Form 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from............to.................
Commission file number 1-4482
ARROW ELECTRONICS, INC.
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(Exact name of registrant as specified in its charter)
New York 11-1806155
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
Number)
25 Hub Drive
Melville, New York 11747
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (516) 391-1300
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
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Common Stock, $1 par value New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
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 No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ]
The aggregate market value of voting stock held by nonaffiliates of the registrant as of March 7, 1997 was $2,809,716,467.
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
Common Stock, $1 par value: 49,543,839 shares outstanding at March 7, 1997.
The following documents are incorporated herein by reference:
1. Proxy Statement filed in connection with Annual Meeting of Shareholders to be held May 14, 1997 (incorporated in Part III).
PART I
The company's global distribution network spans the world's three dominant electronics markets - North America, Europe, and the Asia/Pacific region. The company is the largest electronics distributor in each of these vital industrialized regions, serving a diversified base of original equipment manufacturers (OEMs) and commercial customers worldwide. OEMs include manufacturers of computer and office products, industrial equipment (including machine tools, factory automation, and robotic equipment), telecommunications products, aircraft and aerospace equipment, and scientific and medical devices. Commercial customers are mainly value-added resellers (VARs) of computer systems. The company maintains 172 sales facilities and 19 distribution centers in 32 countries.
In North America, the company is organized into five product- specific sales and marketing groups: The Arrow/Schweber Electronics Group is the largest dedicated semiconductor distributor in the world. Anthem Electronics is a leading distributor of semiconductors and computer products. Zeus Electronics is the only specialist distributor serving the military and high-reliability markets. Capstone Electronics focuses exclusively on the distribution of passive, electromechanical, and interconnect products. Gates/Arrow distributes commercial computer products and systems.
Through its wholly-owned subsidiary, Arrow Electronics
Distribution Group-Europe B.V., Arrow is the largest pan-European
electronics distributor. The company's European strategy
stresses two key elements: strong, locally-managed distributors
to satisfy widely varying customer preferences and business
practices; and an electronic backbone uniting Arrow's European
partners with one another and with Arrow worldwide to leverage
inventory investment and better meet the needs of customers in
all of Europe's leading industrial electronics markets. In most
of these markets, Arrow companies hold the number one position:
Arrow Electronics (UK) in Britain; Spoerle Electronic in Central
Europe; Silverstar in Italy; and Amitron and ATD Electronica in
Spain and Portugal. Arrow Electronique and Arrow Computer
Products (formerly called The Megachip Group) form the largest
electronics distribution group in France, and Arrow's Nordic
companies, Field, TH:s Elektronik, and Exatec, are among the
largest distributors in the markets of Finland, Norway, Sweden,
and Denmark.
Arrow is the largest American electronics distributor in the Asia/Pacific region. Arrow's Components Agent Limited (C.A.L.), the Lite-On Group, and the Melbourne-based Veltek and Zatek companies in Australia are the region's leading multi-national distributors. C.A.L., headquartered in Hong Kong, maintains additional facilities in key cities in Singapore, Malaysia, the People's Republic of China, and South Korea. Lite-On, headquartered in Taipei, serves customers in Taiwan, South Korea, Singapore, and Malaysia. Arrow Ally serves customers in Taipei and Arrow Components (NZ) services customers in New Zealand. Within these dynamic markets, Arrow is benefiting from two important growth factors: the decision by many of Arrow's traditional North American customers to locate production facilities in the region; and the surging demand for electronic products resulting from rising living standards and massive investments in infrastructure.
On January 31, 1997, the company acquired the volume electronic component distribution businesses of Premier Farnell plc (the "Farnell Electronic Services Group") with operations in 15 countries.
The company distributes a broad range of electronic components, computer products, and related equipment manufactured by others. About 66 percent of the company's consolidated sales are comprised of semiconductor products; industrial and commercial computer products, including microcomputer boards and systems, design systems, desktop computer systems, terminals, printers, disk drives, controllers, and communication control equipment account for about 26 percent; and the remaining sales are of passive, electromechanical, and interconnect products, principally capacitors, resistors, potentiometers, power supplies, relays, switches, and connectors.
Most manufacturers of electronic components and computer products rely on independent authorized distributors, such as the company, to augment their product marketing operations. As a stocking, marketing, and financial intermediary, the distributor relieves manufacturers of a portion of the costs and personnel associated with stocking and selling their products (including otherwise sizable investments in finished goods inventories and accounts receivable), while providing geographically dispersed selling, order processing, and delivery capabilities. At the same time, the distributor offers a broad range of customers the convenience of diverse inventories and rapid or scheduled deliveries as well as other value-added services such as kitting and memory programming capabilities. The growth of the electronics distribution industry has been fostered by the many manufacturers who recognize their authorized distributors as essential extensions of their marketing organizations.
The company and its affiliates serve approximately 160,000 industrial and commercial customers. Industrial customers range from major original equipment manufacturers to small engineering firms, while commercial customers include value-added resellers, small systems integrators, and large end-users.
Most of the company's customers require delivery of the products they have ordered on schedules that are generally not available on direct purchases from manufacturers, and frequently their orders are of insufficient size to be placed directly with manufacturers. No single customer accounted for more than 2 percent of the company's 1996 or 1995 sales.
The electronic components and other products offered by the company are sold by field sales representatives, who regularly call on customers in assigned market areas, and by telephone from the company's selling locations, from which inside sales personnel with access to pricing and stocking data provided by computer display terminals accept and process orders. Each of the company's North American selling locations, warehouses, and primary distribution centers is electronically linked to the business' central computer, which provides fully integrated, on- line, real-time data with respect to nationwide inventory levels and facilitates control of purchasing, shipping, and billing. The company's foreign operations utilize Arrow's Worldwide Stock Check System, which affords access to the company's on-line, real- time inventory system.
There are approximately 600 manufacturers whose products are sold by the company. Intel Corporation accounted for approximately 18 percent of the business' purchases because of the market demand for microprocessors. No other supplier accounted for more than 8 percent of 1996 purchases. The company does not regard any one supplier of products to be essential to its operations and believes that many of the products presently sold by the company are available from other sources at competitive prices. Most of the company's purchases are pursuant to authorized distributor agreements which are typically cancelable by either party at any time or on short notice.
Approximately 70 percent of the company's inventory consists of semiconductors. It is the policy of most manufacturers to protect authorized distributors, such as the company, against the potential write-down of such inventories due to technological change or manufacturers' price reductions. Under the terms of the related distributor agreements, and assuming the distributor complies with certain conditions, such suppliers are required to credit the distributor for inventory losses incurred through reductions in manufacturers' list prices of the items. In addition, under the terms of many such agreements, the distributor has the right to return to the manufacturer for credit a defined portion of those inventory items purchased within a designated period of time.
A manufacturer who elects to terminate a distributor agreement is generally required to purchase from the distributor the total amount of its products carried in inventory. While these industry practices do not wholly protect the company from inventory losses, management believes that they currently provide substantial protection from such losses.
The company's business is extremely competitive, particularly with respect to prices, franchises, and, in certain instances, product availability. The company competes with several other large multi-national, national, and numerous regional and local distributors. As the world's largest electronics distributor, the company's financial resources and sales are greater than those of its competitors.
The company and its affiliates employ approximately 7,900 people worldwide.
Executive Officers
The following table sets forth the names and ages of, and the positions and offices with the company held by, each of the executive officers of the company.
Name Age Position or Office Held
---- --- ------------------------
Stephen P. Kaufman 55 Chairman and Chief Executive Officer
Robert E. Klatell 51 Executive Vice President, General
Counsel, and Secretary
Carlo Giersch 59 Chief Executive Officer of Spoerle
Electronic
Gerald Luterman 53 Senior Vice President,
Chief Financial Officer, and
Treasurer
Steven W. Menefee 52 Senior Vice President
Michael J. Long 38 Vice President; President, Gates/Arrow
Distributing
John J. Powers, III 42 Vice President; President, Anthem
Electronics
Wesley S. Sagawa 49 Vice President; President, Capstone
Electronics
Jan M. Salsgiver 40 Vice President; President,
Arrow/Schweber Electronics Group
Betty Jane Scheihing 48 Senior Vice President of Operations
Robert S. Throop 59 Vice President; Chairman, Anthem
Electronics
Vincent Vellucci 47 President; Zeus Electronics
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Set forth below is a brief account of the business experience during the past five years of each executive officer of the company.
Stephen P. Kaufman has been Chairman since May 1994 and President and Chief Executive Officer of the company for more than five years prior thereto.
Robert E. Klatell has been Executive Vice President since July 1995 and has served as Senior Vice President, General Counsel, and Secretary of the company for more than five years. He also served as Chief Financial Officer from January 1992 to April 1996 and Treasurer from 1990 to April 1996.
Carlo Giersch has been Chief Executive Officer of Spoerle Electronic for more than five years.
Gerald Luterman joined the company in April 1996 as Senior Vice President, Chief Financial Officer, and Treasurer. Prior thereto he was Executive Vice President and Chief Financial Officer of American Express Travel Related Services Consumer Card Group for more than five years.
Steven W. Menefee has been a Senior Vice President of the company since July 1995 and Senior Vice President of Corporate Marketing since November 1995. Prior thereto he was a Vice President of the company, and President of the company's Arrow/Schweber Electronics Group since November 1990.
Michael J. Long has been a Vice President of the company and President of Gates/Arrow since November 1995. Prior thereto he held a variety of positions at Capstone Electronics since 1991, the most recent of which was acting President from March 1994 to November 1995.
John J. Powers, III has been a Vice President of the company since November 1994, following the acquisition of Anthem Electronics. He has been President of Anthem Electronics since June 1992; prior thereto he was Senior Vice President.
Wesley S. Sagawa has been a Vice President of the company and President of Capstone Electronics for more than five years. He was managing director of Arrow U.K. from March 1994 to November 1995.
Jan M. Salsgiver has been a Vice President of the company since September 1993 and President of the Arrow/Schweber Electronics Group since November 1995. Prior thereto she had been President of Zeus Electronics. Prior to July 1993, she held a variety of senior marketing positions in the company, the most recent of which was Vice President of Semiconductor Marketing of the Arrow/Schweber Electronics Group.
Betty Jane Scheihing became Senior Vice President in May 1996 and has served as Vice President of Operations of the company for more than five years prior thereto.
Robert S. Throop had been Chairman and Chief Executive Officer of Anthem Electronics for more than five years; he retired in December 1996. He became a Vice President of the company in March 1995.
Vincent Vellucci became President of Zeus Electronics in December 1996 and was acting President since November 1995. Prior thereto he held a variety of sales and marketing positions in the company, the most recent of which was Regional Vice President of Arrow/Schweber's Northeast Region.
In mid-1986 the refining business ceased operations at its battery breaking facility in Plant City, Florida, which facility had been placed on the list of hazardous waste sites targeted for cleanup under the Federal Super Fund program. The Plant City site was not sold to the purchaser of the refining business, and the company remains subject to various environmental cleanup obligations at the site under federal and state law. The company and the EPA became parties to a consent decree which was entered by a federal court in Florida and became effective on April 22, 1992. The consent decree requires the company to fund, design, and implement remediation addressing environmental impacts to site soils and sediment, underlying ground water, and wetland areas. Substantial progress has been made in each of these areas. Remediation of the wetlands areas on the site, including the creation of certain new wetlands areas under agreement with the EPA and the Florida Department of Environmental Conservation, was substantially completed in 1994. A waste water treatment plant has been built on site by the company's contractors, and processing of ground and pond water for discharge to the Plant City Treatment Works commenced in July 1994. Soil stabilization has been substantially completed. Water treatment will continue, at least through 1997. The extent of such remediation activities (including the estimated cost thereof and the time necessary to complete them), however, is subject to change based upon conditions actually encountered during remediation. Moreover, the EPA reserves the right to seek additional action if it subsequently finds further contamination or other conditions rendering the work insufficiently protective of human health or the environment. The company believes that the amount expected to be expended in any year to fund such activities will not have a material adverse impact on the company's liquidity, capital resources or results of operations.
PART II
Market Information
The company's common stock is listed on the New York Stock Exchange (trading symbol: "ARW"). The high and low sales prices during each quarter of 1996 and 1995 were as follows:
Year High Low
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1996:
Fourth Quarter $55-3/8 $43
Third Quarter 47-1/8 37-1/2
Second Quarter 53-5/8 42-1/4
First Quarter 50 35-1/4
1995:
Fourth Quarter $55-1/4 $39-1/4
Third Quarter 59-3/4 48-1/2
Second Quarter 50-7/8 40
First Quarter 44-5/8 35-1/8
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Holders
On March 1, 1997, there were approximately 4,500 shareholders of record of the company's common stock.
Dividend History and Restrictions
The company has not paid cash dividends on its common stock during the past five years. While the board of directors considers the payment of dividends on the common stock from time to time, the declaration of future dividends will be dependent upon the company's earnings, financial condition, and other relevant factors.
The terms of the company's global multi-currency credit facility and its 8.29% senior notes (see Note 4 of the Notes to Consolidated Financial Statements) limit, among other things, the payment of cash dividends and the incurrence of additional borrowings and require that working capital, net worth, and certain other financial ratios be maintained at designated levels.
SELECTED FINANCIAL DATA (a)
(In thousands except per share data)
For the year: 1996 1995 1994(b) 1993(c)(d) 1992
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Sales $6,534,577 $5,919,420 $4,649,234 $3,560,856 $2,423,033
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Operating income 400,627 423,209 255,974 226,089 163,699
Equity in earnings (loss)
of affiliated companies (97) 2,493 - 1,673 6,550
Interest expense 37,959 46,361 36,168 26,573 31,607
Earnings before
extraordinary charges 202,709 202,544 111,889 106,559 84,885
Extraordinary charges,
net of income taxes - - - - 5,424
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Net income $ 202,709 $ 202,544 $ 111,889 $ 106,559 $ 79,461
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Per common share (fully diluted)
Earnings before extra-
ordinary charges (e) $ 3.95 $ 4.03 $ 2.31 $ 2.22 $ 1.96
Extraordinary charges - - - - (.12)
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Net income (e) $ 3.95 $ 4.03 $ 2.31 $ 2.22 $ 1.84
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At year-end:
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Accounts receivable and
inventories $1,947,719 $1,979,160 $1,422,457 $1,094,175 $ 781,267
Total assets 2,710,351 2,701,016 2,038,774 1,569,152 1,080,163
Total long-term debt and
subordinated debentures 344,562 451,706 349,398 314,859 241,804
Shareholders' equity 1,358,482 1,195,881 837,885 701,799 566,100
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Book value per common share $ 27.10 $ 23.61 $ 18.15 $ 15.34 12.64
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(a) In 1994, Arrow acquired Gates and Anthem in transactions accounted for
as poolings of interests. Accordingly, all financial information for years
prior thereto have been restated to include the operations of Gates and
Anthem.
Also, 1994 includes special charges of $45.3 million associated with
the acquisition and integration of Gates and Anthem. Excluding these charges,
operating income, net income, and net income per share were $301.3
million, $140.7 million, and $2.88, respectively.
(b) Includes results of Silverstar, which were accounted for under the
equity method prior to January 1994 when Arrow increased its holdings to a
majority interest.
(c) Includes results of Spoerle, which were accounted for under the equity
method prior to January 1993 when Arrow increased its holdings to a
majority interest.
(d) Net income is after a restructuring charge of $7.8 million associated with
the disposition of a business unit by Anthem. Excluding this charge,
operating income, net income, and net income per share were $233.9
million, $111.1 million, and $2.31, respectively.
(e) After preferred stock dividends of $.9 million in 1993 and $3.9 million
in 1992.
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For an understanding of the significant factors that influenced the company's performance during the past three years, the following discussion should be read in conjunction with the consolidated financial statements and other information appearing elsewhere in this report.
During 1994, the company acquired Gates/FA Distributing, Inc. ("Gates") and Anthem Electronics, Inc. ("Anthem") in transactions accounted for as poolings of interests. The 1994 consolidated financial statements do not reflect the cost savings and synergies achieved during 1995 or the sales attrition which may have resulted from the merger of Gates and Anthem with the company. Beginning in 1994, the consolidated financial statements include the results of Silverstar Ltd., S.p.A. ("Silverstar"), which had been accounted for under the equity method prior to January 1994 when the company increased its holdings to a majority interest. See Note 2 of the Notes to Consolidated Financial Statements for information with respect to the acquisitions.
Sales
Consolidated sales of $6.5 billion in 1996 were 10 percent higher than 1995 sales of $5.9 billion. This sales growth was principally due to increased sales of commercial computer products and microprocessors. The sales of semiconductor products were characterized by an oversupply of product, competitive pricing pressures, and reductions in memory prices.
In 1995, consolidated sales increased to $5.9 billion, a 27 percent increase over 1994 sales of $4.6 billion. This sales growth reflected strong activity levels in each of the company's businesses as well as the impact of key strategic alliances and acquisitions forged around the world during 1994.
Consolidated sales of $4.6 billion in 1994 were 31 percent higher than 1993 sales of $3.6 billion. This increase principally reflected increased activity levels in each of the company's distribution groups throughout the world, the consolidation of Silverstar and, to a lesser extent, acquisitions in Europe and the Asia/Pacific region.
Operating Income
The company's consolidated operating income decreased to $400.6 million in 1996, compared with operating income of $423.2 million in 1995. The reduction in operating income reflects a further decline in gross margins due to proportionately higher sales of lower margin commercial computer products and microprocessors throughout the world and competitive pricing pressures in Europe and the Asia/Pacific region, offset in part by the impact of increased sales and the benefits of continuing economies of scale. Operating expenses as a percent of sales declined to 9.8 percent in 1996, the lowest in the company's history.
In 1995, the company's consolidated operating income increased to $423.2 million, compared with operating income of $256 million in 1994. Included in the 1994 results were special charges of $45.3 million associated with the acquisition and integration of Gates and Anthem into Arrow. The improvement in operating income outpaced the growth in sales as the company benefited from cost savings following the integration of Gates and Anthem. These cost savings principally reflected reductions in personnel performing duplicative functions and the elimination of duplicative administrative facilities, computer and telecommunications equipment, and selling and stocking locations. Operating expenses as a percentage of sales declined to 10.3 percent in 1995.
The company's consolidated operating income increased to $256 million in 1994, compared with operating income of $226.1 million in 1993. Excluding the special charges relating to Gates and Anthem, operating income was $301.3 million. The improvement in operating income, excluding the special charges, reflected the impact of increased sales, continued economies of scale, expense containment which reduced operating expenses as a percentage of sales, and the consolidation of Silverstar, offset in part by lower gross profit margins. Gross profit margins decreased from 1993 as a result of proportionately higher sales of lower margin microprocessors and commercial computer products, coupled with competitive pricing pressures. Operating expenses as a percentage of sales, excluding the special charges, were 11.1 percent.
Interest
Interest expense of $38 million in 1996 decreased by $8.4 million from the 1995 level. The decrease reflects the conversion of the company's 5-3/4% convertible subordinated debentures in October 1995, lower borrowings resulting from improved working capital usage, and lower borrowing costs, offset in part by borrowings to fund purchases of common stock pursuant to a stock repurchase program.
In 1995, interest expense increased to $46.4 million from $36.2 million in 1994, reflecting increases in working capital required to support higher sales, interest related to borrowings associated with acquisitions, and capital expenditures.
Interest expense of $36.2 million in 1994 increased by $9.6 million from 1993. The increase principally reflected the consolidation of Silverstar and, to a lesser extent, interest related to borrowings associated with acquisitions.
Income Taxes
The company recorded a provision for taxes at an effective tax rate of 39.9 percent in 1996, compared with 40.4 percent in 1995. The lower effective rate was the result of decreased earnings in countries with higher tax rates.
In 1995, the company recorded a provision for taxes at an effective tax rate of 40.4 percent compared with 40.6 percent, excluding the special charges associated with the Gates and Anthem acquisitions, in 1994.
The company recorded a provision for taxes at an effective tax rate of 40.6 percent in 1994, compared with 41 percent in 1993. The lower effective tax rate was the result of increased earnings in countries with lower tax rates.
Net Income
Net income in 1996 was $202.7 million, an increase from $202.5 million in 1995. The increase in net income is attributable to decreases in interest expense, income taxes, and minority interest, offset in part by lower operating income.
In 1995, the company's net income advanced to $202.5 million from $140.7 million in 1994, before the special charges of $45.3 million ($28.8 million after taxes) associated with Gates and Anthem. The significant improvement in net income was principally the result of the increase in operating income, offset in part by higher interest expense.
Net income in 1994 was $111.9 million, an advance from $106.6 million in 1993. Excluding the special charges associated with Gates and Anthem, net income in 1994 was $140.7 million. Excluding the restructuring charge associated with the sale by Anthem of its Eagle Technology Business Unit, net income was $111.1 million in 1993. The increase in net income was due principally to increased operating income, offset in part by higher interest expense.
Liquidity and Capital Resources
The company maintains a high level of current assets, primarily accounts receivable and inventories. Consolidated current assets as a percentage of total assets were approximately 78 percent in 1996 and 1995.
In 1996, working capital increased by five percent, or $56 million, compared with 1995. This percentage increase was less than that of sales as a result of improvements in working capital usage.
The net amount of cash provided by operations in 1996 was $308.6 million, the principal element of which was the cash flow resulting from net earnings and improved working capital usage. The net amount of cash used by the company for investing purposes was $57.1 million, including $38.9 million for various acquisitions. Cash flows used for financing activities were $202.6 million, principally reflecting the reduction in the company's borrowings, purchases of common stock, and distributions to partners.
In January 1997, the company issued $200 million of 10 year senior notes bearing interest at 7 percent and $200 million of 30 year senior debentures bearing interest at 7-1/2 percent. The net proceeds of $393.3 million were used primarily to fund the acquisition of the volume electronic component distribution businesses of Premier Farnell plc in January 1997. The balance will be used for working capital and other general corporate purposes.
Working capital increased by $349 million, or 40 percent, in 1995 compared with 1994, primarily as a result of increased sales and, to a lesser extent, acquisitions in Europe and the Asia/Pacific region.
The net amount of cash used for the company's operating activities in 1995 was $114.1 million, as the growth in accounts receivable and inventories outpaced the increase in net income. The net amount of cash used for investing activities was $132.7 million, including $90.7 million for various investments and acquisitions. The net amount of cash provided by financing activities was $228.1 million, principally reflecting the company's borrowings to finance investments and acquisitions, distributions to partners, and the repayment of certain debt.
In October 1995, the company redeemed its 5-3/4% convertible subordinated debentures due 2002, which resulted in the issuance of 3,772,254 shares of common stock and eliminated approximately $125 million in long-term debt and $7.2 million of annual interest charges.
In 1994, working capital increased by $103.6 million, or 14 percent, compared with 1993, as a result of increased sales, the consolidation of Silverstar, and acquisitions.
The net amount of cash provided by operations in 1994 was $125.2 million, the principal element of which was the cash flow resulting from higher net earnings, offset in part by increased working capital needs to support sales growth. The net amount of cash used by the company for investing purposes was $121.7 million, including $108.5 million for various acquisitions. Cash flows from financing activities were $13.4 million, principally from increased borrowings in part to finance acquisitions in Europe and the Asia/Pacific region.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Arrow Electronics, Inc.
We have audited the accompanying consolidated balance sheet of Arrow Electronics, Inc. as of December 31, 1996 and 1995, and the related consolidated statements of income, cash flows, and shareholders' equity for each of the three years in the period ended December 31, 1996. Our audits also included the financial statement schedule listed in the Index at Item 14(a). These financial statements and the schedule are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements and the schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Arrow Electronics, Inc. at December 31, 1996 and 1995, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
New York, New York
February 17, 1997
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The consolidated financial statements of Arrow Electronics, Inc. have been prepared by management, which is responsible for their integrity and objectivity. These statements, prepared in accordance with generally accepted accounting principles, reflect our best use of judgment and estimates where appropriate. Management also prepared the other information in the annual report and is responsible for its accuracy and consistency with the consolidated financial statements.
The company's system of internal controls is designed to provide reasonable assurance that company assets are safeguarded from loss or unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and are properly recorded. In establishing the basis for reasonable assurance, management balances the costs of the internal controls with the benefits they provide. The system contains self- monitoring mechanisms, and compliance is tested through an extensive program of site visits and audits by the company's operating controls staff.
The Audit Committee of the Board of Directors, consisting entirely of outside directors, meets regularly with management, operating controls staff, and independent auditors, and reviews audit plans and results as well as management's actions taken in discharging its responsibilities for accounting, financial reporting, and internal controls. Management, operating controls staff, and independent auditors have direct and confidential access to the Audit Committee at all times.
The company's independent auditors, Ernst & Young LLP, were engaged to audit the consolidated financial statements in accordance with generally accepted auditing standards. These standards include a study and evaluation of internal controls for the purpose of establishing a basis for reliance thereon relative to the scope of their audit of the consolidated financial statements.
Stephen P. Kaufman
Chairman and Chief Executive Officer
Gerald Luterman
Senior Vice President and
Chief Financial Officer
ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
December 31,
------------------------
1996 1995
ASSETS ---- ----
Current assets:
Cash and short-term investments $ 136,400 $ 93,947
Accounts receivable, less allowance for doubtful
accounts ($39,753 in 1996 and $38,670 in 1995) 902,878 940,049
Inventories 1,044,841 1,039,111
Prepaid expenses and other assets 36,004 31,610
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Total current assets 2,120,123 2,104,717
---------- ----------
Property, plant and equipment at cost
Land 8,712 14,527
Buildings and improvements 77,257 63,857
Machinery and equipment 127,633 112,883
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213,602 191,267
Less accumulated depreciation and amortization 98,377 73,932
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115,225 117,335
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Investment in affiliated company 34,200 36,031
Cost in excess of net assets of companies acquired,
less accumulated amortization ($57,802 in 1996
and $48,085 in 1995) 388,787 379,171
Other assets 52,016 63,762
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$2,710,351 $2,701,016
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $594,474 $ 561,834
Accrued expenses 180,129 207,738
Short-term borrowings, including current maturities of
long-term debt 71,504 117,085
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Total current liabilities 846,107 886,657 Long-term debt
---------- ---------
Long-term debt 344,562 451,706
Other liabilities 68,488 68,992
Minority interest 92,712 97,780
Shareholders' equity:
Common stock, par value $1:
Authorized--120,000,000 and 80,000,000 shares in 1996 and 1995
Issued--51,196,385 and 50,647,826 shares in 1996 and 1995 51,196 50,648
Capital in excess of par value 549,913 530,324
Retained earnings 805,342 602,633
Foreign currency translation adjustment 8,753 18,398
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1,415,204 1,202,003
Less: Treasury stock (1,069,699 and 22,297 shares
in 1996 and 1995), at cost 49,065 24
Unamortized employee stock awards 7,657 6,098
---------- ----------
Total shareholders' equity 1,358,482 1,195,881
---------- ----------
$2,710,351 $2,701,016
========== ==========
See accompanying notes.
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ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands except per share data)
Years Ended December 31,
-------------------------------------
1996 1995 1994
---- ---- ----
Sales $6,534,577 $5,919,420 $4,649,234
---------- ---------- ----------
Costs and expenses:
Cost of products sold 5,492,556 4,888,746 3,832,169
Selling, general and administrative expenses 604,412 574,166 487,982
Depreciation and amortization 36,982 33,299 27,759
Integration charges - - 45,350
---------- ---------- ----------
6,133,950 5,496,211 4,393,260
---------- ---------- ----------
Operating income 400,627 423,209 255,974
Equity in earnings (loss)
of affiliated company (97) 2,493 -
Interest expense, net 37,959 46,361 36,168
---------- ---------- ----------
Earnings before income taxes
and minority interest 362,571 379,341 219,806
Provision for income taxes 144,667 153,139 91,206
---------- ---------- ----------
Earnings before minority interest 217,904 226,202 128,600
Minority interest 15,195 23,658 16,711
---------- ---------- ----------
Net income $ 202,709 $ 202,544 $111,889
========== ========== ==========
Per common share:
Primary $3.95 $4.21 $2.40
===== ===== =====
Fully diluted $3.95 $4.03 $2.31
===== ===== =====
Average number of common shares and common
share equivalents outstanding:
Primary 51,380 48,081 46,634
====== ====== ======
Fully diluted 51,380 51,123 50,407
====== ====== ======
See accompanying notes.
|
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
Years Ended December 31,
---------------------------------
1996 1995 1994
---- ---- ----
Cash flows from operating activities:
Net income $202,709 $202,544 $111,889
Adjustments to reconcile net income to net
cash provided by (used for) operations:
Minority interest in earnings 15,195 23,658 16,711
Depreciation and amortization 39,453 35,192 29,821
Equity in undistributed (earnings) loss of
affiliated company 97 (2,493) -
Integration charges - - 45,350
Deferred income taxes 10,280 14,210 8,167
Change in assets and liabilities, net of
effects of acquired businesses:
Accounts receivable 45,845 (221,840) (80,315)
Inventories (8,426) (288,301) (73,425)
Prepaid expenses and other assets (2,893) (8,675) 2,754
Accounts payable 26,276 139,257 93,987
Accrued expenses (23,870) (3,848) (37,275)
Other 3,926 (3,791) 7,511
-------- -------- --------
Net cash provided by (used for) operating activities 308,592 (114,087) 125,175
-------- -------- --------
Cash flows from investing activities:
Acquisition of property, plant and equipment (28,596) (42,254) (22,773)
Proceeds from sale of building 10,442 - -
Cash consideration paid for acquired businesses (38,851) (59,119) (108,478)
Investment in affiliate 1,734 (31,538) -
Other (1,791) 190 9,509
-------- -------- --------
Net cash used for investing activities (57,062) (132,721) (121,742)
-------- -------- --------
Cash flows from financing activities:
Change in short-term borrowings (53,992) 49,976 (35,811)
Change in credit facilities (96,783) 290,436 15,184
Proceeds from long-term debt - 5,701 36,037
Repayment of long-term debt (7,097) (102,370) (6,151)
Proceeds from exercise of stock options 12,323 13,717 4,897
Distributions to minority partners (7,967) (28,590) (524)
Purchases of common stock (48,993) - -
Other (123) (756) (200)
-------- -------- --------
Net cash (used for) provided by financing activities (202,632) 228,114 13,432
-------- -------- --------
Effect of exchange rate changes on cash (6,445) 7,035 7,779
Net increase (decrease) in cash and -------- --------
short-term investments 42,453 (11,659) 24,644
Cash and short-term investments at
beginning of year 93,947 105,606 80,962
-------- -------- --------
Cash and short-term investments at end of year $136,400 $ 93,947 $105,606
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Income taxes $130,834 $142,101 $ 92,514
Interest 38,118 44,019 31,753
See accompanying notes.
|
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands)
Common Foreign Unamortized
Stock Capital in Currency Employee
at Par Excess of Retained Translation Treasury Stock Awards
Value Par Value Earnings Adjustment Stock and Other Total
------- --------- -------- ---------- -------- ----------- -----
Balance at December 31, 1993 $45,753 $378,309 $288,200 $(7,492) $ (12) $ (2,959) $ 701,799
Net income - - 111,889 - - - 111,889
Exercise of stock options 337 4,560 - - - - 4,897
Tax benefits related to
exercise of stock options - 3,147 - - - - 3,147
Restricted stock awards, net 78 2,897 - - (1) (2,974) -
Amortization of employee
stock awards - - - - - 1,182 1,182
Other - - - - - 1,112 1,112
Translation adjustments - - - 13,859 - - 13,859
------- -------- -------- ------- ------ -------
Balance at December 31, 1994 46,168 388,913 400,089 6,367 (13) (3,639) 837,885
Net income - - 202,544 - - - 202,544
Conversion of subordinated
debentures 3,773 118,684 - - - - 122,457
Exercise of stock options 567 13,150 - - - - 13,717
Tax benefits related to
exercise of stock options - 4,758 - - - - 4,758
Restricted stock awards, net 140 4,819 - - (11) (4,948) -
Amortization of employee
stock awards - - - - - 2,313 2,313
Other - - - - - 176 176
Translation adjustments - - - 2,031 - - 12,031
------- -------- -------- ------- -------- -------- ----------
Balance at December 31, 1995 $50,648 $530,324 $602,633 $18,398 $ (24) $ (6,098) $1,195,881
(continued)
|
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands)
Common Foreign Unamortized
Stock Capital in Currency Employee
at Par Excess of Retained Translation Treasury Stock Awards
Value Par Value Earnings Adjustment Stock and Other Total
------- ---------- -------- ----------- -------- ----------- ---------
Balance at December 31, 1995 $50,648 $530,324 $602,633 $18,398 $ (24) $ (6,098) $1,195,881
Net income - - 202,709 - - - 202,709
Exercise of stock options 462 12,236 - - (375) - 12,323
Tax benefits related to
exercise of stock options - 3,345 - - - - 3,345
Restricted stock awards, net 86 4,008 - - 327 (4,421) -
Amortization of employee
stock awards - - - - - 2,862 2,862
Purchases of common stock - - - - (48,993) - (48,993)
Translation adjustments - - - (9,645) - - (9,645)
------- -------- -------- ------- -------- -------- ----------
Balance at December 31, 1996 $51,196 $549,913 $805,342 $ 8,753 $(49,065) $ (7,657) $1,358,482
======= ======== ======== ======= ======== ======== ==========
See accompanying notes.
|
ARROW ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
2. Acquisitions
During 1996, the company increased its holdings in Spoerle Electronic Handelsgesellschaft mbH ("Spoerle") to 75 percent and Silverstar Ltd., S.p.A. ("Silverstar") to 93 percent.
During 1995, Spoerle acquired HED Heinrich Electronic Distribution GmbH. In addition, the company acquired Ally, Inc. in Taiwan and Arrow Components (NZ) Limited in New Zealand. The company also increased its interests in Silverstar to 86 percent; Amitron S.A. and ATD Electronica S.A., the company's subsidiaries serving Spain and Portugal, to 75 percent and 87 percent, respectively; and Arrow Computer Products (formerly The Megachip Group), one of the company's French subsidiaries, to 100 percent.
The cost of each acquisition has been allocated among the net assets acquired on the basis of the respective fair values of the assets acquired and liabilities assumed. For financial reporting purposes, the acquisitions are accounted for as purchase transactions beginning in the respective month of acquisition. The aggregate consideration paid for these acquisitions exceeded the net assets acquired by $20,674,000 and $30,671,000 in 1996 and 1995, respectively.
The company acquired Gates/FA Distributing, Inc. ("Gates") in August 1994 and Anthem Electronics, Inc.("Anthem") in November 1994 through the exchange of 3,743,000 and 10,803,000 shares of newly issued company stock, respectively. These acquisitions were accounted for as poolings of interests. The 1994 consolidated financial statements do not reflect the cost savings achieved from the combination of Gates and Anthem with the company's business or the sales attrition which may have resulted. These cost savings principally reflected reductions in personnel performing duplicative functions and the elimination of duplicative administrative facilities, computer and telecommunications equipment, and selling and stocking locations. The consolidated financial statements for 1994 included special charges of $28,850,000 after taxes ($.62 per share on a primary basis) of costs associated with the acquisition and integration of the Gates and Anthem businesses and related transaction fees. Such integration costs included real estate termination costs and severance and other expenses related to personnel performing duplicative functions.
In connection with certain acquisitions, the company may be required to make additional payments that are contingent upon the acquired businesses achieving certain operating goals. During 1996 and 1995, the company made additional payments of $9,675,000 and $14,884,000, respectively, which have been capitalized as cost in excess of net assets of companies acquired.
3. Investment in Affiliated Company
During 1995, the company acquired a 45 percent interest in Strong Electronics Co., Ltd. ("Strong Electronics"), a joint venture with Lite-On Inc., a Taiwan-based electronics distributor.
4. Debt
Long-term debt consisted of the following at December 31 (in
thousands):
1996 1995
---- ----
Global multi-currency credit facility $267,512 $294,903
8.29% senior notes 75,000 75,000
Lines of credit - 70,000
Other obligations with various
interest rates and due dates 2,254 13,968
--------- ---------
344,766 453,871
Less installments due within one year 204 2,165
--------- --------
$344,562 $451,706
========= ========
|
The company's revolving credit agreement (the "global multi- currency credit facility") was amended in September 1996 to increase to $650,000,000 the amount of available credit, to reduce the applicable borrowing rates, and to extend the maturity date to September 2001. The interest rate for loans under this facility is at the applicable eurocurrency rate (5.6875 percent for U.S. dollar denominated loans at December 31, 1996) plus a margin of .20 percent. The company may also utilize the facility's competitive advance option to obtain loans, generally at a lower rate. The company pays the banks a facility fee of .08 percent per annum.
The senior notes are payable in three equal annual installments commencing in 1998.
The global multi-currency credit facility and the senior notes limit, among other things, the payment of cash dividends and the incurrence of additional borrowings and require that working capital, net worth, and certain other financial ratios be maintained at designated levels.
The company maintains uncommitted lines of credit with a group of banks under which up to $84,000,000 could be borrowed at December 31, 1996 on such terms as the company and the banks may agree. Borrowings under the lines of credit are classified as long-term debt as the company has the ability to renew them or refinance them under the global multi-currency credit facility. There are no fees or compensating balances associated with these borrowings. There were no outstanding borrowings under the lines of credit at December 31, 1996.
The aggregate annual maturities of long-term debt for each of the five years in the period ending December 31, 2001 are: 1997- $204,000; 1998-$25,205,000; 1999-$25,223,000; 2000-$25,242,000; and 2001-$267,774,000.
Short-term borrowings are principally utilized to support the working capital requirements of certain foreign operations. The weighted average interest rates of these borrowings at December 31, 1996 and 1995 were 9 percent and 10.4 percent, respectively.
The estimated fair market value of the senior notes at December 31, 1996 was 104 percent of par. The balance of the company's borrowings approximate their fair value.
5. Income Taxes
The provision for income taxes consists of the following (in thousands):
1996 1995 1994
Current ---- ---- ----
Federal $ 78,715 $ 78,639 $53,465
State 21,482 19,989 15,317
Foreign 29,507 37,330 28,063
-------- -------- -------
129,704 135,958 96,845
======== ======== =======
Deferred
Federal 4,758 2,625 (8,437)
State 1,087 600 (2,824)
Foreign 9,118 13,956 5,622
-------- -------- -------
14,963 17,181 (5,639)
-------- -------- -------
$144,667 $153,139 $91,206
======== ======== =======
|
The principal causes of the difference between the U.S. statutory and effective income tax rates are as follows (in thousands):
1996 1995 1994
---- ---- ----
Provision at statutory rate $126,900 $132,769 $76,932
State taxes, net of federal
benefit 14,670 13,383 8,120
Foreign tax rate differential 6,625 4,959 4,841
Other (3,528) 2,028 1,313
-------- -------- -------
$144,667 $153,139 $91,206
======== ======== =======
|
For financial reporting purposes, income before income taxes attributable to the United States was $279,149,000 in 1996, $252,894,000 in 1995, and $184,241,000 excluding the special charges of $45,350,000 in 1994, and income before income taxes attributable to foreign operations was $83,422,000 in 1996, $126,447,000 in 1995, and $80,915,000 in 1994.
The significant components of the company's deferred tax assets, which are included in other assets, are as follows (in thousands):
1996 1995
------- -------
Inventory reserves $12,730 $10,268
Allowance for doubtful accounts 8,045 6,712
Accrued expenses 5,675 6,217
Other 2,050 3,303
------- -------
$28,500 $26,500
======= =======
|
Included in other liabilities are deferred tax liabilities of $36,156,000 and $33,310,000 at December 31, 1996 and 1995, respectively. The deferred tax liabilities are principally the result of the differences in the bases of the German assets and liabilities for tax and financial reporting purposes.
6. Shareholders' Equity
In May 1996, the shareholders approved an amendment to the certificate of incorporation to increase the number of authorized shares of common stock from 80,000,000 to 120,000,000. The company has 2,000,000 authorized shares of serial preferred stock with a par value of $1.
In 1988, the company paid a dividend of one preferred share purchase right on each outstanding share of common stock. Each right, as amended, entitles a shareholder to purchase one one- hundredth of a share of a new series of preferred stock at an exercise price of $50 (the "exercise price"). The rights are exercisable only if a person or group acquires 20 percent or more of the company's common stock or announces a tender or exchange offer that will result in such person or group acquiring 30 percent or more of the company's common stock. Rights owned by the person acquiring such stock or transferees thereof will automatically be void. Each other right will become a right to buy, at the exercise price, that number of shares of common stock having a market value of twice the exercise price. The rights, which do not have voting rights, expire on March 2, 1998 and may be redeemed by the company at a price of $.01 per right at any time until ten days after a 20 percent ownership position has been acquired. In the event that the company merges with, or transfers 50 percent or more of its consolidated assets or earning power to, any person or group after the rights become exercisable, holders of the rights may purchase, at the exercise price, a number of shares of common stock of the acquiring entity having a market value equal to twice the exercise price.
In May 1996, the company's board of directors authorized management to implement a stock repurchase program under which the company may purchase, from time to time, at least $100,000,000 of the company's common stock. Purchases were made in the open market. The timing and amount of the purchases depended, among other things, on market conditions and corporate requirements. As of February 17, 1997, the company had acquired approximately 1,895,700 shares of its common stock and had substantially completed the program.
7. Employee Stock Plans
Shares awarded under the Plan may not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of, except as provided in the Plan. Shares awarded become free of vesting restrictions over a four-year period. The company awarded 50,000 shares of common stock in early 1997 to 60 key employees in respect of 1996, 119,860 shares of common stock to 81 key employees during 1996, 106,350 shares of common stock to 79 key employees during 1995, and 77,350 shares of common stock to 50 key employees during 1994.
Forfeitures of shares awarded under the Plan were 24,637, 10,425, and 1,000, during 1996, 1995, and 1994, respectively. The aggregate market value of outstanding awards under the Plan at the respective dates of award is being amortized over a four-year period and the unamortized balance is included in shareholders' equity as unamortized employee stock awards.
The company applies Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations in accounting for the Option Plan. Accordingly, no compensation expense has been recognized in the company's accounts for this plan.
The following information relates to the option plan for the years ended December 31:
Average Average Average
Exercise Exercise Exercise
1996 Price 1995 Price 1994 Price
--------- -------- --------- ------- --------- --------
Options outstanding at
beginning of year 2,438,575 $33.38 2,164,038 $27.82 1,806,818 $21.61
Granted 1,633,960 47.35 917,450 41.28 789,123 36.55
Exercised (461,985) 27.49 (566,504) 24.21 (336,481) 14.44
Forfeited (57,029) 37.75 (76,409) 36.15 (95,422) 40.05
Options outstanding --------- ------ --------- ------ --------- ------
at end of year 3,553,521 $40.50 2,438,575 $33.38 2,164,038 $27.82
========= ====== ========= ====== ========= ======
Prices per share of
options outstanding $3.63-55.38 $3.63-55.38 $2.53-52.43
Options available for future grant:
Beginning of year 1,793,281 2,667,389 2,446,345
End of year 216,350 1,793,281 2,667,389
|
The following table summarizes information about stock options outstanding at December 31, 1996:
Options Outstanding Options Exercisable
---------------------------------------- ------------------------
Weighted Weighted Weighted
Maximum Average Average Average
Exercise Number Remaining Exercise Number Exercise
Price Outstanding Contractual Life Price Exercisable Price
- -------- ----------- ---------------- -------- ----------- ---------
$30.00 397,973 65 months $16.62 394,298 $16.53
35.00 491,335 94 months 33.83 460,187 33.93
40.00 358,235 76 months 37.42 327,140 37.41
45.00 1,234,743 103 months 42.38 403,713 42.43
60.00 1,071,235 116 months 51.28 314,566 51.84
--------- ---------
All 3,553,521 103 months $40.50 1,899,904 $35.69
========= =========
|
Had stock-based compensation costs been determined as prescribed by Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation", net income would have been reduced by $4.8 million ($.05 per share on a primary basis) in 1996 and $2.3 million ($.01 per share on a primary basis) in 1995. The pro forma effect on net income for 1996 and 1995 is not comparable as the 1995 amount reflects only the pro forma compensation expense related to grants made in 1995, whereas the 1996 amount reflects the pro forma compensation expense related to grants made in both years.
The estimated weighted average fair value, utilizing the Black- Scholes option-pricing model, at date of option grant during 1996 and 1995 was $11.98 and $13.51, per option, respectively. The weighted average fair value was estimated using the following assumptions:
1996 1995
---- ----
Expected life (months) 31 47
Risk-free interest rate (percent) 5.6 6.7
Expected volatility (percent) 30 36
There is no expected dividend yield.
|
Stock Ownership Plan
The company maintains a noncontributory employee stock ownership plan which enables most North American employees to acquire shares of the company's common stock. Contributions, which are determined by the board of directors, are in the form of common stock or cash which is used to purchase the company's common stock for the benefit of participating employees. Contributions to the plan for 1996, 1995, and 1994 amounted to $4,218,000, $3,878,000, and $2,765,000, respectively.
8. Retirement Plans
The company has a defined contribution plan for eligible employees, which qualifies under Section 401(k) of the Internal Revenue Code. The company's contribution to the plan, which is based on a specified percentage of employee contributions, amounted to $4,608,000, $3,966,000, and $3,235,000 in 1996, 1995, and 1994, respectively. Certain domestic and foreign subsidiaries maintain separate defined contribution plans for their employees and made contributions thereunder which amounted to $1,162,000, $822,000, and $956,000 in 1996, 1995, and 1994, respectively. The company maintains an unfunded supplemental retirement plan for certain executives. The company's board of directors determines those employees eligible to participate in the plan and their maximum annual benefit upon retirement.
9. Lease Commitments
The company leases certain office, warehouse, and other property under noncancelable operating leases expiring at various dates through 2016. Rental expenses of noncancelable operating leases amounted to $29,390,000 in 1996, $27,594,000 in 1995, and $21,736,000 in 1994. Aggregate minimum rental commitments under all noncancelable operating leases approximate $139,278,000 exclusive of real estate taxes, insurance, and leases related to facilities closed in connection with the integration of the acquired businesses. Such commitments on an annual basis are: 1997- $27,830,000; 1998-$24,171,000; 1999-$19,537,000; 2000-$15,230,000; 2001-$11,822,000; and $40,688,000 thereafter. The company's obligations under capitalized leases are reflected as a component of other liabilities.
10. Financial Instruments
The company enters into foreign exchange forward contracts (the "contracts") to reduce risk due to changes in currency exchange rates, principally French francs, German deutsche marks, Italian lira, and British pounds sterling. These contracts hedge firm commitments of inventory purchases and generally are settled within three months. Gains or losses on these contracts are deferred and recognized when the underlying future purchase is recognized. The risk of loss on a contract is the risk of nonperformance by the counterparties. The fair value of the contracts is estimated using market quotes. The notional amount of the contracts at December 31, 1996 and December 31, 1995 was $53,462,000 and $52,345,000, respectively. The carrying amount, which is nominal, approximated fair value at December 31, 1996 and 1995.
11. Segment and Geographic Information
The company is engaged in one business, the distribution of
electronic components, systems, and related products. The
geographic distribution of consolidated sales, operating income
(loss), and identifiable assets is as follows (in thousands):
Sales to Identifiable
Unaffiliated Operating Assets at
Customers Income (Loss) December 31,
------------ ------------ ------------
1996
North America $4,309,839 $317,846 $1,463,528
Europe 1,855,821 101,326 1,040,326
Asia/Pacific 368,917 96 155,830
Corporate - (18,641) 16,467
Investment in affiliated
company - - 34,200
---------- -------- ----------
$6,534,577 $400,627 $2,710,351
========== ======== ==========
|
Sales to Identifiable
Unaffiliated Operating Assets at
Customers Income (Loss) December 31,
1995 ------------ ------------ -----------
North America $3,929,016 $295,941 $1,476,420
Europe 1,719,523 135,519 1,018,755
Asia/Pacific 270,881 8,884 134,947
Corporate - (17,135) 34,863
Investment in affiliated
company - - 36,031
---------- -------- ----------
$5,919,420 $423,209 $2,701,016
========== ======== ==========
1994
North America $3,339,210 $224,007 $1,169,696
Europe 1,146,726 89,879 739,863
Asia/Pacific 163,298 4,288 96,773
Corporate - (16,850) 32,442
Integration charges - (45,350) -
---------- -------- ----------
$4,649,234 $255,974 $2,038,774
========== ======== ==========
|
Strong Electronics, the company's Taiwanese affiliate, recorded sales of approximately $104,000,000 and $97,000,000 in 1996 and 1995, respectively, which are not reflected in the company's consolidated financial statements.
