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As filed with the Securities and Exchange Commission on May 8, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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PIONEER-STANDARD ELECTRONICS, INC.
(Exact name of Registrant as specified in its charter)
OHIO 34-0907152
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4800 EAST 131ST STREET, CLEVELAND, OHIO 44105, TEL. (216) 587-3600
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
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JAMES L. BAYMAN
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
4800 EAST 131ST STREET
CLEVELAND, OHIO 44105
(216) 587-3600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
William A. Papenbrock
Calfee, Halter & Griswold LLP
1400 McDonald Investment Center
800 Superior Avenue
Cleveland, Ohio 44114-2688
(216) 622-8200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
From time to time after the effective date of the Registration Statement and
after compliance with applicable state and federal laws.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
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If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the statement
number of the earlier effective registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED AMOUNT OF
TO BE REGISTERED REGISTERED OFFERING PRICE PER MAXIMUM AGGREGATE REGISTRATION FEE
SHARE (1) OFFERING PRICE (1) (1)
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<S> <C> <C> <C> <C>
Common Shares, Without Par Value (2) 220,000 $12.25 $2,695,000 $816.67
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<FN>
(1) Based upon the average of the high and low sales prices of the Common
Shares as reported on the Nasdaq National Market on May 1, 1997;
estimated solely for purposes of determining the amount of the
registration fee pursuant to Rule 457(c).
(2) Includes Rights to purchase Common Shares under the Company's
Shareholders Rights Plan.
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 3
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PROSPECTUS
ISSUED ______________, 1997 (SUBJECT TO COMPLETION)
220,000 COMMON SHARES
WITHOUT PAR VALUE
PIONEER-STANDARD ELECTRONICS, INC.
================================================================================
This Prospectus relates to up to 220,000 Common Shares, without par
value (the "Common Shares"), of Pioneer-Standard Electronics, Inc., an Ohio
corporation (the "Company"), and the Rights attached thereto (the "Rights"). All
of the Common Shares offered hereby are to be sold from time to time by the
Wachovia Bank of North Carolina, N.A., as trustee (the Trustee") of The Pioneer
Stock Benefit Trust (the "Trust"), or through an agent of the Trustee. The Trust
was established pursuant to the Pioneer-Standard Electronics, Inc. Share
Subscription Agreement and Trust, dated as of July 2, 1996, between the Company
and the Trustee (the "Agreement). See "Use of Proceeds and Plan of Distribution"
and "The Selling Shareholder." The Common Shares are traded on the Nasdaq
National Market ("Nasdaq") under the symbol "PIOS."
The Common Shares offered hereby may be sold from time to time in one
or more of certain types of transactions. See "Use of Proceeds and Plan of
Distribution."
The aggregate proceeds to the Trust from the sale of the Common Shares
will be the selling price of the Common Shares. None of the proceeds from the
sale of the Common Shares offered hereby will be used other than to pay for
benefits under certain employee benefit plans and compensation arrangements of
the Company listed herein (the "Benefit Plans"), which will result in a credit
toward the subscription price for the Common Shares subscribed for by the
Trustee under the Trust. See "Share Subscription Agreement and Trust." The
Company will pay substantially all of the expenses of this offering, including
commissions and discounts of agents, dealers or underwriters. Such expenses,
excluding commissions and discounts, are estimated to be approximately $35,000.
The Company has agreed to indemnify the Trustee against certain
liabilities that may arise in connection with its performance of duties pursuant
to the Trust. See "Use of Proceeds and Plan of Distribution."
The Trustee, the Trust and any agents, dealers or underwriters that
participate in the distribution of the Common Shares offered hereby may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and any commissions received by them and any
profit on the resale of the Common Shares purchased by them may be deemed
underwriting commissions or discounts under the Securities Act.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------
The Trustee may sell the Common Shares to or through underwriters, through
dealers or agents or directly to purchasers. See "Use of Proceeds and Plan of
Distribution." The Prospectus Supplement, or supplemental term sheet or other
offering document, shall set forth the names of any underwriters, dealers or
agents involved in the sale of the Common Shares in respect to which this
Prospectus is being delivered, and any applicable fee, commission or discount
arrangements with them.
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The date of this Prospectus is ________________, 1997
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"), all of which may be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's regional offices at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, 13th
Floor, New York, New York 10007. Copies of such material can also be obtained
from the Commission at prescribed rates through its Public Reference Section at
450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a
Web site at http://www.sec.gov. which contains reports, proxy statements and
other information regarding registrants that file electronically with the
Commission. The Company's Common Shares are traded on the Nasdaq National Market
and reports, proxy statements and other information concerning the Company may
be inspected at the office of the Nasdaq National Market at 1735 K Street, N.W.,
Washington, D.C. 20006.
This Prospectus constitutes a part of the Registration Statement on
Form S-3 filed by the Company with the Commission under the Securities Act. This
Prospectus omits certain of the information contained in the Registration
Statement in accordance with the rules and regulations of the Commission. For
further information, reference is made to the Registration Statement and to the
schedule and exhibits filed therewith. Statements contained in this Prospectus
as to the contents of certain documents are not necessarily complete, and, with
respect to each such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission, reference is made to the copy of the
document so filed. Each statement is qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission pursuant to
the Exchange Act and are incorporated by reference into this Prospectus and made
a part hereof:
1. Annual Report on Form 10-K for the fiscal year ended March 31,
1996;
2. Quarterly Reports on Form 10-Q for the quarters ended June 30,
1996, September 30, 1996 and December 31, 1996; and
3. Current Report on Form 8-K filed with the Commission on March
11, 1997.
All documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the
offering of the Common Shares hereby, shall be deemed to be incorporated herein
by reference.
Any statement contained in a document incorporated or deemed
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus and the Registration Statement of which it is a
part to the extent that a statement contained herein or in any other
subsequently filed document which is also incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus or such Registration
Statement.
The Company will provide without charge to each person to whom a copy
of this Prospectus or any Prospectus Supplement is delivered, upon the written
or oral request of any such person, a copy of any or all of the documents
referred to above which have been or may be incorporated herein or therein by
reference (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference into such documents). Requests for such
documents should be directed to the Vice President, Treasurer and Assistant
Secretary, 4800 East 131st Street, Cleveland, Ohio 44105. Telephone requests for
such copies should be directed to the Vice President, Treasurer and Assistant
Secretary at (216) 587-3600.
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THE SELLING SHAREHOLDER
Up to 220,000 Common Shares may be sold hereunder by the Trustee, as
the selling shareholder, in order to satisfy the Company's obligations to
contribute cash to any of the Benefit Plans.
Pursuant to the Agreement, the Trustee subscribed for 5,000,000 Common
Shares, which will be paid for over the 15 year term of the Trust. Under Ohio
law, the 5,000,000 subscribed for Common Shares as deemed to be issued and
outstanding for voting and dividend purposes (representing approximately 16.1%
of issued and outstanding Common Shares).
THE COMPANY
The Company is engaged in the distribution of industrial and end-user
electronic components and computer products. The Company distributes its
products principally in the United States and Canada. The Company was organized
as an Ohio corporation in 1963, and its Common Shares are traded on the Nasdaq
National Market under the symbol "PIOS." The Company's executive offices are
located at 4800 East 131st Street, Cleveland, Ohio 44105 and its telephone
number is (216) 587-3600.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 80,000,000
Common Shares, without par value. The following summary description of the
capital stock of the Company does not purport to be complete and is qualified in
its entirety by reference to the Company's Articles of Incorporation.
COMMON SHARES
The holders of Common Shares are entitled to receive dividends when, as
and if declared from time to time by the Board of Directors out of funds legally
available therefor. The Common Shares have no preemptive rights or conversion
rights and are not subject to further calls or assessments by the Trustee. There
are no redemption or sinking fund provisions applicable to the Common Shares.
Except for the Common Shares being sold by the Trustee in this offering, all
currently outstanding Common Shares are duly authorized, validly issued, fully
paid and nonassessable. The Common Shares being sold by the Trustee in this
offering have been duly authorized and are validly issued and when paid for as
provided by the Trust, will be fully paid and nonassessable. The holder of each
Common Share, including the Trustee, is entitled to one vote on all matters
submitted to shareholders generally, except shareholders have the right to
cumulate their votes for the election of Directors as permitted by Ohio law. The
Articles can be amended by the affirmative vote of the holders of shares
representing at least two-thirds of the voting power of the Company.
OTHER MATTERS
Board of Directors. The Company's Code of Regulations, as amended (the
"Code"), provides that the Board of Directors shall be divided into three
classes of three, four and three members. The Directors of the class elected at
each Annual Meeting of Shareholders hold office for a term of three years.
Additionally, the Code requires that any proposal to increase or decrease the
number of Directors be approved by the vote of the holders of a majority of
shares entitled to vote on the proposal; provided, however, that the number of
Directors of any class shall consist of not less than three Directors. Moreover,
the Code provides that Directors may be removed from office by the vote of the
holders of two-thirds of the voting power entitled to elect Directors in place
of those removed; provided, however, that unless all the Directors of a
particular class are removed, no individual Director may be removed without
cause if a sufficient number of shares are cast against such removal, such
number being that which, if cumulatively voted at an election for all the
Directors, or all the Directors of a particular class, as the case may be, would
be sufficient to elect at least one Director. The purpose of these provisions is
to prevent Directors from being removed from office prior to the expiration of
their respective terms, thus protecting the safeguards inherent in the
classified Board structure unless dissatisfaction with the performance of one or
more
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Directors is widely shared by the Company's shareholders. These provisions
could also have the effect of increasing the amount of time required for an
acquiror to obtain control of the Company by electing a majority of the Board of
Directors and may also make the removal of incumbent management more difficult
and discourage or render more difficult certain mergers, tender offers, proxy
contests, or other potential takeover proposals. To the extent that these
provisions have the effect of giving management more bargaining power in
negotiations with a potential acquiror, they could result in management using
the bargaining power not only to try to negotiate a favorable price for an
acquisition, but also to negotiate favorable terms for management.
Business Combinations. Under the Articles, the affirmative vote of
holders of not less than 80% of the outstanding shares of the Company entitled
to elect Directors is required for the approval or authorization of any Business
Combination (as hereinafter defined) involving the Company and an Interested
Party (as hereinafter defined). This provision does not apply to Business
Combinations with Interested Parties which have been approved by a majority of
Continuing Directors (as hereinafter defined) or which satisfy certain
provisions of the Articles relating to the consideration to be paid to the
holders of Common Shares by the Interested Party. For purposes of the Articles,
the term "Business Combination" means (i) any merger or consolidation involving
both the Company and the Interested Party, or a subsidiary of either of them,
(ii) any sale, lease, transfer or other disposition of assets of the Interested
Party, (iii) adoption of a plan of liquidation or dissolution, (iv) issuance or
transfer by the Company or a subsidiary to an Interested Party of any securities
with a market value of $2 million or more, or (v) any recapitalization,
reclassification or other transaction which would have the effect of increasing
the Interested Party's voting power in the Company. The term "Interested Party"
means (i) any individual, corporation, partnership or other person or entity
which, together with its affiliates or associates, is a beneficial owner of 10%
or more of the aggregate voting power of any class of capital stock of the
Company entitled to vote generally in the election of directors, and (ii) any
affiliate or associate of such individual, corporation, partnership or other
person or entity. The term "Continuing Director" means any Director who is not
an affiliate of an Interested Party and who was a member of the Board of
Directors of the Company immediately prior to the time that the Interested Party
involved in a Business Combination became an Interested Party, and any successor
to a Continuing Director who is not such an affiliate and who is nominated to
succeed a Continuing Director by a majority of the Continuing Directors in
office at the time of such nomination.
Certain Provisions of Ohio Law. As an Ohio corporation, the Company is
subject to certain provisions of Ohio law which may discourage or render more
difficult an unsolicited takeover of the Company. Among these are provisions
that (i) prohibit certain mergers, sales of assets, issuances or purchases of
securities, liquidation or dissolution, or reclassification of the then
outstanding shares of an Ohio corporation involving certain holders of stock
representing 10% or more of the voting power (other than present shareholders),
unless such transactions are either approved by the Directors in office prior to
the 10% shareholder becoming such or involve a 10% shareholder which has been
such for at least three years and certain requirements related to price and form
of consideration to be received by shareholders are met; and (ii) provide Ohio
corporations with the right to recover profits realized under certain
circumstances by persons engaged in "greenmailing" or who otherwise sell
securities of a corporation within 18 months of proposing to acquire such
corporation.
In addition, pursuant to Section 1701.831 of the Ohio Revised Code, the
purchase of certain levels of voting power of the Company (one-fifth or more but
less than one-third; one-third or more but less than a majority; or a majority
or more) can be made only with the prior authorization of the holders of shares
representing at least a majority of the total voting power of the Company and
the separate prior authorization of the holders of shares representing at least
a majority of the total voting power held by shareholders other than the
proposed purchaser, officers of the Company, and Directors of the Company who
are also employees.
Rights Plan. On April 25, 1989, the Board of Directors of the Company
adopted a Shareholder Rights Plan pursuant to a Rights Agreement (the "Rights
Agreement"), which is an exhibit to the Registration Statement of which this
Prospectus is a part, entered into by and between the Company and a Cleveland,
Ohio bank and declared a dividend distribution of one Right (as defined in the
Rights Agreement) for each outstanding Common Share, which was paid to
shareholders on May 10, 1989. The Rights are also issuable to all holders of
Common Shares issued after May 10, 1989. The Rights are not exercisable until
the earlier to occur of (i) ten days following a public announcement that a
person or group of affiliated or associated persons (an "Acquiring Person") has
acquired
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beneficial ownership of 20% or more of the outstanding Common Shares of the
Company or (ii) ten business days following the commencement of, or announcement
of an intention to make a tender offer or exchange offer for 20% or more of the
outstanding Common Shares of the Company (the earlier of such dates being called
the "Distribution Date"). Once exercisable, each Right entitles the registered
holder to purchase from the Company one Common Share at the then-current
exercise price per Common Share, which currently is $11.85.
In the event that the Company is acquired in a merger or other business
combination transaction, or 50% or more of its consolidated assets or earning
power are sold, proper provision shall be made so that each holder of a Right
will thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of Common Shares of the
acquiring company which at the time of such transaction would have a market
value of two times the exercise price of the Right. In the event that (i) any
person becomes an Acquiring Person (unless such person first acquires 20% or
more of the outstanding Common Shares by a purchase pursuant to a tender offer
for all of the Common Shares for cash, which purchase increases such person's
beneficial ownership to 80% or more of the outstanding Common Shares) or (ii)
during such time as there is an Acquiring Person, there shall be a
reclassification of securities or a recapitalization or reorganization of the
Company or other transaction or series of transactions involving the Company
which has the effect of increasing by more than 1% the proportionate share of
the outstanding shares of any class of equity securities of the Company or any
of its subsidiaries beneficially owned by the Acquiring Person, proper provision
shall be made so that each holder of a Right, other than Rights beneficially
owned by the Acquiring Person (which will thereafter be void), will thereafter
have the right to receive upon exercise that number of Common Shares having a
market value of two times the exercise price of the Right.
At any time prior to the acquisition by a person or group of affiliated
or associated persons of 20% or more of the outstanding Common Shares, the Board
of Directors of the Company may redeem the Rights in whole, but not in part, at
a price of one cent per Right (the "Redemption Price"). In addition, if a bidder
who does not beneficially own more than 1% of the Common Shares (and who has not
within the past year owned in excess of 1% of the Common Shares and, at a time
he held such greater than 1% stake, disclosed, or caused the disclosure of, an
intention which relates to or would result in the acquisition or influence of
control of the Company) proposes to acquire all of the Common Shares (and all
other shares of capital stock of the Company entitled to vote with the Common
Shares in the election of directors or on mergers, consolidations, sales of all
or substantially all of the Company's assets, liquidations, dissolutions or
windings up) for cash at a price which a nationally recognized investment banker
selected by such bidder states in writing is fair, and such bidder has obtained
written financing commitments (or otherwise has financing) and complies with
certain procedural requirements, then the Company, upon the request of the
bidder, will hold a special shareholders meeting to vote on a resolution
requesting the Board of Directors to accept the bidder's proposal. If a majority
of the outstanding shares entitled to vote on the proposal vote in favor of such
resolution, then for a period of 60 days after such meeting the Rights will be
automatically redeemed at the Redemption Price immediately prior to the
consummation of any tender offer for all of such shares at a price per share in
cash equal to or greater than the price offered by such bidder; provided,
however, that no redemption will be permitted or required after the acquisition
by any person or group of affiliated or associated persons of beneficial
ownership of 20% or more of the outstanding Common Shares. The Rights, which
have no voting power, will expire on May 10, 1999 unless earlier redeemed by the
Company as described above.
Director and Officer Indemnification. The Company's Code contains
provisions indemnifying Directors and officers of the Company to the fullest
extent permitted by law and providing for the advancement of expenses incurred
in connection with an action upon the receipt of an appropriate undertaking to
repay said amount if it is determined that the individual in question is not
entitled to indemnification. The Company has also entered into indemnity
agreements pursuant to which it has agreed, among other things, to indemnify its
Directors for settlements in derivative actions. The Company also has purchased
a Director and Officer liability insurance policy (the "D & O Insurance").
General. It is possible that the division of the Board of Directors of
the Company into classes provided for in the Code and the other provisions of
the Code discussed above, the heightened shareholder voting requirements
applicable to certain proposed business combination transactions, the provisions
of Ohio law, the Rights Plan, and the change of control provisions contained in
the indenture dated as of August 1, 1996 between the Company and
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Star Bank, N.A. (the "Indenture") may discourage other persons from making a
tender offer for or acquisitions of substantial amounts of the Company's Common
Shares. The Indenture was entered into in connection with the Company's issuance
of $150,000,000 aggregate principal amount of 8 1/2% Senior Notes due 2006 (the
"Notes"). Upon a Change of Control (as defined in the Indenture), each holder of
the Notes may request that the Company purchase the Notes at a purchase price
equal to 100% of the principal amount of the Notes plus accrued and unpaid
interest, if any, to the date of purchase. This could have an incidental effect
of inhibiting changes in management and may also prevent temporary fluctuations
in the market price of the Company's Common Shares which often result from
actual or rumored takeover attempts. In addition, the indemnification provisions
of the Code, certain indemnity agreements between Directors and officers of the
Company and the D & O Insurance may have the effect of reducing the likelihood
of derivative litigation against Directors and deterring shareholders from
bringing a lawsuit against Directors for breach of their duty of care, even
though such an action, if successful, might otherwise have benefited the Company
and the shareholders.
Transfer Agent and Registrar. The Transfer Agent and Registrar for the
Common Shares is KeyCorp Shareholder Services, Inc., Cleveland, Ohio. As of May
19, 1997, the Transfer Agent and Registrar for the Common Shares will be
National City Bank, Cleveland, Ohio.
SHARE SUBSCRIPTION AGREEMENT AND TRUST
On July 2, 1996, the Company entered into the Agreement with the
Trustee, pursuant to which the Trustee subscribed for 5,000,000 Common Shares of
the Company. It is contemplated at present that such Common Shares will be sold
from time to time by the Trustee to generate cash for contribution to the
Benefit Plans.
The subscribed for Common Shares will be paid for over the 15 year term
of the Trust pursuant to the terms of the Agreement. Under Ohio law, the Common
Shares subscribed for under the Agreement are deemed to be issued and
outstanding for voting and dividend purposes, but will not be fully paid and
nonassessable until such Common Shares are sold and payment for such Common
Shares is received and applied as provided in the Agreement.
The Trust will terminate on March 31, 2011 or any earlier date on which
the subscription is paid in full and all Common Shares have been allocated from
the Trust (the "Termination Date"). The Board of Directors may terminate the
Trust at any time in its sole discretion prior to the Termination Date (whether
or not a transaction that if consummated would constitute a Change of Control
(as defined below) is then pending) or at such time as there are no Common
Shares subject to an outstanding subscription agreement. In the event of such a
termination, any Common Shares held by the Trustee will be allocated to the
Benefit Plans. The Trust will also terminate automatically upon the Company
giving the Trustee notice of a Change of Control. In the event of a termination
upon a Change of Control, the Trustee will use the proceeds from the sale of the
subscribed for Common Shares to pay the subscription prices and any excess funds
will be allocated to the Benefit Plans.
"Change of Control" means (i) a complete dissolution or liquidation of
the Company, (ii) a sale or other disposition of all or substantially all of the
Company's assets, or (iii) a reorganization, merger, or consolidation ("Business
Combination") unless either (A) all or substantially all of the shareholders of
the Company immediately prior to the Business Combination own more than 50% of
the voting securities of the entity surviving the Business Combination, or the
entity which directly or indirectly controls such surviving entity, in
substantially the same proportion as they owned the voting securities of the
Company immediately prior thereto, or (B) the consideration (other than cash
paid in lieu of fractional shares or payment upon perfection of appraisal
rights) issued to shareholders of the Company in the Business Combination is
solely common shares which are publicly traded on an established securities
exchange in the United States.
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USE OF PROCEEDS AND PLAN OF DISTRIBUTION
Under the terms of the Agreement, the Company is required to deliver to
the Trustee a certain annual minimum number of Common Shares. The Common Shares
offered hereby represent the minimum number of shares required by the Agreement
to be delivered to the Trust by the Company during the first two years of the
term of the Trust. Under certain circumstances, the Company may suspend the sale
of Common Shares (any period during which the sale of Common Shares is
suspended, a "Blackout Period").
This Prospectus relates to the Common Shares that from time to time
will be sold in the market by the Trustee over the next 15 years in order to
satisfy the needs of the Benefit Plans for cash (e.g., to fund the reimbursement
of employer medical and dental expenses, employee salaries, bonuses and
commissions, etc.). The number of Common Shares that the Trustee will sell and
the frequency of such sales will depend upon various factors, including the
number of participants in each Benefit Plan, decisions made by participants in
the Benefit Plans, the market price of the Common Shares, the duration of any
Blackout Period, and the Company's pay cycles.
The Company will pay the expenses incident to the registration,
offering and sale of the Common Shares to the public, including commissions and
discounts of agents, dealers or underwriters. To the extent lawfully allowable,
the Company has agreed to indemnify and hold harmless the Trustee from and
against any claims, demands, actions, administrative or other proceedings,
causes of action, liability, loss, cost, damage or expense (including reasonable
attorneys' fees), which may be asserted against the Trustee, in any way arising
out of or incurred as a result of its action or failure to act in connection
with the operation and administration of the Trust; provided that such
indemnification will not apply to the extent that the Trustee has acted in
willful or negligent violation of applicable law or its duties under the Trust
or in bad faith.
The Common Shares offered hereby may be sold from time to time in one
or more of the following transactions: (a) to underwriters who will acquire the
shares for their own account and resell them in one or more transactions,
including negotiated transactions, at a fixed price or at varying prices
determined at the time of sale; any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time; (b) through brokers or dealers, acting as principal or agent,
in transactions (which may involve block transactions) on the Nasdaq National
Market, in special offerings, exchange distributions pursuant to the rules of
the applicable exchanges, or otherwise, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices, at negotiated
prices or at fixed prices; (c) directly or through brokers or agents in private
sales at negotiated prices; or (d) by pledgees, donees, transferees or other
successors in interest. Underwriters participating in any offering may receive
underwriting discounts and commissions and discounts or concessions may be
allowed or reallowed or paid to dealers, and brokers or agents participating in
such transactions may receive brokerage or agent's commissions or fees.
BENEFIT PLANS
The proceeds from the sale of Common Shares held by the Trust may be
used to satisfy the Company's obligations to contribute cash to any of the
following Benefit Plans:
Group Insurance Plan (Life)
Medical Plan
Dental Care Plan
Long Term Disability Plan
Vision Plan
Pioneer-Standard Electronics, Inc. Employees' Profit Sharing Retirement Plan
Pioneer Technologies Group, Inc. Profit Sharing Plan
Employee Bonuses and Commissions
Employee Compensation
7
<PAGE> 10
The Company may, from time to time, add, substitute or delete the
Benefit Plans to which it issues shares or distributes cash. If required, such
addition, substitution or deletion of Benefit Plans will be reflected in an
accompanying Prospectus Supplement, supplemental term sheet or offering
document.
VALIDITY OF SHARES
The validity of the Common Shares offered hereby will be passed upon by
Calfee, Halter & Griswold LLP, 1400 McDonald Investment Center, 800 Superior
Avenue, Cleveland, Ohio 44114. William A. Papenbrock, Esq., a partner of Calfee,
Halter & Griswold LLP, is the Secretary of the Company and as of May 1, 1997,
beneficially owned 3,687 Common Shares of the Company.
EXPERTS
The consolidated financial statements and schedule of the Company
incorporated by reference and included in the Company's Annual Report (Form
10-K) for the year ended March 31, 1996 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon incorporated by
reference and included therein and incorporated herein by reference. Such
consolidated financial statements and schedule have been incorporated herein by
reference in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.
8
<PAGE> 11
===============================================================================
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus, in connection with the offer made by this Prospectus and, if given
or made, such information or representations must not be relied upon as having
been authorized by the Company or any underwriters, agents or dealers. Neither
the delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information herein is
correct as of any time subsequent to its date. This Prospectus does not
constitute an offer to sell or a solicitation of any offer to buy any
securities in any jurisdiction to any person to whom it is unlawful to make
such offer or solicitation.
________________
TABLE OF CONTENTS Page
----
AVAILABLE INFORMATION 2
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE 2
THE SELLING SHAREHOLDER 3
THE COMPANY 3
DESCRIPTION OF CAPITAL STOCK 3
SHARE SUBSCRIPTION AGREEMENT
AND TRUST 6
USE OF PROCEEDS AND PLAN OF
DISTRIBUTION 7
BENEFIT PLANS 7
VALIDITY OF SHARES 8
EXPERTS 8
======================================
PIONEER-STANDARD
ELECTRONICS, INC.
220,000
COMMON SHARES
WITHOUT PAR VALUE
-------------------
P R O S P E C T U S
-------------------
, 1997
======================================
================================================================================
<PAGE> 12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Securities and Exchange Commission filing fee......................$817
Nasdaq National Market filing fee................................$4,400
Legal fees and expenses........................................*$10,000
Accounting fees and expenses...................................*$15,000
Miscellaneous expenses..........................................*$9,783
Total.................................................*$40,000
=======
- -------------------
* Estimate
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1701.13 of the Ohio Revised Code sets forth the conditions and
limitations governing the indemnification of officers, directors and other
persons. Section 1701.13 provides that a corporation shall have the power to
indemnify any person who was or is a party or threatened to be made a party to
any threatened, pending or contemplated action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation in a similar capacity with another corporation or
other entity, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement incurred in connection therewith if he or she acted
in good faith and in a manner that he or she reasonably believed to be in the
best interests of the corporation and, with respect to a criminal proceeding,
had no reasonable cause to believe that his or her conduct was unlawful. With
respect to a suit by or in the right of the corporation, indemnity may be
provided to the foregoing persons under Section 1701.13 on a basis similar to
that set forth above, except that no indemnity may be provided in respect of any
claim, issue or matter as to which such person has been adjudged to be liable to
the corporation unless and to the extent that the Court of Common Pleas or the
court in which such action, suit or proceeding was brought determines that
despite the adjudication of liability but in view of all the circumstances of
the case such person is entitled to indemnity for such expenses as the court
deems proper. Moreover, Section 1701.13 provides for mandatory indemnification
of a director, officer, employee or agent of the corporation to the extent that
such person has been successful in defense of any such action, suit or
proceeding and provides that a corporation shall pay the expenses of an officer
or director in defending an action, suit or proceeding upon receipt of an
undertaking to repay such amounts if it is ultimately determined that such
person is not entitled to be indemnified. Section 1701.13 establishes provisions
for determining whether a given person is entitled to indemnification, and also
provides that the indemnification provided by or granted under Section 1701.13
is not exclusive of any rights to indemnity or advancement of expenses to which
such person may be entitled under any by-law, agreement, vote of shareholders or
disinterested directors or otherwise.
Under certain circumstances provided in Article VIII of the
Registrant's Code of Regulations, as amended, and subject to Section 1701.13 of
the Ohio Revised Code (which sets forth the conditions and limitations governing
the indemnification of officers, directors and other persons), the Registrant
will indemnify any director or officer or any former director or officer of the
Registrant against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement, actually and reasonably incurred by him or her by
reason of the fact that he or she is or was such director or officer in
connection with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative.
II-1
<PAGE> 13
The Registrant has entered into indemnity agreements (the "Indemnity
Agreements") with the current directors and executive officers of the Registrant
and expects to enter into similar agreements with any director or executive
officer elected or appointed in the future at the time of their election or
appointment. Pursuant to the Indemnity Agreements, the Registrant will indemnify
a director or executive officer of the Registrant (the "Indemnitee") if the
Indemnitee is a party to or otherwise involved in any legal proceeding by reason
of the fact that the Indemnitee is or was a director or executive officer of the
Registrant, or is or was serving at the request of the Registrant in certain
capacities with another entity, against all expenses, judgments, settlements,
fines and penalties, actually and reasonably incurred by the Indemnitee, in
connection with the defense or settlement of such proceeding. Indemnity is only
available if the Indemnitee acted in good faith and in a manner which he or she
reasonably believed to be in, or not opposed to, the best interests of the
Registrant. The same coverage is provided whether or not the suit or proceeding
is a derivative action. Derivative actions may be defined as actions brought by
one or more shareholders of a corporation to enforce a corporate right or to
prevent or remedy a wrong to the corporation in cases where the corporation,
because it is controlled by the wrongdoers or for other reasons, fails or
refuses to take appropriate action for its own protection. The Indemnity
Agreements mandate advancement of expenses to the Indemnitee if the Indemnitee
provides the Registrant with a written promise to repay the advanced amounts in
the event that it is determined that the conduct of the Indemnitee has not met
the applicable standard of conduct. In addition, the Indemnity Agreements
provide various procedures and presumptions in favor of the Indemnitee's right
to receive indemnification under the Indemnity Agreement.
Under the Registrant's Director and Officer Liability Insurance Policy,
each director and certain officers of the Registrant are insured against certain
liabilities.
ITEM 16. EXHIBITS.
See Exhibit Index at page E-1 of this Registration Statement.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, unless the information
required to be included in such post-effective amendment is
contained in periodic reports filed by the Registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 and incorporated herein by reference;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement, unless the information required to be included in
such post-effective amendment is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 and incorporated
herein by reference; or
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-2
<PAGE> 14
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) For purposes of determining any liability under the
Securities Act of 1933, each filing of Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities and
Exchange Act of 1934) that is incorporated by reference in the
Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions
described in Item 15 above, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event a claim
for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication
of such issue.
II-3
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cleveland, State of Ohio, on May 8, 1997.
PIONEER-STANDARD ELECTRONICS, INC.
By /s/ James L. Bayman
----------------------------
James L. Bayman
Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on May 8, 1997, by the following
persons in the capacities indicated:
POWER OF ATTORNEY
KNOW ALL MEN AND WOMEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints James L. Bayman, Arthur Rhein,
John V. Goodger, William A. Papenbrock and Edward W. Moore, and each of them,
such individual's true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for such individual and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
SIGNATURES TITLE
---------- -----
/s/ James L. Bayman Chairman of the Board and
- -------------------------------- Chief Executive Officer
James L. Bayman (Principal Executive Officer)
/s/ John V. Goodger Vice President, Treasurer and
- --------------------------------- Goodger (Principal Financial and
John V. Goodger Accounting Officer)
/s/ Preston B. Heller, Jr. Director
- ---------------------------------
Preston B. Heller, Jr.
/s/ Frederick A. Downey Director
- ---------------------------------
Frederick A. Downey
/s/ Victor Gelb Director
- ---------------------------------
Victor Gelb
II-4
<PAGE> 16
/s/ Gordon E. Heffern Director
- ---------------------------------
Gordon E. Heffern
/s/ Arthur Rhein Director
- ---------------------------------
Arthur Rhein
/s/ Edwin Z. Singer Director
- ---------------------------------
Edwin Z. Singer
/s/ Thomas C. Sullivan Director
- ---------------------------------
Thomas C. Sullivan
/s/ Karl E. Ware Director
- ---------------------------------
Karl E. Ware
II-5
<PAGE> 17
PIONEER-STANDARD ELECTRONICS, INC.
