<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE YEAR ENDED DECEMBER 31, 1994
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 1-5374
[LOGO OF WYLE ELECTRONICS]
WYLE ELECTRONICS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 95-1779998
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
15370 BARRANCA PARKWAY, IRVINE, CALIFORNIA 92718
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(714) 753-9953
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH
TITLE OF EACH CLASS EXCHANGE ON WHICH REGISTERED
------------------- ----------------------------
Common Stock New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
(TITLE OF CLASS)
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. [_]
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK OF THE REGISTRANT HELD BY NON-
AFFILIATES OF THE REGISTRANT, BASED ON THE CLOSING PRICE AT WHICH SUCH STOCK
WAS SOLD ON THE NEW YORK STOCK EXCHANGE ON FEBRUARY 28, 1995, WAS $242,769,036.
AT FEBRUARY 28, 1995, THE REGISTRANT HAD 12,214,191 SHARES OF COMMON STOCK
OUTSTANDING.
PARTS I AND III INCORPORATE INFORMATION BY REFERENCE FROM THE REGISTRANT'S
DEFINITIVE PROXY STATEMENT FILED IN CONNECTION WITH THE REGISTRANT'S 1995
ANNUAL MEETING OF SHAREHOLDERS. PARTS I AND II INCORPORATE INFORMATION BY
REFERENCE FROM THE REGISTRANT'S ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR
ENDED DECEMBER 31, 1994.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
WYLE ELECTRONICS
PART I
ITEM 1. BUSINESS
Wyle Electronics (the "Company") principally markets high-technology
electronic products, specializing in semiconductors, computer systems and
related value-added services. Wyle Electronics, formerly Wyle Laboratories, was
founded in 1949 and incorporated in California in 1953.
On December 23, 1994, the Company completed the sale of its Scientific
Services & Systems ("SS&S") business to WESS Investment Corp. ("WESS"), a buy-
out group led by William E. Simon & Sons and certain members of the SS&S
management along with three members of the Company's Board of Directors. Under
the terms of the agreement, WESS acquired certain assets and liabilities of
SS&S, including receivables, inventory, property, equipment, accounts payable
and accrued expenses for a negotiated purchase price of $30 million in cash,
subject to adjustment, plus additional amounts that may be paid to the Company
under a five-year earnout provision. SS&S offers research, engineering, testing
and support services to customers in the aerospace, defense and energy
industries.
In January 1995, the Company changed its name from Wyle Laboratories to
Wyle Electronics to more accurately reflect the Company's business activities
following the sale of discontinued operations.
PRINCIPAL DISTRIBUTION METHODS, SERVICES RENDERED
AND PRODUCTS PRODUCED
The Company serves a broad base of customers in the computer,
telecommunications, military and industrial markets. The Company offers its
products to customers from a network of 30 locations across the United States
located in Huntsville, Alabama; Phoenix, Arizona; Garden Grove, Irvine, Los
Angeles, Sacramento, San Diego and Santa Clara, California; Denver, Colorado;
Tampa and Fort Lauderdale, Florida; Atlanta, Georgia; Chicago, Illinois;
Baltimore, Maryland; Boston, Massachusetts; Minneapolis, Minnesota; Pine Brook,
New Jersey; Raleigh, North Carolina; Cleveland, Ohio; Portland, Oregon;
Philadelphia, Pennsylvania; Austin, Dallas and Houston, Texas; Provo and Salt
Lake City, Utah; Seattle, Washington; and Milwaukee, Wisconsin.
The Company stocks approximately 30,000 items from over 50 electronic
component and computer product suppliers. Principal products distributed
include semiconductors and computer products (e.g., microcomputer systems, board
level subsystems and peripherals). For the year ended December 31, 1994,
semiconductor and computer products sales represented approximately 80% and 20%,
respectively, of total sales.
1
<PAGE>
Most manufacturers of electronic components and computer products rely on
industrial distributors to augment their own sales and marketing operations.
Distributors provide stocking, marketing, technical, design and financing
services, reducing a manufacturer's operating costs associated with stocking and
selling its products. These services also reduce the manufacturer's investment
in finished goods inventories and accounts receivable, while providing
geographically dispersed sales and delivery capabilities.
During the year ended December 31, 1994, the Company's ten largest
suppliers, which in aggregate represented 81% of its sales, were Intel, Digital
Equipment Corporation, Advanced Micro Devices, Texas Instruments, Motorola,
Quantum, Micron Technology, Altera, LSI Logic and Philips. For the year ended
December 31, 1994, Intel and Digital Equipment Corporation, the Company's two
largest suppliers, accounted for approximately 23% and 12%, respectively, of its
sales.
The Company specializes in providing higher complexity semiconductor
products such as user-configurable and fixed ASIC (application-specific
integrated circuit) devices. The Company distributes a full range of
semiconductor technologies, from discrete logic through gate arrays and standard
cells.
The principal computer products offered by the Company include medium and
small scale multi-user systems, workstations, personal computers and related
peripheral equipment products. The Company's peripheral equipment product lines
include terminals, controllers, mass storage products, scanners and printers.
The Company provides specialized value-added services such as kitting,
turnkey manufacturing, autoreplenishment, the design, programming and testing of
semicustom products, computer systems integration and technical support. The
value-added services are designed to enhance the competitiveness of the
Company's customers by providing cost efficiencies and time-to-market
advantages.
The Company's Liberty Contract Services operation in Garden Grove,
California, provides management services for materials and complex inventory
processes for customers in such areas as kitting, turnkey manufacturing,
autoreplenishment, final assembly and test, and systems integration. This
facility offers customers value-added services of varying levels of complexity
from the traditional distributor function through fully-integrated just-in-time
inventory management systems.
Under its kitting program, Liberty Contract Services provides the complete
bill-of-materials of components for a customer's product which is inspected and
packaged in production-ready kit form to customer specifications. Completed kits
are typically shipped directly to the customer's production line on a just-in-
time (JIT) basis. Turnkey manufacturing solutions are offered through alliances
with independent contract manufacturers as an extension of the Company's
JIT/kitting business. Under such arrangements, the Company supplies components
directly to contract manufacturers who perform assembly and test to produce a
completed product, such as a printed circuit board, to customer specifications.
2
<PAGE>
The Company operates six IDEAL(R) (Integrated Design Engineering And Logic)
centers which provide customers with engineering design services for ASIC
products and programmable logic devices as well as programming, testing and
symbolization in a controlled environment. Products from suppliers such as
Actel, Advanced Micro Devices, Altera, Intel, Philips and Texas Instruments can
be programmed and tested at these centers as required for individual customers.
IDEAL(R) centers are located in the Company's facilities in Austin, Boston,
Denver, Garden Grove, Minneapolis and Santa Clara.
The Company's System Enhancement Center in Garden Grove, California,
provides a full range of value-added services, such as system configuration,
networking and software verification, which allows integration of system and
peripheral products to a particular customer requirement.
The Company has distribution agreements with its component and computer
products manufacturers. Distribution agreements are nonexclusive and are
generally subject to cancellation at will or upon 30 days' notice. Although the
loss of a major supplier may significantly impact operating results, the Company
does not regard any one supplier of products to be essential to its operations.
In addition, the Company believes that most products currently sold are
available from other suppliers at competitive prices.
The Company's distribution agreements generally provide, among other
things, that the Company can return inventory declared obsolete by the
manufacturer or inventory in excess of current requirements, up to a specified
percentage of the dollar amount purchased from the manufacturer. Most
manufacturers protect the Company against subsequent manufacturer price
reductions by issuing credits to the Company with respect to the affected
product in the Company's inventory. As part of its value-added services, the
Company purchases certain products from suppliers that have not entered into
distribution agreements with the Company. Consequently, the Company may not
receive the same level of inventory protection as that available under its
distribution agreements, particularly the ability to return obsolete or excess
inventory.
The Company's business is subject to strong competition from several
national and regional independent distributors (some of which may have greater
financial resources than the Company), local independent distributors and direct
sales by manufacturers. The principal factors of competition are quality of
service, price, variety and availability of products carried and value-added
services capability.
The electronics distribution industry is highly sensitive to fluctuating
market conditions primarily caused by changes in the supply and demand for
semiconductors and computer products. The Company's financial results have in
the past reflected significant variations from period to period due to these
factors.
3
<PAGE>
BACKLOG
Most orders received by the Company are for short-term delivery.
Consequently, the dollar amount of unfilled orders is subject to rapid change
and represents customer orders for products for which the Company is awaiting
delivery from the manufacturer, or customer orders for products with delivery
dates scheduled as much as twelve months in advance. However, since these
orders are for products normally stocked, cancellation of an order would not
have a significant effect on the operations of the Company.
EMPLOYEES
As of December 31, 1994, the Company employed a total of 1,248 persons.
FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS
There is hereby incorporated by reference the information appearing in Note
11 of Notes to Consolidated Financial Statements in the Company's Annual Report
to Shareholders for the year ended December 31, 1994.
ITEM 2. PROPERTIES
The Company leases many facilities for its marketing, inventory and
distribution activities, with terms expiring from calendar 1995 through 2014,
aggregating 421,431 square feet, and located in Arizona, California, Colorado,
Florida, Georgia, Illinois, Maryland, Massachusetts, Minnesota, New Jersey,
North Carolina, Ohio, Oregon, Pennsylvania, Texas, Utah, Washington and
Wisconsin. The Company also occupies owned facilities in California and Alabama
totaling 114,757 square feet. The Company believes that its facilities are in
good operating condition, well-maintained and adequate for its present needs.
ITEM 3. LEGAL PROCEEDINGS
In May 1993, Avnet, Inc. ("Avnet") and Hall-Mark Electronics Corporation
("Hall-Mark") filed a civil action against the company and a former employee of
Hall-Mark in the Superior Court of Fulton County, Georgia, seeking injunctive
and unspecified monetary damages, alleging, inter alia, that the Company
tortiously interfered with the employment relations of Hall-Mark and its
employees and that the Company tortiously interfered with a proposed business
combination between the plaintiffs, which combination was consummated
subsequently. Plaintiffs' motion for a preliminary injunction was denied in part
by the trial court and affirmed by the Georgia Supreme Court in December 1993.
The Company has filed a counterclaim against plaintiffs, alleging, inter alia,
that plaintiffs have tortiously interfered with the Company's business and
employment relations. While this litigation is in the pretrial stage, the
Company believes that plaintiffs' complaint is without merit and will contest it
vigorously. Although the Company believes that a result adverse to the Company
in this matter is unlikely, there can be no assurance as to its outcome or the
ultimate impact on the Company's net income or financial position.
4
<PAGE>
The Company also has other contingent liabilities arising in the ordinary
course of business. In the opinion of management, the ultimate disposition of
such matters will not materially affect the Company's net income or financial
position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of the year ended December 31, 1994.
EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
Year in which
he became
Officer Position Age an officer
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles M. Clough(1) Chairman and Chief
Executive Officer 66 1982
Ralph L. Ozorkiewicz(1) President 48 1985
Joseph A. Adamczyk Executive Vice President
and Chief Operating
Officer 51 1992
R. Van Ness Holland, Jr. Executive Vice President-
Finance and Treasurer,
Chief Financial Officer 41 1985
James N. Smith Senior Vice President
and President of Liberty
Contract Services 49 1995
</TABLE>
--------------------------------------------------------------------------------
(1) Also a director of the Company.
There are no family relationships between the officers listed above.
The term of office of each executive officer is until his respective successor
is elected and has qualified, or until his death, resignation or removal.
Officers generally are appointed by the Board of Directors annually at its first
meeting following the Annual Meeting of Shareholders; however, for a discussion
of employment agreements with certain executive officers of the Company, there
is hereby incorporated by reference the information appearing under the caption
"Employment Agreements" in the Company's definitive Proxy Statement for the 1995
Annual Meeting of Shareholders.
5
<PAGE>
For a discussion of the background and business experience of
executive officers who are also directors of the Company, there is hereby
incorporated by reference the information appearing under the caption "Election
of Directors" in the Company's definitive Proxy Statement for the 1995 Annual
Meeting of Shareholders.
Mr. Adamczyk was elected Executive Vice President and Chief Operating
Officer in January 1995. He served as Executive Vice President of the
Corporation and President of Electronics Marketing Group from May 1994 to
January 1995. From September 1992 to May 1994 he served as Vice President of the
Corporation and President of Electronics Marketing Group. Prior to that, he
served at the Electronics Marketing Group as Executive Vice President-Sales from
February 1990 to September 1992, and as Regional Vice President from June 1982
to February 1990.
Mr. Holland was elected Executive Vice President - Finance and
Treasurer, Chief Financial Officer of the Company in January 1992. He served as
Senior Vice President and Corporate Controller from June 1990 to January 1992
and was Vice President and Corporate Controller from June 1987 to June 1990.
Mr. Smith was elected Senior Vice President of the Corporation and
President of Liberty Contract Services in January 1995. He served at the
Electronics Marketing Group as Executive Vice President Operations and President
of Liberty Contract Services from September 1992 to January 1995, and was Vice
President, Operations and Quality Assurance from May 1987 to September 1992.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
There is hereby incorporated by reference the information appearing
under the caption "Results by Quarter and Capital Stock Information" in the
Company's Annual Report to Shareholders for the year ended December 31, 1994.
The Company's shareholders of record on February 28, 1995 totaled 2,094.
ITEM 6. SELECTED FINANCIAL DATA
There is hereby incorporated by reference the information appearing
under the caption "Selected Financial Data" in the Company's Annual Report to
Shareholders for the year ended December 31, 1994.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
There is hereby incorporated by reference the information appearing
under the caption "Management's Discussion and Analysis of Results of Operations
and Financial Condition" in the Company's Annual Report to Shareholders for the
year ended December 31, 1994.
6
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
There is hereby incorporated by reference the information appearing in
the "Consolidated Financial Statements," "Notes to Consolidated Financial
Statements" and "Results by Quarter and Capital Stock Information" in the
Company's Annual Report to Shareholders for the year ended December 31, 1994.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There is hereby incorporated by reference the information appearing
under the captions "Election of Directors" and "Compliance with Section 16 (a)
of the Securities Exchange Act of 1934" in the Company's definitive Proxy
Statement for the 1995 Annual Meeting of Shareholders and the information
appearing under the caption "Executive Officers of the Registrant" in Part I of
this Annual Report on Form 10-K for the year ended December 31, 1994.
ITEM 11. EXECUTIVE COMPENSATION
There is hereby incorporated by reference the information appearing
under the captions "Director Compensation" and "Executive Officers' Compensation
and Other Information" in the Company's definitive Proxy Statement for the 1995
Annual Meeting of Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
There is hereby incorporated by reference the information appearing
under the caption "Security Ownership" in the Company's definitive Proxy
Statement for the 1995 Annual Meeting of Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is hereby incorporated by reference the information appearing
under the captions "Compensation Committee Interlocks and Insider Participation
in Compensation Decisions" and "Certain Transactions" in the Company's
definitive Proxy Statement for the 1995 Annual Meeting of Shareholders.
7
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
a. Financial Statements
l. The following financial statements are included in the Company's Annual
Report to Shareholders for the year ended December 3l, 1994 and are hereby
incorporated by reference.
<TABLE>
<CAPTION>
Page Reference
Annual Report
--------------
<S> <C>
Consolidated Statements of Income for the year ended
December 31, 1994, the eleven months ended December
31, 1993 and the year ended January 3l, l993.............. 16
Consolidated Balance Sheets at December 31, 1994
and 1993.................................................. 17
Consolidated Statements of Cash Flows for the year ended
December 31, 1994, the eleven months ended December
31, 1993 and the year ended January 3l, l993.............. 18
Consolidated Statements of Shareholders' Equity for
the year ended December 31, 1994, the eleven months
ended December 31, 1993 and the year ended
January 3l, l993.......................................... 19
Notes to Consolidated Financial Statements................. 20-27
Report of Independent Public Accountants................... 28
</TABLE>
2. Financial Statement Schedule for the year ended December 31, 1994, the
eleven months ended December 31, 1993 and the year ended January 31, 1993.
<TABLE>
<CAPTION>
Page Reference
Form 10-K
--------------
<S> <C>
Report of Independent Public Accountants................... 13
Consent of Independent Public Accountants.................. 14
Schedule II Valuation and Qualifying Accounts ............ 15
</TABLE>
8
<PAGE>
3. Exhibits
3(a) Restated Articles of Incorporation of the Company dated June 16,
1986, as amended to date
3(b) Bylaws of the Company, as amended to date
4(a) Article Three of Restated Articles of Incorporation of the
Company defines the rights of holders of the Company's
common stock. Incorporated herein by reference to Exhibit 3(a)
4(b) The Company agrees to provide the Commission, upon request,
copies of instruments defining the rights of holders
of its long-term notes payable
4(c) Amended And Restated Rights Agreement between Wyle Electronics
and Chemical Bank as Rights Agent, dated February 23, 1995
10(a) 1978 Non-Qualified Stock Option Plan, as amended, dated June 14,
1988. Incorporated herein by reference to Exhibit 10(a) filed
with the Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1989
10(b) 1982 Stock Option Plan, as amended, dated June 14, 1988.
Incorporated herein by reference to Exhibit 10(b) filed with the
Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 1989
10(c) 1985 Stock Option Plan, as amended, dated June 14, 1988.
Incorporated herein by reference to Exhibit 10(c) filed with the
Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 1989
10(d) 1988 Stock Option Plan. Incorporated herein by reference to
Exhibit 10(d) filed with the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 1989
10(e) 1992 Stock Incentive Plan. Incorporated herein by reference to
Exhibit A to the Company's definitive Proxy Statement dated April
28, 1992 in connection with the 1992 Annual Meeting of
Shareholders
10(f) 1993 Eligible Directors' Stock Option Plan. Incorporated herein
by reference to Exhibit A to the Company's definitive Proxy
Statement dated March 28, 1994 in connection with the 1994 Annual
Meeting of Shareholders
10(g) Compensation Agreement between Frank S. Wyle and the Company
dated February 10, 1981. Incorporated herein by reference to
Exhibit 10(c) filed with the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 1981
10(h) Amendment to Compensation Agreement between Frank S. Wyle and the
Company dated November 16, 1989. Incorporated herein by reference
to Exhibit 10(g) filed with the Company's Annual Report on Form
10-K for the fiscal year ended January 31, 1991
10(i) Second Amendment to Compensation Agreement between Frank S. Wyle
and the Company dated December 23, 1991. Incorporated herein by
reference to Exhibit 10(h) filed with the Company's Annual Report
on Form 10-K for the fiscal year ended January 31, 1992
10(j) Employment Agreement between Charles M. Clough and the Company
dated February 1, 1989, as amended to date. Incorporated herein
by reference to Exhibit 10(j) filed with the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993
9
<PAGE>
10(k) Employment Agreement between Ralph L. Ozorkiewicz and the Company
dated January 1, 1995
10(l) Employment Agreement between Joseph A. Adamczyk and the Company
dated January 1, 1995
10(m) Employment Agreement between R. Van Ness Holland, Jr. and the
Company dated January 1, 1995
10(n) Employment Agreement between James N. Smith and the Company dated
January 1, 1995
10(o) Retirement and Consulting Agreement between Theodore M. Freedman
and the Company dated March 25, 1991. Incorporated herein by
reference to Exhibit 10(j) filed with the Company's Annual Report
on Form 10-K for the fiscal year ended January 31, 1991
10(p) Agreement and General Release between John R. Herring and the
Company dated April 11, 1994. Incorporated herein by reference to
Exhibit 10 filed with the Company's Quarterly Report on Form 10-Q
for the first quarter ended March 31, 1994
10(q) Supplemental Executive Retirement Plan, as amended to date.
Incorporated herein by reference to Exhibit 10(o) filed with the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993
10(r) Supplemental Executive Retirement Trust Agreement between the
Company and Bank of America NT & SA (successor by merger to
Security Pacific National Bank), as trustee, dated March 11,
1992. Incorporated herein by reference to Exhibit 10(o) filed
with the Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1992
10(s) Supplemental Executive Retirement Agreement between Theodore M.
Freedman and the Company dated February 1, 1985, as amended to
date. Incorporated herein by reference to Exhibit 10(q) filed
with the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993
10(t) Supplemental Executive Retirement Agreement between Charles M.
Clough and the Company dated February 1, 1985, as amended to
date. Incorporated herein by reference to Exhibit 10(r) filed
with the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993
10(u) Supplemental Executive Retirement Agreement between Charles M.
Clough and the Company dated January 28, 1988, as amended to
date. Incorporated herein by reference to Exhibit 10(s) filed
with the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993
10(v) Deferred Compensation Plan for Directors of Wyle Electronics
(formerly Wyle Laboratories). Incorporated herein by reference to
Exhibit 10(m) filed with the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 1986
10(w) Directors Deferred Compensation Trust Agreement between the
Company and Bank of America NT & SA (successor by merger to
Security Pacific National Bank), as trustee, dated March 11,
1992. Incorporated herein by reference to Exhibit 10(y) filed
with the Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1992
10
<PAGE>
10(x) Wyle Electronics (formerly Wyle Laboratories) Outside Directors
Retirement Plan, as amended, dated July 23, 1992. Incorporated
herein by reference to Exhibit 10(ab) filed with the Company's
Annual Report on Form 10-K for the fiscal year ended January 31,
1993
10(y) Form of Indemnity Agreement entered into between the Company and
each of its directors and executive officers and each of the
directors and officers of its subsidiaries. Incorporated herein
by reference to Exhibit 10(e) filed with the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 1988
10(z) Form of Indemnification Agreement entered into between the
Company and each of its executive officers and directors and each
of the officers and directors of its subsidiaries. Incorporated
herein by reference to Exhibit 10(r) filed with the Company's
Annual Report on Form 10-K for the fiscal year ended January 31,
1989
10(aa) Incentive Compensation Plan for Corporate Officers of Wyle
Electronics (formerly Wyle Laboratories) (excerpt from March 22,
1990 Board of Directors meeting minutes), as amended to date.
Incorporated herein by reference to Exhibit 10(z) filed with the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993
10(ab) Agreements between the Company and Hewitt Associates for Hewitt
Associates to act as consultant under the Supplemental Executive
Retirement Trust Agreement and Directors Deferred Compensation
Trust Agreement dated March 26, 1992. Incorporated herein by
reference to Exhibit 10(ah) filed with the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 1992
10(ac) Form of Restricted Stock Award Agreements dated January 21, 1993.
Incorporated herein by reference to Exhibit 10(aj) filed with the
Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 1993
10(ad) Trust Agreement between the Company and The Bank of New York
dated December 8, 1992 relating to the establishment of a master
trust for the Wyle Electronics (formerly Wyle Laboratories)
retirement plan. Incorporated herein by reference to Exhibit
10(ak) filed with the Company's Annual Report on Form 10-K for
the fiscal year ended January 31, 1993
10(ae) Credit Agreement, dated as of December 9, 1993, among Wyle
Electronics (formerly Wyle Laboratories), various Financial
Institutions and Bank of America NT & SA (successor by merger to
Continental Bank N.A.), individually and as agent. Incorporated
herein by reference to Exhibit 10(ad) filed with the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1993
10(af) First Amendment to Credit Agreement, dated December 14, 1994,
among Wyle Electronics (formerly Wyle Laboratories), various
Financial Institutions and Bank of America NT & SA (successor by
merger to Continental Bank N.A.), individually and as agent
11 Calculation of Income Per Share
11
<PAGE>
13 Annual Report to Shareholders for the year ended December 31,
1994. (Except for those portions which are expressly incorporated
by reference in this filing, the Annual Report to Shareholders
for the year ended December 31, 1994 is furnished for the
information of the Commission and is not to be deemed filed as
part of this report)
21 Subsidiaries of the Company
23 Consent of Independent Public Accountants
27 Financial Data Schedule
b. Reports on Form 8-K
Completion of the sale of the Company's Scientific Services & Systems
business (Item 7.), filed January 9, 1995.
12
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wyle Electronics:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements included in Wyle Electronics' Annual
Report to Shareholders incorporated by reference in this Form 10-K, and have
issued our report thereon dated March 14, 1995. Our audits were made for the
purpose of forming an opinion on those statements taken as a whole. The
schedule listed in the accompanying index is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing procedures applied
in the audits of the basic consolidated financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic consolidated financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Los Angeles, California
March 14, 1995
13
<PAGE>
SCHEDULE II
WYLE ELECTRONICS
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED JANUARY 31, 1993
THE ELEVEN MONTHS ENDED DECEMBER 31, 1993
AND THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
Amounts
Balance at Charged to Amounts Balance at
Beginning Costs & Written End of
of Period Expenses Off Other (1) Period
--------- ---------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
January 31, 1993:
Allowance for
doubtful accounts $3,965 $3,457 $(2,352) $(113) $4,957
========= ========== ========== ======== ==========
December 31, 1993:
Allowance for
doubtful accounts $4,957 $1,389 $(2,213) $ 50 $4,183
========= ========== ========== ======== ==========
December 31, 1994:
Allowance for
doubtful accounts $4,183 $2,143 $ (884) $(109)(2) $5,333
========= ========== ========== ======== ==========
</TABLE>
------------
NOTES:
(1) Primarily represents changes in the amount of credit memo reserve.
(2) Includes a reduction in the allowance for doubtful accounts of $138,000
associated with trade receivables sold as part of the divestiture of the
Scientific Services & Systems business.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 30th day of March,
1995.
WYLE ELECTRONICS
By: R. VAN NESS HOLLAND, JR.
----------------------------
R. Van Ness Holland, Jr.
Executive Vice President-
Finance and Treasurer,
Chief Financial Officer
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Chairman and Chief
CHARLES M. CLOUGH Executive Officer March 30, 1995
----------------------------
(Charles M. Clough)
RALPH L. OZORKIEWICZ President March 30, 1995
----------------------------
(Ralph L. Ozorkiewicz)
Executive Vice President-
Finance and Treasurer,
R. VAN NESS HOLLAND, JR. Chief Financial Officer March 30, 1995
----------------------------
(R. Van Ness Holland, Jr.)
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
MICHAEL R. CORBOY Director March 30, 1995
----------------------------
(Michael R. Corboy)
JOHN B. FARRELL Director March 30, 1995
----------------------------
(John B. Farrell)
THEODORE M. FREEDMAN Director March 30, 1995
----------------------------
(Theodore M. Freedman)
JOHN R. HERRING Director March 30, 1995
----------------------------
(John R. Herring)
JACK S. KILBY Director March 30, 1995
----------------------------
(Jack S. Kilby)
EDWARD SANDERS Director March 30, 1995
----------------------------
(Edward Sanders)
STANLEY A. WAINER Director March 30, 1995
----------------------------
(Stanley A. Wainer)
KIRK WEST Director March 30, 1995
----------------------------
(Kirk West)
FRANK S. WYLE Director March 30, 1995
----------------------------
(Frank S. Wyle)
F. STEPHEN WYLE Director March 30, 1995
----------------------------
(F. Stephen Wyle)
</TABLE>
17
<PAGE>
WYLE ELECTRONICS
INDEX TO EXHIBITS FILED WITH FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1994
Exhibits:
---------
3(a) Restated Articles of Incorporation of the Company dated June 16, 1986,
as amended to date
3(b) Bylaws of the Company, as amended to date
4(c) Amended And Restated Rights Agreement between Wyle Electronics and
Chemical Bank as Rights Agent, dated February 23, 1995
10(k) Employment Agreement between Ralph L. Ozorkiewicz and the Company dated
January 1, 1995
10(l) Employment Agreement between Joseph A. Adamczyk and the Company dated
January 1, 1995
10(m) Employment Agreement between R. Van Ness Holland, Jr. and the Company
dated January 1, 1995
10(n) Employment Agreement between James N. Smith and the Company dated
January 1, 1995
10(af) First Amendment to Credit Agreement, dated December 14, 1994, among
Wyle Electronics (formerly Wyle Laboratories), various Financial
Institutions and Bank of America NT & SA (successor by merger to
Continental Bank N.A.), individually and as agent
11 Calculation of Income Per Share
13 Annual Report to Shareholders for the year ended December 31, 1994.
(Except for those portions which are expressly incorporated by
reference in this filing, the Annual Report to Shareholders for the
year ended December 31, 1994 is furnished for the information of the
Commission and is not to be deemed filed as part of this report)
21 Subsidiaries of the Company
23 Consent of Independent Public Accountants
27 Financial Data Schedule
<PAGE>
EXHIBIT 3(a)
RESTATED
ARTICLES OF INCORPORATION
OF
WYLE LABORATORIES
Stanley A. Wainer and Joseph E. Sullivan certify that:
1. They are the chairman and secretary, respectively, of Wyle
Laboratories, a California corporation.
2. The articles of incorporation of this corporation are amended and
restated to read as follows:
One: The name of this corporation is:
---
WYLE LABORATORIES
Two: The purpose of the corporation is to engage in any lawful act or
---
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
Three: This corporation is authorized to issue two classes of shares of
-----
stock, and the total number of shares which the corporation is authorized to
issue is twenty-five million five hundred thousand (25,500,000). Five hundred
thousand (500,000) of said shares shall be designated Preference Stock, and
twenty-five million (25,000,000) of said shares shall be designated Common
Stock.
A statement of the designations, powers, preferences, and relative,
participating, optional or other special rights, and qualifications, limitations
and restrictions granted to or imposed upon the class of shares of Preference
Stock or the holders thereof is as follows:
Any unissued shares of the Preference Stock may be issued from time to time
in one or more series. All shares of any one series of Preference Stock shall
be identical in all respects with the other shares of such series, except as to
the date from which dividends thereon shall be cumulative, and all series will
rank equally and be identical in all respects, except as to the designations,
preferences and relative, participating, optional or other special rights and
qualifications, limitations and restrictions thereof and the amount of dividends
as set forth below, which may be fixed by the Board of Directors in connection
with the creation of each such series. Before any shares of Preference Stock of
any particular series shall be issued, the Board of Directors shall fix and
determine, and is hereby expressly empowered to fix and determine, in the manner
provided by law, the following provisions of the shares of such series so far as
such provisions are not inconsistent with the provisions of this Article Three
-----
applicable to all series of Preference Stock:
<PAGE>
(i) the distinctive designation of such series and the number of shares
which shall constitute such series, which number may be increased (except where
otherwise provided by the Board of Directors in creating such series) or
decreased (but not below the number of shares thereof then outstanding) from
time to time by like action of the Board of Directors;
(ii) the annual rate of dividends payable on shares of such series, the
conditions upon which and the dates when such dividends shall be payable, and
the date from which dividends shall be cumulative on all shares of such series
issued prior to the record date for the first dividend of such series;
(iii) the voting rights, if any, of the holders of shares of such series;
(iv) whether or not redeemable, and if redeemable, the time or times
when, the price or prices at which and the manner in which shares of such series
shall be redeemable;
(v) the obligation, if any, of the corporation to maintain a sinking fund
to be applied to the purchase or redemption of such series, and if so entitled,
the amount of such fund and the manner of its application;
(vi) the amount payable on shares of such series in the event of any
liquidation, dissolution or winding-up of the affairs of the corporation;
(vii) the rights, if any, of the holders of shares of such series to
convert such shares into, or exchange such shares for, shares of any other class
or classes or of any other series of the same or any other class or classes of
stock of the corporation and the price or prices or the rates of exchange and
the adjustments, if any, at which such shares shall be convertible or
exchangeable.
(1) Liquidation Rights. In event of any dissolution, liquidation or
------------------
winding-up of the affairs of the corporation, after payment or provision for
payment of the debts and other liabilities of the corporation, the holders of
each series of Preference Stock shall be entitled to receive, out of the net
assets of the corporation, an amount in cash for each share equal to the amount
fixed and determined by the Board of Directors in any resolutions creating such
series of Preference Stock, plus an amount equal to all dividends, if any,
accrued and unpaid on each such share up to the date fixed for distribution and
no more, before any distribution shall be made to the holders of the Common
Stock. If, upon dissolution, liquidation or winding-up, the amounts payable on
or with respect to the Preference Stock of all series are not paid in full, the
holders of shares of Preference Stock of all series shall share ratably in any
distribution in like proportion to the respective preferential amounts to which
each series would otherwise have been entitled had all amounts payable on or
with respect to the Preference Stock of all series been paid in full. Neither
the merger or consolidation of the corporation, nor the sale, lease or
conveyance of all or a part of its assets, shall be deemed to be a liquidation,
dissolution or winding-up of the affairs of the corporation within the meaning
of this paragraph (1).
<PAGE>
(2) Voting Rights. The holders of Preference Stock of each series shall
-------------
have such voting rights as are designated in the resolutions creating such
series of Preference Stock, and, in addition, shall have the special voting
rights set forth below.
So long as any shares of Preference Stock shall be outstanding, the
corporation shall not, without the affirmative vote or written consent of the
holders of at least two-thirds of the aggregate number of shares of Preference
Stock of all series at the time outstanding, considered as a class without
regard to series, by an amendment to the Articles of Incorporation or by merger
or consolidation or in any other manner:
(i) increase the authorized number of shares of Preference Stock;
(ii) authorize any new class of stock ranking, either as to
payment of dividends or distribution of assets, prior to or on a
parity with the Preference Stock; or
(iii) alter or change the designations, or the powers, preferences or
rights, or the qualifications, limitations or restrictions thereof,
of the Preference Stock, so as to affect such class of stock
adversely, but nothing herein contained shall require such a class
vote or consent in connection with any increase in the total number
of authorized shares of Common Stock, or in connection with the
fixing of any of the particulars of shares of other series of
Preference Stock that may be fixed by the Board of Directors as
provided in this Article Three;
-----
provided, however, that no such vote or written consent of the holders of the
Preference Stock shall be required if, at or prior to the time when such
increase is to be effective, the issuance of any such prior stock is to be made
or any such change is to take effect, as the case may be, all shares of
Preference Stock at the time outstanding have been called for redemption and
funds set aside for such redemption.
If and whenever six (6) or more quarterly dividends on any series of the
Preference Stock shall be in arrears, in whole or in part, then and in such
event, the holders of all series of the Preference Stock, whether or not
otherwise entitled to vote for directors, voting separately as a class, shall be
entitled to elect two (2) directors. Such right of the holders of the
Preference Stock to elect two (2) directors may be exercised until the dividends
in arrears on the Preference Stock shall have been paid in full or funds
sufficient therefor set aside, and when so paid or provided for, then the right
of the holders of the Preference Stock to elect such number of directors shall
cease, but subject always to the same provisions for the vesting of such voting
rights in the case of any such future dividend arrearage.
After the voting power to elect a portion of the directors shall have
become so vested in the holders of the Preference Stock as provided in this
paragraph (2), such
<PAGE>
voting power shall become exercisable at the next regular or special meeting of
the shareholders of the corporation. If the next regular meeting of the
shareholders of the corporation shall not be duly held at the time and place and
with the notice specified in the bylaws of the corporation, the Secretary of the
corporation may, and upon the written request of the holders of record of ten
percent (10%) or more of the shares of the Preference Stock then outstanding
addressed to him at the principal office of the corporation in the State of
California shall, call a special meeting of the olders of the Preference Stock
for the election of the directors to be elected by them as hereinafter provided,
to be held within forty (40) days after delivery of such request and at the
place and upon the notice provided by law and in the bylaws for the holding of
meetings of shareholders. At any meeting so called or at any meeting at which
directors are to be elected held while the holders of the shares of Preference
Stock have the voting power to elect two (2) directors, the holders of a
majority of the then outstanding shares of Preference Stock, present in person
or by proxy, shall be sufficient to constitute a quorum for the election of two
(2) directors as herein provided. The directors so elected shall serve until the
next annual meeting or until their respective successors shall be elected and
shall qualify; provided, however, that whenever the holders of the Preference
Stock shall be divested of voting power as above provided, the terms of office
of all persons elected as directors by the holders of the Preference Stock as a
class shall forthwith terminate.
The directors elected solely by the holders of Preference Stock shall be
subject to removal only by the vote of the holders of said shares so long as the
right of such holders solely to elect two (2) directors as hereinabove provided
shall continue. Any vacancy in the Board of Directors occurring by reason of
such removal may be filled by the vote of the holders of shares of Preference
Stock, and if not so filled, such vacancy shall be filled by a majority of the
remaining directors.
Subject to the rights hereinabove granted to holders of Preference Stock to
fill vacancies in the Board of Directors occurring by reason of removal of any
director elected solely by the holders of the Preference Stock, any vacancy in
the Board of Directors occurring by reason of the resignation, death,
disqualification, inability to act or otherwise of any member thereof elected
solely by the holders of shares of Preference Stock may be filled by the
appointment by a majority of the remaining directors of a successor to fill the
vacancy so created until the next election of directors.
(3) Dividends. The holders of Preference Stock of each series will be
---------
entitled to receive when and as declared by the Board of Directors out of funds
legally available for dividends, dividends in cash at the per annum rate
determined by the Board of Directors in the resolutions creating such series,
payable as provided in such resolutions, such dividends to be cumulative from
the date fixed by the Board of Directors in such resolutions. Until cumulative
dividends with respect to the Preference Stock have been paid for all past
dividend periods and until current dividends have been paid or provided for, the
corporation may not purchase or redeem or set aside any funds, through a sinking
fund or otherwise, for the purchase or redemption of Preference Stock of any
series and may not declare or pay any dividend or make any distribution in
respect of any Common Stock of the corporation
<PAGE>
and any other class or classes of stock over which the Preference Stock has
preference or priority in the payment of dividends or in the distribution of
assets on any liquidation or dissolution or winding-up of the corporation (such
Common Stock and other class or classes of stock is hereinafter referred to as
"Junior Stock").
All dividends declared on the Preference Stock will be declared pro rata so
that the amount of dividends per share declared on the Preference Stock of
different series shall in all cases bear to each other the same proportions that
the respective dividend rates of such respective series bear to each other.
(4) Redemption. Shares of Preference Stock of each series may be redeemed
----------
to the extent, in the manner and at the redemption price provided for in the
resolutions creating such series. Notwithstanding the foregoing, if at any time
the corporation shall have failed to pay full cumulative dividends on the
Preference Stock of all series for all past dividend periods and the then
current dividend period or failed to comply with any sinking fund provision,
thereafter and until such full cumulative dividends have been paid or declared
and set apart for payment and such sinking fund provision complied with, the
corporation shall not redeem any shares of Preference Stock of any series.
(5) Sinking Fund. After all cumulative dividends have been paid upon the
------------
Preference Stock of all series then outstanding for all past dividend periods
and after dividends for the then current dividend period shall have been paid or
provided for, but before any dividend or other distribution is made, declared or
set aside with respect to any Junior Stock, the corporation will set aside on
its books such sums as a sinking fund as may have been provided for in the
resolutions creating such outstanding series.
