ANY OF THE CORPORATION RELEASED PARTIES, AS DESCRIBED IN THIS SECTION 4. THE EXECUTIVE ACKNOWLEDGES THAT HE HAS NOT BEEN FORCED OR PRESSURED IN ANY MANNER WHATSOEVER TO SIGN THIS AGREEMENT AND THE EXECUTIVE AGREES TO ALL OF ITS TERMS VOLUNTARILY.

(g) The Executive shall have seven days (the "Revocation Period") from the Effective Date to revoke this Agreement, including the release given under this Section 4 with respect to all claims referred to herein (including, without limitation, any and all claims arising under ADEA). If the Executive revokes this Agreement within the Revocation Period including, without limitation, the release given under this Section 4, neither the Executive nor the Corporation will be deemed not to have accepted the terms of this Agreement, including without limitation any action required of the Corporation by any Section of this Agreement. Notwithstanding the foregoing, no act, or failure to act, by the Executive in consequence of the negotiation, execution or revocation of this Agreement shall be deemed to be a voluntary resignation by the Executive under the Employment Agreement and no act, or failure to act, by the Executive in consequence of the neg otiation, execution or revocation of this Agreement shall provide the Corporation with grounds to terminate the Executive for Cause (as that term is defined in the Employment Agreement) pursuant to the Employment Agreement; provided, however, that if the Executive revokes this Agreement, his employment by the Corporation as President and Chief Executive Officer, his membership on the Board and his service in any offices or on any directorships of any Affiliated Companies shall nonetheless terminate as of the Effective Date.-

5. Return of Corporation Property.

No later than the Effective Date, the Executive shall return to the Corporation (A) all originals and copies of papers, notes and documents (in any medium, including computer disks) relating to the business or affairs of the Corporation and its Affiliated Companies, whether property of the Corporation or any of its Affiliated Companies which are in his possession or under his control, and (B) all equipment and property of the Corporation or any of its Affiliated Companies which are in the Executive's possession or under his control, whether at the Corporation's offices, the Executive's home or elsewhere, except for any documents or equipment for which the Corporation or any of its Affiliated Companies has given written consent for the Executive either to remove or retain. Anything herein to the contrary notwithstanding, the Executive shall be entitled to retain (i) any computers and any other office equipment at his home office, (ii) personal awards and recognition gifts, (ii i) papers and other materials of a personal nature, including, but not limited to, photographs, personal diaries, calendars and Rolodexes, personal files and phone books, (iv) information showing his compensation or relating to reimbursement of expenses, (v) information that he reasonably believes may be needed for tax purposes and (vi) copies of Corporation agreements, plans, policies, programs or other arrangements relating to his employment, or termination thereof, with any member of the Corporation and its Affiliated Companies; provided, however, that the Corporation shall have the right to review any of the foregoing to confirm that no documents or information not coming within this exception are being retained by the Executive. As of the Effective Date, all business credit cards provided to the Executive by the Corporation shall be cancelled by the Corporation.

6. Announcements and Communications. (a) Simultaneously with or as soon as practicable after the execution of this Agreement, the Corporation shall announce the Executive's separation from employment with the Corporation. The public announcement of the Executive's separation from employment with the Corporation shall be in substantially the form attached to this Agreement as Exhibit A. Promptly after 4 P.M. on the day after the Effective Date, the Corporation shall send, on the Executive's behalf, an e-mail to all employees of the Corporation in substantially the form attached to this Agreement as Exhibit B.

(b) The Executive and the Corporation agree not to make any public statement inconsistent with the announcements referred to in Subsection (a) above. The Executive shall not intentionally make any public statements which disparage or defame the goodwill or reputation of the Corporation or any of the Affiliated Companies. The Corporation shall not intentionally make any public statements which disparage or defame the Executive's reputation and shall make reasonable efforts to cause the directors and officers of the Corporation to comply with this provision.

(c) The Corporation agrees that, from the Effective Date until the first anniversary of the Effective Date, the Corporation shall forward to the Executive all mail, e-mail and telephone messages which are addressed to the Executive at the Corporation and which are of a personal nature and unrelated to the business of the Corporation.

7. Availability of Relief.

The Executive acknowledges and agrees that the remedy at law available to the Corporation for breach of any of his obligations under this Agreement, including but not limited to his obligations under Sections 4, 5, and 6 of this Agreement, would be inadequate and that damages flowing from such a breach may not readily be susceptible to being measured in monetary terms. Accordingly, the Executive acknowledges, consents and agrees that, in addition to any other rights or remedies which the Corporation may have at law, in equity or under this Agreement, upon adequate proof of his violation of any such provision of this Agreement, the Corporation shall be entitled to immediate injunctive relief and may obtain a temporary order restraining any threatened or further breach, without the necessity of proof of actual damage.