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
4.1 Credit Agreement dated as of August 12, 1996 by and among
Pioneer-Standard Electronics, Inc., the Banks identified on
the signature pages thereto and National City Bank, as Agent,
which is incorporated by reference from the Form 10-Q for the
quarter ended June 30, 1996
4.2 Rights Agreement dated as of April 25, 1989 by and between
the Company and AmeriTrust Company National Association
4.3 Note Purchase Agreement dated as of October 31, 1990 by and
between the Company and Teachers Insurance and Annuity
Association of America
4.4 Amendment No. 1 to Note Purchase Agreement dated as of
November 1, 1991 by and between the Company and Teachers
Insurance and Annuity Association of America, which is
incorporated by reference from the Company's Annual Report on
Form 10-K for the year ended March 31, 1993
4.5 Amendment No. 2 to Note Purchase Agreement dated as of
November 30, 1995 by and between the Company and Teachers
Insurance and Annuity Association of America, which is
incorporated by reference from the Company's Annual Report on
Form 10-K for the year ended March 31, 1996
4.6 Amendment No. 3 to Note Purchase Agreement dated as of August
12, 1996 by and between the Company and Teachers Insurance
and Annuity Association of America, which is incorporated by
reference from the Company's Annual Report on Form 10-K for
the year ended March 31, 1996
4.7 Form of Indenture with respect to the 8 1/2% Senior Notes due
2006, which is incorporated from the Company's Registration
Statement on Form S-3 (Reg. No. 333-07665)
4.8 Form of 8 1/2% Senior Note due 2006, which is incorporated
from the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996
4.9 Officer's Certificate containing terms relating to the 8 1/2%
Senior Notes due 2006, which is incorporated by reference
from the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996
5.1 Opinion of Calfee, Halter & Griswold LLP
10.1 Share Subscription Agreement and Trust, dated as of July 2,
1996, between the Company and Wachovia Bank of North
Carolina, N.A., as trustee, which is incorporated by
reference from the Company's Registration Statement on Form
S-3 (Reg. No. 333-07665)
23.1 Consent of Ernst & Young LLP
23.2 Consent of Calfee, Halter & Griswold LLP (see Exhibit 5.1)
24.1 Power of Attorney and related certified resolution
E-1
<PAGE> 1
Exhibit 4.2
- --------------------------------------------------------------------------------
PIONEER-STANDARD ELECTRONICS, INC.
and
AMERITRUST COMPANY, NATIONAL ASSOCIATION
Rights Agent
Rights Agreement
Dated as of April 25, 1989
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 1. Certain Definitions..................................................................1
Section 2. Appointment of Rights Agent..........................................................7
Section 3. Issue of Right Certificates..........................................................7
Section 4. Form of Right Certificates...........................................................9
Section 5. Countersignature and Registration...................................................10
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates.............................11
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.......................12
Section 8. Cancellation and Destruction of Right Certificates..................................14
Section 9. Availability of Common Shares.......................................................14
Section 10. Common Shares Record Date...........................................................15
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights..................16
Section 12. Certificate of Adjusted Purchase Price or Number of Shares..........................26
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power................27
Section 14. Fractional Rights and Fractional Shares.............................................28
Section 15. Rights of Action....................................................................30
Section 16. Agreement of Right Holders..........................................................30
Section 17. Right Certificate Holder Not Deemed a Stockholder...................................31
Section 18. Concerning the Rights Agent.........................................................31
Section 19. Merger or Consolidation or Change of Name of Rights Agent...........................32
Section 20. Duties of Rights Agent..............................................................33
Section 21. Change of Rights Agent..............................................................36
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 22. Issuance of New Right Certificates..................................................38
Section 23. Redemption..........................................................................38
Section 24. Exchange............................................................................42
Section 25. Notice of Certain Events............................................................45
Section 26. Notices.............................................................................46
Section 27. Supplements and Amendments..........................................................47
Section 28. Successors..........................................................................47
Section 29. Benefits of this Agreement..........................................................48
Section 30. Severability........................................................................48
Section 31. Governing Law.......................................................................48
Section 32. Counterparts........................................................................48
Section 33. Descriptive Headings................................................................48
Signatures ....................................................................................49
Exhibit A Form of Right Certificate.................................................... A-1
Exhibit B Summary of Rights to Purchase Common Shares.................................. B-1
</TABLE>
<PAGE> 4
RIGHTS AGREEMENT
----------------
Agreement, dated as of April 25, 1989, between
Pioneer-Standard Electronics, Inc., an Ohio corporation (the "Company"), and
AmeriTrust Company, National Association (the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one common share purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company outstanding on May 10, 1989
(the "Record Date"), each Right representing the right to purchase one Common
Share, upon the terms and subject to the conditions herein set forth, and has
further authorized and directed the issuance of one Right with respect to each
Common Share that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date (as such terms are hereinafter defined), including, without limitation,
Common Shares issued upon exercise of employee stock options and the Company's
9% Subordinated Convertible Debentures Due 1998, but excluding Common Shares
issued upon exercise of any Right.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of
<PAGE> 5
twenty percent (20%) or more of the Common Shares of the Company then
outstanding, but shall not include the Company, any Subsidiary (as such term is
hereinafter defined) of the Company, any employee benefit plan of the Company or
any Subsidiary of the Company, or any entity holding Common Shares for or
pursuant to the terms of any such plan. Notwithstanding the foregoing, no Person
shall become an "Acquiring Person" as the result of an acquisition of Common
Shares by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such Person
to twenty percent (20%) or more of the Common Shares of the Company then
outstanding; PROVIDED, HOWEVER, that if a Person shall become the Beneficial
Owner of twenty percent (20%) or more of the Common Shares of the Company then
outstanding by reason of share purchases by the Company and shall, after such
share purchases by the Company, become the Beneficial Owner of any additional
Common Shares of the Company, then such Person shall be deemed to be an
"Acquiring Person".
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such
right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (other than
2
<PAGE> 6
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), or
upon the exercise of conversion rights, exchange rights, rights (other
than these Rights), warrants or options, or otherwise; PROVIDED,
HOWEVER that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, securities tendered pursuant to a tender 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; or (B) the right to vote pursuant to
any agreement, arrangement or understanding; PROVIDED, HOWEVER, 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 (1) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
rules and regulations promulgated under the Exchange Act and (2) is not
also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which 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 (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to Section
l(c)(ii)(B)) or disposing of any securities of the Company.
Notwithstanding anything in this definition of
Beneficial Ownership to the contrary, the phrase "then outstanding,"
when used with reference to a Person's
3
<PAGE> 7
Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding
which such Person would be deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in Cleveland are authorized or
obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00
P.M., Cleveland time, on such date; PROVIDED, HOWEVER, that if such date is not
a Business Day it shall mean 5:00 P.M., Cleveland time, on the next succeeding
Business Day.
(f) "Common Shares" when used with reference to the Company
shall mean the Common Shares, without par value, of the Company. "Common Shares"
when used with reference to any Person other than the Company shall mean the
capital stock (or equity interest) with the greatest voting power of such other
Person or, if such other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(h) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(i) An "Offer" shall mean a written proposal delivered to the
Company by any Person who both beneficially owns one percent (1%) or less of the
outstanding Common Shares as of the date such proposal is delivered and who has
not within one (1) year prior to the delivery of such written proposal
beneficially owned in excess of one percent (1%) of the then outstanding Common
Shares of the Company and (at a time when such Person beneficially
4
<PAGE> 8
owned such greater than one percent (1%) stake) disclosed, or caused the
disclosure of, any intention which relates to or would result in the
acquisition, or influence of control, of the Company (an "Offeror"), and which
proposal:
(i) provides for the acquisition of all of the
outstanding shares of each class or series of Voting Stock (as
hereinafter defined) held by any Person other than the Offeror and its
Affiliates for cash, with all shares of any particular class or series
of Voting Stock to be acquired at the same price;
(ii) is accompanied by a written opinion of a
nationally recognized investment banking firm, which opinion is
addressed to the holders of shares of Voting Stock other than the
Offeror and its Affiliates and states that the price to be paid to the
holders (other than the Offeror and its affiliates) of each individual
class or series of Voting Stock pursuant to the Offer is fair to such
holders;
(iii) states that the Offeror has obtained written
financing commitments from recognized financing sources, and/or has on
hand cash or cash equivalents, for the full amount of all financing
necessary to consummate the Offer; and
(iv) requests the Company to call a special meeting
of the holders of Voting Stock for the purpose of voting on a
resolution requesting the Board of Directors to redeem the Rights in
connection with such Offer (but solely in connection with such Offer)
and contains a written agreement of the Offeror to pay (or share with
any other Offeror) at least one-half (1/2) of the Company's costs of
such special meeting (exclusive of the Company's costs of preparing and
mailing proxy material for its own solicitation) and to accept the time
frame for such meeting specified by the Company.
5
<PAGE> 9
(j) "Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
(k) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(1) "Shares Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
(m) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
(n) "Voting Stock" shall mean (i) the Common Shares of the
Company and (ii) any other shares 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. Whenever any provision of this Agreement requires a determination of whether
a number of shares of Voting Stock comprising a specified percentage of such
Voting Stock has been voted, tendered, acquired, sold or otherwise disposed of,
or a determination of whether a Person has offered or proposed to acquire a
number of shares of Voting Stock comprising such specified percentage, the
number of shares of Voting Stock comprising such specified percentage of Voting
Stock shall in every such case be deemed to be the number of shares of Voting
Stock comprising the specified percentage of the Company's entire voting power
then entitled to vote generally in the election of directors or then 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.
6
<PAGE> 10
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Shares) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable.
Section 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the earlier
of (i) the tenth (10th) day after the Shares Acquisition Date or (ii) the tenth
(10th) business day (or such later date as may be determined by action of the
Board of Directors prior to such time as any Person becomes an Acquiring Person)
after the date of the commencement by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or pursuant to
the terms of any such plan) of, or of the first public announcement of the
intention of any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the Company or
any entity holding Common Shares for or pursuant to the terms of any such plan)
to commence, a tender or exchange offer the consummation of which would result
in any Person becoming the Beneficial Owner of Common Shares aggregating twenty
percent (20%) or more of the then outstanding Common Shares (including any such
date which is after the date of this Agreement and prior to the issuance of the
Rights; the earlier of such dates being herein referred to as the "Distribution
Date"), (x) the Rights will be evidenced (subject to the provisions of Section
3(b) hereof) by the certificates for Common Shares registered in the names of
the holders thereof (which certificates shall also be deemed to be Right
Certificates and not by separate Right Certificates, and (y) the right to
receive Right Certificates
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will be transferable only in connection with the transfer of Common Shares. As
soon as practicable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign, and the Company will send or cause
to be sent (and the Rights Agent will, if requested, send) by first-class,
insured, 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, in substantially the form of
Exhibit A hereto (a "Right Certificate"), evidencing one (1) Right for each
Common Share so held. As of the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter,
the Company will cause the Rights Agent to send a copy of a Summary of Rights to
Purchase Common Shares, in substantially the form of Exhibit B hereto (the
"Summary of Rights"), by first-class, 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. With respect to
certificates for Common Shares outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates registered
in the names of the holders thereof together with a copy of the Summary of
Rights attached thereto. Until the Distribution Date (or the earlier of the
Redemption Date or the Final Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date, with or without a
copy of the Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the last
sentence of this paragraph (c)) after the Record Date but prior to the earliest
of the Distribution Date, the Redemption Date
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or the Final Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in a Rights Agreement between
Pioneer-Standard Electronics, Inc. and AmeriTrust Company,
National Association, dated as of April 25, 1989 (the "Rights
Agreement"), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal
executive offices of Pioneer-Standard Electronics, Inc. at
4800 East 131st Street, Cleveland, Ohio 44105. Under certain
circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. Pioneer-Standard
Electronics, Inc. will mail to the holder of this certificate
a copy of the Rights Agreement without charge within five (5)
days after receipt of a written request therefor. As described
in the Rights Agreement, Rights issued to any Person who
becomes an Acquiring Person (as defined in the Rights
Agreement) shall become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
In the event that the Company purchases or acquires any Common Shares after
the Record Date but prior to the Distribution Date, any Rights associated with
such Common Shares shall be deemed canceled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common Shares
which are no longer outstanding.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates
(and the forms of election to purchase Common Shares and of assignment to be
printed on the reverse thereof) shall be substantially the same as Exhibit A
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
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<PAGE> 13
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 on which
the Rights may from time to time be listed, or to conform to usage. Subject to
the provisions of Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of Common Shares as shall be set forth
therein at the price per Common Share set forth therein (the "Purchase Price"),
but the number of such Common Shares and the Purchase Price shall be subject to
adjustment as provided herein.
Section 5. COUNTERSIGNATURE AND REGISTRATION. The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its President, or any of its Vice Presidents, either manually or by
facsimile signature, shall have affixed thereto the Company's seal or a
facsimile thereof, and shall be attested by the Secretary, Treasurer, or an
Assistant Secretary of the Company, 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 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, nevertheless, may
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; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
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<PAGE> 14
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office, books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF
RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
Subject to the provisions of Section 14 hereof, at any time after the close of
business on the Distribution Date, and at or prior to the close of business on
the earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of Common Shares as
the Right Certificate or Right Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate or Right Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the principal office of the Rights Agent. Thereupon the Rights
Agent shall countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the case may be, 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.
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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
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE;
EXPIRATION DATE OF RIGHTS. (a) The registered holder of any Right Certificate
may exercise the Rights evidenced thereby (except as otherwise provided
herein) in whole or in part at any time after the Distribution Date upon
surrender of the Right Certificate, with the form of election to purchase on
the reverse side thereof duly executed, to the Rights Agent at the principal
office of the Rights Agent, together with payment of the Purchase Price for
each Common Share as to which the Rights are exercised, at or prior to the
earliest of (i) the close of business on May 10, 1999 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section
23 hereof (the "Redemption Date"), or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each Common Share pursuant to the
exercise of a Right shall initially be $40.00, shall be subject to adjustment
from time to time as provided in Sections 11 and 13 hereof and shall be payable
in lawful money of the United States of America in accordance with paragraph (c)
below.
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<PAGE> 16
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the Common Shares to be
purchased 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, cashier's check or money order payable to the order of the
Company, the Rights Agent shall thereupon promptly (i) (A) requisition from any
transfer agent of the Common Shares certificates for the number of Common Shares
to be purchased and the Company hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) requisition from the depositary agent
depositary receipts representing such number of Common Shares as are to be
purchased (in which case certificates for the Common Shares represented by such
receipts shall be deposited by the transfer agent with the depositary agent) and
the Company hereby directs the 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 shares in accordance with Section 14
hereof, (iii) after receipt of such certificates or depositary receipts, 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, deliver such cash to or upon
the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14 hereof.
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<PAGE> 17
(e) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Common Shares or
any Common Shares held in its treasury, the number of Common Shares that will be
sufficient to permit the exercise in full of all outstanding Rights in
accordance with this Section 7.
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 any of the provisions of this Rights 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 canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. AVAILABILITY OF COMMON SHARES. The Company
covenants and agrees that it will take all such action as may be necessary to
ensure that all Common Shares delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such Common Shares (subject to payment
of the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable shares.
The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right Certificates
or of any Common Shares upon the exercise of
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<PAGE> 18
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or delivery of certificates
or depositary receipts for the Common Shares in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise or to issue or to deliver any certificates or depositary receipts for
Common Shares upon the exercise of any Rights 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 reasonable
satisfaction that no such tax is due.
Section 10. COMMON SHARES RECORD DATE. Each person in whose
name any certificate for Common Shares is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Common Shares represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase 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 Common Shares transfer books of the Company are
closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Common Shares transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of Common Shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
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Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number of Common Shares covered by
each 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 the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Common Shares payable in
Common Shares, (B) subdivide the outstanding Common Shares, (C) combine the
outstanding Common Shares into a smaller number of Common Shares or (D) issue
any shares of its capital stock in a reclassification of the Common Shares
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a), the Purchase Price in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares
of capital stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Common Shares transfer books of the Company were open, he would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; PROVIDED, HOWEVER, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the
event (A) any Person shall become an Acquiring Person (other than
through an acquisition described in
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<PAGE> 20
subparagraph (iii) of this paragraph (a)) or (B) during such time as
there is an Acquiring Person, there shall be any reclassification of
securities (including any reverse stock split), or recapitalization or
reorganization of the Company or other transaction or series of
transactions involving the Company which has the effect, directly or
indirectly, of increasing by more than one percent (1%) the
proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries beneficially owned
by any Acquiring Person or any Affiliate or Associate thereof, each
holder of a Right shall thereafter have a right to receive, upon
exercise thereof such number of Common Shares of the Company as shall
equal the result obtained by (x) multiplying the then current Purchase
Price by the then number of Common Shares for which a Right is then
exercisable and dividing that product by (y) fifty percent (50%) of the
then current per share market price of the Company's Common Shares
(determined pursuant to Section 11(d) hereof) on the date of the
occurrence of the earlier of the events described in clauses (A) and
(B) above. In the event that any Person shall become an Acquiring
Person and the Rights shall then be outstanding, the Company shall not
take any action which would eliminate or diminish the benefits intended
to be afforded by the Rights.
Notwithstanding the foregoing and in accordance with
the authority granted under Section 1701.16(B) of the Ohio Revised
Code, from and after the occurrence of the earlier of the events
described in clauses (A) and (B) above, any Rights that are or were
acquired or beneficially owned by any Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall be null and void
and any holder of such Rights shall thereafter have no right to
exercise such Rights under any provision of
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<PAGE> 21
this Agreement. No Right Certificate shall be issued pursuant to
Section 3 that represents Rights beneficially owned by an Acquiring
Person whose Rights would be null and void pursuant to the preceding
sentence or any Associate or Affiliate thereof; no Right Certificate
shall be issued at any time upon the transfer of any Rights to an
Acquiring Person whose Rights would be null and void pursuant to the
preceding sentence or any Associate or Affiliate thereof or to any
nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring
Person whose Rights would be null and void pursuant to the preceding
sentence shall be canceled.
(iii)The right to buy Common Shares of the Company
pursuant to subparagraph (ii)(A) of this paragraph (a) shall not arise
as a result of any Person becoming an Acquiring Person through a
purchase of Common Shares pursuant to a tender offer made in the manner
prescribed by Section 14(d) of the Exchange Act and the rules and
regulations promulgated thereunder; PROVIDED, HOWEVER, that (A) such
tender offer shall provide for the acquisition of all of the
outstanding Common Shares held by any Person other than such Person and
its Affiliates for cash and (B) such purchase shall cause such Person,
together with all Affiliates and Associates of such Person, to be the
Beneficial Owner of eighty percent (80%) or more of the Common Shares
then outstanding.
(iv) If, on the date the Rights first become
exercisable for Common Shares pursuant to Section 11(a)(ii) (the
"Adjustment Date"), the Company does not have sufficient authorized,
unissued and unreserved Common Shares available under applicable law to
permit the exercise in full of all Rights that are exercisable on the
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<PAGE> 22
Adjustment Date for the number of Common Shares per Right provided in
Section 11(a)(ii), then, notwithstanding any other provision of this
Agreement, to the extent necessary and permitted by applicable law,
each Right shall thereafter represent the right to receive upon
exercise thereof at the then current Purchase Price (or Adjusted
Purchase Price (as defined herein) if so specified herein) in
accordance with the terms of this Agreement:
(x) Common Shares; and
(y) the Adjusted Number of Common Shares upon
exercise at the Adjusted Purchase Price (as
such terms are defined herein); and/or
(z) any combination of the above;
PROVIDED, HOWEVER, that the Company shall issue only Common Shares which are
available for such purpose under applicable law upon exercise of the Rights
under this Section 11 until the Company has first issued all authorized,
unissued and unreserved Common Shares; PROVIDED FURTHER, once the Company has
first issued all authorized, unissued and unreserved Common Shares, the Company
shall take, to the extent permitted by applicable law, all such action as may be
necessary in the best judgment of the Board of Directors to provide under
clauses (x), (y) and (z) above such combination of Common Shares and/or
adjustments in Purchase Price as equals as nearly as possible the economic
benefits and as nearly as practicable the voting rights that would otherwise
have been delivered had Common Shares been deliverable upon the exercise of
Rights under Section 11(a)(ii) hereof.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Shares
entitling them (for a period expiring within forty-five (45) calendar days after
such record date) to subscribe for or purchase Common Shares
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<PAGE> 23
or securities convertible into Common Shares at a price per Common Share (or
having a conversion price per share, if a security convertible into Common
Shares) less than the then current per share market price of the Common Shares
(as defined in Section 11(d)) on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Common Shares outstanding on such
record date plus the number of Common Shares which the aggregate offering price
of the total number of Common Shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price and the denominator of which shall be the
number of Common Shares outstanding on such record date plus the number of
additional Common Shares to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible);
PROVIDED, HOWEVER, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.
Common 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
shall be made successively whenever such a record date is fixed; and in the
event that such rights, options or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
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<PAGE> 24
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Common Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Common Shares) or subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
then current per share market price of the Common Shares on such record date,
less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Common Share and the denominator of which shall be such
current per share market price of the Common Shares; PROVIDED, HOWEVER, that in
no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder, the
current per share market price" of any security (a "Security" for the purpose of
this Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior
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<PAGE> 25
to such date; PROVIDED, HOWEVER, that in the event that the current per share
market price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or distribution on
such Security payable in shares of such Security or securities convertible into
such shares, or (B) any subdivision, combination or reclassification of such
Security and prior to the expiration of thirty (30) Trading Days after the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
current per share market price shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security. The closing price
for each day shall be the last sale price, regular way, 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 the 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 the Security is listed or
admitted to trading or, if the 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 the Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of Directors of the
Company. The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to trading is
open for the
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transaction of business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Common Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Common Shares
are not publicly held or so listed or traded, "current per share market price"
shall mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least one
percent (1%) in the Purchase Price; PROVIDED, HOWEVER, that any adjustments
which by reason of this Section 11(e) are not required to be made shall be
carried forward 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 one one-hundredth of a Common Share or one one-hundredth of any other
share or security as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three (3) years from the date of the transaction which
requires such adjustment or (ii) the date of the expiration of the right to
exercise any Rights.
(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 shares of capital stock of the Company other than Common Shares,
thereafter the number of such other shares 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 the
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Common Shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10 and 13 with respect to the Common Shares shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Common Shares
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), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
Common Shares obtained by (i) multiplying (x) the number of Common Shares
covered by a Right immediately prior to this adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of Common 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 Common Shares 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 one-hundredth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect
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immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
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 Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If 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 evidencing,
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,
shall 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
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of Common Shares issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to express
the Purchase Price and the number of Common Shares which were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the Common Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in
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the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Common Shares at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall require that
an. adjustment in the Purchase 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 issuing to the holder of any Right exercised after such record date of
the Common Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Common Shares and other capital
stock or securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; PROVIDED,
HOWEVER, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing 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 reductions in the
Purchase 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 consolidation or subdivision of the Common
Shares, issuance wholly for cash of any Common Shares at less than the current
market price, issuance wholly for cash of Common Shares or securities which by
their terms are convertible into or exchangeable for Common Shares, dividends on
Common Shares payable in Common Shares or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter made by the Company
to holders of its Common Shares shall not be taxable to such stockholders.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER
OF SHARES. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts
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accounting for such adjustment, (b) file with the Rights Agent and with any
transfer agent for the Common Shares a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate in accordance with
Section 25 hereof.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER. In the event, directly or indirectly, (a) the Company
shall consolidate with, or merge with and into, any other Person, (b) any Person
shall consolidate with the Company, or merge with and into the Company and the
Company shall be the continuing or surviving corporation of 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 other Person (or the
Company) or cash or any other property, or (c) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating
fifty percent (50%) or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person other than the Company
or one or more of its wholly-owned Subsidiaries, then, and in each such case,
proper provision shall be made so that (i) each holder of a Right (except as
otherwise provided herein) shall thereafter have the right to receive, upon the
exercise thereof at a price equal to the then current Purchase Price multiplied
by the number of Common Shares for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Common Shares, such
number of Common Shares of such other Person (including the Company as successor
thereto or as the surviving corporation) as shall equal the result obtained by
(A) multiplying the then current Purchase Price by the number of Common Shares
for which a Right is then exercisable and dividing that product by (B) fifty
percent (50%) of the then current per share market price of the Common Shares of
such other Person (determined pursuant to Section 11(d) hereof) on the date of
consummation of such
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consolidation, merger, sale or transfer; (ii) the issuer of such Common Shares
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 such issuer; and (iv) such issuer 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 assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
Common Shares thereafter deliverable upon the exercise of the Rights. The
Company shall not consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such issuer shall have executed and
delivered to the Rights Agent a supplemental agreement so providing. The Company
shall not enter into any transaction of the kind referred to in this Section 13
if at the time of such transaction there are any rights, warrants, instruments
or securities outstanding or any agreements or arrangements which, as a result
of the consummation of such transaction, would eliminate or substantially
diminish the benefits intended to be afforded by the Rights. The provisions of
this Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The
Company shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in 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 of the Rights for the Trading Day
immediately prior to the date on which such fractional
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Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, 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 the Rights are 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 the Rights are listed or
admitted to trading or, if the Rights are 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 NASDAQ or such other system then in use or, if on any
such date the Rights are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Rights selected by the Board of Directors of the
Company. If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good faith
by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
Common Shares upon exercise of the Rights or to distribute certificates which
evidence fractional Common Shares. In lieu of fractional Common Shares, the
Company shall pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Common Share. For the purposes of
this Section 14(b), the current market value of a Common Share shall be the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
such exercise.
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(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
Section 15. RIGHTS OF ACTION. All rights of action in respect
of this Agreement, excepting 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, prior to the Distribution Date, the registered holders
of the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the Common Shares), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right 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 will be entitled to specific performance
of the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, 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 with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
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<PAGE> 34
(b) after the Distribution Date, the Right Certificates are
transferable only 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 (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made 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 CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
No holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Common Shares or any
other securities of the Company which may at any time be issuable on 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
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
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT. The Company agrees
to pay to the Rights Agent reasonable compensation for all services rendered
fby it hereunder in accordance
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with its then existing fee schedule at the time services are rendered and, from
time to time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties hereunder. 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 in the premises.
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 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 counsel as set forth in Section 20 hereof.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT. 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 stock transfer or corporate trust 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
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hereto, provided that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case 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 in case 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 the Right Certificates and in this
Agreement.
In case 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 in
case 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 the 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 thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be full
and complete
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authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such 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
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 execution hereof by the Rights Agent) or in respect 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
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and void pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of
the Rights (including the manner, method or amount thereof) provided for in
Section 3, 11, 13, 23 or 24, or the ascertaining of the existence of facts that
would require any such change or adjustment (except with respect to the exercise
of Rights evidenced 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
Common Shares to be issued pursuant to this Agreement or any Right Certificate
or as to whether any Common Shares 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 President, any Vice President, the
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 by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions.
(h) The Rights Agent and any stockholder, 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
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were not 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
act, default, neglect or misconduct, provided 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 thirty (30) days' notice in writing mailed to the Company and to
any transfer agent of the Common Shares by registered or certified mail, and to
the holders of the Right Certificates by first-class mail; PROVIDED, HOWEVER,
that such resignation and discharge shall not take effect until a new Rights
Agent may be appointed and qualified to serve as such. The Company may remove
the Rights Agent or any successor Rights Agent upon thirty (30) days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to any transfer agent of the Common 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, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of thirty (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 his
Right Certificate for inspection by the Company), then the registered holder of
any
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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 Ohio or New
York (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 Ohio or New
York), in good standing, having an office in the States of Ohio or New York
which 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 which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million. 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. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and transfer agent of the Common Shares, and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for 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 Rights to
the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors
to reflect any adjustment or change in the Purchase Price and the number or
kind or
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class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.
Section 23. REDEMPTION. (a) The Rights may be redeemed by
action of the Board of Directors pursuant to paragraph (b) of this Section 23 or
by stockholder action pursuant to paragraph (c) of this Section 23 and shall not
be redeemed in any other manner.
(b) The Board of Directors of the Company may, at its option,
at any time prior to such time as any Person becomes an Acquiring Person, redeem
all but not less than all the then outstanding Rights at a redemption price of
one cent ($.01) per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price"). The
redemption of the Rights by the Board of Directors may be made effective at such
time on such basis and with such conditions as the Board of Directors in its
sole discretion may establish.
(c) (i) In the event the Company receives an Offer from any
Offeror, the Board of Directors of the Company shall call a special meeting of
stockholders (the "Special Meeting") for the purpose of voting on a
precatory resolution requesting the Board of Directors to redeem the Rights in
connection with such Offer (but only in connection with such offer), as such
Offer may be amended or revised by the offeror from time to time to increas
the price per share in cash to be paid to holders of shares of Voting Stock
(the "Resolution"). The Special Meeting shall be held on a date selected by
the Board of Directors, which date shall be not less than ninety (90) and not
more than one hundred twenty (120) days after the later of (A) the date such
Offer is received by the Company (the "Offer Date") and (B) the date of any
meeting of stockholders already scheduled as of the Offer Date; PROVIDED,
HOWEVER, that if (x) such other meeting shall have been called pursuant to
this Section 23(b) for the purpose of voting on a
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<PAGE> 42
precatory resolution with respect to another Offer and (y) the Offer
Date shall be not later than fifteen (15) days after the date such other Offer
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. The Board of Directors shall set a date for determining the
stockholders of record entitled to notice of and to vote at the Special Meeting
in accordance with the Company's Articles of Incorporation and Code of
Regulations and with applicable law. At the Offeror's request, the Company
shall include in any proxy soliciting material prepared by it in connection
with the Special Meeting proxy soliciting material submitted by the Offeror;
PROVIDED, HOWEVER, that the Offeror shall by written agreement with 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 Offeror's proxy soliciting material
and have agreed to pay the Company's incremental costs incurred as a result of
including such material in the Company's proxy soliciting material.
Notwithstanding the foregoing, no Special Meeting called pursuant to this
Section 23(b) shall be held from and after such time as any Person becomes an
Acquiring Person, and any Special Meeting scheduled prior to such time and not
theretofore held shall be canceled. Notwithstanding the foregoing, no Special
Meeting called pursuant to this Section 23(b) shall limit the applicability of
Section 1701.831 of the Ohio Revised Code (nor shall anything herein be
construed to limit the applicability of any section herein by virtue of the
applicability of Section 1701.831 of the Ohio Revised Code).
(ii) If at the Special Meeting the Resolution receives the
affirmative vote of a majority of the shares of Voting Stock outstanding as of
the record date of the Special Meeting, then all of the Rights shall be redeemed
by such stockholder action at the Redemption Price,
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effective immediately prior to the consummation of any tender offer (provided
that such tender offer is consummated prior to sixty (60) days after the date of
the Special Meeting) pursuant to which any Person offers to purchase all of the
shares of Voting Stock held by Persons other than such Person and its Affiliates
at a price per share in cash equal to or greater than the price contained in the
Resolution approved at the Special Meeting; PROVIDED, HOWEVER, that the Rights
shall not be redeemed at any time from and after such time as any Person becomes
an Acquiring Person.
(iii) Nothing contained in this paragraph (c) 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 Offer, or to recommend that
holders of shares of Voting Stock reject any tender offer, or to take any other
action (including, without limitation, the commencement, prosecution, defense or
settlement of any litigation and the submission of additional or alternative
Offers or other proposals to the Special Meeting) with respect to any Offer or
any tender offer that the Board of Directors believes is necessary or
appropriate in the exercise of such fiduciary duty.
(iv) Nothing in this paragraph (c) shall be construed as
limiting or prohibiting the Company or any Offeror from proposing or engaging,
at any time, 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, or any other business combination or other
transaction, or any other action by the Company or such Offeror in accordance
with applicable law; PROVIDED, HOWEVER, that the holders of Rights shall have
the rights set forth in this
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Agreement with respect to any such acquisition, disposition, transfer, merger,
consolidation, sale, liquidation, dissolution, winding-up, business combination,
transaction or action.
(d) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to paragraph (b) of
this Section 23, or upon the effectiveness of the redemption of the Rights
pursuant to paragraph (c) of this Section 23, and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. The Company shall promptly give public notice of any such redemption;
PROVIDED, HOWEVER, that the failure to give, or any defect in, any such notice
shall not affect the validity of such redemption. Within ten (10) days after
such action of the Board of Directors ordering the redemption of the Rights
pursuant to paragraph (b) or the effectiveness of the redemption of the Rights
pursuant to paragraph (c), as the case may be, the Company shall mail a notice
of redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will 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
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in Section 24 hereof, and
other than in connection with the purchase of Common Shares prior to the
Distribution Date.
Section 24. EXCHANGE. (a) The Board of Directors of the
Company may, at its option, at any time after any Person becomes an Acquiring
Person, in redemption in lieu of
41
<PAGE> 45
exercise thereof exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii) 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").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Shares for or pursuant to the terms of
any such plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of fifty percent (50%) or more of the Common Shares
then outstanding.
(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 24 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 at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided 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 the Common Shares for Rights will be effected
and, in the event of any partial
42
<PAGE> 46
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 void pursuant to the provisions of Section 11(a)(ii) hereof)
held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute other then authorized capital stock for Common
Shares exchangeable for Rights, provided that the combination of Common Shares
and capital stock so delivered shall equal as nearly as practical the voting
rights and economic benefits that would have been delivered had sufficient
Common Shares been available.
(d) In the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, to the
extent permitted by law the Company shall take all such action as may be
necessary to authorize additional Common Shares for issuance upon exchange of
the Rights and, failing such additional action, shall not exercise the exchange
of Rights except to the extent that Common Shares are so available.
(e) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash equal to
the same fraction of the current market value of a whole Common Share. For the
purposes of this paragraph (e), the current market value of a whole Common Share
shall be the closing price of a Common Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
43
<PAGE> 47
Section 25. NOTICE OF CERTAIN EVENTS. (a) In case the Company
shall propose (i) to pay any dividend payable in stock of any class to the
holders of its Common Shares or to make any other distribution to the holders of
its Common Shares (other than a regular quarterly cash dividend), (ii) to offer
to the holders of its Common Shares rights or warrants to subscribe for or to
purchase any additional Common Shares or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Common Shares (other than a reclassification involving only the subdivision of
outstanding Common Shares), (iv) to effect any consolidation or merger into or
with, 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 fifty percent (50%) or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares),
then, 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, which shall specify the record date for the purposes of such stock
dividend, or distribution of rights or warrants,, or the date on 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 the Common 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 ten (10) days prior to the record date for
determining holders of the Common Shares for purposes of such action, and in the
case of any such other action, at least ten
44
<PAGE> 48
(10) 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, whichever shall be
the earlier.
(b) In case any of the events set forth in Section 11(a)(ii)
hereof shall occur, then 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, which notice shall describe
such event and the consequences of such event to holders of Rights under Section
11(a)(ii) 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:
Pioneer-Standard Electronics, Inc.