Four: Notwithstanding any other vote which may be required under
----
applicable law, and in addition thereto, the affirmative vote of holders of not
less than eighty percent (80%) of the total voting power of all outstanding
shares of voting stock of this corporation shall be required to approve: (a) any
merger (other than a short-form merger effected in accordance with Section 1110
of the California General Corporation Law), consolidation, combination or
reorganization of this corporation or any of its subsidiaries with any other
corporation if such other corporation is a Substantial Shareholder (as defined
below) or an Associate (as defined below) of a Substantial Shareholder, or (b)
the sale, lease or exchange by this corporation or any of its subsidiaries of
all or a Substantial Part (as defined below) of its assets to or with a
Substantial Shareholder or an Associate thereof, or (c) the issuance or delivery
of any stock or other securities of this corporation or any of its subsidiaries
in exchange or payment for any (i) cash or other properties or assets of such
Substantial Shareholder or Associate thereof or (ii) securities of such
Substantial Shareholder or Associate thereof, or (d) any reverse stock split of,
or exchange of securities, cash or other properties or assets for, any
outstanding securities of this corporation or any of its subsidiaries or a
liquidation of this corporation or any of its subsidiaries, in any such case in
which a Substantial Shareholder or an Associate thereof receives or retains any
securities, cash or other properties or assets, whether or not different from
those received or retained by any holder of securities of the same class as held
by such
<PAGE>
Substantial Shareholder or Associate thereof; provided, however, that the
foregoing shall not apply to any such merger, consolidation, combination,
reorganization, sale, lease or exchange, or the issuance or delivery of stock or
other securities, or reverse stock split, exchange or liquidation which is
approved by resolutions duly adopted by a majority of the Continuing Directors
(as defined below) of this corporation, nor shall it apply to any such
transaction solely between this corporation and another corporation which is
controlled by this corporation and none of the securities of which is owned
before or after such transaction directly or indirectly by a Substantial
Shareholder or Associate thereof.
As used in this Article Four, the following terms shall have the respective
----
meanings set forth below:
(i) "Substantial Shareholder" shall mean any person or group of two or
more persons who have agreed to act together for the purpose of acquiring,
holding, voting or disposing of securities who singly or together with its or
their Associates own or owns beneficially, in the aggregate, directly or
indirectly, securities representing ten percent (10%) or more of the voting
power of all shares of voting stock of this corporation; provided, however, that
the term "Substantial Shareholder" shall not include any benefit plan or trust
established by this corporation and/or any of its subsidiaries or any trustee,
agent or other representative of any such plan or trust;
(ii) An "Affiliate" of any specified person shall include any person
(other than this corporation and any corporation which is controlled by this
corporation and none of the voting securities of which is owned directly or
indirectly by a Substantial Shareholder or any Associate thereof) who directly,
or indirectly through one or more intermediaries, controls, is controlled by or
is under common control with the person specified;
(iii) The term "control" shall mean the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract or
otherwise;
(iv) "Substantial Part" of the assets shall mean assets of this
corporation or any of its subsidiaries comprising more than ten percent (10%) of
the book value or fair market value of the total assets of this corporation and
its subsidiaries as a whole;
(v) An "Associate" of a Substantial Shareholder shall include any person
who is, or was within a period of five years prior to the time of determination,
an officer, director, employee, partner, trustee, agent, member of the immediate
family or Affiliate of the Substantial Shareholder or of an Affiliate thereof;
(vi) The term "person" shall include a corporation, partnership, trust or
government or political subdivision thereof, an individual, estate, association
or any unincorporated organization;
(vii) The term "member of the immediate family" shall include any of a
person's spouse, parents, children, siblings, mothers and fathers-in-law, sons
and daughters-in-
<PAGE>
law, and brothers and sisters-in-law; and
(viii) "Continuing Director" shall mean, with reference to any Substantial
Shareholder, any member of the Board of Directors of this corporation who (A) is
not an Affiliate of and is not the Substantial Shareholder and (B) was a member
of the Board of Directors of this corporation prior to July 1, 1986 or
thereafter became a member of the Board of Directors of this corporation prior
to the time the Substantial Shareholder became a Substantial Shareholder, and
any successor of a Continuing Director who is recommended to succeed a
Continuing Director by a majority of Continuing Directors then on the Board.
In the context of any transaction described in this Article Four, the Board
----
of Directors acting by majority vote of the Continuing Directors shall have the
exclusive power and duty to determine, on the basis of information known to them
after reasonable inquiry, (a) whether a person is a Substantial Shareholder, (b)
whether a person is an Affiliate or Associate of a Substantial Shareholder, (c)
whether a person is a Continuing Director and (d) whether a portion of the
assets of this corporation constitutes a Substantial Part of such assets. Any
such determination of such directors shall be final and binding in the absence
of bad faith, fraud or gross negligence of such directors.
Five: No action required to be taken or which may be taken by shareholders
----
at any annual or special meeting of shareholders of this corporation may be
taken without a meeting, and the power of shareholders to consent in writing,
without a meeting, to the taking of any action is specifically denied.
Any amendment, repeal, alteration or change of or to this Article Five
----
shall require the affirmative vote of the holders of shares representing at
least eighty percent (80%) of the outstanding shares of stock of this
corporation entitled to vote generally in the election of directors (considered
for this purpose as one class).
Six: The corporation hereby elects to be governed by all of the provisions
---
of the "new law", as defined and provided in Sections 2300 - 2319 of the
California General Corporation Law, not otherwise applicable to it under Chapter
23 thereof.
3. The foregoing amendment and restatement of articles of incorporation
has been duly approved by the board of directors.
4. The foregoing amendment and restatement of articles of incorporation
has been duly approved by the required vote of shareholders, where applicable,
in accordance with Sections 2302 and 902 of the California Corporations Code.
The total number of outstanding shares of the corporation entitled to vote is
7,671,829 shares of Common Stock. The number of shares voting in favor of the
amendment equaled or exceeded the vote required. The percentage vote required
was more than 50%.
<PAGE>
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
Executed at El Segundo, California on June 16, 1986.
/s/ STANLEY A. WAINER
----------------------------
Stanley A. Wainer, Chairman
/s/ JOSEPH E. SULLIVAN
-----------------------------
Joseph E. Sullivan, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
WYLE LABORATORIES
Charles M. Clough and Glenn M. Gottlieb certify that:
1. They are the president and chief executive officer and the assistant
secretary, respectively, of Wyle Laboratories, a California corporation.
2. The articles of incorporation of this corporation are amended by adding
new Article Seven and Article Eight to read in full as follows:
"Seven: The liability of the directors of the corporation for monetary
-----
damages shall be eliminated to the fullest extent permissible under
California law.
"Eight: The corporation is authorized to provide indemnification of its
-----
agents (as that term is defined in Section 317 of the California
Corporations Code), under any bylaw, agreement, vote of shareholders or
disinterested directors or, without limitation, otherwise, in excess of the
indemnification expressly permitted by such Section 317 to the fullest
extent such indemnification may be authorized hereby, subject to the limits
on such excess indemnification set forth in Section 204 of the California
Corporations Code with respect to actions for breach of duty to the
corporation and its shareholders."
3. The foregoing amendments of articles of incorporation have been duly
approved by the board of directors.
4. The foregoing amendments of articles of incorporation have been duly
approved by the required vote of shareholders in accordance with Section 902 of
the California Corporations Code. The total number of outstanding shares of the
corporation entitled to vote is 10,030,459. The number of shares voting in
favor of the amendments equaled or exceeded the vote required. The percentage
vote required was more than 50% of the shares entitled to vote.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
Executed at El Segundo, California on June 30, 1988.
/s/ CHARLES M. CLOUGH
-------------------------------------
Charles M. Clough
President and Chief Executive Officer
/s/ GLENN M. GOTTLIEB
--------------------------------------
Glenn M. Gottlieb
Assistant Secretary
<PAGE>
CERTIFICATE OF OWNERSHIP
OF
WYLE LABORATORIES,
A CALIFORNIA CORPORATION
Ralph Ozorkiewicz and Stephen D. Natcher certify that:
1. They are the duly elected and acting President and Secretary,
respectively, of Wyle Laboratories, a California corporation (herein called
"this Corporation").
2. This Corporation owns 100% of the outstanding shares of Wyle
Electronics, a California corporation.
3. The Board of Directors of this Corporation has duly adopted the
following resolutions:
RESOLVED, that Wyle Electronics be merged with and into this Corporation
with this Corporation as the surviving corporation.
RESOLVED FURTHER, that this Corporation shall, and it hereby does, assume
all the liabilities and obligations of Wyle Electronics.
RESOLVED FURTHER, that Article One of the Articles of Incorporation of this
Corporation be amended to read in its entirety as follows:
"One: The name of this corporation is:
----
Wyle Electronics."
RESOLVED FURTHER, that the officers of this Corporation be, and each of
them hereby is, authorized to take such further actions and to execute and
deliver such further documents as shall be necessary or desirable to effect
the Merger, the taking of such actions or the execution and delivery of
such documents to be conclusive evidence of the necessity or desirability
thereof.
4. This Certificate of Ownership shall become effective upon filing.
<PAGE>
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Ownership on January 12, 1995 at Irvine, California.
/s/ Ralph Ozorkiewicz
_______________________________
Ralph Ozorkiewicz
President
/s/ Stephen D. Natcher
_______________________________
Stephen D. Natcher
Secretary
<PAGE>
EXHIBIT 3(b)
WYLE ELECTRONICS BYLAWS
Amended to date: 09/01/94
<PAGE>
WYLE ELECTRONICS BYLAWS
TABLE OF CONTENTS
-----------------
ARTICLE I
GENERAL PROVISIONS
<TABLE>
<CAPTION>
Section Title Page
------- ----- ----
<S> <C> <C>
1.01 Principal Executive Office 1
1.02 Number of Directors 1
</TABLE>
ARTICLE II
SHARES AND SHAREHOLDERS
<TABLE>
<CAPTION>
Section Title Page
------- ----- ----
<S> <C> <C>
2.01 Meetings of Shareholders 1
(a) Place of Meetings 1
(b) Annual Meetings 1
(c) Special Meetings 2
(d) Notice of Meetings 2
(e) Adjourned Meeting and Notice Thereof 2
(f) Waiver of Notice 3
(g) Quorum 3
2.02 Action Without a Meeting 3
2.03 Voting of Shares 4
(a) In General 4
(b) Cumulative Voting 4
(c) Election by Ballot 4
2.04 Proxies 4
2.05 Inspectors of Election 5
(a) Appointment 5
(b) Duties 5
2.06 Record Date 5
2.07 Share Certificates 6
(a) In General 6
(b) Two or More Classes or Series 7
(c) Special Restrictions 7
2.08 Lost, Stolen or Destroyed Certificates 7
2.09 Certificateless Shares 8
</TABLE>
ii
<PAGE>
ARTICLE III
DIRECTORS
<TABLE>
<CAPTION>
Section Title Page
------- ----- ----
<S> <C> <C>
3.01 Powers 8
3.02 Committees of the Board 8
3.03 Election and Term of Office 9
3.04 Vacancies 9
3.05 Removal 9
3.06 Resignation 10
3.07 Meetings of the Board of Directors 10
(a) Regular Meetings 10
(b) Organization Meeting 10
(c) Special Meetings 10
(d) Notice of Meetings 10
(e) Adjournment 10
(f) Place of Meeting 10
(g) Presence by Conference Telephone Call 11
(h) Quorum 11
3.08 Action Without Meeting 11
3.09 Committee Meetings 11
</TABLE>
ARTICLE IV
OFFICERS
<TABLE>
<CAPTION>
Section Title Page
------- ----- ----
<S> <C> <C>
4.01 Officers 11
4.02 Elections 11
4.03 Other Officers 11
4.04 Resignation 12
4.05 Chief Executive Officer 12
</TABLE>
iii
<PAGE>
ARTICLE V
MISCELLANEOUS
<TABLE>
<CAPTION>
Section Title Page
------- ----- ----
<S> <C> <C>
5.01 Records and Reports 12
(a) Books of Account and Proceedings 12
(b) Annual Report 12
5.02 Representation of Shares of Other 13
Corporations
5.03 Indemnification and Insurance 13
5.04 Construction and Definitions 14
</TABLE>
ARTICLE VI
AMENDMENTS
<TABLE>
<CAPTION>
Section Title Page
------- ----- ----
<S> <C> <C>
6.01 Power of Shareholders 14
6.02 Power of Directors 14
</TABLE>
iv
<PAGE>
BYLAWS FOR THE REGULATION OF
WYLE ELECTRONICS,
a California corporation
ARTICLE I
GENERAL PROVISIONS
Section 1.01 Principal Executive Office. The principal executive office
--------------------------
of the corporation shall be located at 15370 Barranca Parkway, Irvine,
California 92718. The Board of Directors shall have the power to change the
principal office to another location and may fix and locate one or more
subsidiary offices within or without the State of California.
Section 1.02 Number of Directors. The affairs of the Corporation shall be
-------------------
managed by a Board of Directors consisting of not less than 7 nor more than 12
Directors. The exact number of Directors within the limits specified shall be
12 until changed by an amendment to these bylaws duly adopted by the Board of
Directors or by the shareholders. Such indefinite number may be changed, or a
definite number fixed without provision for an indefinite number, by an
amendment to these bylaws duly adopted by the vote or written consent of a
majority of the outstanding shares entitled to vote; provided, however, that a
bylaw reducing the minimum number of directors to a number less than five cannot
be adopted if the votes cast against its adoption at a meeting or the shares not
consenting in the case of action by written consent are equal to more than 16-
2/3 percent of the outstanding shares entitled to vote. No amendment may change
the stated maximum number of authorized directors to a number greater than two
times the stated minimum number of directors minus one.
ARTICLE II
SHARES AND SHAREHOLDERS
Section 2.01 Meetings of Shareholders.
------------------------
(a) Place of Meetings. Meetings of shareholders shall be held at any
-----------------
place within or without the State of California designated by the Board of
Directors. In the absence of any such designation, shareholder meetings shall
be held at the principal executive office of the corporation.
(b) Annual Meetings. An annual meeting of the shareholders of the
---------------
corporation shall be held at 10:30 a.m. on the second Tuesday of June of each
year or at such other time and date as
-1-
<PAGE>
may be designated by the Board of Directors; provided, however, that should said
day fall upon a legal holiday, the annual meeting of shareholders shall be held
at the same time on the next day thereafter ensuing which is a full business
day. At each annual meeting directors shall be elected and any other proper
business may be transacted.
(c) Special Meetings. Special meetings of the shareholders may be called
----------------
by the Board of Directors, the chairman of the board, the president or by the
holders of shares entitled to cast not less than 10% of the votes at the
meeting.
(d) Notice of Meetings. Notice of any shareholders' meeting shall be
------------------
given not less than 10 (or, if sent by third-class mail, 30) nor more than 60
days before the date of the meeting to each shareholder entitled to vote
thereat. Such notice shall state the place, date and hour of the meeting and
(i) in the case of a special meeting, the general nature of the business to be
transacted, and no other business may be transacted, or (ii) in the case of the
annual meeting, those matters which the board, at the time of the giving of the
notice, intends to present for action by the shareholders. The notice of any
meeting at which directors are to be elected shall include the names of nominees
intended at the time of the notice to be presented by the board for election.
If action is proposed to be taken at any meeting, which action is within
Sections 310, 902, 1201, 1900 or 2007 of the General Corporation Law, the notice
shall also state the general nature of that proposal.
Notice of a shareholders' meeting shall be given either personally or by
first-class mail (or, so long as the corporation has outstanding shares held of
record by 500 or more persons on the record date for the meeting, by third-class
mail) or other means of written communication, addressed to the shareholder at
the address of such shareholder appearing on the books of the corporation or
given by the shareholder to the corporation for the purpose of notice; or if no
such address appears or is given, at the place where the principal executive
office of the corporation is located or by publication at least once in a
newspaper of general circulation in the county in which the principal executive
office if located. The notice shall be deemed to have been given at the time
when delivered personally or deposited in the mail or sent by other means of
written communication. An affidavit of mailing of any notice, executed by the
secretary, assistant secretary or any transfer agent, shall be prima facie
evidence of the giving of the notice.
(e) Adjourned Meeting and Notice Thereof. Any meeting of shareholders may
------------------------------------
be adjourned from time to time by the vote of a majority of the shares
represented either in person or by proxy whether or not a quorum is present.
When a shareholders' meeting is adjourned to another time or place, notice need
not be given
-2-
<PAGE>
of the adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken. At the adjourned meeting the
corporation may transact any business which might have been transacted at the
original meeting. However, if the adjournment is for more than 45 days or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each shareholder of record
entitled to vote at the meeting.
(f) Waiver of Notice. The transactions of any meeting of shareholders,
----------------
however called and noticed, and wherever held, are as valid as though had at a
meeting duly held after regular call and notice, if a quorum is present either
in person or by proxy, and if, either before or after the meeting, each of the
persons entitled to vote, not present in person or by proxy, signs a written
waiver of notice or a consent to the holding of the meeting or an approval of
the minutes thereof. The waiver of notice or consent need not specify either
the business to be transacted at or the purpose of any annual or special meeting
of shareholders, except that if action is taken or proposed to be taken for
approval of any of those matters specified in the second paragraph of
subparagraph (d) of Section 2.01 of this Article II, the waiver of notice or
consent shall state the general nature of the proposal. All such waivers,
consents and approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.
(g) Quorum. The presence in person or by proxy of persons entitled to
------
vote a majority of the shares entitled to vote at any meeting shall constitute a
quorum for the transaction of business. Except as provided in the following
paragraph, the affirmative vote of a majority of the shares represented and
voting at a duly held meeting at which a quorum is present (which shares voting
affirmatively also constitute at least a majority of the required quorum) shall
be the act of the shareholders, unless the vote of a greater number or voting by
classes is required by the General Corporation Law or the Articles of
Incorporation.
The shareholders present at a duly called or held meeting at which a quorum
is present may continue to transact business until adjournment notwithstanding
the withdrawal of enough shareholders to leave less than a quorum, provided that
any action taken (other than adjournment) must be approved by at least a
majority of the shares required to constitute a quorum.
Section 2.02 Action Without a Meeting. No action required to be taken or
------------------------
which may be taken by shareholders at any annual or special meeting of
shareholders of the corporation may be taken without a meeting, and the power of
shareholders to consent in writing, without a meeting, to the taking of any
action is
-3-
<PAGE>
specifically denied. Notwithstanding any other provision of these bylaws to the
contrary, any amendment, repeal, alteration or change of or to this Section 2.02
shall require the affirmative vote of the holders of shares representing at
least eighty percent (80%) of the outstanding shares of stock of the corporation
entitled to vote generally in the election of directors (considered for this
purpose as one class).
Section 2.03 Voting of Shares.
----------------
(a) In General. Except as otherwise provided in the Articles of
----------
Incorporation and subject to subparagraph (b) hereof, each outstanding share,
regardless of class, shall be entitled to one vote on each matter submitted to a
vote of shareholders.
(b) Cumulative Voting. At any election of directors, no shareholder shall
-----------------
be entitled to cumulate votes (i.e., cast for any one or more candidates a
number of votes greater than the number of votes which such shareholder normally
is entitled to cast) unless such candidate or candidates' names have been placed
in nomination prior to the voting and the shareholder has given notice at the
meeting prior to the voting of the shareholder's intention to cumulate the
shareholder's votes. If any one shareholder has given such notice, all
shareholders may cumulate their votes for candidates in nomination and give one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which the shareholder's shares are normally
entitled, or distribute the shareholder's votes on the same principle among as
many candidates as the shareholder thinks fit. In any election of directors,
the candidates receiving the highest number of affirmative votes up to the
number of directors to be elected by such shares are elected; votes against a
director and votes withheld shall have no effect.
(c) Election by Ballot. Elections for directors need not be by ballot
------------------
unless a shareholder demands election by ballot at the meeting and before the
voting begins.
Section 2.04 Proxies. Every person entitled to vote shares of this
-------
corporation may authorize another person or persons to act by proxy with respect
to such shares by delivering to the corporation a written authorization signed
by the shareholder or the shareholder's attorney in fact giving such other
person or persons power to vote with respect to the shares of such shareholder.
A proxy shall be deemed signed if the shareholder's name is placed on the proxy
(whether by manual signature, typewriting, telegraphic transmission or
otherwise) by the shareholder or the shareholder's attorney in fact. A validly
executed proxy which does not state that it is irrevocable shall continue in
full force and effect unless (i) before the vote
-4-
<PAGE>
pursuant to that proxy, it is revoked by the person executing it: by a writing
delivered to the corporation stating that the proxy is revoked, by a subsequent
proxy executed by the person executing the prior proxy and presented to the
meeting or by attendance at the meeting and voting in person by the person
executing the proxy; or (ii) before the vote pursuant to that proxy is counted,
written notice of the death or incapacity of the maker of that proxy is received
by the corporation; provided, however, that, unless otherwise provided in the
proxy, no proxy shall be valid after the expiration of 11 months from the date
of the proxy. The revocability of a proxy that states on its face that it is
irrevocable shall be governed by the provisions of Section 705(e) and (f) of the
General Corporation Law.
Section 2.05 Inspectors of Election.
----------------------
(a) Appointment. In advance of any meeting of shareholders the board may
-----------
appoint inspectors of election to act at the meeting and any adjournment
thereof. If inspectors of election are not so appointed, or if any persons so
appointed fail to appear or refuse to act, the chairman of any meeting of
shareholders may, and on the request of any shareholder or a shareholder's proxy
shall, appoint inspectors of election (or persons to replace those who so fail
or refuse) at the meeting. The number of inspectors shall be either one or
three. If appointed at a meeting on the request of one or more shareholders or
proxies, the majority of shares represented in person or by proxy shall
determine whether one or three inspectors are to be appointed.
(b) Duties. The inspectors of election shall determine the number of
------
shares outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum and the authenticity, validity and effect of
proxies, receive votes, ballots or consents, hear and determine all challenges
and questions in any way arising in connection with the right to vote, count and
tabulate all votes or consents, determine when the polls shall close, determine
the result and do such acts as may be proper to conduct the election or vote
with fairness to all shareholders. The inspectors of election shall perform
their duties impartially, in good faith, to the best of their ability and as
expeditiously as is practical. If there are three inspectors of election, the
decision, act or certificate of a majority is effective in all respects as the
decision, act or certificate of all. Any report or certificate made by the
inspectors of election is prima facie evidence of the facts stated therein.
Section 2.06 Record Date. In order that the corporation may determine the
-----------
shareholders entitled to notice of any meeting or to vote or entitled to receive
payment of any dividend or
-5-
<PAGE>
other distribution or allotment of any rights or entitled to exercise any rights
in respect of any other lawful action, the board may fix, in advance, a record
date, which shall not be more than 60 nor less than 10 days prior to the date of
such meeting nor more than 60 days prior to any other action. If no record date
is fixed:
(a) The record date for determining shareholders entitled to notice of or
to vote at a meeting of shareholders shall be at the close of business on the
business day next preceding the day on which notice is given or, if notice is
waived, at the close of business on the business day next preceding the day on
which the meeting is held.
(b) The record date for determining shareholders entitled to give consent
to corporate action in writing without a meeting, when no prior action by the
board has been taken, shall be the day on which the first written consent is
given.
(c) The record date for determining shareholders for any other purpose
shall be at the close of business on the day on which the board adopts the
resolution relating thereto, or the 60th day prior to the date of such other
action, whichever is later.
A determination of shareholders of record entitled to notice of or to vote
at a meeting of shareholders shall apply to any adjournment of the meeting
unless the board fixes a new record date for the adjourned meeting, but the
board shall fix a new record date if the meeting is adjourned for more than 45
days from the date set for the original meeting.
Shareholders at the close of business on the record date are entitled to
notice and to vote or to receive the dividend, distribution or allotment of
rights or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date,
except as otherwise provided in the Articles of Incorporation or by agreement or
in the General Corporation Law.
Section 2.07 Share Certificates.
------------------
(a) In General. The corporation shall issue a certificate or certificates
----------
representing shares of its capital stock. Each certificate so issued shall be
signed in the name of the corporation by the chairman or vice chairman of the
board or the president or a vice president and by the chief financial officer or
an assistant treasurer or the secretary or any assistant secretary, shall state
the name of the record owner thereof and shall certify the number of shares and
the class or series of shares represented thereby. Any or all of the signatures
on the
-6-
<PAGE>
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
has ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if such person were an officer, transfer agent or registrar at the date of
issue.
(b) Two or More Classes or Series. If the shares of the corporation are
-----------------------------
classified or if any class of shares has two or more series, there shall appear
on the certificate one of the following:
(1) A statement of the rights, preferences, privileges and
restrictions granted to or imposed upon the respective classes or series of
shares authorized to be issued and upon the holders thereof; or
(2) A summary of such rights, preferences, privileges and restrictions
with reference to the provisions of the Articles of Incorporation and any
certificates of determination establishing the same; or
(3) A statement setting forth the office or agency of the corporation
from which shareholders may obtain, upon request and without charge, a copy of
the statement referred to in subparagraph (1).
(c) Special Restrictions. There shall also appear on the certificate
--------------------
(unless stated or summarized under subparagraph (1) or (2) of subparagraph (b)
above) the statements required by all of the following clauses to the extent
applicable:
(1) The fact that the shares are subject to restrictions upon
transfer.
(2) If the shares are assessable, a statement that they are
assessable.
(3) If the shares are not fully paid, a statement of the total
consideration to be paid therefor and the amount paid thereon.
(4) The fact that the shares are subject to a voting agreement or an
irrevocable proxy or restrictions upon voting rights contractually imposed by
the corporation.
(5) The fact that the shares are redeemable.
-7-
<PAGE>
(6) The fact that the shares are convertible and the period for
conversion.
Section 2.08 Lost, Stolen or Destroyed Certificates. The corporation may
--------------------------------------
issue a new share certificate or a new certificate for any other security in the
place of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the corporation may require the owner of the lost,
stolen or destroyed certificate or the owner's legal representative to give the
corporation a bond (or other adequate security) sufficient to indemnify it
against any claim that may be made against it (including any expense or
liability) on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 2.09 Certificateless Shares. Notwithstanding any other provisions
----------------------
of this Article II, the corporation may adopt a system of issuance, recordation
and transfer of its shares by electronic or other means not involving any
issuance of certificates, in compliance with and as provided under Section
416(b) of the General Corporation Law.
ARTICLE III
DIRECTORS
Section 3.01 Powers. Subject to the provisions of the General Corporation
------
Law and the Articles of Incorporation, the business and affairs of the
corporation shall be managed and all corporate powers shall be exercised by or
under the direction of the Board of Directors. The board may delegate the
management of the day-to-day operations of the business of the corporation to a
management company or other person provided that the business and affairs of the
corporation shall be managed and all corporate powers shall be exercised under
the ultimate direction of the board.
Section 3.02 Committees of the Board. The board may, by resolution
-----------------------
adopted by a majority of the authorized number of directors, designate one or
more committees, each consisting of two or more directors, to serve at the
pleasure of the board. The board may designate one or more directors as
alternate members of any committee, who may replace any absent member at any
meeting of the committee. The appointment of members or alternate members of a
committee requires the vote of a majority of the authorized number of directors.
Any such committee, to the extent provided in the resolution of the board, shall
have all the authority of the board, except with respect to:
-8-
<PAGE>
(a) The approval of any action which also requires, under the General
Corporation Law, shareholders' approval or approval of the outstanding shares.
(b) The filling of vacancies on the board or in any committee.
(c) The fixing of compensation of the directors for serving on the board
or on any committee.
(d) The amendment or repeal of bylaws or the adoption of new bylaws.
(e) The amendment or repeal of any resolution of the board which by its
express terms is not so amendable or repealable.
(f) A distribution (within the meaning of the General Corporation Law) to
the shareholders of the corporation, except at a rate, in a periodic amount or
within a price range determined by the board.
(g) The appointment of other committees of the board or the members
thereof.
Section 3.03 Election and Term of Office. Directors shall be elected at
---------------------------
each annual meeting of shareholders to hold office until the next annual
meeting. Each director, including a director elected to fill a vacancy, shall
hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.
Section 3.04 Vacancies. Except for a vacancy created by the removal of a
---------
director, vacancies on the board may be filled by approval of the board or, if
the number of directors then in office is less than a quorum, by (a) the
unanimous written consent of the directors then in office, (b) the affirmative
vote of a majority of the directors then in office at a meeting held pursuant to
notice or waivers of notice complying with the General Corporation Law or (c) a
sole remaining director. The shareholders may elect a director or directors at
any time to fill any vacancy or vacancies not filled by the directors, but any
such election by written consent other than to fill a vacancy created by removal
requires the consent of a majority of the outstanding shares entitled to vote.
The board shall have the power to declare vacant the office of a director
who has been declared of unsound mind by an order of court or convicted of a
felony.
Section 3.05 Removal. Any or all of the directors may be removed without
-------
cause if such removal is approved by the vote of
-9-
<PAGE>
a majority of the outstanding shares entitled to vote, except that no director
may be removed (unless the entire board is removed) when the votes cast against
removal, or not consenting in writing to such removal, would be sufficient to
elect such director if voted cumulatively at an election at which the same total
number of votes were cast (or, if such action is taken by written consent, all
shares entitled to vote were voted) and the entire number of directors
authorized at the time of the director's most recent election were then being
elected.
Section 3.06 Resignation. Any director may resign effective upon giving
-----------
written notice to the chairman of the board, the president, the secretary or the
Board of Directors of the corporation, unless the notice specifies a later time
for the effectiveness of such resignation. If the resignation is effective at a
future time, a successor may be elected to take office when the resignation
becomes effective.
Section 3.07 Meetings of the Board of Directors.
----------------------------------
(a) Regular Meetings. Regular meetings of the board may be held as
----------------
provided in these bylaws or by the board. Such meetings may be held without
notice if the time and place of such meetings are fixed by these bylaws or the
board.
(b) Organization Meeting. Immediately following each annual meeting of
--------------------
shareholders, the board shall hold a regular meeting for the purpose of
organization, election of officers and the transaction of other business.
Notice of such meetings is hereby dispensed with.
(c) Special Meetings. Special meetings of the board may be called by the
----------------
chairman of the board or the president or any vice president or the secretary or
any two directors. Special meetings shall be held upon 4 days' notice by mail
or 48 hours' notice delivered personally or by telephone or telegraph.
(d) Notice of Meetings. A notice, or waiver of notice, need not specify
------------------
the purpose of any regular or special meeting of the board. Notice of a meeting
need not be given to any director who signs a waiver of notice or a consent to
holding the meeting or an approval of the minutes thereof, whether before or
after the meeting, or who attends the meeting without protesting, prior thereto
or at its commencement, the lack of notice to such director. All such waivers,
consents and approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.
(e) Adjournment. A majority of the directors present, whether or not a
-----------
quorum is present, may adjourn any meeting to another time and place. If the
meeting is adjourned for more
-10-
<PAGE>
than 24 hours, notice of such adjournment to another time and place shall be
given prior to the time of the adjourned meeting to the directors who were not
present at the time of adjournment.
(f) Place of Meeting. Meetings of the board may be held at any place
----------------
within or without the state which has been designated in the notice of the
meeting or, if not stated in the notice or there is no notice, then such meeting
shall be held at the principal executive office of the corporation, or such
other place designated by resolution of the board.
(g) Presence by Conference Telephone Call. Members of the board may
-------------------------------------
participate in a meeting through use of conference telephone or similar
communications equipment, so long as all members participating in such meeting
can hear one another. Such participation constitutes presence in person at such
meeting.
(h) Quorum. A majority of the authorized number of directors constitutes
------
a quorum of the board for the transaction of business. Every act or decision
done or made by a majority of the directors present at a meeting duly held at
which a quorum is present is the act of the board, unless a greater number be
required by law or by the Articles of Incorporation. A meeting at which a
quorum is initially present may continue to transact business notwithstanding
the withdrawal of directors, if any action taken is approved by at least a
majority of the required quorum for such meeting.
Section 3.08 Action Without Meeting. Any action required or permitted to
----------------------
be taken by the board may be taken without a meeting if all members of the board
individually or collectively consent in writing to such action. Such written
consent or consents shall be filed with the minutes of the proceedings of the
board. Such action by written consent shall have the same force and effect as a
unanimous vote of such directors.
Section 3.09 Committee Meetings. The provisions of Sections 3.07 and 3.08
------------------
of these bylaws apply also to committees of the board and action by such
committees, mutatis mutandis.
ARTICLE IV
OFFICERS
Section 4.01 Officers. The officers of the corporation shall consist of a
--------
chairman of the board or a president, or both, a secretary, a chief financial
officer and such additional officers as may be elected or appointed in
accordance with Section 4.03 of these bylaws and as may be necessary to enable
-11-
<PAGE>
the corporation to sign instruments and share certificates. Any number of
offices may be held by the same person.
Section 4.02 Elections. All officers of the corporation, except such
---------
officers as may be otherwise appointed in accordance with Section 4.03, shall be
chosen by the board and serve at the pleasure of the board, subject to the
rights, if any, of an officer under any contract of employment.
Section 4.03 Other Officers. The board, at its discretion, may appoint,
--------------
or empower the chairman of the board or president to appoint, one or more vice
presidents, assistant secretaries, assistant treasurers or such other officers
as the business of the corporation may require, each of whom shall hold office
for such period, have such authority and perform such duties as the board or the
chairman of the board or president may from time to time determine.
Section 4.04 Resignation. Any officer may resign at any time by giving
-----------
written notice to the corporation without prejudice to the rights, if any, of
the corporation under any contract to which the officer is a party.
Section 4.05 Chief Executive Officer. The chairman of the board or
-----------------------
president, as designated by the board, shall be the general manager and chief
executive officer of the corporation.
ARTICLE V
MISCELLANEOUS
Section 5.01 Records and Reports.
-------------------
(a) Books of Account and Proceedings. The corporation shall keep adequate
--------------------------------
and correct books and records of account and shall keep minutes of the
proceedings of its shareholders, board and committees of the board and shall
keep at its principal executive office, or at the office of its transfer agent
or registrar, a record of its shareholders, giving the names and addresses of
all shareholders and the number and class of shares held by each. Such minutes
shall be kept in written form. Such other books and records shall be kept
either in written form or in any other form capable of being converted into
written form.
(b) Annual Report. An annual report shall be sent to the shareholders of
-------------
this corporation not later than 120 days after the close of the fiscal year and
at least 15 (or, if sent by third-class mail, 35) days prior to the annual
meeting of shareholders to be held during the next fiscal year. Such report
shall contain a balance sheet as of the end of such fiscal year
-12-
<PAGE>
and an income statement and statement of changes in financial position for such
fiscal year, accompanied by a report thereon of independent accountants or, if
there is no such report, the certificate of an authorized officer of the
corporation that such statements were prepared without audit from the books and
records of the corporation. Such report shall also include such further
statements required by law applicable to the corporation from time to time.
Section 5.02 Representation of Shares of Other
---------------------------------
Corporations.
------------
The chairman of the board, if any, president or any vice president of this
corporation, or any person authorized to do so by the chairman of the board,
president or any vice president, is authorized to vote, represent and exercise
on behalf of this corporation all rights incident to any and all shares of any
other corporation standing in the name of this corporation. The authority
herein granted to said officers to vote or represent on behalf of this
corporation any and all shares held by this corporation in any other corporation
may be exercised either in person or by proxy.
Section 5.03 Indemnification and Insurance.
-----------------------------
(a) This corporation shall have the power to indemnify and hold harmless
each "agent" of the corporation, as the term "agent" is defined in Section
317(a) of the General Corporation Law, from and against any expenses, judgments,
fines, settlements and other amounts actually and reasonably incurred in
connection with any "proceeding" (as defined in Section 317(a)) to the full
extent permitted by applicable law. The corporation shall have the power to
advance to its agents expenses incurred in defending any proceeding prior to the
final disposition thereof to the full extent and in the manner permitted by
applicable law.
(b) Any indemnification granted under this section, for any person
referred to in paragraph (a) above, shall create a right of indemnification
whether or not the proceeding to which the indemnification relates arose in
whole or in part prior to adoption of this section, and in the event of death
such right shall extend to such person's legal representatives. Any right of
indemnification given hereby shall not be exclusive of any other rights such
person may have, whether by law or under any agreement, insurance policy, vote
of directors or shareholders or, without limitation, otherwise.
(c) The corporation shall have the power to purchase and maintain
insurance on behalf of any agent of the corporation against any liability
asserted against or incurred by the agent in such capacity or arising out of the
agent's status as such,
-13-
<PAGE>
whether or not the corporation would have the power to indemnify the agent
against such liability.
Section 5.04 Construction and Definitions. Unless the context otherwise
----------------------------
requires, the general provisions, rules of construction and definitions
contained in the California General Corporation Law shall govern the
construction of these bylaws. Without limiting the generality of the foregoing,
the masculine gender includes the feminine and neuter, the singular number
includes the plural and the plural number includes the singular, and the term
"person" includes a corporation as well as a natural person.
ARTICLE VI
AMENDMENTS
Section 6.01 Power of Shareholders. Bylaws may be adopted, amended
---------------------
or repealed by the affirmative vote of the outstanding shares entitled to vote.
Such approval shall include the affirmative vote of a majority of the
outstanding shares of each class or series entitled, by any provision of the
Articles of Incorporation, these bylaws or the General Corporation Law, to vote
as a class or series on the subject matter being voted upon and shall also
include the affirmative vote of such greater proportion of the outstanding
shares of any class or series if such greater proportion is required by the
Articles of Incorporation, these bylaws or the General Corporation Law.
Section 6.02 Power of Directors. Bylaws may be adopted, amended or
------------------
repealed by the approval of the board, except that a bylaw specifying or
changing a fixed number of directors or the maximum or minimum number or
changing from a fixed to a variable board or vice versa may only be adopted in
accordance with Section 6.01.
-14-
<PAGE>
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
1. That I am the elected and acting Secretary of Wyle Electronics, a
California corporation; and
2. That the foregoing bylaws, comprising 14 pages, constitute the
bylaws of said corporation as adopted by the Board of Directors of the
corporation and amended through September 1, 1994.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
seal of said corporation this 18th day of November, 1994.