12. Quarterly Financial Data (Unaudited)
A summary of the company's quarterly results of operations follows (in thousands except per share data):
First Second Third Fourth
Quarter Quarter Quarter Quarter
1996 ---------- ---------- ---------- ----------
Sales $1,703,318 $1,601,651 $1,597,379 $1,632,229
Gross profit 281,817 265,336 243,985 250,883
Net income 56,808 54,097 43,756 48,048
Per common share:
Primary 1.11 1.05 .85 .94
Fully diluted 1.11 1.05 .85 .94
1995
Sales $1,440,353 $1,458,213 $1,459,591 $1,561,263
Gross profit 246,330 262,838 256,794 264,712
Net income 44,851 51,752 50,958 54,983
Per common share:
Primary .96 1.09 1.07 1.09
Fully diluted .91 1.03 1.01 1.08
|
13. Subsequent Event
In January 1997, the company acquired the volume electronic component distribution businesses of Premier Farnell plc for approximately $300,000,000, subject to certain adjustments. The acquisition was financed through the issuance of $200,000,000 of 10 year senior notes (interest at 7 percent per annum) and $200,000,000 of 30 year senior debentures (interest at 7-1/2 percent per annum). The net proceeds of the offering were approximately $393,296,000. The balance of the proceeds will be used for working capital and other general corporate purposes. The terms of the indenture are less restrictive than the terms of the company's global credit facility and 8.29% senior notes.
Part III
Part IV
All other schedules have been omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements, including the notes thereto.
ARROW ELECTRONICS, INC.
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
(Item 14 (a))
Page
----
Report of Ernst & Young LLP, independent auditors 13
Management's responsibility for financial reporting 14
Consolidated balance sheet at December 31, 1996 and 1995 15
For the years ended December 31, 1996, 1995 and 1994:
Consolidated statement of income 16
Consolidated statement of cash flows 17
Consolidated statement of shareholders' equity 18
Notes to consolidated financial statements for
the years ended December 31, 1996, 1995 and 1994 20
Consolidated schedule for the three years
ended December 31, 1996:
II - Valuation and qualifying accounts 36
|
3. Exhibits.
(2)(a)(i) Share Purchase Agreement, dated as of October 10, 1991, among EDI Electronics Distribution International B.V., Aquarius Investments Ltd., Andromeda Investments Ltd., and the other persons named therein (incorporated by reference to Exhibit 2.2 to the company's Registration Statement on Form S-3, Registration No. 33-42176).
(ii) Standstill Agreement, dated as of October 10, 1991, among Arrow Electronics, Inc., Aquarius Investments Ltd., Andromeda Investments Ltd., and the other persons named therein (incorporated by reference to Exhibit 4.1 to the company's Registration Statement on Form S-3, Registration No. 33-42176).
(iii) Shareholder's Agreement, dated as of October 10, 1991, among EDI Electronics Distribution International B.V., Giorgio Ghezzi, Germano Fanelli, and Renzo Ghezzi (incorporated by reference to Exhibit 2(f)(iii) to the company's Annual Report on Form 10-K for the year ended December 31, 1993, Commission File No. 1-4482).
(b) Agreement and Plan of Merger, dated as of June 24, 1994, by and among Arrow Electronics, Inc., AFG Acquisition Company and Gates/FA Distributing, Inc. (incorporated by reference to Exhibit 2 to the company's Registration Statement on Form S-4, Commission File No. 35-54413).
(c) Agreement and Plan of Merger, dated as of September 21, 1994, by and among Arrow Electronics, Inc., MTA Acquisition Company and Anthem Electronics, Inc. (incorporated by reference to Exhibit 2 to the company's Registration Statement on Form S-4, Commission File No. 33-55645).
(d) Master Agreement, dated as of December 20, 1996, among Premier Farnell plc and Arrow Electronics, Inc. relating to the sale and purchase of the Farnell Volume Business.
(3)(a)(i) Restated Certificate of Incorporation of the company, as amended (incorporated by reference to Exhibit 3(a) to the company's Annual Report on Form 10-K for the year ended December 31, 1994 Commission File No. 1-4482).
(ii) Certificate of Amendment of the Certificate of Incorporation of Arrow Electronics, Inc., dated as of August 30, 1996 (incorporated by reference to Exhibit 3 to the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, Commission File No. 1-4482).
(b) By-Laws of the company, as amended (incorporated by reference to Exhibit 3(b) to the company's Annual Report on Form 10-K for the year ended December 31, 1986, Commission File No. 1-4482).
(4)(a)(i) Rights Agreement dated as of March 2, 1988 between Arrow Electronics, Inc. and Manufacturers Hanover Trust Company, as Rights Agent, which includes as Exhibit A a Certificate of Amendment of the Restated Certificate of Incorporation for Arrow Electronics, Inc. for the Participating Preferred Stock, as Exhibit B a letter to shareholders describing the Rights and a summary of the provisions of the Rights Agreement and as Exhibit C the forms of Rights Certificate and Election to Exercise (incorporated by reference to Exhibit 1 to the company's Current Report on Form 8-K dated March 3, 1988, Commission File No. 1-4482).
(ii) First Amendment, dated June 30, 1989, to the Rights Agreement in (4)(a)(i) above (incorporated by reference to Exhibit 4(b) to the Company's Current Report on Form 8-K dated June 30, 1989, Commission File No. 1-4482).
(iii) Second Amendment, dated June 8, 1991, to the Rights Agreement in (4)(a)(i) above (incorporated by reference to Exhibit 4(i)(iii) to the company's Annual Report on Form 10-K for the year ended December 31, 1991, Commission File No. 1-4482).
(iv) Third Amendment, dated July 19, 1991, to the Rights Agreement in (4)(a)(i) above (incorporated by reference to Exhibit 4(i)(iv) to the company's Annual Report on Form 10-K for the year ended December 31, 1991, Commission File No. 1-4482).
(v) Fourth Amendment, dated August 26, 1991, to the Rights Agreement in (4)(a)(i) above (incorporated by reference to Exhibit 4(i)(v) to the company's Annual Report on Form 10-K for the year ended December 31, 1991, Commission File No. 1-4482).
(b)(i) Indenture, dated as of January 15, 1997, between the company and the Bank of Montreal Trust Company, as Trustee.
(ii) Officers' Certificate, as defined by the Indenture in 14(b)(i) above, dated as of January 22, 1997, with respect to the company's $200,000,000 7% Senior Notes due 2007 and $200,000,000 7-1/2% Senior Debentures due 2027.
(10)(a)(i) Arrow Electronics Savings Plan, as amended and restated through December 28, 1994 (incorporated by reference to Exhibit 10(a)(iii) to the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, Commission File No. 1-4482).
(ii) Amendment No. 1, dated March 29, 1996, to the Arrow Electronics Savings Plan in (10)(a)(i) above (incorporated by reference to Exhibit 10(a)(iv) to the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, Commission File No. 1-4482).
(iii) Arrow Electronics Stock Ownership Plan, as amended and restated through December 28, 1994 (incorporated by reference to Exhibit 10(a)(i) to the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, Commission File No. 1-4482).
(iv) Amendment No. 1, dated March 29, 1996, to the Arrow Electronics Stock Ownership Plan in (10)(a)(iii) above (incorporated by reference to Exhibit 10(a)(ii) to the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, Commission File No. 1-4482).
(v) Capstone Electronics Corp. Profit- Sharing Plan, as amended and reinstated through December 28, 1994 (incorporated by reference to Exhibit 10(a)(v) to the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, Commission File No. 1-4482).
(b)(i) Employment Agreement, dated as of October 16, 1990, between the company and John C. Waddell (incorporated by reference to Exhibit 10(c)(i) to the company's Annual Report on Form 10-K for the year ended December 31, 1990, Commission File No. 1-4482).
(ii) Employment Agreement, dated as of February 22, 1995, between the company and Stephen P. Kaufman (incorporated by reference to Exhibit 10(c)(ii) to the company's Annual Report on Form 10-K for the year ended December 31, 1995, Commission File No. 1-4482).
(iii) Form of agreement between the company and the employees parties to the Employment Agreements listed in 10(b)(i) and (ii) above providing extended separation benefits under certain circumstances (incorporated by reference to Exhibit 10(c)(iv) to the company's Annual Report on Form 10-K for the year ended December 31, 1988, Commission File No. 1-4482).
(iv) Form of Employment Agreement, dated as of September 1, 1994 between the company and Steven W. Menefee (incorporated by reference to Exhibit 10(c)(v) to the company's Annual Report on Form 10-K for the year ended December 31, 1994, Commission File No. 1-4482).
(v) Form of Employment Agreement, dated as of September 21, 1994, between the company and Robert S. Throop (incorporated by reference to Exhibit 10(c)(x) to the company's Annual Report on Form 10-K for the year ended December 31, 1994, Commission File No. 1-4482).
(vi) Form of Employment Agreement, dated as of April 15, 1996, between the company and Gerald Luterman.
(vii) Form of agreement between the company and all corporate Vice Presidents, including the employees parties to the Employment Agreements listed in 10(b)(iv)-(vi) above, providing extended separation benefits under certain circumstances (incorporated by reference to Exhibit 10(c)(ix) to the company's Annual Report on Form 10-K for the year ended December 31, 1988, Commission File No. 1-4482).
(viii) Form of agreement between the company and non-corporate officers providing extended separation benefits under certain circumstances (incorporated by reference to Exhibit 10(c)(x) to the company's Annual Report on Form 10-K for the year ended December 31, 1988, Commission File No. 1- 4482).
(ix) Unfunded Pension Plan for Selected Executives of Arrow Electronics, Inc., as amended (incorporated by reference to Exhibit 10(c)(xiii) to the company's Annual Report on Form 10-K for the year ended December 31, 1994, Commission File No. 1-4482).
(x) English translation of the Service Agreement, dated January 19, 1993, between Spoerle Electronic and Carlo Giersch (incorporated by reference to Exhibit 10(f)(v) to the company's Annual Report on Form 10-K for the year ended December 31, 1992, Commission File No. 1-4482).
(c)(i) Senior Note Purchase Agreement, dated as of December 29, 1992, with respect to the company's 8.29 percent Senior Secured Notes due 2000 (incorporated by reference to Exhibit 10(d) to the company's Annual Report on Form 10-K for the year ended December 31, 1992, Commission File No. 1-4482).
(ii) First Amendment, dated as of December 22, 1993, to the Senior Note Purchase Agreement in 10(c)(i) above (incorporated by reference to Exhibit 10(d)(ii) in the company's Annual Report on form 10-K for the year ended December 31, 1993, Commission File No. 1-4482).
(iii) Second Amendment, dated as of April 24, 1995, to the Senior Note Purchase Agreement in 10(c)(i) above.
(iv) Third Amendment, dated as of December 23, 1996, to the Senior Note Purchase Agreement in 10(c)(i) above.
(d)(i) Amended and Restated Credit Agreement, dated as of August 16, 1995 among Arrow Electronics, Inc., the several Banks from time to time parties hereto, Bankers Trust Company and Chemical Bank, as agents.
(ii) First Amendment, dated as of September 30, 1996, to the Arrow Electronics, Inc. Second Amended and Restated Credit Agreement, dated August 16, 1995 in (10)(d)(i) above (incorporated by reference to Exhibit 10 to the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, Commission File No. 1-4482).
(e)(i) Arrow Electronics, Inc. Stock Option Plan, as amended (incorporated by reference to Exhibit 10(i)(i) to the company's Annual Report on Form 10-K for the year ended December 31, 1994, Commission File No. 1-4482).
(ii) Form of Stock Option Agreement under
(e)(i) above (incorporated by reference to Exhibit 10(k)(ii) to
the company's Annual Report on Form 10-K for the year ended
December 31, 1986, Commission File No. 1-4482).
(iii) Form of Nonqualified Stock Option Agreement under (e)(i) above (incorporated by reference to Exhibit 10(k)(iv) to the company's Registration Statement on Form S-4, Registration No. 33-17942).
(f)(i) Restricted Stock Plan of Arrow Electronics, Inc., as amended and restated (incorporated by reference to Exhibit 10(j)(i) to the company's Annual Report on Form 10-K for the year ended December 31, 1994, Commission File No. 1-4482).
(ii) Form of Award Agreement under (f)(i) above (incorporated by reference to Exhibit 10(l)(iv) to the company's Registration Statement on Form S-4, Registration No. 33- 17942).
(g) Form of Indemnification Agreement between the company and each director (incorporated by reference to Exhibit 10(m) to the company's Annual Report on Form 10-K for the year ended December 31, 1986, Commission File No. 1-4482).
(11) Statement Re: Computation of Earnings
Per Share.
(21) List of Subsidiaries.
(23) Consent of Ernst & Young LLP
(28) (i) Record of Decision, issued by the EPA
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on September 28, 1990, with respect to environmental clean-up in Plant City, Florida (incorporated by reference to Exhibit 28 to the company's Annual Report on Form 10-K for the year ended December 31, 1990, Commission File No. 1-4482).
(ii) Consent Decree lodged with the U.S. District Court for the Middle District of Florida, Tampa Division, on December 18, 1991, with respect to environmental clean-up in Plant City, Florida (incorporated by reference to Exhibit 28(ii) to the company's Annual Report on Form 10-K for the year ended December 31, 1991, Commission File No. 1-4482).
(b) Reports on Form 8-K
During the quarter ended December 31, 1996, the following Current Reports on Form 8-K were filed:
Date of Report
(Date of Earliest Event Reported) Items Reported
- --------------------------------- --------------
December 31, 1996 Announcement of Agreement to
acquire the volume electronic
businesses of Premier Farnell
plc.
ARROW ELECTRONICS, INC.
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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the three years ended December 31, 1996
Additions
--------------------------
Balance at Balance
beginning Charged Charged at end
of year to income to other (2) Write-offs of year
---------- --------- ------------ ---------- -----------
Allowance for
doubtful accounts
1996 $38,670,000 $15,495,000 $ - $14,412,000 $39,753,000
=========== =========== ========== =========== ===========
1995 $31,132,000 $21,344,000 $ 67,000 $13,873,000 $38,670,000
=========== =========== ========== =========== ===========
1994 (1) $24,263,000 $20,289,000 $3,251,000 $16,671,000 $31,132,000
=========== =========== ========== =========== ===========
(1) During 1994, the company acquired Gates/FA Distributing, Inc. and Anthem
Electronics, Inc. in transactions accounted for as poolings of interests, accordingly
the balance at the beginning of the year 1994 has been restated.
(2) Represents the allowance for doubtful accounts of the businesses acquired by the company
during each year.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.
ARROW ELECTRONICS, INC.
By/s/ Robert E. Klatell
----------------------
Robert E. Klatell
Executive Vice President
March 27, 1997
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
By/s/Stephen P. Kaufman March 27, 1997
-----------------------------------------------
Stephen P. Kaufman, Chairman, Principal
Executive Officer, and Director
By/s/ Robert E. Klatell March 27, 1997
-----------------------------------------------
Robert E. Klatell, Executive Vice President,
Secretary and Director
By/s/ Gerald Luterman March 27, 1997
-----------------------------------------------
Gerald Luterman, Senior Vice President,
and Principal Financial Officer
By/s/ Paul J. Reilly March 27, 1997
-----------------------------------------------
Paul J. Reilly, Vice President, Controller
and Principal Accounting Officer
By/s/ Daniel W. Duval March 27, 1997
-----------------------------------------------
Daniel W. Duval, Director
By/s/ Carlo Giersch March 27, 1997
-----------------------------------------------
Carlo Giersch, Director
By/s/ Gaynor N. Kelley March 27, 1997
-----------------------------------------------
Gaynor N. Kelley, Director
By/s/ Roger King March 27, 1997
-----------------------------------------------
Roger King, Director
By/s/ Karen Gordon Mills March 27, 1997
-----------------------------------------------
Karen Gordon Mills, Director
By/s/ Richard S. Rosenbloom March 27, 1997
-----------------------------------------------
Richard S. Rosenbloom, Director
By/s/ Robert S. Throop March 27, 1997
-----------------------------------------------
Robert S. Throop, Director
By/s/ John C. Waddell March 27, 1997
-----------------------------------------------
John C. Waddell, Vice Chairman
|
PREMIER FARNELL PLC
and
ARROW ELECTRONICS, INC.
TABLE OF CONTENTS
CLAUSE TITLE PAGE
1. INTERPRETATION...................................... 1
2. CONDITIONS.......................................... 14
3. SALE AND PURCHASE OF FARNELL VOLUME BUSINESS........ 17
4. SALE AND PURCHASE OF UK SHARES...................... 18
5. CALCULATION OF THE PURCHASE PRICE................... 19
6. TRANSFER ACCOUNTS AND DECEMBER STATEMENTS........... 19
7. PAYMENT OF THE PURCHASE PRICE....................... 22
8. ALLOCATION OF THE PURCHASE PRICE.................... 23
9. UNDERTAKINGS........................................ 25
10. COMPLETION UNDERTAKINGS REGARDING CASH GENERATED
IN BUSINESS......................................... 26
11. PERIOD BETWEEN EXCHANGE AND COMPLETION.............. 26
12. COMPLETION.......................................... 29
13. DEFAULT AT COMPLETION............................... 32
14. WARRANTIES.......................................... 32
15. LIMITATION ON LIABILITY............................. 33
16. INDEMNITIES......................................... 36
17. PROTECTION OF FARNELL VOLUME BUSINESS AND
USE OF NAME......................................... 40
18. PROTECTION OF THE RETAINED PREMIER FARNELL GROUP.... 46
19. THIRD PARTY CONSENTS AND THE CONTRACTS.............. 48
20. ASSIGNMENT/UNDERLETTING OF FOREIGN
LEASEHOLD PROPERTIES................................ 51
21. ACCESS.............................................. 56
22. EMPLOYEES........................................... 57
23. PENSION ARRANGEMENTS................................ 59
24. ANNOUNCEMENTS....................................... 60
25. MISCELLANEOUS....................................... 60
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26. VALUE ADDED TAX................................................. 63
27. COSTS........................................................... 64
28. GUARANTEE BY PREMIER FARNELL.................................... 64
29. GUARANTEE BY ARROW.............................................. 65
30. NOTICES......................................................... 66
31. GOVERNING LAW AND JURISDICTION.................................. 67
SCHEDULE 1 Particulars of the Companies................................. 70
SCHEDULE 2 The Companies, Company Vendors and Company Purchasers....... 78
SCHEDULE 3 The Businesses, Business Vendors and Business Purchasers.... 79
SCHEDULE 4 Warranties.................................................. 81
SCHEDULE 5 Intellectual Property....................................... 116
SCHEDULE 6 Properties.................................................. 118
SCHEDULE 7 Pensions.................................................... 141
SCHEDULE 8 Country Managers............................................ 154
SCHEDULE 9 Warranties not repeated at Completion....................... 155
SCHEDULE 10 Part I: Excluded Intellectual Property Rights............... 157
Part II: The Registered Trade Marks......................... 158
Part III: Retained Registered Trade Marks................... 160
DOCUMENTS IN THE AGREED TERMS
Business Accounts
Company Accounts
Disclosure Letter
Farnell Volume Business Accounts
Farnell Volume Business Interim Accounts
Management Accounts
Multicomp/Multicomponent Agreement
Previous Accounts (Farnell Volume Business and each Business)
Regulatory Consents
Swedish Agreement
Tax Deed
Trade Mark Assignment
Transfer Agreements
Directors' resignations
Power of Attorney (Exercise of rights pending registration)
Deeds of Assignment of Slough Properties
Notices to Employees
DOCUMENTS IN THE AGREED FORM
|
Deeds of Assignment/Novations of Loans
THIS AMENDED AND RESTATED AGREEMENT is dated as of 20th December 1996
AND MADE BETWEEN:
(1) PREMIER FARNELL PLC, a company incorporated in England and Wales (registered no. 876412) whose registered office is at Farnell House, Forge Lane, Leeds LS12 2NE ("PREMIER FARNELL"); and
(2) ARROW ELECTRONICS, INC., a corporation incorporated in the State of New York, USA having its principal office at 25 Hub Drive, Melville, New York 11747, USA ("ARROW").
RECITAL:
Premier Farnell has agreed to sell or procure the sale of, and Arrow has agreed to purchase or procure the purchase of, the Farnell Volume Business under or otherwise in accordance with the terms of this Agreement.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement, including its Schedules, the following definitions are used:
"A LIST PROPERTIES" means the UK A List Property and the Foreign A List Properties;
"ACCOUNTS DATE" means 28 January 1996;
"ARROW GROUP" means Arrow, its subsidiaries or subsidiary undertakings from time to time and references to a "MEMBER OF THE ARROW GROUP" shall mean whichever of Arrow or its subsidiaries or subsidiary undertakings may be relevant in the particular context;
"ARROW'S SOLICITORS" means Herbert Smith of Exchange House, Primrose Street, London, EC2A 2HS;
"ASSUMED LIABILITIES" means all liabilities, debts and obligations of each of the Business Vendors at Completion (whether actual or contingent) arising primarily from the Business carried on by the relevant Business Vendor arising in the ordinary course of carrying on that Business but excluding the Excluded Liabilities;
"AUSTRIAN COMPANY" means Farnell Electronic Services GmbH, a company incorporated under the laws of Austria;
"B LIST PROPERTIES" means the UK B List Properties and the Foreign B List Properties;
"BUSINESS" means in relation to each Business Vendor, the business carried on by it under the trading names set out against that Business Vendor in column (1) of Schedule 3 and "Businesses" means all of those businesses;
"BUSINESS ACCOUNTS" means in relation to each Business specified in Schedule 3 the standard accounting forms relating to that Business including a balance sheet of that
Business as at the Accounts Date and a profit and loss account of that Business in respect of the accounting reference period ended on the Accounts Date, in each case in the agreed terms;
"BUSINESS ASSETS" means:
(a) the benefit of the Contracts;
(b) the Goodwill;
(c) the Business Intellectual Property Rights;
(d) the Moveable Assets;
(e) the Stock;
(f) the Receivables;
(g) the benefit (so far as the same can lawfully be assigned) of the Claims; and
(h) such other rights and assets (other than the Properties) owned by the relevant Business Vendor and used primarily in the relevant Business,
other than the Retained Assets and including, without limiting the generality of the foregoing all of the assets of the Business that were included in the Consolidated Net Operating Asset Statement except to the extent such assets have been disposed of after the Transfer Date in the ordinary course of business or otherwise ceased to exist as a result of the operation of the Farnell Volume Business in the ordinary course after the Transfer Date and, for the avoidance of doubt, any proceeds of such assets are reflected in the payment to be made in accordance with clauses 10.1 and 10.4;
"BUSINESS DAY" means a day (not being a Saturday) on which banks are open for general banking business in the City of London;
"BUSINESS INTELLECTUAL PROPERTY RIGHTS" means the Intellectual Property Rights owned by each of the Business Vendors at Completion which relate primarily to the Business carried on by the relevant Business Vendor including, without limitation, those listed in Schedule 5;
"BUSINESS PURCHASER" means, in relation to any Business, the member of the Arrow Group set out in column (4) of Schedule 3 which is to purchase that Business;
"BUSINESS RECORDS" means all the information and records of the Premier Farnell Group in relation to the Farnell Volume Business, including:
(a) all Farnell Volume Business Confidential information;
(b) all other accounting, financial, marketing, sales, supply, personnel, management and technical information, correspondence and literature;
(c) all correspondence relating to debtors and/or creditors of each Company; and
(d) all drawings, software, disks and other material embodying or incorporating or constituting any of the Intellectual Property Rights referred to in Schedule 5;
in each case, in whatever form or medium it is held or recorded which are in the possession or under the control of the Premier Farnell Group and which relate mainly to the Farnell Volume Business (which, for the avoidance of doubt, shall include all statutory books and records required to be maintained by each Company);
"BUSINESS VENDORS" means the members of the Premier Farnell Group specified in column (3) in Schedule 3 and Business Vendor means the relevant member;
"CANADIAN COMPANY" means Farnell (Canada) Limited;
"CLAIMS" means all rights and claims of each of the Business Vendors arising out of the Business carried on by the relevant Business Vendor insofar as they relate to the Business Assets to be sold by a Business Vendor under the relevant Transfer Agreement or to an Assumed Liability;
"COMMERCIAL WARRANTIES" means the warranties set out in Parts I to IV of Schedule 4 other than the Tax Warranties;
"COMPANIES ACT" means the Companies Act 1985;
"COMPANY" and in the plural "COMPANIES" a company which forms part of the Farnell Volume Business prior to Completion and Farnell Holding Inc. brief particulars of which are set out in Schedule 1;
"COMPANY ACCOUNTS" means (a) in relation to each Company other than the US Companies and the Canadian Company, its audited balance sheet as at the Accounts Date and its audited profit and loss account in respect of the accounting reference period ended on the Accounts Date; and (b) in relation to each of the US Companies and the Canadian Company its balance sheet as at the Accounts Date and its profit and loss account in respect of the accounting reference period ended on the Accounts Date as adopted and used for the purposes of consolidation into the statutory accounts of the Premier Farnell Group in agreed terms;
"COMPANY PURCHASER" means, in relation to any Company, the member of the Arrow Group set out in column (3) of Schedule 2 which is to purchase the Shares of that Company;
"COMPANY VENDOR" means, in relation to any Company, the member of the Premier Farnell Group specified in column (2) in Schedule 2 which is to sell the Shares of that Company;
"COMPETENT AUTHORITY" means any local or national agency, authority, court, department, Inspectorate, minister, ministry, official or public or statutory person (whether autonomous or not) of any government of any country (or any supra-national authority, agency or court) having jurisdiction over this Agreement or the parties;
"COMPLETION" means completion of this Agreement in accordance with clause 12;
"COMPLETION DATE" means the date on which Completion takes place;
"CONSOLIDATION ADJUSTMENT" means the difference between the consolidated figure in the Consolidated Net Operating Asset Statement and the sterling equivalent at the rate on the Transfer Date of the aggregate Local GAAP Net Operating Asset Values;
"CONSOLIDATED NET OPERATING ASSET STATEMENT" being a statement of the aggregate of all the Local Net Operating Asset Values shown in the Local Net Operating Asset Statements as consolidated and expressed in sterling in accordance with clause 6.1;
"CONTINENTAL EUROPE" means Austria Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Sweden and Switzerland;
"CONTRACTS" means all contracts and engagements to which any of the Business Vendors is a party which relate to the Business carried on by the relevant Business Vendor prior to Completion which at Completion remain uncompleted or unperformed (in whole or in part) but excluding:
(a) any leases or licence agreements for any of the Properties; and
(b) employment agreements with Employees;
"DANISH COMPANY" means Farnell Danmark AS;
"DECEMBER STATEMENTS" means the Local Net Operating Asset Statements, the Consolidated Net Operating Asset Statement and the Local Retained Assets Statements;
"DISCLOSURE LETTER" means the letter in the agreed terms from Premier Farnell to Arrow delivered immediately prior to the execution of this Agreement;
"DOLLARS" or "$" means US dollars;
"EMPLOYEES" means all the employees of each Company and all employees exclusively or mainly engaged in each Business;
"ENVIRONMENT" means the natural environment including but not limited to all or any of the following media, namely air, water and land, including air within buildings and air within other natural or man-made structures above or below ground and subsurface soil and water;
"ENVIRONMENTAL LAW" means all laws, regulations, directives, statutes, subordinate legislation, common law, ordinances and other national and local laws, all judgments, orders, instructions or awards of any court or competent authority and all codes of practice and guidance notes which relate to the Environment;
"EXCLUDED INTELLECTUAL PROPERTY RIGHTS" means those Intellectual Property Rights set out in Part I of Schedule 10;
"EXCLUDED LIABILITIES" means:
(a) external loans from third parties;
(b) any sums due to a Taxation authority;
(c) any other sums due to any member of the Retained Premier Farnell Group other than those which arose in the ordinary course of trade;
(d) any liability or obligations against which Premier Farnell is to indemnify Arrow pursuant to clause 16; and
(e) any liability arising out of the dispute in Denmark with DME as more fully set forth in the Disclosure Letter,
"FARNELL VOLUME BUSINESS" means the volume electronic component distribution business carried on by the Companies and each of the Business Vendors (insofar as the business of that Business Vendor is carried on under one of the trading names (as appropriate) set out in column (1) of Schedule 3;
"FARNELL VOLUME BUSINESS ACCOUNTS" means the pro forma consolidated balance sheet of the Farnell Volume Business as at the Accounts Date and the pro forma consolidated profit and loss account of the Farnell Volume Business in respect of the accounting reference period ended on the Accounts Date, in each case in the agreed terms;
"FARNELL VOLUME BUSINESS CONFIDENTIAL INFORMATION" means all confidential information and trade secrets relating mainly to the Farnell Volume Business (or any part of it) or of any person having dealings with the Farnell Volume Business or any part of it, including:
(a) its business methods, corporate plans, management systems and new business opportunities or development projects, current trading performance and future business strategy;
(b) all financial, marketing and technical information, ideas, concepts, technology, processes and knowledge; and
(c) all lists or details of customers, suppliers, prices, discounts, margins, information relating to research and development;
and any information derived from any of them and subsisting at Completion but excluding any such information which is in the public domain other than by reason of any breach of any confidentiality undertaking in relation to the Farnell Volume Business or any part of it by any party bound thereby or of any obligations under this Agreement;
"FARNELL VOLUME BUSINESS INTERIM ACCOUNTS" means the pro forma consolidated balance sheet of the Farnell Volume Business as at the Interim Accounts Date and the pro forma consolidated profit and loss account of the Farnell Volume Business in respect of the period from the Accounts Date to the Interim Accounts Date, in each case in the agreed terms;
"FOREIGN A LIST PROPERTIES" means the properties, brief particulars of which are set out in Part III of Schedule 6
"FOREIGN B LIST PROPERTIES" means the properties brief particulars of which are set out in Part IV of Schedule 6;
"FRENCH BUSINESS" means that part of the Farnell Volume Business carried on by the French Business Vendor;
"FRENCH BUSINESS PURCHASER" means Arrow Electronique S.A.;
"FRENCH BUSINESS VENDOR" means Farnell (France) S.A.R.L.;
"GERMAN COMPANY" means Farnell Electronic Services GmbH, a company incorporated under the laws of Germany;
"GOODWILL" means the goodwill of any of the Business Vendors at Completion relating primarily to the Business carried on by it with the exclusive right insofar as any Business Vendor can grant it for the relevant Business Purchaser to represent itself as carrying on the relevant Business in succession to the Business Vendor from Completion;
"INDEMNITIES" means the indemnities contained in clause 16 of this Agreement;
"INTELLECTUAL PROPERTY RIGHTS" means all inventions, patents, registered designs, design rights and copyrights, know-how and trademarks (whether registered or not) and the goodwill therein and applications for any of the same and all rights of a similar nature throughout the world, including, without limitation, those referred to in Schedule 5;
"INTERIM ACCOUNTS DATE" means 28 July 1996;
"IRISH SCHEME" means The Farnell (Republic of Ireland) Staff Benefits Plan established by a deed dated 22 December 1992;
"ITALIAN COMPANY" means Farnell SpA;
"KEY WAREHOUSE" means any one of the A List Properties (other than the property in Finland);
"LOAN(S)" means the balances (other than trading balances) together with interest due to or from Companies to or from members of the Premier Farnell Group but excluding balances between Companies;
"LOCAL COMPLETION STATEMENTS" means in relation to each Company, a statement setting out in the local currency as at the Completion Date the following:
- - the amount of any net movement in the amount of any Loan to or from
that Company for the period 28 December 1996 to the Completion Date
(inclusive) in the ordinary course of business of the Company;
- - the amount of any net movement in any Cash for the period 28 December
1996 to the Completion Date (inclusive) outside the ordinary course of
business of the Company net of tax on such outside the ordinary course
activities;
- - in the case of each of the Canadian Company, the Italian Company and
the UK Company, an amount of interest (calculated at a rate of seven
per cent per annum) on the amounts due to Premier Farnell from the
Canadian Company,
|
the Italian Company and the UK Company in each case for the period 28 December 1996 to the Completion Date (inclusive);
- - the aggregate of the above ("THE LOCAL COMPLETION VALUE")
For the purposes of this definition any movement in the amounts referred to above shall be regarded as within the ordinary course of business if it results from a transaction involving any of the categories of assets or liabilities set out in the Local Net Operating Asset Statements;
"LOCAL GAAP NET OPERATING ASSET STATEMENT" means in relation to each Company and Business, the Local Net Operating Asset Statement adjusted for any differences in order to comply with the generally accepted accounting practices in the place of incorporation of the Company or Business Vendor instead of those in the UK and which would have led to an aggregate difference of (pound sterling) 912,000 between the consolidated figure in the Consolidated Net Operating Asset Statement and the aggregate of the Local GAAP Net Operating Asset Value as at 28 January 1996;
"LOCAL GAAP NET OPERATING ASSET VALUE" has the same meaning as Local Net Operating Asset Value save that the calculation shall be made by reference to the Local GAAP Net Operating Asset Statement rather than the Local Net Operating Asset Statement;
"LOCAL NET OPERATING ASSET STATEMENTS" means in relation to each Company and Business, a statement derived from the Transfer Accounts setting out in the relevant local currency as at the Transfer Date the following:
- - Tangible fixed assets
- - Inventory
- - Trade debtors (including inter-company trade balances)
- - Other debtors and prepayments
- - Trade creditors (including inter-company trade balances)
- - Other taxes
- - Other creditors and accruals
- - Corporate taxes
- - Provisions
- - External Italian debt in respect of trade receivables
- - loans between the Companies other than trade debtors and creditors
between those Companies
- - The net aggregate of the above ("THE LOCAL NET OPERATING ASSET VALUE")
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For the avoidance of doubt none of the assets and their associated liabilities relating to the business to be transferred pursuant to the Swedish Agreement or relating to Farnell
Components Inc. to be transferred to a member of the Retained Premier Farnell Group prior to Completion shall be included in this statement;
"LOCAL RETAINED ASSET STATEMENTS" being in relation to each Company and Business, a statement derived from the Transfer Accounts setting out, in the relevant local currency as at 27 December 1996, the Local Retained Asset Values;
"LOCAL RETAINED ASSET VALUE" means:
in relation to each Company:
- - the net balance of the following categories of assets and liabilities:
bank overdraft and other external borrowings other than trade debts
and the debts incurred by the Italian Company in the ordinary course
in respect of the financing of its trade receivables; cash at bank
and on hand and short term deposits ("CASH") and, for the avoidance
of doubt, excluding any amount included in the Local Net Operating
Asset Statement for such Company;
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in relation to each Business, the net aggregate of:
- - any liabilities relating to the Business which are not acquired or
assumed by the relevant Business Purchaser but which are included in
the Local Net Operating Asset Statement; and
- - any assets relating to the Business which are not acquired or assumed
by the relevant Business Purchaser but which are included in the
Local Net Operating Asset Statement;
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and for the avoidance of doubt, for the purposes of clause 5.4, the net aggregate referred to above shall be deemed positive to the extent that liabilities referred to in this definition (in respect of a Business) exceed assets in this definition.
"LOSSES" means all losses, damages, compensation, liabilities, costs (including, without limitation, reasonable legal costs), charges and expenses, actions, suits, proceedings, claims, demands, judgments, assessments and awards;
"MANAGEMENT ACCOUNTS" means the cumulative management accounts for the ten month period from the Accounts Date to the end of November 1996 in the agreed terms;
"MOVEABLE ASSETS" means the loose or severable plant and equipment, motor vehicles, office equipment and other tangible assets (but excluding the Properties and any fixtures forming part of any of the Properties) owned by the Business Vendor at Completion and used primarily in the Business carried on by the relevant Business Vendor;
"MULTICOMP/MULTICOMPONENT AGREEMENT" means the agreement in the agreed terms between Premier Farnell and Arrow;
"NORTH AMERICA" means Canada and the United States of America;
"OVERSEAS PENSION ARRANGEMENTS" means those arrangements for retirement, disability and other benefits detailed more specifically in the Towers Perrin Report;
"PERMIT" means any licence, consent, authorisation, certification or permit required under Environmental Law;
"PLANNING ACTS" means the Town and Country Planning Acts or any other enactment for the time being in force in any relevant jurisdiction relating to the use, development and enjoyment of land and buildings;
"PREMIER FARNELL CONFIDENTIAL INFORMATION" means all confidential information and trade secrets relating mainly to the business of the Retained Premier Farnell Group (or any part of it) or of any person having dealings with the business of the Retained Premier Farnell Group or any part of it, including:
(a) its business methods, corporate plans, management systems and new business opportunities or development projects, current trading performance and future business strategy;
(b) all financial, marketing and technical information, ideas, concepts, technology, processes and knowledge; and
(c) all lists or details of customers, suppliers, prices, discounts, margins, information relating to research and development;
and any information derived from any of them and subsisting at Completion but excluding any such information which is in the public domain other than by reason of any breach of any confidentiality undertaking in relation to the business of the Retained Premier Farnell Group or any part of it by any party bound thereby or of any obligations under this Agreement;
"PREMIER FARNELL GROUP" means Premier Farnell, its subsidiaries and subsidiary undertakings from time to time and references to a "MEMBER OF THE PREMIER FARNELL GROUP" shall mean whichever of Premier Farnell or its subsidiaries or subsidiary undertakings may be relevant in the particular context;
"PREMIER FARNELL'S SOLICITORS" means Eversheds of Cloth Hall Court, Infirmary Street, Leeds LSI 2JB;
"PREVIOUS ACCOUNTS" means:
(a) in relation to the Farnell Volume Business, the pro forma consolidated balance sheet of the Farnell Volume Business as at the Previous Accounts Date and the pro forma consolidated profit and loss account of the Farnell Volume Business in respect of the accounting reference period ended on the Previous Accounts Date, in each case in the agreed terms;
(b) in relation to each Company save for each of the US Companies and Canadian Company, its audited balance sheet as at the Previous Accounts Date and its audited profit and loss account in respect of the accounting reference period ended on the Previous Accounts Date;
(c) in relation to each of the US Companies and Canadian Company, its balance sheet as at the Previous Accounts Date and its profit and loss account in respect of the accounting reference period on the Previous Accounts Date;
(d) in relation to each Business, the standard accounting forms comprising a balance sheet of that Business as at the Previous Accounts Date and a profit and loss account of that Business in respect of the accounting reference period ended on the Previous Accounts Date, in each case in the agreed terms;
"PREVIOUS ACCOUNTS DATE" means 29 January 1995;
"PROPERTIES" means those properties owned, used or occupied by the Farnell Volume Business, brief particulars of which are set out in Schedule 6;
"PURCHASE PRICE" means the sum of $300,000,000 adjusted and paid in accordance with clauses 5 and 7;
"RECEIVABLES" means the book and other debts owing to any of the Business Vendors which relate primarily to the Business carried on by the relevant Business Vendor (including, without limitation, deposits, trade debts and prepayments) but excluding:
(a) Cash;
(b) debts due from any Taxation authority; and
(c) any sums owed by a member of the Retained Premier Farnell Group other than debts which arose in the ordinary course of trade;
"REGIONAL BUSINESS" means the business carried on by the Farnell Volume Business which is supplied primarily from a Key Warehouse taken as a whole;
"REGISTERED TRADE MARKS" means the registered trade marks of which Premier Farnell is the registered proprietor as detailed in Part II of Schedule 10;
"REGULATORY CONSENTS" means the consents in the agreed terms received from:
(a) the Irish Minister for Enterprise and Employment; and
(b) the German Federal Cartel office;
"RETAINED ASSETS" means:
(a) Cash;
(b) any debts due from any Taxation Authority;
(c) any sums owed by a member of the Retained Premier Farnell Group other than debts which arose in the ordinary course of trade;
(d) the Swiss Property;
(e) the Excluded Intellectual Property Rights;
(f) any assets, rights or properties used primarily in the business carried on by Farnell AG not comprising a Business;
(g) any assets, rights or properties used primarily in the business carried on by Farnell Danmark AS not comprising a Business;
(h) the switchboard or any hire agreement, lease or similar arrangement relating to the same used in Farnell AG; and
(i) Farnell Components Inc.;
"RETAINED PREMIER FARNELL GROUP" means the Premier Farnell Group, excluding the Companies and excluding the Business Vendors (to the extent that the business of such Business Vendor relates to the Farnell Volume Business);
"RTPA" means the Restrictive Trade Practices Acts 1976 and 1977;
"Shares" means, in relation to any Company, the entire issued share capital of that Company, particulars of which are set out in Schedule 1;
"SLOUGH PROPERTIES" means the UK properties brief particulars of which are set out in Part V of Schedule 6;
"STOCK" means the stock-in-trade of any of the Business Vendors at Completion in relation to the Business to be sold by the relevant Business Vendor;
"SWEDISH AGREEMENT" means the agreement in the agreed terms between the Swedish Company and a member of the Retained Premier Farnell Group transferring the Swedish Catalogue Business (to include all employees employed in the Swedish Catalogue Business);
"SWEDISH COMPANY" means Farnell (Sweden) AB;
"SWISS PROPERTY" means the premises at Brandshenkestrasse 178 CH-8027 Zurich;
"TAX DEED" means the deed in the agreed terms to be entered into pursuant to this Agreement at Completion;
"TAX WARRANTIES" means the representations and warranties set out in Part II of
Schedule 4; "TAXATION" or "TAX" means taxation or tax as defined in the Tax Deed; "TAXES ACT" means the income and Corporation Taxes Act 1988; |
"TCGA" means the Taxation of Chargeable Gains Act 1992,
"THE LONDON STOCK EXCHANGE" means London Stock Exchange Limited;
"TOWERS PERRIN REPORT" means a report prepared by Towers Perrin dated 5 December 1996 titled Premier Farnell plc Electronic Services Division International Benefits Summary;
"TOWN AND COUNTRY PLANNING ACTS" means the Town and Country Planning Act 1990, the Planning (Hazardous Substances) Act 1990, and the Planning and Compensation Act 1991;
"TRADE MARK ASSIGNMENT" means the agreement in the agreed terms between Premier Farnell and Arrow;
"TRANSFER ACCOUNTS" MEANS:
(a) the consolidated balance sheet of the Farnell Volume Business and Farnell Holding Inc(excluding Farnell Components Inc) as at the Transfer Date;
(b) in relation to each Company, the balance sheet of that Company as at the Transfer Date; and
(c) in relation to each Business, the balance sheet as at the Transfer Date of the relevant Business Vendor in relation to that Business;
"TRANSFER AGREEMENT" means, in relation to each of the Companies and each of the Businesses, the agreement in the agreed terms to be executed in accordance with this Agreement between a member of the Premier Farnell Group and a member of the Arrow Group to implement the sale and purchase of that Company or Business in accordance with the terms hereof;
"TRANSFER DATE" means the close of business on 27 December, 1996;
"UK A LIST PROPERTY" means the leasehold property known as sites 'A' and 'B' Edinburgh Way, Harlow, Essex brief particulars of which are set out in Part I of Schedule 6;
"UK B LIST PROPERTIES" means the leasehold properties, brief particulars of which are set out in Part II of Schedule 6;
"UK COMPANY" means Farnell Electronic Services Limited;
"UK GAAP" means generally accepted accounting principles, policies and practices in the United Kingdom including all applicable statements of Standard Accounting Practice, Financial Reporting Standards and pronouncements of the Urgent Issues Task Force;
"UK PROPERTIES" means the UK A List Property and the UK B List Properties;
"UK PURCHASER" means Arrow Electronics UK Holdings Limited;
"UK SCHEME" means The Premier Farnell Group of companies 1978 Retirement and Death Benefit Scheme established by interim trust deed dated 26th January 1972;
"UK SHARES" means the 5,500,002 ordinary shares of (pound sterling)1 each comprising the entire issued share capital of the UK Company;
"UK VENDOR" means Premier Farnell;
"US COMPANIES" means Farnell Electronics Inc and Farnell Holding Inc.;
"VAT" means: (i) in the United Kingdom, value added tax; and (ii) in any other country, the equivalent tax; and |
"WARRANTIES" means the warranties set out in Parts I, II III and IV of Schedule 4;
1.2 In this Agreement, words and expressions defined in the Companies Act shall bear the same meaning as in that Act.
1.3 In this Agreement, save where the context otherwise requires:
1.3.1 a reference to a statute or statutory provision shall include
a reference:
(A) to that statute or provision as consolidated,
modified, re-enacted or replaced by any statute or
statutory provision to the extent that such
consolidatory, re-enacting or replacing statute or
statutory provision is in force prior to the Transfer
Date;
(B) to any repealed statute or statutory provision which
it re-enacts (with or without modification); and
(C) any subordinate legislation made under the relevant
statute in force prior to the Transfer Date;
1.3.2 words in the singular shall include the plural, and vice
versa;
1.3.3 the masculine gender shall include the feminine and neuter and
vice versa;
1.3.4 a reference to a person shall include a reference to a firm, a
company, an unincorporated association or to a person's
executors or administrators;
1.3.5 a reference to a company shall include a reference to a body
corporate or other similar association if incorporated or
registered in a jurisdiction other than England and Wales;
1.3.6 a reference to a clause, sub-clause or a Schedule (other than
to a schedule to a statutory provision) shall be a reference
to a clause, sub-clause or Schedule (as the case may be) of or
to this Agreement;
1.3.7 if a period of time is specified and dates from a given day or
the day of an act or event, it shall be calculated exclusive
of that day;
1.3.8 references to any English legal term for any action, remedy,
method or judicial proceeding, legal document, legal status,
court, official or any legal concept or thing shall in respect
of any jurisdiction other than England and Wales be deemed to
include what most nearly approximates in that jurisdiction to
the English legal term;
1.3.9 references to any word or expression defined in any English
statute or statutory provision shall in respect of any
jurisdiction other than England and Wales be deemed to include
what most nearly approximates under applicable legislation in
that jurisdiction to the English word or expression;
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1.3.10 a person shall be deemed to be connected with another
if that person is connected with another within the
meaning of section 839 of the Taxes Act;
1.3.11 references to writing shall include any modes of
reproducing words in a legible and non-transitory
form;
1.3.12 a reference to a balance sheet or profit and loss
account shall include a reference to any note
forming part of it;
1.3.13 where any of the Warranties is qualified by the
expression "to the best of the knowledge, information
and belief of Premier Farnell" or "as far as Premier
Farnell is aware" or any similar expression, that
Warranty shall mean:
(i) the knowledge of the country managers listed
in Schedule 8; and
(ii) the knowledge of Mr. H. Poulson, Mr. I
Andrews, Mr. A Fisher (who shall have
enquired carefully as to the position with
Price Waterhouse), Mr. K. Mullen (who shall
have carefully enquired as to the position
with Eversheds), Mr. E. Burgess, Mr. V.
Baggio, Mr. D. Norton;
1.3.14 references to documents "in the agreed terms" shall
be to documents agreed between the parties, annexed
to this Agreement and initialled for identification
by Premier Farnell's Solicitors and Arrow's
Solicitors;
1.3.15 the headings in this Agreement are for convenience
only and shall not affect the interpretation of any
provision of this Agreement; and
1.3.16 references to this Agreement include this Agreement
as amended or supplemented in accordance with its
terms.
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1.4 The designations adopted in the recitals and introductory statements preceding this clause apply throughout this Agreement, including the Schedules.
2. CONDITIONS
2.1 The provisions of this Agreement, other than this clause, clause 3.3 and clauses 17.2.2 and 18.6 (Confidentiality), 24 (Announcements), 27 (Costs), 30 (Notices) and 31 (Governing Law) are subject to each of the following conditions being satisfied (or waived by written agreement between the parties in accordance with this clause) on or before 30 June 1997:
2.1.1 it becoming apparent that no action will be taken by
the Italian Competition Authority under Law No.
287/90 to prohibit the proposed acquisition of the
Italian Company by the Arrow Group or to order
modifications of the same which are not satisfactory
to both parties acting reasonably either by receipt
of confirmation to that effect in terms satisfactory
to both parties acting reasonably or by the expiry of
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any periods provided under the said law for the commencement of an
investigation of the proposed acquisition;
2.1.2 the Cartel Court of Austria ("the Cartel Court") either (i) having
confirmed,on terms satisfactory to both parties acting reasonably, that
none of the law office of the Federal Republic of Austria, the Federal
Economic Chamber, the Federal Chamber of Labour and the Austrian
Chamber of Agriculture have requested a review and investigation of the
proposed acquisition of Austrian Company by the Arrow Group; or (ii)
where such an investigation has been requested, not having restricted
the merger or (iii) where such an investigation has been requested, not
having ruled to prohibit the merger within the period of five months
provided in S 42b(5) Austrian Cartel Act PROVIDED THAT where such an
investigation has been requested and has not been completed and a
period of three weeks or more shall have elapsed since the last of the
conditions referred to in clauses 2.1.1, 2.1.3 and 2.1.4 was fulfilled
or waived by the parties, this clause 2.1.2 shall cease to operate as a
condition to this Agreement other than in relation to the sale of the
Austrian Company and the relative Transfer Agreement and the parties
will use their reasonable endeavours to agree how best to deal with the
Austrian Company to their mutual satisfaction, regard being had to any
remaining regulatory constraints;
2.1.3 the Swedish Competition Authority having confirmed, on terms
satisfactory to both parties acting reasonably, that no investigation
under Section 38 of the Swedish Competition Act has been initiated with
respect to the proposed acquisition of the Swedish Company by the Arrow
Group;
2.1.4 Farnell (France) S.A.R.L. having initiated consultations with the
appropriate bodies representing the employees of the Farnell Volume
Business in France (the "FRENCH EMPLOYEE REPRESENTATIVES") in
accordance with Article 432-1 of the French Labour Code and the French
Employee Representatives giving an opinion in accordance with the
French Labour Code;
2.1.5 no improper conduct by any of the Companies or Business Vendors having
occurred constituting fraud in connection with transactions with a
supplier of inventory to, or customer of, the Farnell Volume Business
which would have a material adverse effect on any Regional Business;
2.1.6 no violations of law by any of the Companies or Business Vendors having
occurred which would have a material adverse effect on any Regional
Business;
2.1.7 no occurrence of substantial loss or destruction having occurred, not
being covered by insurance or reimbursed by Premier Farnell, to a Key
Warehouse or the inventory contained therein;
2.1.8 the Regulatory Consents not being withdrawn or varied (such variation
being, in the reasonable opinion of either party, material);
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2.1.9 no governmental or regulatory body or court of competent
jurisdiction restraining or preventing Completion or
completion of any of the Transfer Agreements or otherwise
limiting, preventing or restricting the implementation in any
material respect (except as provided in clause 2.1.2) by the
Arrow Group of the purchase of the Farnell Volume Business;
2.1.10 no claim having been made against or paid by any Company or
any Business Vendor under any guarantee by a Company or a
Business Vendor of the obligations of any member of the
Retained Premier Farnell Group which has not been satisfied or
reimbursed by a member of the Retained Premier Farnell Group;
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and, if each of those conditions has not been satisfied, or waived by
written agreement between the parties on or before 30 June 1997, the
provisions of this Agreement (other than clauses 24 (Announcements), 27
(Costs), 30 (Notices), 31 (Governing Law) and 17.2.2 and 18.6
(Confidentiality)) shall from such date have no effect and neither
party shall have any liability under them (without prejudice to the
rights of either party in respect of antecedent breaches).