4800 East 131st Street
Cleveland, OH 44105
Attention: Treasurer
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) as-follows:
AmeriTrust Company, National Association
2073 East Ninth Street
Cleveland, OH 44101
Attention: Corporate Trust Department
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
45
<PAGE> 49
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. The Company may from
time to time supplement or amend this Agreement without the approval of any
holders of Right Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, or to make any other provisions with respect
to the Rights which the Company may deem necessary or desirable, any such
supplement or amendment to be evidenced by a writing signed by the Company and
the Rights Agent; PROVIDED, HOWEVER, that from and after such time as any Person
becomes an Acquiring Person, this Agreement shall not be amended in any manner
which would adversely affect the interests of the holders of Rights. Without
limiting the foregoing, the Company may at any time prior to such time as any
Person becomes an Acquiring Person amend this Agreement to lower the thresholds
set forth in Sections l(a) and 3(a) hereof from twenty percent (20%) to not less
than the greater of (i) any percentage greater than the largest percentage of
the outstanding Common Shares then known by the Company to be beneficially owned
by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any Subsidiary of the Company, or any
entity holding Common Shares for or pursuant to the terms of any such plan) and
(ii) ten percent (10%).
Section 28. 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.
Section 29. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the
46
<PAGE> 50
registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).
Section 30. 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 31. 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 Ohio and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 32. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. 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.
47
<PAGE> 51
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the day and year first
above written.
PIONEER-STANDARD ELECTRONICS, INC.
Attest:
By /s/ Lawrence R. Cowin, Jr. By /s/ James L. Bayman
---------------------------- ----------------------------
Title: Vice President Title: President
Finance and
Administration,
Treasurer and
Assistant Secretary
AMERITRUST COMPANY,
Attest: NATIONAL ASSOCIATION
By /s/ Neal J. Gerstenschlager By /s/ Donald J. Sprenger
---------------------------- ----------------------------
Title: Senior Trust Title: Vice President
Officer and
Assistant
Secretary
48
<PAGE> 52
EXHIBIT A
Form of Right Certificate
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER MAY 10, 1999 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT ONE
CENT ($.01) PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT.
Right Certificate
Pioneer-Standard Electronics, Inc.
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, provisions and
conditions of the Rights Agreement, dated as of April 25, 1989 (the "Rights
Agreement"), between Pioneer-Standard Electronics, Inc., an Ohio corporation
(the "Company"), and AmeriTrust Company, National Association (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5:00 P.M.,
Cleveland time, on May 10, 1999 at the principal office of the Rights Agent, or
at the office of its successor as Rights Agent, one fully paid non-assessable
Common Share, without par value (the "Common Shares"), of the Company, at a
purchase price of $40.00 per Common Share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of Common Shares which may be purchased upon
exercise hereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of May 10, 1989, based on the Common Shares as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price and the number of Common Shares which may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.
A-1
<PAGE> 53
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Right Certificates.
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 surrender at the principal office of the Rights Agent, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of Common Shares as the Rights evidenced 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 surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a redemption
price of one cent ($.01) per Right or (ii) may be exchanged in whole or in part
for Common Shares.
No fractional Common Shares will be issued upon the exercise
of any Right or Rights evidenced hereby, but in lieu thereof a cash payment will
be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Common
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, 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 stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced 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.
A-2
<PAGE> 54
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of May 10, 1989.
ATTEST: PIONEER-STANDARD ELECTRONICS, INC.
By
- ------------------------------ -------------------------------
Countersigned:
[Rights Agent]
By
---------------------------
Authorized Signature
A-3
<PAGE> 55
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ___________________________________________
hereby sells, assigns and transfers unto ______________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
______________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ____________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _________, 19__
-----------------------------------------
Signature
Signature Guaranteed:
Signatures 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.
- --------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
-----------------------------------------
Signature
- --------------------------------------------------------------------------------
A-4
<PAGE> 56
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise the Right Certificate.)
To Pioneer-Standard Electronics, Inc.
The undersigned hereby irrevocably elects to exercise
____________________________________________ Rights represented by this Right
Certificate to purchase the Common Shares issuable upon the exercise of such
Rights and requests that certificates for such Common Shares be issued in the
name of:
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
______________________________________________________________________________
(Please print name and address of transferee)
- ------------------------------------------------------------------------------
Dated: ___________, 19__
------------------------------------
Signature
Signature Guaranteed:
Signatures 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.
A-5
<PAGE> 57
Form of Reverse Side of Right Certificate -- continued
- --------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
--------------------------------
Signature
- --------------------------------------------------------------------------------
NOTICE
------
The signature in the foregoing Forms of Assignment and
Election must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
A-6
<PAGE> 58
Exhibit B
---------
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES
On April 25, 1989, the Board of Directors of Pioneer-Standard
Electronics, Inc. (the "Company") declared a dividend of one common share
purchase right (a "Right") for each outstanding Common Share, without par value
(the "Common Shares"), of the Company. The dividend is payable on May 10, 1989
to the stockholders of record on May 10, 1989 (the "Record Date"). Each Right
entitles the registered holder to purchase from the Company one Common Share of
the Company at a price of $40.00 per Common Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement") between the Company and AmeriTrust
Company National Association, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) ten (10) days following a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") have acquired beneficial ownership of twenty percent
(20%) or more of the outstanding Common Shares or (ii) ten (10) business days
(or such later date as may be determined by action of the Board of Directors
prior to such time as any Person becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of twenty percent (20%) or more of such
outstanding Common Shares (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Share certificates outstanding as of the Record Date, by such Common
Share certificate with a copy of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the Common Shares. Until
the Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date, upon transfer or new
issuance of Common Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares, outstanding as of the Record Date, even without such notation or
a copy of this Summary of Rights being attached thereto, will also constitute
the transfer of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
B-1
<PAGE> 59
The Rights are not exercisable until the Distribution Date.
The Rights will expire on May 10, 1999 (the "Final Expiration Date"), unless the
Final Expiration Date is extended or unless the Rights are earlier redeemed by
the Company, in each case, as described below
The Purchase Price payable, and the number of Common Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Common
Shares, (ii) upon the grant to holders of the Common Shares of certain rights or
warrants to subscribe for or purchase Common Shares at a price, or securities
convertible into Common Shares with a conversion price less than the then
current market price of the Common Shares, or (iii) upon the distribution to
holders of the Common Shares of evidences of indebtedness or assets (excluding
regular periodic cash dividends paid out of earnings or retained earnings or
dividends payable in Common Shares) or of subscription rights or warrants (other
than those referred to above).
In the event that the Company is acquired in a merger or other
business combination transaction or fifty percent (50%) or more of its
consolidated assets or earning power are sold, proper provision will be made so
that each holder of a Right will thereafter have the right to receive, upon the
exercise thereof at the then current exercise price of the Right, that number of
shares of common stock of the acquiring company which at the time of such
transaction will have a market value of two (2) times the exercise price of the
Right. In the event that (i) any person becomes an Acquiring Person (unless such
person first acquires twenty percent (20%) or more of the outstanding Common
Shares by a purchase pursuant to a tender offer for all of the Common Shares for
cash, which purchase increases such person's beneficial ownership to eighty
percent (80%) or more of the outstanding Common Shares) or (ii) during such time
as there is an Acquiring Person, there shall be a reclassification of securities
or a recapitalization or reorganization of the Company or other transaction or
series of transactions involving the Company which has the effect of increasing
by more than one percent (1%) the proportionate share of the outstanding shares
of any class of equity securities of the Company or any of its subsidiaries
beneficially owned by the Acquiring Person, proper provision shall be made so
that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will thereafter be null and void), will thereafter have
the right to receive upon exercise that number of Common Shares having a market
value of two (2) times the exercise price of the Right.
At any time after the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of twenty percent (20%)
or more of the outstanding Common Shares and prior to the acquisition by such
person or group of fifty percent (50%) or more of the outstanding Common Shares,
the Board of Directors of the Company may exchange the Rights (other than Rights
owned by such person or group which have become void), in whole or in part, at
an exchange ratio of one Common Share (or of a share of a class of then
authorized capital stock having equivalent rights, preferences and privileges),
per Right (subject to adjustment).
B-2
<PAGE> 60
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
one percent (1%) in such Purchase Price. No fractional Common Shares will be
issued and in lieu thereof, an adjustment in cash will be made based on the
market price of the Common Shares on the last trading day prior to the date of
exercise.
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of twenty percent (20%)
or more of the outstanding Common Shares, the Board of Directors of the Company
may redeem the Rights in whole, but not in part, at a price of one cent ($.01)
per Right (the "Redemption Price"). The redemption of the rights may be made
effective at such time on such basis and with such conditions as the Board of
Directors in its sole discretion may establish. In addition, if a bidder who
does not beneficially own more than one percent (1%) of the Common Shares (and
who has not within the past year owned in excess of one percent (I%) of the
Common Shares and, at a time he held such greater than one percent (1%) stake,
disclosed, or caused the disclosure of, an intention which relates to or would
result in the acquisition or influence of control of the Company) proposes to
acquire all of the Common Shares (and all other shares of capital stock of the
Company entitled to vote with the Common Shares in the election of directors or
on mergers, consolidations, sales of all or substantially all of the Company's
assets, liquidations, dissolutions or windings up) for cash at a price which a
nationally recognized investment banker selected by such bidder states in
writing is fair, and such bidder has obtained written financing commitments (or
otherwise has financing) and complies with certain procedural requirements, then
the Company, upon the request of the bidder, will hold a special stockholders
meeting to vote on a resolution requesting the Board of Directors to accept the
bidder's proposal. If a majority of the outstanding shares entitled to vote on
the proposal vote in favor of such resolution, then for a period of sixty (60)
days after such meeting the Rights will be automatically redeemed at the
Redemption Price immediately prior to the consummation of any tender offer for
all of such shares at a price per share in cash equal to or greater than the
price offered by such bidder; PROVIDED, HOWEVER, that no redemption will be
permitted or required after the acquisition by any person or group of affiliated
or associated persons of beneficial ownership of twenty percent (20%) or more of
the outstanding Common Shares. Immediately upon any redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights,
including an amendment to lower the threshold for exercisability of the Rights
from twenty percent (20%) to not less than the greater of (i) any percentage
greater than the largest percentage of the outstanding Common Shares then known
to the Company to be beneficially owned by any person or group of affiliated or
associated persons and (ii) ten percent (10%), except that from and after such
time as any person becomes an Acquiring Person no such amendment may adversely
affect the interests of the holders of the Rights.
B-3
<PAGE> 61
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A dated April 27, 1989. A copy of the Rights Agreement is available free
of charge from the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is hereby incorporated herein by reference.
B-4
<PAGE> 1
Exhibit 4.3
CONFORMED COPY
===============================================================================
PIONEER-STANDARD ELECTRONICS, INC.
$20,000,000 IN AGGREGATE PRINCIPAL AMOUNT
OF
9.79% SENIOR NOTES DUE NOVEMBER 1, 2000
- --------------------------------------------------------------------------------
NOTE PURCHASE AGREEMENT
- --------------------------------------------------------------------------------
DATED AS OF OCTOBER 31, 1990
================================================================================
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
PAGE
----
<S> <C>
SECTION 1. THE NOTES..............................................................................................1
Section 1.1 Authorization of Notes .....................................................................1
Section 1.2 Purchase and Sale of Notes .................................................................1
Section 1.3 Use of Proceeds ............................................................................2
SECTION 2. GENERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................2
Section 2.1 Capital Stock; Subsidiaries ................................................................2
Section 2.2 Organization and Authority. ................................................................3
Section 2.3 Financial Statements and Other Information; Financial Condition ............................3
Section 2.4 Business ...................................................................................5
Section 2.5 No Material Adverse Change .................................................................5
Section 2.6 Franchises, Licenses, Registrations, etc. ..................................................5
Section 2.7 Title to Properties; Leases ................................................................5
Section 2.8 Compliance with Other Instruments, etc. ....................................................6
Section 2.9 No Materially Adverse Contracts, etc. ......................................................6
Section 2.10 Compliance with Law ........................................................................6
Section 2.11 Compliance with ERISA ......................................................................7
Section 2.12 Compliance with Environmental Laws .........................................................7
Section 2.13 Pending Litigation, etc. ...................................................................8
Section 2.14 Taxes ......................................................................................8
Section 2.15 Holding Company Act; Investment Company Act ................................................9
Section 2.16 No Foreign Assets Control Regulations Violation. ...........................................9
Section 2.17 No Margin Regulation Violation .............................................................9
Section 2.18 Corporate Proceedings ......................................................................9
Section 2.19 No Event of Default .......................................................................10
Section 2.20 Governmental Consents, etc. ...............................................................10
Section 2.21 Full Disclosure. ..........................................................................10
Section 2.22 Validity of Agreement and Notes ...........................................................10
SECTION 3. SECURITIES ACT; ERISA REPRESENTATIONS.................................................................11
Section 3.1 Offerees ..................................................................................11
Section 3.2 Investment Intent, etc. ...................................................................11
Section 3.3 ERISA Representation ......................................................................12
SECTION 4. CONDITIONS OF OBLIGATION TO PURCHASE NOTES............................................................12
Section 4.1 Opinion of Special Counsel for You ........................................................12
Section 4.2 Opinion of Counsel for the Company ........................................................13
Section 4.3 Performance of Obligations ................................................................13
Section 4.4 Representations True, etc. ................................................................13
Section 4.5 Legality ..................................................................................13
Section 4.6 Assignment of Private Placement Number ....................................................13
</TABLE>
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Section 4.7 Proceedings, Instruments, etc..............................................................13
SECTION 5. EXPENSES..............................................................................................14
SECTION 6. CERTAIN SPECIAL RIGHTS ...............................................................................14
Section 6.1 Home Office Payment .......................................................................14
Section 6.2 Delivery Expenses .........................................................................15
Section 6.3 Issuance Taxes ............................................................................15
Section 6.4 Substitution of Purchaser .................................................................15
SECTION 7. NOTE PREPAYMENTS......................................................................................16
Section 7.1 Required Prepayments.......................................................................16
Section 7.2 Optional Prepayments.......................................................................16
Section 7.3 Notice of Prepayment.......................................................................16
Section 7.4 Partial Prepayment Pro Rata................................................................16
SECTION 8. REGISTRATION, EXCHANGE AND REPLACEMENT OF NOTES.......................................................17
Section 8.1 Registration.............................................................................. 17
Section 8.2 Exchange...................................................................................17
Section 8.3 Replacement................................................................................17
SECTION 9. CERTAIN COVENANTS OF THE COMPANY......................................................................17
Section 9.1 Maintenance of Office......................................................................17
Section 9.2 Corporate Existence........................................................................18
Section 9.3 General Maintenance of Properties and Business, etc........................................18
Section 9.4 Notice of Certain Events and Conditions....................................................19
Section 9.5 Inspection.................................................................................19
Section 9.6 Compliance with Law, etc...................................................................19
Section 9.7 Payment of Taxes and Claims................................................................19
Section 9.8 ERISA......................................................................................20
Section 9.9 Transactions with Affiliates...............................................................20
Section 9.10 Maintenance of Consolidated Net Worth......................................................20
Section 9.11 Current Ratio..............................................................................20
Section 9.12 Fixed Charge Coverage......................................................................20
Section 9.13 Liens......................................................................................20
Section 9.14 Restricted Subsidiary Indebtedness.........................................................21
Section 9.15 Merger, Consolidation......................................................................21
Section 9.16 Transfer and Sale of Assets................................................................22
Section 9.17 Short-Term Indebtedness....................................................................22
Section 9.18 Repurchase of Notes........................................................................22
Section 9.19 Limitations on Restricted Payments and Restricted Investments..............................22
Section 9.20 Limitations on Consolidated Funded Indebtedness............................................23
Section 9.21 Tax Consolidation..........................................................................23
Section 9.22 Restricted Subsidiaries....................................................................24
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SECTION 10. INFORMATION TO BE FURNISHED HOLDERS OF NOTES.........................................................25
Section 10.1 Financial Statements of the Company........................................................25
Section 10.2 Other Information..........................................................................26
Section 10.3 Pioneer/Technologies.......................................................................28
Section 10.4 Officer's Certificates.....................................................................28
Section 10.5 Accountants' Certificates..................................................................28
SECTION 11. DEFAULTS AND REMEDIES................................................................................29
Section 11.1 Events of Default; Acceleration of Notes...................................................29
Section 11.2 Default Remedies...........................................................................31
Section 11.3 Notice of Default..........................................................................32
Section 11.4 Annulment of Acceleration of Notes.........................................................32
SECTION 12. INTERPRETATION OF AGREEMENT AND NOTES................................................................33
Section 12.1 Definitions................................................................................33
Section 12.2 Directly or Indirectly.....................................................................47
Section 12.3 Accounting Terms...........................................................................48
Section 12.4 Governing Law..............................................................................48
Section 12.5 Headings...................................................................................48
Section 12.6 Independence of Covenants..................................................................48
SECTION 13. MISCELLANEOUS........................................................................................48
Section 13.1 Notices....................................................................................48
Section 13.2 Survival...................................................................................48
Section 13.3 Successors and Assigns.....................................................................48
Section 13.4 Amendment and Waiver.......................................................................49
Section 13.5 Counterparts...............................................................................50
Section 13.6 Reproduction of Documents................................................................. 50
Section 13.7 Confidentiality............................................................................50
SIGNATURES.......................................................................................................51
SCHEDULE I Name and Address of Purchaser
SCHEDULE 2.5 Material Adverse Changes
SCHEDULE 4.1 Opinion of Special Counsel for the Purchaser
SCHEDULE 4.2 Opinion of Special Counsel for the Company
SCHEDULE 12.1 Existing Liens
EXHIBIT A Form of Note
EXHIBIT B Consents
EXHIBIT C Permitted Affiliate Transactions
</TABLE>
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<PAGE> 5
PIONEER-STANDARD ELECTRONICS, INC.
4800 East 131st Street
Cleveland, Ohio 44105
--------------------------------------
NOTE PURCHASE AGREEMENT
--------------------------------------
As of October 31, 1990
Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
Attention: Securities Division
Dear Sirs:
The undersigned Pioneer-Standard Electronics, Inc., an Ohio corporation (the
"Company"), hereby agrees with you as follows:
SECTION 1. THE NOTES
SECTION 1.1 AUTHORIZATION OF NOTES. The Company has authorized the
issuance and sale of $20,000,000 in aggregate principal amount of its 9.79%
Senior Notes due November 1, 2000, to be dated (except as otherwise set forth in
Section Section 8.2 and 8.3 hereof) the date of original issuance thereof and to
be substantially in the form of Exhibit A hereof. Such Notes, together with all
Notes (in the form of Exhibit A hereof) issued in exchange or replacement for,
or on the registration or transfer of, such Notes pursuant to the provisions of
this Agreement, are hereinafter called the "Notes." Each Note shall bear
interest from the date thereof until such Note shall become due and payable in
accordance with the terms thereof and hereof (whether at maturity, by
acceleration or otherwise) at the rate of 9.79% per annum, payable semiannually
on each May 1 and November 1 (each an "Interest Payment Date"), commencing May
1, 1991, and shall have a stated maturity of November 1, 2000. Interest shall be
computed on the basis of a 360-day year of twelve 30-day months. Any overdue
portion of the principal amount of any Note and premium, if any, and (to the
extent permitted by applicable law) on any overdue installment of interest shall
bear interest at a rate equal to 11.79% per annum.
SECTION 1.2 PURCHASE AND SALE OF NOTES. The Company agrees to
sell to you, and upon and subject to the terms and conditions hereof and in
reliance upon the representations and warranties of the Company contained
herein, you agree to purchase from the Company, Notes in the aggregate principal
amount of $20,000,000 at a purchase price equal to 100% of such
<PAGE> 6
principal amount (the "Purchase Price"). The Notes are to be sold and delivered
at one closing to be held on November 2, 1990 at 10:00 A.M., New York City time,
or such other date and time (but not later than November 15, 1990) as shall be
agreed upon by you and the Company (such date and time being hereinafter called
the "Closing Date"), at the offices of Orrick, Herrington & Sutcliffe, 599
Lexington Avenue, 29th Floor, New York, New York 10022. On the Closing Date, the
Company will deliver to you a single Note in the form of Exhibit A hereof, dated
the Closing Date, in the principal amount of $20,000,000 and registered in your
name, or in the name of such nominee as you shall have designated by notice to
the Company at least one Business Day prior to the Closing Date. The delivery of
such Note to you shall be made against payment by wire transfer of immediately
available funds in the amount of the Purchase Price to the Company's account no.
10005-5974 in Ameritrust Company National Association, 900 Euclid Avenue,
Cleveland, Ohio 44101, ABA no. 041000687.
SECTION 1.3 USE OF PROCEEDS. The proceeds of the sale of the
Notes (net of expenses and costs) will be promptly applied by the Company to
repay outstanding Debt of the Company under the Credit Agreement dated as of
October 14, 1988 among Ameritrust Company National Association, National City
Bank, Bank One, Dayton, N.A., Ameritrust Company National Association, as Agent,
and the Company (the "Existing Loan Agreement").
SECTION 2. GENERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to you as follows:
SECTION 2.1 CAPITAL STOCK; SUBSIDIARIES. (a) The authorized
capital stock of the Company consists of: 20,000,000 Common Shares, without par
value ($1.00 stated value per share) (the "Common Shares"), of which 5,411,632
shares were issued and outstanding on September 30, 1990. All such outstanding
Common Shares have been validly issued and are fully paid and nonassessable
shares and free of preemptive rights. Except for (i) the Company's incentive
stock option plan described in Note No. 7 to the Company financial statements
(the "1990 Financial Statements") set forth in the Company's Annual Report to
Shareholders for the Fiscal Year ended March 31, 1990 (the "1990 Report"), (ii.)
the Common Share Purchase Rights and (iii) the 9% Subordinated Convertible
Debentures due 1998 issued pursuant to an Indenture dated as of August 1, 1983
between the Company and BancOhio National Bank, as Trustee (the "Debentures"),
there are not outstanding, nor has the Company agreed to grant or to issue, any
options, warrants or similar rights to others to acquire or receive any of its
authorized but unissued shares of capital stock. No shares of the Company's
capital stock are held on the date hereof in the treasury of the Company. There
are no voting trusts or other agreements or understandings with respect to the
voting of the capital stock of the Company. The Company's Common Shares
constitute its only class of Voting Stock. The Company is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retain any shares of its capital stock.
(b) The Company does not own a majority of the Voting Stock of any
corporation. The Company owns 50% of the Voting Stock of Pioneer/Technologies
Group, Inc.,
2
<PAGE> 7
a Maryland corporation ("Pioneer/Technologies"). All of the outstanding shares
of capital stock of Pioneer/Technologies held by the Company have been validly
issued and are fully paid and nonassessable and are owned beneficially and of
record by the Company, free and clear of any Liens other than Permitted Liens.
Although the Company is represented on the Board of Directors of
Pioneer/Technologies (by two directors of a Board of four directors), it has no
right to designate and has not heretofore designated a majority of the members
of such Board and does not have the right to exercise and has not heretofore
exercised active control over the management of the corporate affairs or
business of Pioneer/Technologies. The Company is not obligated to make any
Investment in any corporation.
(c) Since March 31, 1990, the Company's business dealings with
Pioneer/Technologies have consisted solely of Permitted Affiliate Transactions
and the Company has no contractual obligation to engage in any business dealings
with Pioneer/Technologies other than Permitted Affiliate Transactions.
SECTION 2.2 ORGANIZATION AND AUTHORITY. The Company:
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Ohio;
(b) has all requisite power and authority (corporate and other)
and all necessary franchises, licenses, permits and rights to own and operate
its properties, to conduct its business as currently conducted and, so far as
the Company can now reasonably foresee, as currently proposed to be conducted,
and to enter into this Agreement, to offer, issue, sell and deliver the Notes
and to perform its obligations under this Agreement and the Notes; and
(c) has duly qualified to do business as a foreign corporation and
is in good standing in every jurisdiction in which the properties owned (or held
under lease) by it or the nature of its activities makes such qualification
necessary and where the failure to do so would materially adversely affect the
business, earnings, prospects, properties or condition (financial or other) of
the Company. The Company is not presently in good standing in the State of
Illinois because of its failure to file an Annual Return on a timely basis. The
Company has filed the delinquent Annual Return and has been advised by the
office of the Secretary of State of Illinois that it will be restored to good
standing on or about November 10, 1990. The Company does not believe that the
failure to file the Annual Return on a timely basis or the lapse in good
standing in the State of Illinois will have a material adverse effect on the
business, earnings, prospects, properties or condition (financial or other) of
the Company.
SECTION 2.3 FINANCIAL STATEMENTS AND OTHER INFORMATION; FINANCIAL
CONDITION. (a) the Company's Annual Reports to the SEC on Form 10-K for the
Fiscal Year ended March 31, 1990 (the "Form 10-K") and the Fiscal Years ended
March 31, 1988 and 1989, containing (i) balance sheets of the Company as at
March 31, 1987, 1988, 1989 and 1990 and statements of income, cash flows and
shareholders' equity of the Company for its Fiscal Years ended March 31, 1986,
1987, 1988, 1989 and 1990, together in each case with the auditor's report
thereon of Ernst & Young, independent certified public accountants (or its
predecessor firm, Arthur Young & Company) and (ii) consolidated balance sheets
of Pioneer/Technologies
3
<PAGE> 8
and its Subsidiaries as at March 31, 1987, 1988, 1989 and 1990 and consolidated
statements of income, cash flows and shareholders' equity of
Pioneer/Technologies and its Subsidiaries for its Fiscal Years ended March 31,
1986, 1987, 1988, 1989 and 1990, together in each case with the auditor's report
thereon of Ernst & Young (or Arthur Young & Company); (b) the 1990 Report (the
1990 Report together with the Form 10-K, the "1990 Disclosure Documents"); (c)
the Company's Quarterly Report to the SEC on Form 10-Q for the Fiscal Quarter
ended June 30, 1990 (the "Form 10-Q"; together with the 1990 Disclosure
Documents, referred to herein as the "Company Disclosure Documents", the Company
Disclosure Documents constituting all of the reports and other documents, other
than the Company's Proxy Statement for its 1990 Annual Meeting, required to be
filed by the Company with the SEC pursuant to the Exchange Act from March 31,
1990 through the Closing Date), containing unaudited balance sheets as at June
30, 1989 and 1990 and unaudited statements of income, cash flows and
shareholders' equity for the Fiscal Quarters then ended; (d) the Company's
Annual Reports to Shareholders for the Fiscal Years ended March 31, 1981, 1982,
1983, 1984, 1985, 1986, 1987, 1988 and 1989, each containing balance sheets of
the Company as at the end of such Fiscal Year and the preceding Fiscal Year and
statements of income, cash flows (or changes in financial position) and
shareholders' equity of the Company for the three Fiscal Years then ended,
together in each case with the auditor's report thereon of Arthur Young &
Company (or Ernst & Young); and (e) the Company's Quarterly Reports to the SEC
on Form 10-Q for the Fiscal Quarters ended June 30, September 30 and December
31, 1989, each containing unaudited balance sheets of the Company as at the end
of such Fiscal Quarter and the same Fiscal Quarter in the preceding Fiscal Year,
and statements of income, cash flows and shareholders' equity of the Company for
the Fiscal Quarter then ended and for the Fiscal Quarter ended a year earlier
(the Company financial statements contained in the Company Disclosure Documents
and the Company financial statements described in clause (d) and this clause (e)
are hereinafter referred to as the "Company Financial Statements", the
consolidated financial statements of Pioneer/Technologies and its Subsidiaries
contained in the Form 10-K are hereinafter referred to as the
"Pioneer/Technologies Financial Statements" and the Company Financial Statements
and the Pioneer/Technologies Financial Statements are hereinafter collectively
referred to as the "Financial Statements"). The Financial Statements and all
other financial statements contained in any document referred to above, have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the respective periods covered thereby. The
Financial Statements are correct and complete copies thereof and fairly present
in accordance with generally accepted accounting principles the financial
position of the Company or the consolidated financial position of
Pioneer/Technologies and its Subsidiaries, as the case may be, as of the
respective dates of the balance sheets included therein and the results of
operations of the Company or the consolidated results of operations of
Pioneer/Technologies and its Subsidiaries, for the respective periods covered by
the statements of income, shareholders' equity and cash flows (or changes in
financial position) included therein. The Company has no material obligation or
liability of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or not due) which, either individually or in the
aggregate, would be material to the Company that is not reflected in the
Financial Statements, other than liabilities incurred since March 31, 1990 in
the ordinary course of business and which in the aggregate have no material
adverse effect on the financial condition of the Company or on the conduct of
its business. The Company does not know of any basis for the assertion against
the Company of any liability or obligation of any
4
<PAGE> 9
nature whatsoever that is not fully reflected in the Financial Statements which,
either individually or in the aggregate, would be material to the Company.
SECTION 2.4 BUSINESS. The Company Disclosure Documents contain
accurate descriptions of the general nature of the business of the Company, as
presently conducted and as presently proposed to be conducted, and the major
properties owned or leased by the Company on the respective dates of the
Disclosure Documents. The Company is not presently engaged in any line of
business not disclosed in the Company Disclosure Documents or reflected in the
Financial Statements and does not own or lease any significant properties not
disclosed in the Company Disclosure Documents and reflected in the Financial
Statements.
SECTION 2.5 NO MATERIAL ADVERSE CHANGE. Except as disclosed in
Schedule 2.5 hereto, since March 31, 1990, there has been no material adverse
change in the business, earnings, prospects, properties or condition
(financial or other) of the Company, and no event has occurred and no
condition exists (other than general economic, political and international
trends) that will have (so far as the Company can now reasonably foresee) a
material adverse effect on the business, earnings, prospects, properties or
condition (financial or other) of the Company. Since March 31, 1990, the
Company has not directly or indirectly declared, ordered, paid, made or set
apart any sum or property for any Restricted Payment or agreed to do so except
as disclosed in the Company Financial Statements or the Company Disclosure
Documents.
SECTION 2.6 FRANCHISES, LICENSES, REGISTRATIONS, ETC. The Company
owns or possesses, and holds free from restrictions which materially interfere
with their use by the Company, or known conflicts with the rights of others, all
franchises, licenses, registrations, permits, rights of way, easements,
consents, copyrights, trademarks, service marks, trade names and patents, and
all rights with respect to the foregoing, necessary for the conduct of its
businesses as now conducted and, so far as the Company can now reasonably
foresee, as currently proposed to be conducted, and is in full compliance with
the terms and conditions, if any, of all such franchises, licenses,
registrations, permits, rights of way, easements, consents, copyrights,
trademarks, service marks, trade names and patents, and the terms and conditions
of any agreements relating thereto, the non-compliance with which would,
individually or in the aggregate, materially adversely affect the business,
earnings, prospects, properties or condition (financial or other) of the
Company.
SECTION 2.7 TITLE TO PROPERTIES; LEASES. The Company has good and
marketable fee simple title to its real properties and a valid and indefeasible
interest in all other Assets, reflected on the balance sheet as at March 31,
1990 of the Company as well as to the properties acquired by the Company since
said date in the ordinary course of business, subject only to Permitted Liens.
The Company has the right to, and does, enjoy peaceful and undisturbed
possession under all material leases under which it is leasing property. All
leases under which the Company is leasing property are valid, subsisting and in
full force and effect, subject only to Permitted Liens, and the Company is not
in default under any such lease default under which would, individually or in
the aggregate, materially adversely affect the business, earnings, prospects,
properties or condition (financial or other) of the Company, nor does the
Company have any knowledge that any other party to any such lease is in default
under any such lease default under which would,
5
<PAGE> 10
individually or in the aggregate, materially adversely affect the business,
earnings, prospects, properties or condition (financial or other) of the
Company.
SECTION 2.8 COMPLIANCE WITH OTHER INSTRUMENTS, ETC. The Company is
not (a) in violation of any term of its Articles of Incorporation or Code of
Regulations or (b) in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in, and is not
otherwise in default under, (i) any evidence of Indebtedness or any instrument
or agreement under or pursuant to which any evidence of Indebtedness has been
issued, or (ii) any other instrument or agreement to which it is a party or by
which it is bound or any of its properties is affected, the default or defaults
under which other instrument or agreement would, individually or in the
aggregate, have a material adverse effect on the business, earnings, prospects,
properties or condition (financial or other) of the Company and the Company does
not know of any default under any such other instrument or agreement. The
Company has not defaulted in, or failed to make at the time contemplated,
payment of any dividends or any mandatory redemption payments of any preferred
stock or any principal of, or premium or interest on, any Indebtedness. Neither
the execution, delivery or performance of this Agreement nor the offer,
issuance, sale, delivery or performance of the Notes does or will (A) conflict
with or violate the Articles of Incorporation or Code of Regulations of the
Company, (B) conflict with or result in a breach of any of the terms, conditions
or provisions of, or constitute a default under, or result in the creation of
any Lien on any of the properties or Assets of the Company pursuant to the terms
of, any evidence of Indebtedness, or any instrument or agreement under or
pursuant to which any evidence of Indebtedness has been issued, or any other
instrument or agreement referred to in this Section 2.8 to which the Company is
a party or by which it is bound, or (C) require any consent of or other action
by any trustee or any creditor of, any lessor to or any investor in the Company,
except for such consents or other actions as are disclosed in Exhibit B hereto
and which shall have been obtained or completed on or prior to the Closing Date.
SECTION 2.9 NO MATERIALLY ADVERSE CONTRACTS, ETC. The Company is
not a party to or bound by nor is any of its properties affected by) any
contract or agreement, or subject to any order, writ, injunction or decree or
other action of any court or any governmental department, commission, bureau,
board or other administrative agency or official, or any charter or other
corporate or contractual restriction, which materially adversely affects, or in
the future will (so far as the Company can now reasonably foresee) materially
adversely affect the business, earnings, prospects, properties or condition
(financial or other) of the Company.
SECTION 2.10 COMPLIANCE WITH LAW. The Company is not in violation
of any laws, ordinances or governmental rules or regulations to which it is
subject the violation of which would, individually or in the aggregate,
materially adversely affect the business, earnings, prospects, properties or
condition (financial or other) of the Company. Neither the execution, delivery
or performance of this Agreement nor the offer, issuance, sale or delivery of
the Notes does or will cause the Company to be in violation of any law or any
order, rule or regulation of any federal, state, county, municipal or other
governmental or public authority or agency having jurisdiction over the Company
or over any of its properties, or the award of any arbitrator.