/s/ Stephen D. Natcher
-----------------------------
Stephen D. Natcher
[Seal]
<PAGE>
AMENDED AND RESTATED
RIGHTS AGREEMENT
dated as of February 23, 1995
by and between
WYLE ELECTRONICS
and
CHEMICAL BANK
(as successor to Security Pacific National Bank)
as Rights Agent
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Certain Definitions............................ 1
Section 2. Appointment of Rights Agent.................... 7
Section 3. Issuance of Right Certificates................. 7
Section 4. Form of Right Certificates..................... 9
Section 5. Countersignature and Registration.............. 9
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost
or Stolen Right Certificates................... 10
Section 7. Exercise of Rights............................. 11
Section 8. Cancellation and Destruction of Right
Certificates................................... 13
Section 9. Reservation and Availability of Capital Stock.. 13
Section 10. Securities Record Date......................... 14
Section 11. Adjustment of Exercise Price, Number of Shares
Issuable Upon Exercise of Rights or Number of
Rights......................................... 14
Section 12. Certificate of Adjusted Exercise Price or
Number of Shares Issuable Upon Exercise of
Rights......................................... 20
Section 13. Consolidation, Merger, or Sale on Transfer of
Assets or Earning Power........................ 20
Section 14. Fractional Rights and Fractional Shares........ 23
Section 15. Rights of Action............................... 24
Section 16. Agreement of Right Holders..................... 24
Section 17. Right Holder and Right Certificate Holder Not
Deemed a Shareholder........................... 25
Section 18. Concerning the Rights Agent.................... 25
Section 19. Merger or Consolidation or Change of Name of
Rights Agent................................... 26
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 20. Duties of Rights Agent......................... 26
Section 21. Change of Rights Agent......................... 28
Section 22. Issuance of New Right Certificates............. 29
Section 23. Redemption of Rights........................... 29
Section 24. Certain Cash Tender Offers..................... 30
Section 25. Notice of Certain Events....................... 33
Section 26. Notices........................................ 33
Section 27. Supplements and Amendments..................... 34
Section 28. Exchange....................................... 35
Section 29. Certain Covenants.............................. 35
Section 30. Successors..................................... 35
Section 31. Benefits of this Agreement..................... 35
Section 32. Severability................................... 36
Section 33. Governing Law.................................. 36
Section 34. Counterparts................................... 36
Section 35. Descriptive Headings........................... 36
</TABLE>
ii
<PAGE>
TABLE OF EXHIBITS
-----------------
Exhibit A -- Form of Certificate of Determination
Exhibit B -- Form of Right Certificate
iii
<PAGE>
TABLE OF DEFINED TERMS
----------------------
Term Defined Page Section
------------ ---- -------
Adjustment Shares 11(a)(ii)
Affiliate 1(a)
Agreement Introduction
Associate 1(a)
Beneficially Own 1(b)
Beneficial Owner 1(b)
Business Day 1(c)
Cash Tender Offer Proposal 1(d)
Close of Business 1(e)
Closing Price 1(f)
Common Share 1(g)
Common Share Equivalent 11(a)(iii)
Company (Wyle Electronics) Introduction
Company (following a Section 13(a) Event) 13(a)(iii)
Current Market Price 1(h)
Distribution Date 3(a)
Exchange Act 1(j)
Exchange Ratio 28
Exercise Price 7(c)
Expiration Date 1(1)
Fair Offer 24(b)
Fairness Opinion 24(a)
Independent Director 1(n)
NASDAQ 1(f)
Person 1(o)
iv
<PAGE>
Term Defined Page Section
------------ ---- -------
Preferred Share 1(p)
Preferred Share Equivalent 11(b)
Proposal Date 24(a)
Prospective Offeror 1(d)
Record Date Recital
Redemption Date 1(r)
Redemption Price 23(a)
Resolution 24(a)
Right Recital
Rights Agent Introduction
Section 11(a)(ii) Event 11(a)(ii)
Section 13(a) Event 13(a)
Securities Act 1(v)
Special Meeting 24(a)
Subsidiary 1(w)
Surviving Person 13(a)
Trading Day 1(x)
Unavailable Adjustment Shares 11(a)(iii)
Voting Share 1(y)
15% Ownership Date 1(z)
15% Shareholder 1(aa)
v
<PAGE>
EXHIBIT 4(c)
AMENDED AND RESTATED
RIGHTS AGREEMENT
This Amended and Restated Rights Agreement ("Agreement") is made and
entered into as of the 23rd day of February, 1995 by and between WYLE
ELECTRONICS (formerly known as Wyle Laboratories), a California corporation (the
"Company"), and CHEMICAL BANK (as successor to Security Pacific National Bank)
(the "Rights Agent").
WHEREAS, on September 28, 1989, the Board of Directors of the Company
authorized and declared a dividend of one preferred stock purchase right (a
"Right") for each Common Share (as hereinafter defined) of the Company, which
dividend was payable on October 31, 1989 to the holders of record of Common
Shares as of the Close of Business (as hereinafter defined) on October 16, 1989
(the "Record Date");
WHEREAS, the Board of Directors of the Company further authorized and
directed the issuance of one Right for each Common Share that shall be issued by
the Company at any time after the Record Date and prior to the earliest of the
Distribution Date, the Redemption Date or the Expiration Date (as such terms are
hereinafter defined);
WHEREAS, on September 28, 1989, the Company and Security Pacific
National Bank ("Security Pacific") entered into a Rights Agreement (the
"Original Agreement"), pursuant to which Security Pacific was appointed as the
rights agent to act on behalf of the Company for the benefit of the holders of
Rights;
WHEREAS, Section 27 of the Original Agreement provides that until the
occurrence of certain events that have not occurred as of the date hereof, a
majority, but not less than three, of the Independent Directors (as defined in
the Original Agreement) of the Company may, without the approval of any holders
of Rights, direct the Company and the Rights Agent to supplement or amend any
provision of the Original Agreement in any manner, whether or not such
supplement or amendment is adverse to any holders of Rights, and the Company and
the Rights Agent shall so supplement or amend such provision;
WHEREAS, on February 23, 1995, the Board of Directors of the Company,
by a unanimous vote, resolved to approve and adopt the amendments to the
Original Agreement that are reflected in this Agreement; and
WHEREAS, the Rights Agent has assumed the obligations of Security
Pacific as rights agent under the Original Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual agreements set forth herein, and for the
1
<PAGE>
benefit of the holders of Rights, the parties hereto hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
-------------------
following terms have the meanings indicated:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act, as in
effect on the date hereof.
(b) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "Beneficially Own":
(i) any securities that such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly, for
purposes of Section 13(d) of the Exchange Act and Rule 13d-3 promulgated
under the Exchange Act, in each case as in effect on the date hereof;
(ii) any securities that such Person or any of such Person's
Affiliates or Associates has the right to acquire (whether such right is
exercisable immediately, or only after the passage of time, compliance with
regulatory requirements, the fulfillment of a condition, or otherwise)
pursuant to any agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights, rights (other than the
Rights), warrants or options, or otherwise, provided that a Person shall
not be deemed the Beneficial Owner of, or to Beneficially Own, securities
tendered pursuant to a tender offer or exchange offer made by or on behalf
of such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange;
(iii) any securities that such Person or any such Person's
Affiliates or Associates has the right to vote, alone or in concert with
others, pursuant to any agreement, arrangement or understanding, provided
that a Person shall not be deemed the Beneficial Owner of, or to
Beneficially Own, any security if the agreement, arrangement or
understanding to vote such security (A) arises solely from a revocable
proxy given to such Person or any of such Person's Affiliates or Associates
in response to a public proxy solicitation made pursuant to and in
accordance with the applicable rules and regulations of the Exchange Act,
and (B) is not also then reportable on Schedule 13D under the Exchange Act
(or any comparable or successor report);
(iv) any securities that are Beneficially Owned, directly or
indirectly, by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement or
understanding for the purpose
2
<PAGE>
of acquiring, holding, voting (other than voting pursuant to a revocable
proxy as described in the proviso to
Section 1(b)(iii) hereof) or disposing of any securities of the Company;
and
(v) on any day on or after the Distribution Date, all Rights that
prior to such date were represented by certificates for Common Shares that
such Person Beneficially Owns on such day.
Notwithstanding anything to the contrary in this Section 1(b), a Person engaged
in business as an underwriter of securities shall not be deemed to be the
Beneficial Owner of, or to Beneficially Own, any securities acquired through
such Person's participation in good faith in a firm commitment underwriting
until the expiration of 40 days after the date of such acquisition.
(c) "Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in the States of New York or California
are authorized or obligated by law or executive order to close.
(d) "Cash Tender Offer Proposal" shall mean a written proposal
delivered to the Company by any Person (a "Prospective Offeror"), which
proposal:
(i) is for a tender offer for any and all of the outstanding
Voting Shares held by any Person other than such Prospective Offeror or its
Affiliates or Associates for cash at the same price;
(ii) states that such Prospective Offeror has obtained firm
written financing commitments from recognized institutional financing
sources, or has on hand cash or cash equivalents, for the full amount of
all financing necessary to consummate the acquisition of Voting Shares
described in such Cash Tender Offer Proposal, and is accompanied by
reasonable evidence of the foregoing; and
(iii) contains the written agreement of the Prospective Offeror
to pay (or share with any other Prospective Offeror) the Company's costs of
any Special Meeting (as such term is defined in Section 24(a) hereof),
other than the Company's costs of preparing and mailing proxy material for
its own solicitation.
(e) "Close of Business" on any given date shall mean 5:00 o'clock
p.m., Los Angeles time, on such date; provided, however, that if such date is
not a Business Day, it shall mean 5:00 o'clock p.m., Los Angeles time, on the
next succeeding Business Day.
3
<PAGE>
(f) "Closing Price" of a stock or other security on any day shall be
the last sale price, regular way, per share of such stock or unit of such other
security on such day or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if such stock or other security is not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such stock or other security is listed or admitted
to trading or, if such stock or other security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or such other system then in use or, if
on any such date such stock or other security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker that makes a market in such stock or other security
and that is selected by the Board of Directors of the Company.
(g) "Common Share" shall mean one share of the Common Stock, without
par value, of the Company, unless used with reference to a Person other than the
Company, in which case it shall mean one share of the class of common stock of
such Person having the greatest voting power per share or, if such Person is a
Subsidiary of another Person, one Common Share of the Person that ultimately
controls such Person.
(h) "Current Market Price" per share of a stock or unit of any other
security on any date shall mean the average of the daily Closing Prices of such
stock or other security for the 30 consecutive Trading Days through and
including the Trading Day immediately preceding the date in question; provided,
however, that if any event shall have caused the Closing Price on any Trading
Day during such 30-day period not to be fully comparable with the Closing Price
on the date in question (or, if no Closing Price is available on the date in
question, on the Trading Day immediately preceding the date in question), then
each such noncomparable Closing Price so used shall be appropriately adjusted by
the Board of Directors in order to make the Closing Price on each Trading Day
during the period used for the determination of the Current Market Price fully
comparable with the Closing Price on such date in question (or, if applicable,
the immediately preceding Trading Day); and provided further, however, that if
such stock or other security is not publicly held or so listed or traded,
"Current Market Price" per share of such stock or unit of such other security
shall mean the fair value per share of such stock or unit of such other security
as
4
<PAGE>
determined in good faith by the Board of Directors of the Company based upon
such appraisals or valuation reports of such independent experts as the Board of
Directors shall in good faith determine appropriate, which determination shall
be described in a statement filed by the Company with the Rights Agent.
(i) "Distribution Date" shall have the meaning ascribed to it in
Section 3 hereof.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(k) "Exercise Price" shall have the meaning ascribed to it in Section
7(c) hereof.
(l) "Expiration Date" shall mean February 23, 2005.
(m) "Fair Offer" shall have the meaning ascribed to it in Section
24(b) hereof.
(n) "Independent Director" shall mean any director of the Company who
(i) became a director of the Company prior to the 15% Ownership Date or (ii)
became a director of the Company on or after the 15% Ownership Date, was
recommended to become a director of the Company by a majority of the Independent
Directors then in office and is not (A) a 15% Shareholder or an Affiliate or
Associate of a 15% Shareholder, (B) an officer, director or employee of such 15%
Shareholder, Affiliate or Associate, or (C) a relative or nominee of any of the
foregoing. For purposes of this subsection (n), a director shall be deemed to be
a "nominee" of a Person referred to in clause (ii) above if such director was
elected to the Board of Directors of the Company by a vote of shareholders in
which such director failed to receive the affirmative majority of the votes cast
by Persons other than such Person and such Person's Affiliates and Associates.
Whenever this Agreement requires or allows action to be taken by a majority of
the Independent Directors, with or without the concurrence of a specified
minimum number of Independent Directors, if necessary for such action to be
valid under applicable law, such action may be taken by the Board of Directors
or a duly authorized committee thereof, provided that the number of Independent
Directors who are members of the Board of Directors or of such committee and who
vote in favor of such action constitutes a majority of the Independent Directors
then in office and equals or exceeds any such specified minimum number of
Independent Directors.
(o) "Person" shall mean any individual, firm, partnership,
corporation, association, group (as such term is used in Rule 13d-5 promulgated
under the Exchange Act as in effect or the date hereof) or other entity, and
shall include any successor (by merger or otherwise) of such entity.
5
<PAGE>
(p) "Preferred Share" shall mean one share of the Series A Junior
Participating Cumulative Preferred Stock, without par value, of the Company,
which shall have the rights and preferences set forth in the Certificate of
Determination attached hereto as Exhibit A.
(q) "Record Date" shall have the meaning ascribed to it in the
recitals hereto.
(r) "Redemption Date" shall mean the earlier of (i) the date of the
action of a majority, but not less than three, of the Independent Directors
directing the Company to redeem the Rights pursuant to Section 23(a) hereof or
(ii) the date upon which the Rights are redeemed pursuant to Section 25 hereof.
(s) "Redemption Price" shall have the meaning ascribed to it in
Section 23(a) hereof.
(t) "Section 11(a)(ii) Event" shall have the meaning ascribed to it in
Section 11(a)(ii) hereof.
(u) "Section 13(a) Event" shall have the meaning ascribed to it in
Section 13(a) hereof.
(v) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(w) "Subsidiary" of any Person shall mean any corporation or other
Person of which equity securities or equity interests representing a majority of
the voting power are owned, directly or indirectly, or which is effectively
controlled, by such Person.
(x) "Trading Day" shall mean, as to any stock or other security, a day
on which the principal national securities exchange on which such stock or other
security is listed or admitted to trading is open for the transaction of
business or, if such stock or other security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(y) "Voting Share" shall mean (i) a Common Share of the Company and
(ii) any other share of capital stock of the Company entitled to vote generally
in the election of directors or entitled to vote together with the Common Shares
in respect of any merger, consolidation, sale of all or substantially all of the
Company's assets, liquidation, dissolution or winding up. References in this
Agreement to a percentage or portion of the outstanding Voting Shares shall be
deemed a reference to the percentage or portion of the total votes entitled to
be cast by the holders of the outstanding Voting Shares.
6
<PAGE>
(z) "15% Ownership Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or a 15% Shareholder containing the facts by virtue of which a Person
has become a 15% Shareholder.
(aa) "15% Shareholder" shall mean any Person that, together with all
Affiliates and Associates of such Person, hereafter acquires Beneficial
Ownership of, in the aggregate, a number of Voting Shares of the Company equal
to 1% or more of the Voting Shares then outstanding and thereupon or thereafter
Beneficially Owns 15% or more of the Voting Shares of the Company then
outstanding; provided, however, that the term "15% Shareholder" shall not
include: (i) the Company, any wholly-owned Subsidiary of the Company, any
employee benefit plan of the Company or of a Subsidiary of the Company, or any
Person holding Voting Shares for or pursuant to the terms of any such employee
benefit plan; or (ii) any Person if such Person would not otherwise be a 15%
Shareholder but for a reduction in the number of outstanding Voting Shares
resulting from a stock repurchase program or other similar plan of the Company
or from a self tender offer of the Company, which plan or tender offer commenced
on or after the date hereof, provided, however, that the term "15% Shareholder"
shall include such Person from and after the first date upon which (A) such
Person, since the date of the commencement of such plan or tender offer, shall
have acquired Beneficial Ownership of, in the aggregate, a number of Voting
Shares of the Company equal to 1% or more of the Voting Shares of the Company
then outstanding and (B) such Person, together with all Affiliates and
Associates of such Person, shall Beneficially Own 15% or more of the Voting
Shares of the Company then outstanding. In calculating the percentage of the
outstanding Voting Shares that are Beneficially Owned by a Person for purposes
of this subsection (aa), Voting Shares that are Beneficially owned by such
Person shall be deemed outstanding, and Voting Shares that are not Beneficially
Owned by such Person and that are subject to issuance upon the exercise or
conversion of outstanding conversion rights, exchange rights, rights (other than
Rights), warrants or options shall not be deemed outstanding. Any determination
made by the Independent Directors as to whether any Person is or is not a 15%
Shareholder shall be conclusive and binding upon all holders of Rights.
Section 2. Appointment of Rights Agent. The Company hereby confirms
---------------------------
the appointment of the Rights Agent to act as agent for the Company and the
holders of Rights in accordance with the terms and conditions hereof, and the
Rights Agent hereby confirms its acceptance of such appointment. The Company
may from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.
7
<PAGE>
Section 3. Issuance of Right Certificates.
------------------------------
(a) "Distribution Date" shall mean the date, after the date hereof,
that is the earliest of (i) the tenth Business Day following the date of
the,commencement of, or the first public announcement of the intent of any
Person (other than the Company, any wholly-owned Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, or any
Person holding Common Shares for or pursuant to the terms of any such employee
benefit plan) to commence, a tender offer (other than a Fair Offer) or exchange
offer, the consummation of which would cause any Person to become a 15%
Shareholder, (ii) the date of the first Section 11(a)(ii) Event or (iii) the
date of the first Section 13(a) Event.
(b) Until the Distribution Date, (i) the Rights shall be represented
by certificates for Common Shares (all of which certificates for Common Shares
shall be deemed to be Right Certificates) and not by separate Right
Certificates, (ii) the record holder of the Common Shares represented by each of
such certificates shall be the record holder of the Rights represented thereby
and (iii) the Rights shall be transferable only in connection with the transfer
of Common Shares. Until the earliest of the Distribution Date, the Redemption
Date or the Expiration Date, the surrender for transfer of such certificates for
Common Shares shall also constitute the surrender for transfer of the Rights
represented thereby.
(c) As soon as practicable after the Distribution Date, and after
notification by the Company, the Rights Agent shall send by first-class,
postage-prepaid mail to each record holder of Common Shares, as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate substantially in the form of Exhibit
B hereto representing one Right for each Common Share so held. Notwithstanding
the foregoing, the Rights Agent shall not send any Right Certificate to any 15%
Shareholder or any of its Affiliates or Associates or to any Person if the
Rights held by such Person are Beneficially Owned by a 15% Shareholder or any of
its Affiliates or Associates. From and after the Distribution Date, the Rights
shall be represented solely by such Right Certificates and may only be
transferred by the transfer of such Right Certificates, and the holders of such
Right Certificates, as listed in the records of the Company or any transfer
agent or registrar for such Rights, shall be the record holders of such Rights.
Any determination made by a majority of the Independent Directors as to whether
any Common Shares are or were Beneficially Owned at any time by a 15%
Shareholder or an Affiliate or Associate of a 15% Shareholder shall be
conclusive and binding upon all holders of Rights.
(d) As soon as practicable after the Record Date, the Company sent a
copy of a summary of the Rights by first-class,
8
<PAGE>
postage-prepaid mail to each record holder of Common Shares as of the Close of
Business on the Record Date at the address of such holder shown on the records
of the Company.
(e) Certificates for Common Shares issued at any time after the date
hereof and prior to the earliest of the Distribution Date, the Redemption Date
or the Expiration Date, shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also represents Rights that entitle the holder hereof
to certain rights as set forth in an Amended and Restated Rights
Agreement dated as of February 23, 1995 by and between the Corporation
and Chemical Bank, as Rights Agent (the "Rights Agreement"), the terms
and conditions of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive offices of
the Corporation. Under certain circumstances specified in the Rights
Agreement, such Rights will be represented by separate certificates
and will no longer be represented by this certificate. Under certain
circumstances specified in the Rights Agreement, Rights beneficially
owned by certain persons may become null and void. The Corporation
will mail to the record holder of this certificate a copy of the
Rights Agreement without charge promptly following receipt of a
written request therefor.
Certificates for all other Common Shares shall have impressed on,
printed on, written on or otherwise affixed to them the following legend:
This certificate does not represent any Right issued pursuant to the
terms of an Amended and Restated Rights Agreement dated as of February
23, 1995 by and between the Corporation and Chemical Bank, as Rights
Agent.
Section 4. Form of Right Certificates. The Right Certificates and
--------------------------
the form of assignment, including certificate, and the form of election to
purchase, including certificate, printed on the reverse thereof, when, as and if
issued, shall be substantially the same as Exhibit B hereto, and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange upon which the
Rights or the securities of the Company issuable upon exercise of the Rights may
from time to time be listed, or to
9
<PAGE>
conform to usage. Subject to Section 22 hereof, Right Certificates, whenever
issued, that are issued in respect of Common Shares that were issued and
outstanding as of the Close of Business on the Distribution Date, shall be dated
as of the Distribution Date.
Section 5. Countersignature and Registration.
---------------------------------
(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its Vice Chairman of the Board, its President or
any Vice President, either manually or by facsimile signature, and may have
affixed thereto the Company's seal or a facsimile thereof attested by its
Secretary or any Assistant Secretary, either manually or by facsimile signature.
The Right Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed any of the Right Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Right Certificates may
nevertheless be countersigned by the Rights Agent and issued and delivered by
the Company with the same force and effect as though the person who signed such
Right Certificates had not ceased to be such officer of the Company. Any Right
Certificate may be signed on behalf of the Company by any person who at the
actual date of such execution shall be a proper officer of the Company to sign
such Right Certificate, even though such person was not such an officer at the
date of the execution of this Agreement.
(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept at its principal offices books for registration and transfer of
the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of Right Certificates, the number of Rights
represented on its face by each Right Certificate and the date of each Right
Certificate.
Section 6. Transfer, Split Up, Combination and Exchange of Right
-----------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
---------------------------------------------------------------------
(a) Subject to the provisions of Sections 6(c), 7(d) and 14 hereof, at
any time after the Close of Business on the Distribution Date, and so long as
the Rights represented thereby remain outstanding, any one or more Right
Certificates may be transferred, split up, combined or exchanged for one or more
Right Certificates representing the same aggregate number of Rights as the Right
Certificates surrendered. Any registered holder desiring to transfer, split up,
combine or exchange one or more Right Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right
Certificates to be transferred, split up, combined or exchanged
10
<PAGE>
at the office of the Rights Agent with the form of assignment, including
certificate, on the reverse side thereof completed and duly executed, with
signature guaranteed. Thereupon, the Rights Agent shall countersign and deliver
to the person entitled thereto one or more Right Certificates, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
such Right Certificate if mutilated, the Company shall issue and deliver to the
Rights Agent for delivery to the record holder of such Right Certificate a new
Right Certificate of like tenor in lieu of such lost, stolen, destroyed or
mutilated Right Certificate.
(c) Notwithstanding anything to the contrary in this Section 6, the
Rights Agent shall not countersign and deliver a Right Certificate to any Person
if such Right Certificate represents, or would represent when held by such
Person, Rights that had become or would become null and void pursuant to Section
7(d) hereof.
Section 7. Exercise of Rights.
------------------
(a) Until the Distribution Date, no Right may be exercised.
(b) Subject to Section 7(d) and (g) hereof and the other provisions of
this Agreement, at any time after the Close of Business on the Distribution Date
and prior to the Close of Business on the earlier of the Redemption Date or the
Expiration Date, the registered holder of any Right Certificate may exercise the
Rights represented thereby in whole or in part upon surrender of such Right
Certificate, with the form of election to purchase, including certificate, on
the reverse side thereof completed and duly executed, with signature guaranteed,
to the Rights Agent at the office of the Rights Agent at Chemical Bank, 300
South Grand Avenue, 4th Floor, Los Angeles, California 90071, together with
payment of the Exercise Price for each Right exercised. Upon the exercise of an
exercisable Right and payment of the Exercise Price in accordance with the
provisions of this Agreement, the holder of such Right shall be entitled to
receive, subject to adjustment as provided herein, one one-hundredth of a
Preferred Share.
11
<PAGE>
(c) The exercise price for the exercise of each Right (the "Exercise
Price") shall initially be $85.00 and shall be payable in lawful money of the
United States of America in accordance with Section 7(f) hereof. The Exercise
Price and the number of Preferred Shares (or, following the occurrence of a
Section 11(a)(ii) Event or a Section 13(a) Event, Common Shares and/or other
securities) to be acquired upon exercise of a Right shall be subject to
adjustment from time to time as provided in Sections 7(e), 11 and 13 hereof and
the other provisions of this Agreement.
(d) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event or a Section 13(a)
Event, any Rights that are or were Beneficially Owned by a 15% Shareholder or
any Affiliate or Associate of a 15% Shareholder at any time on or after the
Distribution Date shall be null and void, and any holder of such Rights (whether
or not such holder is a 15% Shareholder or an Affiliate or Associate of a 15%
Shareholder) shall thereafter have no right to exercise such Rights.
(e) Prior to the Distribution Date, if a majority, but not less than
three, of the Independent Directors shall have determined that such action
adequately protects the interests of the holders of Rights, the Company may, in
its discretion, substitute for all or any portion of the Preferred Shares that
would otherwise be issuable (after the Close of Business on the Distribution
Date) upon the exercise of each Right and payment of the Exercise Price, (i)
cash, (ii) other equity securities of the Company, (iii) debt securities of the
Company, (iv) other assets or (v) any combination of the foregoing, in each case
having an aggregate value equal to the aggregate value of the Preferred Shares
for which substitution is made. Subject to Section 7(d) hereof, in the event
that the Company takes any action pursuant to this Section 7(e), such action
shall apply uniformly to all outstanding Rights.
(f) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase, including certificate, completed
and duly executed, with signature guaranteed, accompanied by payment of the
Exercise Price for each Right to be exercised and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check or cashier's
check payable to the order of the Company, the Rights Agent shall thereupon
promptly (i) requisition from the transfer agent of the Preferred Shares,
certificates for the number of Preferred Shares to be purchased, and the Company
hereby irrevocably authorizes such transfer agent to comply with all such
requests, and/or, as provided in Section 14 hereof, requisition from the
depositary agent described therein depositary receipts representing such number
of one-hundredths of a Preferred Share as are to be purchased (in
12
<PAGE>
which case certificates for the Preferred Shares represented by such receipts
shall be deposited by the transfer agent with such depositary agent) and the
Company hereby directs such depositary agent to comply with such request, (ii)
when appropriate, requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional Preferred Shares in accordance with Section 14
hereof, (iii) after receipt of such certificates, depositary receipts or cash,
cause the same to be delivered to or upon the order of the registered holder of
such Right Certificate, registered in such name or names as may be designated by
such holder and (iv) when appropriate, after receipt thereof, deliver such cash
to or upon the order of the registered holder of such Right Certificate.
(g) Notwithstanding the foregoing provisions of this Section 7, the
exercisability of the Rights shall be suspended for such period as shall
reasonably be necessary for the Company to register under the Securities Act and
any applicable securities law of any jurisdiction the Preferred Shares to be
issued pursuant to the exercise of the Rights; provided, however, that nothing
contained in this Section 7 shall relieve the Company of its obligations under
Section 9(c) hereof.
(h) In case the registered holder of any Right Certificate shall
exercise less than all of the Rights represented thereby, a new Right
Certificate representing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
Section 8. Cancellation and Destruction of Right Certificates. All
--------------------------------------------------
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
---------------------------------------------
(a) Subject to Section 7(e) hereof, the Company shall cause to be
reserved and kept available out of its authorized and
13
<PAGE>
unissued equity securities (or out of its authorized and issued equity
securities held in its treasury), the number of such equity securities that will
from time to time be sufficient to permit the exercise in full of all
outstanding Rights.
(b) In the event that any securities issuable upon exercise of the
Rights are listed on any national securities exchange, the Company shall use its
best efforts, from and after such time as the Rights become exercisable, to
cause all such securities issued or reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
(c) If necessary to permit the issuance of securities upon exercise of
the Rights, the Company shall use its best efforts, from and after the
Distribution Date, to register such securities under the Securities Act and any
applicable securities laws and to keep such registration effective until the
earlier of the Redemption Date or the Expiration Date.
(d) The Company shall take all such action as may be necessary to
ensure that all securities delivered upon exercise of the Rights shall, at the
time of delivery of the certificates for such securities (subject to payment of
the Exercise Price), be duly and validly authorized and issued and fully paid
and nonassessable securities.
(e) The Company shall pay when due and payable any and all federal and
state transfer taxes and charges that may be payable in respect of the issuance
or delivery of the Right Certificates or of any securities upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax
that may be payable in respect of any transfer or delivery of a Right
Certificate to a Person other than, or the issuance or delivery of a certificate
for securities in respect of a name other than that of, the registered holder of
the Right Certificate representing Rights surrendered for exercise, or to issue
or deliver any certificate for securities upon the exercise of any Right until
any such tax shall have been paid (any such tax being payable by the holder of
such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
(f) With respect to the Common Shares and/or other securities issuable
pursuant to Section 11(a)(ii) and (iii) hereof, the foregoing covenants shall be
applicable only upon and following the occurrence of a Section 11(a)(ii) Event.
Section 10. Securities Record Date. Each person in whose name any
----------------------
certificate for securities of the Company is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
securities represented thereby on, and such certificate shall be dated, the
14
<PAGE>
date upon which the Right Certificate representing such Rights was duly
surrendered and payment of the Exercise Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the securities transfer books of the Company are
closed, such person shall be deemed to have become the record holder of such
securities on, and such certificate shall be dated, the next succeeding Business
Day on which the securities transfer books of the Company are open.
Section 11. Adjustment of Exercise Price, Number of Shares Issuable
-------------------------------------------------------
Upon Exercise of Rights or Number of Rights. The Exercise Price, the number and
-------------------------------------------
kind of securities that may be purchased upon exercise of a Right and the number
of Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a)(i) In the event that the Company shall at any time after the
Close of Business on the date hereof and prior to the Close of Business on
the earlier of the Redemption Date or the Expiration Date (A) declare or
pay any dividend on the Preferred Shares payable in Preferred Shares or
Voting Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares
or (D) issue Preferred Shares or Voting Shares in a reclassification of the
Preferred Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), then and in each such event, the number and kind of Preferred
Shares or other securities issuable upon the exercise of a Right on such
date shall be proportionately adjusted so that the holder of any Right
exercised on or after such date shall be entitled to receive, upon the
exercise thereof and payment of the Exercise Price, the aggregate number
and kind of Preferred Shares or other securities or other property, as the
case may be, that, if such Right had been exercised immediately prior to
such date and at a time when such Right was exercisable and the transfer
books of the Company were open, such holder would have owned upon such
exercise and would have been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an event occurs
that would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event (a "Section 11(a)(ii) Event") that a 15%
Ownership Date shall have occurred and neither the Redemption Date nor the
Expiration Date shall have occurred prior to the tenth Business Day
following such 15%
15
<PAGE>
Ownership Date, then, and upon each such event, proper provision shall be
made so that except as provided in Section 7(d) hereof, each holder of a
Right shall thereafter have the right to receive, upon the exercise thereof
in accordance with the terms of this Agreement and payment of the then
current Exercise Price, such number of Common Shares of the Company as
shall equal the result obtained by multiplying the then current Exercise
Price by the then number of one-hundredths of a Preferred Share for which a
Right was exercisable (or, if the Distribution Date shall not have occurred
prior to the date of such Section 11(a)(ii) Event, the number of one-
hundredths of a Preferred Share for which a Right would have been
exercisable if the Distribution Date had occurred on the Business Day
immediately preceding the date of such Section 11(a)(ii) Event) immediately
prior to such Section 11(a)(ii) Event, and dividing that product by 50% of
the Current Market Price (determined pursuant to Section 11(d) hereof) of a
Common Share on the date of occurrence of the relevant Section 11(a)(ii)
Event (such number of shares being hereinafter referred to as the
"Adjustment Shares"). Successive adjustments shall be made pursuant to
this paragraph each time a Section 11(a)(ii) Event occurs.
(iii) In the event that on the date of a Section 11(a)(ii) Event
the aggregate number of Common Shares that are authorized by the Company's
Restated Articles of Incorporation, as amended, but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights
is less than the aggregate number of Adjustment Shares thereafter issuable
upon the exercise in full of the Rights in accordance with Section
11(a)(ii) hereof (the excess of such number of Adjustment Shares over and
above such number of Common Shares being hereinafter referred to as the
"Unavailable Adjustment Shares"), the Company shall substitute for the pro
rata portion of the Unavailable Adjustment Shares that would otherwise be
issuable thereafter upon the exercise of each Right and payment of the
Exercise Price, (A) cash, (B) other equity securities of the Company
(including, without limitation, shares of preferred stock of the Company or
units of such shares having title same value as one Common Share (a "Common
Share Equivalent")), (C) debt securities of the Company, (D) other assets
or (E) any combination of the foregoing, in each case having an aggregate
value equal to the aggregate value of the Unavailable Adjustment Shares for
which substitution is made. Subject to Section 7(d) hereof, in the event
that the Company takes any action pursuant to this Section 11(a)(iii), such
action shall apply uniformly to all outstanding Rights.
(b) In the event that the Company shall, at any time after the Close
of Business on the date hereof and prior to the
16
<PAGE>
Close of Business on the earlier of the Redemption Date or the Expiration Date,
fix a record date prior to the earlier of the Redemption Date or the Expiration
Date for the issuance of rights, options or warrants to all holders of Preferred
Shares entitling them initially to subscribe for or purchase Preferred Shares
(or shares having the same rights, privileges and preferences as the Preferred
Shares ("Preferred Share Equivalents")) or securities convertible into Preferred
Shares or Preferred Share Equivalents, at a price per Preferred Share or
Preferred Share Equivalent (or having a conversion price per share, if a
security convertible into Preferred Shares or Preferred Share Equivalents) less
than the Current Market Price per Preferred Share on such record date, then the
Exercise Price to be in effect after such record date shall be determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be equal to the sum of the number of
Preferred Shares outstanding on such record date plus the number of Preferred
Shares that the aggregate offering price of the total number of Preferred Shares
and/or Preferred Share Equivalents to be so offered (and/or the aggregate
initial conversion price of the convertible securities to be so offered) would
purchase at such Current Market Price, and the denominator of which shall be
equal to the number of Preferred Shares outstanding on such record date plus the
number of additional Preferred Shares and/or Preferred Share Equivalents to be
offered for subscription or purchase (or into which the convertible securities
to be so offered are initially convertible); provided, however, that if such
rights, options or warrants are not exercisable immediately upon issuance but
become exercisable only upon the occurrence of a specified event or the passage
of a specified period of time, then the adjustment to the Exercise Price shall
be made and become effective only upon the occurrence of such event or such
passage of time, and such adjustment shall be made as if the record date for the
issuance of such rights, options or warrants had been the business day
immediately preceding the date upon which such rights, options or warrants
became exercisable. Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment to the Exercise Price shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not so
issued, the Exercise Price shall be adjusted to be the Exercise Price that would
then be in effect if such record date had not been fixed.
(c) In the event that the Company shall, at any time after the Close
of Business on the Record Date and prior to the Close of Business on the earlier
of the Redemption Date or the Expiration Date, fix a record date for the making
of a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the surviving corporation) of securities or assets (other than a
distribution of securities for
17
<PAGE>
which an adjustment is required under Section 11(a)(i) or (b) hereof or a
regular quarterly cash dividend), the Exercise Price to be in effect after such
record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be equal to the excess of the Current Market Price per Preferred Share on
such record date over and above the fair market value of the portion of the
securities or assets to be so distributed with respect to one Preferred Share,
and the denominator of which shall be equal to such Current Market Price per
Preferred Share. Such adjustments shall be made successively whenever such a
record date is fixed, and in the event that such a distribution is not so made,
the Exercise Price shall be adjusted to be the Exercise Price that would then be
in effect if such record date had not been fixed.
(d) For the purpose of any computation under this Section 11, if the
Preferred Shares are not publicly held or so listed and traded, the "Current
Market Price" per Preferred Share shall be conclusively deemed to be the Current
Market Price per Common Share multiplied by 100.
(e) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Exercise
Price; provided, however, that any adjustments that by reason of this Section
11(e) are not required to be made shall be cumulated and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a Common Share or other
share or one-millionth of a Preferred Share, as the case may be.
(f) If, as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any securities of the Company other than Preferred Shares, the number of
such other securities so receivable upon exercise of any Right shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Preferred Shares contained in this
Section 11, and the other provisions of this Agreement with respect to Preferred
Shares shall apply on like terms to any such other securities.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall represent the right to
purchase, at the adjusted Exercise Price, the number of one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i) below, upon each adjustment of the Exercise Price as a result
of the calculations made in
18
<PAGE>
Sections 11(b) and (c) hereof, each Right outstanding immediately prior to the
making of such adjustment shall thereafter represent the right to purchase, at
the adjusted Exercise Price, that number of one-hundredths of a Preferred Share
(calculated to the nearest one-millionth of a Preferred Share) obtained by
multiplying (i) the number of one-hundredths of a Preferred Share purchasable
upon the exercise of one Right immediately prior to such adjustment of the
Exercise Price by (ii) the Exercise Price in effect immediately prior to such
adjustment, and dividing the product so obtained by the Exercise Price in effect
immediately after such adjustment.
(i) The Company may elect, on or after the date of any adjustment of
the Exercise Price, to adjust the number of Rights instead of making any
adjustment in the number of Preferred Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Exercise Price in effect immediately prior to the
adjustment of the Exercise Price by the Exercise Price in effect immediately
after such adjustment of the Exercise Price. The Company shall make a public
announcement of its election to adjust the number of Rights pursuant to this
Section 11(i), indicating the record date for the adjustment and, if known at
the time, the amount of the adjustment to be made. This record date may be the
date on which the Exercise Price is adjusted or any day thereafter, but, if
separate Right Certificates have been issued, it shall be at least 10 days after
the date of such public announcement. If separate Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right Certificates
representing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment or, at the option of
the Company, cause to be distributed to such holders of record in substitution
and replacement for the Right Certificates held by such holders prior to the
date of such adjustment, and upon surrender thereof if required by the Company,
new Right Certificates representing all the Rights to which such holders shall
be entitled after such adjustment. Right Certificates to be so distributed
shall be issued, executed and countersigned in the manner provided for herein
(and may bear, at the option of the Company, the adjusted Exercise Price) and
shall be registered in the names of the holders of record of Right Certificates
on the record date specified in the public announcement.
19
<PAGE>
(j) Irrespective of any adjustment or change in the
Exercise Price or the number of one-hundredths of a Preferred
Share issuable upon the exercise of one Right, the Right
Certificates theretofore and thereafter issued may continue to
express the Exercise Price per one one-hundredth of a Preferred
Share and the number of Preferred Shares issuable upon the
exercise of one Right that were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Exercise Price below one one-hundredth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action that may, in the advice or opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable one one-hundredths of a Preferred Share at such adjusted Exercise
Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, the issuance to the holder of any Right exercised after such record date
of the number of one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Exercise Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument representing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such further adjustments in the number of one-
hundredths of a Preferred Share that may be purchased upon exercise of one
Right, and such further adjustments in the Exercise Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that it,
in its sole discretion, shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Shares, (ii) issuance wholly for
cash of any Preferred Shares at less than the Current Market Price thereof,
(iii) issuance wholly for cash of Preferred Shares or securities that by their
terms are convertible into or exchangeable for Preferred Shares, (iv) dividends
on Preferred Shares payable in Preferred Shares or (v) issuance of rights,
options or warrants referred to Section 11(b) hereof, hereafter made by the
Company to holders of its Preferred Shares shall not be taxable to such
shareholders.
20
<PAGE>
Section 12. Certificate of Adjusted Exercise Price or Number of
---------------------------------------------------
Shares Issuable Upon Exercise of Rights. Whenever an adjustment is made as
---------------------------------------
provided in Section 11 hereof, the Company shall promptly (a) prepare a
certificate setting forth such adjustment and a brief statement of the facts
giving rise to such adjustment, (b) file with the Rights Agent and with each
transfer agent for the securities issuable upon exercise of the Rights a copy of
such certificate and (c) mail a brief summary thereof to each holder of Rights
in accordance with Section 26 hereof. Notwithstanding the foregoing sentence,
the failure of the Company to make such certification or to give such notice
shall not affect the validity or the force and effect of such adjustment. Any
adjustment to be made pursuant to Sections 11 or 13 hereof shall be effective as
of the date of the event giving rise to such adjustment.
Section 13. Consolidation, Merger, or Sale on Transfer of Assets or
-------------------------------------------------------
Earning Power.