2.2 Arrow and Premier Farnell shall use their respective reasonable endeavours to procure that the conditions in clauses 2.1.1 to 2.1.4 inclusive are satisfied by not later than 30 June 1997. Neither party is entitled to withdraw from this Agreement before 30 June 1997 unless it becomes evident that any of the conditions in clauses 2.1.1 to 2.1.4 has become incapable of satisfaction and both parties, acting reasonably, agree in writing that this Agreement should be of no further effect.
2.3 If the conditions contained in sub-clauses 2.1.1. to 2.1.3 have been satisfied and both parties reasonably agree that the condition set out in sub-clause 2.1.4 is unlikely to be satisfied within a short period following the satisfaction of the latest in time to be satisfied of conditions 2.1.1 to 2.1.3, both parties may agree that sub-clause 2.1.4 shall cease to operate as a condition and to use their reasonable endeavours to agree a proposal for implementing the terms of this Agreement save in respect of the sale of the French Business.
2.4 Without limiting the foregoing, it is agreed that all requests and enquiries from any government, governmental, supranational or trade agency or regulatory body or any trade union or works council shall be dealt with by Premier Farnell and Arrow in consultation with each other and Premier Farnell and Arrow shall promptly co-operate with and provide all necessary information and assistance reasonably required by such government, agency, body, trade union or works council upon being requested to do so by the other.
2.5 If either Arrow or Premier Farnell fails to comply with the provisions of clause 2.2, without affecting any other rights or remedies that either party may have, Arrow and Premier Farnell each acknowledge and agree that damages would not be an adequate remedy for breach of such obligation and the party not in
default shall be entitled to the remedy of specific performance or other equitable relief for any threatened or actual breach of such obligation.
2.6 Each party acknowledges that it is of fundamental importance to the other that, once this Agreement is announced, Completion is effected subject always to the fulfilment, satisfaction or waiver of the conditions set out in clauses 2 and 12.2. Accordingly, each party hereby waives any rights of rescission which may be available to it (save such as may arise in respect of fraud).
2.7 Each party agrees that, if either party fails to complete the Agreement in circumstances where the conditions in clauses 2 and 12.2 have been fulfilled, satisfied or waived and the other party has taken all steps as are required of it to effect Completion, damages will be an inadequate remedy for such other party and that the other party should be entitled to equitable relief including specific performance to the maximum extent available. Nothing contained in this clause shall be construed as preventing either party Mom pursuing any other remedies available to it for failure by the other party to effect Completion in accordance with the provisions of this Agreement.
3. SALE AND PURCHASE OF FARNELL VOLUME BUSINESS
3.1 Premier Farnell shall sell or procure the sale of the Farnell Volume Business (including all of the Shares (excluding the Shares in Farnell Electronics Inc.) and each of the Businesses and their respective Business Assets) with full title guarantee (save, in respect of the Business Assets only, as expressly provided in this Agreement or any of the documents in the agreed terms) and assign or novate the Loans or procure them to be assigned or novated as appropriate and Arrow shall procure the purchase, assignment or novation of the same, in accordance with this Agreement and by the execution and performance of each of the Transfer Agreements.
3.2 In relation to Contracts, the expression "full title guarantee" in clause 3.1 shall not imply that Premier Farnell or the relevant Business Vendor has the right to assign or sell any Contract without the consent of the other party to any Contract nor that Premier Farnell or the Business Vendor has obtained any such consent which is required for such assignment or sale.
3.3 As soon as practicable following the satisfaction or waiver of each of the conditions set out in clauses 2.1.1 to 2.1.4 inclusive and in any event within three Business Days after the date on which the last in time to be satisfied or waived of those conditions is satisfied or waived (as the case may be), Premier Farnell shall procure the execution and completion by the Company Vendors and the Business Vendors of (or itself execute and complete), and Arrow shall procure the execution and completion by the Company Purchasers and Business Purchasers of (or itself execute and complete), the Transfer Agreements on terms that the execution and completion of each of the Transfer Agreements shall be subject to and effective from the completion of the provisions of clause 12 of this Agreement in accordance with its terms.
3.4 Time shall be of the essence for the purposes of clause 3.3.
3.5 Subject to the proviso to clause 2.1.2, neither party shall be obliged to procure completion of the sale and purchase of the Farnell Volume Business unless the other procures completion of or completes the sale and purchase (as appropriate) of all of the Farnell Volume Business in accordance with this Agreement and each of the Transfer Agreements.
3.6 Neither party shall be permitted to delay Completion if the only reason that Completion cannot occur is because a member of such party's Group shall not have executed or completed a Transfer Agreement when it was obliged to do so.
3.7 In relation to a sale of Shares or a Business, each of Premier Farnell and Arrow acknowledge and agree that the other may, as far as the other deems necessary, assign any of its rights under this Agreement (but excluding the rights contained in sub-clause 17.12) or the Transfer Agreements or any of the documents in the agreed terms to any member of the Retained Premier Farnell Group or the Arrow Group (as the case may be) on condition that the assignee shall agree to reassign those rights to another member of the Retained Premier Farnell Group or Arrow Group (as the case may be) if at any time it ceases to be, or it is proposed that it should cease to be, a member of the Retained Premier Farnell Group or Arrow Group (as the case may be).
3.8 Arrow undertakes to Premier Farnell (for itself and as trustee for each of the Business Vendors) that it shall, or shall procure that a Business Purchaser shall:
3.8.1 be responsible for and promptly pay, satisfy,
discharge and perform all the Assumed Liabilities as
they fall due; and
3.8.2 indemnify and keep fully and effectively indemnified
each Business Vendor from and against all Losses
which any Business Vendor may suffer or incur as a
result of the failure by Arrow or the relevant
Business Purchaser to be responsible for or to
promptly pay, satisfy, discharge or perform any of
the Assumed Liabilities.
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4. SALE AND PURCHASE OF UK SHARES
4.1 Premier Farnell shall procure that the UK Shares shall be sold free from any option, charge, claim, equity, lien, rights of pre-emption or any other third party rights and together with all rights attached to them at the date of this Agreement or subsequently becoming attached to them.
4.2 Premier Farnell hereby waives and agrees to waive or to procure the waiver of any restrictions on transfer (including pre-emption rights) which may exist in relation to the UK Shares under the articles of association or other constitutional documents of the UK Company (or otherwise).
4.3 Neither party shall be obliged to procure completion of the sale or purchase of any UK Shares unless the other party completes, or procures completion of, simultaneously the sale and purchase (as appropriate) of all of the UK Shares, but completion of the sale or purchase of some of the UK Shares will not
affect the rights of the parties with respect to the sale and purchase of the other UK Shares.
5. CALCULATION OF THE PURCHASE PRICE
5.1 The total consideration for the sale of the Farnell Volume Business shall be US$300,000,000 as adjusted in accordance with the three adjustments set out in this clause 5. This US$300,000,000 amount shall be called "the Basic Purchase Price" and shall be paid in accordance with clause 7.
5.2 In order to make the required adjustments to the Basic Purchase Price, the December Statements and the Local Completion Statements shall be prepared in accordance with clause 6.
5.3 The first adjustment to the Basic Purchase Price shall be made
by reference to the Consolidated Net Operating Asset
Statement. To the extent the total figure in the Consolidated
Net Operating Asset Statement is more than (pound
sterling)80,700,000, the Basic Purchase Price shall be
increased by that amount. To the extent the total figure in
the Consolidated Net Operating Asset Statement is less than
(pound)80,700,000, the Basic Purchase Price shall be decreased
by that amount. This amount shall be called the "Net Asset
Adjustment" and shall be paid in accordance with clause 7.
5.4 The second adjustment to the Basic Purchase Price shall be made by reference to the Local Retained Asset Statements. Each Local Retained Asset Value as shown in the Local Retained Asset Statement shall be converted into sterling in accordance with clause 6.1 and the various sterling amounts for all the Companies and Businesses shall be aggregated. If this aggregate amount is positive, the Basic Purchase Price shall be increased by that amount. If this amount is negative, the Basic Purchase Price shall be decreased by that amount. This amount shall be called the "Retained Asset Adjustment" and shall be paid in accordance with clause 7.
5.5 The third adjustment to the Basic Purchase Price shall be made as follows:
Each Local Completion Value as shown in the Local Completion Statement shall be converted into sterling in accordance with clause 6.1 and the various sterling amounts for all the Companies and Businesses shall be aggregated. If this aggregate amount is positive, the Basic Purchase Price shall be increased by that amount. If this amount is negative, the Basic Purchase Price shall be decreased by that amount. This amount shall be called the "Completion Adjustment" and shall be paid in accordance with clause 7.
5.6 The total consideration shall be allocated between the various Companies, Businesses and Loans in accordance with clause 8.
6. TRANSFER ACCOUNTS AND DECEMBER STATEMENTS
6.1 Within 20 Business Days of the Transfer Date Premier Farnell shall prepare and deliver the Transfer Accounts and the December Statements to Price Waterhouse. Arrow shall give and shall procure that each Company and each
Business Purchaser gives Premier Farnell such information and assistance as Premier Farnell reasonably requires for the purpose of preparing the Transfer Accounts and December Statements. The Transfer Accounts shall be prepared in sterling under the historical cost convention in compliance with the requirements of the Companies Act in relation to the preparation of audited financial statements (save for the requirement for an audit report) and in accordance with UK GAAP, adopting and consistently applying the accounting principles, policies and practices used by Premier Farnell in the preparation of the Farnell Volume Business Accounts, in order to present fairly the financial position of the Farnell Volume Business at the Transfer Date. The Transfer Accounts shall be prepared on the same basis as that on which they would have been prepared had the Farnell Volume Business remained within the ownership of the Premier Farnell Group. The parties agree that the exchange rate to be applied in translating into sterling:
6.1.1 the Transfer Accounts and the December Statements; and
6.1.2 the Local Completion Statements;
shall be the closing mid point exchange rate for the Transfer Date and the Business Day before the Completion Date respectively rounded to two decimal places as quoted in The Financial Times.
6.2 Premier Farnell shall instruct Price Waterhouse to undertake a review and audit in accordance with UK generally accepted auditing standards of the December Statements and to make such adjustments thereto as may be necessary to ensure that they comply with the requirements of clause 6.1. The instructions to Price Waterhouse shall be on the terms that it shall afford to Ernst & Young the opportunity to review the process and procedures (including attendance at any stock-take or discussion on the need for or level of any provisions or exceptional charges in relation to any asset or liability) and to examine all audit working papers involved in Price Waterhouse's review of the December Statements. Following Completion Arrow shall give and shall procure that each Company and each Business Purchaser gives Price Waterhouse such information and assistance as Price Waterhouse reasonably requires for the purpose of reviewing the December Statements. Price Waterhouse shall deliver the December Statements (both as so reviewed and adjusted) accompanied by a certificate from Price Waterhouse confirming that the December Statements have been prepared on the basis required by clause 6.1 to Premier Farnell, Arrow and Ernst & Young as soon as reasonably practicable and in any event within 20 Business Days after Completion.
6.3 Arrow and Ernst & Young shall be entitled to review the documents referred to in clause 6.2 and to discuss with Premier Farnell and Price Waterhouse any matters arising therefrom. Premier Farnell shall give and shall procure that (following the Transfer Date) each member of the Premier Farnell Group gives Arrow and Ernst & Young such information and assistance (including access to former auditors of the Farnell Volume Business) as either Arrow or Ernst & Young reasonably require. Arrow shall notify Premier Farnell within 20 Business Days after receipt of the documents referred to in clause 6.2 whether
it accepts that the December Statements (both as reviewed and adjusted) have been prepared in compliance with the requirements of this Agreement and, if it does not, such notification be accompanied by a letter from Arrow or Ernst & Young giving detailed reasoning in writing for any non-acceptance. In the case of non-acceptance, the parties shall (in conjunction with their respective accountants) meet and discuss the objections in order to seek to reach agreement upon such adjustments (if any) to the December Statements as are acceptable to Premier Farnell and Arrow. If Arrow does not notify Premier Farnell within the said 20 Business Days, Arrow shall be deemed to have accepted the December Statements delivered to it as the December Statements.
6.4 If there is no such dispute, or such dispute is so resolved or settled, Premier Farnell shall procure that Price Waterhouse issues the December Statements (which shall be in the form of the draft delivered to Arrow with such changes (if any) as reflect the resolution or settlement of such dispute).
6.5 If Premier Farnell and Arrow are unable to resolve all such differences of views within 20 Business Days following the notification of objections by Arrow, the matters in dispute shall be referred on the application of either Arrow or Premier Farnell to an independent firm of internationally recognised chartered accountants in London to be appointed by (in default of nomination by agreement between Arrow and Premier Farnell) the President for the time being of the Institute of Chartered Accountants in England and Wales for resolution. In giving its decision, the firm so appointed shall state what further adjustments (if any) are necessary to the December Statements in order for them to have been prepared in accordance with this Agreement. Any such decision shall be final and binding on all concerned and shall be given by them as experts and not as arbitrators. Such independent firm of accountants shall be entitled, in rendering its decision, to take into account only such evidence and information as the parties shall have put forward to it.
6.6 Arrow and Premier Farnell shall give and shall procure that each member of the Arrow Group and the Premier Farnell Group respectively gives such information and assistance as the expert reasonably requires for the purpose of resolving or settling any dispute relating to the December Statements in accordance with this clause 6.
6.7 Within 20 Business Days of Completion Premier Farnell shall prepare and deliver to Price Waterhouse the Local Completion Statements. Arrow shall give or procure that each Business Purchaser shall give Premier Farnell such information and assistance as Premier Farnell reasonably requires for the purpose of preparing the Local Completion Statements. Price Waterhouse shall review the Local Completion Statements and subject to making any appropriate amendment thereto certify in writing that the statements are complete and correctly extracted. The provisions of clauses 6.3 to 6.6 shall apply to the Local Completion Statements, mutatis mutandis.
6.8 The costs of Price Waterhouse pursuant to the provisions of this clause shall be borne by Premier Farnell. The costs of Ernst & Young pursuant to the
provisions of this clause shall be borne by Arrow. The costs of the independent accountants (if applicable) shall be borne equally by Arrow and Premier Farnell.
7. PAYMENT OF THE PURCHASE PRICE
7.1 On Completion, subject to clause 7.2, Arrow shall pay to Premier Farnell the Basic Purchase Price (being $300,000,000).
7.2.1 If available on or before Completion, Farnell Holding
BV shall deliver to Arrow a certificate issued by the
Minister of National Revenue of Canada pursuant to
subsection 116(2) of the income Tax Act (Canada) (a
"Section 116 Certificate") in respect of the
disposition by Farnell Holding BV of the entire
issued share capital of Farnell (Canada) Limited
("THE CANADIAN SHARES"). The Section 116 Certificate
shall specify as a "certificate limit" an amount no
less than the estimated purchase price for the
Canadian Shares, being Canadian dollars 22,000,000
(the "estimated purchase price for the Canadian
Shares").
7.2.2 in the event that the Section 116 Certificate has not
been delivered to Arrow on or before Completion
Arrow shall withhold from the Basic Purchase Price an
amount equal to 33-1/3% of the estimated purchase
price for the Canadian Shares (the "WITHHELD
AMOUNT"). The Withheld Amount shall be deposited by
Arrow in an interest bearing account at a bank
located in a jurisdiction acceptable to the Canadian
authorities. The Withheld Amount shall be remitted to
the Receiver General of Canada on the date (the
"REMITTANCE DATE") which is 30 days after the end of
the month in which Arrow acquired the Canadian
Shares. All interest received by Arrow on the
Withheld Amount shall be for the account of Farnell
Holding BV and the full amount of such interest shall
be paid to Farnell Holding BV on the Remittance Date.
7.2.3 Notwithstanding the foregoing, if Farnell Holding BV
delivers a Section 116 Certificate to Arrow at any
time after Completion and prior to the Remittance
Date, Arrow shall pay to Farnell Holding BV an amount
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equal to the amount, if any, by which:
(A) the aggregate of:
(1) the Withheld Amount; and
(2) the amount of interest received by Arrow on the Withheld Amount exceeds
(B) 33 1/3% of the amount, if any, by which the estimated purchase price for the Canadian Shares (as adjusted in accordance with the terms of this Agreement) exceeds the "certificate limit" specified in the Section 116 Certificate;
provided however, that the amount, if any, resulting from the calculation required by 7.2.3(B) above shall be remitted by Arrow to the Receiver General of Canada on the Remittance Date.
7.3 Upon the agreement of the relevant calculations, the Net Asset Adjustment, the Retained Asset Adjustment and the Completion Adjustment shall be aggregated to calculate the "Purchase Price Adjustment" (an amount which will be in sterling). If the Purchase Price Adjustment is a positive amount, Arrow shall pay the amount of the Purchase Price Adjustment to Premier Farnell. If the Purchase Price Adjustment is a negative amount, Premier Farnell shall pay the amount of the Purchase Price Adjustment to Arrow.
7.4 Payments in accordance with this clause shall be made by CHAPS automated transfer to an account in the United Kingdom of a clearing bank in the United Kingdom of Premier Farnell or Arrow (as the case may be) previously nominated in writing by it to the other. Receipt in that account of the amount shall be a valid discharge of the paying party to the other.
7.5 Interest shall be payable at the Bank Base Rate of Barclays Bank plc in respect of the Purchase Price Adjustment from the Completion Date to the date of payment of the Purchase Price Adjustment inclusive.
7.6 Payments made in accordance with this clause shall be made on behalf of the relevant Company Purchaser, Business Purchaser and Loan Assignees, Business Vendors, Company Vendors and Loan Assignors respectively.
7.7 For the purposes of calculating the payment to be made pursuant to clause 7.3, in the event that, at the time such payment is due to be made, the amount of tax payable in respect of a net movement in Cash outside the ordinary course of business pursuant to the Completion Adjustment is not yet known, the Completion Adjustment shall be calculated assuming such tax will be payable in an amount equal to the amount of the tax reserve contained in the Local Completion Statement in respect of such movement in Cash (which reserve shall be calculated in accordance with UK GAAP); and a subsequent payment to reflect any difference between such assumed amount and the amount of tax which is actually paid in respect of such movement in Cash shall be made by the appropriate party at the time such actual tax amount becomes known.
8. ALLOCATION OF THE PURCHASE PRICE
8.1 The portion of the Purchase Price allocated to each Business (expressed in the relevant local currency) shall be as follows:
Take the relevant local currency value of Goodwill for the Business in accordance with clause 8.3;
ADD
The relevant Local GAAP Net Operating Asset Value in the relevant local currency as shown in the relevant Local GAAP Net Operating Asset Statement
ADD/DEDUCT
The relevant Local Retained Asset Value in the relevant local currency as shown in the relevant Local Retained Asset Statement
8.2 The portion of the Purchase Price allocated to each Company shall be as follows:
Take the relevant local currency value of Goodwill for the Company in accordance with clause 8.3;
ADD
The relevant Local GAAP Net Operating Asset Value in the relevant local currency as shown in the relevant Local GAAP Net Operating Asset Statement.
ADD/DEDUCT
The relevant Local Retained Asset Value in the relevant local currency as shown in the relevant Local Retained Asset Statement
ADD/DEDUCT
The relevant Local Completion Value in the relevant local currency as shown in the relevant Local Completion Statement
ADD DEDUCT
In the case of the UK Company only, an amount equal to the difference between the Consolidation Adjustment and (pound sterling)912,000.
8.2.1 For the purpose of calculating the portion of the Purchase
Price allocated to the Shares of a Company there shall be
added to the Purchase Price allocated to that Company the
amount of Loans due at Completion to the Company (or its
subsidiaries) and novated by Premier Farnell or the Premier
Farnell Group to the relevant person nominated by Arrow in
respect of the Loans.
8.2.2 Subject to clause 8.2.3, the Purchase Price as adjusted by
clause 8.2.1 allocated to a Company, shall first be allocated
to the assignment of the Loans due from the Company or its
subsidiary to Premier Farnell or the Premier Farnell Group up
to its face value and the balance to the Shares (expressed in
the relevant local currency).
8.2.3 In the event that the Purchase Price as adjusted by clause
8.2.1 allocated to any Company less the amount allocated to
any relevant Loan results in a negative amount, the Purchase
Price allocated to the Shares shall be the local equivalent of
(pound sterling)1 and the amount allocated to the relevant
Loan shall be reduced accordingly.
8.2.4 There shall be then allocated to the novation of any Loan due
at Completion to the Company (or its subsidiary) the amount of
the Loan
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novated by Premier Farnell or the Premier Farnell Group to the relevant person nominated by Arrow in respect of the Loan.
8.3 The value attributable to Goodwill for each Company and Business shall be as follows:
COMPANY OR LOCAL CURRENCY BUSINESS (POUND STERLING)'000 '000 UK 66,366 66,366 Germany NIL NIL Austria NIL NIL Switzerland 196 437 France 3,921 34,466 Belgium 392 21,003 Holland 490 1,431 Italy 686 1,754,445 Canada 7,646 17,509 USA 3,431 5,730 Sweden 5,490 62,915 Finland 8,529 66,185 Denmark 882 8,767 |
8.4 The Transfer Agreements shall provide for the consideration to be consistent with the mechanism set out under the terms of this clause.
9. UNDERTAKINGS
Premier Farnell shall use its reasonable endeavours:
9.1 on or before Completion to repay or replace with advances from members of the Retained Premier Farnell Group all external borrowings to which a Company is a party other than trade debts and the debts incurred by the Italian Company in the ordinary course in respect of the financing of its trade receivables and other than overdrafts to fund the working capital requirements of the Farnell Volume Business between the Transfer Date and Completion;
9.2 on or before the Transfer Date to extract all significant surplus cash of a Company not required to fund medium term ordinary course activities of the Company (other than cash generated in the ordinary course of business);
10. COMPLETION UNDERTAKINGS REGARDING CASH GENERATED IN BUSINESSES
10.1 Premier Farnell shall procure that there shall be paid to Arrow, and Arrow shall procure that there shall be paid to Premier Farnell, as soon as reasonably practical after Completion, the amount of Cash generated or absorbed (as the case may be) by each Business in the ordinary course of business during the period from the Transfer Date to Completion inclusive as adjusted for any tax assets or liabilities retained by the Business Vendor relating to such ordinary course activities.
10.2 A single net payment shall be made in sterling, such amount to be calculated by making the above calculation for each Business in the relevant local currency and translating to sterling using the exchange rate on the Business Day before Completion as determined in accordance with clause 6.1.
103 Interest shall be payable in respect of the amount of the payment due from Completion to the date of payment inclusive in accordance with clause 7.5.
10.4 Any Cash generated or absorbed shall be regarded as within the ordinary course of business if it results from a transaction involving any of the categories of assets or liabilities set out in the Local Net Operating Asset Statements.
10.5 The procedure for determining the Completion Adjustment set out in clause 6.7 shall apply for determining the amount of the Cash generated or absorbed as if the provisions thereof were set out herein verbatim save that references to Local Completion Statements shall be replaced by references to statements of Cash generated and absorbed.
10.6 Each party shall (or shall procure that any member of its Group shall) account to the other (or to the appropriate member of the other's Group) as soon as reasonably practicable in respect of any monies received by it (or by a member of its Group) after Completion which in accordance with the terms of this Agreement belong to the other party (or to a member of the other party's Group).
11. PERIOD BETWEEN EXCHANGE AND COMPLETION
11.1 Pending Completion, Premier Farnell shall procure that:
11.1.1 each Company and each Business Vendor (in relation to
the Business to be sold by it) continues to carry on
business in the normal course so as to maintain the
goodwill and reputation of that Company and that
Business;
11.1.2 Arrow and its advisers are given as soon as
reasonably practicable on request access to such
facilities and information regarding the Business
Assets, liabilities, contracts and affairs of each
Company and each Business Vendor (in relation to the
Business to be sold by it) as Arrow may reasonably
require which shall for the avoidance of doubt
include all information, financial or otherwise
provided by the operating
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management to the board of directors of each Company and Business
Vendor (in relation to the Business to be sold by it) including all
monthly management accounts, comparative financial data, cashflow
information together with any correspondence relating to the
termination or threatened termination of any franchise agreements to
which any of Premier Farnell, the Business Vendors (in relation to the
Business sold by it) or the Companies is a party;
11.1.3 the Deed of Assignment relating to the transfer of the legal and
beneficial title to each of the Slough Properties at fair market value
together with any associated liabilities from the UK Company to, and
assumption by a member of the Retained Premier Farnell Group, is
executed and forthwith upon receipt of any required consent completed
and that all reasonable efforts are made to obtain such consent prior
to Completion and, if such consent is not received prior to Completion,
Arrow is indemnified and held harmless against any liability arising in
respect of the Slough Properties from the Transfer Date;
11.1.4 the Swedish Agreement is executed and, to the extent reasonably
practicable, completed;
11.1.5 the sale of Farnell Components Inc at fair market value is completed;
11.1.6 such officers and representatives of the Arrow Group as Arrow shall
request are given access to, and are permitted to operate within the
sites at which the Farnell Volume Business operates and that the
directors and officers of the Premier Farnell Group, where requested,
consult with and have due regard to suggestions and requests of such
officers and representatives PROVIDED THAT nothing in this sub-clause
shall allow the representatives and officers of Arrow present on such
sites to interfere unduly with the running of the Farnell Volume
Business;
11.1.7 unless Arrow shall have previously specifically consented thereto in
writing (such consent not to be unreasonably withheld or delayed),
neither any Company nor any Business Vendor (in relation to any
Business to be sold by it) shall:
(A) create, extend, grant or issue, or agree to create, grant or
issue any mortgage, charge, debenture or other security (other
than liens arising in the ordinary course of trading); or
(B) create or issue or agree to create or issue any share or loan
capital, or give or agree to give any option in respect of any
share or loan capital; or
(C) pass any resolution by its members in general meeting or make
any alteration to its memorandum or articles of association or
equivalent constitutional documents, charter or bye-laws; or
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(D) declare, make or pay any dividend or other distribution other than a dividend or distribution of any Retained Assets or any proceeds of Retained Assets; or
(E) pay its creditors otherwise than in the ordinary course or change its policy in relation to the payment of creditors; or
(F) enter into any contract or commitment which is outside the
ordinary course of its business; or
(G) enter into or terminate any supply agreement or franchise
agreement with any supplier relating to any products sold by
that Company or Business Vendor to its customers; or
(H) sell or transfer any of its assets except in the ordinary
course of business, or cancel, release or assign any
indebtedness owed to it or any claims held by it except in the
ordinary course of trade; or
(I) enter into any agreement, commitment or arrangement to incur
any liability for, or make any payment in respect of, any
capital expenditure or any other expenditure (in each case,
which exceeds (pound)20,000 in respect of any single item of
expenditure) other than expenditure of a revenue nature
incurred in the ordinary course of business; or
(J) make any material change to the terms of employment of its
employees or the benefits given to its employees (save for
arising as a result of salary negotiations in the ordinary
course) or in any working practices or collective agreements
relating to such practices, or employ or dismiss any employees
with, or to have, an annual salary of in excess of
(pound)25,000; or
(K) enter into any additional agreement, commitment or arrangement
with any member of the Retained Premier Farnell Group outside
of the ordinary course of trading or modify or vary the terms
of any existing agreement, commitment or arrangement with any
member of the Retained Premier Farnell Group;
11.1.8 in relation to negotiations for changes in salary in the ordinary
course of the officers and directors of the Premier Farnell Group
consult with representatives of Arrow and have due regard to their
reasonable requests;
11.1.9 the Farnell Volume Business will not incur or pay any management fees
or other charges to any member of the Retained Premier Farnell Group
except to the extent the same are for actual services rendered to such
Company or Business and are charged at the same rates and on a
consistent basis as prevailed prior to the Transfer Date.
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11.2 The parties acknowledge during the period from the Transfer date until Completion (and contingent upon Completion taking place), the profits and losses and the related cash flows of the Farnell Volume Business, including transactions involving any of the categories of assets or liabilities set out in the Local Net Operating Asset Statements, will be for the account of Arrow in accordance with the terms of clauses 5.5 and 10.1.
11.3 Pending Completion, the parties shall use their reasonable endeavours to procure that the French Employee Representatives are provided with all information required by them in order to complete the consultation procedure in accordance with Article L431-5 of the French Labour Code and to enable the French Employee Representative to give an opinion in accordance with the French Labour Code.
11.4 Premier Farnell shall, from the Transfer Date until Completion, provide the necessary funds to the Farnell Volume Business as may be needed to enable the Farnell Volume Business to be conducted in the ordinary course, such funds to bear interest at the rate of seven per cent. per annum.
11.5 No claim shall be made by any member of the Arrow Group that the transfer referred to in clause 11.13 or the sale referred to in clause 11.1.5 was not made at a fair market value other than a claim for any Losses suffered by any member of the Arrow Group as a result of such transfer or sale having been determined in, or in connection with, proceedings in which unlawful financial assistance contrary to section 151 of the Companies Act is alleged, before a court of competent jurisdiction, to have been made at less than fair market value.
12. COMPLETION
12.1 Immediately following the satisfaction or waiver (as the case may be) of each of the conditions set out in clauses 2.1.1 to 2.1.4, Arrow (in the case of clauses 2.1.1 to 2.1.3) and Premier Farnell (in the case of clause 2.1.4) shall give notice in writing of such occurrence to the other and thereafter each of Premier Farnell and Arrow shall comply with clause 3.3 in respect of each of the Transfer Agreements.
12.2 Completion shall take place at the offices of Arrow's Solicitors on the fourth Business Day, or at such other place or time as the parties shall agree, following the due satisfaction or waiver of the last in time to be satisfied or waived of the conditions specified in clauses 2.1.1 to 2.1.4 provided that none of the events specified within clauses 2.1.5 to 2.1.10 has occurred and provided further that, subject to clause 3.6, it shall be a further condition to each party's obligation to proceed to Completion that all of the Transfer Agreements have been duly executed and delivered.
12.3 At Completion, each of Arrow and Premier Farnell shall or shall procure that the relevant member of the Arrow Group or the Premier Farnell Group (as the case may be) shall execute a Deed of Assignment or Novation in the agreed form in respect of the Loans.
12.4 At Completion, Premier Farnell shall procure that:
12.4.1 there are delivered to the UK Purchaser or Arrow's Solicitors:
(A) a duly executed transfer to the UK Purchaser or its nominee of
the UK Shares, together with definitive share certificates for
them or an indemnity in standard form any missing share
certificates;
(B) any power of attorney under which any document to be executed
pursuant to this Agreement is executed on behalf of the UK
Vendor;
(C) any waivers, consents or other documents required to vest in
the UK Purchaser the full beneficial ownership of the UK
Shares and enable the UK Purchaser to procure them to be
registered in the name of the UK Purchaser or its nominees;
(D) the Tax Deed duly executed by Premier Farnell;
(E) the certificate of incorporation, common seal, all statutory
and minute books (which shall be written up to, but not
including, the date of Completion) and share certificate books
of the UK Company together with all unused share certificate
forms;
(F) all deeds and documents listed in Part VI of Schedule 6
relating to the title of the UK Company to each of the UK
Properties;
(G) the written resignations of Howard Poulson and Andrew Fisher
and any other Premier Farnell nominee directors as directors
of the UK Company executed as a deed in the agreed terms and
evidence that any loans outstanding to any such directors from
any of the Companies or Businesses have been repaid;
(H) evidence reasonably satisfactory to Arrow that each guarantee
given by any Company of any liability of (or otherwise for the
benefit of) any member of the Retained Premier Farnell Group
will be terminated or released with effect from Completion and
each registrable charge to which any of the assets or
undertakings of the UK Company or any of its subsidiaries is
subject has been released or discharged;
(I) a power of attorney from the UK Vendor (and the holders of any
nominee shares) in the agreed terms relating to the exercise
of rights in respect of the UK Shares pending their
registration in the name of the UK Purchaser and/or its
nominee;
(J) a notice of resignation of the existing auditors of the UK
Company containing a statement that there are no circumstances
connected with such resignation which the auditors consider
should be brought to the attention of the
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members or creditors of the UK Company, in accordance
with section 394 of the Companies Act 1985;
(K) if the same have been previously completed, a
certified copy of each of the Deeds of Assignment in
the agreed terms relating to the Slough Properties,
duly executed by the parties thereto;
(L) the Trade Mark Assignment and the Multicomp/
Multicomponent Agreement in the agreed terms duly
executed by Premier Farnell;
(M) except as previously notified to Arrow's solicitors,
original trade mark registration certificates for
the trade marks which will be assigned pursuant to
this Agreement or the Trade Mark Assignment;
12.4.2 the UK Vendor shall procure that the following business is
transacted at meetings of the directors of the UK Company:
(A) the directors of the UK Company shall approve the
transfers of the UK Shares for registration and the
entry of the transferee(s) in the register of members
of the UK Company, in each case subject only to the
transfers being subsequently presented duly stamped;
(B) the situation of the registered office of the UK
Company shall be changed to that nominated by the UK
Purchaser (if any);
(C) all existing mandates for the operation of the bank
accounts of the UK Company shall be revoked and new
mandates issued giving authority to those persons
nominated by Arrow if any are so nominated to Premier
Farnell prior to Completion;
(D) any person nominated by Arrow for appointment as a
director or the secretary of She UK Company shall be
so appointed; and
(E) Ernst & Young shall be appointed to replace the
existing auditors of the UK Company .
12.5 At Completion, Arrow shall procure:
12.5.1 on behalf of each of the Company Purchasers and Business
Purchasers, that She Basic Purchase Price (less any sum
required to be withheld pursuant to the provisions of clause
7.2) is paid by CHAPS automated transfer to the account
(details of which shall have been previously notified by
Premier Farnell to Arrow) of Premier Farnell; and
12.5.2 the UK Purchaser shall deliver or cause to be delivered to the
UK Vendor or Premier Farnell's Solicitors:
(A) the Trade Mark Assignment and the Multicomp/
Multicomponent Agreement in the agreed terms duly
executed by Arrow; and
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(B) the Tax Deed duly executed by Arrow.
13. DEFAULT AT COMPLETION
13.1 Neither party shall be obliged to complete this Agreement until the other complies fully with the requirements of clauses 3.3 (subject to the provisions of clause 3.6) and clauses 12.4.1(A), (B), (C), (D), (F), (H), (I), (L) and (M), 12.4.2 and 12.5 (as appropriate).
13.2 To the extent that Premier Farnell does not comply fully with the requirements of clause 12.4.1(E), (G), (J), and (K) at Completion, Premier Farnell undertakes to satisfy such requirements as soon as practicable following Completion (and in any event within 5 Business Days of Completion) and undertakes to indemnify Arrow (who holds the benefit of such indemnity for itself and as trustee for each of its subsidiaries from time to time (which for the avoidance of doubt shall include the Companies and the Business Purchasers)) for any and all Losses in connection with failure to satisfy such requirements in accordance with this clause.
14. WARRANTIES
14.1 In relation to the Farnell Volume Business (including each of the Companies and Businesses) Premier Farnell warrants to Arrow (who holds the benefit of such warranties for itself and as trustee for each Company Purchaser and each Business Purchaser) in the terms of the Warranties.
14.2 Save with the prior written consent of Arrow, Premier Farnell shall not, and shall procure that no Company Vendor or Business Vendor shall (in the event of any claim being made against any of them in connection with the sale of Shares or any Business or Business Assets), make any claim against any Company or any of its subsidiaries or subsidiary undertakings or (save in the ease of fraud or fraudulent misrepresentation) against any director or employee of any Company or any of its subsidiaries or subsidiary undertakings or any director or employee engaged by any Business Vendor as at the date of Completion, on whom Premier Farnell or any Company Vendor or Business Vendor may have relied before agreeing to any term of this Agreement, of the appropriate Transfer Agreement or the content of any of the Warranties or of the Tax Deed or authorizing any statement in the Disclosure Letter.
14.3 Each of the Warranties shall be construed as a separate warranty and is given subject to the matters which are fairly disclosed in the Disclosure Letter but (save as expressly provided to the contrary) shall not be otherwise limited or restricted by reference to or inference from the terms of any other Warranty or any other term of this Agreement.
14.4 Premier Farnell shall immediately disclose to Arrow any matter or thing which may arise or become known to it or any other member of the Premier Farnell Group after the date of this Agreement which is inconsistent with any of the Warranties or which might render any of them misleading.
14.5 The Warranties, save for the Warranties referred to in Schedule 9, shall be deemed to be repeated at the Transfer Date and at Completion and any express or implied reference therein to the date of this Agreement shall be replaced by a reference to the Transfer Date or to the date of Completion, as the case may be.
14.6 Arrow (for itself and on behalf of each Company Purchaser and Business Purchaser) shall be entitled to claim after Completion that any of the Warranties is or was untrue or misleading or has or had been breached even if Arrow or any Company Purchaser or Business Purchaser could have discovered on or before Completion that the Warranty in question was untrue misleading or had been breached and Completion shall not in any way constitute a waiver of any of the rights of Arrow or any Company Purchaser or Business Purchaser.
14.7 Save as expressly provided to the contrary in this Agreement, the rights and remedies of Arrow and each Company Purchaser and Business Purchaser in respect of a breach of any of the Warranties shall not be affected by Completion, by any investigation made by or on behalf of Arrow or any member of the Arrow Group into the affairs of any Company or any Business (as the case may be), by the giving of any time or other indulgence by Arrow or any Company Purchaser or Business Purchaser to any person, or by any other cause whatsoever except a specific waiver or release by Arrow in writing; and any such waiver or release shall not prejudice or affect any remaining rights or remedies of Arrow or any Company Purchaser or Business Purchaser.
14.8 Premier Farnell acknowledges and agrees with Arrow that, in relation to any claim made in connection with a breach of any of the Warranties, Arrow may determine at its sole discretion to seek damages calculated on either of the following bases:
14.8.1 so as to recover the loss or damage suffered or
incurred by the relevant Company Purchaser or
Business Purchaser arising from the breach of any of
the Warranties; or
14.8.2 so as to recover the loss or damage required to put
the relevant Company Purchaser or Business Purchaser
into the position that it would have been in had the
relevant matter been as so warranted.
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14.9 Arrow warrants to Premier Farnell (who holds the benefit of such warranties for itself and as trustee for each Company Vendor and Business Vendor) in terms of the warranties set out in Part V of Schedule 4.
15. LIMITATION ON LIABILITY
15.1 In this clause "RELEVANT CLAIM" means a claim in respect of any of the Warranties save for those set out in paragraphs 1.1, 1.2 and 1.3 of Part III of Schedule 4.
15.2 No relevant claim shall be made unless written notice containing
specific details of the relevant claim is served on Premier Farnell, in
the case of the Commercial Warranties on or before 30 September 1998
and, in the case of the Tax Warranties, on or before 31 March 2003
15.3 The aggregate amount of the liability of Premier Farnell, the Business
Vendors and the Company Vendors in respect of all relevant claims (and,
except with respect to claims under sub-clause 16.1, claims under
clause 16) shall not exceed the Purchase Price
15.4 No liability shall attach to Premier Farnell in respect of a relevant
claim unless the aggregate amount of the liability of Premier Farnell
in respect of all such relevant claims shall exceed(pound)2,000,000 in
which case Premier Farnell shall only be liable for the amount by which
such aggregate exceeds(pound)250,000
15.5 Premier Farnell shall not be liable for any relevant claim in respect
of an amount less than (pound)10,000.
15.6 Premier Farnell shall not be liable in respect of a relevant claim:
15.6.1 if it would not have arisen but for anything voluntarily done
or knowingly omitted to be done after Completion in the
ordinary course of business by Arrow or any member of the
Arrow Group;
15.6.2 to the extent that it arises or is increased as a result only
of:
(A) an increase in rates of taxation after the Accounts
Date; or
(B) the passing of any legislation, or making of any
subordinate legislation after the Accounts Date;
15.6.3 to the extent that it relates to any loss for which any member
of the Arrow Group is indemnified by insurance;
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15.6.4 to the extent that it relates to:
(A) any matter the subject of a specific or general
provision in, or charged to, the Transfer Accounts;
or
(B) any liability for taxation arising out of the
ordinary course of business of a Company after the
Accounts Date; or
(C) any liability specifically taken account of or
provided for in the Consolidated Net Operating Asset
Statement.
15.7 In respect of relevant claims which are not Special Claims (as defined
in clause 15.8) Arrow shall:
(A) seek to recover from any applicable third party sums
due from that party by taking such steps as would
customarily be taken by Arrow in the ordinary course
of business. To the extent that the sums due relate
to a matter which could give rise to a relevant claim
any amount recovered shall reduce the amount of the
relevant claim;
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(B) as soon as is reasonably practicable, notify Premier Farnell
in writing of any relevant claim and of any claim or matter
which gives rise or is likely to give rise to a relevant
claim;
(C) provide to Premier Farnell such information within its
possession or control relating to any claim or matter which
gives rise or is likely to give rise to a relevant claim as,
in its reasonable opinion, is necessary for Premier Farnell to
be able to evaluate the relevant claim or matter;
(D) subject to it being fully indemnified and reasonably secured
to the satisfaction of Arrow, take such action as Premier
Farnell shall reasonably require to avoid, resist, contest or
compromise any claim or matter which gives rise or is likely
to give rise to a relevant claim (but for the avoidance of
doubt, not entitling Premier Farnell to request that
proceedings be brought in the name of itself or any member of
the Premier Farnell Group)
provided that Arrow shall not be obliged to take or procure that any
member of the Arrow Group shall take any action if Arrow reasonably
considers that such action would be prejudicial to any member of the
Arrow Group from time to time or its respective business or goodwill.
15.8 In respect of relevant claims in excess of (pound)50,000 ("SPECIAL
CLAIMS") Arrow shall:
(A) seek to recover from any applicable third party,
including insurers, any sums due from that party by
taking such steps as Premier Farnell shall reasonably
require. To the extent that the sums due relate to a
matter which could give rise to a relevant claim any
amount recovered shall reduce the amount of the
relevant claim;
(B) promptly notify Premier Farnell in writing of any
Special Claims and of any claim or matter which gives
or is likely to give rise to a Special Claim;
(C) provide to Premier Farnell such information within
its possession or control relating to any claim or
matter which gives or is likely to give rise to a
Special Claim; and
(D) subject to the right of any insurer to conduct the
defence of a claim and subject to it being fully
indemnified in respect of the costs arising and in
respect of any actual or alleged improper or unlawful
conduct of the proceedings relating to such claim and
reasonably secured to the satisfaction of Arrow, take
such action as Premier Farnell shall reasonably
require including the appointment of solicitors
nominated by it to avoid, resist, contest or
compromise any claim or matter which gives or is
likely to give rise to a Special Claim,
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provided that, for the purposes of this clause 15.8,
Premier Farnell will not be acting unreasonably if it
requires Arrow to take action which Arrow considers
would be prejudicial to any member of the Arrow Group
from time to time or its respective business or
goodwill.
15.9 Premier Farnell shall have no liability in respect of any
relevant claim to the extent that it arises as a result of any
change in the accounting policy or practice or in the
accounting reference date of any Company or Business after
Completion;
15.10 Payment of any relevant claim shall to the extent of such
payment satisfy and preclude any other relevant claim or claim
under the indemnities set out in clause 16 and/or the Tax Deed
which is capable of being made in respect of the same subject
matter (and vice versa).
15.11 Nothing herein shall in any way diminish the common law duty
of Arrow or any Company Purchaser or Business Purchaser to
mitigate its loss.
15.12 Any amount payable by Premier Farnell to Arrow in satisfaction
of any relevant claim or any claim under the Indemnities shall
be treated as a reduction of the Purchase Price. Such
reduction shall be made from the part of the Purchase Price
attributable to the part of the Farnell Volume Business to
which the relevant claim relates. To the extent the reduction
relates to a Business, the reduction shall be made either from
the value of goodwill or the net assets dependent upon the
subject matter of the relevant claim.
15.13 Arrow acknowledges and agrees that the Warranties do not apply
to:
15.13.1 the Properties (save for the Warranties contained in
paragraph 9 of Part I of Schedule 4)
15.13.2 matters or circumstances relating to the Environment
or Environmental Law (save for the Warranties
contained in paragraph 15.3 of Part I of Schedule 4).
15.14 Premier Farnell will not be liable for any relevant claim to
the extent that the subject matter of the claim is
specifically taken into account in determining any adjustments
to the Purchase Price as a result of the application of
clauses 5.3 to 5.5 inclusive.
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16. INDEMNITIES
16.1 Subject to the provisions of clauses 16.3 to 16.6, Premier Farnell shall indemnify and keep indemnified Arrow and, as separate covenants, each of the Companies, Company Purchasers and Business Purchasers:
16.1.1 as to 100% of the Costs of any Remedial Works required during the period beginning on Completion and ending on the fifth anniversary of Completion;
16.1.2 as to 50% of the Costs of any Remedial Works required during
the period beginning on the fifth anniversary of Completion
and ending on the seventh anniversary of Completion
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provided that:
(i) the relevant indemnified person shall take all reasonable steps:
(a) to notify Premier Farnell promptly upon receiving actual notice of any circumstances which are likely to lead to a claim under this clause 16.1; and
(b) to consult with Premier Farnell with a view to keeping Costs to as low a level as is reasonably possible, consistent with the nature and extent of the Remedial Works; and
(c) to consult with Premier Farnell in relation to the commissioning and execution of the Remedial Works; and
(ii) no such claim shall be brought under this clause 16.1 in respect of any Costs attributable to works undertaken in excess of the requirements of the competent authority; and
(iii) the person indemnified under this clause 16.1 assigns to
Premier Farnell all and any rights it may have against any
other person under any law to recover against that person
under the "polluter pays" or other principle.
In this clause 16.1:
"COSTS" means the costs actually incurred and paid by those indemnified
under this clause 16.1;
"EXCEPTED WORKS" means any works required as a result of any act on the
part of Arrow or any member of the Arrow Group following Completion
including without limitation a change of use of any of the Properties;
"REMEDIAL WORKS" means any works other than Excepted Works which any
authority charged with the responsibility to enforce Environmental Law
requires the persons indemnified under this clause 16.1 to undertake in
relation to the Farnell Volume Business to restore the Environment
arising from circumstances relating to or arising from hazardous waste,
pollution or other environmental harm in existence at the Properties at
Completion;
"REQUIRES" means notifies as a mandatory obligation and "required" and
"requirement" have corresponding meanings.