6
<PAGE> 11
SECTION 2.11 COMPLIANCE WITH ERISA. (a) As used in this Section
2.11, the terms "employee benefit plan" and "party in interest" shall have the
respective meanings assigned thereto in Section 3 of ERISA and the term
"prohibited transaction" shall have the meanings assigned thereto in Section
4975 of the Code and Section 406 of ERISA.
(b) To the best of the Company's knowledge, neither the Company
nor any of the Company's ERISA Affiliates has, with respect to any employee
benefit plan established or maintained, or to which any contributions have been
made, by the Company or any of its ERISA Affiliates (including any such plan
also maintained by one or more other employers) for the benefit of their
employees or any trust created thereunder (collectively, the "Plans" and,
individually, a "Plan"), engaged in a prohibited transaction that could subject
the Company to a tax or penalty.
(c) Based on your representation in Section 3.3 hereof, the
Company represents that the execution and delivery of this Agreement and the
security documents and the offer, issuance, sale and delivery of the Notes and
the consummation of the transactions contemplated hereby and thereby will not
involve or result in any non-exempt prohibited transaction.
(d) Each Plan is in substantial compliance with ERISA. None of the
Plans is a "defined benefit plan" (within the meaning of Section (3)(35) of
ERISA) established or maintained, or to which any contributions have been made,
by the Company or any of its ERISA Affiliates for the benefit of its employees
or former employees, (a "Pension Plan"). Neither the Company nor any of its
ERISA Affiliates is obligated, nor has at any time within the last six years
been obligated, to make any contributions to any "Multiemployer Plan" (within
the meaning of Section 4001(a)(3) of ERISA).
SECTION 2.12 COMPLIANCE WITH ENVIRONMENTAL LAWS. (a) The Company
is, and will continue to be, in compliance with all applicable federal, state
and local environmental laws, regulations and ordinances governing its
respective business, products, properties or Assets with respect to all
discharges into the ground and surface water, emissions into the ambient air and
generation, accumulation, storage, treatment, transportation, labeling or
disposal of waste materials or process by-products, the non-compliance with
which would, individually or in the aggregate, materially adversely affect the
business, earnings, prospects, properties or condition (financial or other) of
the Company, and the Company is not liable for any penalties, fines or
forfeitures for failure to comply with any of the foregoing. All licenses,
permits or registrations required for the business of the Company, as presently
conducted and proposed to be conducted, under any federal, state or local
environmental laws, regulations or ordinances have been obtained or made and the
Company is in compliance therewith except for such licenses, permits or
registrations, the failure of which to obtain or to comply with would,
individually or in the aggregate, materially adversely affect the business,
earnings, prospects, properties or condition (financial or other) of the
Company.
(b) No release, emission or discharge into the environment of
hazardous substances, as defined under the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, or hazardous waste, as defined under
the Resource Conservation and
7
<PAGE> 12
Recovery Act, or air pollutants as defined under the Clean Air Act, or
pollutants, as defined under the Clean Water Act, has occurred or is presently
occurring on or from any property owned or leased by the Company in excess of
federal, state or local permitted releases or reportable quantities, or other
concentrations, standards or limitations under the foregoing laws or any state
or local law governing the protection of health and the environment or under any
other federal, state or local laws or-regulations (then or now applicable, as
the case may be) except for such releases, emissions or discharges which,
individually or in the aggregate, would materially adversely affect the
business, earnings, prospects, properties or condition (financial or other) of
the Company.
(c) The Company has never, except in accordance with applicable
laws or regulations, (A) owned, occupied or operated a site or structure on or
in which any hazardous substance was or is stored, transported or disposed of,
(B) transported or arranged for the transportation of any hazardous substance or
(C) caused or been held legally responsible for any release or threatened
release of any hazardous substance, or received notification from any federal,
state or other governmental authority of any release or threatened release, or
that it may be required to pay any costs or expenses incurred or to be incurred
in connection with any efforts to mitigate the environmental impact of any
release or threatened release, of any hazardous substance from any site or
structure owned, occupied or operated by the Company which, individually or in
the aggregate, would materially adversely affect the business, earnings,
prospects, properties or condition (financial or other) of the Company.
SECTION 2.13 PENDING LITIGATION, ETC. There is no action at law,
suit in equity or other proceeding or investigation (whether or not purportedly
on behalf of the Company in any court or by or before any other governmental or
public authority or agency or any arbitrator or arbitration panel, pending or
threatened against or affecting the Company or any of its properties, that
either individually or in the aggregate, (a) could materially adversely affect
the business, earnings, prospects, properties or condition (financial or other)
of the Company or (b) could question the validity of this Agreement or the
Notes. The Company is in compliance with respect to any order, writ, injunction,
judgment or decree to which it is subject of any court or other governmental or
public authority or agency or arbitrator or arbitration panel, the-failure to
comply with which, individually or in the aggregate, could materially adversely
affect the business, earnings, prospects, properties or condition (financial or
other) of the Company.
SECTION 2.14 TAXES. All federal, state and other tax returns of
the Company required by law to be filed have been duly filed, and all federal,
state and other taxes, assessments, fees and other governmental charges upon the
Company or upon any of the properties, incomes or Assets of the Company that are
due and payable have been paid other than those being contested in good faith by
appropriate proceedings and for which adequate reserves have been established.
No extensions of the time for the assessment of deficiencies have been granted
by the Company. Except for Permitted Liens, there are no Liens on any properties
or Assets of the Company imposed or arising as a result of the delinquent
payment or the non-payment of any tax, assessment fee or other governmental
charge for which payment is past due. Federal income tax returns for the Company
have been audited by the Internal Revenue Service or the applicable statutes of
limitations with respect to such obligations have expired for the Fiscal Year
ended
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March 31, 1987 and all prior Fiscal Years. The charges, accruals and reserves,
if any, on the books of the Company in respect of federal, state and local
corporate franchise and income taxes for all fiscal periods to date are
adequate, and the Company does not know of any additional unpaid assessments for
such periods or of any factual basis therefor. There are no applicable taxes,
fees or other governmental charges payable by the Company in connection with the
execution and delivery of this Agreement or the offer, issuance, sale or
delivery of the Notes by the Company.
SECTION 2.15 HOLDING COMPANY ACT; INVESTMENT COMPANY ACT. (a) The
Company is not a "public utility company" or a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended, or a
"public utility" within the meaning of the Federal Power Act, as amended.
(b) The Company is not an "investment company" or an "affiliated
person" of an "investment company" or a company "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of 1940, as
amended. The Company is not an "investment adviser" or an "affiliated person" of
an "investment adviser" as such terms are defined in the Investment Advisers Act
of 1940, as amended.
SECTION 2.16 NO FOREIGN ASSETS CONTROL REGULATIONS VIOLATION. None
of the transactions contemplated by this Agreement nor the application of any
part of the proceeds of the sale of the Notes will result in a violation of any
of the foreign assets control regulations of the United States Treasury
Department, 31 C.F.R., Subtitle B, Chapter V, as amended (including, without
limitation, the Foreign Assets Control Regulations, the Transaction Control
Regulations, the Cuban Assets Control Regulations, the Foreign Funds Control
Regulations, the Iranian Assets Control Regulations, the Nicaraguan Trade
Control Regulations, the South African Transactions Regulations, the Libyan
Sanctions Regulations and the Soviet Gold Coin Regulations contained in said
Chapter V) or Presidential Executive Orders 12724 and 12725 prohibiting
transactions with Iraq and Kuwait, respectively, or any ruling issued thereunder
or any enabling legislation or Presidential Executive Order granting authority
therefor, nor will the proceeds of the Notes be used by the Company in a manner
that would violate any thereof.
SECTION 2.17 NO MARGIN REGULATION VIOLATION. None of the
transactions contemplated by this Agreement nor the application of any part of
the proceeds from the sale of the Notes will violate or result in a violation of
Section 7 of the Exchange Act or any regulations issued pursuant thereto,
including, without limitation, Regulation G (12 C.F.R., Part 207), as amended,
Regulation T (12 C.F.R., Part 220), as amended, and Regulation X (12 C.F.R.,
Part 224), as amended, of the Board of Governors of the Federal Reserve System.
Less than 25% of the book value of the Assets of the Company is attributable to
"margin securities" (as defined in said Regulation G).
SECTION 2.18 CORPORATE PROCEEDINGS. The Company has taken all
corporate action necessary to be taken by it to authorize the execution and
delivery of this Agreement, the offer,
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issuance, sale and delivery of the Notes and the performance of all obligations
to be performed by it hereunder and thereunder.
SECTION 2.19 NO EVENT OF DEFAULT. No event has occurred and is
continuing, and no condition exists, that, if the Notes had been issued and were
outstanding on the date hereof, would constitute a Default or an Event of
Default.
SECTION 2.20 GOVERNMENTAL CONSENTS, ETC. No consent of, approval
or authorization by, filing or registration with or notice to any governmental
or public authority or agency is required for the offer, issuance, sale or
delivery of the Notes or the execution, delivery or performance of this
Agreement.
SECTION 2.21 FULL DISCLOSURE. Other than with respect to
Pioneer/Technologies, neither this Agreement, the Company Disclosure Documents
or any report or financial statement referred to in Section 2.3 hereof, nor any
certificate, report, other writing or statement furnished or made to you by or
on behalf of the Company in connection with the negotiation of this Agreement
and the sale of the Notes contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading. The Company is not
aware of any untrue statement of a material fact or omission to state a material
fact necessary to make the statements contained herein or therein not
misleading, contained in or relative to the information relating to
Pioneer/Technologies, its business, properties, financial condition and results
of operations contained in this Agreement, the Company Disclosure Documents, any
report or financial statement referred to in Section 2.3 hereof, or any
certificate, report, other writing or statement furnished or made to you by or
on behalf of the Company in connection with the negotiation of this Agreement
and the sale of the Notes. The Company obtains information about
Pioneer/Technologies through (i) representation on its Board of Directors, (ii)
receipt of monthly financial reports and (iii) regular business dealings. There
is no fact known to the Company that has not been disclosed to you in writing
that (a) materially adversely affects, or in the future may (so far as the
Company can now reasonably foresee) materially adversely affect the business,
earnings, prospects, properties or condition (financial or other) of the Company
or (b) adversely affects or in the future may (so far as the Company can now
reasonably foresee) materially adversely affect the ability of the Company to
perform its obligations under this Agreement and the Notes.
SECTION 2.22 VALIDITY OF AGREEMENT AND NOTES. This Agreement has
been duly executed and delivered by the Company and constitutes a legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms. Upon receipt by the Company of payment for the Notes
as provided in this Agreement, the Notes will have been duly issued and will
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms subject to (a) applicable
bankruptcy, insolvency, avoidance, reorganization, moratorium or similar laws
affecting the rights of creditors generally, and (b) general principles of
equity (regardless of whether considered in a proceeding in equity or at law).
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SECTION 3. SECURITIES ACT; ERISA REPRESENTATIONS
SECTION 3.1 OFFEREES. The Company represents that it has not,
eitheR directly or through any agent, offered any of the Notes or any similar
securities for sale to, or solicited any offers to buy any thereof from, or
otherwise approached or negotiated in respect thereof with, any Person or
Persons other than you and not more than three other Institutional Investors,
each of whom was offered the right to purchase Notes at private sale for
investment. The Company agrees that it will not, and that it will use its best
efforts to cause any agent on behalf of it to not, sell or offer any of the
Notes or any similar securities to, or solicit offers to buy any thereof from,
or otherwise approach or negotiate in respect thereof with, any other Person or
Persons whomsoever, or take any other action, so as to bring the issuance and
sale of the Notes within the provisions of Section 5 of the Securities Act or
the provisions of any state securities law requiring registration of securities,
notification of the issuance and sale thereof or confirmation of the
availability of any exemption from registration thereof.
SECTION 3.2 INVESTMENT INTENT, ETC. (a) ThiS Agreement is made
with you in reliance upon your representation to the Company, which by your
acceptance hereof you confirm, that you are purchasing the Notes to be purchased
by you hereunder for your own account for investment and not with a view to the
distribution thereof, and that you have no present intention of distributing any
of the same; PROVIDED, HOWEVER, that the disposition of your property in
compliance with applicable federal and state securities laws shall be at all
times within your own control, and that your right to sell or otherwise dispose
of all or any part of the Notes purchased by you pursuant to an effective
registration statement (which you acknowledge that the Company has no obligation
to file for your benefit) under the Securities Act or under an exemption from
such registration available under the Securities Act (including, but not limited
to, the exemption provided by Rule 144A) shall not be prejudiced.
(b) You agree (and each subsequent holder of a Note, by its
acceptance of such Note, agrees) that, upon the registration of the transfer of
any Note by you (or such holder),pursuant to Section 3.1 hereof, other than in
connection with the sale of a Note pursuant to registration under the Securities
Act, written notice will be provided by the transferor to the Company at the
time of such registration of transfer that such transfer is exempt from the
registration provisions of the Securities Act and that the transferee is (i) a
Qualified Institutional Buyer under Rule 144A, or (ii) an Institutional
Investor, or (iii) neither a Qualified Institutional Buyer nor an Institutional
Investor, and, if the transferee is neither a Qualified Institutional Buyer nor
an Institutional Investor, such notice will be accompanied by an opinion of
counsel (which may be counsel employed by the transferor) to the effect that
such transfer is exempt from registration under the Securities Act; PROVIDED,
HOWEVER, that notwithstanding the foregoing provisions of this sentence, in the
case of any transfer of a Note by a transferor which is neither a Qualified
Institutional Buyer nor an Institutional Investor to a transferee which is
neither a Qualified Institutional Buyer nor an Institutional Investor, the
Company shall have no obligation to register such transfer or to treat it as
valid for any purpose unless and until the Company shall have received from the
transferor written notice in form and substance reasonably satisfactory to it
describing the manner and circumstances of the proposed transfer in reasonable
detail and identifying the basis for the claimed exemption from the registration
requirements of the
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Securities Act, accompanied by an opinion of counsel reasonably acceptable to
the Company confirming the availability of such exemption in the circumstances.
The Company and you each acknowledge that the Notes are securities (as defined
in the Securities Act and the Exchange Act).
(c) Each Note at any time issued hereunder shall be endorsed with
the following legend (unless and until it is demonstrated to the reasonable
satisfaction of the Company that a Note may be issued or reissued without such
legend without violating applicable securities law):
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT AND THE RULES AND REGULATIONS THEREUNDER. IN
ORDER TO TRANSFER THIS NOTE THE HOLDER MAY BE REQUIRED TO PROVIDE PRIOR
NOTICE OF SUCH TRANSFER TO PIONEER-STANDARD ELECTRONICS, INC. (THE
"COMPANY") AND TO SATISFY CERTAIN OTHER CONDITIONS INTENDED TO ASSURE
COMPLIANCE WITH APPLICABLE SECURITIES LAWS, AS PROVIDED IN THE NOTE
PURCHASE AGREEMENT DATED AS OF OCTOBER 31, 1990, A COPY OF WHICH MAY BE
EXAMINED AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY.
PROVIDED, however, that the Note or Notes received by you on the Closing Date,
and each Note issued upon registration of transfer, exchange or replacement
thereof, need only be endorsed with the first sentence of the above legend,
unless a Note is to be registered in the name of a holder which is not a
Qualified Institutional Buyer or an Institutional Investor.
SECTION 3.3 ERISA REPRESENTATION. You represent that no parT of
the funds to be used by you to pay the purchase price of the Notes to be
purchased by you hereunder constitutes assets allocated to any separate account
maintained by you in which any employee benefit plan (or its related trust) has
any interest. As used in this Section 3.3, the terms "employee benefit plan" and
"separate account" shall have the respective meanings assigned to such terms in
Section 3 of ERISA.
SECTION 4. CONDITIONS OF OBLIGATION TO PURCHASE NOTES.
Your obligation to purchase and pay for the Notes to be purchased
by you hereunder on the Closing Date shall be subject to the satisfaction, prior
to or concurrently with such purchase and payment, of the following conditions:
SECTION 4.1 OPINION OF SPECIAL COUNSEL FOR YOU. You shall have
received from Orrick, Herrington & Sutcliffe, New York, New York, who are acting
as special counsel for you in connection with the transactions contemplated by
this Agreement, an opinion, dated the Closing Date, in form and substance
satisfactory to you, to the effect specified in Schedule 4.1 hereof.
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SECTION 4.2 OPINION OF COUNSEL FOR THE COMPANY. You and your
special counsel shall have received from Calfee, Halter & Griswold, Cleveland,
Ohio, special counsel for the Company, an opinion, dated the Closing Date, in
form and substance satisfactory to you and your special counsel, to the effect
specified in Schedule 4.2 hereof. The Company hereby covenants and agrees to
instruct such counsel to prepare and deliver to you pursuant to this Section 4.2
its opinion referred to above and hereby waives, to the limited extent necessary
to permit the preparation and delivery of such opinions and your reliance
thereon, any attorney-client privilege, right of confidentiality or conflict of
interest which might otherwise render such preparation and delivery improper or
unethical or such reliance unwarranted; PROVIDED, HOWEVER, that such waiver
shall not include work product, communications, and other documents or
information used or conduct with respect to any such preparation or delivery.
SECTION 4.3 PERFORMANCE OF OBLIGATIONS. The CompanY shall have
performed all of its obligations to be performed hereunder prior to or on the
Closing Date, and you shall have received an Officer's Certificate from the
Company, dated the Closing Date, to that effect.
SECTION 4.4 REPRESENTATIONS TRUE, ETC. The representations and
warranties of the Company contained in Sections 2 and 3 hereof shall be true in
all material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the
Closing Date. There shall exist on the Closing Date no event or condition which
would constitute a Default or an Event of Default if the Notes had been
outstanding at all times from and after the date hereof. You shall have received
an Officer's Certificate from the Company, dated the Closing Date, to the effect
of the foregoing sentences.
SECTION 4.5 LEGALITY. In the opinion of you and your legal
counsel, thE Notes shall qualify as a legal investment for you under all
applicable laws of any jurisdiction to which you are subject (without reference
to any so-called "basket clause" of any such law or any clause that imposes
limitations on particular investments, whether in the aggregate or
individually), and the Company shall have delivered to you any evidence thereof
which you or your special counsel may reasonably request; PROVIDED, HOWEVER,
that the Company's legal counsel shall not opine or be responsible with respect
to such qualification.
SECTION 4.6 ASSIGNMENT OF PRIVATE PLACEMENT NUMBER. A private
placement number shall have been applied for and assigned to the Notes by the
CUSIP Service Bureau of Standard & Poor's Corporation.
SECTION 4.7 PROCEEDINGS, INSTRUMENTS, ETC. AlL proceedings and
actions taken on or prior to the Closing Date in connection with the
transactions contemplated by this Agreement, and all instruments incident
thereto, shall be in form and substance reasonably satisfactory to you and your
special counsel, and you and your special counsel shall have received copies of
all documents that you or they may reasonably request in connection with such
proceedings, actions and transactions (including, without limitation, copies of
court documents, certifications and evidence of the correctness of the
representations and warranties contained herein and certifications and evidence
of the compliance with the terms and the fulfillment of the conditions of this
Agreement, in form and substance satisfactory to you and your special counsel).
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SECTION 5. EXPENSES.
Whether or not the Notes shall be sold or this Agreement shall be
terminated, the Company will pay, and will save you harmless against liability
for, all costs and expenses relating to this Agreement and the Notes, and to any
modification, amendment, alteration or enforcement of this Agreement or the
Notes (whether or not the same shall have come into effect), including, without
limitation:
(a) the reasonable cost of preparing and reproducing this
Agreement and the Notes, and every instrument of modification, amendment or
alteration;
(b) the reasonable fees and disbursements of (i) special counsel
for you, which fees and disbursements will be paid on the Closing Date to the
extent reflected by an invoice delivered to the Company on the Closing Date and
promptly upon receipt of any invoice delivered to the Company after the Closing
Date; (ii) special local counsel, if any, for you; and (iii) all counsel for the
Company;
(c) your reasonable out-of-pocket expenses;
(d) the reasonable cost of delivering to your home office, insured
to your satisfaction, the Notes purchased by you on the Closing Date;
(e) all costs and expenses (including, without limitation, legal
fees and disbursements) relating to any modifications, amendments, waivers or
consents involving the provisions hereof or of the Notes, or relating to the
enforcement of this Agreement or the Notes;
(f) the broker's or finder's fees of any Person claiming to have
been engaged by the Company in connection with the sale of the Notes, it being
represented and warranted by the Company that any such person acted solely as
agent for the Company and not as agent for you; PROVIDED, HOWEVER, that the
Company's agreement, representation and warranty contained in this paragraph (f)
is based on your representation, which you hereby confirm, that you have not
engaged any broker or finder in connection with your purchase of the Notes; and
(g) all reasonable expenses in connection with obtaining a private
placement number as contemplated by Section 4.6 hereof.
The obligations of the Company under this Section 5 shall survive the payment of
the Notes and the termination of this Agreement.
SECTION 6. CERTAIN SPECIAL RIGHTS.
SECTION 6.1 HOME OFFICE PAYMENT. Notwithstanding any provision to
the contrary in this Agreement or the Notes, the Company will punctually pay in
immediately available funds all amounts due and payable to you with respect to
any Notes held by you or your nominee (without the necessity for any
presentation or surrender thereof or any notation of such payment thereon) in
the manner and at the address for such purpose specified below your name in
Schedule I
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hereof, or at any other address as you may from time to time direct in writing;
PROVIDED, HOWEVER, that the payment information set forth with respect to you in
Schedule I hereof shall be deemed notice sufficient to permit payment in
accordance with this Section 6.1. You agree that, as promptly as practicable
after the payment or prepayment in whole of any Note held by you or your nominee
and receipt by you of a written request from the Company to surrender such Note
to the Company for cancellation, you will surrender such Note at the office of
the Company maintained pursuant to Section 9.1 hereof. You agree that if you
sell, assign or transfer any Note, you will, prior to any such sale, assignment
or transfer, make a proper notation thereon of the amount of principal paid
thereon as of the date of such sale, assignment or transfer.
SECTION 6.2 DELIVERY EXPENSES. If you shall surrender any Note to
the Company pursuant to this Agreement, or if the Company shall issue any new
Note pursuant to this Agreement, the Company will pay all costs and expenses of
delivery of the surrendered Note and any Note or Notes issued in exchange or
replacement for, or on registration of transfer of, the surrendered Note or any
such new Note, as the case may be, in each case insured to your satisfaction.
The obligations of the Company under this Section 6.2 shall survive the payment
of the Notes and the termination of this Agreement.
SECTION 6.3 ISSUANCE TAXES. The Company will pay all taxes iN
connection with the execution and delivery of this Agreement, the issuance and
sale of the Notes by the Company and any modification of this Agreement or the
Notes (other than taxes otherwise related to income and intangible or other
property or similar taxes on investment or holding) and will save you and any
subsequent holder of Notes harmless, without limitation as to time, against any
and all liabilities (including, without limitation, any interest or penalty for
nonpayment or delay in payment, or any income taxes paid by you in connection
with any reimbursement by the Company for the payment by any other Person of any
such taxes) with respect to all such taxes (other than taxes otherwise related
to income and intangible or other property or similar taxes on investment or
holding). The obligations of the Company under this Section 6.3 shall survive
the payment of the Notes and the termination of this Agreement.
SECTION 6.4. SUBSTITUTION OF PURCHASER. You shall have the right
to substitute Reserve Management, Inc. ("RMI"), your wholly-owned Subsidiary, as
the purchaser of the Notes, by written notice delivered to the Company, which
notice shall be signed by both TIAA and RMI, shall contain RMI's agreement to be
bound by this Agreement and shall contain a confirmation by RMI of the accuracy
with respect to it of the representations set forth in Sections 3.2 and
3.3 hereof. The Company agrees that, upon receipt of such notice, wherever the
word "you" is used in this Agreement in reference to TIAA, such word thereafter
shall be deemed to refer to RMI instead of to TIAA. The Company also agrees that
if TIAA, at any time, acquires the Notes from RMI, then (i) whenever the word
"you" is used in this Agreement and all other documents related to this
Agreement, such word shall thereafter be deemed to refer to TIAA instead of RMI
and (ii) RMI shall be released from any subsequent obligations under this
Agreement, without the need for any further document or written release to be
executed and delivered.
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SECTION 7. NOTE PREPAYMENTS.
SECTION 7.1 REQUIRED PREPAYMENTS. The Company will, without
notice, prepay, without premium: (i) $2,860,000 in aggregate principal amount of
the Notes on November 1, 1994 and on each November 1 thereafter to and including
November 1, 1999 and (ii) $2,840,000 in aggregate principal amount of the Notes
on November 1, 2000 together, in each case, with interest accrued on the amount
to be prepaid to the date of prepayment. Notwithstanding anything contained in
this Section 7.1, on the maturity date of the Notes, the outstanding principal
amount of the Notes, together with accrued interest thereon shall be due and
payable.
SECTION 7.2 OPTIONAL PREPAYMENTS. In addition to the prepayments
required by Section 7.1 hereof, upon the terms and subject to the conditions
hereinafter set forth, the Company, at its option, upon notice as provided in
Section 7.3 hereof, may prepay the Notes in whole, but not in part, at any time,
at a prepayment price equal to the aggregate principal amount so to be prepaid,
together with interest accrued on the amount to be prepaid through and including
the date fixed for prepayment, plus a premium equal to the Make-Whole Amount.
SECTION 7.3 NOTICE OF PREPAYMENT*. Notice of any prepayment of
Notes pursuant to Section 7.2 hereof shall be given to each holder of Notes not
less than 30 or more than 60 days before the date fixed for prepayment (the
"Optional Prepayment Date") and shall be accompanied by an Officer's Certificate
certifying: (a) the Optional Prepayment Date, (b) the aggregate principal amount
of the Notes to be prepaid on such Optional Prepayment Date, (c) the aggregate
principal amount of Notes, and the principal amount of each Note, held by such
holder to be prepaid, (d) the aggregate amount of accrued interest applicable to
such prepayment, and (e) the aggregate amount of the premium that the Company
would be required to pay if such prepayment were made on the date notice is
being given under this Section 7.3. Any notice of prepayment pursuant to Section
7.2 hereof having been so given, the aggregate principal amount of Notes
specified in such notice, together with the premium, if any, and accrued
interest thereon, shall become due and payable on such Optional Prepayment Date.
Additional notice shall be given promptly upon calculation by the Company of the
Make-Whole Amount, if any, that the Company will be required to pay in
connection with such prepayment, but in no event less than three days prior to
the Optional Prepayment Date, and shall be accompanied by an Officer's
Certificate certifying the aggregate amount that the Company is required to pay
in connection with such prepayment and certifying that such amount was
calculated in accordance with the provisions of Section 7.2 hereof, the
definition of the term "Make-Whole Amount" in Section 12.1 hereof and the other
defined terms used in such definition.
SECTION 7.4 PARTIAL PREPAYMENT PRO RATA. The aggregate principal
amount of each partial prepayment of Notes pursuant to Section 7.1 hereof shall
be allocated among the holders of Notes then outstanding in proportion, as
nearly as practicable, to the respective unpaid principal amount of Notes then
held thereby, with adjustments, to the extent practicable, to compensate for any
prior prepayments not made in exactly such proportion.
- --------------------------
* Timing of notices issue to be resolved.
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SECTION 8. REGISTRATION, EXCHANGE AND REPLACEMENT OF NOTES.
SECTION 8.1 REGISTRATION. The Notes issuable under this Agreement
shall be registered Notes. The Company will keep, at its office required to be
maintained pursuant to Section 9.1 hereof, books for the registration and
registration of transfer of Notes. Prior to presentation of any Note for
registration of transfer, the Company shall treat the Person in whose name such
Note is registered as the owner and holder of such Note for all purposes
whatsoever, whether or not such Note shall be overdue, and the Company shall not
be affected by notice to the contrary. The provisions for the registration of
transfer of any Note pursuant to this Section 8.1 are subject to the provisions
of Section 3.2 hereof.
SECTION 8.2 EXCHANGE. The holder of any Note, at its option, may
iN Person or by duly authorized attorney surrender the same for exchange at the
office of the Company maintained pursuant to Section 9.1 hereof and promptly
thereafter and at the Company's expense, except as provided below, receive in
exchange therefor a new Note or Notes, as the case may be, each in the
denomination requested by such holder, dated the date to which interest shall
have been paid on the Note so surrendered or, if no interest shall have yet been
so paid, dated the date of the Note so surrendered and registered in the name of
such Person or Persons as shall have been designated in writing by such holder
or its attorney, for the same principal amount as the then unpaid principal
amount of the Note so surrendered. Subject to Section 9.1 hereof, the Company
may require payment of a sum sufficient to cover any stamp or other tax or
governmental charge imposed in respect of any transfer involved in such
exchange.
SECTION 8.3 REPLACEMENT. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note and (a) in the case of loss, theft or
destruction, of indemnity reasonably satisfactory to it; PROVIDED, HOWEVER, that
if the holder of such Note is the original purchaser of the Notes or any other
Institutional Investor, its own agreement of indemnity shall be deemed to be
satisfactory; or (b) in the case of mutilation, upon surrender thereof, the
Company, at its expense, will execute and deliver in lieu thereof a new Note
executed in the same manner as the Note being replaced, in the same principal
amount as the unpaid principal amount of such Note and dated the date to which
interest shall have been paid on such Note or, if no interest shall have yet
been so paid, dated the date of such Note.
SECTION 9. CERTAIN COVENANTS OF THE COMPANY.
The Company covenants and agrees that so long as any Notes shall
remain outstanding:
SECTION 9.1 MAINTENANCE OF OFFICE. The Company will maintain at
its office located at its address shown at the head of this Agreement an office
where notices, presentations and demands in respect of this Agreement and the
Notes may be given to and made upon it; PROVIDED, HOWEVER, that it may, upon 15
Business Days' prior written notice to the holders of the Notes, move such
office to any other location within the continental boundaries of the United
States. The Company hereby agrees that it will pay or contest in good faith by
appropriate proceedings which will not delay the proposed transfer, and will
save any holder of a Note harmless against
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liability for, any stamp or other tax or governmental charge imposed in respect
of any transfer of a Note made at a time when the books for the registration and
registration of transfer of Notes are maintained at an office outside the State
of Ohio, to the extent that such tax or charge exceeds the amount that would
have been payable had said books been maintained in the State of Ohio; and said
obligation of the Company shall survive the payment or prepayment of the Notes
and the termination of this Agreement.
SECTION 9.2 CORPORATE EXISTENCE. The Company and its Restricted
Subsidiaries each will take and fulfill, or cause to be taken and fulfilled, all
actions and conditions necessary to preserve and keep in full force and effect
its existence, rights and privileges as a corporation and will not liquidate or
dissolve, and it will take and fulfill, or cause to be taken and fulfilled, all
actions and conditions necessary to qualify, and to preserve and keep in full
force and effect its qualification, to do business as a foreign corporation in
each jurisdiction in which the conduct of its business or the ownership or
leasing of its properties requires such qualification and where the failure to
do so would materially adversely affect the business, earnings, prospects,
properties or condition (financial or other) of the Company and its Restricted
Subsidiaries; PROVIDED, HOWEVER, that this Section 9.2 shall not be deemed to
prohibit any transaction permitted by Section 9.15 hereof.
SECTION 9.3 GENERAL MAINTENANCE OF PROPERTIES AND BUSINESS, ETC.
The Company and its Restricted Subsidiaries each will:
(a) maintain its property in good condition (other than obsolete
property) and make all reasonable and necessary renewals, replacements,
additions, betterments and improvements thereof and thereto, so that the
business carried on in connection therewith may be conducted properly at all
times;
(b) maintain or cause to be maintained, with financially sound
insurers of nationally recognized stature and responsibility, insurance with
respect to its property and business of such a nature, with such terms and in
such amounts, as are generally maintained with respect to similar properties and
a similar business, and, in any event, will maintain insurance on all its
property of a character usually insured by corporations engaged in the same or a
similar business similarly situated against loss or damage of the kinds and in
the amounts customarily insured against and for by such corporations, and carry
or cause to be carried, with such insurers in customary amounts, such other
insurance, including public liability insurance, as is usually carried by
corporations engaged in the same or a similar business similarly situated;
(c) keep proper books of record and accounts in which entries will
be made of its business transactions in accordance with and to the extent
required by generally accepted accounting principles; and
(d) set aside on its books from its earnings for each fiscal year,
in amounts deemed adequate in the reasonable opinion of the Company, all proper
accruals and reserves that, in accordance with generally accepted accounting
principles, are required to be set aside from such earnings in connection with
its business, including reserves for depreciation, obsolescence and/or
amortization and accruals for taxes based on or measured by income or profits
and for all other taxes.
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SECTION 9.4 NOTICE OF CERTAIN EVENTS AND CONDITIONS. The Company
will give prompt written notice to each holder of an outstanding Note of any
event of default (or any event which with notice or lapse of time or both would
constitute an event of default) under any evidence of Debt (including the Notes
but not including Debt owing to trade creditors of the Company being paid in
accordance with the Company's normal practices) in an aggregate amount of
$250,000 or more of the Company or under any indenture, mortgage or other
agreement or instrument relating to any such evidence of Debt (including this
Agreement) or under any lease or preferred stock for or in respect of which the
Company may be liable.