-------------
(a) In the event (a "Section 13(a) Event") that, at any time on or
after the 15% Ownership Date and prior to the earlier of the Redemption Date or
the Expiration Date, (x) the Company shall, directly or indirectly, consolidate
with or merge with and into any other Person and the Company shall not be the
continuing or surviving corporation in such consolidation or merger, (y) any
Person shall, directly or indirectly, consolidate with or merge with and into
the Company and the Company shall be the continuing or surviving corporation in
such merger and, in connection with such merger, all or part of the Common
Shares shall be changed into or exchanged for stock or other securities of any
Person or cash or any other property, or (z) the Company and/or any one or more
of its Subsidiaries shall, directly or indirectly, sell or otherwise transfer,
one or more transactions (other than transactions in the ordinary course of
business), assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons other than the Company or one or more of its wholly-owned
Subsidiaries (such Persons, together with the Persons described in clauses (x)
and (y) above shall be collectively referred to in this Section 13 as the
"Surviving Person"), then, and in each such case, proper provision shall be made
so that:
(i) except as provided in Section 7(d) hereof, each holder of a
Right shall thereafter have the right to receive, upon the exercise thereof
in accordance with the terms of this Agreement and payment of the then
current Exercise Price, such number of validly authorized and issued, fully
paid and nonassessable Common Shares of the Surviving Person as shall be
equal to a fraction, the numerator of which is the product of the then
current Exercise Price multiplied by the number of one-hundredths of a
Preferred Share purchasable upon the exercise of one Right
21
<PAGE>
immediately prior to the first Section 13(a) Event (or, if a Section
11(a)(ii) Event has occurred prior to the first Section 13(a) Event, the
product of the number of one-hundredths of a Preferred Share purchasable
upon the exercise of a Right (or, if the Distribution Date shall not have
occurred prior to the date of such Section 11(a)(ii) Event, the number of
one-hundredths of a Preferred Share that would have been so purchasable if
the Distribution Date had occurred on the Business Day immediately
preceding the date of such Section 11(a)(ii) Event) immediately prior to
such Section 11(a)(ii) Event, multiplied by the Exercise Price in effect
immediately prior to such Section 11(a)(ii) Event), and the denominator of
which is 50% of the Current Market Price per Common Share of the Surviving
Person on the date of consummation of such Section 13(a) Event;
(ii) the Surviving Person shall thereafter be liable for and
shall assume, by virtue of such consolidation, merger, sale or transfer,
all the obligations and duties of the Company pursuant to this Agreement;
(iii) the term, "Company," shall thereafter be deemed to refer
to the Surviving Person; and
(iv) the Surviving Person shall take such steps (including, but
not limited to, the reservation of a sufficient number of its Common Shares
in accordance with Section 9 hereof) in connection with such consummation
as may be necessary to ensure that the provisions hereof shall thereafter
be applicable to its Common Shares thereafter deliverable upon the exercise
of Rights.
(b) Notwithstanding the foregoing, if the Section 13(a) Event is the
sale or transfer in one or more transactions of assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole), but less than 100% thereof, then each Person
acquiring all or a portion thereof shall assume the obligations of the Company
as to a fraction of each of the Rights equal to the fraction of the assets of
the Company and its Subsidiaries (taken as a whole) acquired by such Person, and
the obligations of the Company as to the remaining fraction of each of the
Rights shall continue to be the obligations of the Company.
(c) The Company shall not consummate a Section 13(a) Event unless
prior thereto the Company and the Surviving Person shall have executed and
delivered to the Rights Agent a supplemental agreement confirming that such
Surviving Person shall, upon consummation of such Section 13(a) Event, assume
this Agreement in accordance with Section 13 hereof, that all rights of first
refusal or preemptive rights in respect of the issuance of Common Shares of such
Surviving Person upon exercise of outstanding Rights have been waived and that
such Section 13(a)
22
<PAGE>
Event shall not result in a default by such Surviving Person under this
Agreement, and further providing that, as soon as practicable after the date of
consummation of such Section 13(a) Event, such Surviving Person shall:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, use its best efforts to
cause such registration statement to become effective as soon as
practicable after such filing, use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date,
and similarly comply with all applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of)
the Rights and the Common Shares of the Surviving Person purchasable upon
exercise of the Rights on a national securities exchange, or use its best
efforts to cause the Rights and such Common Shares to meet the eligibility
requirements for quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical financial
statements for such Surviving Person that comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act.
(d) In the event that at any time after the occurrence of a Section
11(a)(ii) Event some or all of the Rights shall not have been exercised pursuant
to Section 11 hereof prior to the date of a Section 13(a) Event, such Rights
shall thereafter be exercisable only in the manner described in Section 13(a)
hereof (without taking into account any prior adjustment required by Section
11(a)). In the event that a Section 11(a)(ii) Event occurs on or after the date
of a Section 13(a) Event, Rights shall not be exercisable pursuant to Section 11
hereof but shall instead be exercisable pursuant to, and only pursuant to, this
Section 13.
(e) The provisions of this Section 13 shall apply to each successive
merger, consolidation, sale or other transfer constituting a Section 13(a)
Event.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates that represent fractional Rights. If the
Company shall determine not to issue such fractional Rights, the Company shall
pay to the registered holders of the Right Certificates with respect to which
such fractional Rights would otherwise be issuable, at the time such Rights are
exercised as provided herein, an amount in
23
<PAGE>
cash equal to the same fraction of the Current Market Value of a whole Right.
For the purposes of this Section 14(a), the Current Market Value of a whole
Right shall be the Closing Price per Right for the Trading Day immediately prior
to the date on which such fractional Rights would have been otherwise issuable.
(b) The Company shall not be required to issue fractions of Common
Shares or Preferred Shares (other than fractions that are integral multiples of
one one-hundredth of a Preferred Share) upon exercise of Rights, or to
distribute certificates that represent fractional Common Shares or Preferred
Shares (other than fractions that are integral multiples of one one-hundredth of
a Preferred Share). Fractions of Preferred Shares in integral multiples of one
one-hundredth of a Preferred Share may, at the election of the Company, be
represented by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it, provided that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
Preferred Shares. If the Company shall determine not to issue fractional Common
Shares or Preferred Shares (or depositary receipts in lieu of Preferred Shares),
the Company shall pay to the registered holders of Right Certificates with
respect to which such fractional Common Shares or Preferred Shares would
otherwise be issuable, at the time such Rights are exercised as provided herein,
an amount in cash equal to the same fraction of the Current Market Value of a
whole Common Share or Preferred Share, as the case may be. For purposes of this
Section 14(b), the Current Market Value of a whole Common Share or Preferred
Share shall be the Closing Price per share for the Trading Day immediately prior
to the date of such exercise.
(c) The holder of a Right, by the acceptance of such Right, expressly
waives such holder's right to receive any fractional Rights or any fractional
Common Shares or Preferred Shares upon exercise of such Right, except as
permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of
----------------
this Agreement, except the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates and certificates for Common Shares representing Rights, and any
registered holder of any Right Certificate and of such certificate for Common
Shares, without the consent of the Rights Agent or of the holder of any other
Right Certificate or any other certificate for Common Shares may, in such
holder's own behalf and for such holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder's right to exercise the
Rights represented by such Right Certificate or by such certificate for Common
Shares in the
24
<PAGE>
manner provided in such Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance,
and injunctive relief against actual or threatened violations, of the
obligations of any Person under this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
--------------------------
accepting the same, consents and agrees with the Company and the Rights Agent
and every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be represented by
certificates for Common Shares registered in the name of the holders of such
Common Shares (which certificates for Common Shares shall also constitute Right
Certificates), and each such Right shall be transferable only in connection with
the transfer of such Common Shares;
(b) after the Distribution Date, the Right Certificates shall only be
transferable on the registry books of the Rights Agent if surrendered at the
principal office of the Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate is registered as the absolute owner thereof and
of the Rights represented thereby (notwithstanding any notations of ownership or
writing on the Right Certificate by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary.
Section 17. Right Holder and Right Certificate Holder Not Deemed a
------------------------------------------------------
Shareholder. No holder, as such, of any Right or Right Certificate shall be
-----------
entitled to vote, receive dividends or be deemed for any purpose the holder of
the securities of the Company that may at any time be issuable upon the exercise
of the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right or Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, to give or withhold consent to any
corporate action, to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, in each case until such Right or the
Rights represented by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
25
<PAGE>
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent as compensation for
all services rendered by it hereunder reasonable and customary fees and
expenses. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Right Certificate
or certificate for the Preferred Shares or Common Shares or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of its counsel as set forth in
Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights
---------------------------------------------------
Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. If, at the time such successor Rights Agent shall succeed to
the agency created by this Agreement, any of the Right Certificates shall have
been countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and if at that time any of the Right Certificates
shall not have been countersigned, any successor Rights Agent may countersign
such Right Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in such Right Certificates, and
in this Agreement.
26
<PAGE>
(b) If at any time the name of the Rights Agent shall be changed, and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and if at that time any of the
Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in such Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance of the Rights, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such advice
or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Vice Chairman of the Board, the President, any Vice President, the Treasurer or
the Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or, willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement, or in the Right
Certificates (except its countersignature thereof), or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due authorization, execution and delivery hereof by the Rights Agent) or in
respect
27
<PAGE>
of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including the Rights becoming null and void pursuant to Section
7(d)) or any adjustment in the terms of the Rights (including the manner, method
or amount thereof) provided for in Sections 7, 11, 13 and 23 hereof, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights represented by Right
Certificates after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares or
Common Shares or other securities to be issued pursuant to this Agreement or any
Right Certificate, or as to whether any Preferred Shares or Common Shares or
other securities will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Vice Chairman, the President, any Vice
President, the Secretary, any Assistant Secretary or the Treasurer of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such
officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such
28
<PAGE>
act, default, neglect or misconduct, provided that reasonable care was exercised
in the selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any
----------------------
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares and Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Shares and
Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting as such, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit such holder's Right Certificate for
inspection by the Company), then the Company shall become the Rights Agent and
the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the States of New York or California (or of any other state of the United
States so long as such corporation is authorized to do business as a banking
institution in the States of New York or California), in good standing, having a
principal office in New York or California, that is authorized under such laws
to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and that has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose of this
Agreement and so that the successor Rights Agent may appropriately act as Rights
Agent hereunder. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares and Preferred Shares, and mail a
notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for
29
<PAGE>
in this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any
----------------------------------
of the provisions of this Agreement or of the Right Certificates to the
contrary, the Company may, at its option, issue new Right Certificates in such
form as may be approved by the Board of Directors in order to reflect any
adjustment or change in the Exercise Price and the number or kind or class of
shares or other securities or property purchasable upon exercise of the Rights
in accordance with the provisions of this Agreement.
Section 23. Redemption of Rights.
--------------------
(a) Until the earliest of (i) the date of the first Section 11(a)(ii)
Event, (ii) the date of the first Section 13(a) Event or (iii) the Expiration
Date, a majority, but not less than three, of the Independent Directors may, at
their option, direct the Company to redeem all, but not less than all, of the
then outstanding Rights at a redemption price of $.01 per Right, as such
redemption price shall be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (the
"Redemption Price"), and the Company shall so redeem the Rights.
(b) Immediately upon the action of a majority, but not less than
three, of the Independent Directors directing the Company to redeem the Rights
pursuant to subsection (a) of this Section 23, or at such time and date
thereafter as they may specify, and without any further action and without any
notice, the right to exercise Rights shall terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price.
Within 10 Business Days after the action of a majority, but not less than three,
of the Independent Directors directing the Company to redeem the Rights pursuant
to subsection (a) of this Section 23, the Company shall give notice of such
redemption to the holders of Rights by mailing such notice to all holders of
Rights at their last addresses as they appear upon the registry books of the
Rights Agent or, if prior to the Distribution Date, on the registry books of the
transfer agent for the Common Shares. Any notice that is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives such
notice, but neither the failure to give any such notice nor any defect therein
shall affect the legality or validity of such redemption. Each such notice of
redemption shall state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may,
directly or indirectly, redeem, acquire or purchase for value any Rights in any
manner other than that specifically set forth in Sections 23 or 24 hereof, and
30
<PAGE>
other than in connection with the purchase of Common Shares prior to the
Distribution Date.
Section 24. Certain Cash Tender Offers.
--------------------------
(a) In the event that the Company shall receive a Cash Tender Offer
Proposal from any Prospective Offeror on any date upon which the Rights may be
redeemed by the Company pursuant to Section 23(a) hereof, a majority of the
Independent Directors shall, within 15 Business Days thereafter, at their
option, either (i) engage a nationally recognized investment banking firm to
render an opinion as to whether the price per Voting Share in cash to be paid to
the holders of Voting Shares pursuant to such Cash Tender Offer Proposal is fair
and adequate from a financial point of view (the "Fairness Opinion"), which
Fairness Opinion shall be delivered to the Board of Directors within 20 Business
Days after such engagement, or (ii) call a special meeting of shareholders (the
"Special Meeting") for the purpose of voting on a precatory resolution
requesting the Independent Directors to accept such Cash Tender Offer Proposal
as such Cash Tender Offer Proposal may be amended or revised by such Prospective
Offeror from time to time to increase the price per Voting Share in cash to be
paid to the holders of Voting Shares (the "Resolution"). The Special Meeting,
if any, shall be held on a date selected by a majority of the Independent
Directors, which date shall be not less than 90 nor more than 120 days after the
later of the date such Cash Tender Offer Proposal is received by the Company
(the "Proposal Date") or the date of any previously scheduled meeting of
shareholders to be held within 60 days after the Proposal Date; provided,
however, that if (x) such other meeting shall have been called for the purpose
of voting on a precatory resolution with respect to another Cash Tender Offer
Proposal and (y) the Proposal Date shall be not later than 15 days after the
date such other Cash Tender Offer Proposal was received by the Company, then
both the Resolution and such other resolution shall be voted on at such meeting
and such meeting shall be deemed to be the Special Meeting. A majority of the
Independent Directors shall set a date for determining the shareholders of
record entitled to notice of and to vote at the Special Meeting, if any, in
accordance with the Company's Restated Articles of Incorporation, as amended,
and Bylaws and with applicable law. At the request of the Prospective Offeror,
the Company shall include in any proxy soliciting material prepared by it in
connection with the Special Meeting, if any, proxy soliciting material submitted
by the Prospective Offeror; provided, however, that the Prospective Offeror
shall, by written agreement with the Company, in form and substance satisfactory
to the Company, contained in or delivered with such request, have indemnified
the Company against any and all liabilities resulting from any misstatements,
misleading statements and omissions contained in the Prospective Offeror's proxy
soliciting material, shall have agreed to pay the Company's incremental costs
incurred as a result of including such material in the Company's proxy
31
<PAGE>
soliciting material and shall have advanced to the Company an amount equal to
the Company's estimate from time to time of such incremental costs.
(b) In the event that (x) the Fairness Opinion states that the price
per Voting Share to be paid in cash to the holders of Voting Shares pursuant to
the Cash Tender Offer Proposal is fair and adequate or (y) at the Special
Meeting the Resolution receives the affirmative vote of the majority of the
Voting Shares outstanding as of the record date of the Special Meeting and not
Beneficially Owned on such day by the Prospective Offeror or any of its
Affiliates or Associates, then, subject to Section 24(c) hereof, proper
provision shall be made in order that upon the consummation of any tender offer
(provided that such tender offer is consummated prior to the 60th day following
the date of such event, or prior to such later day upon which a suspension of
operation pursuant to Section 24(c) hereof shall terminate) pursuant to which
the Prospective Offeror offers to purchase and purchases any and all of the
Voting Shares held by Persons other than the Prospective Offeror and its
Affiliates and Associates at a price per Voting Share in cash equal to or
greater than the price per Voting Share provided in the Cash Tender Offer
Proposal (a "Fair Offer"), (i) each outstanding Right shall be redeemed in
accordance with Section 23 hereof, effective immediately prior to the
consummation of such tender offer, (ii) the Voting Shares acquired by the
Prospective Offeror and its Affiliates and Associates pursuant to such tender
offer shall not be taken into account in determining whether such Persons have
or have not become 15% Shareholders and (iii) neither the commencement of, nor
the first public announcement of the intent of the Prospective Offeror to
commence, such tender offer shall be taken into account in determining whether
the Distribution Date has or has not occurred. The redemption of Rights
pursuant to this Section 24 shall not in any way affect the exercisability of
such Rights prior to the effective time of such redemption.
(c) Notwithstanding Section 24(b) hereof, in the event that a majority
of the Independent Directors determine that such action is in the best interests
of the shareholders of the Company other than the Prospective Offeror, they may,
at any time prior to the consummation of the tender offer referred to in the
first sentence of Section 24(b) hereof, suspend the operation of clauses (i) and
(ii) in such sentence for a period of time not to exceed 120 days, such
suspension to be effective upon the date of the first public announcement
thereof.
(d) Nothing contained in this Section 24 shall be deemed to be in
derogation of the obligation of the Board of Directors of the Company to
exercise its fiduciary duty.
Without limiting the foregoing, nothing contained herein shall be construed to
suggest or imply that the Board of Directors shall not be entitled to reject any
Cash Tender Offer Proposal, to recommend that holders of Voting Shares reject
any Cash Tender
32
<PAGE>
Offer Proposal, or to take any other action (including, without limitation, the
commencement, prosecution, defense or settlement of any litigation or the
submission of additional or alternative Cash Tender Offer Proposals or other
proposals to the Special Meeting) with respect to any Cash Tender Offer Proposal
or any tender offer that the Board of Directors believes is necessary or
appropriate in the exercise of such fiduciary duty.
(e) Nothing contained in this Section 24 shall be construed as
limiting or prohibiting the Company or any Prospective Offeror from proposing or
engaging in any acquisition, disposition or other transfer of any securities of
the Company, any merger or consolidation involving the Company, any sale or
other transfer of assets of the Company, any liquidation, dissolution or winding
up of the Company, any other business combination or other transaction, or any
other action; provided, however, that the holders of Rights shall have the
rights set forth in this Agreement with respect to any such acquisition,
disposition, transfer, merger, consolidation, sale, liquidation, dissolution,
winding up, business combination, transaction or other action.
Section 25. Notice of Certain Events.
------------------------
(a) In the event that the Company shall propose (i) to declare or pay
any dividend payable on or make any distribution with respect to its Common
Shares or Preferred Shares (other than a regular quarterly cash dividend), (ii)
to offer to the holders of its Common Shares or Preferred Shares options, rights
or warrants to subscribe for or to purchase any additional shares thereof or
shares of stock of any class or any other securities, rights or options, (iii)
to effect any reclassification of its Common Shares or Preferred Shares (other
than a reclassification involving only the subdivision of outstanding shares),
(iv) to effect any consolidation or merger with or into, or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person or Persons, or (v) to effect the liquidation, dissolution
or winding up of the Company, then and in each such case, the Company shall give
to each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of such proposed action, that shall specify the record date for the
purpose of such dividend or distribution, or the date upon which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation therein
by the holders of record of the Common Shares or Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 20 days prior to the record date
for determining holders of the Common Shares or Preferred Shares for purposes of
such action, and in the case
33
<PAGE>
of any such other action, at least 20 days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of the
Common Shares or Preferred Shares, whichever date shall be the earlier. The
failure to give the notice required by this Section 25 or any defect therein
shall not affect the legality or validity of the action taken by the Company or
the vote upon any such action.
(b) Upon the occurrence of each Section 11(a)(ii) Event and each
Section 13(a) Event, the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, specifying the event and the
consequences of the event to holders of Rights under Sections 11 and 13 hereof.
Section 26. Notices. Notices or demands authorized by this Agreement
-------
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Wyle Electronics
15370 Barranca Parkway
Irvine, California 92718
Attention: President
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) to the principal office of the Rights
Agent as follows:
Chemical Bank
300 South Grand Avenue
4th Floor
Los Angeles, California 90071
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments.
--------------------------
(a) Until the earliest of (i) the date of the first Section 11(a)(ii)
Event, (ii) the date of the first Section 13(a)
34
<PAGE>
Event, (iii) the Redemption Date or (iv) the Expiration Date, a majority, but
not less than three, of the Independent Directors may, without the approval of
any holders of Rights, direct the Company and the Rights Agent to supplement or
amend any provision of this Agreement in any manner, whether or not such
supplement or amendment is adverse to any holders of Rights, and the Company and
the Rights Agent shall so supplement or amend such provision. Prior to the
earlier of the Redemption Date or the Expiration Date, a majority, but not less
than three, of the Independent Directors may, without the approval of any
holders of Rights, direct the Company and the Rights Agent to supplement or
amend any provision of this Agreement in any manner so long as the interests of
the holders of Rights shall not be materially and adversely affected thereby,
and the Company and the Rights Agent shall so supplement or amend such
provision.
(b) After the earlier of the date of the first Section 11(a)(ii) Event
or the date of the first Section 13(a) Event and prior to the earlier of the
Redemption Date or the Expiration Date, the Company shall not effect any
amendment to the Certificate of Determination for the Preferred Shares that
would materially and adversely affect the rights, privileges or preferences of
the Preferred Shares without the prior approval of the holders of two-thirds or
more of the then outstanding Rights.
Section 28. Exchange.
--------
(a) The Board of Directors of the Company may, at its option, at any
time after a 15% Ownership Date, exchange all or part of the then outstanding
and exercisable Rights (which shall not include Rights that have become subject
to the provisions of Section 7(d) hereof) for Common Shares at an exchange ratio
of one Common Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such exchange ratio being hereinafter referred to as the "Exchange Ratio").
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 28 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided,
--------
however, that the failure to give, or any defect in, such notice shall not
-------
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights in the manner provided
for in Section 26 hereof. Any notice which is mailed in accordance with Section
26 shall be deemed given, whether or not the holder receives the notice. Each
such notice of exchange will state the method by which the exchange of
35
<PAGE>
the Common Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become subject to the provisions of Section 7(d) hereof) held by each
holder of Rights.
(c) In the event that there shall not be sufficient authorized Common
Shares to permit an exchange of Rights as contemplated in accordance with this
Section 28, the Company shall take all such action as may be necessary to
authorize additional Common Shares or shares of capital stock or other
securities of the Company of equivalent value to the Common Shares, for issuance
upon exchange of the Rights.
Section 29. Certain Covenants.
-----------------
Subject to Section 27 and the other provisions of this Agreement:
(a) no adjustment to the Exercise Price, the number of Preferred
Shares or Common Shares or other securities (or fractions of a share of any of
them), as the case may be, for which a Right is exercisable or the number of
Rights outstanding shall be made or be effective if such adjustment would have
the effect of reducing or limiting the benefits that the holders of Rights would
have had absent such adjustment, including, without limitation, the benefits
under Sections 7, 11 and 13 hereof, unless the terms of this Agreement are
amended so as to preserve such benefits; and
(b) from and after the earlier of the date of the first Section
11(a)(ii) Event or the date of the first Section 13(a) Event and prior to the
earlier of the Redemption Date or the Expiration Date, the Company shall not (i)
issue or sell, or permit any Subsidiary to issue or sell, to a 15% Shareholder
or a Surviving Person, or any Affiliate or Associate of a 15% Shareholder or a
Surviving Person, or any Person holding Voting Shares of the Company that are
Beneficially Owned by a 15% Shareholder or a Surviving Person, (A) any rights,
options, warrants or convertible securities on terms similar to, or that
materially adversely affect the value of, the Rights or (B) Preferred Shares,
Common Shares or shares of any other class of capital stock, if such sale is
intended to or would materially adversely affect the value of the Rights, or
(ii) take any action that is intended to or would materially adversely affect
the value of the Rights.
Section 30. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
36
<PAGE>
Section 31. Benefits of this Agreement. Nothing in this Agreement
--------------------------
shall be construed to give to any Person other than the Company, the Rights
Agent, the registered holders of the Right Certificates (other than those
representing Rights that have become null and void) and the certificates for
Common Shares representing Rights (other than those Rights that have become null
and void) any legal or equitable right, remedy or claim under this Agreement,
and this Agreement shall be for the sole and exclusive benefit of the Company,
the Rights Agent, such registered holders of Right Certificates and such
certificates for Common Shares representing Rights.
Section 32. Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 33. Governing Law. This Agreement and each Right Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of California and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts made and
performed entirely within such state.
Section 34. Counterparts. This Agreement may be executed in any
------------
number of counterparts and each such counterpart shall for all purposes be
deemed to be an original and all such counterparts shall together constitute but
one and the same instrument.
Section 35. Descriptive Headings. Descriptive headings of the
--------------------
several sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
Attest: WYLE ELECTRONICS
By ________________________ By ________________________________
Stephen D. Natcher Ralph L. Ozorkiewicz
Vice President - President and Chief Operating
Administration, Officer
General Counsel and
Secretary
Attest: CHEMICAL BANK
37
<PAGE>
By _________________________ By ________________________________
Name: Name:
Title: Title:
38
<PAGE>
EXHIBIT A
---------
CERTIFICATE OF DETERMINATION
OF
SERIES A JUNIOR PARTICIPATING CUMULATIVE PREFERRED STOCK
of
WYLE LABORATORIES
Pursuant to Section 401 of the General Corporation
Law of the State of California
We, Theodore M. Freedman, Executive Vice President-Finance and
Treasurer, Chief Financial Officer, and Glenn M. Gottlieb, Secretary and General
Counsel, of Wyle Laboratories, a corporation organized and existing under the
General Corporation Law of the State of California, in accordance with the
provisions of Section 200 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Restated Articles of Incorporation of the Corporation, as amended, the
Board of Directors on September 28, 1989 adopted the following resolution
creating a series of One Hundred Fifty Thousand (150,000) shares of Preferred
Stock designated as Series A Junior Participating Cumulative Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its Restated
Articles of Incorporation, as amended, a series of Preferred Stock of the
Corporation be, and it hereby is, created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof, are as follows:
Section 1. Designation and Amount. The shares of such series shall
----------------------
be designated as Series A Junior Participating Cumulative Preferred Stock (the
"Series A Preferred Stock"), and the number of shares constituting such series
shall be One Hundred Fifty Thousand (150,000).
Section 2. Dividends and Distributions.
---------------------------
(a) The holders of shares of Series A Preferred Stock, in preference
to the holders of shares of Common Stock of the Corporation (the "Common
Stock") and of any other junior stock of the Corporation that may be
outstanding, shall be outstanding, shall be entitled to receive, when, as
and if
A-1
<PAGE>
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the tenth day of January,
April, July and October in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (i) $.25 per share
($1.00 per annum), or (ii) subject, to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in kind)
of all non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock, or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date, since
the first issuance of any share or fraction of a share of Series A
Preferred Stock. In the event that the Corporation shall at any time
declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into
a greater or lesser number of shares of Common Stock, then and in each such
event, the amount to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event under clause (ii) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event, and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
(b) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (a) of this Section 2
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided,
however, that in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $.25 per share ($1.00 per annum) on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Preferred
Stock, unless the date of issue of such shares is prior to the record date
for
A-2
<PAGE>
the first Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Series
A Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which cases such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall cumulate but shall not
bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares
of Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60
days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
-------------
Preferred Stock shall have the following voting rights:
(a) Each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes (and each one one-hundredth of a share of Series A
Preferred Stock shall entitle the holder thereof to one vote) on all
matters submitted to a vote of the shareholders of the Corporation. In the
event that the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then and in each such event, the number of votes per share to which holders
of shares of Series A Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event, and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such
event.
(b) Except as otherwise provided in the Restated Articles of
Incorporation, as amended, of the Corporation or herein or by law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a
vote of shareholders of the Corporation.
A-3
<PAGE>
(c) In addition, the holders of shares of Series A Preferred Stock
shall have the following special voting rights:
(1) In the event that at any time dividends on Series A Preferred
Stock, whenever accrued and whether or not consecutive, shall not have
been paid or declared and a sum sufficient for the payment thereof set
aside, in an amount equivalent to six quarterly dividends on all
shares of Series A Preferred Stock at the time outstanding, then and
in each such event, the holders of shares of Series A Preferred Stock
and each other series of preferred stock now or hereafter issued that
shall be accorded such class voting right by the Board of Directors
and that shall have the right to elect two directors as the result of
a prior or subsequent default in payment of dividends on such series
(each such other series being hereinafter called "Other Series of
Preferred Stock"), voting separately as a class without regard to
series, shall be entitled to elect two directors at the next annual
meeting of shareholders of the Corporation, in addition to the
directors to be elected by the holders of all shares of the
Corporation entitled to vote for the election of directors, and the
holders of all shares (including the Series A Preferred Stock)
otherwise entitled to vote for directors, voting separately as a
class, shall be entitled to elect the remaining members of the Board
of Directors, provided that the Series A Preferred Stock and each
Other Series of Preferred Stock, voting as a class, shall not have the
right to elect more than two directors. Such special voting right of
the holders of shares of Series A Preferred Stock may be exercised
until all dividends in default on the Series A Preferred Stock shall
have been paid in full or declared and funds sufficient therefor set
aside, and when so paid or provided for, such special voting right of
the holders of shares of Series A Preferred Stock shall cease, but
subject always to the same provisions for the vesting of such special
voting rights in the event of any such future dividend default or
defaults. At any time after such special voting rights shall have so
vested in the holders of shares of Series A Preferred Stock, the
Secretary of the Corporation may, and upon the written request of the
holders of record of 10% or more in number of the shares of Series A
Preferred Stock and each Other Series of Preferred Stock then
outstanding addressed to the Secretary at the principal executive
office of the Corporation shall, call a special meeting of the holders
of shares of Preferred Stock so entitled to vote, for the election of
the directors to be elected by them as herein provided, to be held
within 40 days after such
A-4
<PAGE>
call and at the place and upon the notice provided by law and in the
Bylaws for the holding of meetings of shareholders; provided, however,
that the Secretary shall not be required to call such special meeting
in the case of any such request received less than 90 days before the
date fixed for any annual meeting of shareholders, and if in such case
such special meeting is not called or held, the holders of shares of
Preferred Stock so entitled to vote shall be entitled to exercise the
special voting rights provided in this paragraph at such annual
meeting. If any such special meeting required to be called as above
provided shall not be called by the Secretary within 30 days after
receipt of any such request, then the holders of record of 10% or more
in number of the shares of Series A Preferred Stock and each Other
Series of Preferred Stock then outstanding may designate in writing
one of their number to call such meeting, and the person so designated
may, at the expense of the Corporation, call such meeting to be held
at the place and upon the notice given by such person, and for that
purpose shall have access to the stock books of the Corporation. No
such special meeting and no adjournment thereof shall be held on a
date later than 60 days before the annual meeting of shareholders.
If, at any meeting so called or at any annual meeting held while the
holders of shares of Series A Preferred Stock have the special voting
rights provided for in this paragraph, the holders of not less than
40% of the shares of Series A Preferred Stock and each Other Series of
Preferred Stock then outstanding are present in person or by proxy,
which percentage shall be sufficient to constitute a quorum for the
election of additional directors as herein provided, the then
authorized number of directors of the Corporation shall be increased
by two, as of the time of such special meeting or the time of the
first such annual meeting held while such holders have special voting
rights and such quorum is present, and the holders of shares of Series
A Preferred Stock and each Other Series of Preferred Stock, voting as
a class, shall be entitled to elect the additional directors so
provided for. If the directors of the Corporation are then divided
into classes under provisions of the Restated Articles of
Incorporation, as amended, of the Corporation or the Bylaws, the two
additional directors shall be members of those respective classes of
directors in which a vacancy is created as a result of such increase
in the authorized number of directors. If the foregoing expansion of
the size of the Board of Directors shall not be valid under applicable
law, then the holders of shares of Series A Preferred Stock and of
each Other Series of Preferred Stock, voting as a class, shall be
A-5
<PAGE>
entitled, at the meeting of shareholders at which they would otherwise
have voted, to elect directors to fill any then existing vacancies on
the Board of Directors, and shall additionally be entitled, at such
meeting and each subsequent meeting of shareholders at which directors
are elected, to elect all of the directors then being elected until by
such class vote two members of the Board of Directors have been so
elected. Upon the election at such meeting by the holders of shares
of Series A Preferred Stock and each Other Series of Preferred Stock,
voting as a class, of the directors they are entitled so to elect, the
persons so elected, together with such persons as may be directors or
as may have been elected as directors by the holders of all shares
(including Series A Preferred Stock) otherwise entitled to vote for
directors, shall constitute the duly elected directors of the
Corporation. The additional directors so elected by holders of shares
of Series A Preferred Stock and each Other Series of Preferred Stock,
voting as a class, shall serve until the next annual meeting or until
their respective successors shall be elected and qualified, or if any
such director is a member of a class of directors under provisions
dividing the directors into classes, each such director shall serve
until the annual meeting at which the term of office of such
director's class shall expire or until such director's successor shall
be elected and shall qualify, and at each subsequent meeting of
shareholders at which the directorship of any director elected by the
vote of holders of shares of Series A Preferred Stock and each Other
Series-of Preferred Stock under the special voting rights set forth in
this paragraph is up for election, said special class voting rights
shall apply in the reelection of such director or in the election of
such director's successor; provided, however, that whenever the
holders of shares of Series A Preferred Stock and each Other Series of
Preferred Stock shall be divested of the special rights to elect two
directors as above provided, the terms of office of all persons
elected as directors by the holders of shares of Series A Preferred
Stock and each Other Series of Preferred Stock, voting as a class, or
elected to fill any vacancies resulting from the death, resignation,
or removal of directors so elected by the holders of shares of Series
A Preferred Stock and each Other Series of Preferred Stock, shall
forthwith terminate (and, if applicable, the number of directors shall
be reduced accordingly). If, at any time after a special meeting of
shareholders or an annual meeting of shareholders at which the holders
of shares of Series A Preferred Stock and each Other Series of
Preferred Stock, voting as a class, have elected directors as
A-6
<PAGE>
provided above, and while the holders of shares of Series A Preferred
Stock and each Other Series of Preferred Stock shall be entitled so to
elect two directors, the number of directors who have been elected by
the holders of shares of Series A Preferred Stock and each Other
Series of Preferred Stock (or who by reason of one or more
resignations, deaths or removals have succeeded any directors so
elected) shall by reason of resignation, death or removal be less than
two but at least one, the vacancy in the directors so elected by the
holders of shares of the Series A Preferred Stock and each Other
Series of Preferred Stock may be filled by the remaining director
elected by such holders, and in the event that such election shall not
occur within 30 days after such vacancy arises, or in the event that
there shall not be incumbent at least one director so elected by such
holders, the Secretary of the Corporation may, and upon the written
request of the holders of record of 10% or more in number of the
shares of Series A Preferred Stock and each Other Series of Preferred
Stock then outstanding addressed to the Secretary at the principal
office of the Corporation shall, call a special meeting of the holders
of shares of Series A Preferred Stock and each Other Series of
Preferred Stock so entitled to vote, for an election to fill such
vacancy or vacancies, to be held within 40 days after such call and at
the place and upon the notice provided by law and in the Bylaws for
the holding of meetings of shareholders; provided, however, that the
Secretary shall not be required to call such special meeting in the
case of any such request received less than 90 days before the date
fixed for any annual meeting of shareholders, and if in such case such
special meeting is not called, the holders of shares of Preferred
Stock so entitled to vote shall be entitled to fill such vacancy or
vacancies at such annual meeting. If any such special meeting required
to be called as above provided shall not be called by the Secretary
within 30 days after receipt of any such request, then the holders of
record of 10% or more in number of the shares of Series A Preferred
Stock and each Other Series of Preferred Stock then outstanding may
designate in writing one of their number to call such meeting, and the
person so designated may, at the expense of the Corporation, call such
meeting to be held at the place and upon the notice above provided,
and for that purpose shall have access to the stock books of the
Corporation; no such special meeting and no adjournment thereof shall
be held on a date later than 60 days before the annual meeting of
shareholders.
A-7
<PAGE>
(2) So long as any shares of Series A Preferred Stock shall be
outstanding, the Corporation shall not, without the affirmative vote
or written consent of the holders of at least two-thirds of the
aggregate number of shares of Series A Preferred Stock and of all
Other Series of Preferred Stock at the time outstanding, considered as
a class without regard to series, by an amendment to the Restated
Articles of Incorporation, as amended, or by merger or consolidation
or in any other manner:
(i) increase the authorized number of shares of Series A
Preferred Stock;
(ii) authorize any new class of stock ranking, either as to
payment of dividends or distribution of assets, prior to or
on a parity with the Series A Preferred Stock; or
(iii) alter or change the designations, or the powers,
preferences or rights, or the qualifications, limitations or
restrictions thereof, of the Series A Preferred Stock, so as
to affect such class of stock adversely, but nothing herein
contained shall require such a class vote or consent in
connection with any increase in the total number of
authorized shares of Common Stock, or in connection with the
fixing of any of the particulars of shares of Other Series
of Preferred Stock that may be fixed by the Board of
Directors as provided in the Restated Articles of
Incorporation, as amended;
provided, however, that no such vote or written consent of the holders
of the Series A Preferred Stock shall be required if, at or prior to the
time when such increase is to be effective, the issuance of any such prior
stock is to be made or any such change is to take effect, as the case may
be, all shares of Series A Preferred Stock at the time outstanding have
been called for redemption and funds set aside for such redemption.
(d) Nothing herein shall prevent the directors or shareholders from
taking any action to increase the number of authorized shares of Series A
Preferred Stock, or increasing the number of authorized shares of Preferred
Stock of the same class as the Series A Preferred Stock or the number of
authorized shares of Common Stock, or changing the par value of the Common
Stock or Preferred Stock, or issuing options, warrants or rights to any
class of stock of the Corporation as authorized by the Restated Articles of
A-8
<PAGE>
Incorporation, as amended, of the Corporation, as it may hereafter be
amended.
(e) Except as set forth herein, holders of shares of Series A
Preferred Stock shall have no special voting rights and their consent shall
not be required (except to the extent they are entitled to vote as set
forth in the Restated Articles of Incorporation, as amended, of the
Corporation or herein or by law) for taking any corporate action.
Section 4. Certain Restrictions.
--------------------
(a) Whenever any dividends or other distributions payable on the
Series A Preferred Stock as provided in Section 2 hereof are in arrears,
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Preferred Stock outstanding
shall have been paid in full, the Corporation shall not and shall cause its
subsidiaries not to, directly or indirectly:
(i) declare or pay dividends on, or make any other distributions
with respect to, any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends on, or make any other distributions
with respect to, any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on shares of
the Series A Preferred Stock and all such-parity stock on which
dividends are payable or in arrears in proportion to the total amounts
to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred
Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the
Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares
of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A Preferred Stock, except in accordance with a
A-9
<PAGE>
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(b) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under paragraph (a) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
-----------------
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
preferred stock, without designation as to series, and may be reissued as part
of any series of preferred stock created by resolution or resolutions of the
Board of Directors (including Series A Preferred Stock), subject to the
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or winding Up. Upon any
--------------------------------------
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made to:
(a) the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received the greater of (i) $1.00 per share
($.01 per one one-hundredth of a share), plus an amount equal to accrued
and unpaid dividends and distributions thereon, whether or not declared, to
the date of such payment, or (ii) an aggregate amount per share, subject to
the provision for adjustment hereinafter set forth, equal to 100 times the
aggregate amount to be distributed per share to holders of shares of Common
Stock; or
(b) the holders of shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.