16.2 Subject to the provisions of clauses 16.3 to 16.6, Premier Farnell
shall indemnify and keep indemnified Arrow and, as separate covenants,
each of the Companies, Company Purchasers and Business Purchasers
against all Losses which may be suffered or incurred by Arrow or any
of the Companies, Company Purchasers or Business Purchasers:
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16.2.1 arising in connection with any claims or disputes:
(A) relating to former employees of the Farnell Volume Business or
former employees of any member of the Premier Farnell Group;
or
(B) notified to Premier Farnell or to any Company or Business
Vendor prior to Completion relating to the employment on or
prior to Completion or the termination or purported
termination on or prior Completion of the employment of any
Employees of the Farnell Volume Business or employees of any
member of the Premier Farnell Group save as a consequence of
the transaction contemplated by this Agreement or where Arrow
has consented to or required such dismissal;
16.2.2 for a period of three years from the date of Completion as a result of
any claim against Arrow or any member of the Arrow Group (including,
for the avoidance of doubt, the Companies and the Business Purchasers
in relation to the Businesses) arising in connection with death,
personal injury, other injury to persons, damage to property, loss of
business or profits or other consequential loss or deprivation of
rights (whether based on statute, legislation, negligence, breach of
warranty, strict liability or any other theory or legal foundation)
caused by or resulting from, directly or indirectly, any defect or
alleged defect in or with respect to or the lack of or alleged lack of
merchantable quality or lack of or alleged lack of fitness for purpose
of, any goods distributed or service provided (including value added
work in connection with any goods) by any member of the Premier Farnell
Group on or prior to Completion provided that neither Arrow nor any
member of the Arrow Group shall be entitled to recover under this
provision to the extent that such claim can be satisfied by the
performance by Arrow or such member of the Arrow Group of the normal
Farnell Volume Business contractual product or service warranty;
16.2.3 relating to any reorganisation of the Swedish Company carried out in
contemplation of the sale of the Farnell Volume Business by Premier
Farnell to Arrow and arising prior to 31st March 2003;
16.2.4 as a result of any liability (arising prior to 31 March 2003) of Arrow
or any Company Purchaser or Business Purchaser to reinstate (in
relation to structural alteration made prior to Completion only) any
Property used by the Farnell Volume Business at Completion (including
for the avoidance of doubt properties transferred at Completion)
provided that if such structural change was carried out by a third
party prior to the occupation of such Property by any member or former
member of the Premier Farnell Group, the obligations of Premier Farnell
to indemnify hereunder shall be limited to 50% of the amount of such
liability;
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16.2.5 in respect of rent or insurance premiums not charged or
undercharged under the lease of the UK A List Property in
respect of any period prior to Completion;
16.2.6 arising from the fact that the Slough Properties were not
transferred with Landlord's prior formal consent from the UK
Company at Completion or the Slough Properties were
transferred from the UK Company without Landlord's prior
formal consent whether before or after Completion;
16.2.7 arising out of or in connection with the claims made by
Connaught Electronics Limited against the UK Company referred
to in paragraph 14 on page 37 of the Disclosure Letter.
16.3 Premier Farnell covenants to pay any claims in respect of the
entitlement of employees of the French Business relating to periods
prior to Completion to a share of profits of the French Business
Vendor.
16.4 No claim may be made pursuant to this clause 16 unless the amount being
claimed in respect of such claim exceeds (pound)10,000.
16.5 The provisions of clause 15.6.4(A) and (C) and 15.14 shall apply to
claims made pursuant to this clause 16.
16.6 In respect of claims under this clause ("INDEMNITY CLAIMS") Arrow
shall:
16.6.1 seek to recover from any applicable third party (including
insurers) any sums due from that party by taking such steps as
Premier Farnell shall reasonably require. To the extent that
the sums due relate to a matter which could give rise to an
Indemnity Claim any amount recovered shall reduce the amount
of the Indemnity Claim;
16.6.2 promptly notify Premier Farnell in writing of any Indemnity
Claims and of any claim or matter which gives or is likely to
give rise to an Indemnity Claim;
16.6.3 provide to Premier Farnell such information within its
possession or control relating to any claim or matter which
gives or is likely to give rise to an Indemnity Claim;
16.6.4 subject to any right of any insurer to conduct the defence of
such claim and subject to it being fully indemnified in
respect of the costs arising and in respect of any actual or
alleged improper or unlawful conduct of the proceedings
relating to such claim and reasonably secured to the
satisfaction of Arrow, take such reasonable action as Premier
Farnell shall require including the appointment of solicitors
nominated by it to avoid, resist, contest or compromise any
claim or matter which gives or is likely to give rise to an
Indemnity Claim or to effect any recovery from any third party
in respect thereof,
provided that Premier Farnell will not be acting unreasonably if it
requires Arrow to take action which Arrow considers would be
prejudicial to any
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member of the Arrow Group from time to time or its respective business or goodwill.
17. PROTECTION OF FARNELL VOLUME BUSINESS AND USE OF NAME
17.1 In this clause 17:
17.1.1 "COMPETING BUSINESS" means any business in the United
Kingdom, the Republic of Ireland, Continental Europe
or North America which competes with the volume
electronic component distribution business carried on
at Completion by each of the Companies and each of
the Business Vendors in relation to the Businesses
but shall not mean the catalogue electronic component
distribution business carried on at Completion by
Premier Farnell and members of the Retained Premier
Farnell Group.
17.1.2 references to acting directly or indirectly include
(without prejudice to the generality of that
expression) references to acting alone or jointly
with or by means of any other person.
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17.2 Premier Farnell covenants with Arrow and, as separate covenants, with each of the Companies and the Business Purchasers, that:
17.2.1 until 31 March 2002, neither it nor any other member
of the Premier Farnell Group shall directly or
indirectly carry on or be engaged or interested in a
competing business save solely in respect of the
holding for investment of up to three per cent of any
class of securities quoted or dealt in on the London
Stock Exchange. Premier Farnell and the Premier
Farnell Group will be deemed to be observing the
covenant contained in this clause 17.2.1
notwithstanding one or more incidences of breach,
provided there is no course of action pursued by
Premier Farnell or any member of the Premier Farnell
Group which demonstrates to the reasonable
satisfaction of Arrow a strategic intention on the
part of any member of the Premier Farnell Group to
pursue volume business.
17.2.2 until 31 March 2002, neither it nor any other member
of the Premier Farnell Group shall directly or
indirectly solicit or entice away or endeavour to
solicit or entice away from any part of the Farnell
Volume Business or the successors in title of any
part of the Farnell Volume Business in competition
with any part of the Farnell Volume Business or the
successors in title to any part of the Farnell Volume
Business any person employed by any Company or in any
Business in an executive, marketing, technical or
sales capacity at Completion with a view to inducing
that person to leave such employment and to act for
another person in the same or a similar capacity in
relation to the same field of work;
17.2.3 neither it nor any member of the Premier Farnell
Group shall at any time disclose or use for its own
benefit or that of any other person any
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Farnell Volume Business Confidential Information which is in the
possession or control of any member of the Premier Farnell Group.
17.3 Each of the restrictions set out in clauses 17.2.1 to 17.2.3 are
separate and severable and in the event of any such restriction being
determined as unenforceable in whole or in part for any reason, such
unenforceability shall not affect the enforceability of the remaining
restrictions or (in the case of restrictions unenforceable in part) the
remainder of that restriction.
17.4 The restrictions entered into by Premier Farnell in clause 17.2 are
given to Arrow for itself and to each of the Companies and Business
Purchasers and Premier Farnell agrees that it will at the request and
cost of Arrow enter into a further agreement with each Company and
Business Purchaser whereby it will accept restrictions corresponding to
the restrictions in this Agreement (or such of them as Arrow for itself
in its absolute discretion shall deem appropriate).
17.5 The provisions of clause 17.2.1 are effective from Completion (subject
to clause 25.6) but their continued application is conditional upon:
17.5.1 no challenge being made directly or indirectly by Arrow or any
member of the Arrow Group to the validity, lawfulness or
enforceability of the covenant given by Arrow in clause 18.2
(the "ARROW COVENANTS") either proactively by means of any
application to that effect by Arrow or a member of the Arrow
Group to a Competent Authority or defensively in any legal
proceedings brought by Premier Farnell to enforce the Arrow
Covenants; and
17.5.2 Arrow and all members of the Arrow Group continuing to observe
the Arrow Covenants
and in the event that such a challenge is made or there is a failure by
any member of the Arrow Group substantially to observe the Arrow
Covenants the provisions of clause 17.2.1 shall forthwith cease to have
effect.
17.6 Notwithstanding the terms of clause 17.1 and the covenants contained in
clause 17.2.1, Premier Farnell and any member of the Premier Farnell
Group shall be entitled to acquire (whether directly or indirectly):
17.6.1 the undertaking of any person, firm or company which is
engaged concerned or interested in a competing business
(whether directly or indirectly and whether alone or in
conjunction with or on behalf of any other person and whether
as principal, shareholder, director, employee, consultant or
partner); and or
17.6.2 the shares in any other company which itself or through any
subsidiary undertaking (as defined in Section 258 of the
Companies Act) or associated company (as defined in section
416 of the Taxes Act) carries on or is engaged, concerned or
interested in a competing business (whether directly or
indirectly and whether alone or in conjunction with or on
behalf of any other person and whether as principal,
shareholder, director, employee, consultant or partner);
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Provided that
(i) the relevant acquisition is not made primarily with a view to
acquiring the competing business; and
(ii) the turnover derived from the competing business is not (by
reference to the latest available audited accounts of the
relevant company or companies) more than 20 per cent of the
consolidated turnover of the relevant undertaking or of the
relevant company, its subsidiary undertakings and associated
companies (as defined above) insofar as such subsidiary
undertakings and associated companies are comprised in the
acquisition (as the case may be);
and in such event the covenant contained in clause 17.2.1 shall not
apply to such competing business to the extent only that such competing
business is carried on at the time of the relevant acquisition
17.7 Premier Farnell will dispose of any competing business acquired
pursuant to clause 17.6 within two years of completion of that
acquisition unless Arrow consents to its retention by Premier Farnell
(such consent not to be unreasonably withheld or delayed) (and will not
in the meantime actively seek to expand or grow that competing
business) provided that before entering into any negotiations with any
third party with a view to making such disposal it shall first give
Arrow the opportunity to make an offer for the competing business so
acquired. If Arrow does not make any such offer (or if its offer is
not accepted by Premier Farnell) and thereafter Premier Farnell
receives an offer from a third party which it is inclined to accept, it
shall give Arrow the opportunity to match the offer made by that third
party and if the offer is matched both parties will endeavour to
negotiate satisfactory agreements for the sale and purchase of that
competing business.
17.8 At or as soon as possible after Completion, Premier Farnell shall and
shall procure that each applicable member of the Premier Farnell Group
shall co-operate with Arrow and the applicable member of the Arrow
Group in despatching, at the cost of Arrow or such member of the Arrow
Group, notices substantially in the agreed terms to the Employees and
to suppliers, agents, distributors and customers of the Farnell Volume
Business and to such other third parties as Arrow and/or any other
member of the Arrow Group may reasonably request informing them of the
transfer of the Farnell Volume Business.
17.9 Premier Farnell shall and shall procure that each member of the Premier
Farnell Group shall, following Completion, as soon as reasonably
practicable upon receipt forward to Arrow or, if appropriate, the
relevant Company Purchaser or Business Purchaser, all notices,
correspondence, information, orders or enquiries relating to the
Farnell Volume Business or any part of it or to any of the Business
Assets or Contracts if and to the extent that they are received by any
member of the Premier Farnell Group after Completion.
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17.10 On Completion the parties shall procure:
17.10.1 that the name of each Company shall be changed to a name which
does not include Farnell and/or FES and which is not similar
to Farnell and/or FES and which is not likely to cause
confusion and does not create or imply any other association
or link with the Premier Farnell Group or any of its members;
17.10.2 that each Company and Business Purchaser cancels any Internet
domain name registration which includes Farnell and/or FES or
create or imply any other association or link with the Premier
Farnell Group or, where possible, transfers such Internet
domain name to Premier Farnell;
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and, in addition, Arrow shall procure that each Company and Business Purchaser shall, as soon as reasonably possible, cause all entries in published materials such as telephone, street, or other directories to be removed or amended so as not to include reference to Farnell and/or FES.
17.11 Save as expressly provided in this clause 17, nothing in this Agreement
or in any of the Transfer Agreements shall confer upon Arrow or any
other member of the Arrow Group after Completion (including the
Companies and the Business Purchasers) any right or interest in and to
the Farnell and/or FES name and to any name which is similar to Farnell
and/or FES or which is likely to cause confusion. For the avoidance of
doubt, nothing in this Agreement shall entitle Arrow or any other
member of the Arrow Group, before or after Completion, to use Farnell
and/or FES as a corporate name or trading name or an Internet domain
name, or as part thereof.
17.12 Premier Farnell shall permit each Company and each Business Purchaser
in relation to the Business to continue to use the Farnell and/or FES
name on a non-exclusive basis, solely in those territories where it is
respectively used by each Company and each Business Purchaser before
Completion:
17.12.1 on its stationery and invoices in the manner and to the extent
currently used by that Company or in relation to that
Business;
17.12.2 on stock in trade held by that Company or in relation to that
Business on or before Completion provided that it was marked
with the Farnell and/or FES name before Completion and on
stock in trade received pursuant to orders made by that
Company or in relation to that Business on or before
Completion; and
17.12.3 on stocks of promotional material including videos, sales and
marketing catalogues, and packaging and other printed
promotional material held by, or received pursuant to orders
made by, that Company or in relation to that Business on or
before Completion;
provided that Arrow shall procure that each Company and Business
Purchaser concerned shall, in using any of the stationery or invoices
referred to in clause 17.12.1 or any promotional material referred to
in clause 17.12.3
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contemporaneously notify any third party recipient by endorsement on or
addendum to the relevant stationery, invoice or promotional material or
otherwise that the Company or the Business concerned is no longer a
member of or otherwise associated with the Premier Farnell Group.
17.13 The licence granted pursuant to clause 17.12 shall continue until:
17.13.1 in the case of clause 17.12.1, six months from the date of
Completion;
17.13.2 in the case of clause 17.12.2 until the stock in trade is used
or written off as obsolete or, if earlier the date 6 months
after Completion; and
17.13.3 in the case of clause 17.12.3, until the stocks of promotional
materials have been used or become obsolete or, if earlier,
the date six months after Completion, provided that with
respect to stocks of the "Yellow Book" until the earlier of
the next scheduled printing of the same or 31 December 1997.
17.14 Arrow shall procure that no member of the Arrow Group shall after
Completion:
17.14.1 subject to clause 17.12, represent that it is a member of the
Premier Farnell Group;
17.14.2 use the Premier Farnel1 and/or FES name other than as
permitted under clause 17.12;
17.14.3 during the period of the licence contained in clause 17.12,
commit or omit any act or pursue any course of conduct which
might tend to bring the Farnell and/or FES name into disrepute
or use the Farnell name in any way likely to damage the
goodwill attaching to it or the registration thereof.
17.15 Notwithstanding clause 17.12 Premier Farnell shall have the right to
determine the licence granted pursuant to clause 17.12 forthwith on
notice if:-
17.15.1 any Company or Business Purchaser or Arrow challenges Premier
Farnell's and/or the Premier Farnel1 Group's exclusive right
to use the Farnell and/or FES name; or
17.15.2 any Company or Business Purchaser or member of the Arrow Group
applies for an Internet domain name which incorporates the
Farnel1 and/or FES name or any confusingly similar name.
17.15.3 any Company or Business Purchaser commits a material breach of
this clause 17.
17.16 On the expiry or any termination of the licence granted pursuant to
clause 17.12 (howsoever caused) Arrow shall procure that:
17.16.1 each Company and Business Purchaser shall forthwith cease to
use or sell stock in trade under or by reference to the
Farnell and or FES name;
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17.16.2 each Company and Business Purchaser shall as soon as
reasonably practicable remove or obliterate all representation
of the Farnell name on the stock in trade or on any containers
or labels in the power or control of the Companies and the
Business Purchasers;
17.16.3 each Company and Business Purchaser shall as soon as
reasonably practicable cause all advertisements, sales videos,
promotional material, and the like to be expunged or changed
so as to eliminate any reference to the Farnell name; and
17.16.4 each Company and Business Purchaser shall not thereafter use
the Farnell and/or FES name or any trading style, trade name,
trade mark, or get up which is similar to or so nearly
resembles the Farnell and/or FES name as would or would be
likely to cause confusion.
17.17 Arrow:
17.17.1 agrees to indemnify Premier Farnell against any Losses
incurred by Premier Farnell which may be a result of any claim
by a third party that the Companies' and/or Business
Purchasers' use of the Farnell and/or FES name infringes such
third party's rights;
17.17.2 agrees subject to being indemnified to its reasonable
satisfaction to co-operate with Premier Farnell and act on
Premier Farnell's reasonable requests in respect of any
infringement or passing off described in Clause 17.17.3
(including without limit, by passing conduct of any action to
Premier Farnell when requested, by making no admission or
prejudicial statement without Premier Farnell's prior written
consent and by assisting Premier Farnell in such actions) and
shall procure that the Companies and Businesses (where
appropriate) do the same; and
17.17.3 Arrow agrees to notify Premier Farnell promptly of, any trade
mark infringement, passing off or other suspected or
threatened infringement of the Farnell and/or FES name by a
third party of which Arrow becomes aware or any allegation by
a third party of which Arrow becomes aware that the use of the
Farnell and/or FES name infringes or may infringe the rights
of a third party;
17.18 Arrow shall procure that each Company and Business Purchaser shall keep
Premier Farnell fully and effectively indemnified from and against all
Losses sustained by any Company Vendor or any Business Vendor or any
other member of the Retained Premier Farnell Group to the extent that
such Losses arise out of any goods or services supplied by the Company
and Business Purchaser under or using or by reference to the Farnell
and/or FES name (including without limitation such matters arising out
of any action brought under the Consumer Protection Act 1987 or for
negligence by reason of a defect in the stock in trade) after
Completion.
17.19 For a period of 6 months following the date of Completion Premier
Farnell shall permit each Company and each Business Purchaser in
relation to the Business to use the words "formerly trading as Farnell
Electronic Services" on
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its stationery and invoices, and on stocks of promotional material including videos, sales and marketing catalogues and packaging and other printed promotional material held by or received pursuant to orders made by, that Company or in relation to that Business on or before Completion.
18. PROTECTION OF THE RETAINED PREMIER FARNELL GROUP
18.1 In this Clause 18:
18.1.1 "competing business" means any business which
competes in the United Kingdom with the catalogue
electronic component distribution business carried on
at Completion by Premier Farnell. For the purposes of
this Clause 18 Arrow will be deemed to be carrying on
a competing business only if it changes the way the
Farnell Volume Business operates in the UK in a
manner intended to cause, or likely to have the
effect of causing, the Farnell Volume Business to
become a potentially significant competitor to
Premier Farnell's retained catalogue electronic
component distribution business. Included in such
changes, for example, could be one or more of the
following:
(A) the catalogue published and distributed by
the Farnell Volume Business in the UK (and
known as the "Yellow Book") (or any other UK
catalogue) is published more frequently than
once in any 12 month period or is more
widely distributed than is currently the
case; or
(B) deliveries are made or orders accepted in
the ordinary course without charging for
carriage, packing or administration (unless
such change is made in response to changes
in the competitive nature of the volume
business);
(C) customers are solicited whose aggregate
annual purchases of electronic components
are unlikely to exceed (pound
sterling)25,000 in value; or
(D) field sales engineers are engaged whose
responsibilities include focusing on
customers described in paragraph (C) above;
or
(E) prices for electronic components (as opposed
to complete items) are listed per unit
(except to the extent prices are currently
so listed in the Yellow Book).
18.1.2 references to acting directly or indirectly include
(without prejudice to the generality of that
expression) references to acting alone or jointly
with or by means of any other person.
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18.2 Arrow (for and on behalf of itself and its subsidiaries from time to time) covenants with Premier Farnell that until 31 March 2002 neither it nor any other member of the Arrow Group shall directly or indirectly carry on or be engaged or interested in a competing business save solely in respect of the holding for investment of up to three per cent of any class of securities quoted or dealt in on a regulated Stock Exchange. The parties acknowledge that the
continued publication and circulation of the Yellow Book in its present
form end at its present frequency of publication will not constitute a
competing business for the purposes of this clause 18. Arrow will be
deemed to be observing the covenant contained in this clause 18.2
notwithstanding one or more incidences of breach, provided there is no
course of action pursued by Arrow or Any member of the Arrow Group which
demonstrates to the reasonable satisfaction of Premier Farnell a
strategic intention on the part of any member of the Arrow Group to
pursue catalogue business.
18.3 The provisions of clause 18.2 are effective from Completion (subject to
clause 25.6) but their continued application is conditional upon:
18.3.1 no challenge being made directly or indirectly by Premier
Farnell or any member of the Premier Farnell Group to the
validity, lawfulness or enforceability of the covenants given
by Premier Farnell in clause 17.2.1 (THE "FARNELL COVENANTS")
either proactively by means of any application to that effect
by Premier Farnell or a member of the Premier Farnell Group to
a Competent Authority or defensively in any legal proceedings
brought by Arrow to enforce the Farnell Covenants; and
18.3.2 Premier Farnell and all members of the Premier Farnell Group
continuing to observe the Farnell Covenants;
and in the event that such a challenge is made or there is a failure by
any member of the Premier Farnell Group substantially to observe the
Farnell Covenants the provisions of clause 18.2 shall forthwith cease
to have effect.
18.4 Notwithstanding the terms of the covenant contained in clause 18.2 it is
hereby agreed and declared that Arrow and any member of the Arrow Group
shall be entitled to acquire (whether directly or indirectly):
18.4.1 the undertaking of any person, firm or company which is
engaged concerned or interested in a competing business
(whether directly or indirectly and whether alone or in
conjunction with or on behalf of any other person and whether
as principal, shareholder, director, employee, consultant or
partner); and or
18.4.2 the shares in any other company which itself or through any
subsidiary undertaking (as defined in Section 258 of the
Companies Act) or associated company (as defined in section
416 of the Taxes Act) carries on or is engaged, concerned or
interested in a competing business (whether directly or
indirectly and whether alone or in conjunction with or on
behalf of any other person and whether as principal,
shareholder, director, employee, consultant or partner);
provided that
(i) the relevant acquisition is not made primarily with a
view to acquiring the competing business; and
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(ii) the turnover derived from the competing business is not (by reference to the latest available audited accounts of the relevant company or companies) more than 20 per cent of the consolidated turnover relevant undertaking or of the relevant company, its subsidiary undertaking and associated companies (as defined above) (insofar as such subsidiary undertaking and associated companies are comprised in the acquisition) (as the case may be);
and in such event the covenant contained in clause 18.2 shall not apply to such competing business to the extent only that such competing business is carried on at the time of the relevant acquisition.
18.5 Arrow will dispose of any competing business acquired pursuant to clause 18.4 within two years of completion of that acquisition unless Premier Farnell consents to its retention by Arrow (such consent not to be unreasonably withheld or delayed) (and will not in the meantime actively seek to expand or grow that competing business) provided that before entering into any negotiations with any third party with a view to making such disposal it shall first give Premier Farnell the opportunity to make an offer for the competing business so acquired. If Premier Farnell does not make any such offer (or if its offer is not accepted by Arrow) and thereafter Arrow receives an offer from a third party which it is inclined to accept, it shall give Premier Farnell the opportunity to match the offer made by that third party and if the offer is matched both parties will endeavour to negotiate satisfactory agreements for the sale and purchase of that competing business.
18.6 Arrow covenants with Premier Farnell and, as separate covenants, with each of the Company Vendors and Business Vendors that neither it nor any member of the Arrow Group shall at any time disclose or use for its own benefit or that of any other person any Premier Farnell Confidential Information which is in the possession or control of any member of the Arrow Group.
19. THIRD PARTY CONSENTS AND THE CONTRACTS
19.1.1 Arrow shall and shall procure that each
Business Purchaser hereby undertakes for its
own benefit and at its own expense to adopt,
perform and fulfil all of the Business
Vendors' obligations and liabilities under
the Contracts (whether such obligations and
liabilities arise before, on or after
Completion save such liabilities as fall
within the provisions of clause 16.2.2) in
so far as such Contracts relate to the
Business being acquired by that Business
Purchaser.
19.1.2 Arrow shall indemnify and procure that each
Business Purchaser shall indemnify and keep
indemnified Premier Farnell and each
Business Vendor against all costs, expenses,
claims, demands, proceedings and damages
which it may suffer or incur as a result of
any act, neglect, default or omission on the
part of Arrow or any Business Purchaser to
perform or comply with any obligation under
the Contracts save such as fall within the
provisions of clause 16.2.2.
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19.2 If any Contracts cannot effectively assigned or transferred by the relevant Business Vendor to the relevant Business Purchaser except by agreements of novation or without obtaining a consent, an approval, a waiver or the like from a third party ("Consent(s)") such Contracts shall be dealt with as follows:
19.2.1 unless or until any such Contract is so novated or
any necessary Consent is obtained:
(A) Premier Farnell shall procure that the
relevant Business Vendor shall receive and
hold the benefit of the relevant Contract as
agent for the relevant Business Purchaser
and shall accordingly pay to the relevant
Business Purchaser promptly upon receipt any
sums received by it under any such Contract;
and
(B) Arrow shall procure that the relevant
Business Purchaser shall (at its cost) as
the relevant Business Vendor's agent perform
all the obligations and assume all the
liabilities of that Business Vendor under
any such Contracts;
19.2.2 Premier Farnell shall procure that the relevant
Business Vendor and Arrow shall procure that the
relevant Business Purchaser shall each use its
respective reasonable endeavours to procure that such
Contracts are novated and that any Consents required
to such novation are obtained;
19.2.3 in the event a Contract cannot be novated pursuant to
clause 19.2.2 Premier Farnell shall procure that the
relevant Business Vendor and Arrow shall procure that
the relevant Business Purchaser shall use its
respective reasonable endeavours to procure that such
Contract is assigned and that any Consent required to
such assignment is obtained;
19.2.4 in the event a Contract cannot be assigned pursuant
to clause 19.2.3 Premier Farnell shall procure that
the relevant Business Vendor and Arrow shall procure
that the relevant Business Purchaser shall use their
respective reasonable endeavours to procure that such
Contract be performed by appointing the relevant
Business Purchaser as a sub-contractor and that any
Consent required to such appointment be obtained.
Arrow shall and shall procure that the Business
Purchasers shall enter into such undertakings in
favour of any relevant third party as may be
reasonably requested in respect of any liabilities or
obligations for which such Business Purchaser will
become liable upon transfer, novation or assignment
or which may be a term of its appointment as a
sub-contractor;
19.2.5 if any Contracts are not novated or assigned or any
necessary Consent is not obtained or it has not been
possible to appoint the relevant Business Purchaser
as a sub-contractor and the procedure set out in this
clause 19.2 does not enable the full benefit of any
Contract to be enjoyed by the relevant Business
Purchaser after Completion the parties shall use all
reasonable endeavours to achieve an alternative
solution pursuant to which the relevant Business
Purchaser shall
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receive the benefit of that Contract and assume the associated
obligations;
19.2.6 if the parties are prohibited by a court order in favour of
the other party to the Contract or proceedings are initiated
by the other party to the Contract in respect of an injunction
(or other similar order) in circumstances where such
proceedings are likely to be successful in each case in
respect of dealing with the Contract in accordance with the
provisions of this clause then, subject always to the
provisions of clause 19.2.5, the benefit and burden of the
Contract shall revert to the Business Vendor and Premier
Farnell shall indemnify Arrow and the relevant Business
Purchaser against any Losses suffered by any of them as a
result of a claim by any other party to the Contract other
than those arising as a consequence of a failure by Arrow or
the relevant Business Purchaser to perform obligations which
Arrow or the relevant Business Purchaser should have performed
prior to such reversion in accordance with the provisions
hereof;
19.2.7 Premier Farnell shall and shall procure that each relevant
Business Vendor shall use all reasonable endeavours to procure
the assignment of the benefit of the Claims to Arrow or the
relevant Business Purchaser and, subject to it being fully
indemnified in respect of costs arising and in respect of any
actual or alleged improper or unlawful conduct of the
proceedings relating to such claim, Premier Farnell will
co-operate with Arrow or the relevant Business Purchaser in
pursuing Claims, including allowing proceedings to be brought
in the name of the relevant Business Vendor if Arrow shall
reasonably require.
19.3 To the extent that Arrow and/or the relevant Business
Purchaser is unable to obtain or maintain insurance in
relation to any Contract until such time as the Contract is
assigned or novated to Arrow and/or the relevant Business
Purchaser, Premier Farnell will on request from Arrow procure
that the insurance cover in place at the date hereof in
respect of such Contracts is maintained and Arrow will
reimburse Premier Farnell or the relevant Business Vendor, as
the case may be for the premiums paid in respect of such
insurance until such time as either the Contract is assigned
or novated to Arrow or the relevant Business Purchaser or the
benefit or burden of the Contracts shall revert to Premier
Farnell or to the relevant Business Vendor.
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20. ASSIGNMENT/UNDERLETTING OF FOREIGN LEASEHOLD PROPERTIES
20.1 In this clause 20, the following definitions are used:
"Best Endeavours" means taking all those steps in the power of the
party on whom the obligation is imposed which a
prudent determined and reasonable owner acting in its
own interest and desiring to achieve the desired
objective would take;
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"Change of Control Properties" means the four Canadian B List Properties
and the three American B List Properties
brief particulars of which are set out in
Part IV of Schedule 6;
"Consent to Assign" means such consent as is lawfully required
to enable Premier Farnell or the relevant
Business Vendor either to assign the whole
of its interest in each Relevant Property to
the relevant Business Purchaser or for the
relevant Business Purchaser lawfully to
occupy the Relevant Property following a
change of control in the tenant;
"Relevant Property" means such of the properties in Parts III
and IV of Schedule 6 more particularly
described in the Relevant Lease in respect
of which Consent to Assign is required from
a Relevant Landlord;
"Relevant Lease" means the Lease and or other documents dated
and made between the parties specified in
Parts III and IV of Schedule 6;
"Relevant Landlord" means the Landlord of the Relevant Property
or any other party from whom Consent to
Assign or Consent to Underlay is required;
"Security" means:
(i) the deposit of such sum as may be
reasonably required by a Relevant
Landlord as security for the
payment of the rents and other sums
and the observance and performance
of the obligations of the tenant
under a Relevant Lease; or
(ii) a guarantor who is required to
covenant with the Relevant Landlord
to pay the rents and other sums
reserved by and to observe and
perform the obligations of the
tenant contained in the Relevant
Lease in case of default by the
proposed assignee.
20.2 LANDLORD'S CONSENT TO ASSIGN
In respect of each Relevant Property Premier Farnell shall within 20
Business Days of the date of this Agreement make application for, or
where it is not at the date of this Agreement the current tenant of a
Relevant Property, procure
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that the relevant Business Vendor makes application for Consent to
Assign in respect of each Relevant Property.
20.3 Premier Farnell shall use its Best Endeavours and procure that each
Business Vendor uses it Best Endeavours to obtain Consent to Assign
without it being a condition that Consent to Assign that the relevant
Business Purchaser provide Security for the Relevant Landlord;
20.4 Each relevant Business Purchaser shall at its own expense within 10
Business Days of being requested so to do:
20.4.1 supply to Premier Farnell accounts, references and such other
information as the Relevant Landlord may lawfully and properly
require;
20.4.2 enter into a deed or agreement with the Relevant Landlord in
such form as the Relevant Landlord acting reasonably requires
containing direct covenants by the relevant Business Purchaser
with the Relevant Landlord to pay the rents and other sums
reserved by and to observe and perform the obligations of the
tenant under the Relevant Lease from the date of the
assignment or transfer of control (as the case maybe) to the
relevant Business Purchaser;
20.5 Premier Farnell and each relevant Business Purchaser shall procure that
all deeds, agreements and other documents lawfully and properly
required to procure Consent to Assign are executed and delivered within
10 Business Days of being despatched to them.
20.6 If Premier Farnell and/or any Business Vendor is unable having used its
Best Endeavours to obtain Consent to Assign for any Relevant Property
within 6 months from Completion then Premier Farnell shall thereafter
make application for or procure that the relevant Business Vendor makes
application for Consent to Underlet in respect of any such Relevant
Property.
20.7 Premier Farnell shall notify the relevant Business Purchaser of each
application it shall make for Consent to Underlet and the provisions of
clauses 203 to 20.5 (inclusive) shall apply to each application save
that references to Consent to Assign in those clauses shall be deemed
to be references to Consent to Underlet.
20.8 If Premier Farnell and/or any Business Vendor is unable having used its
Best Endeavours to obtain Consent to Underlet for any Relevant Property
within 9 months of Completion then Premier Farnell shall make a further
application for Consent to Assign and the relevant Business Purchaser
will if required by the Relevant Landlord provide Security and the
provisions of Clauses 20.4 and 20.5 shall apply.
20.9 As from Completion Premier Farnell will hold each Relevant Property on
trust for the Business Purchaser and permit the relevant Business
Purchaser to enter into each Relevant Property as licensee from
Completion and each relevant Business Purchaser shall pay to Premier
Farnell the rents reserved by the
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Relevant Leases and perform and observe the covenants on the part of
the tenant and the conditions contained in each Relevant Lease and will
at all times indemnify and keep indemnified Premier Farnell or the
relevant Business Vendor and their estate and effects from and against
all proceedings, liabilities, costs, claims and expenses whatsoever
arising out of the non-payment of the rents reserved by the Relevant
Lease or any breaches of the said covenants or conditions arising after
the date of Completion up to and including the date the Business
Purchaser ceases to occupy the Relevant Property.
20.10 Completion of the assignment of each Relevant Property shall take place
on the later of the 10th Business Day following the date on which
Consent to Assign has been obtained or Completion.
20.11 Each Assignment of a Relevant Property shall contain:
20.11.1 an indemnity covenant by the assignee in favour of the
assignor in respect of the future performance of the rents,
covenants, conditions and other matters contained in each
Relevant Lease;
20.11.2 a declaration that any implied statutory covenant shall be
negatived to the extent it would impose a covenant on the part
of the assignor to the effect that the Relevant Property is in
a better state of repair than it as at Completion.
20.12 Each underlease of a Relevant Property shall so far as the
circumstances allow be in the same form and subject to the same rents,
covenants, conditions and other matters as the Relevant Lease.
20.13 Premier Farnell will indemnify the relevant Company Purchaser for all
rents and other liabilities in respect of any Relevant Lease of the
Change of Control Properties if the Relevant Landlord refuses Consent
to Assign and requires the relevant Company Purchaser to vacate any
Change of Control Property from the date the relevant Company Purchaser
ceases to occupy such Change of Control Properties.
20.14 If Consent to Assign and Consent to Underlet is refused or has not
been obtained at the expiration of 12 months from Completion the
relevant Business Purchaser shall be entitled to remain in occupation
of the Relevant Property until such time as it is required to vacate by
the Relevant Landlord such occupation to be on the terms of clause 20.9
above.
20.15 In the event of the relevant Business Purchaser being required to
vacate the French A list property being Zac du Transport International
CIT Avenue du l'Eorope 58223 Roncq against its wishes if so required by
the Business Purchaser Premier Farnell will use reasonable endeavours
to assist the Business Purchaser in procuring alternative accommodation
from other properties owned or leased by Premier Farnell in France.
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20.16
20.16.1 Such of the Business Vendors who are the current tenants of
the premises at Brandshenkestrasse 178 CH-8027 Zurich ("Swiss
Property") and at Smedeholm 13 DK 2730 Herlev ("Danish
Property") those Business Vendors being hereafter referred to
as the "Swiss Tenant" and the "Danish Tenant" respectively
shall grant and the Business Purchaser of that part of the
Business carried on at the Swiss Property and the Business
Purchaser of the Danish Property shall accept an underlease on
the following terms:
(A) the premises demised by the underlease of the Swiss
Property shall be such part of the Swiss Property
which is at the date of this Agreement occupied by
the Swiss Tenant;
(B) the premises demised by the underlease of the Danish
Property shall be the whole of the Danish Property
which was demised by a lease made between (1)
Ejendomsselskabet Smedeholm 11-13 K/S and (2) Farnell
Danmark A/S (Farnell Electronic Services A/S)
("Danish Lease");
(C) the yearly rents and other surfs payable for such
part of the Swiss Property to be demised pursuant to
clause 20.6.1(A) shall be such sums as shall bear the
same proportion to the rents and other sums paid by
the Swiss Tenant pursuant to the lease of the Swiss
Property as the area in square metres of the premises
to be demised bears to the total area in square
metres of the Swiss Property;
(D) the yearly rents and other sums payable for the
Danish Property shall be the same as the yearly rents
and other sums payable pursuant to the Danish Lease;
(E) save as otherwise provided in this clause 20.16 the
other terms of the underlease of the Swiss Property
and the Danish Property shall be the same as those
contained in the leases of the Swiss Property and the
Danish Property respectively vested in the Swiss
Tenamt and the Danish Tenant;
(F) the term of the underlease of the Danish Property
shall commence on the date of Completion and expire
on the day preceding the expiry of the term created
by the Danish Lease;
(G) the term of the underlease of that part of the Swiss
Property to be demised pursuant to clause 20.16.1(A)
shall commence on the date of Completion and expire
on the first date on which the lease vested in the
Swiss Tenant can be brought to an end in accordance
with its terms by the Swiss Tenant.
20.16.2 The Danish Tenant and the Swiss Tenant and each relevant
Business Purchaser shall immediately after today's date make
application for and
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each use their respective Best Endeavours to obtain the consent of the
relevant landlords to the grant of the underleases to be granted
pursuant to this clause 20.16 without a condition of that consent being
that Security is provided to the relevant landlord by the relevant
Business Purchaser.
20.16.3 The underlease of the Danish Property and the Swiss Property shall be
completed on the later of the date of Completion and the date that
falls five Business Days after the necessary consent to the
underletting has been obtained from the Relevant Landlord.
20.16.4 If at Completion the consent of either or both of the Landlords has not
been obtained to the grant of either or both of the underleases to the
Business Purchaser to whom the lease is to be granted such Business
Purchaser shall be entitled to occupy such part of the Swiss Property
as is to be demised pursuant to clause 20.16.1(A) and/or the Danish
Property and in such case the Business Purchaser shall occupy as
licensee and pay to the Swiss Tenant and/or the Danish Tenant (as the
case may be) the yearly rents and other sums calculated in accordance
with clauses 20.16.1(C) and 20.16.1(D) and perform and observe the
covenants on the part of the tenant and the conditions contained in
the lease of the Swiss Property insofar as they relate to such part of
the Swiss Property as is to be demised pursuant to clause 20.16.1(A)
and the lease of the Danish Property (as the case may be) and will at
all times indemnify and keep indemnified the Swiss Tenant and the
Danish Tenant and their respective estate and effects from and against
all proceedings, liabilities, costs and claims and expenses whatsoever
arising out of any breach of such covenants and conditions arising
after the date of Completion.
20.17 Farnell shall procure that notice is served terminating the leases of
the Swiss Property and the leases of the following premises at the
earliest time it is possible so to do in accordance with the terms of
such leases.
DATE PARTIES PREMISES
- ---- ------- --------
5.8.71 (1) Albert Kleinheinz KG Bahnhofstrasse 44
71698 Moglingen
(2) Standard Electric
20.12.74 Lorenz AG
(1) Albert Kleinheinz KG Bahnhofstrasse 44
71698 Moglingen
(2) Standard Electric
Lorenz AG
20.18 Simultaneously with the application for consent to underlet the Danish
Tenant shall make application to assign the Danish Property to the
company to whom the underlease had been granted and the provisions of
clauses 20.1 to 20.5 and 20.11 shall apply in relation to such
application as if the Danish Property constituted a Relevant Property.
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20.19 If the application to assign the Danish Property is granted
the Danish Tenant shall assign the Danish Property to the
relevant Business Purchaser if the Business Purchaser requires
it to do so.
20.20 Completion of the assignment of the Danish Property shall take
place 10 Business Days after the date Consent Assign is
obtained.
21. ACCESS
21.1 For a period of 6 years following Completion, Premier Farnell
shall and shall procure that each other member of the Premier
Farnell Group, give reasonable access to Arrow and its
authorised representatives to inspect all books and records
directly relating to the Companies and/or Businesses which are
not delivered to Arrow or to its order at Completion and (at
the expense of Arrow) to take copies thereof or extracts
therefrom and Premier Farnell shall and shall procure that
each other member of the Premier Farnell Group from time to
time exercise all reasonable care for the safekeeping thereof
and in addition shall permit reasonable access to management
for the purposes of explaining the same at times to be
mutually agreed.
21.2 For a period of 6 years following Completion, Arrow shall and
shall procure that each other member of the Arrow Group give
reasonable access to Premier Farnell and its authorised
representatives to all the books of account and records of the
Companies and/or Businesses delivered to Arrow or to its order
at Completion and (at the expense of Premier Farnell) to take
copies thereof or extracts therefrom and Arrow shall and shall
procure that each other member of the Arrow Group from time to
time exercise all reasonable care for the safekeeping thereof
and in addition shall permit reasonable access to management
for the purposes of explaining the same at times to be
mutually agreed.
21.3 If Completion shall be effected after 31 January 1997, Arrow
shall and shall procure that each Company Purchaser and each
Business Purchaser shall give all reasonable access to Premier
Farnell and its authorized representatives together with all
reasonable facilities and assistance as shall be required (at
Premier Farnell's cost) to prepare appropriate accounts for
the purposes of the preparation of Premier Farnell's
consolidated accounts for the period ending 28 January 1997.
Arrow shall and shall procure that each Company Purchaser and
each Business Purchaser shall ensure that its personnel shall
render such assistance as shall reasonably be required by
Premier Farnell for this purpose.
22. EMPLOYEES
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The parties acknowledge and agree that on behalf of themselves and each of the Business Vendors and Business Purchasers the contracts of employment between the relevant Business Vendor and the employers employed by such Business Vendor ("the Relevant Employees") will have effect after Completion as if originally made between the relevant Business Purchaser and the Relevant Employees. The transfer of such contracts of employment will be subject to the remaining provisions of this clause 22.
22.1 Upon or as soon as practicable after the signing of this Agreement,
Premier Farnell and Arrow will procure that the relevant Business
Vendor in conjunction, if practical, with the relevant Business
Purchaser makes an announcement to the Relevant Employees in each
relevant jurisdiction accordance with the applicable local employment
legislation regarding the transfer of their contracts of employment. It
is acknowledged by Arrow on behalf of itself and the Business Purchaser
of the French Business that the French Business Vendor has already
informed the French Employee representatives of the transactions set
out in this Agreement.
22.2 Upon or as soon as practicable after the signing of this Agreement,
Premier Farnell and Arrow will procure that Farnell (Sweden) AB will
make an announcement to its employees in accordance with local
employment legislation regarding the sale of the shares of Farnell
(Sweden) AB and the transfer of the Swedish catalogue business to
Farnell Components AB.
22.3 Save as set out in clauses 22.5 and 22.6, Arrow shall indemnify Premier
Farnell and each relevant Business Vendor in full against:
22.3.1 any action or claim against each relevant Business Vendor in
connection with the termination of the employment of any of
the Relevant Employees by each relevant Business Purchaser
after Completion or in consequence or relating to the transfer
of the contracts of employment of the Relevant Employees to
the relevant Business Purchaser and against any Losses
whatsoever suffered or incurred directly or indirectly in
relation to such action or claim; and
22.3.2 all Losses whatsoever arising directly or indirectly in
connection with the employment of the Relevant Employees after
Completion by the relevant Business Purchaser or any other
person including any claim by any of the Relevant Employees
arising or alleged to arise wholly or partly from any act or
omission of the relevant Business Purchaser; and
22.3.3 any refusal by any of the Relevant Employees to accept the
transfer of their contracts of employment from the relevant
Business Vendor to the relevant Business Purchaser including
any continuing costs and/or Losses whatsoever suffered or
incurred directly or indirectly by the relevant Business
Vendor in relation to such refusal or the termination
thereafter by the relevant Business Vendor of the contracts of
employment of such Relevant Employees.
22.4 Premier Farnell and Arrow acknowledge and agree that in the event of any
claim being made by any employee or union or other employee
representative of Farnell France SARL or Farnell (Sweden) AB that
notification prior to the date hereof has not been made to such employee
or union or employee representative in accordance with the local
employment legislation, each of Premier Farnell and Arrow shall bear 50%
of the costs of any claims, demands, awards, orders, costs, damages,
fines, expenses and liabilities arising Tom any court or tribunal
proceedings brought on the basis of the notification prior to the date
hereof not being in accordance with local employment legislation by each
of the French Business Purchaser, French Business Vendor,
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Farnell (Sweden) AB or Farnell Components AB, Premier Farnell or Arrow in relation to such action or claim save that neither Premier Farnell nor Arrow, the French Business Purchaser, the French Business Vendor, Farnell (Sweden) AB or Farnell Components AB shall incur any expenses or costs in relation to such action or claim without having given prior consultation to Premier Farnell or Arrow as the case may be.
22.5 To the extent that either Premier Farnell or Arrow or the French Business Vendor or the French Business Purchaser or Farnell Sweden AB or Farnell Components AB is required to pay any costs, damages, fines, judgements, expenses, awards, claims, demands or liabilities in excess of 50% of such costs, damages, fines, judgements, expenses, awards, claims, demands or liabilities then Premier Farnell or Arrow as the case may be shall immediately indemnify the other in full against such additional payment incurred by the others Group member.
22.6 Premier Farnell hereby agrees to indemnify Arrow in full against any action or claim against Arrow or Farnell Sweden AB in connection with the termination of the employment of any of the employees of the Swedish catalogue business by Farnell Components AB after the date of the transfer of the contracts of employment of the catalogue business employees to Farnell Components AB or in consequence or relating to such transfer and against all Losses arising directly or indirectly in connection with the employment of the employees of the Swedish catalogue business after Completion by Farnell Components AB or any other person including any claim by the relevant employees arising or alleged to arise wholly or partly from any act or omission of Farnell Components AB.
22.7 Arrow expressly acknowledges on behalf of itself and each Business Purchaser that neither Premier Farnell nor any Business Vendor has given any warranty or representation that all the employees of the Business will agree to a transfer to Arrow or the relevant Business Purchaser or agree to continue their employment with Arrow or the relevant Business Purchaser for any period of time after Completion.
23. PENSION ARRANGEMENTS
UK
23.1 The UK Scheme shall be dealt with in accordance with the provisions of Schedule 7
IRELAND
23.2 It is agreed that all those Employees who are members of the Irish Scheme at Completion ("Irish Members") will be offered membership of a pension arrangement operated by the UK Purchaser ("the Purchaser's Irish Arrangement") (which shall be approved by the Irish Revenue Commissioners as an exempt approved scheme) no later than six months from Completion.
23.3 During the period between Completion and the time when the Irish Members are offered membership of the Purchaser's Irish Arrangement ("the Participation Period") the UK Vendor will use all reasonable endeavours to procure that, subject to Irish Revenue Approval, the Irish Members are permitted to continue to participate in the Irish Scheme.
23.4 During the Participation Period the UK Purchaser will make contributions to the Irish Scheme in accordance with the rate recommended by the actuarial valuation of the Irish Scheme prevailing from time to time.
23.5 In respect of each Irish Member who chooses to transfer benefits from the Irish Scheme to the Purchaser's Irish Arrangement referred to above a past service reserve transfer value will be transferred to the Purchaser's Irish Arrangement calculated at Completion using the actuarial assumptions prevailing in the actuarial valuation of the Irish Scheme at Completion, together with the value of the contributions paid by or in respect of such Irish Members during the Participation Period, the total amount to be agreed between the UK Purchaser's actuary and the UK Vendor's actuary within two months and transferred together with interest (at the rate of 2% above the base rate of the Allied Irish Bank from time to time) in respect of the period from the end of the Participation Period to the date of payment, no later than one year after Completion (or such later date as the UK Purchaser and the UK Vendor agree).
23.6 If there is any deficiency in the payment referred to in clause 23.5, the amount of this deficiency will be paid by the UK Vendor to the UK Purchaser forthwith, and in any event no later Plan one year and 30 days after Completion.
23.7 The UK Vendor will use all reasonable endeavours to procure that any additional voluntary contributions held by the trustees of the Irish Scheme in respect of any Irish Member who transfers to the Purchaser's Irish Arrangement will be transferred with the amount referred to in clause 23.5.
23.8 In default of agreement as above, either party may refer the matter to an independent actuary, such appointment to be agreed by the other party. The decision of the independent actuary will be binding on both parties.
SWEDEN
23.9 In respect of the Employees of the Swedish Company who under the Swedish Agreement are transferring to the Swedish catalogue business Premier Farnell agrees to assume all obligations and liabilities in respect of future pension arrangements.
24. ANNOUNCEMENTS
Neither party to this Agreement shall make, or procure or permit the making of, any announcement whether before or after Completion with respect to this Agreement or any of the Transfer Agreements or any ancillary matter without (in the case of an announcement by any member of the Premier Farnell Group) the prior consent of
either of Mr. R. Klatell or Mr. S. Kaufman and (in the case of any member of the Arrow Group) the prior consent of either of Mr. H. Poulson or Mr. A. Fisher, except as required by law or regulatory authority or applicable stock exchange and in such case, not without prior consultation with Arrow or Premier Farnell (as the case may be) and having had due regard to all reasonable requests which such party may make.
25. MISCELLANEOUS
25.1 Subject to clause 3.7, neither party may assign its rights under this Agreement. This Agreement shall be binding on and inure for the benefit of the parties' successors.
25.2 This Agreement, together with the documents in the agreed terms, represents the entire understanding, and constitutes the whole agreement, in relation to its subject matter and supersedes any previous agreement between the parties with respect thereto and without prejudice to the generality of the foregoing excludes any warranty, condition or other undertaking implied at law or by custom (to the fullest extent permitted by law).