SECTION 9.5 INSPECTION. The Company and its Subsidiaries each will
permit any holder of a Note by its representatives, agents or attorneys, (i) to
examine all books of account, records, reports and other papers of the Company
and its Subsidiaries, (ii) to make copies and take extracts from any thereof,
(iii) to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with their respective officers and, upon prior notice to the
Company, independent certified public accountants (and by this provision the
Company hereby authorizes said accountants to discuss with any such holder the
finances and accounts of the Company and its Subsidiaries) and (iv) to visit and
inspect, from to time, at reasonable times during normal business hours the
properties of the Company. Each such inspection shall be at the expense of the
Person making the inspection, unless such inspection shall be made during the
continuance of a Default or an Event of Default (in which event, the expense of
such inspection shall be borne by the Company). Notwithstanding the foregoing
sentence, it is understood and agreed by the Company that all expenses in
connection with any such inspection incurred by the Company, any officers and
employees thereof and the independent certified public accountants therefor
shall be expenses payable by the Company and shall not be expenses of the Person
making the inspection.
SECTION 9.6 COMPLIANCE WITH LAW, ETC. Neither the Company nor any
Restricted Subsidiary will (i) violate any laws, ordinances, governmental rules
or regulations to which it is or may become subject or (ii) fail to obtain or
maintain any patents, trademarks, service marks, trade names, copyrights, design
patents, licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its property or to the conduct of the business if
such violation or failure would, individually or in the aggregate, materially
adversely affect the business, earnings, prospects, properties or condition
(financial or other) of the Company or such Restricted Subsidiary.
SECTION 9.7 PAYMENT OF TAXES AND CLAIMS. The Company and its
Restricted Subsidiaries each will pay and discharge promptly when due:
(a) all taxes, assessments and governmental charges
and levies imposed upon it, its income or profits or any of its
properties, before the same shall become delinquent; and
(b) all lawful claims of materialmen, mechanics,
carriers, warehousemen, landlords and other similar Persons for
labor, materials, supplies and rentals that, if unpaid, might by
law become a Lien upon any of its property;
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PROVIDED, HOWEVER, that, with respect to this Section 9.7, none of the foregoing
need be paid while the same is being contested in good faith by appropriate
proceedings diligently conducted so long as adequate reserves shall have been
established in accordance with generally accepted accounting principles with
respect thereto, title of the Company or its Restricted Subsidiary, as the case
may be, to the particular property shall not be divested thereby and its right
to use the particular property shall not be materially and adversely affected
thereby.
SECTION 9.8 ERISA. (a) Each of the Company, its Restricted
SubsidiarieS and their respective ERISA Affiliates will administer any and all
Plans in substantial compliance with all applicable requirements of the Code,
ERISA and the rules and regulations adopted thereunder, in each case as in
effect at the time, until such Plans are terminated, and the liabilities thereof
discharged, in accordance with applicable law.
(b) None of the Company, its Restricted Subsidiaries or any of
their respective ERISA Affiliates will have any accumulated funding deficiency
with respect to any Pension Plan which is individually or which are in the
aggregate in excess of $250,000.
SECTION 9.9 TRANSACTIONS WITH AFFILIATES. Neither the Company nor
any Restricted Subsidiary will enter into any transaction (including, without
limitation, the purchase, sale or exchange of any property, the rendering of any
services or the payment of management fees) with any Affiliate, except in the
ordinary course of, and pursuant to the reasonable requirements of, the business
of the Company and its Restricted Subsidiaries, and in good faith and upon
commercially reasonable terms that are no less favorable to the Company or such
Restricted Subsidiary than would be obtained in a comparable arm's-length
transaction with a Person other than an Affiliate; PROVIDED, HOWEVER, that the
Company may engage in any Permitted Affiliate Transaction.
SECTION 9.10 MAINTENANCE OF CONSOLIDATED NET WORTH. The Company
shall at all times maintain a Consolidated Net Worth in an amount not less than
the sum of (a) $32,000,000 and (b) 50% of Cumulative Consolidated Net Income.
SECTION 9.11 CURRENT RATIO. The Company shall at all times
maintain a ratio of Consolidated Current Assets to Consolidated Current
Liabilities of at least 1.75 to 1.00.
SECTION 9.12 FIXED CHARGE COVERAGE. The Company shall at all times
maintain a ratio of (a) the sum of Consolidated EBIT plus Operating Lease
Rentals to (b) the sum of Consolidated Interest Expense plus Operating Lease
Rentals, in each instance for the four most recent Fiscal Quarters for which
financial statements are required to have been delivered pursuant to Section
10.1 hereof of not less than 1.50 to 1.00.
SECTION 9.13 LIENS. (a) Neither the Company nor any Restricted
Subsidiary will create, incur or suffer to exist any Lien on property which is
owned by the Company or such Restricted Subsidiary, respectively, on the date
hereof and which is not presently subject to any Lien or any property which is
hereafter acquired by the Company or any Restricted Subsidiary, other than (i)
Permitted Liens and (ii) any Lien other than Permitted Liens on such property
which secures Debt ("Secured Debt"), so long as (x) the sum of the principal
amount of all Secured Debt
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outstanding and the aggregate outstanding amount of Restricted Subsidiary
Indebtedness created, incurred or suffered to exist pursuant to Section 9.14
hereof at no time exceeds 15% of Consolidated Net Worth, (y) there does not
exist at the time of incurrence or creation of any such Lien any Default or
Event of Default which has not been waived pursuant to Section 13.4 hereof or
cured pursuant to Section 11.4 hereof and (z) the creation, incurrence and
existence of such Secured Debt does not otherwise give rise to or represent a
Default or Event of Default (including, but not limited to, a Default or Event
of Default under Section 9.20 hereof).
(b) If any property of the Company or any Restricted Subsidiary is
subjected to a Lien in violation of this Section 9.13, there shall automatically
arise a Lien in favor of the holders of the Notes, or, if legally necessary to
satisfy the following requirements of this paragraph, the Company will make or
cause to be made provision whereby, in either case, the Notes will be secured
equally and ratably with all obligations secured by such Lien, and, in any case,
the Notes shall have the benefit, to the full extent that, and with such
priority as, the holders may be entitled under applicable law, of an equitable
Lien on such property securing (in the manner as aforesaid) the Notes and such
other obligations. Such violation of this Section 9.13 shall constitute an Event
of Default hereunder, whether or not any such provision is made pursuant to this
Section 9.13(b).
SECTION 9.14 RESTRICTED SUBSIDIARY INDEBTEDNESS. The Company will
not permit any Restricted Subsidiary, directly or indirectly, expressly or by
operation of law, to create, incur, issue, assume, guarantee, in any manner
become liable in respect of or suffer to exist any Restricted Subsidiary
Indebtedness unless the sum of the principal amount of all Restricted Subsidiary
Indebtedness outstanding and the aggregate outstanding amount of Secured Debt
created, incurred or suffered to exist pursuant to Section 9.13 hereof at no
time exceeds 15% of Consolidated Net Worth and the creation, incurrence and
existence of such Restricted Subsidiary Indebtedness does not otherwise give
rise to or represent a Default or Event of Default.
SECTION 9.15 MERGER; CONSOLIDATION. (a) Neither the Company nor
any Restricted Subsidiary will merge into or consolidate with any other Person
or permit any other Person to merge into or consolidate with it unless (i) the
corporation which survives such merger or results from such consolidation (the
"surviving corporation") shall be organized under the laws of the United States
of America or a jurisdiction thereof; (ii) if the Company is a party to such
merger or consolidation, the Company shall be the surviving corporation or the
due and punctual payment of the principal of and premium, if any, and interest
on all of the Notes, according to their tenor, and the due and punctual
performance and observance of all the covenants in this Agreement to be
performed or observed by the Company, shall be expressly assumed in writing by
the surviving corporation by an instrument reasonably satisfactory in form and
substance to the holders of at least a majority in aggregate unpaid principal
amount of the Notes then outstanding; (iii) before and immediately after the
consummation of the transaction, and after giving effect thereto, (x) no Default
or Event of Default shall exist and (y) the Company shall be permitted under
Section 9.20 hereof to incur an additional $1.00 of Funded Indebtedness; and
(iv) an opinion of counsel (reasonably satisfactory in form and substance to the
holders of at least a majority of the aggregate unpaid principal amount of the
Notes then outstanding) is delivered to you upon consummation of the transaction
to the effect that the conditions to the transaction contained in this Section
9.15 have been satisfied and, if the Company is a party to such transaction, to
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the effect that this Agreement, the Notes and the instrument referred to in the
foregoing subclause (ii) are legal, valid and binding obligations of the
surviving corporation, enforceable against the surviving corporation in
accordance with their respective terms.
(b) any Restricted Subsidiary may merge into or consolidate with
(i) the Company, if the Company is the surviving corporation, or (ii) any
wholly-owned Restricted Subsidiary.
SECTION 9.16 TRANSFER AND SALE OF ASSETS. The Company will not,
and will not permit or suffer any Restricted Subsidiary to, directly or
indirectly, in a single transaction or a series of transactions, sell, lease,
transfer, abandon or otherwise dispose of all or any part of its property, other
than in the ordinary course of its business (each such sale, lease, transfer,
abandonment or other disposition of property by the Company or a Restricted
Subsidiary other than in the ordinary course of business being hereinafter
referred to as a "Sale"), unless:
(a) at the time of such Sale, no Default or Event of Default
exists, such Sale complies with the requirements of paragraph (b) of this
Section 9.16 and no Default or Event of Default (under any provision hereof
other than this Section 9.16) will exist immediately after the consummation of
such Sale and after giving effect thereto; and
(b) (i) without regard to or inclusion of Sales subject to clause
(ii) of this Section 9.16(b), the sum of the value of the property disposed of
in such Sale and the value of the property disposed of in all other Sales
consummated during the preceding twelve months (based in each case on the fair
market value at the time of each Sale) shall not exceed 10% of Consolidated
Tangible Assets at the end of the Fiscal Quarter immediately preceding the
commencement of such twelve-month period or (ii) such Sale is by a Restricted
Subsidiary to the Company or to a wholly-owned Restricted Subsidiary.
SECTION 9.17 SHORT-TERM INDEBTEDNESS. For at least 60 consecutive
days during each period of twelve consecutive calendar months occurring after
the Closing Date, the aggregate outstanding amount of Short-Term Indebtedness of
the Company and its Restricted Subsidiaries, determined on a consolidated basis
in accordance with generally accepted accounting principles, shall not exceed
the principal amount of additional Funded Indebtedness which could have been
incurred by the Company and its Restricted Subsidiaries in compliance with
Section 9.20 hereof.
SECTION 9.18 REPURCHASE OF NOTES. Neither the Company nor any
Affiliate will, directly or indirectly, repurchase or make any offer to
repurchase any Notes unless the Company or such Affiliate has offered to
repurchase all Notes from all holders of Notes upon the same terms. If the
Company repurchases any Notes, such Notes shall thereafter be canceled and no
Notes shall be issued in substitution therefor.
SECTION 9.19 LIMITATIONS ON RESTRICTED PAYMENTS AND RESTRICTED
INVESTMENTS. (a) The Company shall not make or permit any Restricted Subsidiary
to make any Restricted Payment or Restricted Investment unless, immediately
thereafter and after giving effect to such Restricted Payment or Restricted
Investment, no Default or no Event of Default would exist and the sum of the
aggregate amount of all Restricted Payments and Restricted Investments made
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subsequent to March 31, 1990 through the date of such Restricted Payment or
Restricted Investment shall be less than or equal to the sum of
(i) $7,000,000 plus 50% of Consolidated Net Income,
if any (or, less 100% of Consolidated Net Loss, if any) during
the period from March 31, 1990 to the date of such Restricted
Payment or Restricted Investment, treated as a single
accounting period, plus
(ii) 100% of the aggregate net cash proceeds of sales
of any Common Shares from the Closing Date to such Restricted
Payment or Restricted PROVIDED, HOWEVER, that net cash
proceeds of sales of any Common Shares shall not include any
reduction in the principal amount of outstanding Indebtedness
attributable to the conversion of such Indebtedness to Common
Shares, plus
(iii) 100% of the principal amount of any Debentures
which have been repurchased or redeemed by the Company and are
applied to satisfy the sinking fund obligations with respect
to the Debentures, from time to time, at such times as such
sinking fund obligations arise and are satisfied, but only to
the extent that the repurchase or redemption of Debentures was
not a mandatory redemption or prepayment of Debentures and
constituted a Restricted Payment at the time it was made.
(b) No Restricted Payment in the nature of a dividend or
distribution on capital stock of the Company shall be declared with a payment
date more than 60 days subsequent to the date of declaration thereof.
SECTION 9.20 LIMITATIONS ON CONSOLIDATED FUNDED INDEBTEDNESS. The
Company will not, directly or indirectly, expressly or by operation of law,
create, incur, issue, assume, guarantee or in any manner become liable and will
not permit any Restricted Subsidiary to become liable, contingently or
otherwise, in respect of any Funded Indebtedness unless, immediately thereafter,
and after giving effect thereto, on a PRO FORMA basis, (i) the ratio of
Consolidated Funded Indebtedness to Total Capitalization is less than or equal
to 0.65 to 1.00 at any time from the Closing Date through and including December
31, 1994 and (ii) the ratio of Consolidated Funded Indebtedness to Total
Capitalization is less than or equal to 0.60 to 1.00 at any time subsequent to
December 31, 1994.
SECTION 9.21 TAX CONSOLIDATION.. The Company will not file or
consent to the filing of a consolidated income tax return with any Person other
than a Restricted Subsidiary unless there is at the time in effect a tax-sharing
agreement or other similar agreement between the Company and such Person that
provides for the indemnification of the Company and each Restricted Subsidiary
included in such by such Person consolidated return against paying a portion of
the tax liability with respect to such consolidated return that is larger than
the tax that it would have paid on an unconsolidated basis.
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SECTION 9.22 RESTRICTED SUBSIDIARIES. The Company will not:
(a) designate any corporation as a Restricted Subsidiary (and any such
designation shall be without effect hereunder unless it complies in all
respects with this Section 9.22(a)) unless:
(i) the Board of Directors of the Company shall have duly adopted
a resolution approving such designation;
(ii) such corporation satisfies the requirements of paragraphs
(a), (b), (c) and (d) of the definition of "Restricted Subsidiary" in
Section 12.1 hereof;
(iii) no Default or Event of Default shall exist prior to, as a
result of or immediately after giving effect to such designation;
(iv) immediately after such designation and including such
newly-designated Restricted Subsidiary in such determination, the
Company shall be able to incur an additional $1.00 of Indebtedness
under Section 9.20 hereof; and
(v) the Company shall promptly, and in any event within seven (7)
Business Days of such designation, give written notice to each
Noteholder which is not an Institutional Investor or a holder of at
least 5% in principal amount of the Notes at the time outstanding of
the fact of such designation, the name, jurisdiction of incorporation,
principal business address and business of such newly-designated
Restricted Subsidiary, certifications as to and computations showing
compliance with the requirements of this Section 9.22(a);
(b) while any corporation remains designated a Restricted Subsidiary,
permit such Restricted Subsidiary to merge into or consolidate with another
Person, permit another Person to merge into or consolidate with it or sell,
lease or otherwise dispose of all or substantially all of its assets other
than as permitted by Sections 9.15 and 9.16 hereof; or
(c) rescind the designation of any corporation as a Restricted
Subsidiary (and any such rescission shall be without effect hereunder
unless it complies in all respects with this Section 9.21(c)) unless:
(i) the Board of Directors of the Company has duly adopted a
resolution approving such rescission;
(ii) no Default or Event of Default shall exist prior to, as a
result of, or immediately after giving effect to such rescission;
(iii) immediately after such rescission, the Company shall be
permitted to incur at least $1.00 of additional Indebtedness without
violating Section 9.20 hereof and make a Restricted Payment of at
least $1.00 without violating Section 9.19 hereof;
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(iv) treating such rescission as a Sale of all of the Assets of
such Restricted Subsidiary, such rescission can be effected without
violating Section 9.16 hereof; and
(v) a written notice of such rescission containing computations
showing compliance with this Section 9.22(c) is promptly, and in any
case within seven (7) Business Days of such rescission, sent by the
Company to each Noteholder which is not an Institutional Investor or a
holder of at least 5% in principal amount of the Notes at the time
outstanding;
PROVIDED, HOWEVER, that, for the purposes of this Section
9.22, any computation of Consolidated Assets, Consolidated Current Assets,
Consolidated Current Liabilities, Consolidated EBIT, Consolidated Funded
Indebtedness, Consolidated Indebtedness, Consolidated Interest Expense,
Consolidated Net Income (or Net Loss), Consolidated Net Worth, Consolidated
Shareholders' Equity, Consolidated Tangible Assets and Cumulative Consolidated
Net Income in connection with the determination of the absence of a Default or
Event of Default after giving effect to the designation of a corporation as a
Restricted Subsidiary or the rescission of any such designation shall be made on
a pro-forma basis, including the Assets, Investments, Debts (including
Indebtedness) and other relevant financial indicia of such corporation in any
such computation for any relevant period in the case of any such designation and
eliminating the Assets, Investments, Debts (including Indebtedness) and other
relevant financial indicia of such corporation in any such computation for any
relevant period in the case of any such rescission.
SECTION 10. INFORMATION TO BE FURNISHED HOLDERS OF NOTES.
SECTION 10.1 FINANCIAL STATEMENTS OF THE COMPANY. The Company
covenants that it will deliver to each holder of a Note two copies of the
following:
(a) as soon as practicable and, in any case, within 90 days after
the close of each Fiscal Year, the consolidated and consolidating financial
statements of the Company and its Restricted Subsidiaries, consisting of the
consolidated and consolidating balance sheets of the Company and its Restricted
Subsidiaries as of the end of such Fiscal Year and the consolidated and
consolidating statements of income, changes in stockholders' equity and cash
flows of the Company and its Restricted Subsidiaries for such Fiscal Year,
setting forth in each case, in comparative form, the figures for the preceding
Fiscal Year, all in reasonable detail, such consolidated financial statements to
be accompanied by an unqualified opinion thereon (other than with respect to
qualification related solely to any Default or Event of Default rescinded or
annulled pursuant to Section 11.4 hereof) of Ernst & Young or another firm of
independent auditors of nationally recognized standing, which opinion shall
state that (i) the examination of such accountants in connection with such
financial statements has been made in accordance with generally accepted
auditing standards and, accordingly, included such tests of the accounting
records and such other auditing procedures as were considered necessary in the
circumstances, and (ii) such financial statements present fairly in all material
respects the financial position of the Company and its Restricted Subsidiaries
at such date and the results of operations and cash flows thereof for Such
period and have been prepared in conformity with generally accepted
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accounting principles consistently applied (except as otherwise disclosed
therein with respect to changes in application in which such accountants
concur); PROVIDED, HOWEVER, that, so long as the Company shall not and shall not
be required to prepare its financial statements on a consolidated basis in
accordance with generally accepted accounting principles, the requirements of
this Section 10.1(a) shall be satisfied by the delivery of unconsolidated,
Company-only financial statements; PROVIDED, FURTHER, that so long as the
Company shall be required to file reports with the SEC pursuant to the Exchange
Act, the delivery of its Annual Report on Form 10-K shall satisfy the
requirements of this Section 10.1(a) with regard to consolidated financial
statements to the extent that the consolidated financial statements of the
Company and its Restricted Subsidiaries are audited and the opinion with respect
thereto is unqualified;
(b) as soon as practicable and, in any case, within 45 days after
the end of each of the first three Fiscal Quarters in each Fiscal Year, the
consolidated and consolidating financial statements of the Company and its
Restricted Subsidiaries, setting forth the unaudited consolidated and
consolidating balance sheets of the Company and its Restricted Subsidiaries as
of the end of such Fiscal Quarter and the unaudited consolidated and
consolidating statements of income, changes in stockholders' equity and cash
flows of the Company and its Restricted Subsidiaries for such Fiscal Quarter and
for the Fiscal Year to date, setting forth in each case in comparative form, the
figures for the corresponding periods of the preceding Fiscal Year, all in
reasonable detail and prepared and certified by the Chief Financial Officer or
the Treasurer of the Company as complete and correct, as having been prepared in
accordance with generally accepted accounting principles consistently applied
(except as otherwise disclosed therein) and as presenting fairly the financial
position of the Company and its Restricted Subsidiaries and results of
operations and cash flows thereof subject, in each case, to changes resulting
from year-end audit adjustments; PROVIDED, HOWEVER, that, so long as the Company
shall not and shall not be required to prepare its financial statements on a
consolidated basis in accordance with generally accepted accounting principles,
the requirements of this Section 10.1(b) shall be satisfied by the delivery of
unconsolidated, Company-only financial statements; PROVIDED, FURTHER, that so
long as the Company shall be required to file reports with the SEC pursuant to
the Exchange Act, the delivery of it Quarterly Report on Form 10-Q shall satisfy
the requirements of this Section 10.1(b) with respect to consolidated financial
statements;
SECTION 10.2 OTHER INFORMATION. The Company will deliver to each
Institutional Investor which is a holder of a Note and to each other holder of
at least 5% in principal amount of the Notes at the time outstanding the
following:
(a) promptly after the submission thereof to the Company, copies
of any detailed reports (including the auditors' comment letter to management,
if any such letter is prepared) submitted to the Company by its independent
auditors in connection with each annual or interim audit of the accounts of the
Company made by such accountants;
(b) promptly upon distribution thereof, copies of all financials
or other statements (including proxy statements) and reports as the Company or
any Restricted Subsidiary shall send to any class of its shareholders (other
than the Company or any other Restricted Subsidiary), any of its bank lenders or
any holder of any of its Indebtedness;
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(c) promptly after filing thereof, copies of all regular and
periodic reports and registration statements which the Company may file with the
SEC or any governmental agency substituted therefor and, promptly upon written
request therefor, copies of any financial statements which the Company may file
annually with any state regulatory agency or agencies;
(d) promptly and, in any event, within 30 days thereafter, notice
of the institution of any suit, action or proceeding against the Company or any
Restricted Subsidiary which could, in the reasonable judgment of the Company,
have a materially adverse effect on the business, earnings prospects, properties
or condition (financial or other) of the Company and its Restricted Subsidiaries
on a consolidated basis;
(e) promptly upon any Responsible Officer of the Company obtaining
knowledge of any condition or event which constitutes or which, after notice or
lapse of time or both, would constitute an Event of Default, an Officer's
Certificate of the Company specifying the nature and period of existence
thereof, what action the Company has taken or is taking or proposes to take with
respect thereto, and an estimate of the time necessary to cure such condition or
event;
(f) promptly upon becoming aware of the occurrence of any (i)
ERISA Termination Event or (ii) prohibited transaction (other than one for which
a statutory or administrative class exemption is available or a private
exemption has been obtained) in connection with any Plan, a written notice
specifying the nature thereof, what action the Company is taking or proposes to
take with respect thereto, and, when known, any action taken by the Internal
Revenue Service, the United States Department of Labor or the PBGC with respect
thereto;
(g) promptly upon the formation or the acquisition thereof, notice
of the formation or acquisition, as the case may be, of any new Subsidiary;
(h) together with each set of financial statements delivered
pursuant to Section 10.1(a) hereof, comparable financial statements of
Pioneer/Technologies (which shall be consolidated financial statements of
Pioneer/Technologies and its Subsidiaries if Pioneer/Technologies is required to
prepare consolidated financial statements in accordance with generally accepted
accounting principles and which shall be audited and accompanied by an auditor's
report thereon of independent certified public accountants substantially the
same as that required by Section 10.1(a) hereof;
(i) if at any time the Company ceases to be subject to the
reporting requirements of Section 13 or Section 15(d) of the Exchange Act,
promptly upon the written request of any holder of a Note, (i)(x) a brief
statement of the nature of the business of the Company and its Subsidiaries and
the products and services they offer and (y) the Company's most recent balance
sheet and profit and loss and retained earnings statements, together with
similar financial statements for its two preceding fiscal years (in each case
audited by an independent certified public accountant to the extent reasonably
available); the most recent balance sheet to be as of a date less than sixteen
months prior to the date of such request and the profit and loss and retained
earnings statements to be for the twelve months preceding the date of
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such balance sheet and, if such balance sheet is not as of a date less than six
months before the date of such request, it shall be accompanied by additional
statements of profit and loss and retained earnings for a period from the date
of such balance sheet to a date less than six months before the date of such
request, or (ii) such other information as shall then be required to permit a
resale of Notes by such holder pursuant to Rule 144A (or any superseding rule
providing an exemption from registration under the Securities Act for resales to
qualified institutional buyers); PROVIDED, HOWEVER, that, if such request shall
so indicate, the statement and financial statements or other information shall
be delivered to any named prospective purchaser of a Note as well as to the
requesting Noteholder, so long as the request states that such Noteholder
reasonably believes such prospective purchaser to be a Qualified Institutional
Buyer; and
(j) promptly upon request therefor, such other data, filings and
information as any holder of a Note may from time to time reasonably request.
SECTION 10.3 PIONEER/TECHNOLOGIES. Promptly upon request therefor,
the Company will deliver to each Institutional Investor which is a holder of a
Note and to each other holder of at least 5% in principal amount of the Notes at
the time outstanding, any information pertaining to Pioneer/Technologies as any
such holder may reasonably request; PROVIDED, HOWEVER, that the Company shall
not be obligated to deliver any such information which it does not possess or
which, after using its best efforts, it is unable to obtain.
SECTION 10.4 OFFICER'S CERTIFICATES. Each set of financial
statements delivered pursuant to subsection (a) or (b) of Section 10.1 hereof
shall be accompanied by a certificate, signed by the President, the Chief
Financial Officer or the Treasurer of the Company, in such capacity, stating, in
the opinion of such officer and to the best of his knowledge and belief, that,
upon the date of such certificate or at any time since the beginning of the
period covered by such financial statements, there was no Default or Event of
Default with respect to any of the provisions of this Agreement or the Notes;
PROVIDED, HOWEVER, that, if any such Default or Event of Default, as the case
may be, shall have occurred, such certificate shall so specify and shall state
whether such Default or Event of Default has been cured or is continuing and, if
continuing, what steps the Company has taken or is taking or proposes to take to
cure such Default or Event of Default and an estimate of the time necessary to
cure such Default or Event of Default. Each set of financial statements
delivered pursuant to subsection (b) of Section 10.1 hereof shall be accompanied
by a certificate, signed by the President, the Chief Financial Officer or the
Treasurer of the Company setting forth in reasonable detail the calculations
made during such period and as of the end of such period in determining
compliance with the provisions of Sections 9.10, 9.11, 9.12, 9.13, 9.14,
9.15, 9.16, 9.17, 9.19 and 9.20 hereof.
SECTION 10.5 ACCOUNTANTS' CERTIFICATES. Each set of financial
statements delivered pursuant to subsection (a) of Section 10.1 hereof shall be
accompanied by a report of the independent auditors who shall have reported on
such financial statements stating that such accountants have read this Agreement
insofar as is necessary for such report and that, in making the examination
necessary to express an opinion on such financial statements, such accountants
have obtained no actual knowledge of any condition or event pertaining to
accounting matters, or the consolidated
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financial position of the Company and its Subsidiaries, that then constitutes an
Event of Default, or, if any Event of Default then exists, specifying the nature
and period of existence thereof.
SECTION 11. DEFAULTS AND REMEDIES
SECTION 11.1 EVENTS OF DEFAULT; ACCELERATION OF NOTES. If any of
the following conditions or events ("Events of Default") shall occur and be
continuing:
(a) any payment or prepayment of principal of or premium on any
Note shall not be made when the same becomes due and payable, whether at
maturity, at a date fixed for prepayment, upon acceleration or otherwise; or
(b) any payment of interest on any Note shall not be made when the
same becomes due and payable and such default shall continue for five days
following the date on which such payment was due and payable; or
(c) the Company shall default in the due and punctual performance
of or compliance with any covenant, condition or agreement to be performed or
observed by it under Section 9.3(b) or Section Section 9.10 through 9.20 hereof
or shall use the proceeds of sale of the Notes other than as described in
Section 1.3 hereof; or
(d) the Company shall default in the due and punctual performance
of or compliance with any other covenant, condition or agreement to be performed
or observed by it under any provision hereof (other than as provided for in
paragraphs (a), (b) and (c) of this Section 11.1) and any such failure shall
continue unremedied for 30 days after the date on which a Responsible Officer of
the Company or any holder of a Note obtains knowledge of such default; or
(e) any representation or warranty of the Company or any
Subsidiary contained in this Agreement or in any certificate or other written
statement or agreement furnished or made in connection herewith or pursuant
hereto shall prove to have been false or inaccurate in any material respect on
the date as of which such representation or warranty was made; or
(f) the Company, or any Restricted Subsidiary shall, in respect of
any of its Indebtedness (excluding the Notes) (i) fail to pay any amount of
Indebtedness, when due, whether at maturity, at a date fixed for payment, upon
acceleration or otherwise, or (ii) default in the performance or observance of
any other provision contained in any instrument or agreement evidencing such
Indebtedness (which default shall not have been waived and any grace period with
respect to which shall have expired), if in either (i) (except with respect to a
payment due at maturity) or (ii) hereinabove, the effect of such default is to
cause or permit the holder of such Indebtedness or a trustee or agent to cause,
such Indebtedness to become or be declared due and payable prior to its
scheduled maturity; or
(g) a final judgment or judgments entered by a court or courts of
competent jurisdiction for the payment of money in excess of $250,000 in the
aggregate shall be rendered
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against the Company or any Subsidiary and shall remain in force undischarged and
unstayed for a period of more than 60 days; or
(h) the Company or any Subsidiary shall (i) commence a voluntary
case under any chapter of the Federal Bankruptcy Code, or shall consent to (or
fail to controvert in a timely manner) the commencement of an involuntary case
against it under said Code; (ii) institute proceedings for liquidation,
rehabilitation, readjustment or composition (or for any related or similar
purpose) under any law (other than the Federal Bankruptcy Code) relating to
financially distressed debtors, their creditors or property, or shall consent to
(or fail to controvert in a timely manner) the institution of any such
proceedings against it; (iii) make an assignment for benefit or creditors or
enter into any arrangement for the adjustment or composition of all or a
substantial portion of the Company's or such Subsidiary's debts or claims; (iv)
apply for or consent to the appointment of, or the taking possession by, a
receiver, liquidator, assignee, trustee, custodian or sequestrator (or other
similar official) of itself or of all or a substantial portion of its property;
or (v) take corporate action for the purpose or with the effect of authorizing,
acknowledging or confirming the taking or existence of any action or condition
specified in clause (i), (ii), (iii) or (iv) above; or
(i) a court or other governmental authority or agency having
jurisdiction in the premises shall enter a decree or order (i) for the
appointment of a receiver, liquidator, assignee, trustee, custodian or
sequestrator (or other similar official) of the Company or any Subsidiary or of
any part of their respective properties, or for the winding-up or liquidation of
their respective affairs, and such decree or order shall remain in force
undischarged and unstayed for a period of more than 60 days, or (ii) for the
sequestration or attachment of any material part of the property of the Company
or any Subsidiary without its unconditional return to the possession of the
Company or such Subsidiary, or its unconditional release from such sequestration
or attachment, within 60 days thereafter; or
(j) a court having jurisdiction in the premises shall enter an
order for relief in any involuntary case commenced against the Company or any
Subsidiary under the Federal Bankruptcy Code, and such order shall remain in
force undischarged and unstayed for a period of more than 60 days; or
(k) a court or other governmental authority or agency having
jurisdiction in the premises shall enter a decree or order approving or
acknowledging as properly filed or commences against the Company or any
Subsidiary a petition or proceedings for liquidation, rehabilitation,
readjustment or composition (or for any related or similar purpose) under any
law (other than the Federal Bankruptcy Code) relating to financially distressed
debtors, their creditors or property, and any such decree or order shall remain
in force undischarged and unstayed for a period of more than 60 days; or
(l) the Company or any Subsidiary shall be insolvent (within the
meaning of any applicable law), or shall be unable, or shall admit in writing
its inability, to pay its Indebtedness as they come due; or
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(m) (i) any Pension Plan (other than a Multiemployer Plan) shall
incur an "accumulated funding deficiency," (within the meaning of Section 412(a)
of the Code), with respect to any plan year, which, individually or aggregated
with accumulated funding deficiencies of other Pension Plans, is in excess of
$250,000, or (ii) any waiver of such standard shall be sought or granted under
Section 412(d) of the Code, or (iii) any Plan shall be, have been or be likely
(in the reasonable judgment of the holders of at least a majority in aggregate
unpaid principal amount of the Notes then outstanding) to be terminated or the
subject of termination proceedings under ERISA, or (iv) the Company shall incur
or be likely to incur a liability to or on account of a Plan under Section 4062,
4063, 4064, or 4201 of ERISA, and there shall result from any such event or
events described in clauses (i)-(iv) of this Section 11.1(m) either a liability
or a material risk of incurring a liability to the PBGC or a Plan, which could
have a material adverse effect on the business, earnings, prospects, properties
or condition (financial or other) of the Company and its Subsidiaries;
then:
(x) upon the occurrence and during the continuance of any of the
Events of Default set forth in clauses (h) through (k), inclusive, of this
Section 11.1, the unpaid principal amount of the Notes shall automatically
become due and payable, together with interest accrued thereon, without
presentment, demand, protest or any notice, all of which are expressly hereby
waived; and
(y) upon the occurrence and during the continuance of any of the
Events of Default set forth in subsections (a) or (b) of this Section 11.l, any
holder of Notes may at any time at the holder's option, by written notice or
notices to the Company, declare the Notes held by such holder or holders, as the
case may be, to be due and payable, whereupon the same shall mature and become
due and payable, together with interest accrued thereon, plus a premium equal to
the Make-Whole Amount, without presentment, demand, protest or any other notice,
all of which are expressly hereby waived; and
(z) upon the occurrence and during the continuance of any of the
Events of Default set forth in subsections (a) through (g) inclusive, (1) or
(m), of this Section 11.1 any holder or holders of at least a majority of the
principal amount of the Notes then outstanding may, by written notice or notices
to the Company, declare all of the Notes then outstanding, to be due and
payable, whereupon the same shall mature and become due and payable, together
with interest accrued thereon, plus a premium equal to the Make-Whole Amount,
without presentment, demand, protest or any other notice, all which are hereby
waived.