A-10
<PAGE>
In the event that the Corporation shall at any time declare or pay any dividend
on Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then and in each such event, the aggregate amount to which holders
of shares of Series A Preferred Stock were entitled immediately prior to such
event under the proviso in clause (a) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event, and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In the event that the
---------------------------
Corporation shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, or otherwise
changed, then and in each such event, the shares of Series A Preferred Stock
shall at the same time be similarly exchanged or changed in an amount per share
(subject to the provision for adjustment hereinafter set forth) equal to 100
times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event that the Corporation shall
at any time declare or pay any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then and in each such event,
the amount set forth in the preceding sentence with respect to-the exchange or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event, and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock
-------------
shall not be redeemable. Notwithstanding the foregoing, the Corporation may
acquire shares of Series A Preferred Stock in any other manner permitted by law,
the Restated Articles of Incorporation, as amended, of the Corporation or
herein.
Section 9. Rank. Unless otherwise provided in the Restated Articles
----
of Incorporation, as amended, of the Corporation or a Certificate of
Determination relating to a subsequent series of preferred stock of the
Corporation, the Series A Preferred Stock shall rank junior to all other series
of the Corporation's preferred stock as to the payment of dividends
A-11
<PAGE>
and the distribution of assets on liquidation, dissolution or winding up, and
senior to the Common Stock of the Corporation.
Section 10. Amendment. The Restated Articles of Incorporation, as
---------
amended, of the Corporation shall not be amended in any manner that would
materially and adversely alter or change the powers, preferences or special
rights of the Series A Preferred Stock without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Series A Preferred
Stock, voting together as a single series.
Section 11. Fractional Shares. Series A Preferred Stock may be
-----------------
issued in fractions of a share (in one one-hundredths (1/100) of a share and
integral multiples thereof) that shall entitle the holder thereof, in proportion
to such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and have the benefit of all other rights
of holders of shares of Series A Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this ______
day of October, 1989.
s/THEODORE M. FREEDMAN
----------------------
Theodore M. Freedman,
Executive Vice President-Finance and Treasurer,
Chief Financial Officer
Attest:
s/GLENN M. GOTTLIEB
-------------------
Glenn M. Gottlieb,
Secretary and General Counsel
A-12
<PAGE>
Exhibit B
---------
FORM OF
RIGHT CERTIFICATE
Certificate No. R-__________ ________ Rights
NOT EXERCISABLE AFTER FEBRUARY 23, 2005 OR EARLIER IF REDEEMED. THE
RIGHTS ARE SUBJECT-TO REDEMPTION AT $.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SPECIFIED
IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY CERTAIN PERSONS
OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
Right Certificate
WYLE ELECTRONICS
(formerly known as Wyle Laboratories)
This certifies that _______________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms and conditions of an
Amended and Restated Rights Agreement (the "Rights Agreement") dated as of
February 23, 1995 by and between Wyle Electronics, a California corporation (the
"Company"), and Chemical Bank (as successor to Security Pacific National Bank),
(the "Rights Agent"), to purchase from the Company at any time prior to 5:00
o'clock p.m., Los Angeles time, on the earlier of the Redemption Date (as such
term is defined in the Rights Agreement) or February 23, 2005, at the office or
agency of the Rights Agent at 300 South Grand Avenue, 4th Floor, Los Angeles,
California 90071, or at the office of its successor as Rights Agent, one one-
hundredth of a fully paid and nonassessable share of Series A Junior
Participating Cumulative Preferred Stock, without par value, of the Company (a
"Preferred Share") or, in certain circumstances, other securities or other
property, at a purchase price of $85.00 per one one-hundredth of a Preferred
Share (the "Exercise Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase, including Certificate, on the
reverse side hereof completed and duly executed, with signature guaranteed.
The number of Rights represented by this Right Certificate and the
Exercise Price set forth above are the number of Rights and the Exercise Price
as of February 23, 1995, based upon the Preferred Shares as constituted on such
date. As provided in the Rights Agreement, the Exercise Price and the number of
Preferred Shares or other securities or other property that may be purchased
upon the exercise of the Rights represented
B-1
<PAGE>
by this Right Certificate are subject to modification and adjustment upon the
occurrence of certain events.
The Rights Agreement contains a full description of the rights, limitations
of rights, obligations, duties and immunities of the Rights Agent, the Company
and the holders of Right Certificates. This Right Certificate is subject to all
the terms and conditions of the Rights Agreement, which terms and conditions are
hereby incorporated herein by reference and made a part hereof. Copies of the
Rights Agreement are on file at the principal executive offices of the Company
and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
presentation and surrender at the above-mentioned offices of the Rights Agent,
with the Form of Assignment, including Certificate, on the reverse side hereof
completed and duly executed, with signature guaranteed, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
representing Rights entitling the holder thereof to purchase a like aggregate
number of Preferred Shares or, in certain circumstances, other securities or
other property, as the Rights represented by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive, upon the surrender hereof with the Form of Election to Purchase,
including Certificate, on the reverse side hereof completed and duly executed,
with signature guaranteed, another Right Certificate or Right Certificates for
the number of whole Rights not exercised. Subject to the provisions of the
Rights Agreement, the Rights represented by this Right Certificate may be
redeemed by the Company, at its option, at a redemption price of $.01 per Right.
No fractional securities shall be issued upon the exercise of any
Right or Rights represented hereby (other than fractions of Preferred Shares
that are integral multiples of one one-hundredth of a Preferred Share, that may,
at the option of the Company, be represented by depositary receipts), but in
lieu thereof, a cash payment shall be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or other securities of the Company that may at any time be
issuable on the exercise hereof, nor shall anything contained herein be
construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in the Rights
B-2
<PAGE>
Agreement), or to receive dividends or subscription rights, until the Right or
Rights represented by this Right Certificate shall have been exercised as
provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers
of the Company and its corporate seal. Dated as of ______, 1995.
Attest: WYLE ELECTRONICS
By _________________________ By _________________________
Stephen D. Natcher Ralph L. Ozorkiewicz
Vice President- President and Chief
Administration, General Operating Officer
Counsel and Secretary
Countersigned:
CHEMICAL BANK
By _________________________
Name:
Title:
B-3
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder
desires to transfer any or all of the Rights
represented by this Right Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of transferee)
______________________________ (_________________) of the Rights represented by
this Right Certificate, together with all right, title and interest in and to
said Rights, and hereby irrevocably constitutes and appoints
___________________________ attorney to transfer said Rights on the books of
WYLE ELECTRONICS with full power of substitution.
Dated: _____________, 19__ _____________________________
(Signature)
Signature Guaranteed:
Certificate
-----------
(to be completed, if true)
The undersigned hereby certifies that the Rights represented by this
Right Certificate are not Beneficially Owned by a 15% Shareholder or an
Affiliate or Associate of a 15% Shareholder (as such capitalized terms are
defined in the Rights Agreement).
Dated: _______________, 19__ ______________________________
(Signature)
Signature Guaranteed:
B-4
<PAGE>
Form of Reverse Side of Right Certificate
(continued)
NOTICE
The signatures to the foregoing Assignment and the foregoing
Certificate, if applicable, must correspond to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever, and must be guaranteed by a member firm of a
registered national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by a 15% Shareholder or an Affiliate or
Associate of a 15% Shareholder (as such capitalized terms are defined in the
Rights Agreement), and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.
B-5
<PAGE>
Form of Reverse Side of Right Certificate
(continued)
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed by the registered holder if such holder
desires to exercise any or all of the Rights
represented by this Right Certificate)
To WYLE ELECTRONICS:
The undersigned hereby irrevocably elects to exercise
______________________ (________________) of the Rights represented by this
Right Certificate to purchase the following:
(Check one of the following boxes)
[_] the Preferred Shares or other securities or property issuable upon the
exercise of said number of Rights pursuant to Section 7(c) of the Rights
Agreement.
[_] the shares of the Common Stock, without par value, of the Company, or other
securities or property issuable upon the exercise of said number of Rights
pursuant to Section 11(a)(ii) of the Rights Agreement.
[_] the securities issuable upon the exercise of said number of Rights pursuant
to Section 13(a) of the Rights Agreement.
The undersigned hereby requests that any such property and a
certificate for any such securities be issued in the name of and delivered to:
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of issues)
The undersigned hereby further requests that if said number of Rights
shall not be all the Rights represented by this Right Certificate, a new Right
Certificate for the remaining balance of such Rights be issued in the name of
and delivered to:
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of issues)
Dated: __________________, 19__ ______________________________
(Signature)
Signature Guaranteed:
B-6
<PAGE>
Form of Reverse Side of Right Certificate
(continued)
Certificate
-----------
(to be completed, if true)
The undersigned hereby certifies that the Rights represented by this
Right Certificate are not Beneficially Owned by a 15% Shareholder or an
Affiliate or Associate of a 15% Shareholder (as such capitalized terms are
defined in the Rights Agreement).
Dated: _________________, 19__ ______________________________
(Signature)
Signature Guaranteed:
NOTICE
The signatures to the foregoing Assignment and the foregoing
Certificate, if applicable, must correspond to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever, and must be guaranteed by a member firm of a
registered national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by a 15% Shareholder or an Affiliate or
Associate of a 15% Shareholder (as such capitalized terms are defined in the
Rights Agreement), and not issue any property or certificate for securities upon
the exercise of this Right Certificate or issue any new Right Certificate for
any remaining balance of unexercised Rights represented by this Right
Certificate.
B-7
<PAGE>
EXHIBIT 10(k)
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
as of January 1, 1995 by and between Ralph L. Ozorkiewicz ("Employee") and Wyle
Electronics, a California corporation (the "Company").
The parties agree as follows:
1. Employment.
----------
1.1 Title & Duties. The Company hereby employs Employee, and
--------------
Employee hereby accepts employment, as President of the Company, and effective
as of the close of business March 31, 1995, its President and Chief Executive
Officer. Employee shall be given duties consistent with such offices and
positions. There shall be no change in Employee's titles or duties without the
mutual consent of the Company and Employee.
1.2 Place. Employee shall not be required to perform any duties as
-----
described in section 1.1 at any place other than in the County of Orange, State
of California, except insofar as his duties shall require reasonable business
trips and/or visits to suppliers or customers or Company facilities.
2. Extent of Services.
------------------
2.1 General. It is recognized that the services to be rendered by
-------
Employee are of such a nature as to be peculiarly rendered by Employee,
encompass the individual ability of Employee and cannot be measured exclusively
in terms of hours or services rendered in any particular period. Employee
agrees to devote his full time and efforts to the performance of his duties and
exclusively to advance the interests of the Company.
2.2 Vacation. Employee shall be entitled to such vacations and other
--------
absences from work as shall be reasonably consistent with the performance of his
duties as provided in this Agreement.
3. Term. Subject to the provisions for earlier termination provided
----
herein, the term of Employee's employment by the Company shall continue
uninterrupted, and such employment shall terminate and the term of this
Agreement shall expire on, December 31, 1999.
4. Compensation.
------------
4.1 Cash Compensation. The Company shall compensate Employee for
-----------------
services rendered under this Agreement in an amount of not less than $550,000.00
per year, as determined from time to time by the Board of Directors. Employee
shall be considered in
1
<PAGE>
the Company's annual review of executive compensation and he shall be a
participant in the Company's executive bonus plans as may be in effect from time
to time. All cash compensation paid to Employee under this Agreement shall be
aggregated for purposes of meeting the $550,000.00 per year requirement, whether
in the form of annual compensation or in the form of bonuses.
4.2 Employee Benefits. Employee shall be entitled to receive fringe
-----------------
benefits consistent with Employee's duties and positions, which benefits shall
(except as specified below) be no less than those to which he is entitled as of
the date hereof, including but not limited to all plans of life, accident and
health, salary continuation and other insurance which is or becomes generally
available to other employees, officers or executives of the Company and
participation in the Company's retirement plans. Employee shall be provided
with the full-time use of an automobile consistent with the Company's corporate
policy on automobiles as in effect from time to time. The Company reserves the
right to modify, suspend or discontinue any and all of its fringe benefits
referred to in this Section 4.2 at any time without recourse by Employee so long
as such action is taken generally with respect to other similarly situated peer
executives and does not single out Employee.
4.3 Expenses. Employee shall be reimbursed for all expenses
--------
reasonably incurred in the furtherance of the business of the Company. Employee
shall keep complete and accurate records of all expenditures such that Employee
may fully account to the Board of Directors, if requested, or as may then be
required by the Internal Revenue Service.
5. Confidential Information; Non-Competition.
-----------------------------------------
5.1 General. Employee acknowledges that during his employment by,
-------
and as a result of his relationship with, the Company he will obtain knowledge
of and gain access to information regarding the Company's business, operations,
products, proposed products, production methods, processes, customer lists,
advertising, marketing and promotional plans and materials, price lists, pricing
policies, financial information and other trade secrets, confidential
information and material proprietary to the Company or designated as being
confidential by the Company which is not generally known to non-Company
personnel, including information and material originated, discovered or
developed in whole or in part by Employee (collectively referred to herein as
"Confidential Information"). Employee agrees that during the term of this
Agreement and, to the fullest extent permitted by law, thereafter, he will, in a
fiduciary capacity for the benefit of the Company, hold all Confidential
Information strictly in confidence and will not directly or indirectly reveal,
report, disclose, publish or transfer any of such Confidential Information to
any person, firm or other entity, or utilize any of the Confidential Information
2
<PAGE>
for any purpose, except in furtherance of his employment under this Agreement.
5.2 Return of Materials. Employee agrees that upon the expiration or
-------------------
earlier termination of this Agreement, he will at the Company's request
surrender and return to the Company all lists, books, records and other
Confidential Information of the Company, or obtained in connection with the
Company's business, it being expressly acknowledged by Employee that all such
items are the exclusive property of the Company, and all other property
belonging to the Company then in the possession of Employee, and Employee shall
not make or retain any copies thereof.
5.3 Non-Competition. Employee agrees that during the term of this
---------------
Agreement he will neither directly nor indirectly engage in a business competing
with any of the businesses conducted by the Company or any of its subsidiaries
or affiliates, nor without the prior written consent of the Board of Directors
of the Company, directly or indirectly have any interest in, own, manage,
operate, control, be connected with as a stockholder, joint venturer, director,
officer, employee, partner or consultant, or otherwise engage, invest or
participate in any business which is competitive with any of the businesses
conducted by the Company or by any subsidiary or affiliate of the Company;
provided, however, that nothing contained in this Section 5.3 shall prevent
Employee from investing or trading in stocks, bonds, commodities, securities,
real estate or other forms of investment for his own account and benefit
(directly or indirectly), so long as such investment activities do not interfere
with Employee's services to be rendered hereunder and are consistent with the
conflict of interest provisions contained in the Company's Business Ethics
Policy as it exists from time to time.
6. Termination Prior to Expiration of Term. Employee's employment, and
---------------------------------------
his rights under this Agreement, may be terminated prior to the expiration of
the term of this Agreement (as provided in Section 3 hereof) only as provided in
this Section 6.
6.1 Discharge or Resignation.
------------------------
(a) Employee may be discharged prior to the expiration of the
term of this Agreement (1) for "Just Cause"; or (2) upon 60 days written notice,
even if "Just Cause" does not exist.
(b) For a discharge which occurs prior to a "Change in Control,"
as defined herein, "Just Cause" shall mean that the Company, acting in good
faith based upon the information then known to the Company, determines that
Employee has: (1) committed a material breach of his duties and responsibilities
to the Company (other than as a result of incapacity due to the Employee's
disability); or (2) been
3
<PAGE>
convicted of a crime involving moral turpitude; or (3) refused to perform his
required duties and responsibilities or performed them incompetently; or (4)
violated any fiduciary duty owned to the Company; or (5) taken actions which are
injurious to the Company and which involve moral turpitude or actual malice
towards the Company. For a discharge which occurs coincident with or after a
"Change in Control," "Just Cause" means (x) Employee's conviction of a crime
involving moral turpitude; or (y) actions of Employee which are injurious to the
Company and involve moral turpitude or actual malice toward the Company.
(c) Employee may resign prior to the term of this Agreement (1)
for "Good Reason"; or (2) upon 60 days written notice, even if "Good Reason"
does not exist. Regardless of whether a resignation occurs prior to, coincident
with or after a "Change in Control," "Good Reason" shall mean the material
failure by the Company to fulfill its obligations under this Agreement, to the
extent not remedied in a reasonable period of time after receipt of written
notice by the Employee specifying the material failure by the Company. Any
reduction or attempted reduction of compensation or benefits below that required
by Section 4 is deemed material. For a resignation which occurs coincident with
or following a Change in Control, "Good Reason" shall also mean the failure by
the Company or its successors to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if a succession had not occurred.
(d) (1) If Employee is discharged for "Just Cause" or resigns
without "Good Reason," the Company shall not be obligated to pay the Employee
any sums of money other than all compensation and benefits due employee as of
the date of discharge or resignation and the bonus (if any) for the period of
his employment prior to the discharge or resignation.
(2) If employee is discharged without "Just Cause" or resigns
for "Good Reason," Employee shall be entitled to the following:
(i) all compensation and benefits due Employee as of the
date of discharge or resignation and the bonus for the period of
employment prior to the discharge or resignation; plus
(ii) A lump sum payment equal to the present value of the
compensation which would be received by Employee (using the
highest annual amount of compensation in any year during which
this Agreement was in force) through the term of this Agreement
had the resignation or discharge not occurred. The present value
shall be determined by using the applicable federal mid-term
rate,
4
<PAGE>
compounded monthly, as determined under Section 1274(d) of the
Internal Revenue Code of 1986, as amended (the "Code"), or its
successor, as of the date of discharge or resignation. The
entire lump-sum amount shall be paid within 30 days of the date
of resignation or discharge. Employee shall have no duty to
mitigate or attempt to mitigate his damages.
(e) (1) Notwithstanding anything to the contrary in this
Agreement, payments to the Employee which constitute "parachute payments," as
defined in Section 280G of the Code, shall be limited, if necessary, so that the
maximum amount of such payments to the Employee shall be one dollar ($1.00) less
than the amount which would cause the payments to the Employee (including
payments to the Employee which are not included in this Agreement) to be subject
to the excise tax imposed by Section 4999 of the Code.
(2) Any determination that payments to the Employee must be
limited and the assumptions to be utilized in arriving at such determination,
shall be made by Arthur Andersen, LLP (the "Accounting Firm"), which shall
provide detailed supporting calculations both to the Company and the Employee
within 15 business days of the time such calculation is requested by the Company
or the Employee. In the event that the Accounting Firm is serving as accountant
or auditor for the individual, entity or group effecting a Change of Control,
the Employee shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. If the Accounting Firm
determines that payments to the Employee shall be limited, it shall furnish the
Employee with its written opinion that failure to limit the payments would
result in the imposition of a tax under Section 4999 of the Code. Any
determination by the Accounting Firm shall be binding upon the Company and the
Employee. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that payments to the Employee which will not have been
made by the Company should have been made ("Underpayment"). The Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Employee. In the event that any payment made to the Employee shall be determined
by the Accounting Firm to result in the imposition of any tax under Section 4999
of the Code, the Employee shall promptly reimburse the Company for the amount of
such excess together with interest on such amount (at the same rate as is
applied to determine the present value of payments under Section 280G or any
successor thereto), from the date the reimbursable payment was received by the
Employee to the date the same is
5
<PAGE>
repaid to the Company. The parties hereto acknowledge and agree that the amount
of any such reimbursement shall be deemed never to have been paid to the
Employee.
(f) For purposes of this Agreement; a "Change of Control" shall be
deemed to have occurred if (1) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934), directly or indirectly, of securities of the Company representing 35%
or more of the combined voting power of the Company's then outstanding
securities; or (2) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of the Company
(the "Board") cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the Company's
shareholders, of each new Board member was approved by a vote of at least three-
fourths of the Board members then still in office who were Board members at the
beginning of such period.
6.2 Disability. If the Company in good faith determines that the
----------
Employee has become ill or injured and such illness or injury will prevent
Employee from performing the services required under this Agreement for a period
of more than 12 consecutive months on substantially a full time basis, the
Company may give Employee written notice that it intends to terminate the
employment of Employee. Such termination of employment shall become effective
30 days after receipt of such notice by Employee, provided that, within 30 days
after such receipt, Employee shall not have returned to full time performance of
his duties. If Employee's employment is so terminated, Employee shall be
entitled to receive his full compensation and benefits until the expiration of
12 months from the date on which he was first unable to substantially perform
his duties hereunder.
6.3 Death. The death of Employee shall result in automatic
-----
termination of this Agreement, and the Company shall not be obligated to pay the
estate or personal representative of Employee any sums of money other than any
and all compensation and benefits due Employee at the date of his death and
bonus for the period of his employment prior to death.
7. Arbitration.
-----------
7.1 General. Any dispute, controversy or claim arising out of or
-------
relating to this Agreement, the breach hereof or the coverage or enforceability
of this arbitration provision shall be settled by arbitration in Orange County,
California, conducted by the Judicial Arbitration and Mediation Service ("JAMS")
before a retired judge on the JAMS panel. The arbitration of any such issue,
including the determination of the
6
<PAGE>
amount of any damages suffered by either party hereto by reason of the acts or
omissions of the other, shall be to the exclusion of any court of law.
Notwithstanding the foregoing, either party hereto may seek any provisional
remedy in a court, including but not limited to an action for injunctive relief
or attachment, without waiving the right to arbitration. From the JAMS panel,
each party shall rank in descending order five candidates. Within 20 days of
the date on which the arbitration demand was delivered, the parties shall
simultaneously exchange lists with such rankings. The name receiving the
highest point total among all names on both lists shall serve as arbitrator. In
the event of a tie or a failure to identify any common candidates, the parties
shall attempt to agree upon an arbitrator from the panel. Failing agreement,
the arbitrator shall be selected by the procedure set forth in California Code
of Civil Procedure Section 1281.6.
7.2 Procedure. The parties shall agree upon one arbitrator from the
---------
JAMS panel. The Company shall have the burden of proving Just Cause for any
discharge of Employee under Section 6.1 hereof; for a resignation which occurs
prior to a Change in Control, the Employee shall have the burden of proving Good
Reason, and for a resignation which occur after a Change in Control, the Company
shall have the burden of proving that Good Reason did not exist. Judgment upon
any award of the arbitrator may be entered in any court having jurisdiction, or
application may be made to any such court for the judicial acceptance of the
award and for an order of enforcement.
7.3 Costs and Expenses. The Company shall pay the fees of the
------------------
arbitrator, witnesses and such other expenses as may be generated by the
arbitration, except Employee's attorneys' fees, unless the arbitrator concludes
that such arbitration procedure was not instituted in good faith by Employee.
In such event the arbitrator shall be empowered to allocate fees and assess
costs and other expenses of the arbitration, except attorneys' fees, as the
arbitrator may deem appropriate, bearing in mind the relative financial
abilities of the parties and the respective merits of their positions.
8. Non-Assignment. This Agreement shall not be assignable nor the duties
--------------
hereunder delegable by Employee. None of the payments hereunder may be
encumbered, transferred or in any way anticipated. The Company shall not assign
this Agreement nor shall it transfer all or any substantial part of its assets
without first obtaining in conjunction with such transfer the express assumption
of the obligations hereof by the assignee or transferee.
9. Remedies. Employee acknowledges that the services he is to render
--------
under this Agreement are of a unique and special nature, the loss of which
cannot reasonably or adequately be compensated for in monetary damages, and that
irreparable injury
7
<PAGE>
and damage will result to the Company in the event of any default or breach of
this Agreement by Employee. Because of the unique nature of the Confidential
Information, Employee further acknowledges and agrees that the Company will
suffer irreparable harm if Employee fails to comply with his obligations in
section 5 hereof and that monetary damages would be inadequate to compensate the
Company for such breach. Accordingly, Employee agrees that the Company will, in
addition to any other remedies available to it at law, in equity or, without
limitation, otherwise, be entitled to injunctive relief or specific performance
to enforce the terms, or prevent or remedy the violation, of any provisions of
this Agreement. This provision shall not constitute a waiver by the Company of
any rights to damages or other remedies which it may have pursuant to this
Agreement or otherwise.
10. Survival. The provisions of Sections 5.1, 5.2, 7 and 9 shall survive
--------
the expiration or earlier termination of this Agreement.
11. Notices. Any notices or other communications relating to this
-------
Agreement shall be in writing and delivered personally or mailed by certified
mail, return receipt requested, to the party
concerned at the address set forth below:
If to Company: Wyle Electronics
15370 Barranca Parkway
Irvine, California 92718
Attn: Senior Vice President
If to Employee: At his residence address as maintained by the Company
in the regular course of its business for payroll
purposes.
Either party may change the address for the giving of notices at any time by
notice given to the other party under the provisions of this section 11.
12. Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties and supersedes all prior written and oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may not be changed orally, but only
by an agreement in writing signed by both parties.
13. Construction. This Agreement shall be governed under
------------
and construed in accordance with the laws of the State of
California. The paragraph headings and captions contained herein are for
reference purposes and convenience only and shall not in any way affect the
meaning or interpretation of this Agreement. It is intended by the parties that
this Agreement be interpreted in accordance with its fair and simple meaning,
not for or against either party, and neither party shall be deemed to be the
drafter of this Agreement.
8
<PAGE>
14. Severability. If any portion or provision of this Agreement is
------------
determined by arbitration or by a court of competent jurisdiction to be invalid,
illegal or unenforceable, the remaining portions or provisions hereof shall not
be affected.
15. Binding Effect. The rights and obligations of the parties under this
--------------
Agreement shall be binding upon and inure to the benefit of the permitted
successors, assigns, heirs, administrators, executors and personal
representatives of the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and in the year first written above.
WYLE ELECTRONICS
By: /s/ Stephen D. Natcher
___________________________________
Stephen D. Natcher
Its: Vice President
/s/ Ralph L. Ozorkiewicz
________________________________________
Ralph L. Ozorkiewicz
9
<PAGE>
EXHIBIT 10(L)
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
as of January 1, 1995 by and between Joseph A. Adamczyk ("Employee") and Wyle
Electronics, a California corporation (the "Company").
The parties agree as follows:
1. Employment.
----------
1.1 Title & Duties. The Company hereby employs Employee, and
--------------
Employee hereby accepts employment, as Executive Vice President and Chief
Operating Officer of the Company. Employee shall be given duties consistent
with such offices and positions. There shall be no change in Employee's titles
or duties without the mutual consent of the Company and Employee.
1.2 Place. Employee shall not be required to perform any duties as
-----
described in section 1.1 at any place other than in the County of Orange, State
of California, except insofar as his duties shall require reasonable business
trips and/or visits to suppliers or customers or Company facilities.
2. Extent of Services.
------------------
2.1 General. It is recognized that the services to be rendered by
-------
Employee are of such a nature as to be peculiarly rendered by Employee,
encompass the individual ability of Employee and cannot be measured exclusively
in terms of hours or services rendered in any particular period. Employee
agrees to devote his full time and efforts to the performance of his duties and
exclusively to advance the interests of the Company.
2.2 Vacation. Employee shall be entitled to such vacations and other
--------
absences from work as shall be reasonably consistent with the performance of his
duties as provided in this Agreement.
3. Term. Subject to the provisions for earlier termination provided
----
herein, the term of Employee's employment by the Company shall continue
uninterrupted, and such employment shall terminate and the term of this
Agreement shall expire on, December 31, 1999.
4. Compensation.
------------
4.1 Cash Compensation. The Company shall compensate Employee for
-----------------
services rendered under this Agreement in an amount of not less than $325,000.00
per year, as determined from time to time by the Board of Directors. Employee
shall be considered in the Company's annual review of executive compensation and
he
1
<PAGE>
shall be a participant in the Company's executive bonus plans as may be in
effect from time to time. All cash compensation paid to Employee under this
Agreement shall be aggregated for purposes of meeting the $325,000.00 per year
requirement, whether in the form of annual compensation or in the form of
bonuses.
4.2 Employee Benefits. Employee shall be entitled to receive fringe
-----------------
benefits consistent with Employee's duties and positions, which benefits shall
(except as specified below) be no less than those to which he is entitled as of
the date hereof, including but not limited to all plans of life, accident and
health, salary continuation and other insurance which is or becomes generally
available to other employees, officers or executives of the Company and
participation in the Company's retirement plans. Employee shall be provided
with the full-time use of an automobile consistent with the Company's corporate
policy on automobiles as in effect from time to time. The Company reserves the
right to modify, suspend or discontinue any and all of its fringe benefits
referred to in this Section 4.2 at any time without recourse by Employee so long
as such action is taken generally with respect to other similarly situated peer
executives and does not single out Employee.
4.3 Expenses. Employee shall be reimbursed for all expenses
--------
reasonably incurred in the furtherance of the business of the Company. Employee
shall keep complete and accurate records of all expenditures such that Employee
may fully account to the Board of Directors, if requested, or as may then be
required by the Internal Revenue Service.
5. Confidential Information; Non-Competition.
-----------------------------------------
5.1 General. Employee acknowledges that during his employment by,
-------
and as a result of his relationship with, the Company he will obtain knowledge
of and gain access to information regarding the Company's business, operations,
products, proposed products, production methods, processes, customer lists,
advertising, marketing and promotional plans and materials, price lists, pricing
policies, financial information and other trade secrets, confidential
information and material proprietary to the Company or designated as being
confidential by the Company which is not generally known to non-Company
personnel, including information and material originated, discovered or
developed in whole or in part by Employee (collectively referred to herein as
"Confidential Information"). Employee agrees that during the term of this
Agreement and, to the fullest extent permitted by law, thereafter, he will, in a
fiduciary capacity for the benefit of the Company, hold all Confidential
Information strictly in confidence and will not directly or indirectly reveal,
report, disclose, publish or transfer any of such Confidential Information to
any person, firm or other entity, or utilize any of the Confidential Information
2
<PAGE>
for any purpose, except in furtherance of his employment under this Agreement.
5.2 Return of Materials. Employee agrees that upon the expiration or
-------------------
earlier termination of this Agreement, he will at the Company's request
surrender and return to the Company all lists, books, records and other
Confidential Information of the Company, or obtained in connection with the
Company's business, it being expressly acknowledged by Employee that all such
items are the exclusive property of the Company, and all other property
belonging to the Company then in the possession of Employee, and Employee shall
not make or retain any copies thereof.
5.3 Non-Competition. Employee agrees that during the term of this
---------------
Agreement he will neither directly nor indirectly engage in a business competing
with any of the businesses conducted by the Company or any of its subsidiaries
or affiliates, nor without the prior written consent of the Board of Directors
of the Company, directly or indirectly have any interest in, own, manage,
operate, control, be connected with as a stockholder, joint venturer, director,
officer, employee, partner or consultant, or otherwise engage, invest or
participate in any business which is competitive with any of the businesses
conducted by the Company or by any subsidiary or affiliate of the Company;
provided, however, that nothing contained in this Section 5.3 shall prevent
Employee from investing or trading in stocks, bonds, commodities, securities,
real estate or other forms of investment for his own account and benefit
(directly or indirectly), so long as such investment activities do not interfere
with Employee's services to be rendered hereunder and are consistent with the
conflict of interest provisions contained in the Company's Business Ethics
Policy as it exists from time to time.
6. Termination Prior to Expiration of Term. Employee's employment, and
---------------------------------------
his rights under this Agreement, may be terminated prior to the expiration of
the term of this Agreement (as provided in Section 3 hereof) only as provided in
this Section 6.
6.1 Discharge or Resignation.
------------------------
(a) Employee may be discharged prior to the expiration of the
term of this Agreement (1) for "Just Cause"; or (2) upon 60 days written notice,
even if "Just Cause" does not exist.
(b) For a discharge which occurs prior to a "Change in Control,"
as defined herein, "Just Cause" shall mean that the Company, acting in good
faith based upon the information then known to the Company, determines that
Employee has: (1) committed a material breach of his duties and responsibilities
to the Company (other than as a result of incapacity due to the Employee's
disability); or (2) been
3
<PAGE>
convicted of a crime involving moral turpitude; or (3) refused to perform his
required duties and responsibilities or performed them incompetently; or (4)
violated any fiduciary duty owned to the Company; or (5) taken actions which are
injurious to the Company and which involve moral turpitude or actual malice
towards the Company. For a discharge which occurs coincident with or after a
"Change in Control," "Just Cause" means (x) Employee's conviction of a crime
involving moral turpitude; or (y) actions of Employee which are injurious to the
Company and involve moral turpitude or actual malice toward the Company.
(c) Employee may resign prior to the term of this Agreement (1)
for "Good Reason"; or (2) upon 60 days written notice, even if "Good Reason"
does not exist. Regardless of whether a resignation occurs prior to, coincident
with or after a "Change in Control," "Good Reason" shall mean the material
failure by the Company to fulfill its obligations under this Agreement, to the
extent not remedied in a reasonable period of time after receipt of written
notice by the Employee specifying the material failure by the Company. Any
reduction or attempted reduction of compensation or benefits below that required
by Section 4 is deemed material. For a resignation which occurs coincident with
or following a Change in Control, "Good Reason" shall also mean the failure by
the Company or its successors to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if a succession had not occurred.
(d) (1) If Employee is discharged for "Just Cause" or resigns
without "Good Reason," the Company shall not be obligated to pay the Employee
any sums of money other than all compensation and benefits due employee as of
the date of discharge or resignation and the bonus (if any) for the period of
his employment prior to the discharge or resignation.
(2) If employee is discharged without "Just Cause" or resigns
for "Good Reason," Employee shall be entitled to the following:
(i) all compensation and benefits due Employee as of the
date of discharge or resignation and the bonus for the period of
employment prior to the discharge or resignation; plus
(ii) A lump sum payment equal to the present value of the
compensation which would be received by Employee (using the
highest annual amount of compensation in any year during which
this Agreement was in force) through the term of this Agreement
had the resignation or discharge not occurred. The present value
shall be determined by using the applicable federal mid-term
rate,
4
<PAGE>
compounded monthly, as determined under Section 1274(d) of the
Internal Revenue Code of 1986, as amended (the "Code"), or its
successor, as of the date of discharge or resignation. The
entire lump-sum amount shall be paid within 30 days of the date
of resignation or discharge. Employee shall have no duty to
mitigate or attempt to mitigate his damages.
(e) (1) Notwithstanding anything to the contrary in this
Agreement, payments to the Employee which constitute "parachute payments," as
defined in Section 280G of the Code, shall be limited, if necessary, so that the
maximum amount of such payments to the Employee shall be one dollar ($1.00) less
than the amount which would cause the payments to the Employee (including
payments to the Employee which are not included in this Agreement) to be subject
to the excise tax imposed by Section 4999 of the Code.
(2) Any determination that payments to the Employee must be
limited and the assumptions to be utilized in arriving at such determination,
shall be made by Arthur Andersen, LLP (the "Accounting Firm"), which shall
provide detailed supporting calculations both to the Company and the Employee
within 15 business days of the time such calculation is requested by the Company
or the Employee. In the event that the Accounting Firm is serving as accountant
or auditor for the individual, entity or group effecting a Change of Control,
the Employee shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. If the Accounting Firm
determines that payments to the Employee shall be limited, it shall furnish the
Employee with its written opinion that failure to limit the payments would
result in the imposition of a tax under Section 4999 of the Code. Any
determination by the Accounting Firm shall be binding upon the Company and the
Employee. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that payments to the Employee which will not have been
made by the Company should have been made ("Underpayment"). The Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Employee. In the event that any payment made to the Employee shall be determined
by the Accounting Firm to result in the imposition of any tax under Section 4999
of the Code, the Employee shall promptly reimburse the Company for the amount of
such excess together with interest on such amount (at the same rate as is
applied to determine the present value of payments under Section 280G or any
successor thereto), from the date the reimbursable payment was received by the
Employee to the date the same is
5
<PAGE>
repaid to the Company. The parties hereto acknowledge and agree that the amount
of any such reimbursement shall be deemed never to have been paid to the
Employee.
(f) For purposes of this Agreement; a "Change of Control"
shall be deemed to have occurred if (1) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934), directly or indirectly, of securities of the Company representing
35% or more of the combined voting power of the Company's then outstanding
securities; or (2) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of the Company
(the "Board") cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the Company's
shareholders, of each new Board member was approved by a vote of at least three-
fourths of the Board members then still in office who were Board members at the
beginning of such period.
6.2 Disability. If the Company in good faith determines that the
----------
Employee has become ill or injured and such illness or injury will prevent
Employee from performing the services required under this Agreement for a period
of more than 12 consecutive months on substantially a full time basis, the
Company may give Employee written notice that it intends to terminate the
employment of Employee. Such termination of employment shall become effective
30 days after receipt of such notice by Employee, provided that, within 30 days
after such receipt, Employee shall not have returned to full time performance of
his duties. If Employee's employment is so terminated, Employee shall be
entitled to receive his full compensation and benefits until the expiration of
12 months from the date on which he was first unable to substantially perform
his duties hereunder.
6.3 Death. The death of Employee shall result in automatic
-----
termination of this Agreement, and the Company shall not be obligated to pay the
estate or personal representative of Employee any sums of money other than any
and all compensation and benefits due Employee at the date of his death and
bonus for the period of his employment prior to death.
7. Arbitration.
-----------
7.1 General. Any dispute, controversy or claim arising out of or
-------
relating to this Agreement, the breach hereof or the coverage or enforceability
of this arbitration provision shall be settled by arbitration in Orange County,
California, conducted by the Judicial Arbitration and Mediation Service ("JAMS")
before a retired judge on the JAMS panel. The arbitration of any such issue,
including the determination of the
6
<PAGE>
amount of any damages suffered by either party hereto by reason of the acts or
omissions of the other, shall be to the exclusion of any court of law.
Notwithstanding the foregoing, either party hereto may seek any provisional
remedy in a court, including but not limited to an action for injunctive relief
or attachment, without waiving the right to arbitration. From the JAMS panel,
each party shall rank in descending order five candidates. Within 20 days of
the date on which the arbitration demand was delivered, the parties shall
simultaneously exchange lists with such rankings. The name receiving the
highest point total among all names on both lists shall serve as arbitrator. In
the event of a tie or a failure to identify any common candidates, the parties
shall attempt to agree upon an arbitrator from the panel. Failing agreement,
the arbitrator shall be selected by the procedure set forth in California Code
of Civil Procedure Section 1281.6.
7.2 Procedure. The parties shall agree upon one arbitrator from the
---------
JAMS panel. The Company shall have the burden of proving Just Cause for any
discharge of Employee under Section 6.1 hereof; for a resignation which occurs
prior to a Change in Control, the Employee shall have the burden of proving Good
Reason, and for a resignation which occur after a Change in Control, the Company
shall have the burden of proving that Good Reason did not exist. Judgment upon
any award of the arbitrator may be entered in any court having jurisdiction, or
application may be made to any such court for the judicial acceptance of the
award and for an order of enforcement.
7.3 Costs and Expenses. The Company shall pay the fees of the
------------------
arbitrator, witnesses and such other expenses as may be generated by the
arbitration, except Employee's attorneys' fees, unless the arbitrator concludes
that such arbitration procedure was not instituted in good faith by Employee.
In such event the arbitrator shall be empowered to allocate fees and assess
costs and other expenses of the arbitration, except attorneys' fees, as the
arbitrator may deem appropriate, bearing in mind the relative financial
abilities of the parties and the respective merits of their positions.
8. Non-Assignment. This Agreement shall not be assignable nor the duties
--------------
hereunder delegable by Employee. None of the payments hereunder may be
encumbered, transferred or in any way anticipated. The Company shall not assign
this Agreement nor shall it transfer all or any substantial part of its assets
without first obtaining in conjunction with such transfer the express assumption
of the obligations hereof by the assignee or transferee.