25.3 Each party confirms that, except as provided in this Agreement and, without prejudice to any liability for fraudulent misrepresentation, no party has relied on any representation or warranty or undertaking which is not contained in this Agreement or any document referred to in it or which was made by any other party who is not a party to this Agreement.
25.4 So far as it remains to be performed, this Agreement shall continue in full force and effect notwithstanding Completion.
25.5 Premier Farnell and Arrow shall each and shall procure that each other member of the Premier Farnell Group or the Arrow Group, as the case may be, shall after Completion execute all such deeds and documents and do all such things as Arrow or Premier Farnell, as the case may be, may reasonably require for perfecting the transaction intended to be effected under or pursuant to this Agreement and each of the Transfer Agreements.
25.6 To the extent that any provision of this Agreement, or of any other arrangement of which it forms part, is a restriction or information provision for the purposes of the RTPA by virtue of which this Agreement or any such arrangement is registrable under the RTPA, no such restriction or provision shall take effect until the day after particulars of this Agreement or, as the case may be, that arrangement, have been furnished to the Director General of Fair Trading in accordance with the RTPA. The parties shall co-operate fully in furnishing particulars of any registrable agreement, as soon as practicable after the date hereof, to the Director General of Fair Trading. The parties shall prepare any filings to the Director General on a joint basis and shall forward copies to each other of all correspondence received from the Office of Fair Trading in relation thereto.
25.7 Arrow and each member of the Arrow Group on its part and Premier Farnell and each member of the Retained Premier Farnell Group on its part acknowledges that the purpose of the Transfer Agreements is to reflect and
implement the provisions of this Agreement and accordingly Arrow and each member of the Arrow Group on its part and Premier Farnell and each member of the Retained Premier Farnell Group on its part acknowledges that it shall not be entitled to claim for any Losses arising as a consequence of the Transfer Agreements which would not have arisen under this Agreement and, to the extent that any member of the Arrow Group or any member of the Retained Premier Farnell Group from time to time makes a claim pursuant to or reliant upon the Transfer Agreements for in excess of that which would be recoverable under this Agreement, Arrow or Premier Farnell (as the case may be) agrees to indemnify the relevant member of the Retained Premier Farnell Group or the relevant member of the Arrow Group (as the case may be) in respect of all Losses incurred in relation to such claim. In addition, in the event that a member of the Retained Premier Farnell Group or a member of the Arrow Group incurs a liability under one of the Transfer Agreements which it would not have incurred had the relevant Transfer Agreement expressly provided that in the event of any inconsistency between the relevant Transfer Agreement and this Agreement, this Agreement prevails, Arrow or Premier Farnell (as the case may be) agrees to indemnify the relevant members of the Retained Premier Farnell Group or the relevant member of the Arrow Group (as the case may be) against such liability.
25.8 With the agreement of Arrow, Premier Farnell has agreed the senior management completion bonuses referred to in the last sub-paragraph of paragraph 16.33 of the Disclosure Letter and the copy documentation contained in part M of Annex 3 to the Disclosure Letter, Item 11. The payments of Messrs. Burgess, Baggio, Norton and Andrews will either be home by:
25.8.1 Premier Farnell; or
25.8.2 the Farnell Volume Business in which case the amount
thereof shall be reflected in the Net Operating Asset
Value to the extent that the same have not been paid
at the Transfer Date.
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25.9 The payments referred to in paragraph 16.33 of the Disclosure Letter other than those for Messrs Burgess, Baggio, Norton and Andrews will be borne equally by Premier Farnell and Arrow. Accordingly:
25.9.1 if Premier Farnell effects such payments Arrow will
reimburse it for one half thereof;
25.9.2 if payments are made by the Farnell Volume Business
prior to the Transfer Date then one half of the
amount thereof shall be treated as an asset for the
purpose of determining the Net Operating Asset Value;
or
25.9.3 if payments are not made prior to the Transfer Date
and are to be paid by the Farnell Volume Business
then only 50% of the costs thereof will be included
as a liability in the Net Operating Asset Value and
the liability will then be assumed by the relevant
Company or the relevant Business Purchaser as part of
the Farnell Volume Business.
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25.10 Arrow shall at or as soon as practicable after Completion use
its reasonable endeavours to secure the release of each member
of the Retained Premier Farnell Group from all payment
guarantees, guarantees to suppliers, performance bonds or
similar obligations which they have given or to which they are
subject in respect of the Farnell Volume Business and to the
extent that any liabilities arise in connection with any of
them after the Transfer Date Arrow shall indemnify the
relevant member of the Retained Premier Farnell Group in
respect of any loss arising in respect of such guarantees,
bonds or obligations
25.11 Premier Farnell shall procure as soon as reasonably
practicable the release of Premier Farnell Electronic Services
Limited from:
25.11.1 the guarantee given by it pursuant to the terms of a
credit agreement dated 23 January 1996 made between
Premier Farnell and FAC Delaware Corp. as borrowers,
Natwest Markets Acquisition Finance as arranger,
National Westminster Bank plc as bank and National
Westminster Bank plc as agent; and
25.11.2 the guarantee given by it pursuant to the terms of a
note purchase agreement dated 17 June 1996 issued by
Premier Farnell Corp. as issuer and Premier Farnell
as guarantor whereby Premier Farnell Corp. authorised
the issue and sale of certain guaranteed senior
notes.
25.12 Each party agrees with the other that to the extent that a
judgment for costs is obtained in relation to this Agreement
or the matters contemplated by it which does not provide the
party in whose favour the judgment is made (the "FAVOURED
PARTY") with a full recovery of all legal costs and other
associated expenses the other party shall indemnify the
Favoured Party for the balance of all such costs and expenses
incurred.
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26. VALUE ADDED TAX
26.1 All amounts due from Arrow (or the relevant Business Purchaser or Company Purchaser) to Premier Farnell or the relevant Business Vendor or Company Vendor in accordance with clause 5 above or pursuant to or in connection with any other provision of this Agreement shall be exclusive of any applicable VAT.
26.2 If VAT is payable in connection with any supply made pursuant to or in connection with this Agreement, Premier Farnell shall procure that an appropriate VAT invoice is issued to the relevant person and on production of that invoice Arrow (on behalf of the relevant person) shall pay to Premier Farnell (on behalf of the relevant person) any VAT due in respect of the supply. Such payments shall be treated as additional Purchase Price where appropriate.
26.3 Subject to clauses 26.4, 26.5 and 26.6, each of Arrow and Premier Farnell intend that the sales of the Businesses and the Companies shall be outside the charge to VAT on the basis of applicable reliefs and exemptions and Arrow and Premier Farnell shall use their reasonable endeavours to secure this
treatment (including, for the avoidance of doubt, making all applicable necessary registrations, elections and notices).
26.4 Arrow represents, warrants and undertakes to Premier Farnell that it will procure that:
26.4.1 in relation to each Business, the Business Purchaser
will be duly and properly registered with effect from
the Completion for the purposes of VAT in the
jurisdiction where the Business is carried on; and
26.4.2 the Business Purchaser will from Completion use the
Business Assets in carrying on the same kind of
business as the Business Vendor.
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26.5 The sale by the French Business Vendor of certain assets of the Farnell Volume Business is subject to VAT and such VAT shall be paid in accordance with clause 26.2.
26.6 Nothing in clause 26.3 shall require Premier Farnell or any member of the Premier Farnell Group to request a review or appeal any determination of any revenue authority. If after payment of Any VAT by Arrow pursuant to clause 26.2 Arrow wishes to dispute the VAT treatment with the appropriate revenue authority Premier Farnell shall, at Arrow's cost and expense, give such assistance as Arrow may reasonably require.
26.7 All VAT records relating to any Business which are required by applicable VAT law to be delivered to any Business Purchaser shall be delivered to Arrow or the relevant Business Purchaser on Completion and Arrow shall procure that the relevant Business Purchaser shall retain and preserve those records for any applicable time period required by the applicable VAT law and give reasonable access on receiving reasonable notice to Premier Farnell to such records that are reasonably required by Premier Farnell or any member of the Retained Premier Farnell Group to comply with its VAT obligations.
27. COSTS
27.1 Save as expressly provided in the Transfer Agreements or in sub-clause 27.2, each of Arrow and Premier Farnell shall pay its own costs in connection with the preparation and negotiation of this Agreement, the Transfer Agreements and any matter contemplated by any of them.
27.2 Arrow agrees to pay stamp duty costs arising in connection with the transfer of the UK Shares pursuant to this Agreement together with any transfer or registration taxes or fees applicable to the transfer of the French Business.
28. GUARANTEE BY PREMIER FARNELL
28.1 Premier Farnell hereby unconditionally and irrevocably guarantees to Arrow and, as separate guarantees to each of the Company Purchasers and Business Purchases, the due and punctual performance and observance by each of the Company Vendors and Business Vendors of all their obligations, commitments, undertakings, warranties and indemnities under or pursuant to this Agreement, as the same may be varied from time to time in accordance
with the provisions hereof, each of the Transfer Agreements and the Swedish Agreement (in this clause 28.1, the "Guaranteed Obligations") so as to ensure that the same benefits shall be conferred on Arrow and the relevant Company Purchaser or Business Purchaser as either of them would have received if the Guaranteed Obligations had been duly performed and satisfied by the relevant Company Vendor or Business Vendor. For the avoidance of doubt, Arrow may claim against Premier Farnell, or against the relevant Company Vendor or Business Vendor and Premier Farnell jointly, without having to first make a successful claim against the relevant Company Vendor or Business Vendor. The liability of Premier Farnell under this clause 28 shall not be released or diminished by any variation of the terms of this Agreement or of any Transfer Agreement (whether or not agreed by Premier Farnell), or, save as expressly provided in this Agreement, any forbearance, neglect or delay in seeking performance of the Guaranteed Obligations or any granting of time for such performance.
28.2 If and whenever any Company Vendor or Business Vendor defaults for any reason whatsoever in the performance of any of its Guaranteed Obligations, Premier Farnell shall forthwith upon written demand perform (or procure performance of) and satisfy (or procure the satisfaction of) the Guaranteed Obligations in regard to which such default has been made in the manner prescribed by this Agreement or the Swedish Agreement or the Transfer Agreements.
(A) This guarantee is to be a continuing guarantee and accordingly is to remain in force until all the Guaranteed Obligations shall have been performed or satisfied.
(B) This guarantee is in addition to and without prejudice to and not in substitution for any rights or security which Arrow or any Company Purchaser or Business Purchaser may now or hereafter have or hold for the performance and observance of the Guaranteed Obligations.
28.3 As a separate and independent stipulation, Premier Farnell agrees that any of the Guaranteed Obligations (including, without limitation, the obligation to pay any moneys expressed to be payable under this Agreement or any Transfer Agreement) which may not be enforceable against or recoverable from the relevant Company Vendor or Business Vendor by reason of any legal limitation, disability or incapacity on or of the relevant Company Vendor or Business Vendor or any other fact or circumstance (other than any limitation imposed by this Agreement or any Transfer Agreement) shall nevertheless be enforceable against and recoverable from Premier Farnell as though the same has been incurred by Premier Farnell and Premier Farnell were the sole or principal obligor in respect thereof and shall be performed or paid by Premier Farnell on demand.
28.4 Without prejudice to the provisions of clause 28.3, the liability of Premier Farnell under this clause 28 in respect of any obligation or liability of a Company Vendor or Business Vendor shall not exceed the liability of the relevant Company Vendor or Business Vendor.
29. GUARANTEE BY ARROW
29.1 Arrow hereby unconditionally and irrevocably guarantees to Premier Farnell and, as separate guarantees to each of the Company Vendors and Business Vendors, the due and punctual performance and observance by each of the Company Purchasers and Business Purchasers of all their obligations, commitments, undertakings, warranties and indemnities under or pursuant to this Agreement, as the same may be varied from time to time in accordance with the provisions hereof, each of the Transfer Agreements and the Swedish Agreement (in this clause 29, the "Guaranteed Obligations") that the same benefits shall be conferred on Premier Farnell and the relevant Company Vendor or Business Vendor as either of them would have received if the Guaranteed Obligations had been duly performed and satisfied by the relevant Company Purchaser or Business Purchaser. For the avoidance of doubt, Premier Farnell may claim against Arrow, or against the relevant Company Purchaser or Business Purchaser and Arrow jointly without having to first make a successful claim against the relevant Company Purchaser or Business Purchaser. The liability of Arrow under this clause 29 shall not be released or diminished by any variation of the terms of this Agreement or of any Transfer Agreement (whether or not agreed by Arrow), or, save as expressly provided in this Agreement, any forbearance, neglect or delay in seeking performance of the Guaranteed Obligations or any granting of time for such performance.
29.2 If and whenever any Company Purchaser or Business Purchaser defaults for any reason whatsoever in the performance of any of its Guaranteed Obligations, Arrow shall forthwith upon written demand from Premier Farnell perform (or procure performance of) and satisfy (or procure the satisfaction of) the Guaranteed Obligations in regard to which such default has been made in the manner prescribed by this Agreement or the Swedish Agreement or the Transfer Agreement.
(A) This guarantee is to be a continuing guarantee and accordingly is to remain in force until all the Guaranteed Obligations shall have been performed or satisfied.
(B) This guarantee is in addition to and without prejudice to and not in substitution for any rights or security which Premier Farnell or any Company Vendor or Business Vendor may now or hereafter have or hold for the performance and observance of the Guaranteed Obligations.
29.3 As a separate and independent stipulation, Arrow agrees that any of the Guaranteed Obligations (including, without limitation, the obligation to pay any moneys expressed to be payable under this Agreement or any Transfer Agreement) which may not be enforceable against or recoverable from the Relevant Company Purchaser or Business Purchaser by reason of any legal limitation, disability or incapacity on or of the relevant Company Purchaser or Business Purchaser or any other fact or circumstance (other than any limitation imposed by this Agreement or any Transfer Agreement) shall nevertheless be enforceable against and recoverable from Arrow as though the same had been
incurred by Arrow and Arrow were the sole or principal obligor in respect thereof and shall be performed or paid by Arrow on demand.
29.4 Without prejudice to the provisions of clause 29.3, the liability of Arrow under this clause 29 in respect of any obligation or liability of a Company Purchaser or a Business Purchaser shall not exceed the liability of the relevant Company Purchaser or Business Purchaser.
30. NOTICES
30.1 A notice, approval, consent or other communication in connection with this Agreement:
30.1.1 must be in writing;
30.1.2 in the case of Arrow must be marked for the attention
of Robert E. Klatell, Executive Vice President at the
address set forth on page 1 of this Agreement, Fax
No. (516) 391-1683;
30.1.3 in the case of Premier Farnell must be marked for the
attention of the Finance Director and the Company
Secretary at the address set forth on page 1 of this
Agreement, Fax No. (01937) 580070; and
30.1.4 in each case must be left at the address specified
above or sent by prepaid first class post to such
address or sent by facsimile to the facsimile number
of the addressee which is specified in this clause or
if the addressee notifies another address or
facsimile number in writing (citing this Agreement)
then to that address or telex or facsimile number.
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30.2 A notice, approval, consent or other communication shall take effect from the time it is received (or, if earlier, the time it is deemed to be received in accordance with clause 30.3) unless a later time is specified in it.
30.3 A letter or facsimile is deemed to be received:
30.3.1 in the case of a posted letter, unless actually
received earlier, on the second (fifth, if sent
airmail from overseas) Business Day after posting;
30.3.2 in the case of facsimile, on production of a
transmission report from the machine from which the
facsimile was sent which indicates that the facsimile
was sent in its entirety to the facsimile number of
the recipient.
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31. GOVERNING LAW AND JURISDICTION
31.1 This Agreement and the documents to be entered into pursuant to it shall, save as expressly referred to therein, be governed by, and construed in accordance with, English law.
31.2 Each party irrevocably agrees that the Courts of England shall have exclusive jurisdiction in relation to any claim, dispute or difference concerning this Agreement and such documents and any matter arising therefrom (save in
circumstances where any legal restriction or qualification exists to hinder a claim being made, or judgment or judicial order being enforced in the Courts of England in which case the Courts of England shall have non-exclusive jurisdiction).
31.3 Each party irrevocably waives any right that it may have to object to an action being brought in those Courts, to claim that the action has been brought in an inconvenient forum, or to claim that those Courts do not have jurisdiction.
31.4 Premier Farnell irrevocably agrees that without preventing any other mode of service, any document in an action (including, but not limited to, any writ of summons or other originating process or any third or other party notice) may be served on Premier Farnell by being delivered to or left for Premier Farnell at its address for service of notices under clause 30 and Premier Farnell undertakes to maintain such an address at all times in the United Kingdom and to notify Arrow in advance of any change from time to time of the details of such address in accordance with the manner prescribed for service of notices under clause 30.
31.5 Arrow irrevocably agrees that without preventing any other mode of service, any document in action (including, but not limited to, any writ, summons, order, judgment or other process or any third or other party notice) may be sufficiently and effectively served on it by service on its agent appointed in this clause 31.5. Arrow hereby irrevocably appoints Arrow (UK) Limited as its agent for service of process.
31.6 Nothing in this clause 31 shall affect the right of either party to serve process in any other manner permitted by law. Arrow hereby irrevocably waives (and irrevocably agrees not to raise) any right it would have under any federal or state law in the United States of America to resist the recognition of any judgment obtained by Premier Farnell relating to this Agreement in any proceedings in the United Kingdom on the basis that it did not receive due notice of the proceedings (provided that it received notice in accordance with clause 31.5) or that any such related proceedings were brought in an inconvenient forum. Each party irrevocably agrees that a judgment obtained requiring the payment of money or specific performances in any proceedings in the United Kingdom shall, subject to all rights of appeal available to it in the Courts of England, be conclusive and binding on it and may be enforced in the courts of any other jurisdiction.
IN WITNESS of which the parties have executed this Agreement as at the date first mentioned above.
SIGNED as a DEED by
PREMIER FARNELL PLC
acting by
a director and its secretary
Director /s/ Howard Poulson
------------------------------------
Name (in block letters) Howard Poulson
---------------------
Secretary /s/ Kenneth Mullen
------------------------------------
Name (in block letters) Kenneth Mullen
---------------------
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SIGNED as a DEED by
ARROW ELECTRONICS, INC.
acting by /s/ Robert E. Klatell
---------------------
duly authorized
Name (in block letters) Robert E. Klatell
---------------------
Executive Vice
President
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#20149879.3 CONFORMED COPY
ARROW ELECTRONICS, INC.
and
BANK OF MONTREAL TRUST COMPANY,
Trustee
Indenture
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions 1
Section 1.2 Other Definitions 6
Section 1.3 Incorporation By Reference Of Trust Indenture Act 7
Section 1.4 Rules Of Construction 7
ARTICLE 2
THE SECURITIES
Section 2.1 Form 8
Section 2.2 Execution And Authentication 8
Section 2.3 Amount Unlimited; Issuable In Series 9
Section 2.4Denomination And Date Of Securities; Payments Of Interest 12
Section 2.5 Registrar And Paying Agent; Agents Generally 13
Section 2.6 Paying Agent To Hold Money In Trust 13
Section 2.7 Transfer And Exchange 14
Section 2.8 Replacement Securities 16
Section 2.9 Outstanding Securities 17
Section 2.10 Temporary Securities 17
Section 2.11 Cancellation 18
Section 2.12 CUSIP Numbers 18
Section 2.13 Defaulted Interest 18
Section 2.14 Series May Include Tranches 18
ARTICLE 3
REDEMPTION
Section 3.1 Applicability Of Article 19
Section 3.2 Notice Of Redemption; Partial Redemptions 19
Section 3.3 Payment Of Securities Called For Redemption 20
Section 3.4 Exclusion Of Certain Securities
From Eligibility For Selection For Redemption 21
Section 3.5 Mandatory And Optional Sinking Funds 21
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ARTICLE 4
COVENANTS
Section 4.1 Payment Of Securities 24
Section 4.2 Maintenance Of Office Or Agency 24
Section 4.3 Negative Pledge 25
Section 4.4 Certain Sale And Lease-Back Transactions 26
Section 4.5 Certificate To Trustee 27
Section 4.6 Reports By The Company 27
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.1 When Company May Merge, Etc. 28
Section 5.2 Successor Substituted 28
ARTICLE 6
DEFAULT AND REMEDIES
Section 6.1 Events Of Default 29
Section 6.2 Acceleration 30
Section 6.3 Other Remedies 31
Section 6.4 Waiver Of Past Defaults 31
Section 6.5 Control By Majority 32
Section 6.6 Limitation On Suits 32
Section 6.7 Rights Of Holders To Receive Payment 33
Section 6.8 Collection Suit By Trustee 33
Section 6.9 Trustee May File Proofs Of Claim 33
Section 6.10 Application Of Proceeds 33
Section 6.11 Restoration Of Rights And Remedies 34
Section 6.12 Undertaking For Costs 34
Section 6.13 Rights And Remedies Cumulative 35
Section 6.14 Delay Or Omission Not Waiver 35
ARTICLE 7
TRUSTEE
Section 7.1 General 35
Section 7.2 Certain Rights Of Trustee 35
Section 7.3 Individual Rights Of Trustee 37
Section 7.4 Trustee's Disclaimer 37
Section 7.5 Notice Of Default 37
Section 7.6 Reports By Trustee To Holders 38
Section 7.7 Compensation And Indemnity 38
Section 7.8 Replacement Of Trustee 39
Section 7.9 Successor Trustee By Merger, Etc. 40
Section 7.10 Eligibility 40
Section 7.11 Money Held In Trust 40
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.1 Defeasance Within One Year Of Payment 40
Section 8.2 Defeasance 41
Section 8.3 Covenant Defeasance 42
Section 8.4 Application Of Trust Money 43
Section 8.5 Repayment To Company 43
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Without Consent Of Holders 44
Section 9.2 With Consent Of Holders 44
Section 9.3 Revocation And Effect Of Consent 45
Section 9.4 Notation On Or Exchange Of Securities 46
Section 9.5 Trustee To Sign Amendments, Etc. 46
Section 9.6 Conformity With Trust Indenture Act 46
ARTICLE 10
MISCELLANEOUS
Section 10.1 Trust Indenture Act Of 1939 47
Section 10.2 Notices 47
Section 10.3 Certificate And Opinion As To Conditions Precedent 48
Section 10.4 Statements Required In Certificate Or Opinion 48
Section 10.5 Evidence Of Ownership 49
Section 10.6 Rules By Trustee, Paying Agent Or Registrar 50
Section 10.7 Payment Date Other Than A Business Day 50
Section 10.8 Governing Law 50
Section 10.9 No Adverse Interpretation Of Other Agreements 50
Section 10.10 Successors 50
Section 10.11 Duplicate Originals 50
Section 10.12 Separability 51
Section 10.13 Table Of Contents, Headings, Etc. 51
Section 10.14 Incorporators, Shareholders,
Officers And Directors Of Company
Exempt From Individual Liability 51
Section 10.15 Judgment Currency 51
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INDENTURE, dated as of January 15, 1997, between Arrow Electronics, Inc., a New York corporation (the "Company"), and Bank of Montreal Trust Company (the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the issue from time to time of its debentures, notes or other evidences of indebtedness to be issued in one or more series (the "Securities") up to such principal amount or amounts as may from time to time be authorized in accordance with the terms of this Indenture and to provide, among other things, for the authentication, delivery and administration thereof, the Company has duly authorized the execution and delivery of this Indenture; and
WHEREAS, all things necessary to make this Indenture a valid indenture and agreement according to its terms have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the Securities by the holders thereof, the Company and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective holders from time to time of the Securities or of any and all series thereof and of the coupons, if any, appertaining thereto as follows:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
"Agent" means any Registrar, Paying Agent, transfer agent or Authenticating Agent.
"Attributable Debt" means, when used in connection with a sale and lease-back transaction referred to in Section 4.4, on any date as of which the amount thereof is to be determined, the product of (a) the net proceeds from such sale and lease-back transaction multiplied by (b) a fraction, the numerator of which is the number of full years of the term of the lease relating to the property involved in such sale and lease-back transaction (without regard to any options to renew or extend such term) remaining on the date of the making of such computation and the denominator of which is the number of full years of the term of such lease measured from the first day of such term.
"Authorized Newspaper" means a newspaper (which, in the
case of The City of New York, will, if practicable, be The Wall
Street Journal (Eastern Edition) and in the case of London, will, if
practicable, be the Financial Times (London Edition) and published
in an official language of the country of publication customarily
published at least once a day for at least five days in each
calendar week and of general circulation in The City of New York or
47
London, as applicable. If it shall be impractical in the opinion of
the Trustee to make any publication of any notice required hereby in
an Authorized Newspaper, any publication or other notice in lieu
thereof which is made or given with the approval of the Trustee
shall constitute a sufficient publication of such notice.
"Board Resolution" means one or more resolutions of the board of directors of the Company or any authorized committee thereof, certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted and to be in full force and effect on the date of certification, and delivered to the Trustee.
"Business Day" means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in The City of New York or in the city in which the Corporate Trust Office is located, with respect to any Security the interest on which is based on the offered quotations in the interbank Eurodollar market for dollar deposits in London, or with respect to Securities denominated in a specified currency other than United States dollars, in the principal financial center of the country of the specified currency.
"Capital Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person's capital stock or equity, including, without limitation, all Common Stock and Preferred Stock.
"Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.
"Common Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person's common stock, whether now outstanding or issued after the date of this Indenture, including, without limitation, all series and classes of such common stock.
"Company" means the party named as such in the first paragraph of this Indenture until a successor replaces it pursuant to Article 5 of this Indenture and thereafter means the successor.
"Consolidated Net Tangible Assets" means total assets after deducting therefrom all current liabilities and intangible assets as set forth in the most recent balance sheet of the Company and its consolidated Subsidiaries and computed in accordance with GAAP.
"Corporate Trust Office" means the office of the Trustee at which the corporate trust business of the Trustee shall, at any particular time, be principally administered, which office is, at the date of this Indenture, located at 77 Water Street, New York, New York 10005, Attention: Therese Gaballah, Vice President.
"Default" means any Event of Default as defined in Section 6.1 and any event that is, or after notice or passage of time or both would be, an Event of Default.
"Depositary" means, with respect to the Securities of any series issuable or issued in the form of one or more Registered Global Securities, the Person designated as Depositary by the Company pursuant to Section 2.3 until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Depositary" shall mean or include each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, "Depositary" as used with respect to the Securities of any such series shall mean the Depositary with respect to the Registered Global Securities of that series. The initial Depositary shall be The Depository Trust Company, New York, New York.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exempted Debt" means the sum, without duplication, of the
following items outstanding as of the date Exempted Debt is being
determined: (i) indebtedness of the Company and its Restricted
Subsidiaries incurred after the date of this Indenture and secured
by liens created or assumed or permitted to exist pursuant to
Section 4.3(b) and (ii) Attributable Debt of the Company and its
Restricted Subsidiaries in respect of all sale and lease-back
transactions with regard to any Principal Property entered into
pursuant to Section 4.4(b).
"Funded Debt" means all indebtedness for money borrowed, including purchase money indebtedness, having a maturity of more than one year from the date of its creation or having a maturity of less than one year but by its terms being renewable or extendible, at the option of the obligor in respect thereof, beyond one year from the date of its creation.
"GAAP" means generally accepted accounting principles in the United States of America at the date of any computation required or permitted hereunder.
"Holder" or "Securityholder" means the registered holder of any Security with respect to Registered Securities and the bearer of any Unregistered Security or any coupon appertaining thereto, as the case may be.
"Indenture" means this Indenture as originally executed or as it may be amended or supplemented from time to time by one or more indentures supplemental to this Indenture entered into pursuant to the applicable provisions of this Indenture and shall include the forms and terms of the Securities of each series established as contemplated pursuant to Sections 2.1 and 2.3.
"Investment" means any investment in any Person, whether by means of share purchase, capital contribution, loan, time deposit or otherwise.
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, or any other type of preferential arrangement that has the practical effect of creating a security interest, in respect of such asset. For the purposes of this Indenture, the Company or any Subsidiary shall be deemed to own subject to a Lien any asset that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.
"Officer" means, with respect to the Company, the Chairman of the Board of Directors, the President or Chief Executive Officer, any Vice President, the Chief Financial Officer, the Treasurer or any Assistant Treasurer, or the Secretary or any Assistant Secretary.
"Officers' Certificate" means a certificate signed in the
name of the Company (i) by the Chairman of the Board of Directors,
the President or Chief Executive Officer or a Vice President and
(ii) by the Chief Financial Officer, the Treasurer or any Assistant
Treasurer, or the Secretary or any Assistant Secretary, complying
with Section 10.4 and delivered to the Trustee. Each such
certificate shall comply with Section 314 of the Trust Indenture Act
and include (except as otherwise expressly provided in this
Indenture) the statements provided in Section 10.4, if and to the
extent required thereby.
"Opinion of Counsel" means a written opinion signed by legal counsel, who may be an employee of or counsel to the Company, satisfactory to the Trustee and complying with Section 10.4. Each such opinion shall comply with Section 314 of the Trust Indenture Act and include the statements provided in Section 10.4, if and to the extent required thereby.
"Original Issue Date" of any Security (or portion thereof) means the earlier of (a) the date of authentication of such Security or (b) the date of any Security (or portion thereof) for which such Security was issued (directly or indirectly) on registration of transfer, exchange or substitution.
"Original Issue Discount Security" means any Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 6.2.
"Periodic Offering" means an offering of Securities of a series from time to time, the specific terms of which Securities, including, without limitation, the rate or rates of interest, if any, thereon, the stated maturity or maturities thereof and the redemption provisions, if any, with respect thereto, are to be determined by the Company or its agents upon the issuance of such Securities.
"Person" means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
"Preferred Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person's preferred or preference stock, whether now outstanding or issued after the date of this Indenture, including, without limitation, all series and classes of such preferred or preference stock.
"Principal" of a Security means the principal amount of, and, unless the context indicates otherwise, includes any premium payable on, the Security.
"Principal Property" means any manufacturing or processing
plant or warehouse owned at the date hereof or hereafter acquired by
the Company or any Restricted Subsidiary of the Company which is
located within the United States and the gross book value of which
(including related land and improvements thereon and all machinery
and equipment included therein without deduction of any depreciation
reserves) on the date as of which the determination is being made
exceeds 2% of Consolidated Net Tangible Assets, other than (i) any
such manufacturing or processing plant or warehouse or any portion
thereof (together with the land on which it is erected and fixtures
comprising a part thereof) which is financed by industrial
development bonds which are tax exempt pursuant to Section 103 of
the Internal Revenue Code (or which receive similar tax treatment
under any subsequent amendments thereto or any successor laws
thereof or under any other similar statute of the United States),
(ii) any property which in the opinion of the Company's Board of
Directors is not of material importance to the total business
conducted by the Company as an entirety, or (iii) any portion of a
particular property which is similarly found not to be of material
importance to the use or operation of such property.
"Registered Global Security" means a Security evidencing all or a part of a series of Registered Securities, issued to the Depositary for such series in accordance with Section 2.2, and bearing the legend prescribed in Section 2.2.
"Registered Security" means any Security registered on the Security Register (as defined in Section 2.5).
"Responsible Officer" means, when used with respect to the Trustee, any senior trust officer, any vice president, any trust officer, any assistant trust officer, or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with the particular subject.
"Restricted Subsidiary" means a Subsidiary of the Company
(i) substantially all the property of which is located, or
substantially all the business of which is carried on, within the
United States, and (ii) which owns Principal Property; provided,
however, that any Subsidiary may be declared a Restricted Subsidiary
by Board Resolution, effective as of the date such Board Resolution
is adopted; provided further, that any such declaration may be
rescinded by further Board Resolution, effective as of the date such
further Board Resolution is adopted.
"Securities" means any of the securities, as defined in the first paragraph of the recitals hereof, that are authenticated and delivered under this Indenture and, unless the context indicates otherwise, shall include any coupon appertaining thereto.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means, with respect to any Person, any corporation, association or other business entity of which more than 50% of the outstanding Voting Stock is owned, directly or indirectly, by such Person and one or more other Subsidiaries of such Person.
"Trustee" means the party named as such in the first paragraph of this Indenture until a successor replaces it in accordance with the provisions of Article 7 and thereafter means such successor.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb), as it may be amended from time to time.
"UCC" means the Uniform Commercial Code, as in effect in each applicable jurisdiction.
"United States Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended and as codified in Title 11 of the United States Code, as amended from time to time hereafter, or any successor federal bankruptcy law.
"Unregistered Security" means any Security other than a Registered Security.
"U.S. Government Obligations" means securities that are
(i) direct obligations of the United States of America for the
payment of which its full faith and credit is pledged or
(ii) obligations of an agency or instrumentality of the United
States of America the payment of which is unconditionally guaranteed
as a full faith and credit obligation by the United States of
America, and shall also include a depository receipt issued by a
bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or
principal of any such U.S. Government Obligation held by such
custodian for the account of the holder of a depository receipt;
provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the
specific payment of interest on or principal of the U.S. Government
Obligation evidenced by such depository receipt.
"Voting Stock" means with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the election of directors, managers or other voting members of the governing body of such Person.
"Yield to Maturity" means, as the context may require, the yield to maturity (i) on a series of Securities or (ii) if the Securities of a series are issuable from time to time, on a Security of such series, calculated at the time of issuance of such series in the case of clause (i), or at the time of issuance of such Security of such series in the case of clause (ii), or, if applicable, at the most recent redetermination of interest on such series or on such Security, and calculated in accordance with the constant interest method or such other accepted financial practice as is specified in the terms of such Security.
Section 1.2 Other Definitions. Each of the following terms is defined in the section set forth opposite such term:
Term Section
Authenticating Agent 2.2
Cash Transaction 7.3
Dollars 4.2
Event of Default 6.1
Judgment Currency 10.15
mandatory sinking fund payment 3.5
optional sinking fund payment 3.5
Paying Agent 2.5
Record Date 2.4
Registrar 2.5
Required Currency 10.15
Security Register 2.5
Self-Liquidating Paper 7.3
sinking fund payment date 3.5
tranche 2.14
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Section 1.3 Incorporation By Reference Of Trust Indenture Act. Whenever this Indenture refers to a provision of the Trust Indenture Act, the provision is incorporated by reference in and made a part of this Indenture. The following terms used in this Indenture that are defined by the Trust Indenture Act have the following meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Holder or a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company or any other obligor on the Securities.
All other terms used in this Indenture that are defined by the Trust Indenture Act, defined by reference in the Trust Indenture Act to another statute or defined by a rule of the Commission and not otherwise defined herein have the meanings assigned to them therein.
Section 1.4 Rules Of Construction. Unless the context otherwise requires:
(i) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(ii) words in the singular include the plural, and words in the plural include the singular;
(iii) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;
(iv) all references to Sections or Articles refer to Sections or Articles of this Indenture unless otherwise indicated; and
(v) use of masculine, feminine or neuter pronouns should not be deemed a limitation, and the use of any such pronouns should be construed to include, where appropriate, the other pronouns.
ARTICLE 2
THE SECURITIES
Section 2.1 Form. The Securities of each series shall be substantially in such form or forms (not inconsistent with this Indenture) as shall be established by or pursuant to one or more Board Resolutions or in one or more indentures supplemental hereto, or in one or more Officer's Certificates pursuant to such Board Resolutions or supplemental indentures, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have imprinted or otherwise reproduced thereon such legend or legends or endorsements, not inconsistent with the provisions of this Indenture, as may be required to comply with any law, or with any rules of any securities exchange or usage, all as may be determined by the officers executing such Securities as evidenced by their execution of the Securities. Unless otherwise so established, Unregistered Securities shall have coupons attached.
Section 2.2 Execution And Authentication. Two officers shall execute the Securities (other than coupons) for the Company by facsimile or manual signature in the name and on behalf of the Company. The seal of the Company, if any, shall be reproduced on the Securities. If an Officer whose signature is on a Security no longer holds that office at the time the Security is authenticated, the Security shall nevertheless be valid.
The Trustee, at the expense of the Company, may appoint an authenticating agent (the "Authenticating Agent") to authenticate Securities other than coupons. The Authenticating Agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such Authenticating Agent.
A Security (other than coupons) shall not be valid until the Trustee or Authenticating Agent manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture.
At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series having attached thereto appropriate coupons, if any, executed by the Company to the Trustee for authentication together with the applicable documents referred to below in this Section, and the Trustee shall thereupon authenticate and deliver such Securities to or upon the written order of the Company. In authenticating any Securities of a series, the Trustee shall be entitled to receive prior to the first authentication of any Securities of such series, and (subject to Article 7) shall be fully protected in relying upon, unless and until such documents have been superseded or revoked:
(1) any Board Resolution and/or executed supplemental indenture referred to in Sections 2.1 and 2.3 by or pursuant to which the forms and terms of the Securities of that series were established;
(2) any Officers' Certificate referred to in Sections 2.1 and 2.3 setting forth the form or forms and terms of the Securities, stating that the form or forms and terms of the Securities of such series have been, or will be when established in accordance with such procedures as shall be referred to therein, established in compliance with this Indenture; and
(3) at the option of the Company, either an Opinion of Counsel, or a letter addressed to the Trustee permitting it to rely on an Opinion of Counsel, substantially to the effect that the Securities have been duly authorized and, if executed and authenticated in accordance with the provisions of the Indenture and delivered to and duly paid for by the purchasers thereof on the date of such opinion, would be entitled to the benefits of the Indenture and would be valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, receivership, moratorium and other similar laws affecting creditors' rights generally, general principles of equity, and such other matters as shall be specified therein.
If the Company shall establish pursuant to Section 2.3 that the Securities of a series or a portion thereof are to be issued in the form of one or more Registered Global Securities, then the Company shall execute and the Trustee shall authenticate and deliver one or more Registered Global Securities that (i) shall represent and shall be denominated in an amount equal to the aggregate principal amount of all of the Securities of such series issued in such form and not yet canceled, (ii) shall be registered in the name of the Depositary for such Registered Global Security or Securities or the nominee of such Depositary, (iii) shall be delivered by the Trustee to such Depositary or its custodian or pursuant to such Depositary's instructions and (iv) shall bear a legend substantially to the following effect: "Unless and until it is exchanged in whole or in part for Securities in definitive registered form, this Security may not be transferred except as a whole by the Depositary to the nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary."
Section 2.3 Amount Unlimited; Issuable In Series. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series and each such series shall rank equally and pari passu with all other unsecured and unsubordinated debt of the Company. There shall be established in or pursuant to Board Resolution or one or more indentures supplemental hereto, or in an Officer's Certificate pursuant to such Board Resolution or such supplemental indenture, prior to the initial issuance of Securities of any series, subject to the last sentence of this Section 2.3,
(1) the designation of the Securities of the series, which shall distinguish the Securities of the series from the Securities of all other series;
(2) any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture and any limitation on the ability of the Company to increase such aggregate principal amount after the initial issuance of the Securities of that series (except for securities authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of, or upon redemption of, other Securities of the series pursuant hereto);
(3) the date or dates on which the principal of the Securities of the series is payable (which date or dates may be fixed or extendible);
(4) the rate or rates (which may be fixed or variable) per annum at which the Securities of the series shall bear interest, if any, the date or dates from which such interest shall accrue, on which such interest shall be payable and (in the case of Registered Securities) on which a record shall be taken for the determination of Holders to whom interest is paya ble and/or the method by which such rate or rates or date or dates shall be determined;
(5) if other than as provided in Section 4.2, the place or places where the principal of and any interest on Securities of the series shall be payable, any Registered Securities of the series may be surrendered for exchange, notices, demands to or upon the Company in respect of the Securities of the series and this Indenture may be served and notice to Holders may be published;
(6) the right, if any, of the Company to redeem Securities of the series, in whole or in part, at its option and the period or periods within which, the price or prices at which and any terms and conditions upon which Securities of the series may be so redeemed, pursuant to any sinking fund or otherwise;
(7) the obligation, if any, of the Company to redeem, purchase or repay Securities of the series pursuant to any mandatory redemption, sinking fund or analogous provisions or at the option of a Holder thereof and the price or prices at which and the period or periods within which and any of the terms and conditions upon which Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation;
(8) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of the series shall be issuable;
(9) if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon acceleration of the maturity thereof;
(10) if other than the coin or currency in which the Securities of the series are denominated, the coin or currency in which payment of the Principal of or interest on the Securities of the series shall be payable or if the amount of payments of principal of and/or interest on the Securities of the series may be determined with reference to an index based on a coin or currency other than that in which the Securities of the series are denominated, the manner in which such amounts shall be determined;
(11) if other than the currency of the United States of America, the currency or currencies, including composite currencies, in which payment of the Principal of and interest on the Securities of the series shall be payable, and the manner in which any such currencies shall be valued against other currencies in which any other Securities shall be payable;
(12) whether the Securities of the series or any portion thereof will be issuable as Registered Securities (and if so, whether such Securities will be issuable as Registered Global Securities) or Unregistered Securities (with or without coupons), or any combination of the foregoing, any restrictions applicable to the offer, sale or delivery of Unregistered Securities or the payment of interest thereon and, if other than as provided herein, the terms upon which Unregistered Securities of any series may be exchanged for Registered Securities of such series and vice versa;
(13) whether and under what circumstances the Company will pay additional amounts on the Securities of the series held by a person who is not a U.S. person in respect of any tax, assessment or governmental charge withheld or deducted and, if so, whether the Company will have the option to redeem such Securities rather than pay such additional amounts;
(14) if the Securities of the series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and terms of such certificates, documents or conditions;
(15) unless otherwise provided herein, any trustees, depositaries, authenticating or paying agents, transfer agents or the registrar or any other agents with respect to the Securities of the series;
(16) provisions, if any, for the defeasance of the Securities of the series (including provisions permitting defeasance of less than all Securities of the series), which provisions may be in addition to, in substitution for, or in modification of (or any combination of the foregoing) the provisions of Article 8;
(17) if the Securities of the series are issuable in whole or in part as one or more Registered Global Securities, the identity of the Depositary for such Registered Global Security or Securities (which Depositary shall, at the time of its designation as Depositary and at all times while it serves as Depositary, be a clearing agency registered under the Exchange Act and any other applicable statute or regulation) if other than The Depository Trust Company, New York, New York;
(18) any other events of default or covenants with respect to the Securities of the series in addition to the Events of Default or covenants set forth herein; and
(19) any other terms of the Securities of the series (which terms shall not be inconsistent with the provisions of this Indenture).
All Securities of any one series and coupons, if any, appertaining thereto shall be substantially identical, except in the case of Registered Securities as to date and denomination, except in the case of any Periodic Offering and except as may otherwise be provided by or pursuant to the Board Resolution referred to above or as set forth in any such indenture supplemental hereto, or Officer's Certificate pursuant to such Board Resolution or such supplemental indenture. All Securities of any one series need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if so provided by or pursuant to such Board Resolution or in any such indenture supplemental hereto, or Officer's Certificate pursuant to such Board Resolution or such supplemental indenture, and any forms and terms of Securities to be issued from time to time may be completed and established from time to time prior to the issuance thereof by procedures described in such Board Resolution or supplemental indenture, or Officer's Certificate pursuant to such Board Resolution or such supplemental indenture.
Section 2.4 Denomination And Date Of Securities; Payments Of Interest. The Securities of each series shall be issuable as Registered Securities or Unregistered Securities in denominations established as contemplated by Section 2.3 or, if not so established with respect to Securities of any series, in denominations of $1,000 and any integral multiple thereof. The Securities of each series shall be numbered, lettered or otherwise distinguished in such manner or in accordance with such plan as the Officers of the Company executing the same may determine, as evidenced by their execution thereof.
Each Security shall be dated the date of its authentication. The Securities of each series shall bear interest, if any, from the date, and such interest and shall be payable on the dates, established as contemplated by Section 2.3.
The person in whose name any Registered Security of any series is registered at the close of business on any record date applicable to a particular series with respect to any interest payment date for such series shall be entitled to receive the interest, if any, payable on such interest payment date notwithstanding any transfer or exchange of such Registered Security subsequent to the record date and prior to such interest payment date, except if and to the extent the Company shall default in the payment of the interest due on such interest payment date for such series, in which case the provisions of Section 2.13 shall apply. The term "Record Date" as used with respect to an interest payment date (except a date for payment of defaulted interest) for the Securities of any series shall mean the date specified as such in the terms of the Registered Securities of such series established as contemplated by Section 2.3, or, if no such date is so established, the fifteenth day next preceding such interest payment date, whether or not such record date is a Business Day.
Section 2.5 Registrar And Paying Agent; Agents Generally. The Company shall maintain an office or agency where Securities may be presented for registration, registration of transfer or for exchange (the "Registrar") and an office or agency where Securities may be presented for payment (the "Paying Agent"), which shall be in the Borough of Manhattan, The City of New York. The Company shall cause the Registrar to keep a register of the Registered Securities and of their registration, transfer and exchange (the "Security Register"). The Company may have one or more additional Paying Agents or transfer agents with respect to any series.
The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture and the Trust Indenture Act that relate to such Agent. The Company shall give prompt written notice to the Trustee of the name and address of any Agent and any change in the name or address of an Agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such.
The Company may remove any Agent upon written notice to such Agent and the Trustee; provided that no such removal shall become effective until (i) the acceptance of an appointment by a successor Agent to such Agent as evidenced by an appropriate agency agreement entered into by the Company and such successor Agent and delivered to the Trustee or (ii) notification to the Trustee that the Trustee shall serve as such Agent until the appointment of a successor Agent in accordance with clause (i) of this proviso. The Company or any affiliate of the Company may act as Paying Agent or Registrar; provided that neither the Company nor an affiliate of the Company shall act as Paying Agent in connection with the defeasance of the Securities or the discharge of this Indenture under Article 8.
The Company initially appoints the Trustee as Registrar and Paying Agent. If, at any time, the Trustee is not the Registrar, the Registrar shall make available to the Trustee ten days prior to each interest payment date and at such other times as the Trustee may reasonably request the names and addresses of the Holders as they appear in the Security Register.
Section 2.6 Paying Agent To Hold Money In Trust. Not later than 10:00 a.m. New York City time on each due date of any Principal or interest on any Securities, the Company shall deposit with the Paying Agent money in immediately available funds sufficient to pay such Principal or interest. The Company shall require each Paying Agent other than the Trustee to agree in writing that such Paying Agent shall hold in trust for the benefit of the Holders of such Securities or the Trustee all money held by the Paying Agent for the payment of Principal of and interest on such Securities and shall promptly notify the Trustee of any default by the Company in making any such payment. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and account for any funds disbursed, and the Trustee may at any time during the continuance of any payment default, upon written request to a Paying Agent, require such Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed. Upon doing so, the Paying Agent shall have no further liability for the money so paid over to the Trustee. If the Company or any affiliate of the Company acts as Paying Agent, it will, on or before each due date of any Principal of or interest on any Securities, segregate and hold in a separate trust fund for the benefit of the Holders thereof a sum of money sufficient to pay such Principal or interest so becoming due until such sum of money shall be paid to such Holders or otherwise disposed of as provided in this Indenture, and will promptly notify the Trustee in writing of its action or failure to act as required by this Section.
Section 2.7 Transfer And Exchange. Unregistered Securities (except for any temporary global Unregistered Securities) and coupons (except for coupons attached to an temporary global Unregistered Securities) shall be transferable by delivery.
At the option of the Holder thereof, Registered Securities of any series (other than a Registered Global Security, except as set forth below) may be exchanged for a Registered Security or Registered Securities of such series and tenor having authorized denominations and an equal aggregate principal amount, upon surrender of such Registered Securities to be exchanged at the agency of the Company that shall be maintained for such purpose in accordance with Section 2.5 and upon payment, if the Company shall so require, of the charges hereinafter provided. If the Securities of any series are issued in both registered and unregistered form, except as otherwise established pursuant to Section 2.3, at the option of the Holder thereof, Unregistered Securities of any series may be exchanged for Registered Securities of such series and tenor having authorized denominations and an equal aggregate principal amount, upon surrender of such Unregistered Securities to be exchanged at the agency of the Company that shall be maintained for such purpose in accordance with Section 4.2, with, in the case of Unregistered Securities that have coupons attached, all unmatured coupons and all matured coupons in default thereto appertaining, and upon payment, if the Company shall so require, of the charges hereinafter provided. At the option of the Holder thereof, if Unregistered Securities of any series, maturity date, interest rate and original issue date are issued in more than one authorized denomination, except as otherwise established pursuant to Section 2.3, such Unregistered Securities may be exchanged for Unregistered Securities of such series and tenor having authorized denominations and an equal aggregate principal amount, upon surrender of such Unregistered Securities to be exchanged at the agency of the Company that shall be maintained for such purpose in accordance with Section 4.2, with, in the case of Unregistered Securities that have coupons attached, all unmatured coupons and all matured coupons in default thereto appertaining, and upon payment, if the Company shall so require, of the charges hereinafter provided. Registered Securities of any series may not be exchanged for Unregistered Securities of such series. Whenever any securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive.
All Registered Securities presented for registration of transfer, exchange, redemption or payment shall be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder or his attorney duly authorized in writing.
The Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of Securities. No service charge shall be made for any such transaction.