SECTION 11.2 DEFAULT REMEDIES. If an Event of Default shalL occur
and be continuing, the holder of any Note then outstanding may exercise any
right, power or remedy permitted to it by law, either by suit in equity or by
action at law, or both, whether for specific performance of any covenant or
agreement contained in this Agreement or in such Note or for an injunction
against a violation of any of the terms of this Agreement or such Note or in aid
of the exercise of any power granted in this Agreement or in such Note, or may
proceed to enforce payment of such Note or to enforce any other legal or
equitable right of the holder of such Note. No remedy
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herein conferred upon any holder of a Note is intended to be exclusive of any
other remedy and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law, in equity, by statute or otherwise. No course of dealing on the part of any
holder of any Note, or any delay or failure on the part of any holder of any
Note to exercise any right or power, shall operate as a waiver of such right or
power or otherwise prejudice the rights, powers and remedies of such holder or
of any other holder. No failure to insist upon strict compliance with any
covenant, term, condition or other provision of this Agreement or the Notes
shall constitute a waiver by any holder of any of the Notes of any such
covenant, term, condition or other provision or of any Default or Event of
Default in connection therewith. To the extent effective under applicable law,
the Company hereby agrees to waive, and does hereby absolutely and irrevocably
waive and relinquish, the benefit and advantage of any valuation, stay,
appraisement, extension or redemption laws now existing or that may hereafter
exist that, but for this provision, might be applicable to any sale made under
any judgment, order or decree of any court, or otherwise, based on the Notes or
on any claim for interest on the Notes. If an Event of Default shall occur, and
be continuing, the Company will pay to the holders of the Notes, to the extent
not prohibited by applicable law, promptly upon the receipt by the Company of a
written request for the payment thereof such further amount as shall be
sufficient to cover the reasonable costs and expenses of collection and of the
taking of remedial actions and the maintenance of enforcement proceedings,
including, without limitation, reasonable attorneys' fees and disbursements. All
sums payable by the Company under the Notes or this Agreement shall be paid
without counterclaim, setoff, deduction or defense and without abatement,
suspension, deferment, diminution or reduction; PROVIDED, HOWEVER, that this
sentence shall not constitute a waiver of any rights or claims which the Company
may have against any holder of a Note, but only the waiver of the right to
assert or raise such right or claim by way of counterclaim, setoff, deduction or
defense against or with respect to any amount payable with respect to such Note
or this Agreement.
SECTION 11.3 NOTICE OF DEFAULT. If the holder of any Note or oF
any other evidence of Indebtedness of the Company shall give any notice or take
any other action with respect to an alleged default, the Company shall forthwith
give written notice thereof to all holders of Notes then outstanding describing
the notice or action and the nature of the alleged default.
SECTION 11.4 ANNULMENT OF ACCELERATION OF NOTES. If notice is
delivered pursuant to clause (y) of Section 11.1 hereof by any holder of Notes,
then such holder may, in respect of the Notes held by such holder, by written
instrument filed with the Company, rescind and annul such declaration and the
consequences thereof or of such Event of Default pursuant to this Agreement (and
such Event of Default shall, for the purposes of this Agreement, be deemed not
to have occurred and such declaration to have no further effect under this
Agreement), and, if notice is delivered pursuant to clause (z) of Section 11.1
hereof by any holder or holders of Notes, then the holders of 66-2/3% of the
aggregate unpaid principal amount of Notes then outstanding may, in respect of
all of the Notes, by written instrument filed with the Company, rescind and
annul such declaration and the consequences thereof or of such Event of Default
pursuant to this Agreement; PROVIDED, HOWEVER, that at the time of any such
annulment and rescission:
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(a) no final judgment or decree shall have been entered for
payment or any monies due pursuant to the Notes or this Agreement;
(b) all arrears of principal, premium and interest upon all the
Notes and all other sums payable under the Notes and this Agreement (including,
promptly upon the receipt by the Company of a written request for the payment
thereof, reasonable costs and expenses of the holders incurred in connection
with such notice under Section 11.1 hereof or annulment under this Section 11.4,
but excluding any principal or interest on the Notes that shall have become due
and payable by reason of such notice under Section 11.1 hereof or happening of
such Event of Default) shall have been duly paid; and
(c) each and every other Default hereunder and Event of Default
shall have been duly waived or cured;
and, PROVIDED FURTHER, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right or power
consequent thereon.
SECTION 12. INTERPRETATION OF AGREEMENT AND NOTES.
SECTION 12.1 DEFINITIONS. Except as the context shall otherwise
require, the following terms shall have the following meanings for all purposes
of this Agreement (the definitions to be applicable to both the singular and the
plural form of the terms defined, where either such form is used in this
Agreement):
The term "AFFILIATE", with respect to any Person (hereinafter
"such Person"), shall mean any other Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, such Person, (ii) which beneficially owns or holds 10% or
more of the shares of any class of the Voting Stock of such Person or (iii) 10%
or more of the shares of any class of Voting Stock of which is beneficially
owned or held of record by such Person or any Subsidiary of such Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of Voting Stock, by contract or otherwise. The
term "AFFILIATE," when used herein without reference to any Person, shall mean
an Affiliate of the Company.
The term "ASSETS", with respect to any Person, shall mean, as of
the date of any determination thereof, all assets of such Person (less
depreciation, depletion, obsolescence, amortization and all other reserves
properly established in accordance with generally accepted accounting
principles).
The term "BUSINESS DAY" shall mean any day on which commercial
banks are not authorized or required to close in New York City.
The term "CAPITAL LEASE" shall mean any lease or other agreement
for the use of property which is required to be capitalized on a balance sheet
of the lessee or other user of property in accordance with generally accepted
accounting principles.
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The term "CAPITALIZED LEASE OBLIGATIONS" shall mean the aggregate
amount which, in accordance with generally accepted accounting principles, is
required to be reported as a liability on the balance sheet of any Person at
such time in respect of such Person's interest as lessee under a Capital Lease.
The term "CLOSING DATE" shall have the meaning assigned thereto in
Section 1.2 hereof.
The term "CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
The term "COMMON SHARE PURCHASE RIGHTS" shall mean the Common
Share Purchase Rights deemed issued under the Company's Common Share Purchase
Rights Plan described in Note 6 of the Notes to Financial Statements in the Form
10-K.
The term "COMMON SHARES" shall have the meaning set forth in
Section 2.1(a) hereof.
The term "COMPANY" shall mean Pioneer-Standard Electronics, Inc.,
a Ohio corporation, and its successors and assigns.
The term "COMPANY DISCLOSURE DOCUMENTS" shall have the meaning set
forth in Section 2.3 hereof.
The term "COMPANY FINANCIAL STATEMENTS" shall have the meaning set
forth in Section 2.3 hereof.
The term "CONSOLIDATED ASSETS" shall mean, as of the date of
determination thereof, the aggregate of all Assets of the Company and its
Restricted Subsidiaries (valued at depreciated cost) determined on a
consolidated basis, after eliminating all items required to be eliminated in
accordance with generally accepted accounting principles, including, without
limitation, such eliminations regarding offsetting debits and credits between
the Company and its Restricted Subsidiaries and all eliminations appropriate in
respect of Minority Interests; PROVIDED, HOWEVER, that the Company's investment
in Pioneer/Technologies shall not be included in Consolidated Assets.
The term "CONSOLIDATED CURRENT ASSETS" with respect to the Company
and its Restricted Subsidiaries, shall mean as of the date of any determination
thereof, the aggregate of the Current Assets of the Company and its Restricted
Subsidiaries determined on a consolidated basis after eliminating all items
required to be eliminated in accordance with generally accepted accounting
principles applied on a consistent basis, including, without limitation, such
eliminations regarding offsetting debits and credits between the Company and its
Restricted Subsidiaries and all eliminations appropriate in respect of Minority
Interests.
The term "CONSOLIDATED CURRENT LIABILITIES" with respect to the
Company and its Restricted Subsidiaries, shall mean as of the date of any
determination thereof, the Current Liabilities of the Company and its Restricted
Subsidiaries determined on a consolidated basis after eliminating all items
required to be eliminated in accordance with generally accepted
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accounting principles applied on a consistent basis, including, without
limitation, such eliminations regarding offsetting debits and credits between
the Company and its Restricted Subsidiaries and all eliminations appropriate in
respect of Minority Interests.
The term "CONSOLIDATED EBIT" of any Person shall mean, as of the
date of determination thereof, (i) Consolidated Net Income of such Person for
such period, plus (ii) Consolidated Interest Expense of such Person for such
period, plus (iii) provisions for federal, state and local income taxes of such
Person for such period, in each case, for the period of the four most recent
Fiscal Quarters for which financial statements are required to have been
delivered pursuant to Section 10.1 hereof prior to the date of determination
thereof.
The term "CONSOLIDATED FUNDED INDEBTEDNESS" of the Company and its
Restricted Subsidiaries, shall mean as of any date of determination thereof, the
aggregate of all Funded Indebtedness of the Company and its Restricted
Subsidiaries determined on a consolidated basis after eliminating all items
required to be eliminated in accordance with generally accepted accounting
principles applied on a consistent basis, including, without limitation, such
eliminations regarding offsetting debits and credits between the Company and its
Restricted Subsidiaries and all eliminations appropriate in respect of Minority
Interests; PROVIDED, HOWEVER, that, notwithstanding generally accepted
accounting principles or the foregoing, Consolidated Funded Indebtedness shall
include any Funded Indebtedness of the Company owing to any Restricted
Subsidiary.
The term "CONSOLIDATED INDEBTEDNESS", with respect to the Company
and its Restricted Subsidiaries shall mean, on any date of determination thereof
the aggregate of all Indebtedness of the Company and its Restricted Subsidiaries
determined on a consolidated basis after eliminating all items required to be
eliminated in accordance with generally accepted accounting principles,
including, without limitation, such eliminations regarding offsetting debits and
credits between the Company and its Restricted Subsidiaries and all eliminations
appropriate in respect of Minority Interests.
The term "CONSOLIDATED INTEREST EXPENSE" shall mean, for any
period, without duplication, the aggregate of all interest paid or accrued by
the Company and its Restricted Subsidiaries during such period for Indebtedness
of the Company or its Restricted Subsidiaries owed to any Person other than the
Company or any Restricted Subsidiary, on a consolidated basis, including,
without limitation, interest payable with respect to the Notes and the interest
portion of Capital Lease payments, all as determined in accordance with
generally accepted accounting principles and all eliminations appropriate in
respect of Minority Interests; PROVIDED, HOWEVER, that, notwithstanding
generally accepted accounting principles or the foregoing, Consolidated Interest
Expense shall include any interest with respect to any Indebtedness of the
Company owing to a Restricted Subsidiary which has accrued or been paid by the
Company.
The term "CONSOLIDATED NET INCOME (OR NET LOSS)" shall mean, for
any period, the consolidated net income (or net loss) of the Company and its
Restricted Subsidiaries for such period determined in accordance with generally
accepted accounting principles applied on a consistent basis, after eliminating
all items to be eliminated in accordance with generally
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accepted accounting principles, including, without limitation, such eliminations
regarding offsetting debits and credits between the Company and its Restricted
Subsidiaries, but, in any event, excluding:
(a) any gains or losses on the sale or other disposition (other
than a sale or other disposition in the ordinary course of business) of
investments or fixed or capital Assets, and any taxes on such excluded gains and
any tax deductions or credits on account of any such excluded losses;
(b) all items properly classified as extraordinary in accordance
with generally accepted accounting principles;
(c) net earnings and losses of any Restricted Subsidiary accrued
prior to the date it became a Restricted Subsidiary;
(d) net earnings and losses of any Person (other than the Company
or a Restricted Subsidiary), substantially all the Assets of which have been
acquired by the Company or any Restricted Subsidiary in any manner, realized by
such other Person prior to the date of such acquisition;
(e) net earnings and losses of any Person (other than the Company
or a Restricted Subsidiary) which shall have been merged into or consolidated
with the Company or any Restricted Subsidiary prior to the date of such merger
or consolidation;
(f) net earnings of any Person (other than the Company or a
Restricted Subsidiary) in which the Company or any Restricted Subsidiary has an
ownership interest (including Pioneer/Technologies), except to the extent such
net earnings shall have actually been received by the Company or such Restricted
Subsidiary in the form of cash distributions;
(g) earnings resulting from any reappraisal, revaluation or
write-up of Assets subsequent to March 31, 1990;
(h) any gain after applicable taxes arising from the acquisition
of any capital stock or other securities of the Company or any Restricted
Subsidiary; and
(i) earnings resulting from the elimination of all or a portion of
any reserve established prior to the accounting period for which Consolidated
Net Income (or Net Loss) is being determined; PROVIDED, HOWEVER, that earnings
in any such period resulting from the elimination of all or a portion of one or
more reserves established prior to such period with respect to transactions in
the ordinary course of business need not be excluded to the extent that they do
not in the aggregate exceed 5% of Consolidated Net Income for such period.
The term "CONSOLIDATED NET WORTH" shall mean, as of the date of
determination thereof, the sum of the amount of common stock, the aggregate
liquidation preference of any preferred stock, capital surplus and retained
earnings accounts, less treasury stock, which would appear on a consolidated
balance sheet of the Company and its Restricted Subsidiaries as of the
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date of determination in accordance with generally accepted accounting
principles, less all Minority Interests and less the amount at which the
Company's investment in Pioneer/Technologies would be reflected on such balance
sheet.
The term "CONSOLIDATED SHAREHOLDERS' EQUITY" shall mean, as of the
date of determination thereof, the total stockholders' equity of the Company and
its Restricted Subsidiaries determined on a consolidated basis after eliminating
all items required to be eliminated in accordance with generally accepted
accounting principles applied on a consistent basis, including, without
limitation, such eliminations regarding offsetting debits and credits between
the Company and its Restricted Subsidiaries, less the amount at which the
Company's investment in Pioneer/Technologies would be reflected on such balance
sheet.
The term "CONSOLIDATED TANGIBLE ASSETS", with respect to the
Company and its Restricted Subsidiaries, shall mean, as of the date of
determination thereof, the aggregate of all Assets of the Company and its
Restricted Subsidiaries determined on a consolidated basis, after excluding
Minority Interests and after eliminating all items required to be eliminated in
accordance with generally accepted accounting principles applied on a consistent
basis, including, without limitation, such eliminations regarding offsetting
debits and credits between the Company and its Restricted Subsidiaries, valued
at book value (established in accordance with generally accepted accounting
principles), except (a) goodwill (whether representing the excess of cost over
book value of Assets acquired or otherwise), patents, trade names, trademarks,
copyrights, franchises, research and development expense, organization expense,
unamortized debt discount and expense, deferred Assets other than prepaid
insurance, prepaid taxes and deferred taxes, the excess of cost of shares
acquired over book value of related Assets and such other Assets as are properly
classified as "intangible assets" in accordance with generally accepted
accounting principles, (b) treasury stock of the Company and its Restricted
Subsidiaries, (c) cash set apart or held in any sinking fund or similar or
analogous fund for the purpose of redeeming or otherwise retiring stock of the
Company and its Restricted Subsidiaries and (d) any write-up of the book value
of any Assets of the Company and its Restricted Subsidiaries (resulting from
appraisal or otherwise) subsequent to March 31, 1990.
The term "CUMULATIVE CONSOLIDATED NET INCOME" shall mean, as of
the date of determination thereof, an amount equal to the sum of the
Consolidated Net Income for (i) each complete Fiscal Year for which financial
statements have been delivered or are required to have been delivered pursuant
to Section 10.1(a) hereof and which commenced after March 31, 1990 and ended
prior to such date of determination (treating each such complete Fiscal Year as
a separate accounting period for such purpose) and (ii) each complete Fiscal
Quarter for which financial statements have been delivered or are required to
have been delivered pursuant to Section 10.1(b) hereof and which commenced after
the end of the last such complete Fiscal Year and ended prior to such date of
determination (treating each such complete Fiscal Quarter as a separate
accounting period for such purpose), but without subtraction of the amount of
any Consolidated Net Loss for any such Fiscal Year or Fiscal Quarter.
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The term "CURRENT ASSETS" of any Person, at any date of
determination, shall mean all amounts which, in accordance with generally
accepted accounting principles, would be included as current assets on a balance
sheet of such Person at such date.
The term "CURRENT LIABILITIES" of any Person, at any date of
determination, shall mean all amounts which, in accordance with generally
accepted accounting principles, would be included as current liabilities on a
balance sheet of such Person at such date, but shall under any circumstances
include all Indebtedness payable on demand or maturing within one year after
such date without any option on the part of the obligor to extend or renew
beyond such year.
The term "DEBT," with respect to any Person, shall mean all
items (other than capital stock, capital surplus, retained earnings and deferred
credits), which in accordance with generally accepted accounting principles
would be included in determining total liabilities as shown on the liability
side of a balance sheet as at the date on which Indebtedness is to be
determined. The term "DEBT" shall also include, whether or not so reflected, (i)
indebtedness, obligations and liabilities secured by any Lien on property of
such Person whether or not the indebtedness secured thereby shall have been
assumed by such Person, (ii) all obligations in respect of Capital Leases (other
than any obligations not required under generally accepted accounting principles
to be capitalized on the books of such Person) and (iii) all Guaranties.
The term "DEFAULT" shall mean an event or condition which,
with the passage of time or the giving of notice, or both, would become an Event
of Default.
The term "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
The term "ERISA AFFILIATE" shall mean any Person which is
under "common control" with the Company within the meaning of Section 4001 of
ERISA.
The term "ERISA TERMINATION EVENT" shall mean (i) a
"reportable event" (as described in Section 4043 of ERISA) and the regulations
issued thereunder (other than a "reportable event" not subject to the provision
for 30-day notice to the PBGC under such regulations), (ii) the withdrawal of
the Company or any of its ERISA Affiliates from a Plan during a plan year in
which it was a "substantial employer" (as defined in Section 4001(a)(2) of
ERISA), (iii) the providing of a notice of intent to terminate a Plan pursuant
to Section 4041(a)(2) of ERISA or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, (iv) the institution of proceedings to
terminate a Plan by the PBGC, or (v) any other event or condition which might
reasonably constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan.
The term "EVENT OF DEFAULT" shall have the meaning assigned
thereto in Section 11.1 hereof.
The term "EXCHANGE ACT" shall mean the Securities Exchange
Act of 1934, as amended from time to time.
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The term "EXISTING LOAN AGREEMENT" shall have the meaning set
forth in Section 1.3 hereof.
The term "FINANCIAL STATEMENTS" shall have the meaning set
forth in Section 2.3 hereof.
The term "FISCAL QUARTER" shall mean each of the four
consecutive quarterly periods collectively forming a Fiscal Year.
The term "FISCAL YEAR" shall mean any period of four
consecutive Fiscal Quarters ending on March 31 of each year.
The term "FORM 10-K" shall have the meaning set forth in
Section 2.3 hereof.
The term "FORM 10-Q" shall have the meaning set forth in
Section 2.3 hereof.
The term "FUNDED INDEBTEDNESS" of any Person, shall mean, as
of the date of any determination thereof, all Indebtedness of such Person having
a final maturity of one or more than one year from the date of creation thereof
(other than that portion of the principal of such Funded Indebtedness due within
one year from such date of determination, but including, however, any
Indebtedness of such Person having a final maturity, duration or payment date
within one year from such date which, pursuant to the terms of a revolving
credit or similar agreement or otherwise may be renewed or extended at the
option of such Person for more than one year from such date, whether or not
theretofore renewed or extended).
The term "GUARANTY", with respect to any Person, shall mean
any obligations (other than the endorsement in the ordinary course of business
of negotiable instruments for deposit or collection) of such Person guaranteeing
or in effect guaranteeing any Indebtedness, dividend or other obligation or
investment of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including obligations incurred through an agreement,
contingent or otherwise, by such Person (a) to purchase such Indebtedness,
obligation or investment or any property or Assets constituting security
therefor, (b) to advance or supply funds (i) for the purchase or payment of such
Indebtedness, obligation or investment or (ii) to maintain working capital or
equity capital, or otherwise to advance or make available funds for the purchase
or payment of such Indebtedness, obligation or investment, (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of such Indebtedness, obligation or investment of the ability of the primary
obligor to make payment of such indebtedness, obligation or investment or (d)
otherwise to assure the owner of such Indebtedness, obligation or investment
against loss in respect thereof.
The terms "HEREOF", "HEREIN", "HEREUNDER" and other words of
similar import shall be construed to refer to this Agreement as a whole and not
to any particular Section or other subdivision.
The term "HOLDER", with respect to any Note, shall mean the
Person on whose name such Note is registered.
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The term "INDEBTEDNESS", with respect to any Person, shall
mean and include the aggregate amount of, without duplication: (a) all
obligations of such Person for borrowed money; (b) all obligations of such
Person evidenced by bonds, debentures, notes, or other similar instruments; (c)
all Capitalized Lease Obligations of such Person; (d) all obligations or
liabilities of others secured by a Lien on any Asset owned by such Person,
irrespective of whether such obligation or liability is assumed, to the extent
of the lesser of such obligation or liability or the fair market value of such
Asset; (e) all obligations of such Person to pay the deferred purchase price of
Assets or services, exclusive of trade and other payables which, by their terms,
are due and payable within ninety (90) calendar days of the creation thereof and
are not overdue or are being properly and expeditiously contested in good faith
by appropriate proceedings, so long as appropriate reserves have been
established and the use by such Person of any Assets involved has not been
materially interfered with; (f) any liability (whether contingent or not) in
respect of unfunded vested accrued benefits under any Pension Plan which is
subject to Title IV of ERISA; and (g) any Guaranty of Indebtedness described in
any of clauses (a) through (g) above, including reimbursement obligations in
respect of letters of credit; PROVIDED, HOWEVER, that Indebtedness shall not
include any Guaranty (i) by the Company of Indebtedness of a Restricted
Restricted Subsidiary or (ii) by a Restricted Subsidiary of Indebtedness of
another Restricted Restricted Subsidiary; and, PROVIDED, FURTHER, that, for
purposes of any determination of Consolidated Funded Indebtedness and Section
9.20 hereof, no Guaranty shall be treated as Indebtedness if the obligation
guaranteed thereby is Indebtedness; and, PROVIDED, FURTHER, that Indebtedness
shall not include any Guaranty by the Company or a Restricted Subsidiary of the
Indebtedness of another Person if (i) treating such Guaranty as Indebtedness and
including it in Consolidated Funded Indebtedness would result in a violation of
Section 9.20 hereof at the time the Company or such Restricted Restricted
Subsidiary becomes liable therefor, (ii) the Company elects (and evidences such
election by prompt written notice thereof to each holder of a Note) to treat
such Guaranty as a Restricted Investment and (iii) treated as a Restricted
Investment, the incurrence of such Guaranty can be effected in compliance with
Section 9.19 hereof.
The term "INSTITUTIONAL INVESTOR" shall mean any one or more
of the following Persons: (a) any bank, savings institution, trust company or
national banking association; acting for its own account or in a fiduciary
capacity; (b) any charitable foundation; (c) any insurance company or fraternal
benefit association; (d) any pension, retirement or profit-sharing trust or
fund; or (e) any public employees' pension or retirement system or any other
governmental agency supervising the investment of public funds; PROVIDED,
HOWEVER, that such Person shall have a capital, surplus and undivided profits or
net worth of not less than $25,000,000.
The term "INTEREST PAYMENT DATE" shall have the meaning set
forth in Section 1.1 hereof.
The term "INVESTMENT" shall mean (a) any direct or indirect
purchase or other acquisition of stock or other securities of any Person, (b)
any loan, advance or capital contribution to any Person or (c) a Guaranty in
favor of any Person if the Company elects to treat such Guaranty as an
Investment pursuant to the third proviso to the definition of Indebtedness in
this Section 12.1.
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The term "LIEN" shall mean any interest in property securing
an obligation owed to, or a claim by, any Person other than the owner of the
property (but excluding any rights of set-off that a bank may have), whether
such interest shall be based on the common law, statute or contract, whether or
not such interest shall be recorded or perfected and whether or not such
interest shall be contingent upon the occurrence of some future event or events
or the existence of some future circumstance or circumstances, and including the
lien or security interest arising from a mortgage, encumbrance, pledge, adverse
claim or charge, conditional sale or trust receipt, or from a lease, consignment
or bailment for security purposes. The term "LIEN" shall also include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting property. For the purposes of this Agreement, a Person shall be deemed
to be the owner of any property that such Person shall have acquired or shall
hold subject to a conditional sale agreement or other arrangement (including a
leasing arrangement) pursuant to which title to the property shall have been
retained by or vested in some other Person for security purposes.
The term "MAKE-WHOLE AMOUNT" shall mean an amount, determined
as of the date of any optional prepayment pursuant to Section 7.2 hereof or any
acceleration pursuant to Section 11.1 hereof in respect of each Note to be
prepaid or each Note being accelerated, equal to the greater of (a) zero and (b)
the difference between (x) the sum of the present values, as at the date of such
prepayment or acceleration, of the amount of each remaining scheduled payment of
interest on and principal of such Note which will not be required to be made as
a result of such prepayment (each such amount discounted separately at the
Treasury Rate, determined as at the date five Business Days before the date of
such prepayment or acceleration, compounded semi-annually from the date such
amount would be due), minus (y) the principal amount of such Note.
The term "MINORITY INTERESTS" shall mean any shares of stock
of any class of a Restricted Subsidiary (other than directors' qualifying shares
required by law) that are not owned by the Company and/or one or more Restricted
Subsidiaries. Minority Interests shall be valued by valuing Minority Interests
constituting preferred stock at the voluntary or involuntary liquidation value
of such preferred stock, whichever is greater, and by valuing Minority Interests
constituting common stock at the book value of capital and surplus applicable
thereto adjusted, if necessary, to reflect any changes from the book value of
such common stock required by the foregoing method of valuing Minority Interests
in preferred stock.
The term "MULTIEMPLOYER PLAN" shall mean any Pension Plan that
is a "Multiemployer Plan" (as defined in Section 4001(a)(3) of ERISA).
The term "NOTEHOLDER", with respect to any Note, shall mean
the Person in whose name such Note is registered.
The term "NOTES" shall have the meaning set forth in Section
1.1 hereof.
The term "OFFICER'S CERTIFICATE" shall mean a certificate
executed on behalf of the Company by the Chairman of the Board of Directors, the
President, any Vice President, the Chief Financial Officer or the Treasurer of
the Company.
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The term "OPERATING LEASE" shall mean any lease which is not a
Capital Lease.
The term "OPERATING LEASE RENTALS" shall mean, as of any date
of determination, without duplication, rentals accrued or paid by the Company
and its Restricted Subsidiaries on Operating Leases on a consolidated basis for
the four Fiscal Quarters immediately preceding the date of determination for
which financial statements have been delivered or are required to have been
delivered pursuant to Section 10.1 hereof.
The term "OPTIONAL PREPAYMENT DATE" shall have the meaning set
forth in Section 7.3 hereof.
The term "OUTSTANDING", with respect to the Notes, shall mean,
as of the date of determination, all Notes theretofore delivered pursuant to
this Agreement, except Notes theretofore canceled or delivered for cancellation
and Notes in exchange or replacement for which other Notes have been delivered
pursuant to this Agreement; PROVIDED, HOWEVER, that, in determining whether the
unpaid principal amount of Notes outstanding have given any notice or taken any
action hereunder, Notes held or owned, directly or indirectly, by the Company,
any Subsidiary or any other Affiliate shall be disregarded and deemed not to be
outstanding.
The term "PBGC" shall mean the Pension Benefit Guaranty
Corporation or any successor thereof.
The term "PENSION PLAN" shall have the meaning set forth in
Section 2.11(d) hereof.
The term "PERMITTED AFFILIATE TRANSACTION" shall mean any
transaction between the Company and Pioneer/Technologies described in Exhibit C
hereto which does not, individually or together with other similar transactions,
have a material adverse effect on the business, earnings, prospects, properties
or condition (financial or other) of the Company.
The term "PERMITTED LIENS" shall mean:
(a) Liens securing taxes, assessments, governmental charges or
levies or the claims of carriers, warehousemen, materialmen, mechanics and other
like Persons not yet due, or being properly and expeditiously contested in good
faith by appropriate proceedings so long as any appropriate reserves have been
established and the use by the Company or a Restricted Subsidiary of the
property subject to the contested Lien has not been materially interfered with,
PROVIDED, HOWEVER, that the payment thereof shall not be required by Section 9.7
hereof; and, PROVIDED FURTHER, that this clause (a) shall not be deemed to
permit any Liens which may be imposed pursuant to Section 4068 of ERISA;
(b) Liens of or resulting from any judgment or award, the time
for the appeal or petition for rehearing of which shall not have expired, or in
respect of which the Company shall at any time in good faith by prosecuting an
appeal or proceeding for a review and in respect of which a stay of execution
pending such appeal or proceeding for review shall have been secured;
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(c) Liens incidental to the normal conduct of business or the
ownership of properties and Assets (including warehousemen's and statutory
landlords' Liens), Liens, deposits or pledges securing the performance of bids,
tenders or trade contracts, and Liens securing statutory obligations or surety
or appeal bonds in connection with proceedings in which the Company or a
Restricted Subsidiary is a party; PROVIDED, however, that (i) any such Lien
shall not be created in connection with and shall not secure Indebtedness, (ii)
any obligation secured by any such Lien shall not be overdue or, if overdue,
shall be contested in good faith by appropriate actions or proceedings and
adequate book reserves shall have been established in accordance with generally
accepted accounting principles; and (iii) all such Liens, pledges and deposits
shall not in the aggregate materially impair the use or value of the properties
of the Company and its Restricted Subsidiaries in the operation of the business
of the Company and its Restricted Subsidiaries; and, PROVIDED FURTHER, that this
clause (c) shall not be deemed to permit any Liens which may be imposed pursuant
to Section 4068 of ERISA;
(d) minor survey exceptions and minor encumbrances, easements
or reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the activities of the Company
and its Restricted Subsidiaries or which customarily exist on properties of
corporations engaged in similar activities and similarly situated and which do
not in any event materially impair the use of any of such properties in the
operation of the business of the Company and its Restricted Subsidiaries;
(e) leases made, or existing on property acquired, by the
Company and its Restricted Subsidiaries in the ordinary course of their
businesses, PROVIDED, HOWEVER, that, in the case of any Capital Lease, the
Indebtedness represented thereby shall have been incurred in compliance with
Section 9.20 hereof;
(f) Liens originally created to secure payment of a portion of
the purchase price relating to any real property or equipment or any interest
therein, which the Company (or, in the case of any Capital Lease, the owner)
shall acquire after the date hereof, but, with respect to any such Lien, which
property, equipment or interest shall not be acquired more than 60 days prior to
the date of the creation of such Lien; PROVIDED, HOWEVER, that (i) no such Lien
shall attach to any other Asset at the time owned by the Company, (ii) the
outstanding principal amount of Indebtedness secured by any such Lien shall not
exceed 85% of the fair market value of property to which such Lien attaches,
(iii) any Indebtedness secured by any such Lien shall have been incurred in
compliance with Section 9.20 hereof and (iv) the aggregate amount of
Indebtedness secured by any such Liens shall not at any time exceed $3,000,000;
(g) Liens in replacement, extension or renewal of any Liens
described in the preceding clause (f) upon or in the same property theretofore
subject thereto;
(h) Liens existing on the date hereof and set forth on
Schedule 12.1 hereof, but not any Liens resulting from any renewal or extension
of the Indebtedness secured thereby;
(i) Liens or pledges or deposits made in the usual course of
business to secure payment of workmen's compensation, unemployment insurance or
social security obligations;
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(j) Liens created with respect to any consignment, lease, land
contract or other title retention agreement or arrangement; and
(k) Liens created with respect to the Stock Purchase Agreement
dated July 24, 1986 among the Company and the other shareholders of
Pioneer/Technologies.
The term "PERSON" shall mean any individual, corporation,
partnership, joint venture, association, joint stock company, trust, estate,
unincorporated organization or government (or any agency or political
subdivision thereof).
The term "PIONEER/TECHNOLOGIES" shall mean
Pioneer/Technologies Group, Inc., a Maryland corporation.
The term "PIONEER/TECHNOLOGIES FINANCIAL STATEMENTS" shall
have the meaning set forth in Section 2.3 hereof.
The term "PLAN" shall have the meaning set forth in Section
2.11(d) hereof.
The term "PURCHASE PRICE" shall have the meaning set forth in
Section 1.2 hereof.
The term "QUALIFIED INSTITUTIONAL BUYER" shall have the
meaning assigned thereto in Rule 144A.
The term "RESPONSIBLE OFFICER", with respect to the Company
shall mean the President, the Chief Financial Officer, the Chairman, any other
Vice President, the Treasurer or the Secretary thereof.