8. Entire Agreement.

(a) Except as otherwise specifically provided in Subsections (b) and (c) below, this Agreement is the entire agreement between the parties with respect to the subject matter hereof and contains all agreements, whether written, oral, express or implied, between the parties relating thereto and supersedes and extinguishes any other agreement relating thereto, whether written, oral, express or implied, between the Parties.

(b) This Agreement supersedes the Employment Agreement, which shall be deemed terminated from and after the date hereof without any remaining obligation of either party thereunder; provided, however, that notwithstanding the foregoing, the provisions of Paragraphs 9 and 10 of the Employment Agreement shall not terminate and shall remain in full force and effect in accordance with their terms. For the avoidance of doubt, (i) the provisions of Paragraph 9 of the Employment Agreement shall terminate on June 30, 2004, (ii) the provisions of Paragraph 10(a) of the Employment Agreement shall terminate on the Effective Date, (iii) the obligations of the Executive set forth in Paragraph 10(b) of the Employment Agreement shall apply only with respect to (A) any methods, developments, inventions, processes, discoveries and/or improvements acquired, conceived of or made, and (B) writings or other materials written or produced, by the Executive, in each case, during the period beginning July 1, 2000 and ending on the Effective Date, and (iv) and the provisions of Paragraph 10(c) of the Employment Agreement shall be deemed to become effective upon the Revocation Date.

(c) Except to the extent specifically provided in this Agreement, the Executive shall not have any rights under the Employment Agreement, the Health Benefit Plans, the SERP, the Stock Options, the awards with respect to the Restricted Stock and any other Corporation agreement, plan, policy, program or other arrangement. For the avoidance of doubt, (i) in the event of any inconsistency between the terms of this Agreement and the terms of any other Corporation plan, policy, program or other arrangement, the terms of this Agreement shall control, (ii) to the extent that any Corporation plan, policy, program or other arrangement has provisions relating to the reason for termination of employment, the Executive shall be treated thereunder as having been terminated by the Corporation "without cause", and (iii) nothing in any other Corporation plan, policy, program or other arrangement shall be deemed to provide any payments or benefits that duplicate any paym ents or benefits provided hereunder.

9. Miscellaneous.

(a) Notices. Any notice given pursuant to this Agreement to any party hereto shall be deemed to have been duly given (i) two days after being mailed by registered or certified mail, return receipt requested or (ii) when hand delivered (including delivery by a recognized courier service with a signed acknowledgement of delivery) as follows:

If to the Company:
Arrow Electronics, Inc.
25 Hub Drive
Melville, New York 11747
Attention: Senior Vice President and General Counsel

with a copy to:

Milbank, Tweed, Hadley & Mccloy LLP
1 Chase Manhattan Plaza
New York, New York 10005
Facsimile No.: (212) 822-5530
Attn: Howard S. Kelberg, Esq.

If to the Executive:

Francis M. Scricco
428 Harbor Road
Cold Springs Harbor, New York 11724

with a copy to:

Law Offices of Joseph E. Bachelder
780 Third Avenue, 29th Floor
New York, New York 10017
Attention: Joseph E. Bachelder, Esq.

or at such other address as either party shall from time to time designate by written notice, in the manner provided herein, to the other party hereto.

(b) Arbitration. (i) Except as otherwise provided herein, any disputes arising under or in connection with this Agreement shall be resolved by binding arbitration, to be held in the New York City metropolitan area in accordance with the commercial arbitration rules and procedures of the American Arbitration Association.

(ii) Each party shall appoint one arbitrator, and the two party appointed arbitrators shall appoint a third arbitrator, who shall serve as the chairperson of the three-member arbitration panel.

(iii) Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.

(iv) Each party shall bear all costs and expenses of such arbitration, including reasonable attorneys' fees and expenses, except to the extent that the arbitrators determine that the prevailing party shall be entitled to have its or his costs paid by the other party. Pending the resolution of any disputes, the Corporation shall continue payment of all amounts due to the Executive under this Agreement and all benefits to which the Executive is entitled at the time the dispute arises.

(c) Non-Admission of Liability. By entering into this Agreement, neither party admits, and each specifically denies, any liability, wrongdoing or violation of any law, statute, regulation or policy, and it is expressly understood and agreed that this Agreement is being entered into solely for the purpose of amicably resolving all matters in controversy of any kind whatsoever between the Corporation and the Executive. Moreover, by signing this Agreement, the Executive acknowledges he is not aware of any wrongdoing on the part of the Corporation.