Notwithstanding any other provision of this Section 2.7, unless and until it is exchanged in whole or in part for Securities in definitive registered form, a Registered Global Security representing all or a portion of the Securities of a series may not be transferred except as a whole by the Depositary for such series to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary for such series or a nominee of such successor Depositary.
If at any time the Depositary for any Registered Global Securities of any series notifies the Company that it is unwilling or unable to continue as Depositary for such Registered Global Securities or if at any time the Depositary for such Registered Global Securities shall no longer be eligible under applicable law, the Company shall appoint a successor Depositary eligible under applicable law with respect to such Registered Global Securities. If a successor Depositary eligible under applicable law for such Registered Global Securities is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company will execute, and the Trustee, upon receipt of the Company's order for the authentication and delivery of definitive Registered Securities of such series and tenor, will authenticate and deliver Registered Securities of such series and tenor, in any authorized denominations, in an aggregate principal amount equal to the principal amount of such Registered Global Securities, in exchange for such Registered Global Securities.
The Company may at any time and in its sole discretion determine that any Registered Global Securities of any series shall no longer be maintained in global form. In such event the Company will execute, and the Trustee, upon receipt of the Company's order for the authentication and delivery of definitive Registered Securities of such series and tenor, will authenticate and deliver, Registered Securities of such series and tenor in any authorized denominations, in an aggregate principal amount equal to the principal amount of such Registered Global Securities, in exchange for such Registered Global Securities.
Any time the Registered Securities of any series are not in the form of Registered Global Securities pursuant to the preceding two paragraphs, the Company agrees to supply the Trustee with a reasonable supply of certificated Registered Securities without the legend required by Section 2.2 and the Trustee agrees to hold such Registered Securities in safekeeping until authenticated and delivered pursuant to the terms of this Indenture.
If established by the Company pursuant to Section 2.3 with respect to any Registered Global Security, the Depositary for such Registered Global Security may surrender such Registered Global Security in exchange in whole or in part for Registered Securities of the same series and tenor in definitive registered form on such terms as are acceptable to the Company and such Depositary. Thereupon, the Company shall execute, and the Trustee shall authenticate and deliver, without service charge,
(i) to the Person specified by such Depositary new Registered Securities of the same series and tenor, of any authorized denominations as requested by such Person, in an aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Registered Global Security; and
(ii) to such Depositary a new Registered Global Security in a denomination equal to the difference, if any, between the principal amount of the surrendered Registered Global Security and the aggregate principal amount of Registered Securities authenticated and delivered pursuant to clause (i) above.
Registered Securities issued in exchange for a Registered Global Security pursuant to this Section 2.7 shall be registered in such names and in such authorized denominations as the Depositary for such Registered Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee or an agent of the Company or the Trustee. The Trustee or such agent shall deliver such Securities to or as directed by the Persons in whose names such Securities are so registered.
All Securities issued upon any transfer or exchange of Securities shall be valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange.
Notwithstanding anything herein or in the forms or terms of any Securities to the contrary, none of the Company, the Trustee or any agent of the Company or the Trustee shall be required to exchange any Unregistered Security for a Registered Security if such exchange would result in adverse Federal income tax consequences to the Company (such as, for example, the inability of the Company to deduct from its income, as computed for Federal income tax purposes, the interest payable on the Unregistered Securities) under then applicable United States Federal income tax laws. The Trustee and any such agent shall be entitled to rely on an Officers' Certificate or an Opinion of Counsel in determining such result.
Neither the Registrar nor the Company shall be required
(i) to issue, authenticate, register the transfer of or exchange
Securities of any series for a period of 15 days before a selection
of such Securities to be redeemed or (ii) to register the transfer
of or exchange any Security selected for redemption in whole or in
part.
Section 2.8 Replacement Securities. If a defaced or mutilated Security of any series is surrendered to the Trustee or if a Holder claims that its Security of any series has been lost, destroyed or wrongfully taken, the Company shall, subject to the further provisions of this Section 2.8, issue and the Trustee shall authenticate a replacement Security of such series and tenor and principal amount bearing a number not contemporaneously outstanding. The Company may charge such Holder for any tax or other governmental charge that may be imposed as a result of or in connection with replacing a Security and for its expenses and the expenses of the Trustee (including without limitation attorneys' fees and expenses) in replacing a Security. In case any such mutilated, defaced, lost, destroyed or wrongfully taken Security has become or is about to become due and payable, the Company in its discretion may pay such Security instead of issuing a new Security in replacement thereof. If required by the Trustee or the Company, (i) an indemnity bond must be furnished that is sufficient in the judgment of both the Trustee and the Company to protect the Company, the Trustee and any Agent from any loss that any of them may suffer if a Security is replaced or paid as provided in this Section 2.8 and (ii) in the case of a lost, destroyed or wrongfully taken Security, evidence must be furnished to the satisfaction of both the Trustee and the Company of the loss, destruction or wrongful taking of such Security. Notwithstanding the foregoing, the Company and the Trustee shall have no obligation to replace or pay a Security pursuant to this Section 2.8 if either the Company or the Trustee has notice that such Security has been acquired by a bona fide purchaser.
Every replacement Security is an additional obligation of the Company and shall be entitled to the benefits of this Indenture.
To the extent permitted by law, the foregoing provisions of this Section are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or wrongfully taken Securities.
Section 2.9 Outstanding Securities. Securities outstanding at any time are all Securities that have been authenticated and delivered by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.8, it ceases to be outstanding unless and until the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a holder in due course.
If the Paying Agent (other than the Company or an affiliate of the Company) holds on the maturity date or any redemption date or date for repurchase of the Securities money sufficient to pay Securities payable or to be redeemed or repurchased on that date, then on and after that date such Securities cease to be outstanding and interest on them shall cease to accrue.
A Security does not cease to be outstanding because the Company or one of its affiliates holds such Security, provided, however, that, in determining whether the Holders of the requisite principal amount of the outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any affiliate of the Company shall be disregarded and deemed not to be outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities as to which a Responsible Officer of the Trustee has received written notice to be so owned shall be so disregarded. Any Securities so owned that are pledged by the Company, or by any affiliate of the Company, as security for loans or other obligations, otherwise than to another such affiliate of the Company, shall be deemed to be outstanding, if the pledgee is entitled pursuant to the terms of its pledge agreement and is free to exercise in its or his discretion the right to vote such securities, uncontrolled by the Company or by any such affiliate.
Section 2.10 Temporary Securities. Until definitive Securities of any series are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities of such series. Temporary Securities of any series shall be substantially in the form of definitive Securities of such series but may have insertions, substitutions, omissions and other variations determined to be appropriate by the Officers executing the temporary Securities, as evidenced by their execution of such temporary Securities. If temporary Securities of any series are issued, the Company will cause definitive Securities of such series to be prepared without unreasonable delay. After the preparation of definitive Securities of any series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series and tenor upon surrender of such temporary Securities at the office or agency of the Company designated for such purpose pursuant to Section 4.2, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of such series and tenor and authorized denominations. Until so exchanged, the temporary Securities of any series shall be entitled to the same benefits under this Indenture as definitive Securities of such series.
Section 2.11 Cancellation. The Company at any time may deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold. The Registrar, any transfer agent and the Paying Agent shall forward to the Trustee any Securities surrendered to them for transfer, exchange or payment. The Trustee shall cancel and destroy all Securities surrendered for transfer, exchange, payment or cancellation and shall deliver a certificate of destruction to the Company. The Company may not issue new Securities to replace Securities it has paid in full or delivered to the Trustee for cancellation.
Section 2.12 CUSIP Numbers. The Company in issuing the Securities may use "CUSIP" and "CINS" numbers (if then generally in use), and the Trustee shall use CUSIP numbers or CINS numbers, as the case may be, in notices of redemption or exchange as a convenience to Holders and no representation shall be made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or exchange.
Section 2.13 Defaulted Interest. If the Company defaults in a payment of interest on the Securities, it shall pay, or shall deposit with the Paying Agent money in immediately available funds sufficient to pay, the defaulted interest plus (to the extent lawful) any interest payable on the defaulted interest (as may be specified in the terms thereof, established pursuant to Section 2.3) to the Persons who are Holders on a subsequent special record date, which shall mean the 15th day next preceding the date fixed by the Company for the payment of defaulted interest, whether or not such day is a Business Day. At least 15 days before such special record date, the Company shall mail to each Holder and to the Trustee a notice that states the special record date, the payment date and the amount of defaulted interest to be paid.
Section 2.14 Series May Include Tranches. A series of Securities may include one or more tranches (each, a "tranche") of Securities, including Securities issued in a Periodic Offering. The Securities of different tranches may have one or more different terms, including authentication dates and public offering prices, but all the Securities within each such tranche shall have identical terms, including authentication date and public offering price. Notwithstanding any other provision of this Indenture, with respect to Sections 2.2 (other than the fourth paragraph thereof) through 2.4, 2.7, 2.8, 2.10, 3.1 through 3.5, 4.2, 6.1 through 6.14, 8.1 through 8.5 and 9.2, if any series of Securities includes more than one tranche, all provisions of such sections applicable to any series of Securities shall be deemed equally applicable to each tranche of any series of Securities in the same manner as though originally designated a series unless otherwise provided with respect to such series or tranche pursuant to Section 2.3. In particular, and without limiting the scope of the next preceding sentence, any of the provisions of such sections which provide for or permit action to be taken with respect to a series of Securities shall also be deemed to provide for and permit such action to be taken instead only with respect to Securities of one or more tranches within that series (and such provisions shall be deemed satisfied thereby), even if no comparable action is taken with respect to Securities in the remaining tranches of that series.
ARTICLE 3
REDEMPTION
Section 3.1 Applicability Of Article. The provisions of this Article shall be applicable to the Securities of any series which are redeemable before their maturity or to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 2.3 for Securities of such series.
Section 3.2 Notice Of Redemption; Partial Redemptions. Notice of redemption to the Holders of Registered Securities of any series to be redeemed as a whole or in part at the option of the Company shall be given by mailing notice of such redemption by first class mail postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption to such Holders of Registered Securities of such series at their last addresses as they shall appear upon the Securities Register. Notice of redemption to the Holders of Unregistered Securities of any series to be redeemed as a whole or in part who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act, shall be given by mailing notice of such redemption, by first class mail, postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption, to such Holders at such addresses as were so furnished to the Trustee (and, in the case of any such notice given by the Company, the Trustee shall make such information available to the Company for such purpose). Notice of redemption to all other Holders of Unregistered Securities of any series to be redeemed as a whole or in part shall be published in an Authorized Newspaper in The City of New York or with respect to any Security the interest on which is based on the offered quotations in the interbank Eurodollar market for dollar deposits in an Authorized Newspaper in London, in each case, once in each of three successive calendar weeks, the first publication to be not less than 30 days nor more than 60 days prior to the date fixed for redemption. Any notice which is mailed or published in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. Failure to give notice by mail, or any defect in the notice to the Holder of any Security of a series designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security of such series.
The notice of redemption to each such Holder shall specify
(i) the principal amount of each Security of such series held by
such Holder to be redeemed, (ii) the CUSIP numbers of the Securities
to be redeemed, (iii) the date fixed for redemption, (iv) the
redemption price, (v) the place or places of payment, (vi) that
payment will be made upon presentation and surrender of such
Securities and, in the case of Securities with coupons attached
thereto, of all coupons appertaining thereto maturing after the date
fixed for redemption, (vii) that such redemption is pursuant to the
mandatory or optional sinking fund, or both, if such be the case,
(viii) that interest accrued to the date fixed for redemption will
be paid as specified in such notice and that on and after said date
interest thereon or on the portions thereof to be redeemed will
cease to accrue. In case any Security of a series is to be redeemed
in part only, the notice of redemption shall state the portion of
the principal amount thereof to be redeemed and shall state that on
and after the date fixed for redemption, upon surrender of such
Security, a new Security or Securities of such series and tenor in
principal amount equal to the unredeemed portion thereof will be
issued.
The notice of redemption of Securities of any series to be redeemed at the option of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company.
Not later than 10:00 a.m. New York City time on the redemption date specified in the notice of redemption given as provided in this Section, the Company will deposit with the Trustee or with one or more Paying Agents (or, if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust as provided in Section 2.6) an amount of money in immediately available funds sufficient to redeem on the redemption date all the Securities of such series so called for redemption at the appropriate redemption price, together with accrued interest to the date fixed for redemption. If less than all the outstanding Securities of a series are to be redeemed, the Company will deliver to the Trustee at least 15 days prior to the last date on which notice of redemption may be given to Holders pursuant to the first paragraph of this Section 3.2 (or such shorter period as shall be acceptable to the Trustee) an Officers' Certificate (which need not contain the statements required by Section 10.4) stating the aggregate principal amount of such Securities to be redeemed. In case of a redemption at the election of the Company prior to the expiration of any restriction on such redemption, the Company shall deliver to the Trustee, prior to the giving of any notice of redemption to Holders pursuant to this Section, an Officers' Certificate stating that such redemption is not prohibited by such restriction.
If less than all the Securities of a series are to be redeemed, the Trustee shall select, pro rata, by lot or in such manner as it shall deem appropriate and fair, Securities of such series to be redeemed in whole or in part. Securities may be redeemed in part in multiples equal to the minimum authorized denomination for Securities of such series or any multiple thereof. The Trustee shall promptly notify the Company in writing of the Securities of such series selected for redemption and, in the case of any Securities of such series selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed.
Section 3.3 Payment Of Securities Called For Redemption. If notice of redemption has been given as above provided, the Securities or portions of Securities specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption, and on and after such date (unless the Company shall default in the payment of such Securities at the redemption price, together with interest accrued to such date) interest on the Securities or portions of Securities so called for redemption shall cease to accrue, and the unmatured coupons, if any, appertaining thereto shall be void and, except as provided in Sections 7.11 and 8.4, such Securities shall cease from and after the date fixed for redemption to be entitled to any benefit under this Indenture, and the Holders thereof shall have no right in respect of such Securities except the right to receive the redemption price thereof and unpaid interest to the date fixed for redemption. On presentation and surrender of such Securities at a place of payment specified in said notice, together with all coupons, if any, appertaining thereto maturing after the date fixed for redemption, said Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption; provided that payment of interest becoming due on or prior to the date fixed for redemption shall be payable in the case of Securities with coupons attached thereto, to the Holders of the coupons for such interest upon surrender thereof, and in the case of Registered Securities, to the Holders of such Registered Securities registered as such on the relevant record date subject to the terms and provisions of Sections 2.4 and 2.13 hereof.
If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate of interest or Yield to Maturity (in the case of an Original Issue Discount Security) borne by such Security.
If any Security with coupons attached thereto is surrendered for redemption and is not accompanied by all appurtenant coupons maturing after the date fixed for redemption, the surrender of such missing coupon or coupons may be waived by the Company and the Trustee, if there be furnished to each of them such security or indemnity as they may require to save each of them harmless.
Upon presentation of any Security of any series redeemed in part only, the Company shall execute and the Trustee shall authenticate and deliver to or on the order of the Holder thereof, at the expense of the Company, a new Security or Securities of such series and tenor (with any unmatured coupons attached), of authorized denominations, in principal amount equal to the unredeemed portion of the Security so presented.
Section 3.4 Exclusion Of Certain Securities From Eligibility For Selection For Redemption. Securities shall be excluded from eligibility for selection for redemption if they are identified by registration and certificate number in a written statement signed by an authorized officer of the Company and delivered to the Trustee at least 40 days prior to the last date on which notice of redemption may be given as being owned of record and beneficially by, not pledged or hypothecated by either (a) the Company or (b) an entity specifically identified in such written statement as directly or indirectly controlling or controlled by or under direct or indirect common control with the Company.
Section 3.5 Mandatory And Optional Sinking Funds. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment," and any payment in excess of such minimum amount provided for by the terms of the Securities of any series is herein referred to as an "optional sinking fund payment." The date on which a sinking fund payment is to be made is herein referred to as the "sinking fund payment date."
In lieu of making all or any part of any mandatory sinking fund payment with respect to any series of Securities in cash, the Company may at its option (a) deliver to the Trustee Securities of such series theretofore purchased or otherwise acquired (except through a mandatory sinking fund payment) by the Company or receive credit for Securities of such series (not previously so credited) theretofore purchased or otherwise acquired (except as aforesaid) by the Company and delivered to the Trustee for cancellation pursuant to Section 2.11, (b) receive credit for optional sinking fund payments (not previously so credited) made pursuant to this Section, or (c) receive credit for Securities of such series (not previously so credited) redeemed by the Company through any optional sinking fund payment. Securities so delivered or credited shall be received or credited by the Trustee at the sinking fund redemption price specified in such Securities.
On or before the sixtieth day next preceding each sinking fund payment date for any series, or such shorter period as shall be acceptable to the Trustee, the Company will deliver to the Trustee an Officers' Certificate (a) specifying the portion of the mandatory sinking fund payment to be satisfied by payment of cash and the portion to be satisfied by credit of specified Securities of such series and the basis for such credit, (b) stating that none of the specified Securities of such series has theretofore been so credited, (c) stating that no defaults in the payment of interest or Events of Default with respect to such series have occurred (which have not been waived or cured) and are continuing and (d) stating whether or not the Company intends to exercise its right to make an optional sinking fund payment with respect to such series and, if so, specifying the amount of such optional sinking fund payment that the Company intends to pay on or before the next succeeding sinking fund payment date. Any Securities of such series to be credited and required to be delivered to the Trustee in order for the Company to be entitled to credit therefor as aforesaid which have not theretofore been delivered to the Trustee shall be delivered for cancellation pursuant to Section 2.11 to the Trustee with such Officers' Certificate (or reasonably promptly thereafter if acceptable to the Trustee). Such Officers' Certificate shall be irrevocable and upon its receipt by the Trustee the Company shall become unconditionally obligated to make all the cash payments or delivery of securities therein referred to, if any, on or before the next succeeding sinking fund payment date. Failure of the Company, on or before any such sixtieth day, to deliver such Officer's Certificate and Securities specified in this paragraph, if any, shall not constitute a Default but shall constitute, on and as of such date, the irrevocable election of the Company (i) that the mandatory sinking fund payment for such series due on the next succeeding sinking fund payment date shall be paid entirely in cash without the option to deliver or credit Securities of such series in respect thereof and (ii) that the Company will make no optional sinking fund payment with respect to such series as provided in this Section.
If the sinking fund payment or payments (mandatory or optional or both) to be made in cash on the next succeeding sinking fund payment date plus any unused balance of any preceding sinking fund payments made in cash shall exceed $50,000 (or a lesser sum if the Company shall so request with respect to the Securities of any series), such cash shall be applied on the next succeeding sinking fund payment date to the redemption of Securities of such series at the sinking fund redemption price thereof together with accrued interest thereon to the date fixed for redemption. If such amount shall be $50,000 (or such lesser sum) or less and the Company makes no such request then it shall be carried over until a sum in excess of $50,000 (or such lesser sum) is available. The Trustee shall select, in the manner provided in Section 3.2, for redemption on such sinking fund payment date a sufficient principal amount of Securities of such series to absorb said cash, as nearly as may be, and shall inform the Company of the serial numbers of the Securities of such series (or portions thereof) so selected. Securities shall be excluded from eligibility for redemption under this Section if they are identified by registration and certificate number in an Officers' Certificate delivered to the Trustee at least 60 days prior to the sinking fund payment date as being owned of record and beneficially by, and not pledged or hypothecated by either (a) the Company or (b) an entity specifically identified in such Officers' Certificate as directly or indirectly controlling or controlled by or under direct or indirect common control with the Company. The Trustee, in the name and at the expense of the Company (or the Company, if it shall so request the Trustee in writing) shall cause notice of redemption of the Securities of such series to be given in substantially the manner provided in Section 3.2 (and with the effect provided in Section 3.3) for the redemption of Securities of such series in part at the option of the Company. The amount of any sinking fund payments not so applied or allocated to the redemption of Securities of such series shall be added to the next cash sinking fund payment for such series and, together with such payment, shall be applied in accordance with the provisions of this Section. Any and all sinking fund moneys held on the stated maturity date of the Securities of any particular series (or earlier, if such maturity is accelerated), which are not held for the payment or redemption of particular Securities of such series shall be applied, together with other moneys, if necessary, sufficient for the purpose, to the payment of the Principal of, and interest on, the Securities of such series at maturity.
Not later than 10:00 a.m. New York City time on each sinking fund payment date, the Company shall pay to the Trustee in cash or shall otherwise provide for the payment of all interest accrued to the date fixed for redemption on Securities to be redeemed on the next following sinking fund payment date.
The Trustee shall not redeem or cause to be redeemed any Securities of a series with sinking fund moneys or mail any notice of redemption of Securities of such series by operation of the sinking fund during the continuance of a Default in payment of interest on such Securities or of any Event of Default except that, where the mailing of notice of redemption of any Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities, provided that it shall have received from the Company a sum sufficient for such redemption. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such Default or Event of Default shall occur, and any moneys thereafter paid into the sinking fund, shall, during the continuance of such Default or Event of Default, be deemed to have been collected under Article 6 and held for the payment of all such Securities. In case such Event of Default shall have been waived as provided in Section 6.4 or the Default cured on or before the sixtieth day preceding the sinking fund payment date in any year, such moneys shall thereafter be applied on the next succeeding sinking fund payment date in accordance with this Section to the redemption of such Securities.
ARTICLE 4
COVENANTS
Section 4.1 Payment Of Securities. The Company shall pay the Principal of and interest on the Securities on the dates and in the manner provided in the Securities and this Indenture. The interest on Securities with coupons attached (together with any additional amounts payable pursuant to the terms of such Securities) shall be payable only upon presentation and surrender of the several coupons for such interest installments as are evidenced thereby as they severally mature. The interest on any temporary Unregistered Securities (together with any additional amounts payable pursuant to the terms of such Securities) shall be paid, as to the installments of interest evidenced by coupons attached thereto, if any, only upon presentation and surrender thereof, and, as to the other installments of interest, if any, only upon presentation of such Unregistered Securities for notation thereon of the payment of such interest. The interest on Registered Securities (together with any additional amounts payable pursuant to the terms of such Securities) shall be payable only to the Holders thereof and at the option of the Company may be paid by mailing checks for such interest payable to or upon the written order of such Holders at their last addresses as they appear on the Security Register of the Company.
Notwithstanding any provisions of this Indenture and the
Securities of any series to the contrary, if the Company and a
Holder of any Registered Security so agree, payments of interest on,
and any portion of the Principal of, such Holder's Registered
Security (other than interest payable at maturity or on any
redemption or repayment date or the final payment of Principal on
such Security) shall be made by the Paying Agent, upon receipt from
the Company of immediately available funds by 11:00 A.M., New York
City time (or such other time as may be agreed to between the
Company and the Paying Agent), directly to the Holder of such
Security (by Federal funds wire transfer or otherwise) if the Holder
has delivered written instructions to the Trustee 15 days prior to
such payment date requesting that such payment will be so made and
designating the bank account to which such payments shall be so made
and in the case of payments of Principal surrenders the same to the
Trustee in exchange for a Security or Securities aggregating the
same principal amount as the unredeemed principal amount of the
Securities surrendered. The Trustee shall be entitled to rely on
the last instruction delivered by the Holder pursuant to this
Section 4.1 unless a new instruction is delivered 15 days prior to a
payment date. The Company will indemnify and hold each of the
Trustee and any Paying Agent harmless against any loss, liability or
expense (including attorneys' fees) resulting from any act or
omission to act on the part of the Company or any such Holder in
connection with any such agreement or from making any payment in
accordance with any such agreement.
The Company shall pay interest on overdue Principal, and interest on overdue installments of interest, to the extent lawful, at the rate per annum specified in the Securities.
Section 4.2 Maintenance Of Office Or Agency. The Company will maintain in the Borough of Manhattan, The City of New York, an office or agency where Securities may be surrendered for registration of transfer or exchange or for presentation for payment and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company hereby initially designates the Corporate Trust Office of the Trustee, located in the Borough of Manhattan, The City of New York, as such office or agency of the Company. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 10.2.
The Company will maintain one or more agencies in a city or cities located outside the United States (including any city in which such an agency is required to be maintained under the rules of any stock exchange on which the Securities of any series are listed) where the Unregistered Securities, if any, of each series and coupons, if any, appertaining thereto may be presented for payment. No payment on any Unregistered Security or coupon will be made upon presentation of such Unregistered Security or coupon at an agency of the Company within the United States nor will any payment be made by transfer to an account in, or by mail to an address in, the United States unless, pursuant to applicable United States laws and regulations then in effect, such payment can be made without adverse tax consequences to the Company. Notwithstanding the foregoing, if full payment in United States Dollars ("Dollars") at each agency maintained by the Company outside the United States for payment on such Unregistered Securities or coupons appertaining thereto is illegal or effectively precluded by exchange controls or other similar restrictions, payments in Dollars of Unregistered Securities of any series and coupons appertaining thereto which are payable in Dollars may be made at an agency of the Company maintained in the Borough of Manhattan, The City of New York.
The Company may also from time to time designate one or more other offices or agencies where the Securities of any series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
Section 4.3 Negative Pledge. (a) The Company will not,
and will not permit any Restricted Subsidiary to, create or incur
any Lien on any shares of stock, indebtedness or other obligations
of a Restricted Subsidiary or any Principal Property of the Company
or a Restricted Subsidiary, whether such shares of stock,
indebtedness or other obligations of a Restricted Subsidiary or
Principal Property are owned at the date of this Indenture or
hereafter acquired, unless the Company secures or causes such
Restricted Subsidiary to secure the outstanding Securities equally
and ratably with (or, at the Company's option, prior to) all
indebtedness secured by such Lien, so long as such indebtedness
shall be so secured; provided, however, that this covenant shall not
apply in the case of: (i) the creation of any Lien on any shares of
stock, indebtedness or other obligations of a Subsidiary or any
Principal Property hereafter acquired (including acquisitions by way
of merger or consolidation) by the Company or a Restricted
Subsidiary contemporaneously with such acquisition, or within 180
days thereafter, to secure or provide for the payment or financing
of any part of the purchase price thereof, or the assumption of any
Lien upon any shares of stock, indebtedness or other obligations of
a Subsidiary or any Principal Property hereafter acquired existing
at the time of such acquisition, or the acquisition of any shares of
stock, indebtedness or other obligations of a Subsidiary or any
Principal Property subject to any Lien without the assumption
thereof, provided that every such Lien referred to in this clause
(i) shall attach only to the shares of stock, indebtedness or other
obligations of a Subsidiary or any Principal Property so acquired
and fixed improvements thereon; (ii) any Lien on any shares of
stock, indebtedness or other obligations of a Subsidiary or any
Principal Property existing at the date of this Indenture; (iii) any
Lien on any shares of stock, indebtedness or other obligations of a
Subsidiary or any Principal Property in favor of the Company or any
Restricted Subsidiary; (iv) any Lien on any Principal Property being
constructed or improved securing loans to finance such construction
or improvements; (v) any Lien on shares of stock, indebtedness or
other obligations of a Subsidiary or any Principal Property incurred
in connection with the issuance of tax-exempt governmental
obligations (including, without limitation, industrial revenue bonds
and similar financings); (vi) any mechanics', materialmen's,
carriers' or other similar Liens arising in the ordinary course of
business with respect to obligations that are not yet due or that
are being contested in good faith, (vii) any Lien on any shares of
stock, indebtedness or other obligations of a Subsidiary or any
Principal Property for taxes, assessments or governmental charges or
levies not yet delinquent, or already delinquent but the validity of
which is being contested in good faith, (viii) any Lien on any
shares of stock, indebtedness or other obligations of a Subsidiary
or any Principal Property arising in connection with legal
proceedings being contested in good faith, including any judgment
Lien so long as execution thereon is stayed, (ix) any landlord's
Lien on fixtures located on premises leased by the Company or a
Restricted Subsidiary in the ordinary course of business, and
tenants' rights under leases, easements and similar Liens not
materially impairing the use or value of the property involved, (x)
any Lien arising by reason of deposits necessary to qualify the
Company or any Restricted Subsidiary to conduct business, maintain
self insurance, or obtain the benefit of, or comply with, any law,
(xi) Liens on current assets of the Company to secure loans to the
Company that mature within twelve months from the creation thereof
and that are made in the ordinary course of business, and (xii) any
renewal of or substitution for any Lien permitted by any of the
preceding clauses (i) through (xi), provided, in the case of a Lien
permitted under clause (i), (ii) or (iv), the indebtedness secured
is not increased nor the Lien extended to any additional assets.
(b) Notwithstanding the provisions of paragraph (a) of this Section, the Company or any Restricted Subsidiary may create or assume Liens in addition to those permitted by paragraph (a) of this Section, and renew, extend or replace such liens, provided that at the time of such creation, assumption, renewal, extension or replacement, and after giving effect thereto, Exempted Debt does not exceed 15% of Consolidated Net Tangible Assets.
Section 4.4 Certain Sale And Lease-Back Transactions.
(a) The Company will not, and will not permit any Restricted
Subsidiary to, sell or transfer, directly or indirectly, except to
the Company or a Restricted Subsidiary, any Principal Property as an
entirety, or any substantial portion thereof, with the intention of
taking back a lease of such property, except a lease for a period of
three years or less at the end of which it is intended that the use
of such property by the lessee will be discontinued; provided that,
notwithstanding the foregoing, the Company or any Restricted
Subsidiary may sell any such Principal Property and lease it back
for a longer period (i) if the Company or such Restricted Subsidiary
would be entitled, pursuant to the provisions of Section 4.3(a), to
create a Lien on the property to be leased securing Funded Debt in
an amount equal to the Attributable Debt with respect to such sale
and lease-back transaction without equally and ratably securing the
outstanding Securities or (ii) if (A) the Company promptly informs
the Trustee of such transaction and (B) the Company causes an amount
equal to the fair value (as determined by Board Resolution of the
Company) of such property to be applied (1) to the purchase of other
property that will constitute Principal Property having a fair value
at least equal to the fair value of the property sold, or (2) to the
retirement, within 120 days after receipt of such proceeds, of
Funded Debt incurred or assumed by the Company or a Restricted
Subsidiary (including the Securities); provided further that, in
lieu of applying all of or any part of such net proceeds to such
retirement, the Company may, within 75 days after such sale, deliver
or cause to be delivered to the applicable trustee for cancellation
either debentures or notes evidencing Funded Debt of the Company
(which may include the Securities) or of a Restricted Subsidiary
previously authenticated and delivered by the applicable trustee,
and not theretofore tendered for sinking fund purposes or called for
a sinking fund or otherwise applied as a credit against an
obligation to redeem or retire such notes or debentures, and an
Officers' Certificate (which shall be delivered to the Trustee and
which need not contain the statements prescribed by Section 10.4)
stating that the Company elects to deliver or cause to be delivered
such debentures or notes in lieu of retiring Funded Debt as
hereinabove provided. If the Company shall so deliver debentures or
notes to the applicable trustee and the Company shall duly deliver
such Officers' Certificate, the amount of cash that the Company
shall be required to apply to the retirement of Funded Debt under
this Section 4.4(a) shall be reduced by an amount equal to the
aggregate of the then applicable optional redemption prices (not
including any optional sinking fund redemption prices) of such
debentures or notes, or, if there are no such redemption prices, the
principal amount of such debentures or notes; provided, that in the
case of debentures or notes that provide for an amount less than the
principal amount thereof to be due and payable upon a declaration of
the maturity thereof, such amount of cash shall be reduced by the
amount of principal of such debentures or notes that would be due
and payable as of the date of such application upon a declaration of
acceleration of the maturity thereof pursuant to the terms of the
indenture pursuant to which such debentures or notes were issued.
(b) Notwithstanding the provisions of paragraph (a) of this Section 4.4, the Company or any Restricted Subsidiary may enter into sale and lease-back transactions in addition to those permitted by paragraph (a) of this Section 4.4 without any obligation to retire any outstanding Securities or other Funded Debt, provided that at the time of entering into such sale and lease-back transactions and after giving effect thereto, Exempted Debt does not exceed 15% of Consolidated Net Tangible Assets.
Section 4.5 Certificate To Trustee. The Company will furnish to the Trustee annually, on or before a date not more than four months after the end of its fiscal year (which, on the date hereof, is a calendar year), a brief certificate (which need not contain the statements required by Section 10.4) from its principal executive, financial or accounting officer as to his or her knowledge of the compliance of the Company with all conditions and covenants under this Indenture (such compliance to be determined without regard to any period of grace or requirement of notice provided under this Indenture) which certificate shall comply with the requirements of the Trust Indenture Act.
Section 4.6 Reports By The Company. The Company covenants to file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents, and other reports which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act.
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.1 When Company May Merge, Etc. The Company shall not consolidate with, merge with or into, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its property and assets (in one transaction or a series of related transactions) to, any Person (other than a consolidation with or merger with or into a Subsidiary or a sale, conveyance, transfer, lease or other disposition to a Subsidiary) or permit any Person to merge with or into the Company unless:
(a) either (i) the Company shall be the continuing Person or (ii) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or that acquired or leased such property and assets of the Company shall be a corporation organized and validly existing under the laws of the United States of America or any jurisdiction thereof and shall expressly assume, by a supplemental indenture, executed and delivered to the Trustee, all of the obligations of the Company on all of the Securities and under this Indenture and the Company shall have delivered to the Trustee an Opinion of Counsel stating that such consolidation, merger or transfer and such supplemental indenture complies with this provision and that all conditions precedent provided for herein relating to such transaction have been complied with and that such supplemental indenture constitutes the legal, valid and binding obligation of the Company or such successor enforceable against such entity in accordance with its terms, subject to customary exceptions; and
(b) an Officers' Certificate to the effect that immediately after giving effect to such transaction, no Default shall have occurred and be continuing and an Opinion of Counsel as to the matters set forth in Section 5.1(a) shall have been delivered to the Trustee.
Section 5.2 Successor Substituted. Upon any consolidation or merger, or any sale, conveyance, transfer, lease or other disposition of all or substantially all of the property and assets of the Company in accordance with Section 5.1, the successor Person formed by such consolidation or into which the Company is merged or to which such sale, conveyance, transfer, lease or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein. In the event of any such sale, conveyance, transfer or other disposition (other than by way of lease) the Company or any successor Person that shall heretofore have become such in the manner described in this Article shall be discharged from all obligations and covenants under this Indenture and the Securities and may be liquidated and dissolved.
ARTICLE 6
DEFAULT AND REMEDIES
Section 6.1 Events Of Default. An "Event of Default" shall occur with respect to the Securities of any series if:
(a) the Company defaults in the payment of the Principal of any Security of such series when the same becomes due and payable at maturity, upon acceleration, redemption or mandatory repurchase, including as a sinking fund installment, or otherwise;
(b) the Company defaults in the payment of interest on any Security of such series when the same becomes due and payable, and such default continues for a period of 30 days;
(c) the Company defaults in the performance of or breaches any other covenant or agreement of the Company in this Indenture with respect to any Security of such series or in the Securities of such series and such default or breach continues for a period of 30 consecutive days after written notice to the Company by the Trustee or to the Company and the Trustee by the Holders of 25% or more in aggregate principal amount of the Securities of all series affected thereby;
(d) an involuntary case or other proceeding shall be commenced against the Company or any Restricted Subsidiary with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Company or any Restricted Subsidiary under the federal bankruptcy laws as now or hereafter in effect;
(e) the Company or any Restricted Subsidiary (A) commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, (B) consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or any Restricted Subsidiary or for all or substantially all of the property and assets of the Company or any Restricted Subsidiary or (C) effects any general assignment for the benefit of creditors; or
(f) any other Event of Default established pursuant to
Section 2.3 with respect to the Securities of such series
occurs.
Section 6.2 Acceleration. (a) If an Event of Default
described in clauses (a) or (b) of Section 6.1 with respect to the
Securities of any series then outstanding occurs and is continuing,
then, and in each and every such case, except for any series of
Securities the principal of which shall have already become due and
payable, either the Trustee or the Holders of not less than 25% in
aggregate principal amount of the Securities of any such affected
series then outstanding hereunder (each such series treated as a
separate class) by notice in writing to the Company (and to the
Trustee if given by Securityholders), may declare the entire
principal (or, if the Securities of any such series are Original
Issue Discount Securities, such portion of the principal amount as
may be specified in the terms of such series established pursuant to
Section 2.3) of all Securities of such affected series, and the
interest accrued thereon, if any, to be due and payable immediately,
and upon any such declaration the same shall become immediately due
and payable.
(b) If an Event of Default described in clauses (c) or
(f) of Section 6.1 with respect to the Securities of one or more but
not all series then outstanding, or with respect to the Securities
of all series then outstanding, occurs and is continuing, then, and
in each and every such case, except for any series of Securities the
principal of which shall have already become due and payable, either
the Trustee or the Holders of not less than 25% in aggregate
principal amount (or, if the Securities of any such series are
Original Issue Discount Securities, the amount thereof accelerable
under this Section) of the Securities of all such affected series
then outstanding hereunder (treated as a single class) by notice in
writing to the Company (and to the Trustee if given by
Securityholders), may declare the entire principal (or, if the
Securities of any such series are Original Issue Discount
Securities, such portion of the principal amount as may be specified
in the terms of such series established pursuant to Section 2.3) of
all Securities of all such affected series, and the interest accrued
thereon, if any, to be due and payable immediately, and upon any
such declaration the same shall become immediately due and payable.
(c) If an Event of Default described in clause (d) or (e) of Section 6.1 occurs and is continuing, then the principal amount (or, if any Securities are Original Issue Discount Securities, such portion of the principal as may be specified in the terms thereof established pursuant to Section 2.3) of all the Securities then outstanding and interest accrued thereon, if any, shall be and become immediately due and payable, without any notice or other action by any Holder or the Trustee, to the full extent permitted by applicable law.
The foregoing provisions, however, are subject to the condition that if, at any time after the principal (or, if the securities are Original Issue Discount Securities, such portion of the principal as may be specified in the terms thereof established pursuant to Section 2.3) of the Securities of any series (or of all the Securities, as the case may be) shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Securities of each such series (or of all the Securities, as the case may be) and the principal of any and all Securities of each such series (or of all the Securities, as the case may be) which shall have become due otherwise than by acceleration (with interest upon such principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest, at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of each such series to the date of such payment or deposit) and such amount as shall be sufficient to cover all amounts owing the Trustee under Section 7.7, and if any and all Events of Default under the Indenture, other than the non-payment of the principal of Securities that shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein, then, and in each and every such case, the Holders of a majority in aggregate principal amount of all the then outstanding Securities of all such series that have been accelerated (voting as a single class), by written notice to the Company and to the Trustee, may waive all defaults with respect to all such series (or with respect to all the Securities, as the case may be) and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon.
For all purposes under this Indenture, if a portion of the principal of any Original Issue Discount Securities shall have been accelerated and declared due and payable pursuant to the provisions hereof, then, from and after such declaration, unless such declaration has been rescinded and annulled, the principal amount of such Original Issue Discount Securities shall be deemed, for all purposes hereunder, to be such portion of the principal thereof as shall be due and payable as a result of such acceleration, and payment of such portion of the principal thereof as shall be due and payable as a result of such acceleration, together with interest, if any, thereon and all other amounts owing thereunder, shall constitute payment in full of such Original Issue Discount Securities.
Section 6.3 Other Remedies. If a payment default or an Event of Default with respect to the Securities of any series occurs and is continuing, the Trustee may pursue, in its own name or as trustee of an express trust, any available remedy by proceeding at law or in equity to collect the payment of principal of and interest on the Securities of such series or to enforce the performance of any provision of the Securities of such series or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding.
Section 6.4 Waiver Of Past Defaults. Subject to Sections 6.2, 6.7 and 9.2, the Holders of at least a majority in principal amount (or, if the Securities are Original Issue Discount Securities, such portion of the principal as is then accelerable under Section 6.2) of the outstanding Securities of all series affected (voting as a single class), by notice to the Trustee, may waive, on behalf of the Holders of all the Securities of such series, an existing Default or Event of Default with respect to the Securities of such series and its consequences, except a Default in the payment of Principal of or interest on any Security as specified in clause (a) or (b) of Section 6.1 or in respect of a covenant or provision of this Indenture which cannot be modified or amended without the consent of the Holder of each outstanding Security affected. Upon any such waiver, such Default shall cease to exist, and any Event of Default with respect to the Securities of such series arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto.
Section 6.5 Control By Majority. Subject to Sections 7.1 and 7.2(v), the Holders of at least a majority in aggregate principal amount (or, if any Securities are Original Issue Discount Securities, such portion of the principal as is then accelerable under Section 6.2) of the outstanding Securities of all series affected (voting as a single class) may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Securities of such series by this Indenture; provided that the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that may involve the Trustee in personal liability or that the Trustee determines in good faith may be unduly prejudicial to the rights of Holders not joining in the giving of such direction; and provided further that the Trustee may take any other action it deems proper that is not inconsistent with any directions received from Holders of Securities pursuant to this Section 6.5.
Section 6.6 Limitation On Suits. No Holder of any Security of any series may institute any proceeding, judicial or otherwise, with respect to this Indenture or the Securities of such series, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(a) such Holder has previously given to the Trustee written notice of a continuing Event of Default with respect to the Securities of such series;
(b) the Holders of at least 25% in aggregate principal amount of outstanding Securities of all such series affected shall have made a written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee indemnity reasonably satisfactory to the Trustee against any costs, liabilities or expenses to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and
(e) during such 60 day period, the Holders of a majority in aggregate principal amount of the outstanding Securities of all such affected series have not given the Trustee a direction that is inconsistent with such written request.
A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over such other Holder.
Section 6.7 Rights Of Holders To Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Security to receive payment of Principal of or interest, if any, on such Holder's Security on or after the respective due dates expressed on such Security, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.
Section 6.8 Collection Suit By Trustee. If an Event of Default with respect to the Securities of any series in payment of Principal or interest specified in clause (a) or (b) of Section 6.1 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount (or such portion thereof as specified in the terms established pursuant to Section 2.3 of Original Issue Discount Securities) of Principal of, and accrued interest remaining unpaid on, together with interest on overdue Principal of, and, to the extent that payment of such interest is lawful, interest on overdue installments of interest on, the Securities of such series, in each case at the rate or Yield to Maturity (in the case of Original Issue Discount Securities) specified in such Securities, and such further amount as shall be sufficient to cover all amounts owing the Trustee under Section 7.7.
Section 6.9 Trustee May File Proofs Of Claim. In the case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for amounts due the Trustee under Section 7.7) and the Holders allowed in any judicial proceedings relative to the Company (or any other obligor on the Securities), its creditors or its property and shall be entitled and empowered to collect and receive any moneys, securities or other property payable or deliverable upon conversion or exchange of the Securities or upon any such claims and to distribute the same, and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it under Section 7.7. Nothing herein contained shall be deemed to empower the Trustee to authorize or consent to, or accept or adopt on behalf of any Holder, any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10 Application Of Proceeds. Any moneys collected by the Trustee pursuant to this Article in respect of the Securities of any series shall be applied in the following order at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of Principal or interest, upon presentation of the several Securities and coupons appertaining to such Securities in respect of which moneys have been collected and noting thereon the payment, or issuing Securities of such series and tenor in reduced principal amounts in exchange for the presented Securities of such series and tenor if only partially paid, or upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 7.7 applicable to the Securities of such series in respect of which moneys have been collected;
SECOND: In case the principal of the Securities of such series in respect of which moneys have been collected shall not have become and be then due and payable, to the payment of interest on the Securities of such series in default in the order of the maturity of the installments of such interest, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in such Securities, such payments to be made ratably to the persons entitled thereto, without discrimination or preference;
THIRD: In case the principal of the Securities of such series in respect of which moneys have been collected shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all the Securities of such series for Principal and interest, with interest upon the overdue Principal, and (to the extent that such interest has been collected by the Trustee) upon overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Securities of such series, then to the payment of such Principal and interest or Yield to Maturity, without preference or priority of Principal over interest or Yield to Maturity, or of interest or Yield to Maturity over Principal, or of any installment of interest over any other installment of interest, or of any Security of such series over any other Security of such series, ratably to the aggregate of such Principal and accrued and unpaid interest or Yield to Maturity; and
FOURTH: To the payment of the remainder, if any, to the Company or any other person lawfully entitled thereto.
Section 6.11 Restoration Of Rights And Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then, and in each and every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored to their former positions hereunder and thereafter all rights and remedies of the Company, Trustee and the Holders shall continue as though no such proceeding had been instituted.
Section 6.12 Undertaking For Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, in either case in respect to the Securities of any series, a court may require any party litigant in such suit (other than the Trustee) to file an undertaking to pay the costs of the suit, and the court may assess reasonable costs, including reasonable attorneys' fees, against any party litigant (other than the Trustee) in the suit having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.12 does not apply to a suit by a Holder pursuant to Section 6.7 or a suit by Holders of more than 10% in aggregate principal amount of the outstanding Securities of such series.
Section 6.13 Rights And Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or wrongfully taken Securities in Section 2.8, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
Section 6.14 Delay Or Omission Not Waiver. No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article 6 or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
ARTICLE 7
TRUSTEE
Section 7.1 General. The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act and as set forth herein. Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, unless it receives indemnity satisfactory to it against any loss, liability or expense. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Article 7.
Section 7.2 Certain Rights Of Trustee. Subject to Trust Indenture Act Sections 315(a) through (d):
(a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, Officers' Certificate, Opinion of Counsel (or both), statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper person or persons. The Trustee need not investigate any fact or matter stated in the document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit;
(b) before the Trustee acts or refrains from acting, it may require an Officers' Certificate and/or an Opinion of Counsel, which shall conform to Section 10.4. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion. Subject to Sections 7.1 and 7.2, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee, and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof;
(c) the Trustee may act through its attorneys and agents not regularly in its employ and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care by it hereunder;
(d) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officers' Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any Board Resolution may be evidenced to the Trustee by a copy thereof certified by the Secretary or an Assistant Secretary of the Company;
(e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction;
(f) the Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within its rights or powers or for any action it takes or omits to take in accordance with the direction of the Holders in accordance with Section 6.5 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture;
(g) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; and
(h) prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all Events of Default, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, Officers' Certificate, Opinion of Counsel, Board Resolution, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine, during normal business hours and upon prior written notice, books, records and premises of the Company, personally or by agent or attorney.
Section 7.3 Individual Rights Of Trustee. The Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company or its affiliates with the same rights it would have if it were not the Trustee. Any Agent may do the same with like rights. However, the Trustee is subject to Trust Indenture Act Sections 310(b) and 311. For purposes of Trust Indenture Act Section 311(b)(4) and (6), the following terms shall mean:
(a) "Cash Transaction" means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; and
(b) "Self-Liquidating Paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and that is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation.
Section 7.4 Trustee's Disclaimer. The recitals contained
herein and in the Securities (except the Trustee's certificate of
authentication) shall be taken as statements of the Company and not
of the Trustee and the Trustee assumes no responsibility for the
correctness of the same. Neither the Trustee nor any of its agents
(i) makes any representation as to the validity or adequacy of this
Indenture or the Securities and (ii) shall be accountable for the
Company's use or application of the proceeds from the Securities.
Section 7.5 Notice Of Default. If any Default with respect to the Securities of any series occurs and is continuing and if such Default is known to the actual knowledge of a Responsible Officer with the Corporate Trust Department of the Trustee, the Trustee shall give to each Holder of Securities of such series notice of such Default within 90 days after it occurs (i) if any Unregistered Securities of such series are then outstanding, to the Holders thereof, by publication at least once in an Authorized Newspaper in the Borough of Manhattan, The City of New York and at least once in an Authorized Newspaper in London and (ii) to all Holders of Securities of such series in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, unless such Default shall have been cured or waived before the mailing or publication of such notice; provided, however, that, except in the case of a Default in the payment of the Principal of or interest on any Security, the Trustee shall be protected in withholding such notice if the Trustee in good faith determines that the withholding of such notice is in the interests of the Holders.
Section 7.6 Reports By Trustee To Holders. Within 60 days after each May 15, beginning with May 15, 1997, the Trustee shall mail to each Holder as and to the extent provided in Trust Indenture Act Section 313(c) a brief report dated as of such May 15, if required by Trust Indenture Act Section 313(a).
Section 7.7 Compensation And Indemnity. The Company shall pay to the Trustee such compensation as shall be agreed upon in writing from time to time for its services. The compensation of the Trustee shall not be limited by any law on compensation of a Trustee of an express trust. The Company agrees to pay or reimburse the Trustee and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture and the Securities or the issuance of the Securities or any series thereof (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ) except to the extent any such expense, disbursement or advance may arise from its negligence or bad faith. The Company shall indemnify the Trustee and each predecessor Trustee for, and to hold it harmless against, any loss, liability or expense arising out of or in connection with the acceptance or administration of this Indenture and the Securities or the issuance of the Securities or any series thereof or the trusts hereunder and the performance of its duties hereunder, including the costs and expenses of defending itself against or investigating any claim of liability in the premises, except to the extent such loss, liability or expense is due to the negligence or bad faith of the Trustee or such predecessor Trustee. The Trustee shall notify the Company promptly of any claim asserted against the Trustee for which it may seek indemnity. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel; provided that the Company will not be required to pay such fees and expenses if it assumes the Trustee's defense and there is no conflict of interest between the Company and the Trustee in connection with such defense. The Company need not pay for any settlement made without its written consent. The Company need not reimburse any expense or indemnify against any loss or liability to the extent incurred by the Trustee through its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this
Section 7.7, the Trustee shall have a lien prior to the Securities
on all money or property held or collected by the Trustee, in its
capacity as Trustee, except money or property held in trust to pay
Principal of, and interest on particular Securities.