The term "RESTRICTED INVESTMENT" shall mean any Investment
(other than an Investment in, to or in favor of any Person which is, or after
the making of which, will be, a Restricted Subsidiary) paid for with cash or
other property (other than equity securities of the Company) other than:
(i) any certificate of deposit with a final maturity
of one year or less issued by any bank or trust company having
capital and surplus at the end of its most recently ended
fiscal year in excess of $100,000,000;
(ii) commercial paper of any corporation incorporated
in the United States of America maturing not more than 270
days from the date of issuance thereof and rated "A-1" or
better by Standard & Poor's Corporation ("S&P") or "P-1" or
better by Moody's Investors Service, Inc. ("Moody's");
PROVIDED, HOWEVER, that any such commercial paper that is
rated by both such rating agencies shall be rated "A-1" or
better by S&P and "P-1" or better by Moody's;
(iii) any direct obligation of the United States of
America or obligation of any instrumentality or agency thereof
the payment of the principal of and interest on which is
unconditionally guaranteed by the United States of America;
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PROVIDED, HOWEVER, that any such obligation shall have a final
maturity date not more than two years after the acquisition
thereof;
(iv) the Investment by the Company in Pioneer/
Technologies prior to the date hereof in the
aggregate amount of $55,000;
(v) any Indebtedness or other security of the
Company or a Restricted Subsidiary which is purchased,
repurchased, redeemed, prepaid or acquired or reacquired in
any other manner by the Company or a Restricted Subsidiary, so
long as such Indebtedness or other security is retired or
canceled promptly after its acquisition by the Company or such
Restricted Subsidiary; and
(vi) any Investment by the Company or a Restricted
Subsidiary the making of which constitutes a Restricted
Payment.
The term "RESTRICTED PAYMENT" shall mean (a) any dividend or
other distribution, direct or indirect, in respect of any shares of the capital
stock of the Company; or (b) any purchase, redemption, prepayment, retirement or
other acquisition or reacquisition of (i) any shares of capital stock of the
Company, now or hereafter outstanding, (ii) any warrants, rights or options
evidencing a right to purchase or acquire any such shares (except in exchange
for other shares of capital stock or warrants, rights or options evidencing a
right to purchase or acquire any such shares), or (iii) any Indebtedness of the
Company which is subordinated or junior in right of payment to the Notes
(including the Debentures); PROVIDED, HOWEVER, that no dividend or other
distribution, purchase, redemption, prepayment, retirement or other acquisition
shall constitute a Restricted Payment to the extent that it consists of or is
paid for with an equity security of the Company or is effected by the conversion
of any security into an equity security of the Company; and, PROVIDED, FURTHER,
that no mandatory redemption or prepayment of Debentures shall constitute a
Restricted Payment if (x) the redemption or prepayment price is paid in cash
representing the proceeds of a contemporaneous issuance of Indebtedness which is
unsecured and is subordinated or junior in right of payment to the Notes, or (y)
it is made in cash at the time required by the Indenture under which the
Debentures were issued in satisfaction of the sinking fund requirements of said
Indenture. The amount of any Restricted Payment in property shall be deemed to
be the greater of its fair value (as determined by the Board of Directors of the
Company) or its net book value.
The term "RESTRICTED SUBSIDIARY" shall mean any Subsidiary of
the Company hereafter designated by action of the Board of Directors of the
Company as a Restricted Subsidiary pursuant to Section 9.22 hereof; PROVIDED,
HOWEVER, that no corporation may be designated a Restricted Subsidiary unless:
(a) such corporation is organized under the laws of the United States
or any jurisdiction thereof;
(b) such corporation conducts substantially all of its business and
owns substantially all of its property within the United States;
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(c) a majority of the shares of each class of the capital
stock of such Subsidiary are owned by the Company directly or
indirectly through another Restricted Subsidiary;
(d) such corporation has not previously been designated as a
Restricted Subsidiary hereunder and had such designation rescinded;
and
(e) the requirements of Section 9.22(a) have been complied
with or are complied with concurrently with such designation;
PROVIDED, FURTHER, that Pioneer/Technologies shall not be designated a
Restricted Subsidiary hereunder; and, PROVIDED, FURTHER, that the designation of
a Restricted Subsidiary may be rescinded by action of the Board of Directors of
the Company pursuant to Section 9.22(c) hereof.
The term "RESTRICTED SUBSIDIARY INDEBTEDNESS" shall mean any
Indebtedness created, incurred, issued, assumed or guaranteed by a Restricted
Subsidiary.
The term "RMI" shall have the meaning set forth in Section 6.4 hereof.
The term "RULE 144A" shall mean Rule 144A under the Securities Act, as
presently in effect and as hereafter amended from time to time, or any
superseding or substituted rule adopted by the SEC from time to time.
The term "SALE" shall have the meaning set forth in Section 9.16
hereof.
The term "SEC" shall mean the Securities and Exchange Commission and
any successor organization.
The term "SEC REPORTS" shall have the meaning set forth in Section 2.3
hereof.
The term "SECURED DEBT" shall have the meaning set forth in Section
9.13(a) hereof.
The term "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended from time to time.
The term "SHORT-TERM INDEBTEDNESS" of any Person shall mean and
include all Indebtedness of such Person which does not constitute Funded
Indebtedness.
The term "SUBSIDIARY" shall mean any corporation other than
Pioneer/Technologies (a) which is organized under the laws of any jurisdiction
of the United States of America, (b) which conducts substantially all of its
business and has substantially all of its Assets within the United States of
America and (c) of which more than 50% (by number of votes) of its Voting Stock
is owned by the Company and/or one or more Subsidiaries wholly-owned by the
Company.
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The term "THIS AGREEMENT" shall mean this Note Purchase
Agreement (including the annexed Exhibits and Schedules), as it may from time to
time be amended, supplemented or modified in accordance with its terms.
The term "TIAA" shall mean Teachers Insurance and Annuity
Association of America.
The term "TOTAL CAPITALIZATION" shall mean the sum of (i)
Consolidated Funded Indebtedness, plus (ii) Consolidated Shareholders' Equity.
The term "TREASURY RATE", as of the date of any determination
thereof in connection with the determination of the Make-Whole Amount, shall
mean the sum of (i) 50 basis points and (ii) the rate per annum equal to the
arithmetic average of the two most recent weekly average yields on issues of
United States Treasury securities adjusted to a constant maturity equal to the
Weighted Average Life to Maturity of the Notes (determined, if necessary, by
interpolating such yields on United States Treasury Securities adjusted to the
particular constant maturities greater than (but nearest to) and less than (but
nearest to) the Weighted Average Life to Maturity of the Notes), as published by
the Federal Reserve Board for release on the first Business Day of the week in
which such determination is made in its Statistical Release H.15(519) under the
heading "Treasury Constant Maturities", such weekly average yields to be for the
two calendar weeks ending on the two Wednesdays immediately preceding the date
of such release or, if such average is not published for such periods, of such
reasonably comparable index as may be designated for such periods by the holder
or holders of at least a majority in, aggregate unpaid principal amount of the
Notes then outstanding.
The term "VOTING STOCK", with respect to a corporation, shall
mean the stock of such corporation the holders of which are ordinarily, in the
absence of contingencies, entitled to elect members of the Board of Directors
(or other governing body) of such corporation.
The term "WEIGHTED AVERAGE LIFE TO MATURITY" of any borrowed
funds or preferred stock, as of the date of the determination thereof, shall
mean the number of years obtained by dividing the then Remaining Dollar-Years of
such borrowed funds or preferred stock by the then outstanding principal amount
thereof (in the case of such borrowed funds) or the aggregate redemption price
of all outstanding shares thereof. The term "REMAINING DOLLAR-YEARS" of any
borrowed funds or preferred stock shall mean the amount obtained by (a)
multiplying the amount of each then remaining sinking fund, serial maturity or
other required repayment or redemption price, including repayment at final
maturity, by the number of years (calculated to the nearest one-twelfth) which
will elapse between the time in question and the date of the repayment or
redemption and (b) totaling all of the products obtained in (a).
SECTION 12.2 DIRECTLY OR INDIRECTLY. Any provision iN this
Agreement referring to action to be taken by any Person, or that such Person is
prohibited from taking, shall be applicable whether such action is taken
directly or indirectly by such Person.
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SECTION 12.3 ACCOUNTING TERMS. All accounting terms used
herein that are not otherwise expressly defined shall have the respective
meanings given to them in accordance with generally accepted accounting
principles at the particular time.
SECTION 12.4 GOVERNING LAW. THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
NEW YORK.
SECTION 12.5 HEADINGS. The headings of the Sections and other
subdivisions of this Agreement have been inserted for convenience of reference
only, and shall not be deemed to constitute a part hereof.
SECTION 12.6 INDEPENDENCE OF COVENANTS. Each covenant made by
the Company herein is independent of each other covenant so made. The fact that
the operation of any such covenant permits a particular action to be taken or
condition to exist does not mean that such action or condition is not
prohibited, restricted or conditioned by the operation of the provisions of any
other covenant herein.
SECTION 13. MISCELLANEOUS.
SECTION 13.1 NOTICES. (a) All communications under this
Agreement or the Notes shall be in writing and shall be delivered or mailed (i)
if to you, to you at your address set forth in Schedule I hereof, marked for
attention as there indicated, or at such other address as you may have
furnished to the Company in writing, (ii) if to any other holder of Notes,
to it at its address listed in the books for the registration and registration
of transfer of Notes, required to be maintained by the Company pursuant to
Section 9.1 hereof, or at such other address as such holder shall have furnished
to the Company in writing, and (iii) if to the Company, to it at its address
shown at the head of this Agreement, or at such other address as it shall have
furnished in writing to you and all other holders of the Notes at the time
outstanding.
(b) Any written communication so addressed and mailed by
certified mail, return receipt requested, shall be deemed to have been given
when so mailed. All other written communications shall be deemed to have been
given upon receipt thereof.
SECTION 13.2 SURVIVAL. All representations, warranties and
covenants made by the Company herein or by the Company or any Subsidiary in any
certificate or other instrument delivered under or in connection with this
Agreement shall be considered to have been relied upon by you and shall survive
the delivery to you of the Notes regardless of any investigation made by you or
on your behalf. All statements in any such certificate or other instrument shall
constitute representations and warranties of the Company hereunder.
SECTION 13.3 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the parties hereto and their respective successors and assigns, and
shall inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns permitted hereunder; PROVIDED, HOWEVER, that
you shall not have any obligation to purchase Notes of any Person other than
Pioneer-Standard Electronics, Inc., an Ohio corporation. Whether or not
expressly so stated
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and subject to the restrictions set forth herein, the provisions of Sections 5
through 13 of this Agreement are intended to be for your benefit and for the
benefit of all holders from tide to time of the Notes, and shall be enforceable
by you and any other such holder whether or not an express assignment to such
holder of rights under this Agreement shall have been made by you or your
successors or assigns; PROVIDED, HOWEVER, that the provisions of Section 5 and
Sections 6.2, 6.3 and 9.1 hereof and the provisions of Section 9.5 hereof
relating to the payment of expenses shall also be for the benefit of, and shall
be enforceable by, any Person who shall no longer be a holder of any Note but
who shall have incurred any expense or been subjected to any liability for which
reimbursement or payment by the Company is provided therein while, or on the
basis of being, such a holder.
SECTION 13.4 AMENDMENT AND WAIVER. (a) This Agreement and the
Notes may be amended or supplemented, and the observance of any term hereof or
thereof may be waived, with the written consent of the Company and (i) on or
prior to the Closing Date, you, and (ii) after the Closing Date, the holders of
at least a 66-2/3% in aggregate unpaid principal amount of the Notes then
outstanding; PROVIDED, HOWEVER, that no such amendment, supplement or waiver
shall, without the written consent of the holders of all the Notes then
outstanding, (x) change, with respect to the Notes, the amount or time of any
required prepayment or payment of principal or premium or the rate or time of
payment of interest, or change the funds in which any prepayment or payment on
the Notes is required to be made; (y) amend or supplement, or (subject to
Section 11.4 hereof) waive any Default or Event of Default arising by reason of
the failure of the Company to comply with, any provision of Section 7; or (z)
reduce the percentage of the aggregate principal amount of Notes required for
any amendment, consent or waiver hereunder. Any amendment or waiver effected in
accordance with this Section 13.4 shall be binding upon each holder of any Note
at the time outstanding, each future holder of any Note and the Company.
Notwithstanding any other provision of this Agreement, no consent to any such
amendment or supplement by any holder of a Note and no such waiver by any holder
of a Note shall have any effect for the purposes of this Section 13.4 if such
consent or waiver was obtained in connection with or in anticipation of the
purchase by the Company, any Affiliate of the Company or any other Person of any
portion of the Notes held by such Noteholder, unless the holder of each Note at
the time outstanding has executed a consent or waiver, as the case may be, to
substantially the same effect as the consent or waiver obtained from such
Noteholder.
(b) Except as provided or contemplated in Section 11.4 hereof,
the Company will not solicit, request or negotiate for or with respect to any
proposed waiver or amendment of any of the provisions of this Agreement or the
Notes unless each holder of the Notes (irrespective of the amount of Notes then
owned by it) shall be informed thereof by the Company and shall be afforded the
opportunity of considering the same and shall be supplied by the Company with
sufficient information to enable it to make an informed decision with respect
thereto. Executed or true and correct copies of any waiver effected pursuant to
the provisions of this Section 13.4 shall be delivered by the Company to each
holder of outstanding Notes forthwith following the date on which the same shall
have been executed and delivered by the holder or holders of the requisite
percentage of outstanding Notes. The Company will not, directly or indirectly,
pay or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, to any holder of the Notes as
consideration for or as an inducement to the entering into
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by any holder of the Notes of any waiver or amendment of any of the terms and
provisions of this Agreement unless such renumeration is concurrently paid, on
the same terms ratably to the holders of all of the Notes then outstanding.
SECTION 13.5 COUNTERPARTS. This Agreement may be executed and
delivered to you simultaneously in two or more counterparts, each of which
shall be deemed an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 13.6 REPRODUCTION OF DOCUMENTS. This Agreement and all
documents relating hereto (other than the Notes), including, without limitation,
(a) consents, waivers and modifications that may hereafter be executed, (b)
documents received by you at the closing of your purchase of the Notes, and (c)
financial statements, certificates and other information heretofore or hereafter
furnished to you,-may be reproduced by you by any photographic or other similar
process and you may destroy any original document so reproduced. The Company
agrees and stipulates that, to the extent permitted by applicable law and court
or agency rules, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by you in
the regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall be admissible in evidence to the same
extent.
SECTION 13.7 CONFIDENTIALITY. You agree to use your best
efforts (and each subsequent holder of any Note, by accepting assignment of
such Note, agrees to use its best efforts) to keep confidential from all
Persons other than your (or its) counsel, accountants, financial advisors,
employees, consultants and agents all information obtained by you (or such
subsequent holder) pursuant to this Agreement and designated or marked in
writing by the Company as confidential; PROVIDED, HOWEVER, that you (or any
such subsequent holder) may disclose any such information (a) as has become
generally available to the public (through no action on your or its part); (b)
as may be required or appropriate in any report, statement or testimony
submitted to any municipal, state or federal regulatory body having or claiming
to have jurisdiction over you (or such subsequent holder) or to the National
Association of Insurance Commissioners or similar organizations or their
successors; (c) as may be required in response to any summons or subpoena or in
connection with any litigation; (d) in order to comply with any law, regulation
or rule applicable to you (or such subsequent holder); (e) to a prospective
transferee which is an Institutional Investor or Qualified Institutional Buyer
in connection with any contemplated transfer of any Note held by you (or any
such subsequent holder) and to which transfer of a Note would be permitted by
Section 3.2 hereof; (f) to any other Noteholder; and (g) otherwise as may be
reasonably necessary to the enforcement of your rights (or the rights of such
subsequent holder) with respect to the Notes or under this Agreement.
50
<PAGE> 55
If the foregoing is satisfactory to you, please sign the form
of acceptance on the enclosed counterparts hereof and return the same to the
Company, whereupon this letter, as so accepted, shall become a binding contract
between you and each of the undersigned.
Very truly yours,
PIONEER-STANDARD ELECTRONICS, INC.
By: /s/ JOHN GOODGER
----------------------------------
Title: Vice President
The foregoing Agreement
is hereby accepted.
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By: /s/ BARBARA J. PAIGE
-------------------------
Title: Investment Officer
51
<PAGE> 56
SCHEDULE I
PURCHASER OF THE
9.79% SENIOR NOTES
DUE NOVEMBER 1, 2000
OF PIONEER-STANDARD ELECTRONICS, INC.
<TABLE>
<CAPTION>
Principal Amount of
Name And Address Of Purchaser Notes To Be Purchased
----------------------------- ----------------------
<S> <C>
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA $20,000,000
(1) In the case of all payments on account of the
Notes: to TIAA, by crediting (in the form of bank
wire transfer of immediately available funds) its
Account No. 121-85-001 in Morgan Guaranty Trust
Company of New York, 23 Wall Street, New York, New
York 10015; with telephone advice of payment to
Treasury Services--TIAA at (212) 916-4000.
(2) Address for notices in respect of payment:
730 Third Avenue
New York, New York 10017
Attention: Treasury Services
(3) Address for all other communications:
730 Third Avenue
New York, New York 10017
Attention: Securities Division
</TABLE>
I-1
<PAGE> 57
SCHEDULE 2.5
MATERIAL ADVERSE CHANGES
NONE.
2.5-1
<PAGE> 58
SCHEDULE 4.1
[LETTERHEAD OF ORRICK, HERRINGTON & SUTCLIFFE]
November 2, 1990
Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
Re: $20,000,000 in Aggregate Principal Amount of 9.79%
Senior Notes due November 1, 2000 of
Pioneer-Standard Electronics, Inc.
Ladies and Gentlemen:
We have acted as special counsel in connection with your
purchase today of $20,000,000 in aggregate principal amount of 9.79% Senior
Notes due November 1, 2000 (the "Notes") of Pioneer-Standard Electronics, Inc.,
an Ohio corporation (the "Company"), pursuant to the Note Purchase Agreement
dated as of October 31, 1990 between the Company and you (the "Note Purchase
Agreement"). All capitalized terms used herein without definition have the
meanings assigned thereto in the Note Purchase Agreement.
We have examined a fully executed original of the Note
Purchase Agreement. We also have examined the executed Note being issued and
delivered on the date hereof. In addition, we have examined originals (or copies
certified or otherwise identified to our satisfaction) of such other
instruments, certificates, records and documents as we have deemed necessary or
appropriate for the purpose of rendering this opinion.
Based upon such examination and subject to the limitations and
qualifications set forth below, we are of the opinion that:
1. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio.
2. The Note Purchase Agreement and the execution, delivery
and performance thereof have been duly authorized by all necessary
corporate action on the
<PAGE> 59
part of the Company. The Note Purchase Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company
in accordance with its terms.
3. The Notes and the offer, issuance, sale, delivery and
performance thereof have been duly authorized by all necessary
corporate action on the part of the Company. The Notes have been duly
executed, issued and delivered by the Company and constitute the
legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms.
4. On the basis of the representations contained in
Sections 3.1 and 3.2 of the Note Purchase Agreement, it is not
necessary, in connection with the issuance and delivery of the Notes
to you under the circumstances contemplated by the Note Purchase
Agreement, to register the Notes under the Securities Act or to
qualify an indenture with respect thereto under the Trust Indenture
Act of 1939, as amended.
With your permission, we have assumed the following: (a) the
genuineness of all signatures and the authenticity of all documents submitted to
us as originals; (b) the conformity to the original documents of all documents
submitted to us as copies; (c) the truth, accuracy, and completeness of the
information, factual matters, representations, and warranties contained in the
records, documents, instruments and certificates we have reviewed; and (d)
except as specifically covered in the opinion set forth above, the due
authorization, execution, and delivery on behalf of the respective parties
thereto of documents referred to herein and the legal, valid, and binding effect
thereof on such parties.
Our opinion that any agreement, instrument or document is
legal, valid, binding or enforceable against any Person in accordance with its
terms is qualified as to:
(a) limitations imposed by bankruptcy, insolvency,
fraudulent conveyance, reorganization, arrangement, moratorium or
other laws affecting the enforcement of creditor's rights generally,
including, without limitation, laws relating to fraudulent transfers
or conveyances, preferences and equitable subordination;
(b) as a general matter, of law, the unenforceability under
certain circumstances of provisions imposing penalties, forfeiture,
late payment charges or an increase in interest rate upon delinquency
in payment or the occurrence of any Event of Default; and
(c) general principles of equity, regardless of whether
enforceability is considered in a proceeding in equity or at law.
We are not opining on law other than the law of the State of
New York and the federal law of the United States of America. In giving the
opinions set forth in paragraphs 1, 2 and 3 above, we have relied solely upon
the opinion of Calfee, Halter & Griswold, counsel for the Company, dated the
date hereof and delivered to you pursuant to Section 4.2 of the Note Purchase
2
<PAGE> 60
Agreement, as to matters pertaining to the laws of the State of Ohio. We have
made no independent examination of such matters.
We further advise you that we have reviewed the opinion of
Calfee, Halter & Griswold, referred to above, and we believe such opinion is
satisfactory in form and scope and you and we are justified in relying thereon.
This opinion letter is solely for the benefit of the party to
whom it is addressed and may not be relied upon, used, circulated, quoted or
referred to, nor copies hereof delivered to, any other person (other than a
subsequent holder of a Note) without our prior written approval. We disclaim any
obligation to update this opinion letter for events occurring after the date
hereof.
Very truly yours,
/s/ Orrick, Herrington & Sutcliffe
3
<PAGE> 61
SCHEDULE 4.2
[LETTERHEAD OF CALFEE, HALTER & GRISWOLD]
November 2, 1990
Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
Re: Pioneer-Standard Electronics, Inc.--Sale of 9.79%
-------------------------------------------------
Senior Notes due November 1, 2000
---------------------------------
Gentlemen:
This opinion is furnished to you pursuant to and in satisfaction of
Section 4.2 of that certain Note Purchase Agreement, dated as of October 31,
1990 (the "Note Purchase Agreement"), by and between Pioneer-Standard
Electronics, Inc., an Ohio corporation ("Borrower"), and Teachers Insurance and
Annuity Association of America, a New York corporation (the "Purchaser"). We
have acted as counsel to Borrower in connection with the negotiation of the Note
Purchase Agreement and we are delivering this opinion to you in connection with
the initial distribution of sale proceeds to the Borrower thereunder.
Capitalized terms not otherwise defined herein shall have the meaning given them
in the Note Purchase Agreement.
We have examined originals or copies, certified or otherwise,
identified to our satisfaction, of the following documents and corporate records
in connection with this opinion:
(1) The Note Purchase Agreement;
2) The Note;
3) A copy of the Articles of Incorporation of Borrower and all
amendments thereto, certified as true, complete and accurate
by the office of the Ohio Secretary of State as of October
4, 1990;
4) A Good Standing Certificate from the Secretary of State of
Ohio, dated October 2, 1990, certifying Borrower's status as
a corporation in good standing under the laws of the State
of Ohio;
<PAGE> 62
Teachers Insurance and Annuity
Association of America
November 2, 1990
Page 2
(5) Good Standing Certificates or their equivalent (the
"Foreign Jurisdiction Certificates") from: (i) the
Secretary of State of Michigan, dated October 9,
1990; (ii) the Secretary of the Commonwealth of
Pennsylvania, dated October 10, 1990; (iii) the
Secretary of State of Minnesota, dated October 9,
1990; (iv) the Secretary of State of Texas, dated
October 8, 1990, and the Comptroller of Public
Accounts of Texas dated October 26, 1990; (v) the
Secretary of State of Indiana, dated October 10,
1990; (vi) the Secretary of the Commonwealth of
Massachusetts, dated October 9, 1990; (vii) the
Secretary of State of Connecticut, dated October 10,
1990; (viii) the Department of the State of New York,
dated October 5, 1990; (ix) the Secretary of State of
New Jersey, dated October 10, 1990; (x) the Secretary
of State of Wisconsin, dated October 9, 1990; (xi)
the Secretary of State of Missouri dated October 9,
1990; (xii) the Secretary of State of Oklahoma dated
October 9, 1990; and (xiii) the Secretary of State of
California dated November 1, 1990;
(6) The Board of Governors of the Federal Reserve System
List of Marginable OTC Stocks as of November 13,
1989, as supplemented by (i) the Supplement to List
of Marginable OTC Stocks February 12, 1990, (ii) the
Supplement to List of Marginable OTC Stocks May 14,
1990 and (iii) the Supplement to List of Marginable
OTC Stocks August 13, 1990;
(7) An Officer's Certificate from John V. Goodger, Vice
President, Treasurer and Assistant Secretary of the
Borrower, as to (i) the true, complete and correct
nature of the Code of Regulations as of the date
hereof, (ii) the true, complete and correct nature as
of the date hereof of the resolutions adopted by the
Board of Directors of Borrower on October 30, 1990,
authorizing the Borrower's execution and delivery of
and performance under the Note Purchase Agreement,
the Note, and such certificates and documents as may
be related to the Note Purchase Agreement or the
Note, and (iii) certain other factual matters, a copy
of which certificate is attached to this opinion as
Exhibit A and incorporated herein by reference (the
"Officer's Certificate").
The opinions hereinafter expressed are premised upon the
following assumptions: (i) all materials, records and documents examined by us
in connection with the preparation of this opinion letter are complete,
authentic and accurate and, to the extent represented by certified or
photostatic copies, conform to their respective originals, (ii) all signatures
contained in such materials, records and documents are genuine signatures of the
parties purporting to have signed
<PAGE> 63
Teachers Insurance and Annuity
Association of America
November 2, 1990
Page 3
the same, (iii) all natural parties signing said documents and records had, at
the time of such signing, full legal capacity to sign and deliver said
materials, records and documents, and (iv) no action has been taken which
amends, revokes or otherwise affects any of the materials, records or documents
which we have examined. Further, any opinion hereinafter expressed that an
agreement, instrument or document is a valid and binding obligation of Borrower
or is enforceable in accordance with its terms is premised upon the assumption
that (a) the Note Purchase Agreement is a legal, valid, and binding obligation
of the Purchaser, and (b) the Purchaser has actually advanced moneys to Borrower
pursuant to the Purchaser's purchase of the Note pursuant to the terms of the
Note Purchase Agreement.
We have relied upon the foregoing Foreign Jurisdiction
Certificates and have not conducted an independent review or investigation of
the matters set forth therein. Any opinion hereinafter set forth relative to the
Borrower's good standing status is based solely upon such certificates as of the
date thereof.
Except for our review of the Material Contracts (as defined
and set forth in the Officer's certificate) and as further described in the
following sentence, we have not conducted an independent review or investigation
of the matters contained in said Officer's Certificate, and except to the extent
otherwise expressed herein, render no opinion in respect to such matters.
Insofar as this opinion relates to our knowledge of factual matters set forth in
the Officer's Certificate or other factual matters, information with respect to
which is in the possession of Borrower or other entities, we have made inquiries
of and relied upon representations from one or more officers or employees of
Borrower with respect to such matters and nothing has come to our attention
leading us to question, or giving us reasonable grounds to question, the
accuracy of such information. In addition, we are not aware of any Indebtedness
of Borrower for borrowed money other than Indebtedness disclosed in the
officer's Certificate. In rendering our opinion, we have not conducted any
investigation into the types of businesses and activities in which Borrower
engages or the manner in which it conducts its business as would enable us to
render any opinion (and, accordingly, we express no opinion) as to the
applicability to the Borrower of any law or regulation of Ohio or any other
governmental authority not of general applicability to business corporations.
We have no present, actual knowledge that any of the foregoing
assumptions are not, as of the date hereof, accurate or complete. We assume no
obligation to advise you of any changes in fact or law, or of anything coming to
our attention bearing on the accuracy or completeness of any assumption, whether
or not material, which may be brought to our attention subsequent to the date
hereof.
<PAGE> 64
Teachers Insurance and Annuity
Association of America
November 2, 1990
Page 4
Based solely upon and subject to: (i) the foregoing; (ii) the
qualifications set forth below; and (iii) our review of such matters of law and
other documents and corporate records as we have deemed necessary in connection
with this opinion, we are of the opinion that:
1. Borrower is incorporated, validly existing and in good
standing as an Ohio corporation, and has all requisite corporate power and
authority under its Articles of Incorporation and Code of Regulations to own its
properties and to carry on its business as it is, to the best of our knowledge,
presently being conducted.
2. Based solely upon the Foreign Jurisdiction Certificates
referenced above, Borrower is duly qualified to do business as a foreign
corporation in those states designated in the Officer's Certificate as Foreign
Jurisdictions other than the State of Illinois; it being understood we are
rendering no opinion with respect to the due qualification of Borrower to do
business as a foreign corporation in any other jurisdiction.
3. Borrower has full corporate power and authority to offer,
issue, sell, execute, deliver and perform its obligations under the Note, and to
execute, deliver and perform its obligations under the Note Purchase Agreement.
4. Without independent investigation and based solely upon the
Officer's Certificate, and except as disclosed in said Certificate, we are not
aware of any litigation or proceedings pending or threatened against or
affecting Borrower, at law or in equity, or before any government agency or
authority, or any arbitrator or arbitration panel, which, if successful, would
result in any material, adverse change in the condition, financial or otherwise,
of Borrower or which in any manner draws into question the validity or
enforceability of the Note Purchase Agreement or the Note.
5. The execution and delivery of the Note Purchase Agreement
and the offer, issuance, sale, execution and delivery of the Note and compliance
with the terms of the Note Purchase Agreement and the Note by the Borrower, will
not violate (i) the provisions of any presently applicable Ohio or Federal
statute, (ii) any existing provision of the Borrower's Articles of Incorporation
or Code of Regulations, or (iii) to the best of our knowledge, any judgment,
injunction, order or decree of any court, governmental authority, arbitrator or
arbitration panel applicable to the Borrower.
6. Neither the execution and delivery of the Note Purchase
Agreement, the offer, issuance, sale, execution and delivery of the Note, nor
the Borrower's compliance with the terms of the Note Purchase Agreement or the
Note, will violate or constitute a default under any of the Material Contracts
set forth in the Officer's Certificate.
<PAGE> 65
Teachers Insurance and Annuity
Association of America
November 2, 1990
Page 5
7. The Note Purchase Agreement and the Note have been duly
executed and delivered by duly authorized officers of the Borrower and are valid
and binding obligations of Borrower, enforceable against Borrower in accordance
with their respective terms. The performance of the Note Purchase Agreement and
the Note has been duly authorized by all necessary corporate action on the part
of the Borrower.
8. On the basis, in part, of the representations contained in
Section 3.2 and Section 3.3 of the Note Purchase Agreement, no prior consent of,
approval, authorization, qualification, designation, or declaration by, filing
or registration with or notice to any federal or Ohio governmental or public
authority or agency is required for the valid offer, issuance, sale or delivery
of the Note or the execution, delivery or performance of the Note Purchase
Agreement by the Borrower.
9. On the basis, in part, of the representations contained in
Section 3.1 and Section 3.2 of the Note Purchase Agreement, it is not necessary,
in connection with the issuance and delivery of the Note to the Purchaser under
the circumstances contemplated by the Note Purchase Agreement, to register the
Note under the Securities Act or to qualify an indenture with respect thereto
under the Trust Indenture Act of 1939, as amended.
10. Based solely upon the information set forth in the
Officer's Certificate, the application of the proceeds from the sale of the Note
will not violate or result in a violation of Section 7 of the Exchange Act or
any regulations issued pursuant thereto, including, without limitation,
Regulation G (12 C.F.R., Part 207), as amended, or Regulation X (12 C.F.R., Part
224), as amended, or Regulation T (12 C.F.R., Part 224), as amended, of the
Board of Governors of the Federal Reserve System; PROVIDED, HOWEVER, that with
respect to the Pioneer-Standard Debentures (as defined in the Officer's
Certificate), we have assumed without opinion that such proceeds will not be
used to retire "purpose credit" (as defined in Regulation G, 12 C.F.R., Part
207) secured directly or indirectly by such Pioneer-Standard Debentures.
11. To the best of our knowledge, the Borrower is not a
"public utility company" or a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended, or a
"public utility" within the meaning of the Federal Power Act, as amended.
12. The Borrower is not an "investment company" or an
"affiliated person" of an "investment company" or a company "controlled" by an
"investment company" as such terms are defined in the Investment Company Act of
1940, as amended. The Borrower is not an
<PAGE> 66
Teachers Insurance and Annuity
Association of America
November 2, 1990
Page 6
"investment adviser" or an "affiliated person" of an "investment adviser" as
such terms are defined in the Investment Advisers Act of 1940, as amended.
The foregoing opinions are subject, however, to the further
qualifications that:
(a) Any opinion set forth above that an instrument or
agreement is a valid and binding obligation of Borrower or is enforceable in
accordance with its terms, is subject to (i) general principles of equity
(regardless of whether considered in a proceeding in equity or at law), (ii) any
bankruptcy, moratorium, fraudulent conveyance, preferential transfer, avoidance,
insolvency or other law relating to or affecting the enforcement of creditors'
rights, and (iii) the Purchaser's obligation to act reasonably, in good faith
and with fairness in exercising rights and remedies under the Note Purchase
Agreement and the Note.
(b) Certain of the remedial provisions in the Note Purchase
Agreement and the Note may be limited or rendered unenforceable under the laws
of Ohio. By way of example and without limitation, such provisions include (i)
any provision purporting to allow the collection of attorneys fees; (ii) any
waiver of statutory, constitutional or equitable rights; (iii) any provision
which purports to waive any requirement of diligent performance or otherwise
purports to establish standards of care, reasonableness or diligence with
respect to the Purchaser in the exercise of its rights and remedies or the
satisfaction of its duties to Borrower to the extent that such remedies are not
specifically provided for under the Uniform Commercial Code as now or hereafter
in effect in Ohio.
(c) We express no opinion as to the binding effect, validity
or enforceability of any provision in the Note Purchase Agreement or the Note
which (i) provides that delays of the Purchaser will not operate as a waiver, or
(ii) attempts to modify or waive any requirements of commercial reasonableness
or notice arising under applicable laws.
(d) The opinions herein expressed are limited to matters of
Ohio and Federal law; except to the extent hereinafter specified, we express no
opinion as to the effect of any applicable law of any other jurisdiction.
Further, we note that the Note Purchase Agreement and the Note are stated to be
governed by the laws of the State of New York. To the extent the laws of the
State of New York govern the matters as to which the opinions expressed herein
are rendered, you may rely upon our opinions as opinions with respect to the
laws of the State of New York to the extent such laws are construed and applied
with the same effect as the laws of the State of Ohio. We express no opinion as
to whether the laws of the State of New York are construed or applied with the
same effect as the laws of the State of Ohio.