(d) (i) Corporation Representations and Warranties. The Corporation represents and warrants that (A) it is fully authorized and empowered to enter into this Agreement and this Agreement has been duly authorized by the Board (and, to the extent required, by the appropriate committees of the Board), (B) the officer signing this Agreement is duly authorized and empowered to do so, (C) the execution, delivery or performance of its obligations pursuant to this Agreement will not violate any applicable law, regulation, order, judgment or decree or any agreement or corporate governance document to which the Corporation is a party or by which it is bound, (D) it has received all necessary approvals, if any, of any third party, (E) upon the execution and delivery of this Agreement by the parties, it shall be a valid and binding obligation of the Corporation, enforceable against it in accordance with its terms, except to the extent that enforce ability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and (F) the Board (and, to the extent required, the appropriate committees of the Board) has taken any and all action which is necessary or desirable to implement the terms and conditions of this Agreement at or before the Effective Date.

(ii) Executives Representations and Warranties. The Executive represents and warrants that (A) he has read and understands this Agreement, is fully aware of its legal effect, and has consulted an attorney with respect thereto, and (B) is entering into this Agreement knowingly and voluntarily for the purpose of making a full and final settlement of all rights and claims he may have in connection with his employment or the termination of his employment with the Corporation.

(d) Successors and Assigns. (i) This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors, heirs (in the case of the Executive) and assigns. No rights or obligations of the Corporation under this Agreement may be assigned or transferred by the Corporation except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which the Corporation is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of the Corporation, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Corporation and such assignee or transferee assumes the liabilities, obligations and duties of the Corporation, as contained in this Agreement, either contractually or as a matter of law. The Corporation further agrees that, in the event of a sale or liquidation of all or substanti ally all of its assets as described in the preceding sentence, it shall take whatever action it reasonably can in order to cause such assignee or transferee to expressly assume the liabilities, obligations and duties of the Corporation hereunder.

(ii) No rights or obligations of the Executive under this Agreement may be assigned or transferred by the Executive other than his rights to compensation and benefits, which may be transferred only by will or operation of law or as otherwise provided by the terms of any Corporation agreement, plan, policy, program or other arrangement. In the event of the Executive's death or a judicial determination of his incompetence, the separation payments and other benefits due to the Executive under this Agreement shall be paid to his estate, legal representative or designated beneficiary or beneficiaries, as the case may be, and any references in this Agreement to the Executive shall be deemed to refer, where appropriate, to his estate or other legal representative or to his designated beneficiary or beneficiaries.

(e) Taxes. The Executive shall be responsible for the payment of any and all required federal, state, local and foreign taxes incurred, or to be incurred, in connection with any amounts payable to the Executive under this Agreement. Notwithstanding any other provision of this Agreement, the Corporation may withhold from amounts payable under this Agreement all federal, state, local and foreign taxes that are required to be withheld by applicable laws and regulations.

(f) Severability. In the event that any provision of this Agreement is determined to be invalid or unenforceable, the remaining terms and conditions of this Agreement shall be unaffected and shall remain in full force and effect.

(g) Counterparts. This Agreement may be executed by one or more of the parties hereto on any number of separate counterparts and all such counterparts shall be deemed to be one and the same instrument. Each party hereto confirms that any facsimile copy of such party's executed counterpart of this Agreement (or its signature page thereof) shall be deemed to be an executed original thereof.

(h) No Offset/Mitigation. The Executive shall be under no obligation to seek other employment or to become self-employed and there shall be no offset against amounts due the Executive under this Agreement or otherwise, on account of any remuneration attributable to any subsequent employment that he may obtain or on account of any claim that the Corporation or any Affiliated Companies may have against him.

(i) Governing Law/Venue. This Agreement shall be governed by, and construed in accordance with the internal laws of the State of New York, without regard to principles of conflicts of law.

(j) Captions/Headings. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.

(k) Amendment/Waiver. This Agreement may not be modified or amended, nor may any rights under it be waived, otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. Neither the Executive's nor the Corporation's failure to insist upon strict compliance with any provision hereof shall be deemed to be a waiver of such provision or any other provision thereof.

(l) Availability of Executive. The Executive agrees to make himself available, at reasonable times and so as not to interfere with any employment, business or family obligations, to assist the Corporation and its representatives with the prosecution and defense of any legal proceedings involving matters of which the Executive may have relevant knowledge. The Corporation will reimburse the Executive for such reasonable expenses as the Executive may incur in providing such assistance upon his submission of appropriate documentation, which shall include a mutually agreeable reasonable per diem for any time spent in satisfaction of this obligation in excess of 5 days per year.

* * *

IN WITNESS WHEREOF, the undersigned have executed this Agreement on the Effective Date.

ARROW ELECTRONICS, INC.

By:/s/ Robert E. Klatell
Name: Robert E. Klatell
Title: Executive Vice President

/s/ Francis M. Scricco
Francis M. Scricco

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