9. Remedies. Employee acknowledges that the services he is to render
--------
under this Agreement are of a unique and special nature, the loss of which
cannot reasonably or adequately be compensated for in monetary damages, and that
irreparable injury
7
<PAGE>
and damage will result to the Company in the event of any default or breach of
this Agreement by Employee. Because of the unique nature of the Confidential
Information, Employee further acknowledges and agrees that the Company will
suffer irreparable harm if Employee fails to comply with his obligations in
section 5 hereof and that monetary damages would be inadequate to compensate the
Company for such breach. Accordingly, Employee agrees that the Company will, in
addition to any other remedies available to it at law, in equity or, without
limitation, otherwise, be entitled to injunctive relief or specific performance
to enforce the terms, or prevent or remedy the violation, of any provisions of
this Agreement. This provision shall not constitute a waiver by the Company of
any rights to damages or other remedies which it may have pursuant to this
Agreement or otherwise.
10. Survival. The provisions of Sections 5.1, 5.2, 7 and 9 shall survive
--------
the expiration or earlier termination of this Agreement.
11. Notices. Any notices or other communications relating to this
-------
Agreement shall be in writing and delivered personally or mailed by certified
mail, return receipt requested, to the party
concerned at the address set forth below:
If to Company: Wyle Electronics
15370 Barranca Parkway
Irvine, California 92718
Attn: Senior Vice President
If to Employee: At his residence address as maintained by the Company
in the regular course of its business for payroll
purposes.
Either party may change the address for the giving of notices at any time by
notice given to the other party under the provisions of this section 11.
12. Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties and supersedes all prior written and oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may not be changed orally, but only
by an agreement in writing signed by both parties.
13. Construction. This Agreement shall be governed under
------------
and construed in accordance with the laws of the State of
California. The paragraph headings and captions contained herein are for
reference purposes and convenience only and shall not in any way affect the
meaning or interpretation of this Agreement. It is intended by the parties that
this Agreement be interpreted in accordance with its fair and simple meaning,
not for or against either party, and neither party shall be deemed to be the
drafter of this Agreement.
8
<PAGE>
14. Severability. If any portion or provision of this Agreement is
------------
determined by arbitration or by a court of competent jurisdiction to be invalid,
illegal or unenforceable, the remaining portions or provisions hereof shall not
be affected.
15. Binding Effect. The rights and obligations of the parties under this
--------------
Agreement shall be binding upon and inure to the benefit of the permitted
successors, assigns, heirs, administrators, executors and personal
representatives of the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and in the year first written above.
WYLE ELECTRONICS
By: /s/ Ralph L. Ozorkiewicz
___________________________________
Ralph L. Ozorkiewicz
Its: President
/s/ Joseph A. Adamczyk
________________________________________
Joseph A. Adamczyk
9
<PAGE>
EXHIBIT 10(m)
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
as of January 1, 1995 by and between R. Van Ness Holland, Jr. ("Employee") and
Wyle Electronics, a California corporation (the "Company").
The parties agree as follows:
1. Employment.
----------
1.1 Title & Duties. The Company hereby employs Employee, and
--------------
Employee hereby accepts employment, as Executive Vice President and Chief
Financial Officer of the Company. Employee shall be given duties consistent
with such offices and positions. There shall be no change in Employee's titles
or duties without the mutual consent of the Company and Employee.
1.2 Place. Employee shall not be required to perform any duties as
-----
described in section 1.1 at any place other than in the County of Orange, State
of California, except insofar as his duties shall require reasonable business
trips and/or visits to suppliers or customers or Company facilities.
2. Extent of Services.
------------------
2.1 General. It is recognized that the services to be rendered by
-------
Employee are of such a nature as to be peculiarly rendered by Employee,
encompass the individual ability of Employee and cannot be measured exclusively
in terms of hours or services rendered in any particular period. Employee
agrees to devote his full time and efforts to the performance of his duties and
exclusively to advance the interests of the Company.
2.2 Vacation. Employee shall be entitled to such vacations and other
--------
absences from work as shall be reasonably consistent with the performance of his
duties as provided in this Agreement.
3. Term. Subject to the provisions for earlier termination provided
----
herein, the term of Employee's employment by the Company shall continue
uninterrupted, and such employment shall terminate and the term of this
Agreement shall expire on, December 31, 1999.
4. Compensation.
------------
4.1 Cash Compensation. The Company shall compensate Employee for
-----------------
services rendered under this Agreement in an amount of not less than $312,000.00
per year, as determined from time to time by the Board of Directors. Employee
shall be considered in the Company's annual review of executive compensation and
he
1
<PAGE>
shall be a participant in the Company's executive bonus plans as may be in
effect from time to time. All cash compensation paid to Employee under this
Agreement shall be aggregated for purposes of meeting the $312,000.00 per year
requirement, whether in the form of annual compensation or in the form of
bonuses.
4.2 Employee Benefits. Employee shall be entitled to receive fringe
-----------------
benefits consistent with Employee's duties and positions, which benefits shall
(except as specified below) be no less than those to which he is entitled as of
the date hereof, including but not limited to all plans of life, accident and
health, salary continuation and other insurance which is or becomes generally
available to other employees, officers or executives of the Company and
participation in the Company's retirement plans. Employee shall be provided
with the full-time use of an automobile consistent with the Company's corporate
policy on automobiles as in effect from time to time. The Company reserves the
right to modify, suspend or discontinue any and all of its fringe benefits
referred to in this Section 4.2 at any time without recourse by Employee so long
as such action is taken generally with respect to other similarly situated peer
executives and does not single out Employee.
4.3 Expenses. Employee shall be reimbursed for all expenses
--------
reasonably incurred in the furtherance of the business of the Company. Employee
shall keep complete and accurate records of all expenditures such that Employee
may fully account to the Board of Directors, if requested, or as may then be
required by the Internal Revenue Service.
5. Confidential Information; Non-Competition.
-----------------------------------------
5.1 General. Employee acknowledges that during his employment by,
-------
and as a result of his relationship with, the Company he will obtain knowledge
of and gain access to information regarding the Company's business, operations,
products, proposed products, production methods, processes, customer lists,
advertising, marketing and promotional plans and materials, price lists, pricing
policies, financial information and other trade secrets, confidential
information and material proprietary to the Company or designated as being
confidential by the Company which is not generally known to non-Company
personnel, including information and material originated, discovered or
developed in whole or in part by Employee (collectively referred to herein as
"Confidential Information"). Employee agrees that during the term of this
Agreement and, to the fullest extent permitted by law, thereafter, he will, in a
fiduciary capacity for the benefit of the Company, hold all Confidential
Information strictly in confidence and will not directly or indirectly reveal,
report, disclose, publish or transfer any of such Confidential Information to
any person, firm or other entity, or utilize any of the Confidential Information
2
<PAGE>
for any purpose, except in furtherance of his employment under this Agreement.
5.2 Return of Materials. Employee agrees that upon the expiration or
-------------------
earlier termination of this Agreement, he will at the Company's request
surrender and return to the Company all lists, books, records and other
Confidential Information of the Company, or obtained in connection with the
Company's business, it being expressly acknowledged by Employee that all such
items are the exclusive property of the Company, and all other property
belonging to the Company then in the possession of Employee, and Employee shall
not make or retain any copies thereof.
5.3 Non-Competition. Employee agrees that during the term of this
---------------
Agreement he will neither directly nor indirectly engage in a business competing
with any of the businesses conducted by the Company or any of its subsidiaries
or affiliates, nor without the prior written consent of the Board of Directors
of the Company, directly or indirectly have any interest in, own, manage,
operate, control, be connected with as a stockholder, joint venturer, director,
officer, employee, partner or consultant, or otherwise engage, invest or
participate in any business which is competitive with any of the businesses
conducted by the Company or by any subsidiary or affiliate of the Company;
provided, however, that nothing contained in this Section 5.3 shall prevent
Employee from investing or trading in stocks, bonds, commodities, securities,
real estate or other forms of investment for his own account and benefit
(directly or indirectly), so long as such investment activities do not interfere
with Employee's services to be rendered hereunder and are consistent with the
conflict of interest provisions contained in the Company's Business Ethics
Policy as it exists from time to time.
6. Termination Prior to Expiration of Term. Employee's employment, and
---------------------------------------
his rights under this Agreement, may be terminated prior to the expiration of
the term of this Agreement (as provided in Section 3 hereof) only as provided in
this Section 6.
6.1 Discharge or Resignation.
------------------------
(a) Employee may be discharged prior to the expiration of the term of
this Agreement (1) for "Just Cause"; or (2) upon 60 days written notice, even if
"Just Cause" does not exist.
(b) For a discharge which occurs prior to a "Change in Control," as
defined herein, "Just Cause" shall mean that the Company, acting in good faith
based upon the information then known to the Company, determines that Employee
has: (1) committed a material breach of his duties and responsibilities to the
Company (other than as a result of incapacity due to the Employee's disability);
or (2) been
3
<PAGE>
convicted of a crime involving moral turpitude; or (3) refused to perform his
required duties and responsibilities or performed them incompetently; or (4)
violated any fiduciary duty owned to the Company; or (5) taken actions which are
injurious to the Company and which involve moral turpitude or actual malice
towards the Company. For a discharge which occurs coincident with or after a
"Change in Control," "Just Cause" means (x) Employee's conviction of a crime
involving moral turpitude; or (y) actions of Employee which are injurious to the
Company and involve moral turpitude or actual malice toward the Company.
(c) Employee may resign prior to the term of this Agreement (1) for
"Good Reason"; or (2) upon 60 days written notice, even if "Good Reason" does
not exist. Regardless of whether a resignation occurs prior to, coincident with
or after a "Change in Control," "Good Reason" shall mean the material failure by
the Company to fulfill its obligations under this Agreement, to the extent not
remedied in a reasonable period of time after receipt of written notice by the
Employee specifying the material failure by the Company. Any reduction or
attempted reduction of compensation or benefits below that required by Section 4
is deemed material. For a resignation which occurs coincident with or following
a Change in Control, "Good Reason" shall also mean the failure by the Company or
its successors to assume expressly and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if a succession had not occurred.
(d) (1) If Employee is discharged for "Just Cause" or resigns without
"Good Reason," the Company shall not be obligated to pay the Employee any sums
of money other than all compensation and benefits due employee as of the date of
discharge or resignation and the bonus (if any) for the period of his employment
prior to the discharge or resignation.
(2) If employee is discharged without "Just Cause" or resigns for
"Good Reason," Employee shall be entitled to the following:
(i) all compensation and benefits due Employee as of the
date of discharge or resignation and the bonus for the period of
employment prior to the discharge or resignation; plus
(ii) A lump sum payment equal to the present value of the
compensation which would be received by Employee (using the highest
annual amount of compensation in any year during which this
Agreement was in force) through the term of this Agreement had the
resignation or discharge not occurred. The present value shall be
determined by using the applicable federal mid-term rate,
4
<PAGE>
compounded monthly, as determined under Section 1274(d) of the
Internal Revenue Code of 1986, as amended (the "Code"), or its
successor, as of the date of discharge or resignation. The
entire lump-sum amount shall be paid within 30 days of the date
of resignation or discharge. Employee shall have no duty to
mitigate or attempt to mitigate his damages.
(e) (1) Notwithstanding anything to the contrary in this Agreement,
payments to the Employee which constitute "parachute payments," as defined in
Section 280G of the Code, shall be limited, if necessary, so that the maximum
amount of such payments to the Employee shall be one dollar ($1.00) less than
the amount which would cause the payments to the Employee (including payments to
the Employee which are not included in this Agreement) to be subject to the
excise tax imposed by Section 4999 of the Code.
(2) Any determination that payments to the Employee must be limited
and the assumptions to be utilized in arriving at such determination, shall be
made by Arthur Andersen, LLP (the "Accounting Firm"), which shall provide
detailed supporting calculations both to the Company and the Employee within 15
business days of the time such calculation is requested by the Company or the
Employee. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting a Change of Control, the
Employee shall appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. If the Accounting Firm determines
that payments to the Employee shall be limited, it shall furnish the Employee
with its written opinion that failure to limit the payments would result in the
imposition of a tax under Section 4999 of the Code. Any determination by the
Accounting Firm shall be binding upon the Company and the Employee. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
payments to the Employee which will not have been made by the Company should
have been made ("Underpayment"). The Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Employee. In the
event that any payment made to the Employee shall be determined by the
Accounting Firm to result in the imposition of any tax under Section 4999 of the
Code, the Employee shall promptly reimburse the Company for the amount of such
excess together with interest on such amount (at the same rate as is applied to
determine the present value of payments under Section 280G or any successor
thereto), from the date the reimbursable payment was received by the Employee to
the date the same is
5
<PAGE>
repaid to the Company. The parties hereto acknowledge and agree that the amount
of any such reimbursement shall be deemed never to have been paid to the
Employee.
(f) For purposes of this Agreement; a "Change of Control" shall be
deemed to have occurred if (1) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934), directly or indirectly, of securities of the Company representing 35%
or more of the combined voting power of the Company's then outstanding
securities; or (2) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of the Company
(the "Board") cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the Company's
shareholders, of each new Board member was approved by a vote of at least three-
fourths of the Board members then still in office who were Board members at the
beginning of such period.
6.2 Disability. If the Company in good faith determines that the
----------
Employee has become ill or injured and such illness or injury will prevent
Employee from performing the services required under this Agreement for a period
of more than 12 consecutive months on substantially a full time basis, the
Company may give Employee written notice that it intends to terminate the
employment of Employee. Such termination of employment shall become effective
30 days after receipt of such notice by Employee, provided that, within 30 days
after such receipt, Employee shall not have returned to full time performance of
his duties. If Employee's employment is so terminated, Employee shall be
entitled to receive his full compensation and benefits until the expiration of
12 months from the date on which he was first unable to substantially perform
his duties hereunder.
6.3 Death. The death of Employee shall result in automatic
-----
termination of this Agreement, and the Company shall not be obligated to pay the
estate or personal representative of Employee any sums of money other than any
and all compensation and benefits due Employee at the date of his death and
bonus for the period of his employment prior to death.
7. Arbitration.
-----------
7.1 General. Any dispute, controversy or claim arising out of or
-------
relating to this Agreement, the breach hereof or the coverage or enforceability
of this arbitration provision shall be settled by arbitration in Orange County,
California, conducted by the Judicial Arbitration and Mediation Service ("JAMS")
before a retired judge on the JAMS panel. The arbitration of any such issue,
including the determination of the
6
<PAGE>
amount of any damages suffered by either party hereto by reason of the acts or
omissions of the other, shall be to the exclusion of any court of law.
Notwithstanding the foregoing, either party hereto may seek any provisional
remedy in a court, including but not limited to an action for injunctive relief
or attachment, without waiving the right to arbitration. From the JAMS panel,
each party shall rank in descending order five candidates. Within 20 days of
the date on which the arbitration demand was delivered, the parties shall
simultaneously exchange lists with such rankings. The name receiving the
highest point total among all names on both lists shall serve as arbitrator. In
the event of a tie or a failure to identify any common candidates, the parties
shall attempt to agree upon an arbitrator from the panel. Failing agreement,
the arbitrator shall be selected by the procedure set forth in California Code
of Civil Procedure Section 1281.6.
7.2 Procedure. The parties shall agree upon one arbitrator from the
---------
JAMS panel. The Company shall have the burden of proving Just Cause for any
discharge of Employee under Section 6.1 hereof; for a resignation which occurs
prior to a Change in Control, the Employee shall have the burden of proving Good
Reason, and for a resignation which occur after a Change in Control, the Company
shall have the burden of proving that Good Reason did not exist. Judgment upon
any award of the arbitrator may be entered in any court having jurisdiction, or
application may be made to any such court for the judicial acceptance of the
award and for an order of enforcement.
7.3 Costs and Expenses. The Company shall pay the fees of the
------------------
arbitrator, witnesses and such other expenses as may be generated by the
arbitration, except Employee's attorneys' fees, unless the arbitrator concludes
that such arbitration procedure was not instituted in good faith by Employee.
In such event the arbitrator shall be empowered to allocate fees and assess
costs and other expenses of the arbitration, except attorneys' fees, as the
arbitrator may deem appropriate, bearing in mind the relative financial
abilities of the parties and the respective merits of their positions.
8. Non-Assignment. This Agreement shall not be assignable nor the duties
--------------
hereunder delegable by Employee. None of the payments hereunder may be
encumbered, transferred or in any way anticipated. The Company shall not assign
this Agreement nor shall it transfer all or any substantial part of its assets
without first obtaining in conjunction with such transfer the express assumption
of the obligations hereof by the assignee or transferee.
9. Remedies. Employee acknowledges that the services he is to render
--------
under this Agreement are of a unique and special nature, the loss of which
cannot reasonably or adequately be compensated for in monetary damages, and that
irreparable injury
7
<PAGE>
and damage will result to the Company in the event of any default or breach of
this Agreement by Employee. Because of the unique nature of the Confidential
Information, Employee further acknowledges and agrees that the Company will
suffer irreparable harm if Employee fails to comply with his obligations in
section 5 hereof and that monetary damages would be inadequate to compensate the
Company for such breach. Accordingly, Employee agrees that the Company will, in
addition to any other remedies available to it at law, in equity or, without
limitation, otherwise, be entitled to injunctive relief or specific performance
to enforce the terms, or prevent or remedy the violation, of any provisions of
this Agreement. This provision shall not constitute a waiver by the Company of
any rights to damages or other remedies which it may have pursuant to this
Agreement or otherwise.
10. Survival. The provisions of Sections 5.1, 5.2, 7 and 9 shall survive
--------
the expiration or earlier termination of this Agreement.
11. Notices. Any notices or other communications relating to this
-------
Agreement shall be in writing and delivered personally or mailed by certified
mail, return receipt requested, to the party
concerned at the address set forth below:
If to Company: Wyle Electronics
15370 Barranca Parkway
Irvine, California 92718
Attn: Senior Vice President
If to Employee: At his residence address as maintained by the Company
in the regular course of its business for payroll
purposes.
Either party may change the address for the giving of notices at any time by
notice given to the other party under the provisions of this section 11.
12. Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties and supersedes all prior written and oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may not be changed orally, but only
by an agreement in writing signed by both parties.
13. Construction. This Agreement shall be governed under
------------
and construed in accordance with the laws of the State of
California. The paragraph headings and captions contained herein are for
reference purposes and convenience only and shall not in any way affect the
meaning or interpretation of this Agreement. It is intended by the parties that
this Agreement be interpreted in accordance with its fair and simple meaning,
not for or against either party, and neither party shall be deemed to be the
drafter of this Agreement.
8
<PAGE>
14. Severability. If any portion or provision of this Agreement is
------------
determined by arbitration or by a court of competent jurisdiction to be invalid,
illegal or unenforceable, the remaining portions or provisions hereof shall not
be affected.
15. Binding Effect. The rights and obligations of the parties under this
--------------
Agreement shall be binding upon and inure to the benefit of the permitted
successors, assigns, heirs, administrators, executors and personal
representatives of the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and in the year first written above.
WYLE ELECTRONICS
By: /s/ Ralph L. Ozorkiewicz
___________________________________
Ralph L. Ozorkiewicz
Its: President
/s/ R. Van Ness Holland, Jr.
________________________________________
R. Van Ness Holland, Jr.
9
<PAGE>
EXHIBIT 10(n)
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
as of January 1, 1995 by and between James N. Smith ("Employee") and Wyle
Electronics, a California corporation (the "Company").
The parties agree as follows:
1. Employment.
----------
1.1 Title & Duties. The Company hereby employs Employee, and
--------------
Employee hereby accepts employment, as Senior Vice President of the Company and
President of Liberty Contract Services. Employee shall be given duties
consistent with such offices and positions. There shall be no change in
Employee's titles or duties without the mutual consent of the Company and
Employee.
1.2 Place. Employee shall not be required to perform any duties as
-----
described in section 1.1 at any place other than in the County of Orange, State
of California, except insofar as his duties shall require reasonable business
trips and/or visits to suppliers or customers or Company facilities.
2. Extent of Services.
------------------
2.1 General. It is recognized that the services to be rendered by
-------
Employee are of such a nature as to be peculiarly rendered by Employee,
encompass the individual ability of Employee and cannot be measured exclusively
in terms of hours or services rendered in any particular period. Employee
agrees to devote his full time and efforts to the performance of his duties and
exclusively to advance the interests of the Company.
2.2 Vacation. Employee shall be entitled to such vacations and other
--------
absences from work as shall be reasonably consistent with the performance of his
duties as provided in this Agreement.
3. Term. Subject to the provisions for earlier termination provided
----
herein, the term of Employee's employment by the Company shall continue
uninterrupted, and such employment shall terminate and the term of this
Agreement shall expire on, December 31, 1999.
4. Compensation.
------------
4.1 Cash Compensation. The Company shall compensate Employee for
-----------------
services rendered under this Agreement in an amount of not less than $262,000.00
per year, as determined from time to time by the Board of Directors. Employee
shall be considered in
1
<PAGE>
the Company's annual review of executive compensation and he shall be a
participant in the Company's executive bonus plans as may be in effect from time
to time. All cash compensation paid to Employee under this Agreement shall be
aggregated for purposes of meeting the $262,000.00 per year requirement, whether
in the form of annual compensation or in the form of bonuses.
4.2 Employee Benefits. Employee shall be entitled to receive fringe
-----------------
benefits consistent with Employee's duties and positions, which benefits shall
(except as specified below) be no less than those to which he is entitled as of
the date hereof, including but not limited to all plans of life, accident and
health, salary continuation and other insurance which is or becomes generally
available to other employees, officers or executives of the Company and
participation in the Company's retirement plans. Employee shall be provided
with the full-time use of an automobile consistent with the Company's corporate
policy on automobiles as in effect from time to time. The Company reserves the
right to modify, suspend or discontinue any and all of its fringe benefits
referred to in this Section 4.2 at any time without recourse by Employee so long
as such action is taken generally with respect to other similarly situated peer
executives and does not single out Employee.
4.3 Expenses. Employee shall be reimbursed for all expenses
--------
reasonably incurred in the furtherance of the business of the Company. Employee
shall keep complete and accurate records of all expenditures such that Employee
may fully account to the Board of Directors, if requested, or as may then be
required by the Internal Revenue Service.
5. Confidential Information; Non-Competition.
-----------------------------------------
5.1 General. Employee acknowledges that during his employment by,
-------
and as a result of his relationship with, the Company he will obtain knowledge
of and gain access to information regarding the Company's business, operations,
products, proposed products, production methods, processes, customer lists,
advertising, marketing and promotional plans and materials, price lists, pricing
policies, financial information and other trade secrets, confidential
information and material proprietary to the Company or designated as being
confidential by the Company which is not generally known to non-Company
personnel, including information and material originated, discovered or
developed in whole or in part by Employee (collectively referred to herein as
"Confidential Information"). Employee agrees that during the term of this
Agreement and, to the fullest extent permitted by law, thereafter, he will, in a
fiduciary capacity for the benefit of the Company, hold all Confidential
Information strictly in confidence and will not directly or indirectly reveal,
report, disclose, publish or transfer any of such Confidential Information to
any person, firm or other entity, or utilize any of the Confidential Information
2
<PAGE>
for any purpose, except in furtherance of his employment under this Agreement.
5.2 Return of Materials. Employee agrees that upon the expiration or
-------------------
earlier termination of this Agreement, he will at the Company's request
surrender and return to the Company all lists, books, records and other
Confidential Information of the Company, or obtained in connection with the
Company's business, it being expressly acknowledged by Employee that all such
items are the exclusive property of the Company, and all other property
belonging to the Company then in the possession of Employee, and Employee shall
not make or retain any copies thereof.
5.3 Non-Competition. Employee agrees that during the term of this
---------------
Agreement he will neither directly nor indirectly engage in a business competing
with any of the businesses conducted by the Company or any of its subsidiaries
or affiliates, nor without the prior written consent of the Board of Directors
of the Company, directly or indirectly have any interest in, own, manage,
operate, control, be connected with as a stockholder, joint venturer, director,
officer, employee, partner or consultant, or otherwise engage, invest or
participate in any business which is competitive with any of the businesses
conducted by the Company or by any subsidiary or affiliate of the Company;
provided, however, that nothing contained in this Section 5.3 shall prevent
Employee from investing or trading in stocks, bonds, commodities, securities,
real estate or other forms of investment for his own account and benefit
(directly or indirectly), so long as such investment activities do not interfere
with Employee's services to be rendered hereunder and are consistent with the
conflict of interest provisions contained in the Company's Business Ethics
Policy as it exists from time to time.
6. Termination Prior to Expiration of Term. Employee's employment, and
---------------------------------------
his rights under this Agreement, may be terminated prior to the expiration of
the term of this Agreement (as provided in Section 3 hereof) only as provided in
this Section 6.
6.1 Discharge or Resignation.
------------------------
(a) Employee may be discharged prior to the expiration of the
term of this Agreement (1) for "Just Cause"; or (2) upon 60 days written notice,
even if "Just Cause" does not exist.
(b) For a discharge which occurs prior to a "Change in Control,"
as defined herein, "Just Cause" shall mean that the Company, acting in good
faith based upon the information then known to the Company, determines that
Employee has: (1) committed a material breach of his duties and responsibilities
to the Company (other than as a result of incapacity due to the Employee's
disability); or (2) been
3
<PAGE>
convicted of a crime involving moral turpitude; or (3) refused to perform his
required duties and responsibilities or performed them incompetently; or (4)
violated any fiduciary duty owned to the Company; or (5) taken actions which are
injurious to the Company and which involve moral turpitude or actual malice
towards the Company. For a discharge which occurs coincident with or after a
"Change in Control," "Just Cause" means (x) Employee's conviction of a crime
involving moral turpitude; or (y) actions of Employee which are injurious to the
Company and involve moral turpitude or actual malice toward the Company.
(c) Employee may resign prior to the term of this Agreement (1)
for "Good Reason"; or (2) upon 60 days written notice, even if "Good Reason"
does not exist. Regardless of whether a resignation occurs prior to, coincident
with or after a "Change in Control," "Good Reason" shall mean the material
failure by the Company to fulfill its obligations under this Agreement, to the
extent not remedied in a reasonable period of time after receipt of written
notice by the Employee specifying the material failure by the Company. Any
reduction or attempted reduction of compensation or benefits below that required
by Section 4 is deemed material. For a resignation which occurs coincident with
or following a Change in Control, "Good Reason" shall also mean the failure by
the Company or its successors to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if a succession had not occurred.
(d) (1) If Employee is discharged for "Just Cause" or resigns
without "Good Reason," the Company shall not be obligated to pay the Employee
any sums of money other than all compensation and benefits due employee as of
the date of discharge or resignation and the bonus (if any) for the period of
his employment prior to the discharge or resignation.
(2) If employee is discharged without "Just Cause" or resigns
for "Good Reason," Employee shall be entitled to the following:
(i) all compensation and benefits due Employee as of the
date of discharge or resignation and the bonus for the period
of employment prior to the discharge or resignation; plus
(ii) A lump sum payment equal to the present value of the
compensation which would be received by Employee (using the
highest annual amount of compensation in any year during which
this Agreement was in force) through the term of this
Agreement had the resignation or discharge not occurred. The
present value shall be determined by using the applicable
federal mid-term rate,
4
<PAGE>
compounded monthly, as determined under Section 1274(d) of the
Internal Revenue Code of 1986, as amended (the "Code"), or its
successor, as of the date of discharge or resignation. The
entire lump-sum amount shall be paid within 30 days of the date
of resignation or discharge. Employee shall have no duty to
mitigate or attempt to mitigate his damages.
(e) (1) Notwithstanding anything to the contrary in this Agreement,
payments to the Employee which constitute "parachute payments," as defined in
Section 280G of the Code, shall be limited, if necessary, so that the maximum
amount of such payments to the Employee shall be one dollar ($1.00) less than
the amount which would cause the payments to the Employee (including payments to
the Employee which are not included in this Agreement) to be subject to the
excise tax imposed by Section 4999 of the Code.
(2) Any determination that payments to the Employee must be limited
and the assumptions to be utilized in arriving at such determination, shall be
made by Arthur Andersen, LLP (the "Accounting Firm"), which shall provide
detailed supporting calculations both to the Company and the Employee within 15
business days of the time such calculation is requested by the Company or the
Employee. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting a Change of Control, the
Employee shall appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. If the Accounting Firm determines
that payments to the Employee shall be limited, it shall furnish the Employee
with its written opinion that failure to limit the payments would result in the
imposition of a tax under Section 4999 of the Code. Any determination by the
Accounting Firm shall be binding upon the Company and the Employee. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
payments to the Employee which will not have been made by the Company should
have been made ("Underpayment"). The Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Employee. In the
event that any payment made to the Employee shall be determined by the
Accounting Firm to result in the imposition of any tax under Section 4999 of the
Code, the Employee shall promptly reimburse the Company for the amount of such
excess together with interest on such amount (at the same rate as is applied to
determine the present value of payments under Section 280G or any successor
thereto), from the date the reimbursable payment was received by the Employee to
the date the same is
5
<PAGE>
repaid to the Company. The parties hereto acknowledge and agree that the amount
of any such reimbursement shall be deemed never to have been paid to the
Employee.
(f) For purposes of this Agreement; a "Change of Control" shall
be deemed to have occurred if (1) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934), directly or indirectly, of securities of the Company representing 35%
or more of the combined voting power of the Company's then outstanding
securities; or (2) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of the Company
(the "Board") cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the Company's
shareholders, of each new Board member was approved by a vote of at least three-
fourths of the Board members then still in office who were Board members at the
beginning of such period.
6.2 Disability. If the Company in good faith determines that the
----------
Employee has become ill or injured and such illness or injury will prevent
Employee from performing the services required under this Agreement for a period
of more than 12 consecutive months on substantially a full time basis, the
Company may give Employee written notice that it intends to terminate the
employment of Employee. Such termination of employment shall become effective
30 days after receipt of such notice by Employee, provided that, within 30 days
after such receipt, Employee shall not have returned to full time performance of
his duties. If Employee's employment is so terminated, Employee shall be
entitled to receive his full compensation and benefits until the expiration of
12 months from the date on which he was first unable to substantially perform
his duties hereunder.
6.3 Death. The death of Employee shall result in automatic
-----
termination of this Agreement, and the Company shall not be obligated to pay the
estate or personal representative of Employee any sums of money other than any
and all compensation and benefits due Employee at the date of his death and
bonus for the period of his employment prior to death.
7. Arbitration.
-----------
7.1 General. Any dispute, controversy or claim arising out of or
-------
relating to this Agreement, the breach hereof or the coverage or enforceability
of this arbitration provision shall be settled by arbitration in Orange County,
California, conducted by the Judicial Arbitration and Mediation Service ("JAMS")
before a retired judge on the JAMS panel. The arbitration of any such issue,
including the determination of the
6
<PAGE>
amount of any damages suffered by either party hereto by reason of the acts or
omissions of the other, shall be to the exclusion of any court of law.
Notwithstanding the foregoing, either party hereto may seek any provisional
remedy in a court, including but not limited to an action for injunctive relief
or attachment, without waiving the right to arbitration. From the JAMS panel,
each party shall rank in descending order five candidates. Within 20 days of
the date on which the arbitration demand was delivered, the parties shall
simultaneously exchange lists with such rankings. The name receiving the
highest point total among all names on both lists shall serve as arbitrator. In
the event of a tie or a failure to identify any common candidates, the parties
shall attempt to agree upon an arbitrator from the panel. Failing agreement,
the arbitrator shall be selected by the procedure set forth in California Code
of Civil Procedure Section 1281.6.
7.2 Procedure. The parties shall agree upon one arbitrator from the
---------
JAMS panel. The Company shall have the burden of proving Just Cause for any
discharge of Employee under Section 6.1 hereof; for a resignation which occurs
prior to a Change in Control, the Employee shall have the burden of proving Good
Reason, and for a resignation which occur after a Change in Control, the Company
shall have the burden of proving that Good Reason did not exist. Judgment upon
any award of the arbitrator may be entered in any court having jurisdiction, or
application may be made to any such court for the judicial acceptance of the
award and for an order of enforcement.
7.3 Costs and Expenses. The Company shall pay the fees of the
------------------
arbitrator, witnesses and such other expenses as may be generated by the
arbitration, except Employee's attorneys' fees, unless the arbitrator concludes
that such arbitration procedure was not instituted in good faith by Employee.
In such event the arbitrator shall be empowered to allocate fees and assess
costs and other expenses of the arbitration, except attorneys' fees, as the
arbitrator may deem appropriate, bearing in mind the relative financial
abilities of the parties and the respective merits of their positions.
8. Non-Assignment. This Agreement shall not be assignable nor the duties
--------------
hereunder delegable by Employee. None of the payments hereunder may be
encumbered, transferred or in any way anticipated. The Company shall not assign
this Agreement nor shall it transfer all or any substantial part of its assets
without first obtaining in conjunction with such transfer the express assumption
of the obligations hereof by the assignee or transferee.
9. Remedies. Employee acknowledges that the services he is to render
--------
under this Agreement are of a unique and special nature, the loss of which
cannot reasonably or adequately be compensated for in monetary damages, and that
irreparable injury
7
<PAGE>
and damage will result to the Company in the event of any default or breach of
this Agreement by Employee. Because of the unique nature of the Confidential
Information, Employee further acknowledges and agrees that the Company will
suffer irreparable harm if Employee fails to comply with his obligations in
section 5 hereof and that monetary damages would be inadequate to compensate the
Company for such breach. Accordingly, Employee agrees that the Company will, in
addition to any other remedies available to it at law, in equity or, without
limitation, otherwise, be entitled to injunctive relief or specific performance
to enforce the terms, or prevent or remedy the violation, of any provisions of
this Agreement. This provision shall not constitute a waiver by the Company of
any rights to damages or other remedies which it may have pursuant to this
Agreement or otherwise.
10. Survival. The provisions of Sections 5.1, 5.2, 7 and 9 shall survive
--------
the expiration or earlier termination of this Agreement.
11. Notices. Any notices or other communications relating to this
-------
Agreement shall be in writing and delivered personally or mailed by certified
mail, return receipt requested, to the party
concerned at the address set forth below:
If to Company: Wyle Electronics
15370 Barranca Parkway
Irvine, California 92718
Attn: Senior Vice President
If to Employee: At his residence address as maintained by the Company
in the regular course of its business for payroll
purposes.
Either party may change the address for the giving of notices at any time by
notice given to the other party under the provisions of this section 11.
12. Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties and supersedes all prior written and oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may not be changed orally, but only
by an agreement in writing signed by both parties.
13. Construction. This Agreement shall be governed under
------------
and construed in accordance with the laws of the State of
California. The paragraph headings and captions contained herein are for
reference purposes and convenience only and shall not in any way affect the
meaning or interpretation of this Agreement. It is intended by the parties that
this Agreement be interpreted in accordance with its fair and simple meaning,
not for or against either party, and neither party shall be deemed to be the
drafter of this Agreement.
8
<PAGE>
14. Severability. If any portion or provision of this Agreement is
------------
determined by arbitration or by a court of competent jurisdiction to be invalid,
illegal or unenforceable, the remaining portions or provisions hereof shall not
be affected.
15. Binding Effect. The rights and obligations of the parties under this
--------------
Agreement shall be binding upon and inure to the benefit of the permitted
successors, assigns, heirs, administrators, executors and personal
representatives of the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and in the year first written above.
WYLE ELECTRONICS
By: /s/ Ralph L. Ozorkiewicz
___________________________________
Ralph L. Ozorkiewicz
Its: President
/s/ James N. Smith
________________________________________
James N. Smith
9
<PAGE>
EXHIBIT 10(af)
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as of
---------
December 14, 1994, is entered into among WYLE LABORATORIES, a California
corporation (the "Company"), BANK OF AMERICA ILLINOIS (formerly known as
-------
Continental Bank N.A.), NBD BANK N.A., THE BANK OF NEW YORK and NATIONSBANK OF
TEXAS, N.A. (together with their respective successors and assigns, collectively
called the "Banks" and individually a "Bank"), BANK OF AMERICA ILLINOIS, as
----- ----
agent for the Banks (the "Original Agent") and BANK OF AMERICA NATIONAL TRUST
--------------
AND SAVINGS ASSOCIATION, as the successor agent for the Banks (the "Successor
---------
Agent").
-----
PRELIMINARY STATEMENTS
A. The Company, the Banks and the Original Agent have entered into that
certain Credit Agreement dated as of December 9, 1993 (the "Credit Agreement";
----------------
capitalized terms used herein without definition shall have the meanings set
forth in the Credit Agreement).
B. The Company, the Banks, the Original Agent and the Successor Agent
wish to amend the Credit Agreement in certain respects, including, without
limitation, to increase the commitments of the Banks thereunder to $80,000,000.
C. In consideration of the premises and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Company, the Banks, the Original Agent and the Successor Agent hereby agree as
follows.
SECTION I: AMENDMENTS TO THE CREDIT AGREEMENT
1.1. Amendment to Preamble.
---------------------
The Preamble of the Credit Agreement is hereby amended by deleting
"CONTINENTAL BANK N.A. (in its individual capacity, "Continental")" and
replacing it with "BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (in
its individual capacity, "BofA")."
1.2. Amendments to Section 1: Definitions.
------------------------------------
(a) The definition of "Agent" in Section 1.1 of the Credit Agreement
is hereby amended and restated in its entirety to read as follows:
1
<PAGE>
Agent means BofA in its capacity as agent for the Banks hereunder and any
-----
successor thereto in such capacity.
(b) The definition of "Alternate Reference Rate" in Section 1.1 of
the Credit Agreement is hereby amended and restated in its entirety to read
as follows:
Alternate Reference Rate means at any time the higher of (a) the
------------------------
Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in
effect for such day as publicly announced from time to time by BofA
in San Francisco, California, as its "reference rate." (The
"reference rate" is a rate set by BofA based upon various factors
including BofA's costs and desired return, general economic
conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such
announced rate.) Any change in the reference rate announced by BofA
shall take effect at the opening of business on the day specified in
the public announcement of such change. The Agent will give notice
promptly to the Company and the Banks of changes in the Alternate
Reference Rate.
(c) The definition of "Business Day" in Section 1.1 of the Credit
Agreement is hereby amended and restated in its entirety to read as
follows:
Business Day means any day on which BofA is open for commercial
------------
banking business in San Francisco and, in the case of a Business Day
which relates to a Eurodollar Loan, on which dealings are carried on
in the London interbank eurodollar market.
(d) The second sentence of the definition of "Commitment" in Section
1.1 of the Credit Agreement is hereby amended and restated in its entirety
to read as follows: "The amount of each Commitment is set forth on
Schedule 1 hereto."
----------
(e) The definition of "Continental" in Section 1.1 of the Credit
Agreement is hereby amended and restated in its entirety to read as
follows:
Continental means BofA Illinois.
-----------
(f) The definition of "Eurodollar Rate" in Section 1.1 of the Credit
Agreement is amended and restated in its entirety to read as follows:
2
<PAGE>
Eurodollar Rate means, with respect to any Eurodollar Loan for
---------------
any Interest Period, the rate per annum at which Dollar deposits in
immediately available funds are offered to the Agent two Business
Days prior to the beginning of such Interest Period by major banks in
the London eurodollar market at approximately 11:00 a.m., London
time, for delivery on the first day of such Interest Period, for the
number of days comprised therein and in an amount equal or comparable
to the amount of the Eurodollar Loan of BofA Illinois for such
Interest Period.