The obligations of the Company under this Section to compensate and indemnify the Trustee and each predecessor Trustee and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture or the rejection or termination of this Indenture under bankruptcy law. Such additional indebtedness shall be a senior claim to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Securities or coupons, and the Securities are hereby subordinated to such senior claim. If the Trustee renders services and incurs expenses following an Event of Default under Section 6.1(d) or Section 6.1(e), the parties hereto and the Holders by their acceptance of the Securities hereby agree that such expenses are intended to constitute expenses of administration under any bankruptcy law.
Section 7.8 Replacement Of Trustee. A resignation or removal of the Trustee as Trustee with respect to the Securities of any series and appointment of a successor Trustee as Trustee with respect to the Securities of any series shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 7.8.
The Trustee may resign as Trustee with respect to the Securities of any series at any time by so notifying the Company in writing. The Holders of a majority in aggregate principal amount of the outstanding Securities of any series may remove the Trustee as Trustee with respect to the Securities of such series by so notifying the Trustee and the Company in writing and may appoint a successor Trustee with respect thereto with the consent of the Company. The Company may remove the Trustee as Trustee with respect to the Securities of any series if: (a) the Trustee is no longer eligible under Section 7.10 of this Indenture; (b) the Trustee is adjudged a bankrupt or insolvent; (c) a receiver or other public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed as Trustee with respect to the Securities of any series, or if a vacancy exists in the office of Trustee with respect to the Securities of any series for any reason, the Company shall promptly appoint a successor Trustee with respect thereto. Within one year after the successor Trustee takes office, the Holders of a majority in aggregate principal amount of the outstanding Securities of such series may appoint a successor Trustee in respect of such Securities to replace the successor Trustee appointed by the Company. If the successor Trustee with respect to the Securities of any series does not deliver its written acceptance required by the next succeeding paragraph of this Section 7.8 within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of a majority in aggregate principal amount of the outstanding Securities of such series may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect thereto.
A successor Trustee with respect to the Securities of any
series shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Company. Immediately after the delivery
of such written acceptance, subject to the lien provided for in
Section 7.7, (a) the retiring Trustee shall transfer all property
held by it as Trustee in respect of the Securities of such series to
the successor Trustee, (b) the resignation or removal of the
retiring Trustee in respect of the Securities of such series shall
become effective and (c) the successor Trustee shall have all the
rights, powers and duties of the Trustee in respect of the
Securities of such series under this Indenture. A successor Trustee
shall mail notice of its succession to each Holder of Securities of
such series.
Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in the preceding paragraph.
The Company shall give notice of any resignation and any removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee in respect of the Securities of such series to all Holders of Securities of such series. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office.
Notwithstanding replacement of the Trustee with respect to the Securities of any series pursuant to this Section 7.8, the Company's obligations under Section 7.7 shall continue for the benefit of the retiring Trustee.
Section 7.9 Successor Trustee By Merger, Etc. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation or national banking association, the resulting, surviving or transferee corporation or national banking association without any further act shall be the successor Trustee with the same effect as if the successor Trustee had been named as the Trustee herein.
Section 7.10 Eligibility. This Indenture shall always
have a Trustee who satisfies the requirements of Trust Indenture Act
Section 310(a). The Trustee shall have a combined capital and
surplus of at least $10,000,000 as set forth in its most recent
published annual report of condition, if any. The Trustee shall
comply with Trust Indenture Act Section 310(b). If at any time the
Trustee with respect to the Securities of any series shall cease to
be eligible in accordance with the provisions of this Section, it
shall resign immediately within the manner and with the effect
hereinafter specified in this Article.
Section 7.11 Money Held In Trust. The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law and except for money held in trust under Article 8 of this Indenture.
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.1 Defeasance Within One Year Of Payment. Except as otherwise provided in this Section 8.1, the Company may terminate its obligations under the Securities of any series and this Indenture with respect to Securities of such series if:
(a) all Securities of such series previously
authenticated and delivered (other than destroyed, lost or
wrongfully taken Securities of such series that have been
replaced or Securities of such series that are paid pursuant to
Section 4.1 or Securities of such series for whose payment
money or securities have theretofore been held in trust and
thereafter repaid to the Company, as provided in Section 8.5)
have been delivered to the Trustee for cancellation and the
Company has paid all sums payable by it hereunder; or
(b) (i) the Securities of such series mature within one year or all of them are to be called for redemption within one year under arrangements satisfactory to the Trustee for giving the notice of redemption, (ii) the Company irrevocably deposits in trust with the Trustee, as trust funds solely for the benefit of the Holders of such Securities for that purpose, money or U.S. Government Obligations or a combination thereof sufficient (unless such funds consist solely of money, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee), without consideration of any reinvestment, to pay Principal of and interest on the Securities of such series to maturity or redemption, as the case may be, and to pay all other sums payable by it hereunder, and (iii) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, in each case stating that all conditions precedent provided for herein relating to the satisfaction and discharge of this Indenture with respect to the Securities of such series have been complied with.
With respect to the foregoing clause (a), only the Company's obligations under Sections 7.7 and 8.5 in respect of the Securities of such series shall survive. With respect to the foregoing clause (b), only the Company's obligations in Sections 2.2 through 2.12, 4.2, 7.7, 7.8 and 8.5 in respect of the Securities of such series shall survive until such Securities of such series are no longer outstanding. Thereafter, only the Company's obligations in Sections 7.7 and 8.5 in respect of the Securities of such series shall survive. After any such irrevocable deposit, the Trustee shall acknowledge in writing the discharge of the Company's obligations under the Securities of such series and this Indenture with respect to the Securities of such series except for those surviving obligations specified above.
Section 8.2 Defeasance. Except as provided below, the Company will be deemed to have paid and will be discharged from any and all obligations in respect of the Securities of any series and the provisions of this Indenture will no longer be in effect with respect to the Securities of such series (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same); provided that the following conditions shall have been satisfied:
(a) the Company has irrevocably deposited in trust with the Trustee as trust funds solely for the benefit of the Holders of the Securities of such series, for payment of the Principal of and interest on the Securities of such series, money or U.S. Government Obligations or a combination thereof sufficient (unless such funds consist solely of money, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee) without consideration of any reinvestment and after payment of all federal, state and local taxes or other charges and assessments in respect thereof payable by the Trustee, to pay and discharge the Principal of and accrued interest on the outstanding Securities of such series to maturity or earlier redemption (irrevocable provided for under arrangements satisfactory to the Trustee), as the case may be;
(b) such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound;
(c) no Default with respect to the Securities of such series shall have occurred and be continuing on the date of such deposit;
(d) the Company shall have delivered to the Trustee (1)
either (x) a ruling directed to the Trustee received from the
United States Internal Revenue Service to the effect that the
Holders of the Securities of such series will not recognize
income, gain or loss for federal income tax purposes as a
result of the Company's exercise of its option under this
Section 8.2 and will be subject to federal income tax on the
same amount and in the same manner and at the same times as
would have been the case if such deposit and defeasance had not
occurred, (y) an Opinion of Counsel to the same effect as the
ruling described in clause (x) above and based upon a change in
law, or (z) an instrument, in form reasonably satisfactory to
the Trustee, wherein the Company, notwithstanding the payment
and discharge, pursuant to this Section 8.2, of its
indebtedness in respect of Securities of any series, or any
portion of the principal amount thereof, shall assume the
obligation (which shall be absolute and unconditional) to
irrevocably deposit with the Trustee such additional sums of
money, if any, or additional U.S. Government Obligations
(meeting the requirements of this Article 8), if any, or any
combination thereof, at such time or times, as shall be
necessary, together with the money and/or U.S. Government
Obligations theretofore so deposited, to pay when due the
Principal of and premium, if any, and interest due and to
become due on such Securities or portions thereof; provided,
however, that such instrument may state that the obligation of
the Company to make additional deposits as aforesaid shall be
subject to the delivery to the Company by the Trustee of a
notice asserting the deficiency accompanied by an opinion of an
independent public accountant of nationally recognized
standing, selected by the Trustee, showing the calculation
thereof, and (2) an Opinion of Counsel to the effect that the
Holders of the Securities of such series have a valid security
interest in the trust funds subject to no prior liens under the
UCC; and
(e) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, in each case stating that all conditions precedent provided for herein relating to the defeasance contemplated by this Section 8.2 of the Securities of such series have been complied with.
The Company's obligations in Sections 2.2 through 2.12, 4.2, 7.7, 7.8 and 8.5 with respect to the Securities of such series shall survive until such Securities are no longer outstanding. Thereafter, only the Company's obligations in Sections 7.7 and 8.5 shall survive.
Section 8.3 Covenant Defeasance. The Company may omit to
comply with any term, provision or condition set forth in Sections
4.3 or 4.4 (or any other specific covenant relating to such series
provided for in a Board Resolution or supplemental indenture, or
Officer's Certificate pursuant to such Board Resolution or such
supplemental indenture, pursuant to Section 2.3 that may by its
terms be defeased pursuant to this Section 8.3), and such omission
shall be deemed not to be an Event of Default under clauses (c) or
(f) of Section 6.1, with respect to the outstanding Securities of a
series if:
(a) the Company has irrevocably deposited in trust with the Trustee as trust funds solely for the benefit of the Holders of the Securities of such series, for payment of the Principal of and interest, if any, on the Securities of such series, money or U.S. Government Obligations or a combination thereof in an amount sufficient (unless such funds consist solely of money, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee) without consideration of any reinvestment and after payment of all federal, state and local taxes or other charges and assessments in respect thereof payable by the Trustee, to pay and discharge the Principal of and accrued interest on the outstanding Securities of such series to maturity or earlier redemption (irrevocably provided for under arrangements satisfactory to the Trustee), as the case may be;
(b) such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound;
(c) no Default with respect to the Securities of such series shall have occurred and be continuing on the date of such deposit;
(d) the Company has delivered to the Trustee an Opinion of Counsel to the effect that the Holders of the Securities of such series have a valid security interest in the trust funds subject to no prior liens under the UCC; and
(e) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, in each case stating that all conditions precedent provided for herein relating to the covenant defeasance contemplated by this Section 8.3 of the Securities of such series have been complied with.
Section 8.4 Application Of Trust Money. Subject to
Section 8.5, the Trustee or Paying Agent shall hold in trust money
or U.S. Government Obligations deposited with it pursuant to Section
8.1, 8.2 or 8.3, as the case may be, in respect of the Securities of
any series and shall apply the deposited money and the proceeds from
deposited U.S. Government Obligations in accordance with the
Securities of such series and this Indenture to the payment of
Principal of and interest on the Securities of such series; but such
money need not be segregated from other funds except to the extent
required by law. The Company shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against
the U.S. Government Obligations deposited pursuant to Section 8.1,
8.2 or 8.3, as the case may be, or the Principal and interest
received in respect thereof, other than any such tax, fee or other
charge that by law is for the account of the Holders.
Section 8.5 Repayment To Company. Subject to Sections 7.7, 8.1, 8.2 and 8.3, the Trustee and the Paying Agent shall promptly pay to the Company upon request set forth in an Officers' Certificate any money held by them at any time and not required to make payments hereunder and thereupon shall be relieved from all liability with respect to such money. The Trustee and the Paying Agent shall pay to the Company upon written request any money held by them and required to make payments hereunder under this Indenture that remains unclaimed for two years; provided that the Trustee or such Paying Agent before being required to make any payment may cause to be published at the expense of the Company once in an Authorized Newspaper in The City of New York or with respect to any Security the interest on which is based on the offered quotations in the interbank Eurodollar market for dollar deposits in an Authorized Newspaper in London or mail to each Holder entitled to such money at such Holder's address (as set forth in the Security Register) notice that such money remains unclaimed and that after a date specified therein (which shall be at least 30 days from the date of such publication or mailing) any unclaimed balance of such money then remaining will be repaid to the Company. After payment to the Company, Holders entitled to such money must look to the Company for payment as general creditors unless an applicable law designates another Person, and all liability of the Trustee and such Paying Agent with respect to such money shall cease.
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Without Consent Of Holders. The Company and the Trustee may amend or supplement this Indenture or the Securities of any series without notice to or the consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency in this Indenture; provided that such amendments or supplements shall not materially and adversely affect the interests of the Holders;
(b) to comply with Article 5;
(c) to comply with any requirements of the Commission in connection with the qualification of this Indenture under the Trust Indenture Act;
(d) to evidence and provide for the acceptance of appointment hereunder with respect to the Securities of any or all series by a successor Trustee;
(e) to establish the form or forms or terms of Securities of any series or of the coupons appertaining to such Securities as permitted by Section 2.3;
(f) to provide for uncertificated or Unregistered Securities and to make all appropriate changes for such purpose;
(g) to change or eliminate any provisions of this Indenture with respect to all or any series of the Securities not then outstanding (and, if such change is applicable to fewer than all such series of the Securities, specifying the series to which such change is applicable), and to specify the rights and remedies of the Trustee and the holders of such Securities in connection therewith; and
(h) to make any change that does not materially and adversely affect the rights of any Holder.
Section 9.2 With Consent Of Holders. Subject to Sections 6.4 and 6.7, without prior notice to any Holders, the Company and the Trustee may amend this Indenture and the Securities of any series with the written consent of the Holders of a majority in aggregate principal amount of the outstanding Securities of all series affected by such supplemental indenture (all such series voting as one class), and the Holders of a majority in aggregate principal amount of the outstanding Securities of all series affected thereby (all such series voting as one class) by written notice to the Trustee may waive future compliance by the Company with any provision of this Indenture or the Securities of such series.
Notwithstanding the provisions of this Section 9.2, without the consent of each Holder affected thereby, an amendment or waiver, including a waiver pursuant to Section 6.4, may not:
(a) extend the stated maturity of the Principal of, or any sinking fund obligation or any installment of interest on, such Holder's Security, or reduce the Principal amount thereof or the rate of interest thereon (including any amount in respect of original issue discount), or any premium payable with respect thereto, or adversely affect the rights of such Holder under any mandatory redemption or repurchase provision or any right of redemption or repurchase at the option of such Holder, or reduce the amount of the Principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity thereof pursuant to Section 6.2 or the amount thereof provable in bankruptcy, or change any place of payment where, or the currency in which, any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the due date therefor;
(b) reduce the percentage in principal amount of outstanding Securities of the relevant series the consent of whose Holders is required for any such supplemental indenture, for any waiver of compliance with certain provisions of this Indenture or certain Defaults and their consequences provided for in this Indenture;
(c) waive a Default in the payment of Principal of or interest on any Security of such Holder; or
(d) modify any of the provisions of this Section 9.2, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each outstanding Security affected thereby.
A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of Holders of Securities of such series with respect to such covenant or provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series or of the coupons appertaining to such Securities.
It shall not be necessary for the consent of any Holder under this Section 9.2 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this
Section 9.2 becomes effective, the Company or, at the Company's
request, the Trustee shall give to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. The
Company or, at the Company's request, the Trustee will mail
supplemental indentures to Holders upon request. Any failure of the
Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such
supplemental indenture or waiver.
Section 9.3 Revocation And Effect Of Consent. Until an amendment or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the Security of the consenting Holder, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to its Security or portion of its Security. Such revocation shall be effective only if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective.
The Company may, but shall not be obligated to, fix a record date (which may be not less than 10 nor more than 60 days prior to the solicitation of consents) for the purpose of determining the Holders of the Securities of any series affected entitled to consent to any amendment, supplement or waiver. If a record date is fixed, then, notwithstanding the immediately preceding paragraph, those Persons who were such Holders at such record date (or their duly designated proxies) and only those Persons shall be entitled to consent to such amendment, supplement or waiver or to revoke any consent previously given, whether or not such Persons continue to be such Holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective with respect to the Securities of any series affected thereby, it shall bind every Holder of such Securities theretofore or thereafter authenticated and delivered hereunder unless it is of the type described in any of clauses (a) through (d) of Section 9.2. In case of an amendment or waiver of the type described in clauses (a) through (d) of Section 9.2, the amendment or waiver shall bind each such Holder who has consented to it and every subsequent Holder of a Security that evidences the same indebtedness as the Security of the consenting Holder.
Section 9.4 Notation On Or Exchange Of Securities. If an amendment, supplement or waiver changes the terms of any Security, the Trustee may require the Holder thereof to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security about the changed terms and return it to the Holder and the Trustee may place an appropriate notation on any Security of such series thereafter authenticated. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security of the same series and tenor that reflects the changed terms.
Section 9.5 Trustee To Sign Amendments, Etc. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of an amendment, supplement or waiver authorized pursuant to this Article 9 is authorized or permitted by this Indenture, stating that all requisite consents have been obtained or that no consents are required and stating that such supplemental indenture constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to customary exceptions. Subject to the preceding sentence, the Trustee shall sign such amendment, supplement or waiver if the same does not adversely affect the rights of the Trustee. The Trustee may, but shall not be obligated to, execute any such amendment, supplement or waiver that affects the Trustee's own rights, duties or immunities under this Indenture or otherwise.
Section 9.6 Conformity With Trust Indenture Act. Every supplemental indenture executed pursuant to this Article 9 shall conform to the requirements of the Trust Indenture Act as then in effect.
ARTICLE 10
MISCELLANEOUS
Section 10.1 Trust Indenture Act Of 1939. This Indenture shall incorporate and be governed by the provisions of the Trust Indenture Act that are required to be part of and to govern indentures qualified under the Trust Indenture Act. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by operation of Section 318(c) of the Trust Indenture Act, the imposed duties shall control.
Section 10.2 Notices. Any notice or communication shall be sufficiently given if written and (a) if delivered in person when received or (b) if mailed by first class mail 5 days after mailing, or (c) as between the Company and the Trustee if sent by facsimile transmission, when transmission is confirmed, in each case addressed as follows:
If to the Company:
Arrow Electronics, Inc.
25 Hub Drive
Melville, New York 11747
Telecopy: (516) 391-1683 Attention: Robert E. Klatell
If to the Trustee:
Bank of Montreal Trust Company
77 Water Street
New York, New York
Telecopy: (212) 701-7684
Attention: Therese Gaballah
The Company or the Trustee by written notice to the other may designate additional or different addresses for subsequent notices or communications.
Any notice or communication shall be sufficiently given to Holders of any Unregistered Securities, by publication at least once in an Authorized Newspaper in The City of New York, or with respect to any Security the interest on which is based on the offered quotations in the interbank Eurodollar market for dollar deposits at least once in an Authorized Newspaper in London, and by mailing to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act at such addresses as were so furnished to the Trustee (and in the case of an notice given by the Company, the Trustee shall make such information available to the Company for such purpose) and to Holders of Registered Securities by mailing to such Holders at their addresses as they shall appear on the Security Register. Notice mailed shall be sufficiently given if so mailed within the time prescribed. Copies of any such communication or notice to a Holder shall also be mailed to the Trustee and each Agent at the same time.
Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to
other Holders. Except as otherwise provided in this Indenture, if a
notice or communication is mailed in the manner provided in this
Section 10.2, it is duly given, whether or not the addressee
receives it.
Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
In case it shall be impracticable to give notice as herein contemplated, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.
Section 10.3 Certificate And Opinion As To Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent, if any, have been complied with.
Section 10.4 Statements Required In Certificate Or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:
(a) a statement that each person signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the examination or investigation upon which the statement or opinion contained in such certificate or opinion is based;
(c) a statement that, in the opinion of each such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of each such person, such condition or covenant has been complied with; provided, however, that, with respect to matters of fact, an Opinion of Counsel may rely on an Officers' Certificate or certificates of public officials.
In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
Any certificate, statement or opinion of an officer of the
Company may be based, insofar as it relates to legal matters, upon a
certificate or opinion of or representations by counsel, unless such
officer knows that the certificate or opinion or representations
with respect to the matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise
o reasonable care should know that the same are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar
as it relates to factual matters or information that is in the
possession of the Company, upon the certificate, statement or
opinion of or representations by an officer or officers of the
Company, unless such counsel knows that the certificate, statement
or opinion or representations with respect to the matters upon which
his certificate, statement or opinion may be base as aforesaid are
erroneous, or in the exercise of reasonable care should know that
the same are erroneous.
Any certificate, statement or opinion of an officer of the Company or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate or opinion of any independent firm of public accountants filed with the Trustee shall contain a statement that such firm is independent.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
Section 10.5 Evidence Of Ownership. The Company, the Trustee and any agent of the Company or the Trustee may deem and treat the Holder of any Unregistered Security and the Holder of any coupon as the absolute owner of such Unregistered Security or coupon (whether or not such Unregistered Security or coupon shall be overdue) for the purpose of receiving payment thereof or on account thereof and for all other purposes, and neither the Company, the Trustee, nor any agent of the Company or the Trustee shall be affected by any notice to the contrary. The fact of the holding by any Holder of an Unregistered Security, and the identifying number of such Security and the date of his holding the same, may be proved by the production of such Security or by a certificate executed by any trust company, bank, banker or recognized securities dealer wherever situated satisfactory to the Trustee, if such certificate shall be deemed by the Trustee to be satisfactory. Each such certificate shall be dated and shall state that on the date thereof a Security bearing a specified identifying number was deposited with or exhibited to such trust company, bank, banker or recognized securities dealer by the person named in such certificate. Any such certificate may be issued in respect of one or more Unregistered Securities specified therein. The holding by the person named in any such certificate of any Unregistered Securities specified therein shall be presumed to continue for a period of one year from the date of such certificate unless at the time of any determination of such holding (1) another certificate bearing a later date issued in respect of the same Securities shall be produced or (2) the Security specified in such certificate shall be produced by some other Person, or (3) the Security specified in such certificate shall have ceased to be outstanding. Subject to Article 7, the fact and date of the execution of any such instrument and the amount and numbers of Securities held by the Person so executing such instrument may also be proven in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in any other manner which the Trustee may deem sufficient.
The Company, the Trustee and any agent of the Company or the Trustee may deem and treat the person in whose name any Registered Security shall be registered upon the Security Register for such series as the absolute owner of such Registered Security (whether or not such Registered Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the Principal of and, subject to the provisions of this Indenture, interest on such Registered Security and for all other purposes; and neither the Company nor the Trustee nor any agent of the Company or the Trustee shall be affected by any notice to the contrary.
Section 10.6 Rules By Trustee, Paying Agent Or Registrar. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Paying Agent or Registrar may make reasonable rules for its functions.
Section 10.7 Payment Date Other Than A Business Day. If any date for payment of Principal or interest on any Security shall not be a Business Day at any place of payment, then payment of Principal of or interest on such Security, as the case may be, need not be made on such date, but may be made on the next succeeding Business Day at any place of payment with the same force and effect as if made on such date and no interest shall accrue in respect of such payment for the period from and after such date.
Section 10.8 Governing Law. The rights and duties of the parties under this Indenture shall, pursuant to New York General Obligations Law Section 5-1401, be governed by the law of the State of New York.
Section 10.9 No Adverse Interpretation Of Other Agreements. This Indenture may not be used to interpret another indenture or loan or debt agreement of the Company or any Subsidiary of the Company. Any such indenture or agreement may not be used to interpret this Indenture.
Section 10.10 Successors. All agreements of the Company in this Indenture and the Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors.
Section 10.11 Duplicate Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.
Section 10.12 Separability. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 10.13 Table Of Contents, Headings, Etc. The Table of Contents and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms and provisions hereof.
Section 10.14 Incorporators, Shareholders, Officers And Directors Of Company Exempt From Individual Liability. No recourse under or upon any obligation, covenant or agreement contained in this Indenture or any indenture supplemental hereto, or in any Security or any coupons appertaining thereto, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such, or against any past, present or future shareholder, officer, director or employee, as such, of the Company or of any successor, either directly or through the Company or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Securities and the coupons appertaining thereto by the Holders thereof and as part of the consideration for the issue of the Securities and the coupons appertaining thereto.
Section 10.15 Judgment Currency. The Company agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the Principal of or interest on the Securities of any series (the "Required Currency") into a currency in which a judgment will be rendered (the "Judgment Currency"), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the day on which final unappealable judgment is entered, unless such day is not a Business Day, then, to the extent permitted by applicable law, the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the Business Day preceding the day on which final unappealable judgment is entered and (b) its obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any Judgment (whether or not entered in accordance with subsection (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the date first written above.
(SEAL) ARROW ELECTRONICS, INC.,
ATTEST: as the Company
/s/ Gerald Luterman By: /s/ Robert E. Klatell
- ------------------------- ---------------------------
Name: Gerald Luterman Name: Robert E. Klatell
Title: Senior Vice President and Title: Executive Vice President
Chief Financial Officer and Secretary
(SEAL) BANK OF MONTREAL TRUST COMPANY,
ATTEST: as the Trustee
/s/Frances Rusakowsky By: /s/ Therese Gaballah
Name: Frances Rusakowsky Name: Therese Gaballah
Title: Assistant Secretary Title: Vice President
|
STATE OF __NEW YORK__ )
)
COUNTY OF __NEW YORK__)
BEFORE ME, the undersigned authority, on this __22nd__ day of __January__ 1997, personally appeared __Robert E. Klatell__, of Arrow Electronics, Inc., a New York corporation, known to me (or proved to me by introduction upon the oath of a person known to me) to be the person and officer whose name is subscribed to the foregoing instrument, and acknowledged to me that he/she executed the same as the act of such corporation for the purposes and consideration herein expressed and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL THIS __22nd__ DAY OF
__January__, 1997.
(SEAL)
/s/ Robert W. Phelan ---------------------- NOTARY PUBLIC, STATE OF __New York__ Print Name: Robert W. Phelan Commission Expires: March 25,1998 |
STATE OF__NEW YORK__ )
)
COUNTY OF__NEW YORK__)
BEFORE ME, the undersigned authority, on this __22nd__ day of __January__, 1997, personally appeared _Therese Gaballah__, of Bank of Montreal Trust Company, known to me (or proved to me by introduction upon the oath of a person known to me) to be the person and officer whose name is subscribed to the foregoing instrument, and acknowledged to me that he/she executed the same as the act of such trust for the purposes and consideration herein expressed and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL THIS __22nd__ DAY OF
__January__, 1997.
(SEAL)
/s/ Maureen Radigan --------------------- NOTARY PUBLIC, STATE OF __New York__ Print Name: Maureen Radigan Commission Expires:August 27, 1998 |
4(b)(i) above, dated as of January 22, 1997, with respect to the company's $200,000,000 7% Senior Notes due 2007 and $200,000,000 7-1/2% Senior Debentures due 2027
#20165035.4
ARROW ELECTRONICS, INC.
OFFICER'S CERTIFICATE
Reference is made to the Indenture dated as of January 15, 1997 (the "Indenture") from Arrow Electronics, Inc. (the "Company") to Bank of Montreal Trust Company (the "Trustee"). Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Indenture.
Pursuant to (i) authority granted under those certain
resolutions of the Board of Directors of the Company adopted on
December 13, 1996, and (ii) Section 2.3 of the Indenture, Robert
E. Klatell, Executive Vice President and Secretary, and Gerald
Luterman, Senior Vice President and Chief Financial Officer, of
the Company, respectively, do hereby certify as follows:
1. The Securities of the first series to be issued under the Indenture shall be designated "7% Senior Notes due 2007" (the "2007 Senior Notes");
2. The 2007 Senior Notes shall be limited in aggregate principal amount to $200,000,000 at any time Outstanding;
3. The 2007 Senior Notes shall mature and the principal shall be due and payable together with all accrued and unpaid interest thereon on January 15, 2007;
4. The 2007 Senior Notes shall bear interest from January 15, 1997, at the rate of 7% per annum payable semiannually on January 15 and July 15 of each year (each, a "2007 Interest Payment Date") commencing July 15, 1997. Interest on the 2007 Senior Notes will accrue from January 15, 1997 to the first 2007 Interest Payment Date, and thereafter will accrue from the last 2007 Interest Payment Date to which interest has been paid or duly provided for. No interest will accrue on the 2007 Senior Notes with respect to the day on which the 2007 Senior Notes mature. In the event that any 2007 Interest Payment Date is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of such delay) with the same force and effect as if made on the 2007 Interest Payment Date. Interest on any overdue principal will accrue at the same rate as the interest rate on the 2007 Senior Notes set forth above, but interest will not accrue on overdue installments of interest on the 2007 Senior Notes;
5. Each installment of interest on a 2007 Senior Note shall be payable to the Person in whose name such 2007 Senior Note is registered at the close of business on the December 31 or July 1 next preceding the corresponding 2007 Interest Payment Date for the 2007 Senior Notes;
6. The 2007 Senior Notes are not redeemable prior to maturity;
7. The Securities of the second series to be issued under the Indenture shall be designated "7-1/2% Senior Debentures due 2027" (the "2027 Senior Debentures" and, together with the 2007 Senior Notes, the "Offered Securities");
8. The 2027 Senior Debentures shall be limited in aggregate principal amount to $200,000,000 at any time Outstanding;
9. The 2027 Senior Debentures shall mature and the principal shall be due and payable together with all accrued and unpaid interest thereon on January 15, 2027;
10. The 2027 Senior Debentures shall bear interest from January 15, 1997, at the rate of 7-1/2% per annum payable semiannually on January 15 and July 15 of each year (each, a "2027 Interest Payment Date") commencing July 15, 1997. Interest on the 2027 Senior Debentures will accrue from January 15, 1997 to the first 2027 Interest Payment Date, and thereafter will accrue from the last 2027 Interest Payment Date to which interest has been paid or duly provided for. No interest will accrue on the 2027 Senior Debentures with respect to the day on which the 2027 Senior Debentures mature. In the event that any 2027 Interest Payment Date is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of such delay) with the same force and effect as if made on the 2027 Interest Payment Date. Interest on any overdue principal will accrue at the same rate as the interest rate on the 2027 Senior Debentures set forth above, but interest will not accrue on overdue installments of interest on the 2027 Senior Debentures;
11. Each installment of interest on a 2027 Senior Debenture shall be payable to the Person in whose name such 2027 Senior Debenture is registered at the close of business on the December 31 or July 1 next preceding the corresponding 2027 Interest Payment Date for the 2027 Senior Debentures;
12. The 2027 Senior Debentures are not redeemable prior to maturity;
13. The Offered Securities will be
originally issued in global registered form
payable to Cede & Co, as the nominee of the
Depositary, and will, unless and until Offered
Securities are exchanged in whole or in part for
certificated Offered Securities registered in the
names of the various beneficial holders thereof
(in accordance with the conditions set forth in
the legend appearing in the forms of the Offered
Securities attached hereto as Exhibits A-1 and A-
2), contain restrictions on transfer,
substantially described in such forms. For so
long as the Offered Securities are registered in
the name of Cede & Co., the principal and each
installment of interest due on the Offered
Securities will be payable by the Paying Agent to
the Depositary for payment to its participants for
subsequent disbursement to the beneficial holders
thereof;
14. The Offered Securities shall have such other terms and provisions as are provided in the forms set forth in Exhibits A-1 and A-2 attached hereto and shall be issued in substantially such forms;
15. The forms and terms of the Offered Securities have been established in compliance with the Indenture;
16. The undersigned has read all of the covenants or conditions contained in the Indenture relating to the authentication and delivery of the Offered Securities and the definitions in the Indenture relating thereto;
17. The statements contained in this certificate are based upon the familiarity of the undersigned with the Indenture, the documents accompanying this certificate and upon discussions by the undersigned with officers and employees of the Company familiar with the matters set forth herein;
18. In the opinion of the undersigned, he has made such examination or investigation as is necessary to express an informed opinion as to whether or not such covenants or conditions have been complied with; and
19. In the opinion of the undersigned, such covenants or conditions have been complied with.
IN WITNESS WHEREOF, I have executed this Officer's Certificate this 22nd day of January, 1997.
By: /s/ Robert E. Klatell
---------------------------
Name: Robert E. Klatell
Title: Executive Vice President and
Secretary
By: /s/ Gerald Luterman
---------------------------
Name: Gerald Luterman
Title: Senior Vice President and
Chief Financial Officer
|
Exhibit A-1
CUSIP: 042735AJ9
No. R-1 $200,000,000
Unless and until it is exchanged in whole or in part for Notes in definitive registered form, this Note may not be transferred except as a whole by the Depositary to the nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.
ARROW ELECTRONICS, INC.
7% Senior Note due 2007
ARROW ELECTRONICS, INC., a New York corporation (the "Company", which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to Cede & Co., or registered assigns, at the office or agency of the Company in New York, New York, the principal sum of Two Hundred Million Dollars on January 15, 2007, in the coin or currency of the United States, and to pay interest, semi-annually on January 15 and July 15 of each year, commencing July 15, 1997 on said principal sum at said office or agency, in like coin or currency, at the rate per annum specified in the title of this Note, from the January 15 or the July 15, as the case may be, next preceding the date of this Note to which interest has been paid or duly provided for, unless the date hereof is a date to which interest has been paid or duly provided for, in which case from the date of this Note, or unless no interest has been paid or duly provided for on this Note, in which case from January 15, 1997, until payment of said principal sum has been made or duly provided for; provided, that payment of interest may be made at the option of the Company by check mailed to the address of the person entitled thereto as such address shall appear on the Security Register or by wire transfer as provided in the Indenture. Notwithstanding the foregoing, if the date hereof is after January 15 or July 15, as the case may be, and before the following January 15 or July 15, this Note shall bear interest from such January 15 or July 15; provided, that if the Company shall default in the payment of interest due on such January 15 or July 15, then this Note shall bear interest from the next preceding January 15 or July 15, to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for on this Note, from January 15, 1997. The interest so payable on any January 15 or July 15 will, subject to certain exceptions provided in the Indenture referred to on the reverse hereof, be paid to the person in whose name this Note is registered at the close of business on the December 31 or July 1, as the case may be, next preceding such January 15 or July 15, whether or not such day is a Business Day.
Reference is made to the further provisions of this Note set forth on the reverse hereof. Such further provisions shall for all purposes have the same effect as though fully set forth at this place.
This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by the Trustee under the Indenture referred to on the reverse hereof.
IN WITNESS WHEREOF, ARROW ELECTRONICS, INC., has caused this instrument to be signed manually or by facsimile by its duly authorized officers and has caused a facsimile of its corporate seal to be affixed hereunto or imprinted hereon.
Dated: January 22, 1997
(SEAL) ARROW ELECTRONICS, INC.
By /s/Robert E. Klatell
--------------------
By /s/Gerald Luterman
--------------------
|
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
Dated: January 22, 1997 BANK OF MONTREAL TRUST
COMPANY, as Trustee
By /s/ Theresa Gaballah
--------------------
Authorized Signatory
|
REVERSE OF NOTE
ARROW ELECTRONICS, INC.
7% Senior Note due 2007
This Note is one of a duly authorized issue of debentures, notes, bonds or other evidences of indebtedness of the Company (hereinafter called the "Securities") of the series hereinafter specified, all issued or to be issued under and pursuant to an indenture dated as of January 15, 1997 (herein called the "Indenture"), duly executed and delivered by the Company to Bank of Montreal Trust Company (herein called the "Trustee"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders of the Securities. The Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at different rates, may be subject to different redemption provisions (if any), may be subject to different sinking, purchase or analogous funds (if any) and may otherwise vary as in the Indenture provided. This Note is one of a series designated as the 7% Senior Notes due 2007 of the Company, limited in aggregate principal amount to $200,000,000.
Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal and, to the extent lawful, on overdue installments of interest at the rate per annum borne by this Note. If a payment date is not a Business Day as defined in the Indenture at a place of payment, payment may be made at that place on the next succeeding day that is a Business Day, and no interest shall accrue for the intervening period.
In case an Event of Default with respect to the 7% Senior Notes due 2007 shall have occurred and be continuing, the Principal hereof and the interest accrued hereon, if any, may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions that provide that, without prior notice to any Holders, the Company and the Trustee may amend the Indenture and the Securities of any series with the written consent of the Holders of a majority in aggregate principal amount of the outstanding Securities of all series affected by such supplemental indenture (all such series voting as one class), and the Holders of a majority in aggregate principal amount of the outstanding Securities of all series affected thereby (all such series voting as one class) by written notice to the Trustee may waive future compliance by the Company with any provision of the Indenture or the Securities of such series; provided that, without the consent of each Holder of the Securities of each series affected thereby, an amendment or waiver, including a waiver of past defaults, may not: (i) extend the stated maturity of the Principal of, or any sinking fund obligation or any installment of interest on, such Holder's Security, or reduce the principal amount thereof or the rate of interest thereon (including any amount in respect of original issue discount), or any premium payable with respect thereto, or adversely affect the rights of such Holder under any mandatory redemption or repurchase provision or any right of redemption or repurchase at the option of such Holder, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity or the amount thereof provable in bankruptcy, or change any place of payment where, or the currency in which, any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the due date therefor; (ii) reduce the percentage in principal amount of outstanding Securities of the relevant series the consent of whose Holders is required for any such supplemental indenture or for any waiver of compliance with certain provisions of the Indenture or certain Defaults and their consequences provided for in the Indenture; (iii) waive a Default in the payment of Principal of or interest on any Security of such Holder; or (iv) modify any of the provisions of the Indenture governing supplemental indentures with the consent of Securityholders, except to increase any such percentage or to provide that certain other provisions of the Indenture cannot be modified or waived without the consent of the Holder of each outstanding Security affected thereby.
It is also provided in the Indenture that, subject to certain conditions, the Holders of at least a majority in aggregate principal amount of the outstanding Securities of all series affected (voting as a single class), by notice to the Trustee, may waive an existing Default or Event of Default with respect to the Securities of such series and its consequences, except a Default in the payment of Principal of or interest on any Security or in respect of a covenant or provision of the Indenture that cannot be modified or amended without the consent of the Holder of each outstanding Security affected. Upon any such waiver, such Default shall cease to exist, and any Event of Default with respect to the Securities of such series arising therefrom shall be deemed to have been cured, for every purpose of the Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto.
The Indenture provides that a series of Securities may include one or more tranches (each, a "tranche") of Securities, including Securities issued in a Periodic Offering. The Securities of different tranches may have one or more different terms, including authentication dates and public offering prices, but all the Securities within each such tranche shall have identical terms, including authentication date and public offering price. Notwithstanding any other provision of the Indenture, subject to certain exceptions, with respect to sections of the Indenture concerning the execution, authentication and terms of the Securities, redemption of the Securities, Events of Default of the Securities, defeasance of the Securities and amendment of the Indenture, if any series of Securities includes more than one tranche, all provisions of such sections applicable to any series of Securities shall be deemed equally applicable to each tranche of any series of Securities in the same manner as though originally designated a series unless otherwise provided with respect to such series or tranche pursuant to Section 2.3 of the Indenture establishing such series or tranche.
No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the Principal of and interest on this Note in the manner, at the place, at the respective times, at the rate and in the coin or currency herein prescribed.
The Notes are issuable initially only in registered form without coupons in denominations of $1,000 and any multiple of $1,000 at the office or agency of the Company in the Borough of Manhattan, The City of New York, and in the manner and subject to the limitations provided in the Indenture, but, without the payment of any service charge, Notes may be exchanged for a like aggregate principal amount of Notes of other authorized denominations.
This Note is not redeemable prior to maturity.
Upon due presentment for registration of transfer of this Note at the office or agency of the Company in the Borough of Manhattan, The City of New York, a new Note or Notes of authorized denominations for an equal aggregate principal amount will be issued to the transferee in exchange therefor, subject to the limitations provided in the Indenture, without charge except for any tax or other governmental charge imposed in connection therewith.
The Company, the Trustee and any agent of the Company or the Trustee may deem and treat the registered Holder hereof as the absolute owner of this Note (whether or not this Note shall be overdue and notwithstanding any notation of ownership or other writing hereon), for the purpose of receiving payment of, or on account of, the Principal hereof and, subject to the provisions hereof, interest hereon, and for all other purposes, and neither the Company nor the Trustee nor any agent of the Company or the Trustee shall be affected by any notice to the contrary.
No recourse under or upon any obligation, covenant or agreement of the Company in the Indenture or any indenture supplemental thereto or in any Note, or because of any indebtedness evidenced thereby, shall be had against any incorporator, stockholder, officer, director or employee, as such, past, present, or future, of the Company or of any successor, either directly or through the Company or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance hereof and as part of the consideration for the issue hereof.
Terms used herein which are defined in the Indenture shall have the respective meanings assigned thereto in the Indenture.
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
(PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE)
(PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
ASSIGNEE)
the within Note and all rights thereunder, hereby irrevocably constituting
and appointing, such person attorney to transfer such Note on the books of the
Issuer, with full power of substitution in the premises.
Dated:
NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever.
Exhibit A-2
CUSIP: 042735AK6
No. R-1 $200,000,000
Unless and until it is exchanged in whole or in part for Notes in definitive registered form, this Note may not be transferred except as a whole by the Depositary to the nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.
ARROW ELECTRONICS, INC.
7-1/2% Senior Debenture due 2027
ARROW ELECTRONICS, INC., a New York corporation (the "Company", which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to Cede & Co., or registered assigns, at the office or agency of the Company in New York, New York, the principal sum of Two Hundred Million Dollars on January 15, 2027, in the coin or currency of the United States, and to pay interest, semi-annually on January 15 and July 15 of each year, commencing July 15, 1997 on said principal sum at said office or agency, in like coin or currency, at the rate per annum specified in the title of this Debenture, from the January 15 or the July 15, as the case may be, next preceding the date of this Debenture to which interest has been paid or duly provided for, unless the date hereof is a date to which interest has been paid or duly provided for, in which case from the date of this Debenture, or unless no interest has been paid or duly provided for on this Debenture, in which case from January 15, 1997, until payment of said principal sum has been made or duly provided for; provided, that payment of interest may be made at the option of the Company by check mailed to the address of the person entitled thereto as such address shall appear on the Security Register or by wire transfer as provided in the Indenture. Notwithstanding the foregoing, if the date hereof is after January 15 or July 15, as the case may be, and before the following January 15 or July 15, this Debenture shall bear interest from such January 15 or July 15; provided, that if the Company shall default in the payment of interest due on such January 15 or July 15, then this Debenture shall bear interest from the next preceding January 15 or July 15, to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for on this Debenture, from January 15, 1997. The interest so payable on any January 15 or July 15 will, subject to certain exceptions provided in the Indenture referred to on the reverse hereof, be paid to the person in whose name this Debenture is registered at the close of business on the December 31 or July 1, as the case may be, next preceding such January 15 or July 15, whether or not such day is a Business Day.
Reference is made to the further provisions of this Debenture set forth on the reverse hereof. Such further provisions shall for all purposes have the same effect as though fully set forth at this place.
This Debenture shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by the Trustee under the Indenture referred to on the reverse hereof.
IN WITNESS WHEREOF, ARROW ELECTRONICS, INC., has caused this instrument to be signed manually or by facsimile by its duly authorized officers and has caused a facsimile of its corporate seal to be affixed hereunto or imprinted hereon.
Dated: January 22, 1997
(SEAL) ARROW ELECTRONICS, INC.
By /s/Robert E. Klatell
--------------------
By /s/Gerald Luterman
--------------------
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
Dated: January 22, 1997 BANK OF MONTREAL TRUST
|
COMPANY, as Trustee
By /s/ Theresa Gaballah -------------------- Authorized Signatory |
REVERSE OF DEBENTURE
ARROW ELECTRONICS, INC.
7-1/2% Senior Debenture due 2027
This Debenture is one of a duly authorized issue of debentures, notes, bonds or other evidences of indebtedness of the Company (hereinafter called the "Securities") of the series hereinafter specified, all issued or to be issued under and pursuant to an indenture dated as of January 15, 1997 (herein called the "Indenture"), duly executed and delivered by the Company to Bank of Montreal Trust Company (herein called the "Trustee"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders of the Securities. The Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at different rates, may be subject to different redemption provisions (if any), may be subject to different sinking, purchase or analogous funds (if any) and may otherwise vary as in the Indenture provided. This Debenture is one of a series designated as the 7-1/2% Senior Debentures due 2027 of the Company, limited in aggregate principal amount to $200,000,000.
Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal and, to the extent lawful, on overdue installments of interest at the rate per annum borne by this Debenture. If a payment date is not a Business Day as defined in the Indenture at a place of payment, payment may be made at that place on the next succeeding day that is a Business Day, and no interest shall accrue for the intervening period.
In case an Event of Default with respect to the 7-1/2% Senior Debentures due 2027 shall have occurred and be continuing, the Principal hereof and the interest accrued hereon, if any, may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions that provide that, without prior notice to any Holders, the Company and the Trustee may amend the Indenture and the Securities of any series with the written consent of the Holders of a majority in aggregate principal amount of the outstanding Securities of all series affected by such supplemental indenture (all such series voting as one class), and the Holders of a majority in aggregate principal amount of the outstanding Securities of all series affected thereby (all such series voting as one class) by written notice to the Trustee may waive future compliance by the Company with any provision of the Indenture or the Securities of such series; provided that, without the consent of each Holder of the Securities of each series affected thereby, an amendment or waiver, including a waiver of past defaults, may not: (i) extend the stated maturity of the Principal of, or any sinking fund obligation or any installment of interest on, such Holder's Security, or reduce the principal amount thereof or the rate of interest thereon (including any amount in respect of original issue discount), or any premium payable with respect thereto, or adversely affect the rights of such Holder under any mandatory redemption or repurchase provision or any right of redemption or repurchase at the option of such Holder, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity or the amount thereof provable in bankruptcy, or change any place of payment where, or the currency in which, any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the due date therefor; (ii) reduce the percentage in principal amount of outstanding Securities of the relevant series the consent of whose Holders is required for any such supplemental indenture or for any waiver of compliance with certain provisions of the Indenture or certain Defaults and their consequences provided for in the Indenture; (iii) waive a Default in the payment of Principal of or interest on any Security of such Holder; or (iv) modify any of the provisions of the Indenture governing supplemental indentures with the consent of Securityholders, except to increase any such percentage or to provide that certain other provisions of the Indenture cannot be modified or waived without the consent of the Holder of each outstanding Security affected thereby.
It is also provided in the Indenture that, subject to certain conditions, the Holders of at least a majority in aggregate principal amount of the outstanding Securities of all series affected (voting as a single class), by notice to the Trustee, may waive an existing Default or Event of Default with respect to the Securities of such series and its consequences, except a Default in the payment of Principal of or interest on any Security or in respect of a covenant or provision of the Indenture that cannot be modified or amended without the consent of the Holder of each outstanding Security affected. Upon any such waiver, such Default shall cease to exist, and any Event of Default with respect to the Securities of such series arising therefrom shall be deemed to have been cured, for every purpose of the Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto.
The Indenture provides that a series of Securities may include one or more tranches (each, a "tranche") of Securities, including Securities issued in a Periodic Offering. The Securities of different tranches may have one or more different terms, including authentication dates and public offering prices, but all the Securities within each such tranche shall have identical terms, including authentication date and public offering price. Notwithstanding any other provision of the Indenture, subject to certain exceptions, with respect to sections of the Indenture concerning the execution, authentication and terms of the Securities, redemption of the Securities, Events of Default of the Securities, defeasance of the Securities and amendment of the Indenture, if any series of Securities includes more than one tranche, all provisions of such sections applicable to any series of Securities shall be deemed equally applicable to each tranche of any series of Securities in the same manner as though originally designated a series unless otherwise provided with respect to such series or tranche pursuant to Section 2.3 of the Indenture establishing such series or tranche.
No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the Principal of and interest on this Debenture in the manner, at the place, at the respective times, at the rate and in the coin or currency herein prescribed.
The Debentures are issuable initially only in registered form without coupons in denominations of $1,000 and any multiple of $1,000 at the office or agency of the Company in the Borough of Manhattan, The City of New York, and in the manner and subject to the limitations provided in the Indenture, but, without the payment of any service charge, Debentures may be exchanged for a like aggregate principal amount of Debentures of other authorized denominations.
This Debenture is not redeemable prior to maturity.
Upon due presentment for registration of transfer of this Debenture at the office or agency of the Company in the Borough of Manhattan, The City of New York, a new Debenture or Debentures of authorized denominations for an equal aggregate principal amount will be issued to the transferee in exchange therefor, subject to the limitations provided in the Indenture, without charge except for any tax or other governmental charge imposed in connection therewith.
The Company, the Trustee and any agent of the Company or the Trustee may deem and treat the registered Holder hereof as the absolute owner of this Debenture (whether or not this Debenture shall be overdue and notwithstanding any notation of ownership or other writing hereon), for the purpose of receiving payment of, or on account of, the Principal hereof and, subject to the provisions hereof, interest hereon, and for all other purposes, and neither the Company nor the Trustee nor any agent of the Company or the Trustee shall be affected by any notice to the contrary.