(g) The definition of "Federal Funds Rate" in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
Federal Funds Rate means, for any day, the rate set forth in the
------------------
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York
(including any such successor, "H.15(519)") on the preceding Business
Day opposite the caption "Federal Funds (Effective)"; or, if for any
relevant day such rate is not so published on any such preceding
Business Day, the rate for such day will be the arithmetic mean as
determined by the Agent of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York City
time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
(h) The definition of "Issuing Bank" in Section 1.1 of the Credit
Agreement is amended and restated in its entirety to read as follows:
Issuing Bank means BofA Illinois or with respect to any Letter
------------
of Credit issued by any other Bank designated by BofA Illinois, such
other Bank.
(i) The second sentence of the definition of "Percentage" in Section
1.1 of the Credit Agreement is hereby amended and restated in its entirety
to read as follows: "The Percentage for each Bank is set forth on Schedule
--------
1 hereto."
-
(j) The definition of "Termination Date" in Section 1.1 of the Credit
Agreement is hereby amended by deleting the date "December 9, 1996" and
replacing it with "December 9, 1997."
3
<PAGE>
(k) Section 1.1 of the Credit Agreement is hereby amended by adding
the following definitions thereto, which shall be inserted in alphabetical
order.
Applicable Margin means the percentage determined by reference
-----------------
to the Leverage Ratio as of the last day of the most recently ended
Fiscal Quarter, as follows:
<TABLE>
<CAPTION>
Eurodollar Facility Letter of
Leverage Loan Fee Credit
Ratio Margin Margin Margin
------------------ ----------- --------- ----------
<C> <C> <C> <C>
less than or
equal to .25 to 1.0 .375% .15% .375%
more than .25 to
1.0 but less than
or equal to .3 to 1.0 .40625% .16875% .40625%
more than .3 to 1.0 .4375% .1875% .4375%
</TABLE>
The Applicable Margin shall be based on the Leverage Ratio as set
forth in the most recent Compliance Certificate, and shall be
effective from and including the date the Agent receives such
Compliance Certificate to but excluding the date on which the Agent
receives the next Compliance Certificate; provided, however, that if
-------- -------
Agent does not receive a Compliance Certificate by the date required
by Section 10.1.3 the Applicable Margin shall, effective as of such
--------------
date, increase to the highest level to but excluding the date the
Agent receives such Compliance Certificate. Subject to the foregoing
proviso, from the First Amendment Effective Date until the date on
which the Agent has received a Compliance Certificate for the quarter
ended December 31, 1994, the Borrower's Eurodollar Loan Margin,
Facility Fee Margin and Letter of Credit Margin will be .375%, .15%
and .375%, respectively.
BofA - see the Preamble.
---- --------
BofA Illinois means Bank of America Illinois, an Illinois
-------------
banking corporation formerly known as Continental Bank.
Capital means the sum of (i) Debt and (ii) Tangible Net Worth.
-------
4
<PAGE>
First Amendment Effective Date means the Effective Date as
------------------------------
defined in that certain First Amendment to Credit Agreement dated as
of December 14, 1994 among the Company, the Banks, BofA Illinois, as
retiring Agent and BofA, as successor Agent.
Leverage Ratio means, at any time, the ratio of (i) Debt to (ii)
--------------
Capital.
1.3. Amendments to Section 2: Commitments of the Bank, etc.
-------------------------------------------------------
(a) Section 2.3 of the Credit Agreement is hereby amended (i) by
deleting "Chicago time" in each of the places it appears therein and
replacing it with "San Francisco time", (ii) by inserting the following in
the second line thereof between the words "notice" and "to", "(which shall,
in the case of telephonic notice, be immediately confirmed by facsimile)",
and (iii) by deleting "2:00 p.m." and "in Chicago" in the fourth sentence
thereof and replacing them with "noon" and "in San Francisco",
respectively.
(b) Section 2.4 of the Credit Agreement is hereby amended by (i)
deleting "Chicago time" in each of the places it appears therein and
replacing it with "San Francisco time" and (ii) inserting the following
between the words "notice" and "to" in the fifth and sixth lines thereof,
"(which shall, in the case of telephonic notice, be immediately confirmed
by facsimile)".
(c) The first sentence of Section 2.7 of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:
BofA Illinois shall be the Issuing Bank with respect to each
Letter of Credit, unless each of the Company, BofA Illinois and
another Bank designate such other Bank to be the Issuing Bank with
respect to any Letter of Credit, in which case such other Bank shall
be the Issuing Bank with respect to such Letter of Credit.
(d) Section 2.11 of the Credit Agreement is hereby amended by
deleting "Chicago time" in each of the places it appears therein and
replacing it with "San Francisco time".
(e) Section 2.15 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
2.15 Transfer Instructions. All funds to be transferred to
---------------------
Agent shall be wire transferred in
5
<PAGE>
immediately available funds to the Agent's Account No. 12338-14365,
re: Wyle Laboratories, Attention: Agency Management Services #5596,
maintained at BofA, ABA no. 1210-00358, with the purpose of the
payment indicated, or shall be transferred as the Agent may otherwise
request from time to time.
1.4. Amendments to Section 4: Interest.
----------------------------------
(a) Clause (b) of Section 4.1 of the Credit Agreement is hereby
amended by deleting "plus three eighths of one percent 3/8%)" and replacing
it with "plus the Applicable Margin for Eurodollar Loans."
(b) Section 4.3 of the Credit Agreement is hereby amended by deleting
"Chicago time" and replacing it with "San Francisco time".
1.5. Amendments to Section 5: Fees.
------------------------------
(a) The first sentence of Section 5.1 of the Credit Agreement is
hereby amended by deleting the figure "0.1875%" and replacing it with "the
Applicable Margin for Facility Fees."
(b) Clause (a) of Section 5.2 of the Credit Agreement is hereby
amended by deleting the figure "0.375%" and replacing it with "the
Applicable Margin for Letter of Credit Fees."
1.6. Amendment to Section 6: Reduction or Termination of the Commitments;
---------------------------------------------------------------------
Prepayments.
-----------
Section 6.2 of the Credit Agreement is hereby amended by deleting
"Chicago time" in each of the places it appears therein and replacing it
with "San Francisco time".
1.7. Amendment to Section 7: Making and Proration of Payments; Setoff;
------------------------------------------------------------------
Taxes.
-----
The first sentence of Section 7.1 of the Credit Agreement is hereby
amended (i) by deleting "in Chicago" and replacing it with "in San
Francisco" and (ii) by deleting "Chicago time" and replacing it with "San
Francisco time".
1.8. Amendments to Section 10: Covenants.
------------------------------------
(a) Section 10.1 of the Credit Agreement is hereby amended by
deleting the introductory phrase "Furnish to each Bank" and replacing it
with "Furnish to the Agent and each Bank."
6
<PAGE>
(b) Section 10.6.1 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
10.6.1 Minimum Tangible Net Worth. Not permit Tangible Net Worth at
--------------------------
any time to be less than $145,000,000, plus 75% of Consolidated Net
Income for each Fiscal Quarter (beginning with the Fiscal Quarter
ended December 31, 1994) in which such Consolidated Net Income is
greater than zero, plus the net proceeds of any equity securities
issued by the Company or any Subsidiary after the Effective Date
minus up to $15,000,000 in the aggregate paid by the Company for the
purchase or redemption of its common stock on or after September 30,
1994.
(c) Section 10.6.2 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
10.6.2 Maximum Leverage. Not permit the Leverage Ratio to exceed
----------------
.35 to 1 at any time.
(d) Section 10.6.3 of the Credit Agreement is hereby amended in its
entirety to read as follows:
10.6.3 Minimum Fixed Charge Coverage. Not permit the ratio of (i)
-----------------------------
the sum of Consolidated Net Income before deducting Interest Expense,
income taxes and lease payments for any Computation Period, minus all
interest income included in Consolidated Net Income for such
Computation Period, plus, for the Fiscal Quarter ended September 30,
1994, $14,610,934, to (ii) all Interest Expense for such Computation
Period plus all lease payments for such Computation Period, to be
less than (x) if the last date of such Computation Period is prior to
June 1, 1995, 2.00 to 1 or (y) if the last date of such Computation
Period is on or after June 1, 1995, 2.25 to 1, for any Computation
Period.
(e) The proviso to Section 10.8 of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
provided that the Company may purchase or redeem its capital stock
--------
for not more than fair market value and may pay dividends on its
common stock so long as the aggregate amount paid by the Company for
such purchases, redemptions and dividends on or after July 31, 1993
shall not exceed the sum of (i) $15,000,000 plus (ii) 50% of
Consolidated Net Income for each Fiscal Quarter (beginning with the
7
<PAGE>
Fiscal Quarter ended October 31, 1993) in which such Consolidated Net
Income is greater than zero minus (iii) 100% of Consolidated Net
Income for each Fiscal Quarter (beginning with the Fiscal Quarter
ended October 31, 1993) in which such Consolidated Net Income is less
than zero (exclusive of $14,610,934 of losses recorded by the Company
in the Fiscal Quarter ended September 30, 1994), in each case so long
as no Event of Default or Unmatured Event of Default has occurred and
is continuing or would occur as a result thereof.
(f) Section 10.9 of the Credit Agreement is hereby amended by
inserting the following proviso immediately prior to the end thereof:
provided, further that notwithstanding the provisions of this Section
-------- ------- -------
10.9, the Company may sell its Scientific Services & Systems Group on
----
the terms set forth in the asset purchase agreement dated October 5,
1994.
(g) The first sentence of Section 10.19 of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:
Not, and not permit its Subsidiaries to, make or commit to make
Capital Expenditures in any Fiscal Year in excess of 225% of the
amount expended as depreciation in determining Consolidated Net
Income from continuing operations for the immediately preceding
Fiscal Year; provided that Capital Expenditures by the Company of up
--------
to $18,000,000 to acquire and equip a new warehouse facility for the
purpose of centralizing its warehouse operations shall not be
included in determining compliance with this covenant.
1.9. Amendment to Section 13: The Agent.
-----------------------------------
Section 13.7 of the Credit Agreement is hereby amended by deleting "Chicago
time" and replacing it with "San Francisco time".
1.10. Amendment to Section 14: General.
---------------------------------
The first parenthetical clause in the first sentence of Section 14.6
of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:
8
<PAGE>
(including the fees and charges of counsel for the Agent, including,
without limitation, all allocated costs of the Agent's internal
counsel, and of local counsel, if any, who may be retained).
1.11. Amendment to Schedules.
----------------------
There shall be added to the Credit Agreement a new Schedule 1 in the form
attached to this Amendment as Schedule 1.
SECTION II: CONDITIONS TO EFFECTIVENESS
2.1. Conditions. This Amendment shall be and become effective on such
----------
date (the "Effective Date") when all of the conditions set forth below shall
--------------
have been satisfied.
(a) The Successor Agent shall have received executed originals of
this Amendment from the Company, each Bank, the Original Agent and the
Successor Agent.
(b) The Successor Agent shall have received a certificate, dated the
Effective Date, of the Secretary or any Assistant Secretary of the Company
as to resolutions of the Board of Directors of the Company authorizing this
Amendment and the transactions contemplated hereby.
(c) The Successor Agent shall have received a waiver letter from The
Prudential Insurance Company of America confirming that Wyle Distribution
Group - Santa Clara, Inc. may unconditionally guarantee all obligations of
the Company under the Credit Agreement as amended hereby (the "Amended
-------
Agreement").
---------
(d) The Successor Agent shall have received an affirmation letter in
substantially the form attached hereto as Exhibit A from Wyle Distribution
---------
Group - Santa Clara, Inc. (the "Guaranty Affirmation").
--------------------
(e) The Successor Agent shall have received the opinion of Stephen
Natcher, Vice President - Administration, General Counsel and Secretary of
the Company substantially in the form attached hereto as Exhibit B.
---------
(f) The Successor Agent shall have received from the Company, for
distribution to the Banks in accordance with their Percentages, an
amendment fee in the amount of $32,000.
9
<PAGE>
(g) The Successor Agent shall have received replacement promissory
notes from the Company reflecting each bank's new Commitment.
(h) All documents executed or submitted pursuant hereto shall be
satisfactory in form and substance to the Successor Agent and its counsel;
and all legal matters incident to the transactions contemplated by this
Amendment shall be satisfactory to the Agent and its counsel.
2.2. Termination. If the Effective Date shall not have occurred on or
-----------
prior to December 23, 1994, the agreements of the parties contained in this
Amendment shall terminate effective immediately on such date and without any
further action.
SECTION III: COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce the Successor Agent and the Banks to enter into this
Amendment and to amend the Credit Agreement in the manner provided herein, the
Company represents and warrants to the Successor Agent and the Banks that the
following statements are true, correct and complete:
3.1. Organization and Powers. The Company has all requisite corporate
-----------------------
power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Amended
Agreement.
3.2. Authorization; No Conflict. The execution and delivery by the
--------------------------
Company of this Amendment and the performance by the Company of its obligations
under the Amended Agreement have been duly authorized by all necessary corporate
action on the part of the Company (including any necessary stockholder action),
have received all necessary governmental approval (if any shall be required),
and do not and will not (i) violate any provision of law or any order, decree or
judgment of any court or other government authority or agency which is binding
on the Company, (ii) contravene or conflict with, or result in a breach of, any
provision of the Articles of Incorporation, By-Laws or other organizational
documents of the Company or of any material agreement, indenture, instrument or
other document which is binding on the Company or (iii) result in, or require,
the creation or imposition of any Lien on any property of the Company (except
Liens in favor of the Agent and the Banks as provided in the Amended Agreement),
except in those instances in which such violation or breach would not be
reasonably expected to materially adversely affect either (i) the financial
condition, operations, assets, business, properties or, to the knowledge of the
Company, prospects of the Company and its Subsidiaries taken as a whole or (ii)
the ability of the Loan Parties to perform
10
<PAGE>
their obligations under the Loan Documents. This Amendment has been duly
executed and delivered by the Company.
3.3. Binding Obligation. This Amendment and the Amended Agreement are the
------------------
legally valid and binding obligations of the Company, enforceable against it in
accordance with their respective terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles.
3.4. Incorporation of Representations and Warranties from Credit
-----------------------------------------------------------
Agreement. The representations and warranties contained in Section 9 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Effective Date, to the same extent as though made on
and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and
warranties were true, correct and complete in all material respects on and as of
such earlier date.
3.5. Absence of Default. After giving effect to the terms of this
------------------
Amendment, there does not exist any Event of Default or Unmatured Event of
Default.
Section IV: MISCELLANEOUS
4.1. Reference to and Effect on the Credit Agreement.
-----------------------------------------------
(a) On and after the Effective Date, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of
like import, and each reference in the Notes and the other Loan Documents
to the Credit Agreement, shall mean and be a reference to the Amended
Agreement.
(b) Notwithstanding the provisions of Section 13.8 of the Credit
Agreement, on and as of the Effective Date, the resignation of the Original
Agent shall be effective and the Successor Agent shall become the Agent for
all purposes of the Credit Agreement. By their execution of this
Amendment, each Bank and the Company acknowledge and confirm (i) the
appointment of the Successor Agent as the Agent under the Credit Agreement,
(ii) that the Successor Agent shall succeed to and become vested with all
rights, powers, privileges and duties of the Original Agent, and (iii) that
the Original Agent shall be discharged from all further duties and
obligations under the Credit Agreement and the provisions of Section 13 of
the Credit Agreement shall inure to the benefit of Original Agent as to any
actions taken or
11
<PAGE>
omitted to be taken by it while it was the Agent under the Credit
Agreement.
(c) On and after the Effective Date, each reference in Credit
Agreement, the Notes and the other Loan Documents to "Continental, as
Agent", the "Agent" or words of like import shall mean and be a reference
to "BofA, as Agent". On and after the Effective Date, each reference in
the Credit Agreement, the Notes and the other Loan Documents to
"Continental" in any capacity other than as Agent, shall mean and be a
reference to "BofA Illinois".
(d) Except as specifically amended by this Amendment, the Credit
Agreement, the Notes and each other Loan Document shall remain in full
force and effect and are hereby ratified and confirmed.
(e) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of the
Banks under, the Credit Agreement, the Notes or any other Loan Document.
4.2. Execution in Counterparts; Effectiveness. This Amendment may be
----------------------------------------
executed in any number of counterparts and by the different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument.
4.3. Notices. Except as otherwise provided in the Credit Agreement, all
-------
notices under the Credit Agreement shall be in writing (including, without
limitation, facsimile transmission) and shall be sent to the applicable party at
its address shown below its signature hereto or at such other address as such
party may, by written notice received by the other party, have designated as its
address for such purpose.
4.4. Governing Law. THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND SHALL
-------------
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
4.5. Waiver of Jury Trial. EACH OF THE COMPANY, THE ORIGINAL AGENT, THE
--------------------
SUCCESSOR AGENT AND EACH BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AMENDMENT, THE
AMENDED AGREEMENT, ANY LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR THEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN
CONNECTION WITH ANY OF THE
12
<PAGE>
FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
4.6. Headings. Section headings in this Amendment are included herein for
--------
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose or be given any substance or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
WYLE LABORATORIES
By /s/ R. Van Ness Holland, Jr.
______________________________
R. Van Ness Holland, Jr.
Title: Executive Vice President
________________________
15370 Barranca Parkway
Irvine, California 92718
Attention: R. Van Ness Holland, Jr.
Telephone: (714) 753-9953
Facsimile: (714) 753-9908
BANK OF AMERICA ILLINOIS, as Original Agent and as
a Bank
By /s/ Mark F. Milner
______________________________
Mark F. Milner
Title: Managing Director
________________________
Credit Products - 5618
555 South Flower Street
11th Floor
Los Angeles, California 90071
Attention: Ms. Ruth Z. Edwards
Telephone: (213) 228-2678
Facsimile: (213) 228-2756
13
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Successor Agent
By /s/ Charles D. Graber
______________________________
Charles D. Graber
Title: Vice President
________________________
1455 Market Street, 13th Floor
San Francisco, California 94103
Attention: Mr. Charles D. Graber
Telephone: (415) 953-4624
Facsimile: (415) 622-4894
NBD BANK, N.A.
By /s/ Curtis A. Price
______________________________
Curtis A. Price
Title: Vice President
________________________
611 Woodward Avenue
Detroit, Michigan 49226
Attention: Curtis A. Price Vice President
Telephone: (313) 225-4387
Facsimile: (313) 225-2649
THE BANK OF NEW YORK
By /s/ Rebecca Kyman
______________________________
Rebecca Kyman
Title: Assistant Vice President
________________________
10990 Wilshire Blvd.
Suite 1700
Los Angeles, California 90024
Attention: Rebecca Kyman
Telephone: (310) 996-8650
Facsimile: (310) 996-8667
14
<PAGE>
NATIONSBANK OF TEXAS, N.A.
By /s/ Michele Shafroth
______________________________
Michele Shafroth
Title: Senior Vice President
________________________
444 South Flower Street
Suite 1500
Los Angeles, California 90071
Attention: Michele Shafroth
Senior Vice President
Telephone: (213) 236-4907
Facsimile: (213) 624-5815
15
<PAGE>
Schedule 1
----------
<TABLE>
<CAPTION>
Bank Loan Commitment Percentage
----------------------------- --------------- -----------
<S> <C> <C>
Bank of America Illinois $24,000,000 30%
NationsBank of Texas, N.A. $24,000,000 30%
NBD Bank, N.A. $16,000,000 20%
The Bank of New York $16,000,000 20%
</TABLE>
16
<PAGE>
EXHIBIT A
December 14, 1994
Bank of America National Trust
and Savings Association, as Agent and each of the Banks party to the
hereinafter-defined Credit Agreement
Re: First Amendment to Credit Agreement
Ladies and Gentlemen:
The undersigned has previously executed and delivered a Subsidiary
Guaranty dated as of December 9, 1993 (the "Guaranty") of the obligations of
--------
Wyle Laboratories (the "Company") to you under the terms of that certain Credit
-------
Agreement dated as of December 9, 1993 (the "Credit Agreement") and the Loan
----------------
Documents (as defined in the Credit Agreement) executed in connection therewith.
The undersigned is familiar with, and has consented to, that certain
First Amendment to Credit Agreement of even date herewith among you and the
Company (the "Amendment"). This letter will evidence the undersigned's approval
---------
of the terms of the Amendment and will confirm the undersigned's understanding
that the Guaranty remains in full force and effect. We understand that you have
entered into the Amendment in reliance upon the continued effectiveness of the
Guaranty.
Very truly yours,
WYLE DISTRIBUTION GROUP -SANTA CLARA, INC.
By /s/ R. Van Ness Holland, Jr.
------------------------------
R. Van Ness Holland, Jr.
Its: Executive Vice President
-----------------------------
17
<PAGE>
EXHIBIT 11
PAGE 1 OF 2
WYLE ELECTRONICS
CALCULATION OF INCOME PER SHARE
FOR THE YEAR ENDED DECEMBER 31, 1994,
THE ELEVEN MONTHS ENDED DECEMBER 31, 1993
AND YEAR ENDED JANUARY 31, 1993
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Year Eleven Year
Ended Months Ended Ended
December 31, December 31, January 31,
1994 1993 1993
------------- ------------- -----------
<S> <C> <C> <C>
PRIMARY:
-------
Income (loss) applicable to common shares:
Income from continuing operations........... $ 13,980 $ 8,336 $11,787
Discontinued operations
Income from operations, net of taxes....... 1,418 2,993 3,641
Loss on sale, net of taxes................. (15,779) - -
Cumulative effect of accounting
change for postretirement
benefits other than pensions............... - (3,193) -
-------- ------- -------
Net income (loss)........................... $ (381) $ 8,136 $15,428
======== ======= =======
Common and common equivalent shares -
Weighted average number of
common shares outstanding.................. 12,252 12,183 10,345
Stock options included under
the treasury stock method (1).............. 173 172 270
-------- ------- -------
12,425 12,355 10,615
======== ======= =======
Income (loss) per share -
Income from continuing operations........... $ 1.13 $ .67 $ 1.11
======== ======= =======
Discontinued operations
Income from operations, net of taxes....... $ .11 $ .24 $ .34
======== ======= =======
Loss on sale, net of taxes................. $ (1.27) $ - $ -
======== ======= =======
Cumulative effect of accounting
change for postretirement
benefits other than pensions............... $ - $ (.26) $ -
======== ======= =======
Net income (loss) per common share.......... $ (.03) $ .66 $ 1.45
======== ======= =======
</TABLE>
<PAGE>
EXHIBIT 11
PAGE 2 OF 2
WYLE ELECTRONICS
CALCULATION OF INCOME PER SHARE
FOR THE YEAR ENDED DECEMBER 31, 1994,
THE ELEVEN MONTHS ENDED DECEMBER 31, 1993
AND YEAR ENDED JANUARY 31, 1993
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Year Eleven Year
Ended Months Ended Ended
December 31, December 31, January 31,
1994 1993 1993 (2)
------------ ------------ ------------
<S> <C> <C> <C>
FULLY DILUTED:
-------------
Income (loss) applicable to common shares
Income from continuing operations.............. $ 11,787
Interest expense on convertible subordinated
debentures, net of taxes..................... 758
--------
Income from continuing operations applicable
to common shares (assuming full dilution)..... 12,545
Income from discontinued operations............ 3,641
--------
Net income applicable to common shares
(assuming full dilution)...................... $ 16,186
========
Common and common equivalent shares -
Weighted average number of
common shares outstanding..................... 10,345
Stock options included under
the treasury stock method (1)................. 345
Conversion of 6 1/4% subordinated debentures... 1,510
--------
12,200
========
Income per share -
Income from continuing operations.............. $ 1.03
========
Income from discontinued operations............ $ .30
========
Net income per common share (2)................ $ 1.33
========
</TABLE>
(1) Under the primary computation the assumed repurchase price of option shares
is based on the average market price for the period. Under the fully
diluted computation the repurchase price is based on the higher of the
average market price or the year-end closing price, whichever provides
greater dilution.
(2) During the fourth quarter ended January 31, 1993, the Company converted its
outstanding subordinated debentures into its common stock, which resulted
in primary and fully diluted earnings per share being the same for the year
ended December 31, 1994 and the eleven months ended December 31, 1993.
<PAGE>
EXHIBIT 13
WYLE ELECTRONICS
Management's Discussion and Analysis of Results of Operations and Financial
Condition
Results of Operations
On December 23, 1994, the company completed the sale of its Scientific
Services & Systems ("SS&S") business to WESS Investment Corp. ("WESS") (see
Note 9 of Notes to Consolidated Financial Statements herein). During the third
quarter ended September 30, 1994, the company recorded the originally expected
loss on sale of this discontinued operation of $13.4 million, after tax, which
included certain costs and reserves associated with the disposition. On March
13, 1995, the company was notified that WESS was not awarded the renewal of a
certain major SS&S contract which, in accordance with the provisions of the
Asset Purchase Agreement between Wyle and WESS, will result in a reduction of
the purchase price paid by WESS. Consequently, the loss on sale of discontinued
operations was increased by $2.3 million, after tax, and this amount is
included in the fourth quarter results of operations, bringing the total loss
on sale to $15.8 million for the year.
Operating results for SS&S are classified as discontinued operations on the
company's income statement, and prior periods have been restated accordingly.
Therefore, the company's sales and income from continuing operations for all
periods reflect only the operating results of its Electronics Marketing Group
together with applicable Corporate expenses.
Sales and income from continuing operations, before a special charge, for
the year ended December 31, 1994 totaled $792.3 million and $15.1 million,
respectively. During the third quarter ended September 30, 1994, the company
recorded a special charge to continuing operations of $1.9 million ($1.2
million after tax), to provide for anticipated legal expenses associated with a
certain litigation matter and certain changes in the company's organizational
structure following the sale of SS&S. Including the special charge, income from
continuing operations was $14.0 million for the year ended December 31, 1994.
After recording the loss on sale and income from operations of the discontinued
business, the company reported a net loss of $381,000 for the year ended
December 31, 1994.
In the previous year, the company changed its fiscal year-end from January
31 to December 31, resulting in a two-month fourth quarter and eleven-month
fiscal year for the periods ended December 31, 1993. Therefore, current year
results, which reflect a full twelve-month reporting period, are not directly
comparable with those of the prior year.
For the eleven months ended December 31, 1993, the company posted sales of
$473.4 million and income from continuing operations of $8.3 million. Net
income, including income from discontinued operations, totaled $11.3 million,
before the effect of an accounting change.
During the first quarter ended April 30, 1993, the company recorded a
one-time, non-cash charge of $3.2 million, after tax, for the cumulative effect
of an accounting change to adopt Financial Accounting Standards Board ("FASB")
Statement No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions" (see Note 1 of Notes to Consolidated Financial Statements
herein).
In May 1993, the company's Electronics Marketing Group initiated a major
geographic expansion program to open ten new facilities in key eastern and
midwestern markets within the United States. The company's earnings for the
eleven months ended December 31, 1993 were negatively impacted by initial
expansion-related start-up expenses aggregating approximately $8 million. As
anticipated, the expansion operations incurred quarterly operating losses
through June 30, 1994 during this initial investment period. Sales for the new
expansion divisions have increased steadily since inception and aggregate
operating losses for these divisions continued to decline through the quarter
ended June 30, 1994. For the second half of 1994, the expansion divisions, as a
whole, provided a positive income contribution.
The growth in sales from continuing operations for the year ended December
31, 1994 in comparison to the eleven months ended December 31, 1993, resulted
mainly from increased demand for semiconductor products, particularly those
offered through the company's value-added activities such as kitting, turnkey
manufacturing, autoreplenishment, design of application-specific integrated
circuits (ASICs) and other design/programming services. The company also
registered higher shipments of lower margin commodity products, primarily
microprocessors, and increased computer product revenues. The continued ramp-up
in shipments from the company's new expansion divisions also contributed to the
current year's sales gain. In addition, revenues for the year ended December
31, 1994 included twelve months of operations versus the eleven-month period of
the prior year.
13
<PAGE>
The increase in income from continuing operations, before special charge,
for the year ended December 31, 1994 compared to the eleven months ended
December 31, 1993, primarily reflects the reduction in operating losses
associated with the company's major expansion program, coupled with increased
profits generated by the non-expansion divisions. During 1994, the company
experienced a decline in the aggregate gross margin percentage compared to the
prior year due mainly to a change in product mix, as a higher percentage of
revenues was generated from lower margin commodity products and high-volume
customer engagements. Earnings for the current year also reflected a higher
level of interest expense due to an increased level of credit line borrowings.
In addition, income from continuing operations for the year ended December 31,
1994 included twelve months of operations versus the eleven-month period of the
prior year.
Sales from continuing operations for the eleven months ended December 31,
1993 surpassed those for the year ended January 31, 1993 of $446.6 million. The
increase in sales reflected strong broad-based semiconductor demand which
contributed to higher shipments of the company's traditional semiconductor
products, combined with growth in value-added services revenues, such as
kitting, turnkey manufacturing and semiconductor design/programming services.
The company's income from continuing operations for the eleven months ended
December 31, 1993 was less than the year ended January 31, 1993 of $11.8
million due primarily to expansion related costs, combined with the shorter
eleven-month accounting period. Earnings for the eleven months ended December
31, 1993, before the impact of expansion related costs, were higher than those
for the year ended January 31, 1993. The company's aggregate gross margin
percentage for the eleven months ended December 31, 1993 declined from the
prior year due in part to a change in the mix of products sold along with
increased pressure on pricing for certain commodity type products, particularly
microprocessors. Income from continuing operations for the eleven months ended
December 31, 1993 benefitted from reduced interest expense due primarily to the
company's call for redemption and subsequent conversion of its subordinated
debentures in the prior year.
The electronics distribution industry is highly sensitive to fluctuating
market conditions primarily caused by changes in the supply and demand for
semiconductors and computer products. The company's financial results have in
the past reflected significant variations from period to period due to these
factors.
Discontinued Operations
The Scientific Services & Systems Group, classified as a discontinued
operation, reported income of $1.4 million, after tax, for the nine months
ended September 30, 1994. Operating results for SS&S from October 1, 1994
through the closing date of the sale were netted in balance sheet reserves
established as part of the loss on sale. Sales and income from discontinued
operations for the nine months ended September 30, 1994 were substantially
below the prior year, primarily due to the continuing decline in the aerospace
and defense markets served by the group. In addition, operating results in 1994
reflect costs and expenses totaling $1.1 million associated with resolving a
certain contract dispute.
Income from discontinued operations for the eleven months ended December 31,
1993 aggregated $3.0 million, after tax, representing a decline from the year
ended January 31, 1993, which included an early retirement program charge of
$947,000. The decline in earnings resulted primarily from the impact of the
eleven-month accounting period along with heavy investments in new business
development initiatives, principally in automotive, support services and
international markets, in order to offset shrinking demand for testing services
provided to the aerospace and defense markets. In addition, operating results
for the eleven months ended December 31, 1993 were adversely impacted by
competitive conditions in the group's major markets.
Other
Net interest expense for the year ended December 31, 1994 of $1.3 million
rose from the eleven-month period ended December 31, 1993. The rise in net
interest expense occurred mainly as a result of higher credit line borrowings,
which were incurred primarily to fund the company's continuing start-up costs
and working capital requirements associated with its expansion program. Net
interest expense for the eleven-month period ended December 31, 1993 of $174,000
14
<PAGE>
declined substantially from $2.3 million for the year ended January 31,
1993, due primarily to the call for redemption and subsequent conversion of the
company's 6-1/4% subordinated debentures during the fourth quarter of the year
ended January 31, 1993. An interest rate swap agreement previously entered into
by the company had an immaterial effect on overall interest expense for the
periods presented.
The company's effective income tax rate for continuing operations was 38.5%,
34.5% and 35.6% for the fiscal periods ended December 31, 1994 and 1993 and
January 31, 1993, respectively. The rise in the effective tax rate for the year
ended December 31, 1994 versus the prior period can be attributed mainly to a
reduced effect of certain credits to the income tax provision and an increase
in the aggregate effective state income tax rate, as a larger proportion of
sales are being derived from states with higher income tax rates due, in part,
to the company's national expansion.
On February 1, 1993, the company adopted FASB Statement No. 109, "Accounting
for Income Taxes," and on January 1, 1994, the company adopted FASB Statement
No. 112, "Employers' Accounting for Postemployment Benefits." Neither of these
adoptions had a material effect on the company's net income (loss) or financial
position.
Financial Condition
The company's working capital at December 31, 1994 of $170.8 million rose
$27.3 million from December 31, 1993. Working capital growth resulted primarily
from an increase in inventories and trade receivables due to higher sales
levels, offset partially by higher accounts payable and accrued expenses
coupled with lower cash and cash equivalents. Working capital at December 31,
1993 included $15.4 million for a discontinued operation, which was sold during
1994. Accrued expenses at December 31, 1994 increased from the prior year due
mainly to establishing certain reserves as part of recording the loss on sale
of a discontinued operation. The current ratio was 2.7 to 1 at December 31,
1994 compared with 2.8 to 1 at December 31, 1993. The ratio of long-term debt
to total capital was 10% and 4% at December 31, 1994 and 1993, respectively.
The increased debt to capital ratio results primarily from higher long-term
credit line borrowings.
Capital expenditures for the year ended December 31, 1994 aggregated $8.4
million. The company anticipates a higher level of capital expenditures in
calendar 1995 due primarily to the construction of a new warehouse/value-added
distribution center. Capital outlays in 1995 for this new facility, which is
planned to be completed during the second half of the year, are currently
expected to aggregate approximately $16-18 million.
Many factors affect the company's cash requirements such as changes in its
sales level and inventory turnover rate. During electronics industry growth
periods, increases in receivable and inventory balances have typically been
financed through cash on hand and cash flow from operations as well as bank
borrowings. During electronics industry recessionary periods, cash has been
generated through receivable and inventory reductions.
In December 1994, the company amended its $50,000,000 three-year revolving
credit agreement with four banks by increasing the committed credit line to
$80,000,000 and extending its maturity through December 1997. In addition, the
company has arrangements with a number of other banks to provide short-term
financing on a non-committed basis.
The company's cash requirements for 1995 are expected to be higher than
normal due primarily to funds required to finance capital expenditures for
construction of the value- added distribution center. Also, during the fourth
quarter of 1994 the company reactivated a plan to purchase from time to time up
to 1,500,000 shares of the corporation's common stock in the open market or
through negotiated purchases. The company's Board of Directors has authorized
the implementation of this stock repurchase plan in phases, with the initial
phase approved at $10 million of aggregate stock purchases. The company's
near-term cash requirements are expected to be financed through a combination
of internally generated cash flow and bank borrowings.
15
<PAGE>
WYLE ELECTRONICS
Consolidated Statements of Income
<TABLE>
<CAPTION>
Year Eleven months Year
ended ended ended
December 31, December 31, December 31,
In thousands, except per share amounts 1994 1993 1993
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $792,309 $473,443 $446,609
----------------------------------------
Costs and expenses
Cost of sales 663,741 382,513 353,558
Selling and administrative expenses 103,253 78,833 72,134
Special charge 1,900 -- --
Interest expense, net 1,289 174 2,283
Miscellaneous, net (604) (811) 324
----------------------------------------
769,579 460,709 428,299
----------------------------------------
Income from continuing operations before income taxes 22,730 12,734 18,310
Income taxes 8,750 4,398 6,523
----------------------------------------
Income from continuing operations 13,980 8,336 11,787
Discontinued operations
Income from operations, net of taxes 1,418 2,993 3,641
Loss on sale, net of taxes (15,779) -- --
Cumulative effect of accounting change for postretirement benefits
other than pensions -- (3,193) --
----------------------------------------
Net income (loss) $ (381) $ 8,136 $ 15,428
========================================
Income (loss) per share
Primary
Income from continuing operations $ 1.13 $ .67 $1.11
========================================
Discontinued operations
Income from operations, net of taxes $ .11 $ .24 $ .34
========================================
Loss on sale, net of taxes $(1.27) -- --
========================================
Cumulative effect of accounting change for
postretirement benefits other than pensions -- $(.26) --
========================================
Net income (loss) $ (.03) $ .66 $1.45
========================================
Fully diluted
Income from continuing operations -- -- $1.03
========================================
Income from discontinued operations -- -- $1.30
========================================
Net income -- -- $1.33
========================================
Average common and common equivalent shares 12,425 12,355 10,615
========================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
WYLE ELECTRONICS
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31,
---------------------------
In thousands, except shares 1994 1993
---------------------------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 9,319 $ 23,748
Receivables (less allowances of $5,333 and $4,183, respectively) 115,082 87,287
Inventories 140,332 105,716
Prepaid expenses 9,301 6,949
--------------------------
Total current assets 274,034 223,700
Property, plant & equipment
Land 862 3,879
Buildings and improvements 12,236 29,664
Machinery and equipment 19,568 43,959
--------------------------
32,666 77,502
Less accumulated depreciation and amortization 17,169 46,896
--------------------------
15,497 30,606
--------------------------
Other assets 16,382 6,265
--------------------------
Total assets $305,913 $260,571
==========================
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt $ 3,000 $ 4,120
Accounts payable 70,444 60,556
Accrued expenses 29,817 15,592
--------------------------
Total current liabilities 103,261 80,268
--------------------------
Long-term debt, less current maturities 17,802 6,000
--------------------------
Other liabilities 25,104 9,947
--------------------------
Commitments and contingencies -- --
--------------------------
Shareholders' equity
Common stock, 25,000,000 shares authorized
(shares outstanding: December 31, 1994 -- 12,193,041
and December 31, 1993 -- 12,216,923) 86,647 86,348
Retained earnings 73,099 78,008
--------------------------
159,746 164,356
--------------------------
Total liabilities and shareholders' equity $305,913 $260,571
==========================
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
WYLE ELECTRONICS
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Year Eleven months Year
ended ended ended
December 31, December 31, January 31,
In thousands 1994 1993 1993
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income (loss) $ (381) $ 8,136 $ 15,428
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Depreciation and amortization 6,761 5,422 5,501
Provision for losses on receivables 2,143 1,389 3,457
Provision for deferred income taxes (161) (1,071) 583
Loss on sale of discontinued operations 15,779 -- --
Cumulative effect of accounting change for
postretirement benefits other than pensions -- 3,193 --
(Increase) in receivables (44,529) (6,731) (9,040)
(Increase) in inventories (39,636) (21,901) (14,012)
(Increase) decrease in prepaid expenses 1,354 (1,355) 565
Increase in accounts payable 12,232 21,506 11,254
Increase (decrease) in accrued expenses 4,790 (2,819) (1,539)
Other, net (1,003) (460) 90
--------------------------------------
Net cash provided by (used for) operating activities (42,651) 5,309 12,287
--------------------------------------
Financing activities
Additions to long-term debt 14,802 -- --
Payments of long-term debt (4,120) (3,422) (7,517)
Dividends on common stock (3,431) (3,412) (2,990)
Purchase of common stock (1,634) (28) --
Exercise of stock options 684 689 6,103
--------------------------------------
Net cash provided by (used for) financing activities 6,301 (6,173) (4,404)
--------------------------------------
Investing activities
Proceeds from sale of discontinued operations 30,000 -- --
Additions to property, plant and equipment (8,434) (6,008) (4,692)
Proceeds from disposition of property, plant
and equipment -- 1,704 --
Other non-current assets and liabilities, net 355 (551) (2,585)
--------------------------------------
Net cash provided by (used for) investing activities 21,921 (4,855) (7,277)
--------------------------------------
Increase (decrease) in cash and cash equivalents (14,429) (5,719) 606
Cash and cash equivalents at beginning of period 23,748 29,467 28,861
--------------------------------------
Cash and cash equivalents at end of period $ 9,319 $ 23,748 $ 29,467
======================================
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 1,542 $ 1,162 $ 4,630
Income taxes 10,168 8,364 8,276
======================================
Noncash financing activity:
Conversion of 6-1/4% subordinated debentures -- -- $ 24,980
======================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
WYLE ELECTRONICS
Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
For the year ended December 31, 1994, the eleven months ended December 31, Common Stock Retained
1993 and the year ended January 31, 1993 (in thousands, except shares) Shares Amount Earnings
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, January 31, 1992 10,040,325 $54,286 $61,017
Net income 15,428
Dividends on common stock (2,990)
Conversion of debentures 1,622,057 25,046
Exercise of stock options 472,410 6,120 (17)
Issuance of restricted stock 6,550 129
Unamortized value of restricted stock (122)
--------------------------------
Balance, January 31, 1993 12,141,342 85,459 73,438
Net income 8,136
Dividends on common stock (3,412)
Exercise of stock options 64,281 829 (140)
Issuance of restricted stock 13,300 232
Unamortized value of restricted stock, net (158)
Purchase of common stock (2,000) (14) (14)
--------------------------------
Balance, December 31, 1993 12,216,923 86,348 78,008
Net loss (381)
Dividends on common stock (3,431)
Exercise of stock options 61,368 780 (96)
Issuance of restricted stock 3,950 72
Amortization of restricted stock, net 80
Purchase of common stock (89,200) (633) (1,001)
--------------------------------
Balance, December 31, 1994 12,193,041 $86,647 $73,099
================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
WYLE ELECTRONICS
Notes to Consolidated Financial Statements
Note 1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Wyle
Electronics and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
Discontinued Operations
On December 23, 1994, the company completed the sale of its Scientific
Services & Systems ("SS&S") business (see Note 9). Operating results for SS&S
are classified as discontinued operations in the company's consolidated
statements of income and prior periods have been restated accordingly.
In January 1995, the company changed its name from Wyle Laboratories to Wyle
Electronics to more accurately reflect the company's business activities
following the sale of discontinued operations.
Change in Fiscal Year-end
During the fiscal year ended December 31, 1993, the company changed its
fiscal year-end from January 31 to December 31, resulting in an eleven-month
reporting period. Pro forma information for the eleven-month period ended
December 31, 1992 is as follows (unaudited): net sales -- $406,712,000; gross
profit -- $85,258,000; income taxes -- $5,818,000; income from continuing
operations -- $10,513,000; income from discontinued operations -- $3,240,000;
net income -- $13,753,000; income per share from continuing operations -- $1.00
(primary) and $.93 (fully diluted); and income per share from discontinued
operations -- $.31 (primary) and $.27 (fully diluted).
Changes in Accounting Principles
As of February 1, 1993, the company adopted Financial Accounting Standards
Board ("FASB") Statement No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," and Statement No. 109, "Accounting for Income
Taxes." As of January 1, 1994, the company adopted FASB Statement No. 112,
"Employers' Accounting for Postemployment Benefits." The effects of adopting
these accounting standards are described in Notes 8 and 4. Financial statements
for the previous years have not been restated as a result of the adoption of
these standards.
Revenue Recognition
Sales are generally recognized at the time of shipment of the product.
Interest Expense, Net
Interest income earned on short-term investments is classified in the
consolidated statements of income as a reduction of interest expense. Interest
income was $254,000 for the year ended December 31, 1994, $897,000 for the
eleven months ended December 31, 1993 and $927,000 for the year ended January
31, 1993.
Receivables
Receivables include amounts billed to customers for products shipped or
services performed which are anticipated to be collected within one year.
Concentrations of credit risk with respect to trade receivables are limited by
the large number of customers comprising the company's customer base and their
dispersion across different industries.
Inventories
Inventories are stated at the lower of cost (first-in first-out or average
cost) or market.
Property, Plant & Equipment
Property, plant & equipment are stated at cost. Major improvements and
betterments are capitalized. Maintenance, repairs and minor refurbishments are
expensed as incurred. Depreciation is provided using the straight-line method
based on estimated useful lives. Useful lives range from 2 to 40 years for
buildings and improvements and from 2 to 10 years for machinery and equipment.
Leasehold improvements are amortized over the lesser of the lease term or
estimated useful life.
Consolidated Statements of Cash Flows
For the purpose of reporting cash flows, cash and cash equivalents include
cash on hand and cash invested in short-term securities with original
maturities of three months or less. The company places its temporary cash
investments in high quality securities and, by policy, limits the amount that
can be invested in any one particular instrument.
20
<PAGE>
Note 2. Detail of Certain Balance Sheet Amounts
A detail of certain balance sheet amounts at December 31 follows:
<TABLE>
<CAPTION>
In thousands 1994 1993
------------------------------------------------------------------------
<S> <C> <C>
Inventories:
Finished goods $140,332 $100,600
Work in process -- 3,057
Raw materials -- 2,059
------------------------
Total $140,332 $105,716
========================
Accrued expenses:
Payroll and employee benefits $ 6,736 $ 7,797
Reserves related to discontinued operations 11,908 --
Other 11,173 7,795
------------------------
Total $ 29,817 $ 15,592
========================
Accounts payable:
Trade and other $ 53,471 $ 22,459
Checks outstanding 16,973 38,097
------------------------
Total $ 70,444 $ 60,556
========================
</TABLE>
Note 3. Bank Loans and Long-Term Debt
Long-term debt at December 31 consists of the following:
<TABLE>
<CAPTION>
In thousands 1994 1993
------------------------------------------------------------------------
<S> <C> <C>
Non-committed credit line borrowings $14,802 $ --
Senior unsecured loan:
At 8.95% due through 1996 6,000 9,000
Mortgage note: At 8.25% -- 1,120
-----------------------
20,802 10,120
Less current maturities 3,000 4,120
-----------------------
$17,802 $ 6,000
=======================
</TABLE>
The non-committed credit line borrowings bear interest at rates ranging
between 5.75%-6.30%, and are due on January 3, 1995. Such unsecured amounts are
classified as long-term debt on the balance sheet at December 31, 1994, since
they may be refinanced at any time with borrowings under the company's
three-year revolving credit arrangement.
The senior unsecured loan is payable in equal annual installments through
December 1996.
Aggregate maturities of long-term debt are as follows:
1995 -- $3,000,000; 1996 -- $3,000,000; and
1997 -- $14,802,000.
In December 1994, the company amended its $50,000,000 three-year revolving
credit agreement with four banks by increasing the committed credit line to
$80,000,000 and extending its maturity through December 1997. The credit
agreement provides for borrowings at either the agent bank's reference rate or
the Eurodollar rate plus 3/8% to 7/16%, depending on the company's debt to
total capital ratio. An annual facility fee of .15% to 3/16%, also based on the
company's debt to total capital ratio, is payable on the amount of the
commitment. No balances were outstanding under the credit agreement at December
31, 1994 or 1993. The company has additional credit line arrangements with a
number of banks that provide for short-term borrowings on a non-committed basis.
Terms of certain borrowing agreements of the company provide, among other
things, for the maintenance of certain amounts or ratios relating to working
capital, debt, tangible net worth and fixed charge coverage. The agreements
also provide for restrictions on creation of additional debt, payment of
dividends, purchase of company stock and on capital expenditures. Pursuant to
restrictive covenants of these agreements, retained earnings of $17,311,000
were available at December 31, 1994 for the payment of cash dividends on common
stock. The company is in full compliance with the restrictive covenants
contained in the borrowing agreements.
The company has an interest rate swap agreement and an interest rate cap
agreement, both maturing in February 1995 and based on notional amounts of
$5,000,000. Under the interest rate swap agreement, the company exchanged a
fixed interest rate for a floating interest rate, which has had an immaterial
effect on the company's interest expense for the periods presented. The
interest rate cap agreement limits the company's floating interest rate
exposure.
21
<PAGE>
Note 4. Income Taxes
On February 1, 1993, the company adopted FASB Statement No. 109, "Accounting
for Income Taxes," under which deferred tax assets and liabilities are provided
on differences between financial reporting and taxable income using the enacted
tax rates. The adoption of this new statement did not have a material effect on
the company's net income or financial position. Prior to adoption of this new
statement, income taxes were computed in accordance with Accounting Principles
Board Opinion No. 11.
The provision for income taxes from continuing operations was computed using
effective tax rates calculated as follows:
<TABLE>
<CAPTION>
Year Eleven months Year
ended ended ended
December 31, December 31, January 31,
1994 1993 1993
------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory tax rate 35.0% 35.0% 34.0%
State income taxes, net
of federal tax benefit 5.3 4.8 4.5
Other, net (1.8) (5.3) (2.9)
----------------------------------------
Effective tax rate 38.5% 34.5% 35.6%
========================================
</TABLE>
The provision for income taxes from continuing operations consists of:
<TABLE>
<CAPTION>
Year Eleven months Year
ended ended ended
December 31, December 31, January 31,
In thousands 1994 1993 1993
----------------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $7,074 $4,603 $4,878
State 1,837 866 1,062
----------------------------------------
8,911 5,469 5,940
Deferred taxes arising
from timing differences:
State income taxes (112) (72) (72)
Receivables allowance (440) 289 (611)
Inventory valuation (487) (133) 186
Depreciation and
amortization (87) (147) (138)
Differences arising
from changes in
accruals and other 965 (1,008) 1,218
----------------------------------------
(161) (1,071) 583
----------------------------------------
$8,750 $4,398 $6,523
========================================
</TABLE>
Deferred tax assets (liabilities) at December 31 were composed of the
following:
<TABLE>
<CAPTION>
In thousands 1994 1993
---------------------------------------------------------
<S> <C> <C>
Postretirement benefits $ 2,032 $1,889
Inventory valuation 1,944 1,457
Employee benefit programs 1,904 972
Receivables allowance 1,749 1,309
Depreciation and amortization (1,391) (1,486)
Discontinued operations 9,878 --
Operating accruals and other (2,760) (1,906)
-------------------
$13,356 $2,235
===================
</TABLE>
Net deferred tax assets at December 31, 1994 of $13,356,000 consisted of
deferred tax assets of $19,583,000 and deferred tax liabilities of $6,227,000.
Deferred taxes are classified in the consolidated balance sheets as current or
noncurrent based on the classification of the related asset or liability. Net
current deferred tax assets of $6,524,000 and $2,818,000 are included in
prepaid expenses at December 31, 1994 and 1993, respectively. No valuation
allowance was required for the deferred tax assets.
Note 5. Capital Stock and Dividends
Common stock authorized is 25,000,000 shares. The company declared and paid
dividends on common stock of $.28 per share during the fiscal periods ended
December 31, 1994 and 1993. Preference stock authorized is 500,000 shares. No
preference stock was outstanding at December 31, 1994 or 1993.
The company has a Shareholder Rights Plan (the "Plan") which provides for
one stock purchase right (the "Rights") to be traded initially in tandem with
each share of its common stock. The Plan, which was amended effective February
23, 1995, provides that if any person becomes the beneficial owner of 15% or
more of the outstanding shares of common stock of the company, each Right
(other than Rights held by the 15% shareholder) will be exercisable, on or
after the close of business on the tenth business day following such event, to
purchase common stock having a market value equal to two times the then current
exercise price of the Rights (initially $85.00), or may be exchangeable for one
share of common stock.
22
<PAGE>
The Plan further provides that if, on or after the occurrence of such event,
the company is merged into any other corporation or if 50% or more of the
company's assets or earning power are sold, appropriate provision shall be made
so that each Right (other than Rights held by the 15% shareholder) will be
exercisable to purchase common stock of the acquiring corporation having a
market value equal to two times the exercise price of the Rights. The Rights
expire on February 23, 2005, and are subject to redemption by the Board of
Directors at $.01 per Right at any time prior to the first date upon which they
become exercisable.
In November 1994, the company reactivated a plan to purchase from time to
time up to 1,500,000 shares of the corporation's common stock in the open
market or through negotiated purchases. The company's Board of Directors has
authorized the implementation of this stock repurchase plan in phases, with the
initial phase approved at $10 million of aggregate stock purchases. Through
December 31, 1994, 91,200 shares had been purchased under this program, of
which 89,200 shares were acquired during 1994. The shares purchased, which
remain authorized but unissued, were financed primarily through internally
generated cash and bank borrowings.
Note 6. Stock Options and Awards
Under the company's stock option and stock incentive plans, non-qualified
and incentive stock options, restricted stock, performance awards and stock
appreciation rights may be granted to selected key employees. Non-qualified
stock options may be granted at prices less than 100% of the fair market value
of the company's common stock on the date of grant. Through December 31, 1994,
no stock options have been granted at less than fair market value under any of
the plans. Options generally become exercisable beginning one year from the
date of grant in equal annual installments over a five-year period. Options are
exercisable on a cumulative basis and expire ten years from the date of grant.
A summary of changes in the shares under option follows:
<TABLE>
<CAPTION>
Shares Price Range
-----------------------------------------------------
<S> <C> <C>
January 31, 1992 988,659 $ 5.20 - 16.20
Granted 125,000 19.75
Canceled (30,925) 6.20 - 16.20
Exercised (473,887) 5.20 - 14.75
------------------------------
January 31, 1993 608,847 8.25 - 19.75
Granted 378,500 17.00 - 18.50
Canceled (11,500) 9.25 - 11.50
Exercised (75,750) 8.70 - 14.30
------------------------------
December 31, 1993 900,097 8.25 - 19.75
Granted 156,000 17.75 - 20.00
Canceled (23,800) 9.00 - 19.75
Exercised (68,497) 8.70 - 17.00
------------------------------
December 31, 1994 963,800 $ 8.25 - 20.00
==============================
</TABLE>
At December 31, 1994, expiration dates for options outstanding ranged from
1995 to 2004, with a weighted average purchase price of $15.42; options for
425,169 shares were exercisable and 53,702 shares were reserved for the
granting of additional options or awards. No amounts have been reflected in the
company's consolidated statements of income with respect to these stock options.
Restricted share awards of the company's common stock are subject to certain
restriction periods from the date of grant, during which they may not be sold,
assigned, pledged or otherwise encumbered. Restricted stock awards of 3,950,
13,300 and 6,550 shares were granted during the fiscal years ended December 31,
1994 and 1993 and January 31, 1993, respectively.
Under the company's stock option plan for its outside directors,
non-employee members of its Board of Directors may receive a grant of up to
5,000 non-qualified stock options annually up to a maximum of 10,000 that are
exercisable in equal annual installments over a three-year period. Stock
options under this program cannot be granted at less than fair market value on
the date of grant. Stock options granted under this plan, included in the table
above, totaled 50,000 and 40,000 for the fiscal years ended December 31, 1994
and 1993, respectively.
23
<PAGE>
Note 7. Income per Share
Income per share is computed based on the average number of shares of common
stock and common equivalent shares (stock options) outstanding, after giving
effect to the assumed exercise of dilutive stock options. The company's primary
and fully diluted income per share were the same for the fiscal years ended
December 31, 1994 and 1993. The fully diluted computation for the year ended
January 31, 1993 assumed conversion of the 6-1/4% Convertible Subordinated
Debentures. During the fourth quarter ended January 31, 1993, a total of
1,622,057 shares of the company's common stock were issued upon conversion as a
result of the company's call for redemption of its 6-1/4% Convertible
Subordinated Debentures due 2002.
Note 8. Retirement and Other Employee Benefits Plans
The company has a defined benefit pension plan covering substantially all of
its employees. Plan benefits are generally based on employees' years of service
and average compensation during the final years of employment. Funding of
retirement costs for the plan complies with the funding requirements specified
by the Employee Retirement Income Security Act. At December 31, 1994, plan
assets were invested in diversified equity portfolios (48%), pooled funds of
fixed income securities (31%) or in guaranteed income contracts (21%).
Pension expense, including discontinued operations, consists of the
following components:
<TABLE>
<CAPTION>
Year Eleven months Year
ended ended ended
December 31, December 31, January 31,
1994 1993 1993
----------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned
during the period $2,504 $1,989 $2,034
Interest cost on projected
benefit obligation 4,134 3,371 3,337
Actual return on plan assets (626) (4,129) (4,116)
Net amortization and deferral (3,833) 215 354
----------------------------------------
Net periodic pension cost 2,179 1,446 1,609
Curtailment gain (1,880) -- --
----------------------------------------
Net pension expense $ 299 $1,446 $1,609
========================================
</TABLE>
The company's pension expense for the year ended December 31, 1994 included
a curtailment gain, which was included in the loss on sale of discontinued
operations, recognized as a result of the sale of discontinued operations (see
Note 9).
The pension plan's funded status and amounts recognized in the company's
consolidated balance sheets at December 31 were as follow:
<TABLE>
<CAPTION>
In thousands 1994 1993
------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefits $(46,441) $(41,766)
Nonvested benefits (701) (1,871)
-----------------------
Accumulated benefit obligation (47,142) (43,637)
Effect of projected future
compensation increases (4,159) (12,323)
-----------------------
Projected benefit obligation (51,301) (55,960)
Market value of plan assets 49,093 48,488
=======================
Plan assets (less than) projected
benefit obligation (2,208) (7,472)
Unrecognized actuarial net loss 4,792 7,794
Unrecognized prior service cost (839) (304)
Unrecognized net asset at
February 1, 1987 (1,286) (1,403)
-----------------------
Prepaid (accrued) pension liability $ 459 $ (1,385)
=======================
</TABLE>
In determining the actuarial present value of the projected benefit
obligation under the pension plan, the discount rate used was 8.25% as of
December 31, 1994 and 7.5% as of December 31, 1993, and the rate of increase in
future compensation levels was 5.0% for both periods. The expected long-term
rate of return on pension plan assets was 9.5% for the fiscal years ended
December 31, 1994 and 1993.
The company's pension plan provides that, in the event the plan is
terminated following an involuntary change of control, any excess plan assets
over plan liabilities would be used to provide increased benefits under the
pension plan or other employee benefit plans.
24
<PAGE>
The company has a supplemental executive retirement plan ("SERP") which
provides benefits to certain employees whose benefits under the defined benefit
pension plan are reduced as a result of limitations imposed by the Internal
Revenue Code. The present value of the accumulated benefit obligation related
to this plan totaled $2,405,000 at December 31, 1994 and $2,618,000 at December
31, 1993.
Expense under the SERP was $393,000 for the year ended December 31, 1994,
$473,000 for the eleven months ended December 31, 1993 and $305,000 for the
year ended January 31, 1993.
The company maintains a capital accumulation plan, which qualifies under
Section 401(k) of the Internal Revenue Code, for employees meeting certain
service requirements. Eligible employees can contribute up to 15% of their
annual compensation, subject to certain Internal Revenue Code restrictions. In
1994, the company began matching employee contributions at a rate of 25% on the
first $1,200 contributed. Company matching contributions for the year ended
December 31, 1994 aggregated $316,000.
The company has established certain Rabbi trusts to fund benefit payments
under its SERP and other executive and director deferred compensation plans.
Trust assets are irrevocable to the company but are subject to creditor claims
under certain conditions. Assets held in the trusts at December 31, 1994 and
1993 totaled $3,531,000 and $3,269,000, respectively.
The company also has an unfunded retirement plan for its outside directors
under which benefits are accrued over the estimated service period for each
covered director. Amounts expensed related to this plan were not significant
for the periods presented.
The company has established a Voluntary Employees' Beneficiary Association
(VEBA) trust to fund certain employee benefit payments. Trust assets, which are
irrevocable to the company, totaled $530,000 and $1,802,000 at December 31,
1994 and 1993, respectively.
The company provides postretirement medical coverage to qualifying
employees. The company's employees upon retirement may become eligible for
benefits if they meet certain age and length of service requirements as
specified in the plan.
In December 1990, the FASB issued Statement No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions." Statement No. 106 required
the company to change its method of accounting for postretirement benefits, to
accrue for the cost of these benefits during an employee's years of service. On
February 1, 1993, the company adopted the new statement by recording a one-time
charge of $3,193,000 (which was net of income taxes of $1,796,000),
representing the accumulated postretirement benefit obligation (the "APBO") as
of February 1, 1993. Prior to the adoption of this statement, medical claims
under the plan, which were not significant, were expensed as incurred. The new
statement will have no effect on the company's cash outlays for retiree
benefits.
The provision for postretirement benefits, including discontinued
operations, consists of the following components:
<TABLE>
<CAPTION>
Year Eleven months
ended ended
December 31, December 31,
In thousands 1994 1993
___________________________________________________________________________
<S> <C> <C>
Service cost -- benefits earned
during the period $292 $218
Interest cost on APBO 449 352
Net amortization and deferral 15 --
_______________________
Net periodic postretirement benefit cost 756 570
Curtailment gain (827) --
_______________________
Net postretirement medical (income)
expense $(71) $570
=======================
</TABLE>
The company's postretirement benefits provision for the year ended December
31, 1994 included a curtailment gain, which was included in the loss on sale of
discontinued operations, recognized as a result of the sale of discontinued
operations (see Note 9). The company will continue to be responsible for
certain postretirement benefit obligations relating to the discontinued
operations.
25
<PAGE>
Components of the APBO recognized in the company's consolidated balance
sheets at December 31 were as follows:
<TABLE>
<CAPTION>
In thousands 1994 1993
__________________________________________________________________________
<S> <C> <C>
Actuarial present value of benefit obligations:
Retirees and beneficiaries $(3,587) $(2,298)
Fully eligible active plan participants (579) (413)
Other active plan participants (1,752) (3,032)
_____________________
Total APBO (5,918) (5,743)
Unrecognized actuarial net loss 985 346
_____________________
Accrued postretirement benefit liability $(4,933) $(5,397)
=====================
</TABLE>
In determining the actuarial present value of the APBO as of December 31,
1994, the assumed health care cost trend rate was 11%, reducing gradually to an
ultimate rate of 6.25% in 1999, and the discount rate was 8.25%. As of December
31, 1993, the assumed health care cost trend rate was 12%, reducing gradually
to an ultimate rate of 5.5% in 2001, and the discount rate was 7.5%. If the
health care cost trend rate were increased by 1% in each year, the APBO as of
December 31, 1994 would be increased by $849,000 and the service cost and
interest cost components of the net periodic postretirement benefit expense for
the current year would be increased by $166,000.
In November 1992, the FASB issued Statement No. 112, "Employers' Accounting
for Postemployment Benefits." This statement required the company to change its
method of accounting for postemployment benefits provided to qualifying former
or inactive employees and their dependents before retirement, to accrue for the
cost of these benefits during an employee's years of service. The company's
adoption of the new statement at the beginning of 1994 had an immaterial effect
on its net income and financial position.
Note 9. Discontinued Operations
On December 23, 1994, the company completed the sale of its SS&S business to
WESS Investment Corporation ("WESS"), a buy-out group led by William E. Simon &
Sons and certain members of the SS&S management along with three members of the
company's Board of Directors.
Under the terms of the agreement, WESS acquired certain assets and
liabilities of SS&S, including receivables, inventory, property, equipment,
accounts payable and accrued expenses for a negotiated purchase price of $30
million in cash, subject to adjustment, plus additional amounts that may be
paid to the company under a five-year earnout provision. Certain excess real
properties of SS&S were excluded from the sale to WESS. Such assets are stated
at their estimated net realizable value of $3,695,000, and are classified in
other assets. The company intends to sell these assets in the future.
During the third quarter ended September 30, 1994, the company recorded the
originally expected loss on sale of discontinued operations of $13.4 million,
after income tax benefits of $8.4 million. The loss on sale included certain
transaction costs and reserves associated with the disposition such as reserves
for insurance and employee related matters, various contractual arrangements
and certain contingent liabilities. The loss on sale was reduced by certain
curtailment gains as discussed in Note 8. On March 13, 1995, the company was
notified that WESS was not awarded the renewal of a certain major SS&S contract
which, in accordance with the provisions of the Asset Purchase Agreement
between Wyle and WESS, will result in a reduction of the purchase price paid by
WESS. Consequently, the loss on sale of discontinued operations was increased
by $2.3 million, after tax, and this amount is included in the fourth quarter
results of operations, bringing the total loss on sale to $15.8 million for the
year. Liabilities related to discontinued operations totaled $28,166,000 at
December 31, 1994 of which $11,908,000 were classified in accrued expenses and
$16,258,000 were included in long-term liabilities.
Operating results for SS&S are classified as discontinued operations on the
company's consolidated statements of income. Sales applicable to discontinued
operations for the nine months ended September 30, 1994, the eleven months
ended December 31, 1993 and the year ended January 31, 1993 aggregated
$61,076,000, $84,498,000 and $94,878,000, respectively. Income from
discontinued operations is net of income taxes of $1,036,000, $2,030,000 and
$2,346,000 for the nine months ended September 30, 1994, the eleven months
ended December 31, 1993 and for the year ended January 31, 1993, respectively.
Operating results for SS&S from October 1, 1994 through the closing date of the
sale were netted in balance sheet reserves established as part of the loss on
sale.
26
<PAGE>
Note 10. Commitments and Contingencies
Commitments
The minimum aggregate rentals payable on long-term operating leases
subsequent to December 31, 1994 approximate $19,092,000. The amounts are
payable as follows: 1995 -- $4,703,000; 1996 -- $3,670,000; 1997 -- $2,520,000;
1998 -- $2,291,000; 1999 -- $1,630,000; and thereafter -- $4,278,000. Rental
expense (including month to month rentals) approximated $8,096,000, $6,477,000
and $6,873,000 for the year ended December 31, 1994, the eleven months ended
December 31, 1993 and the year ended January 31, 1993, respectively.
The company has certain minimum commitments related to the construction of a
value-added distribution center. The commitments are for land, building,
material handling equipment and software development which aggregated
$10,315,000 at December 31, 1994.
Contingencies
In May 1993, Avnet, Inc. ("Avnet") and Hall-Mark Electronics Corporation
("Hall-Mark") filed a civil action against the company and a former employee of
Hall-Mark in the Superior Court of Fulton County, Georgia, seeking injunctive
and unspecified monetary damages, alleging, inter alia, that the company
tortiously interfered with the employment relations of Hall-Mark and its
employees and that the company tortiously interfered with a proposed business
combination between the plaintiffs, which combination was consummated
subsequently. Plaintiffs' motion for a preliminary injunction was denied in
part by the trial court and affirmed by the Georgia Supreme Court in December
1993. The company has filed a counterclaim against plaintiffs, alleging, inter
alia, that plaintiffs have tortiously interfered with the company's business
and employment relations. While this litigation is in the pretrial stage, the
company believes that plaintiffs' complaint is without merit and will contest
it vigorously. The company recorded a special charge of $1,900,000 during the
third quarter of 1994, primarily for anticipated legal expenses associated with
the defense of this litigation. Although the company believes that a result
adverse to the company in this matter is unlikely, there can be no assurance as
to its outcome or the ultimate impact on the company's net income or financial
position.
The company also has other contingent liabilities arising in the ordinary
course of business. In the opinion of management, the ultimate disposition of
such matters will not materially affect the company's net income or financial
position.
Note 11. Business Segments
The company is now exclusively in the electronics
marketing business, after the sale of its SS&S operations in December 1994
(see Note 9). Financial information for SS&S, shown below as discontinued
operations, is through December 23, 1994.
Identifiable assets, capital expenditures and depreciation and amortization
by segment follow:
<TABLE>
<CAPTION>
Year Eleven months Year
ended ended ended
December 31, December 31, January 31,
In thousands 1994 1993 1993
_______________________________________________________________________
<S> <C> <C> <C>
Identifiable assets:
Continuing operations $302,218 $221,658 $193,743
Discontinued operations 3,695 38,913 42,470
_______________________________________
Total $305,913 $260,571 $236,213
=======================================
Capital expenditures:
Continuing operations $7,644 $4,990 $3,418
Discontinued operations 790 1,018 1,274
_______________________________________
Total $8,434 $6,008 $4,692
=======================================
Depreciation and amortization:
Continuing operations $4,120 $3,062 $2,939
Discontinued operations 2,641 2,360 2,562
_______________________________________
Total $6,761 $5,422 $5,501
=======================================
</TABLE>
27
<PAGE>
Report of Independent Public Accountants
To the Board of Directors and Shareholders of Wyle Electronics:
We have audited the accompanying consolidated balance sheets of Wyle
Electronics (a California corporation) and subsidiaries as of December 31, 1994
and 1993 and the related consolidated statements of income, shareholders'
equity, and cash flows for the year ended December 31, 1994, the eleven-month
period ended December 31, 1993 and the year ended January 31, 1993. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements 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 financial position of Wyle
Electronics and subsidiaries as of December 31, 1994 and 1993 and the results
of their operations and their cash flows for the year ended December 31, 1994,
the eleven-month period ended December 31, 1993 and the year ended January 31,
1993, in conformity with generally accepted accounting principles.
As explained in Note 1 to the consolidated financial statements, effective
February 1, 1993, the company changed its method of accounting for
postretirement benefits other than pensions.
Los Angeles, California ARTHUR ANDERSEN LLP
March 14, 1995
28
<PAGE>
WYLE ELECTRONICS
<TABLE>
____________________________________________________________________________________________________________________________________
Results by Quarter and Capital Stock Information
Unaudited Year ended December 31, 1994 Eleven months ended December 31, 1993
by Quarter(a) by Quarter(a)(b)
----------------------------------------- -----------------------------------------
In thousands, except per share amounts First Second Third Fourth First Second Third Fourth(b)
____________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $175,579 $188,104 $204,148 $224,478 $112,016 $125,690 $137,983 $97,754
Gross profit 28,863 31,313 33,067 35,325 23,793 24,180 25,903 17,054
Income from continuing operations 2,117 3,318 3,125(c) 5,420 3,595 2,152 1,971 618
Discontinued operations
Income (loss) from operations, net
of taxes 692 976 (250) -- 942 648 839 564
Loss on sale, net of taxes -- -- (13,442) (2,337) -- -- -- --
Cumulative effect of accounting change
for postretirement benefits other than
pensions -- -- -- -- (3,193) -- -- --
Net income (loss) $2,809 $4,294 $(10,567) $3,083 $1,344 $2,800 $2,810 $1,182
======================================= =====================================
Income (loss) per share
Income from continuing operations $.17 $.27 $.25(c) $.44 $.29 $.17 $.16 $.05
Discontinued operations
Income (loss) from operations, net
of taxes .06 .08 (.02) -- .08 .05 .07 .05
Loss on sale, net of taxes -- -- (1.08) (.19) -- -- -- --
Cumulative effect of accounting change for
postretirement benefits other than
pensions -- -- -- -- (.26) -- -- --
Net income (loss) $.23 $.35 $(.85) $.25 $.11 $.23 $.23 $.10
======================================= =====================================
</TABLE>
(a)On December 23, 1994, the company completed the sale of its Scientific
Services & Systems ("SS&S") business. Therefore, operating results for SS&S
are classified as discontinued operations on the company's consolidated
statements of income and prior periods have been restated accordingly.
(b)The company changed its fiscal year-end from January 31 to December 31,
resulting in a two-month fourth quarter and an eleven-month fiscal year.
(c)Includes a special charge of $1.2 million, after tax, or $.09 per share,
for anticipated expenses related to a particular litigation matter and
certain changes in the company's organizational structure following the
sale of the SS&S business.
Wyle Electronics common stock is traded on the New York Stock Exchange under the
symbol WYL. The high and low price ranges and dividends paid per share for
each quarterly period during the past two fiscal years are as follows:
<TABLE>
<CAPTION>
Year ended Price Range Dividends Eleven months ended Price Range Dividends
December 31, 1994 High Low Per Share December 31, 1993 High Low Per Share
==========================================================================================================
<C> <C> <C> <C> <C> <C> <C> <C>
Quarter ended Quarter ended
March 31, 1994 $20-3/4 $16-3/4 $.07 April 30, 1993 $20-7/8 $15-1/2 $.07
June 30, 1994 19-3/8 16-1/4 .07 July 31, 1993 18-3/4 14-1/8 .07
September 30, 1994 20-3/4 16-3/4 .07 October 31, 1993 18-3/4 14 .07
December 31, 1994 20 16-3/4 .07 December 31, 1993 19-5/8 15-7/8 .07
========================= =========================
</TABLE>
29
<PAGE>
WYLE ELECTRONICS
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________________
Selected Financial Data
Year Eleven months
ended ended
December 31, December 31, _________________
In thousands, except per share amounts and percentages 1994 1993(b) 1993
_____________________________________________________________________________________________________________________
<S> <C> <C> <C>
Operating results(a)
Net sales $792,309 $473,443 $446,609
Cost of sales 663,741 382,513 353,558
Interest expense, net 1,289 174 2,283
Income (loss) from continuing operations
before income taxes 22,730(c) 12,734 18,310
Income (loss) from continuing operations 13,980(c) 8,336 11,787
Net income (loss) (381)(c)(d) 8,136(e) 15,428
Income (loss) per share
Primary
Continuing operations 1.13(c) .67 1.11
Net income (loss) (.03)(c)(d) .66(e) 1.45
Fully diluted(f)
Continuing operations -- -- 1.03
Net income (loss) -- -- 1.33
Dividends per common share .28 .28 .28
Dividends paid 3,431 3,412 2,990
=====================================================================================================================
Year end financial data
Working capital $170,773 $143,432 $141,970
Net investment in property, plant and
equipment 15,497 30,606 29,884
Total assets 305,913 260,571 236,213
Long-term debt, including subordinated
debentures 17,802 6,000 10,120
Shareholders' equity 159,746 164,356 158,897
Book value per common share 13.10 13.45 13.09
Income (loss) from continuing operations
as a % of sales 1.8% 1.8% 2.6%
Annualized return from continuing operations
on average shareholders' equity 8.6% 5.6% 8.6%
=====================================================================================================================
</TABLE>
(a)On December 23, 1994, the company completed the sale of its Scientific
Services & Systems ("SS&S") business. Therefore, operating results for SS&S
are classified as discontinued operations on the company's consolidated
statements of income and prior periods have been restated accordingly.
(b)The company changed its fiscal year-end from January 31 to December 31,
resulting in an eleven-month fiscal year.
(c)Includes a special charge of $1.9 million ($1.2 million, after tax, or $.09
per share) for anticipated expenses related to a particular litigation
matter and certain changes in the company's organizational structure
following the sale of the SS&S business.
(d)Includes a net loss on sale of discontinued operations of $15,779,000, or
$1.27 per share, and income from discontinued operations of $1,418,000, or
$.11 per share (see Note 9).
(e)Includes a charge of $3,193,000, or $.26 per share, for the cumulative
effect of an accounting change for postretirement benefits other than
pensions (see Note 8).
(f)During the year ended January 31, 1993, the company converted its
outstanding convertible subordinated debentures into its common stock,
which resulted in primary and fully diluted earnings per share being the
same.
<PAGE>
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________________________
Selected Financial Data
Year ended January 31,
In thousands, except per share amounts ---------------------------------------------------------------------------------------
and percentages 1992 1991 1990 1989 1988 1987 1986 1985
____________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating results(a)
Net sales $359,868 $358,921 $319,061 $318,107 $265,395 $224,559 $195,384 $274,685
Cost of sales 280,414 273,374 246,368 246,502 207,992 174,294 149,787 207,531
Interest expense, net 2,426 2,668 3,240 3,770 3,140 2,413 1,971 3,497
Income (loss) from continuing
operations before income taxes 7,793 14,688 5,859 6,463 1,989 (1,187) (3,601) 15,089
Income (loss) from continuing
operations 5,275 9,350 3,782 3,957 1,136 65 (1,432) 8,073
Net income (loss) 9,668 12,694 7,478 7,800 5,779 4,307 (3,196) 9,395
Income (loss) per share
Primary
Continuing operations .52 .94 .38 .39 .11 .01 (.15) .85
Net income (loss) .95 1.28 .75 .77 .57 .44 (.33) .99
Fully diluted(f)
Continuing operations .53 .89 .41 .42 .16 .02 (.15) .82
Net income (loss) .90 1.18 .72 .74 .56 .43 (.33) .95
Dividends per common share .28 .28 .28 .28 .27 .26 .26 .26
Dividends paid 2,792 2,728 2,791 2,837 2,673 2,461 2,432 2,382
====================================================================================================================================
Year end financial data
Working capital $133,074 $115,268 $101,611 $96,220 $106,466 $81,256 $75,432 $85,478
Net investment in property,
plant and equipment 30,513 30,902 31,306 30,243 25,860 27,137 24,031 24,815
Total assets 216,530 194,341 176,142 182,913 175,761 148,574 137,840 140,213
Long-term debt, including
subordinated debentures 41,991 36,039 36,571 32,405 43,724 25,882 21,472 26,290
Shareholders' equity 115,303 105,535 94,286 93,851 88,522 80,612 78,373 81,800
Book value per common share 11.48 10.79 9.77 9.26 8.78 8.37 8.18 8.76
Income (loss) from continuing
operations as a % of sales 1.5% 2.6% 1.2% 1.2% .4% -- (.7)% 2.9%
Annualized return from continuing
operations on average shareholders'
equity 4.8% 9.4% 4.0% 4.3% 1.3% .1% (1.8)% 10.4%
====================================================================================================================================
</TABLE>
30
<PAGE>
EXHIBIT 21
WYLE ELECTRONICS
SUBSIDIARIES
The following is a list of all the subsidiaries of the Company, which are
included in the Company's Consolidated Financial Statements, and as to each
named, the percentage of voting securities owned by the Company.
State of Percentage of
Name of Company Incorporation Ownership
--------------- ------------- -------------
Wyle Distribution Group-Santa Clara, Inc. California 100%
Redwing of California, Inc. (Inactive) California 100%
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports included or incorporated by reference in this Form 10-K, into the
Company's previously filed Registration Statements File Nos. 2-61600, 2-85129,
33-6360, 33-29071, 33-52922 and 33-55637.
ARTHUR ANDERSEN LLP
Los Angeles, California
March 14, 1995
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 9,319
<SECURITIES> 0
<RECEIVABLES> 120,415
<ALLOWANCES> 5,333
<INVENTORY> 140,332
<CURRENT-ASSETS> 274,034
<PP&E> 32,666
<DEPRECIATION> 17,169
<TOTAL-ASSETS> 305,913
<CURRENT-LIABILITIES> 103,261
<BONDS> 17,802
<COMMON> 86,647
0
0
<OTHER-SE> 73,099
<TOTAL-LIABILITY-AND-EQUITY> 305,913
<SALES> 792,309
<TOTAL-REVENUES> 792,309
<CGS> 663,741
<TOTAL-COSTS> 663,741
<OTHER-EXPENSES> 102,406<F1>
<LOSS-PROVISION> 2,143
<INTEREST-EXPENSE> 1,289
<INCOME-PRETAX> 22,730
<INCOME-TAX> 8,750
<INCOME-CONTINUING> 13,980
<DISCONTINUED> (14,361)<F2>
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (381)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> 0
<FN>
<F1> Includes a $1.9 million provision for anticipated legal expenses
associated with a certain litigation matter and costs related to changes
in the company's organizational structure following the sale of
discontinued operations.
<F2> The company recorded a loss on sale of discontinued operations of
$15,779,000, net of taxes.
</FN>
</TABLE>