No recourse under or upon any obligation, covenant or agreement of the Company in the Indenture or any indenture supplemental thereto or in any Debenture, or because of any indebtedness evidenced thereby, shall be had against any incorporator, stockholder, officer, director or employee, as such, past, present, or future, of the Company or of any successor, either directly or through the Company or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance hereof and as part of the consideration for the issue hereof.
Terms used herein which are defined in the Indenture shall have the respective meanings assigned thereto in the Indenture.
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
(PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE)
(PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
ASSIGNEE)
Dated:
NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within Debenture in every particular without alteration or enlargement or any change whatsoever.
EMPLOYMENT AGREEMENT made as of the 15th day of April 1996 by and between ARROW ELECTRONICS, INC., a New York corporation with its principal office at 25 Hub Drive, Melville, New York 11747 (the "Company"), and GERALD LUTERMAN, residing at 65 Old Hill Road, Westport, Connecticut 06880 (the "Executive").
WHEREAS, the Company wishes to employ the Executive as a Senior Vice President and its Chief Financial Officer, with the responsibilities and duties of a principal executive officer of the Company; and
WHEREAS, the Executive wishes to accept such employment and to render services to the Company on the terms set forth in, and in accordance with the provisions of, this Employment Agreement (the "Agreement");
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties agree as follows:
1. Employment and Duties.
a) Employment. The Company hereby employs the Executive for the Employment Period defined in Paragraph 3, to perform the duties for the Company, its subsidiaries, and its affiliates and to hold the offices specified from time to time by the Company's Board of Directors, subject to the following provisions of this Agreement. The Executive hereby accepts such employment.
b) Duties and Responsibilities. The Executive will be a Senior Vice President and the Chief Financial Officer of the Company, reporting to the Company's chief executive officer. During the Employment Period, without the consent of the Executive, he shall not be assigned any titles, duties or responsibilities which, in the aggregate, represent a material diminution in, or are materially inconsistent with, his title, duties, and responsibilities as Senior Vice President and Chief Financial Officer. If the Board of Directors does not either continue the Executive in the office of Senior Vice President and Chief Financial Officer or elect him to some other principal executive office satisfactory to the Executive, the Executive shall have the right to decline to give further service to the Company and shall have the rights and obligations which would accrue to him under Paragraph 6 if he were discharged without cause. If the Executive decides to exercise such right to decline to give further service, he shall within forty-five days after receiving written notice of such action or omission by the Board of Directors give written notice to the Company stating his objection and the action he thinks necessary to correct it, and he shall permit the Company to have a forty-five day period in which to correct its action or omission. If the Company makes a correction satisfactory to the Executive, the Executive shall be obligated to continue to serve the Company. If the
Company does not make such a correction, the Executive's rights and obligations under Paragraph 6 shall accrue at the expiration of such forty-five day period.
c) Time Devoted to Duties. The Executive shall devote substantially all of his normal business time and efforts to the business of the Company, its subsidiaries, and its affiliates, the amount of such time to be sufficient, in the reasonable judgment of the Board of Directors, to permit him diligently and faithfully to serve and endeavor to further their interests to the best of his ability.
d) Location of Office. The Company shall not require the Executive to locate his office more than fifty miles from New York, New York, without his prior written consent.
2. Compensation.
a) Monetary Remuneration and Benefits. During the Employment Period, the Company shall pay to the Executive for all services rendered by him in any capacity:
i. a minimum base salary at the rate of $350,000 per year (payable in accordance with the Company's then prevailing practices, but in no event less frequently than in equal monthly installments), subject to increase if the Board of Directors of the Company in its sole discretion so determines;
ii. such additional compensation by way of salary or bonus or fringe benefits as the Board of Directors of the Company in its sole discretion shall authorize or agree to pay, payable on such terms and conditions as it shall determine; and
iii. such employee benefits that are made available by the Company to its other principal executives.
b) Annual Incentive Payment. The Executive shall
participate in the Company's Management Incentive Plan (or such
successor or replacement plan or program in which the Company's
principal executives, other than the Chief Executive Officer,
generally participate) and shall have a targeted incentive
thereunder of not less than $200,000 per annum; provided,
however, that the Executive's actual incentive payment in any
year shall be measured by the Company's performance against
goals established for that year and that such performance may
produce an incentive payment ranging from one-half to twice the
targeted amount. The foregoing notwithstanding, it is
specifically agreed that the Executive's incentive for the
portion of the Employment Period ending December 31, 1996 shall
be $200,000.
c) Supplemental Executive Retirement Plan. The
Executive shall participate in the Company's Unfunded Pension
Plan for Selected Executives, which shall provide him with a
benefit of $100,000 per year (the "SERP") at the normal
retirement age of 60. It is expressly agreed and understood
that, if the Company terminates the Executive's employment
without cause prior to his reaching age 60, or if his employment
terminates as a result of disability pursuant to Paragraph 4, he
shall receive an annual benefit under the SERP at age 60 in
accordance with the following schedule:
Age Annual Benefit 55 $50,000 56 $55,000 57 $60,000 58 $70,000 59 $85,000 |
The Executive shall receive no retirement benefit under the SERP if he resigns before December 31, 2000 (other than pursuant to Paragraphs 1(b) or 6) or if the Company terminates his employment for cause.
d) Automobile. During the Employment Period, the Company will pay the Executive a monthly automobile allowance of $850.
e) Expenses. During the Employment Period, the Company agrees to reimburse the Executive, upon the submission of appropriate vouchers, for out-of-pocket expenses (including, without limitation, expenses for travel, lodging and entertainment) incurred by the Executive in the course of his duties hereunder.
f) Office and Staff. The Company will provide the Executive with an office, secretary and such other facilities as may be reasonably required for the proper discharge of his duties hereunder.
g) Indemnification. The Company agrees to indemnify the Executive for any and all liabilities to which he may be subject as a result of his employment hereunder (and as a result of his service as an officer or director of the Company, or as an officer or director of any of its subsidiaries or affiliates), as well as the costs of any legal action brought or threatened against him as a result of such employment, to the fullest extent permitted by law.
h) Participation in Plans. Notwithstanding any other provision of this Agreement, the Executive shall have the right to participate in any and all of the plans or programs made available by the Company (or its subsidiaries, divisions or affiliates) to, or for the benefit of, executives or employees in general, on a basis consistent with other senior executives.
3. The Employment Period.
The "Employment Period," as used in this Agreement, shall mean the period beginning as of the date hereof and terminating on the last day of the calendar month in which the first of the following occurs:
a) the death of the Executive;
b) the disability of the Executive as determined in accordance with Paragraph 4 and subject to the provisions thereof;
c) the termination of the Executive's employment by the Company for cause in accordance with Paragraph 5; or
d) December 31, 2000; provided, however, that, unless sooner terminated as otherwise provided herein, the Employment Period shall automatically be extended for one or more twelve (12) month periods beyond the then scheduled expiration date thereof unless between the 18th and 12th month preceding such scheduled expiration date either the Company or the Executive gives the other written notice of its or his election not to have the Employment Period so extended.
4. Disability.
For purposes of this Agreement, the Executive will be deemed "disabled" upon the earlier to occur of (i) his becoming disabled as defined under the terms of the disability benefit program applicable to the Executive, if any, and (ii) his absence from his duties hereunder on a full-time basis for one hundred eighty (180) consecutive days as a result of his incapacity due to accident or physical or mental illness. If the Executive becomes disabled (as defined in the preceding sentence), the Employment Period shall terminate on the last day of the month in which such disability is determined. Until such termination of the Employment Period, the Company shall continue to pay to the Executive his base salary, any additional compensation authorized by the Company's Board of Directors, and any other remuneration and benefits provided in accordance with Paragraph 2, all without delay, diminution or proration of any kind whatsoever (except that his remuneration hereunder shall be reduced by the amount of any payments he may otherwise receive as a result of his disability pursuant to a disability program provided by or through the Company), and his medical benefits and life insurance shall remain in full force. After termination of the Employment Period as a result of the disability of the Executive, the medical benefits covering the Executive and his family shall remain in place (subject to the eligibility requirements and other conditions continued in the underlying plan, as described in the Company's employee benefits manual, and subject to the requirement that the Executive continue to pay the "employee portion" of the cost thereof), and the Executive's life insurance policy under the Management Insurance Program shall be transferred to him, as provided in the related agreement, subject to the obligation of the Executive to pay the premiums therefor.
In the event that, notwithstanding such a determination of disability, the Executive is determined not to be totally and permanently disabled prior to the then scheduled expiration of the Employment Period, the Executive shall be entitled to resume employment with the Company under the terms of this Agreement for the then remaining balance of the Employment Period.
5. Termination for Cause.
In the event of any willful misconduct, active fraud or gross negligence by the Executive in connection with his employment hereunder, the Company shall have the right to terminate the Employment Period by giving the Executive notice in writing of the reason for such proposed termination. If the Executive shall not have corrected such conduct to the satisfaction of the Company within thirty days after such notice, the Employment Period shall terminate and the Company shall have no further obligation to the Executive hereunder but the restriction on the Executive's activities contained in Paragraph 7 and the obligations of the Executive contained in Paragraphs 8(b) and 8(c) shall continue in effect as provided therein.
6. Termination Without Cause.
In the event that the Company discharges the Executive during the Employment Period (which, for the purposes of this Paragraph 6, shall include any extensions pursuant to Paragraph 3(d) and any notice requirements set forth therein) without cause, the Executive shall be entitled to continuation of the salary provided in Paragraph 2(a), two-thirds of the targeted incentive provided in Paragraph 2(b), all benefits (including health and life insurance) enjoyed by the Executive at the time of such termination, the other benefits in that certain letter dated February 6, 1996, the full vesting of any restricted stock awards and the immediate exercisability of any stock options, all for the full Employment Period (which, in that event, shall continue until the then scheduled expiration of the Employment Period unless sooner terminated by the Executive's disability or death) and the SERP benefit at age 60 contemplated by Paragraph 2(c) if the Executive had remained in the employ of the Company for the full Employment Period. Any amounts payable to the Executive under this Paragraph 6 shall be reduced by the amount of the Executive's earnings from other employment (which the Executive shall have a duty to seek; provided, however, that the Executive shall not be obligated to accept a new position which is not reasonably comparable to his employment with the Company) during the same period, and the non-cash benefits provided hereunder shall cease at such time as they are replaced by similar or equal benefits from the Executive's new employer. The provisions of Paragraph 7 restricting the Executive's activities and the Executive's obligations under Paragraphs 8(b) and 8(c) shall continue in effect. The provisions of this Paragraph 6 shall not act to limit the Executive's ability to recover damages from the Company for breaching this Agreement by terminating the Employment Period without cause, except as otherwise permitted by Paragraph 3.
7. Non-Competition; Trade Secrets.
During the Employment Period and for a period of one year after the termination of the Employment Period, the Executive will not, directly or indirectly:
a) Disclosure of Information. Use, attempt to use, disclose or otherwise make known to any person or entity (other than to the Board of Directors of the Company or otherwise in the course of the business of the Company, its subsidiaries or affiliates and except as may be required by applicable law):
i. any knowledge or information, including, without limitation, lists of customers or suppliers, trade secrets, know-how, inventions, discoveries, processes and formulae, as well as all data and records pertaining thereto, which he may acquire in the course of his employment, in any manner which may be detrimental to or cause injury or loss to the Company, its subsidiaries or affiliates; or
ii. any knowledge or information of a confidential nature (including all unpublished matters) relating to, without limitation, the business, properties, accounting, books and records, trade secrets or memoranda of the Company, its subsidiaries or affiliates, which he now knows or may come to know in any manner which may be detrimental to or cause injury or loss to the Company, its subsidiaries or affiliates;
b) Non-Competition. Engage or become interested in the United States, Canada or Mexico (whether as an owner, shareholder, partner, lender or other investor, director, officer, employee, consultant or otherwise) in the business of distributing electronic parts, components, supplies or systems, or any other business that is competitive with the principal business or businesses then conducted by the Company, its subsidiaries or affiliates (provided, however, that nothing contained herein shall prevent the Executive from acquiring or owning less than 1% of the issued and outstanding capital stock or debentures of a corporation whose securities are listed on the New York Stock Exchange, American Stock Exchange, or the National Association of Securities Dealers Automated Quotation System, if such investment is otherwise permitted by the Company's Human Resource and Conflict of Interest policies);
c) Solicitation. Solicit or participate in the solicitation of any business of any type conducted by the Company, its subsidiaries or affiliates, during said term or thereafter, from any person, firm or other entity which was or at the time is a supplier or customer, or prospective supplier or customer, of the Company, its subsidiaries or affiliates; or
d) Employment. Employ or retain, or arrange to have any other person, firm or other entity employ or retain, or otherwise participate in the employment or retention of, any person who was an employee or consultant of the Company, its subsidiaries or affiliates, at any time during the period of twelve consecutive months immediately preceding such employment or retention.
The Executive will promptly furnish in writing to the Company, its subsidiaries or affiliates, any information reasonably requested by the Company (including any third party confirmations) with respect to any activity or interest the Executive may have in any business.
Except as expressly herein provided, nothing contained herein is intended to prevent the Executive, at any time after the termination of the Employment Period, from either (i) being gainfully employed or (ii) exercising his skills and abilities outside of such geographic areas, provided in either case the provisions of this Agreement are complied with.
8. Preservation of Business.
a) General. During the Employment Period, the Executive will use his best efforts to advance the business and organization of the Company, its subsidiaries and affiliates, to keep available to the Company, its subsidiaries and affiliates, the services of present and future employees and to advance the business relations with its suppliers, customers and others.
b) Patents and Copyrights, etc. The Executive agrees, without additional compensation, to make available to the Company all knowledge possessed by him relating to any methods, developments, inventions, processes, discoveries and/or improvements (whether patented, patentable or unpatentable) which concern in any way the business of the Company, its subsidiaries or affiliates, whether acquired by the Executive before or during his employment hereunder.
Any methods, developments, inventions, processes, discoveries and/or improvements (whether patented, patentable or unpatentable) which the Executive may conceive of or make, related directly or indirectly to the business or affairs of the Company, its subsidiaries or affiliates, or any part thereof, during the Employment Period, shall be and remain the property of the Company. The Executive agrees promptly to communicate and disclose all such methods, developments, inventions, processes, discoveries and/or improvements to the Company and to execute and deliver to it any instruments deemed necessary by the Company to effect the disclosure and assignment thereof to it. The Executive also agrees, on request and at the expense of the Company, to execute patent applications and any other instruments deemed necessary by the Company for the prosecution of such patent applications or the acquisition of Letters Patent in the United States or any other country and for the assignment to the Company of any patents which may be issued. The Company shall indemnify and hold the Executive harmless from any and all costs, expenses, liabilities or damages sustained by the Executive by reason of having made such patent applications or being granted such patents.
Any writings or other materials written or produced by the Executive or under his supervision (whether alone or with others and whether or not during regular business hours), during the Employment Period which are related, directly or indirectly, to the business or affairs of the Company, its subsidiaries or affiliates, or are capable of being used therein, and the copyright thereof, common law or statutory, including all renewals and extensions, shall be and remain the property of the Company. The Executive agrees promptly to communicate and disclose all such writings or materials to the Company and to execute and deliver to it any instruments deemed necessary by the Company to effect the disclosure and assignment thereof to it. The Executive further agrees, on request and at the expense of the Company, to take any and all action deemed necessary by the Company to obtain copyrights or other protections for such writings or other materials or to protect the Company's right, title and interest therein. The Company shall indemnify and hold the Executive harmless from any and all costs, expenses, liabilities or damages sustained by the Executive by reason of the Executive's compliance with the Company's request.
c) Return of Documents. Upon the termination of the Employment Period, including any termination of employment described in Paragraph 6, the Executive will promptly return to the Company all copies of information protected by Paragraph 7(a) hereof or pertaining to matters covered by subparagraph (b) of this Paragraph 8 which are in his possession, custody or control, whether prepared by him or others.
9. Separability.
The Executive agrees that the provisions of Paragraphs 7 and 8 constitute independent and separable covenants which shall survive the termination of the Employment Period and which shall be enforceable by the Company notwithstanding any rights or remedies the Executive may have under any other provisions hereof. The Company agrees that the provisions of Paragraph 6 constitute independent and separable covenants which shall survive the termination of the Employment Period and which shall be enforceable by the Executive notwithstanding any rights or remedies the Company may have under any other provisions hereof.
10. Specific Performance.
The Executive acknowledges that (i) the services to be rendered under the provisions of this Agreement and the obligations of the Executive assumed herein are of a special, unique and extraordinary character; (ii) it would be difficult or impossible to replace such services and obligations; (iii) the Company, its subsidiaries and affiliates will be irreparably damaged if the provisions hereof are not specifically enforced; and (iv) the award of monetary damages will not adequately protect the Company, its subsidiaries and affiliates in the event of a breach hereof by the Executive. The Company acknowledges that (i) the Executive will be irreparably damaged if the provisions of Paragraph 6 hereof are not specifically enforced and (ii) the award of monetary damages will not adequately protect the Executive in the event of a breach thereof by the Company. By virtue thereof, the Executive agrees and consents that if he violates any of the provisions of this Agreement, and the Company agrees and consents that if it violates any of the provisions of Paragraph 6 hereof, the other party, in addition to any other rights and remedies available under this Agreement or otherwise, shall (without any bond or other security being required and without the necessity of proving monetary damages) be entitled to a temporary and/or permanent injunction to be issued by a court of competent jurisdiction restraining the breaching party from committing or continuing any violation of this Agreement, or any other appropriate decree of specific performance. Such remedies shall not be exclusive and shall be in addition to any other remedy which any of them may have.
11. Miscellaneous.
a) Entire Agreement; Amendment. This Agreement, the letter agreement dated February 5, 1996, and that certain letter agreement dated as of the date hereof granting to the Executive extended separation benefits in the event of a change in control of the Company constitute the whole employment agreement between the parties and may not be modified, amended or terminated except by a written instrument executed by the parties hereto. All other agreements between the parties pertaining to the employment or remuneration of the Executive are terminated and shall be of no further force or effect.
b) Assignment. Except as stated below, this Agreement is not assignable by the Company without the written consent of the Executive, or by the Executive without the written consent of the Company, and any purported assignment by either party of such party's rights and/or obligations under this Agreement shall be null and void; provided, however, that, notwithstanding the foregoing, the Company may merge or consolidate with or into another corporation, or sell all or substantially all of its assets to another corporation or business entity or otherwise reorganize itself, provided the surviving corporation or entity, if not the Company, shall assume this Agreement and become obligated to perform all of the terms and conditions hereof, in which event the Executive's obligations shall continue in favor of such other corporation or entity. No such assignment shall release the Company of its obligations hereunder.
c) Waivers, etc. No waiver of any breach or default hereunder shall be considered valid unless in writing, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature. The failure of any party to insist upon strict adherence to any term of this Agreement on any occasion shall not operate or be construed as a waiver of the right to insist upon strict adherence to that term or any other term of this Agreement on that or any other occasion.
d) Arbitration. In the event of any dispute between the parties hereto arising out of or relating to this Agreement or the employment relationship between the Company and the Executive (except any dispute with respect to Paragraph 7 or 8 hereof), such dispute shall be settled by arbitration in New York, New York in accordance with the commercial arbitration rules then obtaining of the American Arbitration Association, except that there shall be one arbitrator selected with respect to any such arbitration proceeding. Judgment upon the award rendered may be entered in any court having jurisdiction thereof. In the event any arbitration proceeding is instituted, the arbitrator shall be authorized to assess the costs thereof to the party, or allocate the costs between the parties, after taking into account the arbitrator's view as to which party prevails in such proceeding; provided, however, that costs shall be assessed or allocated to the Executive only if the arbitrator concludes that the position asserted by the Executive is largely or principally without merit. Notwithstanding anything herein to the contrary, if any dispute arises between the parties under Paragraph 7 or 8, the Company shall not be required to arbitrate such dispute or claim but shall have the right to institute judicial proceedings in any court of competent jurisdiction with respect to such dispute or claim. If such judicial proceedings are instituted, the parties agree that such proceedings shall not be stayed or delayed pending the outcome of any arbitration proceeding hereunder.
e) Provisions Overly Broad. In the event that any term or provision of this Agreement shall be deemed by an arbitrator having jurisdiction under clause (d) above or a court of competent jurisdiction as the case may be to be overly broad in scope, duration or area of applicability, the arbitrator or 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.
f) Notices. Any notice permitted or required hereunder shall be in writing and shall be deemed to have been given on the date of delivery or, if mailed by registered or certified mail, postage prepaid, on the date of mailing:
i. if to the Executive to:
Gerald Luterman 65 Old Hill Road Westport, Connecticut 06880
ii. if to the Company to:
Arrow Electronics, Inc. 25 Hub Drive Melville, New York 11747 Attention: Executive Vice President
Either party may, by notice to the other, change his or its address for notice hereunder.
g) New York Law. This Agreement shall be construed and governed in all respects by the internal laws of the State of New York, without giving effect to principles of conflicts of law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.
Attest: ARROW ELECTRONICS, INC.
By: /s/ Wayne Brody By: /s/ Robert E. Klatell
-------------------- ---------------------------
Name: Wayne Brody Name: Robert E. Klatell
Title: Assistant Secretary Title: Executive Vice President
and Chief Financial Officer
|
THE EXECUTIVE
By: /s/ Gerald Luterman
----------------------
Name: Gerald Luterman
|
#30097112.5
CONFORMED COPY
SECOND AMENDMENT
TO
SENIOR NOTE PURCHASE AGREEMENT
Arrow Electronics, Inc.
$75,000,000 8.29% Senior Secured Notes Due 2000
THIS SECOND AMENDMENT (the "Amendment") to those several Senior Note Purchase Agreements each dated as of December 29, 1992, as amended by the First Amendment to Senior Note Purchase Agreements dated as of December 22, 1993 (collectively referred to herein as the "Purchase Agreements" and individually as a "Purchase Agreement"), is made as of April 24, 1995, by and among ARROW ELECTRONICS, INC., a New York corporation (the "Company"), and the several Holders of the Senior Notes (hereinafter, together with their respective successors and assigns, collectively called the "Holders" and individually a "Holder"). Capitalized terms used herein without definition shall have the respective meanings ascribed to such terms in the Purchase Agreements, as hereby amended.
WHEREAS, the Holders and the Company are parties to the Purchase Agreements, pursuant to which the Purchasers were issued, in the respective amounts set forth opposite their names on Schedule I thereto, $75,000,000 aggregate principal amount of the Company's 8.29% Senior Secured Notes Due 2000 (the "Senior Notes"); and
WHEREAS, the Company and the undersigned Holders, constituting the Required Holders, desire to amend the Purchase Agreements as provided herein, upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and conditions contained herein and of other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Amendments to the Purchase Agreements.
Subject to the satisfaction of the conditions set forth in
Section 2 hereof, the Purchase Agreements are hereby amended
as follows:
(a) Section 2.02 of the Purchase Agreements
is hereby amended by (i) deleting the defined terms
"Permitted Investments" and "Restricted Payments" in
their entirety and by substituting therefor the
following definitions of "Permitted Investments" and
"Restricted Payments" and
(ii) adding thereto, in appropriate alphabetical order,
the following definitions of "Amendment No. 2",
"Amendment No. 2 Date", "Consolidated Cash Flow",
"Consolidated Cash Interest Expense", "Spoerle
Electronic" and "Subordinated Guaranty":
"Amendment No. 2" means Amendment No. 2 to this Agreement, dated as of April 24, 1995.
"Amendment No. 2 Date" means the date on which Amendment No. 2 was executed and delivered by each of the parties thereto.
"Consolidated Cash Flow" means, for any period
of four consecutive full fiscal quarters of the Company
and its Subsidiaries, Consolidated Net Income for such
period plus (a) all amounts deducted in determining such
Consolidated Net Income on account of income taxes,
interest expense, depreciation and amortization, minus
(b) all amounts included in determining such Consolidated
Net Income on account of non-cash equity earnings of
unconsolidated Affiliates, plus (c) all amounts excluded
in determining such Consolidated Net Income on account of
cash distributions received by the Company from
unconsolidated Affiliates, minus (d) an amount equal to
the excess of the net income of Spoerle Electronic for
such period over any cash distributions received by the
Company from Spoerle Electronic during such period, all
as determined with respect to such period for the Company
and its Subsidiaries.
"Consolidated Cash Interest Expense" means,
with respect to any period, for the Company and its
Subsidiaries on a consolidated basis in accordance with
GAAP, the aggregate amount of cash interest (including,
without limitation, that portion of rental payments
pursuant to Capitalization Lease Obligations which would,
in accordance with GAAP, be categorized as "interest
expense", but excluding non-cash finance charges).
"Permitted Investments" means: (i) extensions
of trade credit in the ordinary course of business; (ii)
Investments in Cash Equivalents; (iii) loans and advances
to employees of the Company or its Subsidiaries for (a)
travel, entertainment and relocation expenses in the
ordinary course of business and (b) other purposes in an
aggregate amount not exceeding $1,500,000 at any one
time; (iv) intercompany charges for corporate and other
services allocated to Subsidiaries of the Company in the
ordinary course of business; (v) extensions of credit by
the Company to Capstone evidenced by notes pledged, pari
passu, to the Banks and to the Holders; (vi) Investments
made to acquire a Person thereupon becoming a Subsidiary
and Investments in Subsidiaries to purchase additional
equity in such Subsidiary at fair market value
(determined in good faith by the Board of Directors of
the Company); (vii) other loans, Guarantees or advances
to Subsidiaries; (viii) Investments by the Company in the
Schuylkill facility located at Plant City, Florida,
provided that the proceeds of any such Investments are
used by Schuylkill solely to pay remediation or other
environmental costs; and (ix) Investments not otherwise
permitted by clauses (i)-(viii) above in an aggregate
amount not exceeding (as to the Company and all such
Subsidiaries) $1,000,000 at any one time.
"Restricted Payments" shall mean (i) the
declaration or payment of any dividends or distributions
on any shares of any class of capital stock of the
Company or a Subsidiary of the Company to Persons (other
than the Company or a wholly-owned Subsidiary of the
Company), except dividends payable solely by the issuance
of shares of any capital stock of the Company which is
not mandatorily redeemable or otherwise subject to
mandatory repurchase, retirement, call, put or other
reacquisition (or acceleration of any thereof) prior to
or on the maturity date of the Senior Notes, (ii) the
application of any property or assets of the Company or
its Subsidiaries to the purchase or acquisition,
redemption or other retirement of,
or setting apart of any sum for the payment of any
dividends or distributions on, or for the purchase,
redemption or other retirement of, or the making of any
other distribution by reduction of capital stock or
otherwise in respect of any class of capital stock of the
Company or any Subsidiary of the Company from any Person
other than the Company or a wholly-owned Subsidiary of
the Company and (iii) any Investment other than a
Permitted Investment.
"Spoerle Electronic" means Spoerle Electronic Handelsgesellschaft mbH & Co., a German corporation.
"Suppliers Guaranty" means an unsecured Guaranty by the Company of contractual obligations of a Subsidiary for goods sold or services rendered to such Subsidiary on payment terms requiring payment within 60 days.
(b) Subsection 7.01(g) of the Purchase Agreements is hereby amended by deleting such Section in its entirety and by substituting therefor the following:
"(g) [Intentionally Omitted]"
(c) Subsection 8.01(j) of the Purchase Agreements is hereby amended by (i) by deleting the cross reference to Section 8.08(iv) in Subclause (z) of such Subsection and by substituting therefor a cross reference to Section 8.08(v) and (ii) by deleting the language following Subclause (z) of such Subsection in its entirety and by substituting therefor the following:
"does not exceed (A) from the Amendment No. 2 Date through and including December 31, 1996, 15% of Consolidated Net Worth and (B) on or after January 1, 1997, 20% of Consolidated Net Worth;"
(d) Section 8.04 of the Purchase Agreements is hereby amended by deleting such Section in its entirety and by substituting therefor the following:
"Section 8.04. Restricted Payments. The
Company will not, and will not permit any of its
Subsidiaries to, make any Restricted Payments, except
that the Company and its Subsidiaries may make Restricted
Payments in an aggregate amount not to exceed the sum of
(x) $20,000,000 plus (y) 30% of cumulative Consolidated
Net Income from Operations from October 1, 1993 to the
date of such Restricted Payment or, if such cumulative
Consolidated Net Income from Operations is a deficit
figure, then minus 100% of such deficit (provided that
Consolidated Finance Charges attributable to any
Subsidiary shall not be deducted in the determination of
Consolidated Net Income for purposes of calculating
Consolidated Net Income from Operations to the extent
that the net earnings of such Subsidiary have been
excluded from the calculation of Consolidated Net Income
from Operations pursuant to clause (e) of the definition
of such term), provided that the amount determined
pursuant to this clause (y), if a negative number, shall
not reduce the amount available pursuant to clause (x),
plus (z) 100% of the Net Proceeds from sales of capital
stock of the Company which is not mandatorily redeemable
or otherwise subject to mandatory repurchase, retirement,
call, put or other reacquisition (or acceleration of any
thereof) prior to or on the maturity date of the Senior
Notes."
(e) Section 8.08 of the Purchase Agreements is
hereby amended by deleting such Section in its entirety and
by substituting therefor the following:
"Section 8.08. Limitation on Guarantees. The
Company will not, and will not permit any of its
Subsidiaries to, assume, guarantee, endorse, contingently
agree to purchase or otherwise become liable upon the
obligation of any Person except: (i) the Subsidiary
Guarantees, (ii) Guarantees of purchase orders made in the
ordinary course of business, (iii) Guarantees by the Company
of contractual obligations of any Subsidiary, provided that
such Guarantees are unsecured and are expressly subordinated
(on terms substantially similar to those set forth in the
Subordination Agreement included in the Security Documents)
to the obligations of the Company under this Agreement, the
Other Agreements and the Senior Notes, (iv) Suppliers
Guarantees, (v) other Guarantees by the Company or any of
its Subsidiaries of contractual obligations of any
Subsidiary which would not be permitted pursuant to
subclauses (iii) or (iv) hereof, so long as, immediately
after giving effect to any such Guarantee, the Company
continues to be in compliance with Sections 8.01(j) and 8.04
and (vi) Guarantees by Subsidiaries of the Company not
otherwise prohibited under applicable provisions of this
Agreement."
(f) Section 8.09 of the Purchase Agreements is
hereby amended by deleting such Section in its entirety and
by substituting therefor the following:
"Section 8.09. Cash Flow Coverage. The Company
will not permit the ratio of Consolidated Cash Flow to
Consolidated Cash Interest Expense to be less than 3.00 :
1.00, measured on the last day of each fiscal quarter for
the period of four consecutive full fiscal quarters then
ended."
(g) Section 8.10 of the Purchase Agreements is
hereby amended by deleting such Section in its entirety and
by substituting therefor the following:
"Section 8.10. Fixed Charge Coverage Ratio. At
all times following the release of Collateral pursuant to
Section 8.15, the Company will not permit the ratio of EBIT
to Consolidated Finance Charges to be less than (i) from the
Amendment No. 2 Date through and including December 31,
1996, 2.00 : 1.00 and (ii) on and after January 1, 1997,
2.25 : 1.00."
(h) Section 8.11 of the Purchase Agreements is
hereby amended by deleting such Section in its entirety and
by substituting therefor the following:
"Section 8.11. [Intentionally Omitted]"
Conditions Precedent. As provided in Section 1
above, the amendments set forth in Section 1 shall become and be
effective upon the satisfaction of the following conditions:
(a) All corporate and other proceedings taken or
to be taken in connection with this Amendment and all
documents incident hereto shall be satisfactory in form and
substance to the Required Holders, and the Required Holders
shall have received all such counterpart originals or
certified or other copies of such documents as they may
reasonably request.
(b) The Company and the Required Holders shall
have duly executed counterparts of this Amendment and
delivered the same to the other parties hereto or their
representatives.
Effect of Amendment.
(a) It is hereby agreed that, except as
specifically provided herein, this Amendment does not in any
way affect or impair the terms, conditions and other
provisions of the Purchase Agreement or the obligations of
the Company thereunder, and all terms, conditions and other
provisions of the Purchase Agreements shall remain in full
force and effect except to the extent specifically amended
or modified pursuant to the provisions of this Amendment.
(b) Reference in the Purchase Agreements to "this Agreement" (and indirect references such as "hereunder", "hereby", "herein" and "hereof") shall be deemed to be references to the Purchase Agreements as amended hereby.
Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which taken together shall be deemed to constitute one and the same instrument.
Costs and Expenses. As provided in Section 10.02 of the Purchase Agreements, the Company agrees to pay on demand all fees, costs and expenses incurred by the Holders in connection with the negotiation, preparation, execution and delivery of this Amendment and all other documents executed pursuant to or in connection herewith.
Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES OF SUCH STATE).
Headings. Section headings are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purposes.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective duly authorized officers on the date first above written.
ARROW ELECTRONICS, INC.
By /s/ ROBERT E. KLATELL
----------------------------
Name: Robert E. Klatell
Title: Senior Vice President
and Chief Financial Officer
ZANDE & CO.
By /s/ GARY W. FREDERICKS
----------------------------
Name: Gary W. Fredericks
Title: Partner
CIG & CO.
By /s/ EDWARD LEWIS
-----------------------------
Name: Edward Lewis
Title: Partner
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By /s/ JON C. HEINY
-----------------------------
Name:Jon C. Heiny
Title: Counsel
By /s/ CHRISTOPHER J. HENDERSON
-----------------------------
Name: Christopher J. Henderson
Title: Counsel
TEACHERS INSURANCE & ANNUITY
ASSOCIATION OF AMERICA
By /s/ WM. STUART SHEPETIN
-----------------------------
Name: Wm. Stuart Shepetin
Title: Director-Private Placements
|
LIFE INSURANCE COMPANY OF GEORGIA By
Internationale Nederlanden
North America, Investment Centre, Inc.,
its Agent
By /s/ FRED C. SMITH
----------------------------
Name: Fred C. Smith
Title: S.V.P. and Managing Director
|
SOUTHLAND LIFE INSURANCE COMPANY
By Internationale Nederlanden North
America, Investment Centre, Inc., its Agent
By /s/ FRED C. SMITH
----------------------------
Name: Fred C. Smith
Title: S.V.P. and Managing Director
|
PEERLESS INSURANCE COMPANY
By Internationale Nederlanden North
America, Investment Centre, Inc., its Agent
By /s/ FRED C. SMITH
----------------------------
Name: Fred C. Smith
Title: S.V.P. and Managing Director
|
CONSOLIDATED INSURANCE COMPANY
By Internationale Nederlanden North
America, Investment Centre, Inc., its Agent
By /s/ FRED C. SMITH ---------------------------- Name: Fred C. Smith Title: S.V.P. and Managing Director |
#30151455.2
THIRD AMENDMENT
TO
SENIOR NOTE PURCHASE AGREEMENT
Arrow Electronics, Inc.
$75,000,000 8.29% Senior Secured Notes Due 2000
THIS THIRD AMENDMENT (the "Amendment") to those
several Senior Note Purchase Agreements each dated as of
December 29, 1992, as amended by the First Amendment to
Senior Note Purchase Agreements dated as of December 22,
1993 and the Second Amendment to Senior Note Purchase
Agreements dated as of April 24, 1995 (collectively referred
to herein as the "Purchase Agreements" and individually as a
"Purchase Agreement"), is made as of
December 23, 1996, by and among ARROW ELECTRONICS, INC., a
New York corporation (the "Company"), and the several
Holders of the Senior Notes (hereinafter, together with
their respective successors and assigns, collectively called
the "Holders" and individually a "Holder"). Capitalized
terms used herein without definition shall have the
respective meanings ascribed to such terms in the Purchase
Agreements, as hereby amended.
WHEREAS, the Holders and the Company are parties to the Purchase Agreements, pursuant to which the Purchasers were issued, in the respective amounts set forth opposite their names on Annex A thereto, $75,000,000 aggregate principal amount of the Company's 8.29% Senior Secured Notes Due 2000 (the "Senior Notes"); and
WHEREAS, the Company and the undersigned Holders, constituting the Required Holders, desire to amend the Purchase Agreements as provided herein, upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and conditions contained herein and of other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Amendments to the Purchase Agreements.
Subject to the satisfaction of the conditions set forth in
Section 2 hereof, for all periods on and after October 1,
1996, Section 8.04 of the Purchase Agreements is hereby
amended by deleting such Section in its entirety and by
substituting therefor the following:
"Section 8.04. Restricted Payments. On and
after
October 1, 1996, the Company will not, and will not
permit any of its Subsidiaries to, make any Restricted
Payment, if (a) the ratio of EBIT to Consolidated
Finance Charges of the Company and its Subsidiaries for
the four full fiscal quarters for which quarterly or
annual financial statements are available next
preceding the date of such Restricted Payment shall be
less than 3.00 to 1.00 and (b) after giving effect to
such Restricted Payment, the Company's Consolidated Net
Worth determined on the basis of the quarterly or
annual financial statements that are available
next preceding the date of such Restricted Payment
shall be less than $900,000,000."
Conditions Precedent. As provided in Section
1 above, the amendment set forth in Section 1 shall become
and be effective upon the satisfaction of the following
conditions:
(a) All corporate and other proceedings
taken or to be taken in connection with this Amendment
and all documents incident hereto shall be satisfactory
in form and substance to the Required Holders, and the
Required Holders shall have received all such
counterpart originals or certified or other copies of
such documents as they may reasonably request.
(b) The Company and the Required Holders
shall have duly executed counterparts of this Amendment
and delivered the same to the other parties hereto or
their representatives.
Effect of Amendment.
(a) It is hereby agreed that, except as specifically provided herein, this Amendment does not in any way affect or impair the terms, conditions and other provisions of the Purchase Agreements or the obligations of the Company thereunder, and all terms, conditions and other provisions of the Purchase Agreements shall remain in full force and effect except to the extent specifically amended or modified pursuant to the provisions of this Amendment.
(b) Reference in the Purchase Agreements to "this Agreement" (and indirect references such as "hereunder", "hereby", "herein" and "hereof") shall be deemed to be references to the Purchase Agreements as amended hereby.
Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which taken together shall be deemed to constitute one and the same instrument.
Costs and Expenses. As provided in Section 10.02 of the Purchase Agreements, the Company agrees to pay on demand all fees, costs and expenses incurred by the Holders in connection with the negotiation, preparation, execution and delivery of this Amendment and all other documents executed pursuant to or in connection herewith.
Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES OF SUCH STATE).
Headings. Section headings are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purposes.
8. Representation and Warranty. Immediately prior to and immediately subsequent to the effective date of this Amendment, the Company hereby represents and warrants that there has not been any Default or Event of Default under the Purchase Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective duly authorized officers on the date first above written.
ARROW ELECTRONICS, INC.
By: /s/ Robert E. Klatell
-----------------------
Name: Robert E. Klatell
Title: Executive Vice President
|
CONNECTICUT GENERAL LIFE INSURANCE CO.
By Cigna Investments, Inc.
By: /s/ Edward Lewis
------------------------
Name: Edward Lewis Title:
Managing Director
|
LIFE INSURANCE COMPANY OF NORTH AMERICA
By Cigna Investments, Inc.
By: /s/ Edward Lewis
------------------------
Name: Edward Lewis
Title: Managing Director
|
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By: /s/ Jon C. Heiny
------------------------
Name: Jon C. Heiny
Title: Counsel
By: /s/ Stephen G. Skrivaner
------------------------
Name: Stephen G. Skrivaner
Title: Counsel
|
TEACHERS INSURANCE & ANNUITY
ASSOCIATION OF AMERICA
By: /s/ Irene S. Giman
--------------------------
Name: Irene S. Giman
Title: Director-Private Placements
|
LIFE INSURANCE COMPANY OF GEORGIA
SOUTHLAND LIFE INSURANCE COMPANY
PEERLESS INSURANCE COMPANY CONSOLIDATED
INSURANCE COMPANY
By: ING Investment Management, Inc. its Agent
By: /s/ Fred C. Smith
--------------------------
Name: Fred C. Smith
Title: SVP and Managing Director
|
Exhibit 11
ARROW ELECTRONICS, INC.
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS EXCEPT PER SHARE DATA)
Year Ended December 31,
------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- -------
Primary
- -------
Average shares of common stock
outstanding 50,763 47,332 45,999 44,532 38,329
Net effect of dilutive stock options -
based on the treasury method 617 749 635 828 1,241
-------- -------- -------- -------- -------
Total 51,380 48,081 46,634 45,360 39,570
======== ======== ======== ======== =======
Net income $202,709 $202,544 $111,889 $106,559 $79,461
Less preferred stock dividends - - - (880) (3,903)
-------- -------- -------- -------- -------
Total $202,709 $202,544 $111,889 $105,679 $75,558
======== ======== ======== ======== =======
Per share amount $ 3.95 $ 4.21 $ 2.40 $ 2.33 $ 1.91
======== ======== ======== ======== =======
Fully Diluted
- -------------
Average shares of common stock
outstanding 50,763 47,332 45,999 44,532 38,329
Net effect of dilutive stock options -
based on the treasury method 872 762 635 911 1,263
Assumed conversion of 5-3/4 %
convertible subordinated
debentures - 3,029 3,773 3,774 381
Assumed conversion of preferred
stock - - - 691 3,433
-------- -------- -------- -------- -------
Total 51,635 51,123 50,407 49,908 43,406
======== ======== ======== ======== =======
Net income $202,709 $202,544 $111,889 $106,559 $79,461
Add interest on 5-3/4 % convertible
subordinated debentures, net of
income tax effect - 3,471 4,313 4,313 455
-------- -------- -------- -------- -------
Total $202,709 $206,015 $116,202 $110,872 $79,916
======== ======== ======== ======== =======
Per share amount $ 3.93(A)$ 4.03 $ 2.31 $ 2.22 $ 1.84
======== ======== ======== ======== =======
(A) This calculation is submitted in accordance with Regulation S-K, Item 601(b)(11),
although not required by footnote 2 to paragraph 14 of APB Opinion No.15 because
it results in dilution of less than 3%.
|
ARROW ELECTRONICS, INC.
SUBSIDIARY LISTING
as of 1/2/97
1. Arrow Electronics, Inc. a New York Corporation
2. Arrow Electronics International, Inc., a Virgin Islands Corporation
3. Arrow Electronics Canada Ltd., a Canadian Corporation
4. Lex Electronics, Ltd., a Canadian Corporation
5. Arrow Electronics Credit Corporation, a Delaware Corporation
6. Schuylkill Metals of Plant City, Inc., a Delaware Corporation
7. Arrow Electronics International, Inc., a Delaware Corporation
8. Arrow Electronics (UK) Inc., a Delaware Corporation
9. Arrow/TEK Ltd., a Japanese Joint Venture (50% owned)
10. High Tech Ad, Inc., a New York Corporation
11. Gates/Arrow Distributing, Inc., a Delaware Corporation
12. Anthem Electronics, Inc., a Delaware Corporation, including subsidiaries:
A. Anthem Enterprises
B. Lionex Corp.
C. Anthem Technology Systems
13. Arrow-Field OY and subsidiaries, a Finnish Company
14. Arrow-TH:s Elektronik AB, and subsidiaries, a Swedish Company (owned 85%)
15. Exatec A/S, and subsidiaries, a Danish company (owned 85%)
16. Arrow Electronics Distribution Group - Europe B.V., a Dutch
company, and subsidiaries which include:
A. Arrow Electronics (UK) Limited, a British Company, and subsidiaries:
1. RR Electronics Limited, a British Company
2. Axiom Electronics Ltd., a British Company
3. Jermyn Holdings Limited, a British Company & subsidiaries
4. Techdis Limited, a British company, and subsidiary:
a. Microprocessor & Memory Distribution Ltd., a
British Company
B. EDI Electronics Distribution International (France) SA,
a French Company and subsidiaries:
1. Arrow Electronique S.A., a French Company, and
subsidiaries:
a. Generim S.A., a French Company
b. Feutrier S.A., a French Company
c. CCI Electronique S.A., a French Company
d. Arrow Computer Products S.N.C. (f/k/a
Megachip S.A., a French
Company and subsidiaries
C. Arrow Electronics GmbH, a German Company (which owns
75% interest of Spoerle Electronic Handelsgesellschaft mbH, a German
company, and subsidiaries)
[Continued on Next Page]
SUBSIDIARY LISTING
D. Arrow ATD Netherlands B.V., a Dutch company (which owns
87% of ATD
Electronica S.A., a Spanish company
E. ARROW-Amitron Netherlands B.V., a Dutch company (which owns 75%
of the shares of Amitron-Arrow S.A.)
F. Silverstar Ltd. S.p.A. (93% owned) & subsidiaries
17. Arrow Australia Pty Ltd. and subsidiaries:
1. Veltek Australia Pty Ltd. (75% owned)
2. Zatek Australia Pty Ltd. (75% owned)
18. Components Agent Limited, a British Virgin Island company (90% owned) and
Subsidiaries which include:
A. Components Agent Limited, a Hong Kong company
B. Components Agent China Limited, a Hong Kong company
C. Components Agent Korea Limited, a Hong Kong company
D. Components Assembly & Sales Pte Ltd, a Singapore company
E. Casl. (M) Sdn. Berhad, a Malaysian company, and subsidiaries
F. Salson Holdings Limited, a British Virgin Islands company, and
subsidiary:
1. Qinhuangdao Arrow Electronics Company Limited, a company
of the People's Republic of China
G. Components Korea Company Limited, a Korean company
19. Texny (Holdings) Limited, a British Virgin Islands company
and subsidiaries:
A. Texny (H.K.) Limited, a Hong Kong company, and subsidiary:
1. Glorytact Company Limited, a Hong Kong company
B. Intex-semi Limited, a Hong Kong company (inactive company)
C. Colourmedia Animation Limited, a Hong Kong company (inactive
company)
20. Strong Electronics Co., Ltd. and subsidiaries, a Taiwanese Joint Venture (45% owned)
21. Ally/Arrow, Inc. a Taiwanese company (75% owned)
22. Arrow Components (NZ) Limited, a New Zealand company (75% owned)
comply/subsidry.lst
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements (Forms S-8 No. 33-55565, No. 33-66594, No. 33-48252, No. 33-20428 and No. 2-78185) and in the related Prospectuses pertaining to the employee stock plans of Arrow Electronics, Inc., in Amendment No. 1 to the Registration Statement (Form S-3 No. 333-19431) and in the related Prospectus pertaining to the registration and issuance of the senior notes and senior debentures of Arrow Electronics, Inc., in Amendment No. 1 to the Registration Statement (Form S-3 No. 33-54473) and in the related Prospectus pertaining to the registration of 1,376,843 shares of Arrow Electronics, Inc. Common Stock, in Amendment No. 1 to the Registration Statement (Form S-3 No. 33-67890) and in the related Prospectus pertaining to the registration of 1,009,086 shares of Arrow Electronics, Inc. Common Stock, and in Amendment No. 1 to the Registration Statement (Form S-3 No. 33-42176) and in the related Prospectus pertaining to the registration of up to 944,445 shares of Arrow Electronics, Inc. Common Stock held by Aquarius Investments Ltd. and Andromeda Investments Ltd. of our report dated February 17, 1997 with respect to the consolidated financial statements and schedule of Arrow Electronics, Inc. included in this Annual Report on Form 10-K for the year ended December 31, 1996.
ERNST & YOUNG LLP
New York, New York
March 27, 1997
| ARTICLE 5 |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1996 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. |
| MULTIPLIER: 1,000 |
| CURRENCY: U.S.DOLLARS |
| FISCAL YEAR END: DEC 31 1996 |
| PERIOD START: JAN 1 1996 |
| PERIOD END: DEC 31 1996 |
| PERIOD TYPE: 12 MOS |
| EXCHANGE RATE: 1 |
| CASH: 136,400 |
| SECURITIES: 0 |
| RECEIVABLES: 902,878 |
| ALLOWANCES: 39,753 |
| INVENTORY: 1,044,841 |
| CURRENT ASSETS: 2,120,123 |
| PP&E: 213,602 |
| DEPRECIATION: 98,377 |
| TOTAL ASSETS: 2,710,351 |
| CURRENT LIABILITIES: 846,107 |
| BONDS: 344,562 |
| PREFERRED MANDATORY: 0 |
| PREFERRED: 0 |
| COMMON: 51,196 |
| OTHER SE: 1,307,286 |
| TOTAL LIABILITY AND EQUITY: 2,710,351 |
| SALES: 6,534,577 |
| TOTAL REVENUES: 6,534,577 |
| CGS: 5,492,556 |
| TOTAL COSTS: 6,133,950 |
| OTHER EXPENSES: 0 |
| LOSS PROVISION: 15,495 |
| INTEREST EXPENSE: 37,959 |
| INCOME PRETAX: 362,571 |
| INCOME TAX: 144,667 |
| INCOME CONTINUING: 202,709 |
| DISCONTINUED: 0 |
| EXTRAORDINARY: 0 |
| CHANGES: 0 |
| NET INCOME: 202,709 |
| EPS PRIMARY: 3.95 |
| EPS DILUTED: 3.95 |