<PAGE> 67
Teachers Insurance and Annuity
Association of America
November 2, 1990
Page 7
The opinion expressed above is intended solely for your use in
the above-described transaction and may not be reproduced, filed publicly or
relied upon by any other persons for any purpose without the express written
consent of the undersigned, except that you may furnish copies thereof: (a) to
your independent auditors and attorneys; (b) to any state or federal authority
having regulatory jurisdiction over you; (c) pursuant to order or legal process
of any court or governmental agency; (d) in connection with any legal action to
which you are party arising out of the transactions contemplated by the Note
Purchase Agreement; and
(e) to any Noteholder or proposed assignee of any Note.
Respectfully submitted,
/s/ Calfee, Halter & Griswold
CALFEE, HALTER & GRISWOLD
<PAGE> 68
EXHIBIT A
TO
OPINION OF
CALFEE, HALTER & GRISWOLD
Officer's Certificate
---------------------
To: Calfee, Halter & Griswold
The undersigned, being the duly elected and acting Vice
President, Treasurer and Assistant Secretary of Pioneer-Standard Electronics,
Inc. ("Borrower") does hereby certify, in his capacity as an officer of Borrower
and on behalf of Borrower, that he has monitored all legal proceedings against
Borrower and that, as of the date hereof:
1. The following is a true, correct and complete list of the
only foreign jurisdictions (the "Foreign Jurisdictions") in which Borrower
currently wherein Borrower presently (i) owns or leases substantial real
property significant to continued business operations, (ii) maintains sales
offices or sales agents authorized to bind the Borrower to any purchase or sales
contracts, or (iii) maintains warehouses or otherwise maintains inventory (other
than with respect to consignments of inventory) for purpose of sale or other
distribution:
a) Illinois h) Connecticut
b) Michigan i) New York
c) Pennsylvania j) New Jersey
d) Minnesota k) Wisconsin
e) Texas 1) Missouri
f) Indiana m) Oklahoma
g) Massachusetts n) California
2. Set forth on Schedule I hereto is a true, correct and complete list
of each contract, lease or commitment to which Borrower is a party which, in the
event of a default by Borrower thereunder, could reasonably be expected to
result in a material adverse effect on the condition (financial or otherwise),
business, or operations, of Borrower (all of such contracts, leases and
commitments being collectively referred to herein as the "Material Contracts").
3. To the best of my knowledge, except as set forth on Schedule I
hereto, there is no litigation or proceeding pending or threatened by or against
Borrower, at law or in equity, or before any government agency or authority, or
any arbitrator or arbitration panel, which, if successful would result in any
material adverse change in the condition (financial or otherwise), of Borrower
or which in any manner draws into question the validity or enforceability of the
Note Purchase Agreement or the Note.
<PAGE> 69
4. Set forth on Schedule I hereto is a true, correct and complete list
of all equity securities, stocks, securities convertible into stock or other
equity securities, warrants or rights to subscribe to or purchase stock or
equity securities, and securities issued by any investment company presently
owned or held by the Borrower.
5. To the best of my knowledge, the execution and delivery of the Note
Purchase Agreement and the offer, issuance, sale, execution and delivery of the
Note and compliance with the terms of the Note Purchase Agreement and the Note
by Borrower will not violate any judgment, injunction, order or decree of any
court, governmental authority, arbitrator or arbitration panel applicable to
Borrower.
6. The proceeds of the sale of the Note will be applied by Borrower in
accordance with Section 1.3 of the Note, Purchase Agreement.
7. Attached hereto as Exhibit 1 is a true, complete and correct copy of
resolutions duly adopted by the Board of Directors of Borrower on October 30,
1990. Such resolutions are still in full force and effect and have not in any
manner whatsoever been amended or modified.
8. Attached hereto as Exhibit 2 is a true, complete and correct copy of
the Code of Regulations of Borrower. Such Code of Regulations is still in full
force and effect and has not in any manner whatsoever been amended or modified.
9. The offer and sale of the Note was not made by means of any general
solicitation; there has been no advertising in connection with the offer and
sale of the Note; Borrower has not offered for sale or sold any other securities
in a transaction which would be integrated with the offer and sale of the Note.
10. Set forth on Schedule I hereto is a true, correct and complete
list of all of Borrower's Indebtedness for borrowed money.
All capitalized terms not otherwise defined or referenced in this certificate
are used herein as defined in the Opinion of Calfee, Halter & Griswold to which
this certificate is attached.
The undersigned acknowledges and agrees that Calfee, Halter & Griswold
intends to, and may, rely on this Certificate and the matters contained herein,
in rendering opinions in connection with the transactions contemplated by the
Note Purchase Agreement, dated as of October 31, 1990, between Teachers
Insurance and Annuity Association of America and Borrower.
<PAGE> 70
IN WITNESS WHEREOF, I have executed this Certificate as of this 2nd day
of November, 1990.
PIONEER-STANDARD ELECTRONICS, INC.
By:
------------------------------
John V. Goodger
Vice President, Treasurer
and Assistant Secretary
<PAGE> 71
SCHEDULE I TO
OFFICER'S CERTIFICATE
LIST OF MATERIAL CONTRACTS;
MATERIAL LITIGATION; SECURITIES
-------------------------------
(a) Material Contract:
------------------
1. The Note Purchase Agreement and the Note.
2. Credit Agreement dated as of October 14, 1988, among
Borrower, Ameritrust National Association ("Ameritrust"),
National City Bank, Bank One, Dayton, NA and Ameritrust, as
agent.
3. Loan Agreement Relating to the Pioneer-Standard Electronics,
Inc. Facility dated as of December 1, 1979, between County
of Montgomery, Ohio and Borrower.
4. Open-End Mortgage and Security Agreement dated as of
December 1, 1979, between County of Montgomery, Ohio and
Borrower.
5. Indenture dated as of August 1, 1983, between Borrower and
BancOhio National Bank, as Trustee.
6. Stock Purchase Agreement dated as of July 24, 1986, among
Borrower, Pioneer/Technologies Group, INC. ("Technologies"),
and certain individual shareholders of Technologies.
7. Mortgage dated March 27, 1980, between The Harvey Group,
Inc. ("Harvey"), and The Equitable Life Assurance Society of
the United States ("Equitable").
8. Assumption and Modification Agreement dated December 10,
1982, among Harvey, Equitable and Pioneer-Standard
Electronics, Inc.
9. Rights Agreement dated as of April 25, 1989, between
Pioneer-Standard Electronics, Inc. and Ameritrust Company,
National Association, as Rights Agent.
(b) Material Litigation Or Proceedings:
----------------------------------
1. Litigation disclosed in the Financial Statements.
2. MTI Systems Corp. ("MTI"), a subsidiary of Arrow Electronics
Inc., has filed suit against two employees of Borrower for
alleged theft of trade secrets and confidential business
information. The lawsuit is currently in the discovery stage.
Borrower has suspended the two employees without pay. MTI has
not named
<PAGE> 72
Borrower in the lawsuit, but several of Borrower's employees
have been deposed by MTI. It is possible that MTI might
attempt to name Borrower in the lawsuit.
(c) Securities, Stock, Etc.:
-----------------------
1. Borrower owns 50,000 shares of the capital stock of
Pioneer/Technologies Group, Inc., a Maryland corporation.
2. Borrower has purchased certain of the Pioneer-Standard
Electronics, Inc. 9% Subordinated Convertible Debentures, Due
1998 (the "Pioneer-Standard Debentures") for an aggregate
purchase price of $2,109,885 and having an aggregate par value
of $2,378,000. Such Pioneer-Standard Debentures have been
purchased for and are being held for use in meeting Borrower's
sinking fund obligations under the Indenture executed by
Borrower in connection with the issuance of the
Pioneer-Standard Debentures.
(d) Indebtedness for Borrowed Money:
-------------------------------
1. Indebtedness incurred by the Borrower under or in connection
with the Material Contracts listed above.
2. Capitalized Lease Obligations of the Borrower.
3. Indebtedness of the Borrower of the type described in
subsection (e) of the definition of Indebtedness set forth
in the Note Purchase Agreement.
4. Indebtedness of the Borrower incurred under or in connection
with various life insurance policies of the Borrower in an
aggregate amount of One Hundred Seventy Thousand Four Hundred
Sixty-Nine Dollars ($170,469).
5. Indebtedness of the Borrower incurred under or in connection
with a short-term credit line with Ameritrust Company National
Association in an aggregate amount of Two Million Dollars
($2,000,000).
6. Operating lease obligations of the Borrower.
7. Indebtedness of the Borrower incurred in connection with the
Liens set forth in Schedule 12.1 to the Note Purchase
Agreement.
<PAGE> 73
EXHIBIT 1
BOARD OF DIRECTORS RESOLUTIONS
------------------------------
OF PIONEER-STANDARD ELECTRONICS, INC.
-------------------------------------
WHEREAS, the officers of the Company have negotiated with Teachers Insurance and
Annuity Association of America (the "Purchaser") the terms of a note purchase
agreement (the "Note Purchase Agreement") providing for the offer, issuance and
sale of the Company's corporate notes to the Purchaser; and
WHEREAS, copies of drafts of such Note Purchase Agreement bearing a draft date
of about October 22, 1990, have been reviewed by each member of the Board of
Directors;
NOW, THEREFORE, it is hereby:
RESOLVED, that any officer of the Company be and hereby is authorized and
empowered (either alone or in conjunction with any one or more of the other
officers of the Company) to take, from time to time, all or any part of the
following action on or in behalf of the Company: (1) to negotiate, execute and
deliver to Purchaser a Note Purchase Agreement (the "Note Purchase Agreement")
providing for the sale by the Company to Purchaser of up to $20,000,000 of 9.79%
Senior Notes due November 1, 2000 (the "Notes"), and (ii) other documents to be
substantially in the form of those presented to the Board of Directors of the
Company, which such additional, modified of revised terms as may be acceptable
to such officer of the Company as conclusively witnessed by his execution
thereof, (2) to offer, issue, sell, negotiate, execute and deliver a Note or
Notes in an aggregate principal amount not to exceed $20,000,000; and (3) to
carry out, perform in accordance with, modify, amend or terminate any
arrangements, instruments or agreements at any time existing between the Company
and the Purchaser. All capital terms used in these resolutions and not otherwise
defined herein are used herein with the meaning ascribed thereto by the Note
Purchase Agreement.
FURTHER RESOLVED, that any arrangements, agreements, security agreements,
guaranties, or other instruments or documents executed pursuant to these
resolutions, by any officer of the Company, or by an employee of the Company
acting pursuant to delegation of authority, may be attested by such person under
the corporate seal of the Company and may contain such terms and provisions as
such person shall, in his sole discretion, determine; and
FURTHER RESOLVED, that any officer of the Company be and hereby is authorized
and empowered (either alone or in conjunction with any one of the other officers
of the Company), on behalf of the Company and in its name, to execute and
deliver to Purchaser a written waiver of the Company's right, in the event of a
default under any mortgage, deed of trust, security agreement or similar
document, now or at any time or times hereafter executed by the Company and
delivered to Purchaser, to a notice and hearing prior to the exercise by
Purchaser of its rights to repossess any Collateral without judicial process or
replevy, attach or levy upon the Collateral without prior notice and hearing;
and
<PAGE> 74
RESOLVED FINALLY, that the proper officers of the Company are each hereby
authorized and directed to take or cause to be taken any and all such additional
actions, in the name and on behalf of the Company or otherwise, as in any such
officer's judgment is necessary, desirable or appropriate in order to consummate
the transactions contemplated by or to otherwise effect the purposes or intent
of the foregoing resolutions.
<PAGE> 75
PIONEER-STANDARD ELECTRONICS, INC.
AMENDED CODE OF REGULATIONS
ARTICLE I - MEETINGS OF SHAREHOLDERS
------------------------------------
Annual Meetings
---------------
SECTION 1. The annual meeting of the shareholders of the
Corporation shall be held in the principal office of the Corporation or at such
other place within or without the State of Ohio as the Directors shall
determine, at such date and time during the month of June or July of each year
as shall be designated by the Board of Directors. If no other date is designated
by the Board of Directors, the annual meeting shall be held at 2:00 p.m. on the
last Thursday in June of each year, or if such date shall fall upon a legal
holiday, the annual meeting shall be held upon the next succeeding day which is
not a legal holiday, at the same hour. Upon due notice, there may also be
considered and acted upon at an annual meeting any matter which could properly
be considered and acted upon at a special meeting.
Special Meetings
----------------
SECTION 2. Special meetings of the shareholders shall be
called by the Chairman of the Board; the President; the Secretary; pursuant to a
resolution of the Board of Directors; or upon the written request of two (2)
Directors, and shall be held at such times and places, within or outside of the
State of Ohio, as shall be specified in the call thereof.
Notice Of Meetings
------------------
SECTION 3. A written notice of each annual and special
meeting, stating the time, place and purposes thereof, shall be given to each
shareholder of record entitled to notice of the meeting in writing by personal
delivery or by mail not less than seven (7) days, and not more than sixty (60)
days before any such meeting, by or at the direction of the President, Chairman
of the Board or Secretary, directed to the last known address of each such
shareholder aforesaid as it appears on the records of the Corporation. All
notices with respect to any shares to which persons are jointly entitled may be
given to that one of such persons who is named first upon the books of the
Corporation, and notice so given shall be sufficient notice to all other persons
jointly entitled to said shares. Notice may be waived in writing by any
shareholder either before or after such meeting, and shall be waived by the
attendance of any shareholder at any such meeting without protesting, prior to
or at the commencement of the meeting, the lack of proper notice.
<PAGE> 76
Quorum
------
SECTION 4. Except as otherwise provided by law, the Articles
of Incorporation, or these Regulations, a quorum at all meetings of shareholders
shall consist of the holders of record of a majority of shares entitled to vote
thereat, present in person or by proxy.
Adjournment
-----------
SECTION 5. If less than a quorum shall be in attendance at the
time for which any meeting of the shareholders shall have been called, the
meeting may be adjourned from time to time by a majority of, the voting shares
present in person or by proxy and entitled to vote, without any notice other
than by announcement at the meeting of the time and place to which it adjourned,
until a quorum shall attend. At any adjourned meeting at which a quorum shall
attend, any business may be transacted which might have been transacted if the
meeting had been held as originally called.
Proxies
-------
SECTION 6. Any person entitled to attend a shareholders'
meeting, to vote thereat, or to execute consents, waivers, or releases, may be
represented at such meeting or an adjourned meeting thereof and vote thereat,
and execute consents, waivers and releases, and exercise any of his other rights
by proxy or proxies appointed by a writing signed by such person, providing the
writing has been filed with the Secretary prior to the action to be taken.
ARTICLE II - DIRECTORS
----------------------
Number, Classification, Term of Office
---------------------------------------
SECTION 1. The Board of Directors shall be divided into three
classes to be known as Class A, Class B and Class C. The number of Directors in
each class may be fixed or changed at any meeting of shareholders called to
elect Directors, at which a quorum is present, by the vote of the holders of a
majority of the shares represented at the meeting and entitled to vote on the
proposal, but no class shall consist of less than three Directors. Unless and
until otherwise so fixed or changed, there shall be three (3) Class A Directors,
four (4) Class B Directors and three (3) Class C Directors. One class of
Directors shall be elected each year and the Directors in each class shall hold
office for a term of three years and until their respective successors are
elected and qualified. In case of any increase in the authorized number of
Directors of any class, any additional Directors provided for and elected to
such class shall hold office for a term which shall coincide with the full term
or the remainder of the term, as the case may be, of such class.
2
<PAGE> 77
Annual Meetings
---------------
SECTION 2. The Board of Directors shall meet immediately
following the adjournment of the annual meeting of shareholders at the place of
the annual shareholders' meeting or at such time and place as may be designated
in writing by a majority of all the Directors, for the purpose of electing
officers or otherwise, and no notice of such meeting need be given to the
Directors in order legally to constitute the meeting; provided, that a majority
of the whole Board shall be present.
Meetings
--------
SECTION 3. Meetings of the Board of Directors may be called by
the Chairman of the Board, the President (or in his absence by a Vice President)
or any two (2) Directors on written notice to each Director, given by personal
delivery or by mail, cablegram or telegram, at least two (2) days before the
time of such meeting. Notice of any such meeting may be waived by any Director,
however, before or after the meeting by writing and shall be deemed to be waived
by any Director who shall attend such meeting in person without protesting,
prior to or at the commencement of the meeting, the lack of proper notice. Any
meeting of the Board of Directors shall be a legal meeting without notice having
been given, if attended by all the members of the Board.
Quorum
------
SECTION 4. At all meetings of the Board of Directors, a
majority of the whole authorized number of Directors shall constitute a quorum
for the transaction of business, except that a majority of the Directors then in
office shall constitute a quorum for purposes of filling a vacancy in the Board.
Telephone Conferences
---------------------
SECTION 5. Meetings of the Board of Directors or any committee
thereof may be held through any communications equipment, if all persons
participating can hear each other, and participation in such a meeting shall
constitute presence at such meeting.
Resignation
-----------
SECTION 6. Any Director may resign at any time by delivering a
signed written notice thereof to the Secretary of the Corporation, which
resignation shall take effect at the time of said delivery or at such other time
as may be specified in said notice.
3
<PAGE> 78
Removal
-------
SECTION 7. All the Directors or all the Directors of a
particular class or any individual Director may be removed from office, with or
without cause, by the vote of the holders of two-thirds of the voting power
entitled to elect Directors in place of those to be removed; provided, that
unless all the Directors or all the Directors of a particular class are to be
removed, no Director shall be removed without cause if the number of shares
voted against his removal would be sufficient to elect at least one Director if
cumulatively voted at an election of all the Directors, or all the Directors of
a particular class, as the case may be.
Vacancies
---------
SECTION 8. Vacancies in the Board of Directors, whether caused
by the death or resignation or removal of a Director, or by an increase in the
authorized number of Directors, or otherwise, may be filled for the unexpired
term by a vote of a majority of the remaining Directors, though less than a
majority of the whole authorized number of Directors.
Board Committees
----------------
SECTION 9. (a) The Board of Directors may from time to time
appoint certain of its members (but not less than three (3)) to act as a
Committee or Committees of Directors, and, subject to the provisions of this
Section, may delegate to any such Committee any of the authority of the Board,
however conferred, other than that of filling vacancies among the Directors or
in any Committee of Directors. The Board of Directors may likewise appoint one
or more Directors as alternate members of any such Committee, who may take the
place of any absent member or members at any meeting of such Committee. Each
such member and each such alternate shall serve in such capacity at the
pleasure of the Board of Directors.
(b) In particular, the Board of Directors may create an
Executive Committee in accordance with the provisions of this Section, if
created, the Executive Committee shall possess and may exercise all of the
powers of the Board in the management and control of the business of the
Corporation during the intervals between meetings of the Board subject to
provisions of this Section. The chairman of the Executive Committee shall be
determined by the Board of Directors from time to time. All action taken by the
Executive Committee shall be reported in writing to the Board of Directors at
its first meeting thereafter.
(c) Each such Committee shall serve at the pleasure of the
Board of Directors, shall act only in the intervals between meetings of the
Board and shall be subject to the control and direction of the Board. Each
Committee shall keep regular minutes of its proceedings and shall report the
same to the Board when required.
(d) An act or authorization of any act by any such Committee
within the authority delegated to it shall be effective for all purposes as the
act or authorization of the Board of Directors. In every case the affirmative
vote of a majority of its members at a meeting, or the
4
<PAGE> 79
written consent of all of the members of any such Committee without a meeting,
shall be necessary for the taking or approval of any action.
(e) Each such Committee may prescribe such rules as it shall
determine for calling and holding meetings and its method of procedure, subject
to the provisions of this Section and any rules prescribed by the Board of
Directors.
Compensation
------------
SECTION 10. The compensation of the Directors shall be such as
the Board of Directors may from time to time determine. On resolution of the
Board of Directors, a fixed sum for expenses of attendance may be allowed for
attendance at each meeting. Members of the Executive Committee or other
Committee of the Board may be allowed such compensation and such expenses for
attending committee meetings as the Board of Directors may determine.
ARTICLE III - OFFICERS
----------------------
Composition
-----------
SECTION 1. The officers of the Corporation shall include a
Chairman of the Board (who shall be a Director), a President, one or more Vice
Presidents (including a Financial Vice President), a Secretary, a Treasurer, and
such other officers as the Board of Directors may determine to be necessary or
appropriate, including, but not limited tog a Vice Chairman of the Board, a
Controller, one or more Executive Vice Presidents, one or more Assistant
Secretaries, and one or more Assistant Treasurers. The Board of Directors may
also appoint such other subordinate officers, employees and agents as it shall
deem necessary, who shall have such authority and shall perform such duties as
from time to time shall be prescribed by the Board.
Election and Term of Office
---------------------------
SECTION 2. The said officers shall be elected by the Board of
Directors by a majority ballot and shall hold office for one (1) year and until
their respective successors are elected and qualified, but shall be subject to
the power of removal hereinafter provided.
Removal
-------
SECTION 3. Any officer elected or appointed by the Board of
Directors may be removed at any time either with or without cause by the
affirmative vote of two-thirds of the Board of Directors. Any other officer or
employee of the Corporation may be removed at any time by vote of the Board of
Directors, or by any committee or superior officer upon whom such power of
removal may be conferred by the Board of Directors.
5
<PAGE> 80
Compensation
------------
SECTION 4. The compensation of the officers of the Corporation
shall be fixed from time to time by the Board of Directors.
Bond
----
SECTION 5. All or any of said officers shall, if the Board of
Directors so determines, furnish bonds for the faithful performance of their
duties in such amount or amounts as the Board of Directors may require, upon
terms, provisions and conditions and with surety or sureties to the satisfaction
of the said Board.
ARTICLE IV - DUTIES OF OFFICERS
-------------------------------
The Chairman of the Board
-------------------------
SECTION 1. The Chairman of the Board shall preside at all
meetings of the Board of Directors. The Chairman of the Board or the President
shall sign the minutes of the shareholders' and Directors' meetings. The
Chairman of the Board shall perform the duties and exercise the powers of the
President in case of the President's disability or absence from the office of
the Corporation. The Chairman of the Board shall have such other powers and
duties as may be prescribed by the Board of Directors.
The President
-------------
SECTION 2. The President shall exercise, subject to the
control of. the Board of Directors, general supervision over the affairs of the
Corporation and shall perform generally, subject to the control of the Board,
all duties customarily incident to the office and such other duties as may be
assigned to him from time to time by the Board of Directors. He shall see that
all orders and resolutions of the Board are carried into effect, subject,
however, to the right of the Board to delegate to any officer or officers of the
Corporation specific powers, other than those that may be by law conferred upon
the President. He shall sign all the certificates of stock, bonds, contracts,
notes, mortgages and other documents authorized by the Board of Directors and
execute for or in the name of the Corporation all endorsements, assignments,
transfers, share powers or other instruments of transfer of securities except in
cases where the execution thereof shall be expressly delegated by the Board or
these Regulations or by law to some other officer or agent of the Corporation.
In case of the disability or absence from office of the Chairman of the Board,
the President shall also perform the duties and exercise the powers of that
office. The President or Chairman of the Board shall sign the records of the
shareholders' and Directors' meetings.
6
<PAGE> 81
Chief Executive and Chief Operating Officers
--------------------------------------------
SECTION 3. The Board of Directors may designate one or more
persons as either Chief Executive Officer or Chief Operating Officer or both and
may specify the duties, authority and responsibilities of each of said officers.
Vice Presidents
---------------
SECTION 4. The Vice President (or if there be more than one,
the Vice President designated by the Board of Directors) shall perform the
duties and exercise the powers of the President in case of his disability or
absence from the office of the Corporation and in case of the disability or
absence from the office of the Corporation of the Chairman of the Board. The
signature of the Corporation by any Vice President to any deed, contract or
other instrument in writing, purporting to be the act of the Corporation, shall
be taken, received and accepted as the authorized and binding act of the
Corporation and with like effect as if made by the President. The Financial Vice
President shall be the Chief Financial Officer of the Corporation. Any Vice
President shall have such further powers, and perform such further duties, as
may be from time to time granted or imposed by the Board of Directors.
Secretary
---------
SECTION 5. The Secretary shall attend all meetings of the
Board and all meetings of the shareholders held at the office of the
Corporation, shall keep minutes of all of the proceedings thereof, and shall
record all votes and the minutes of all of the proceedings in a book to be kept
for that purpose. He shall perform like duties for committees of the Corporation
when so required. He shall give, or cause to be given, notice of all meetings of
the shareholders and of the Board of Directors, and shall attest the seal of the
Corporation when required. The Secretary shall have custody of the seal of the
Corporation, and either he or the Treasurer shall attest the seal and see that
it is affixed to all authorized documents requiring a seal ` The Secretary or
the Treasurer shall sign all certificates of shares in the Corporation and
execute for or in the name of the Corporation all endorsements, assignments,
transfers, share powers or other instruments of transfer of securities. The
Secretary shall perform such other duties usually incident to the office of
Secretary, and such further duties as shall from time to time be prescribed by
the Board of Directors, Chairman of the Board or President. At any meeting of
the shareholders or Board of Directors at which the Secretary is not present, a
secretary pro tempore may be appointed.
Assistant Secretary
-------------------
SECTION 6. In case of the Secretary's sickness, disability or
temporary absence from the office of the Corporation, one or more Assistant
Secretaries, if any, shall perform his duties. The Assistant Secretary or
Secretaries, if any, shall perform such further duties as from time to time may
be prescribed by the Board of Directors, Chairman of the Board, President or
Secretary.
7
<PAGE> 82
Treasurer
---------
SECTION 7. The Treasurer shall, subject to the direction of
the Board of Directors, have custody of the corporate funds and securities and
shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation. He shall deposit all moneys and other valuable
effects in the name of and to the credit of the Corporation, in such
depositories as may be designated by the Board of Directors. The Treasurer or
the Secretary shall attest the seal of the Corporation and see that it is
affixed to all authorized documents requiring a seal. The Treasurer or Secretary
shall sign all certificates for shares in the Corporation and execute for or in
the name of the Corporation all endorsements, assignments, transfers, share
powers or other instruments of transfer of securities. The Treasurer shall
perform such other duties usually incident to the office of Treasurer and such
other duties as may be prescribed by the Board of Directors, Chairman of the
Board or President.
Assistant Treasurer
-------------------
SECTION 8. In case of the Treasurer's sickness, disability or
temporary absence from the office of the Corporation, one or more Assistant
Treasurers, if any, shall perform his duties. The Assistant Treasurer or
Treasurers, if any, shall perform such further duties as from time to time shall
be prescribed by the Board of Directors, Chairman of the Board, President or
Treasurer.
Controller
----------
SECTION 9. The Controller, if one is elected, shall be the
Chief Accounting Officer of the Corporation, and shall have such duties and
responsibilities as are normally incident to that office.
ARTICLE V - SEAL
----------------
SECTION 1. The Seal of the Corporation shall be circular, with
the words and figures "SEAL, PIONEER-STANDARD ELECTRONICS, INC., OHIO," or words
and figures of similar import inscribed thereon.
ARTICLE VI - SHARES
-------------------
CERTIFICATES
------------
SECTION 1. Certificates evidencing the ownership of shares of
the Corporation shall be issued to those entitled to them by transfer or
otherwise. Each certificate for shares shall bear a distinguishing number, the
signature of the President and of the Secretary or the Treasurer, and such
recitals as may be required by law. The certificates for shares shall be of such
tenor and design as the Board of Directors from time to time may adopt.
8
<PAGE> 83
Transfers
---------
SECTION 2. The shares may be transferred on the books of the
Corporation by the registered holders thereof, or by their attorneys legally
constituted in writing or their legal representatives, by surrender of the
certificate or certificates therefor for cancellation and a written assignment
of the shares evidenced thereby. The Board of Directors may, from time to time,
appoint such Transfer Agents or Registrars of shares as it may deem advisable,
and may define their powers and duties. The Board of Directors shall have
authority to make such other rules and regulations as it deems expedient
concerning the issuance, registration and transfer of certificates for shares.
Substituted Certificates
------------------------
SECTION 3. The Board of Directors may order a new certificate
or certificates for shares to be issued in place of any certificate or
certificates alleged to have been lost, stolen or destroyed, but in every such
case the owner of the lost, stolen or destroyed certificate or certificates
shall first make an affirmation of that fact and cause to be given to the
Corporation, if so requested, a bond, with surety or sureties satisfactory to
the Corporation in such sum as said Board of Directors may in its discretion
deem sufficient, as indemnity against any loss or liability that the Corporation
may incur by reason of the issuance of such new certificates; provided, the
Board of Directors may, in its discretion, refuse to issue such new certificate
save upon the order of some court having jurisdiction in such matters.
Closing of Transfer Books
-------------------------
SECTION 4. The share transfer books of the Corporation may be
closed by order of the Board of Directors for a period not exceeding sixty (60)
days prior to any meeting of the shareholders, and for a period not exceeding
sixty (60) days prior to the payment of any dividend. The times during which the
books may be closed shall, from time to time, be fixed by the Board of
Directors.
ARTICLE VII - NOTICES
---------------------
Notice By Mail
--------------
SECTION 1. Whenever, under the provisions of these
Regulations, notice is permitted to be given to any shareholder or Director by
mail, it may be given by depositing the same in the post office or letter box,
in a postpaid sealed wrapper, addressed to the shareholder or Director, at such
address as appears on the books of the Corporation; and such notice shall be
deemed to be given at the time when the same shall be thus deposited in the
mail.
9
<PAGE> 84
Notice by Telegraph
--------------------
SECTION 2. Whenever, under the provisions of these
Regulations, notice is permitted to be given to any Director by telegraph, it
may be given by a prepaid telegram addressed to such Director at such address as
appears on the books of the Corporation, or in default of other address, at his
place of residence or usual place of business, last known to the Corporation,
and such notice shall be deemed to be given at the time such telegram shall be
delivered to the telegraph company for transmittal.
ARTICLE VIII - INDEMNIFICATION
------------------------------
SECTION 1. Each person who is or was a Director, Officer,
Employee or Agent of the Corporation, or is or was serving at the request of the
Corporation as a Director, Officer, Employee, Trustee or Agent of another
corporation, domestic or foreign, non-profit or -for profit, partnership, joint
venture, trust or other enterprise, shall be indemnified by the Corporation as
follows:
(a) If such person was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative,
other than an action by or in the right of the Corporation, by reason
of his being or having been such Director, Officer, Trustee, Agent or
Employee, such person shall be indemnified against expenses, including
attorney's fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action,
suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of
the Corporation and, with respect to any criminal action or proceeding,
he had no reasonable cause to believe his conduct was unlawful;
provided the termination of any action, suit or proceeding by judgment,
order, settlement or conviction, or upon a plea of nolo contenders or
its equivalent, shall not, of itself, create a presumption that the
person did not act in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation, and
with respect to any criminal action or proceeding, shall also not
create a presumption that the person had reasonable cause to believe
that his conduct was unlawful; or
(b) If such person was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by
or in the right of the Corporation to procure a judgment in its favor
by reason of his having been such Director, Officer. Trustee, Agent or
Employee, such person shall be indemnified against expenses, including
attorneys' fees, actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, except that no
indemnification shall be made in respect of either (i) any claim, issue
or matter to which such person is adjudged to be liable for negligence
or misconduct in the performance of his duty to the Corporation unless,
and only to the extent that, the Court of Common Pleas or the court in
which such action or suit was brought determines upon
10
<PAGE> 85
application that, despite the adjudication of liability but in view
of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the Court of
Common Pleas or such other court shall deem proper or (ii) any action
or suit involving a Director in which the only liability asserted
against such director is pursuant to Section 1701.95 of the Ohio
Revised Code.
SECTION 2. To the extent that such a Director, Officer,
Trustee, Agent or Employee has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Paragraph (a) or (b) of
Section I of this Article, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses, including attorney's fees, actually
and reasonably incurred by him in connection with the action, suit or
proceeding.
SECTION 3. In all cases in which the Director, Officer,
Trustee, Agent or Employee may be entitled to indemnification under Paragraphs
(a) or (b) of Section 1 of this Article, any indemnification, unless ordered by
a court, shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the Director, Officer,
Trustee, Employee or Agent is proper in the circumstances because he has met the
standards of conduct set forth in Paragraph (a) or (b) of Section 1 of this
Article, whichever is applicable. Such determination shall be made as follows:
(a) By a majority vote of a quorum of the Corporation's
Directors who were not and are not parties to or threatened with any
such action, suit or proceeding; or
(b) If such a quorum is not obtainable or if a majority of a
quorum of disinterested Directors so directs, in a written opinion by
independent legal counsel other than an attorney or a firm having
associated with it an attorney who has been retained by or who has
performed services for the Corporation or any person to be' indemnified
within the past five (5) years; or
(c) By the shareholders; or
(d) By the Court of Common Pleas or the court in which such
action, suit or proceeding was brought.
Any determination made by the disinterested Directors under Paragraph (a) or by
independent legal counsel under Paragraph (b) of Section 3 of this Article shall
be promptly communicated to the person who threatened or brought the action or
suit by or in the right of the Corporation, if the expenses for which
indemnification has been sought were incurred in an action or suit by or in the
right of the Corporation.
SECTION 4. In the case of an action, suit or proceeding
involving a Director, unless the only liability asserted against such Director
in a proceeding referred to in paragraphs (a) or (b) of Section I of this
Article is pursuant to Section 1701.95 of the Ohio Revised Code, the Corporation
shall pay expenses, including attorney's fees, incurred by a Director in
defending such an action, suit or proceeding as they are incurred in advance of
the final disposition of such action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the Director in
11
<PAGE> 86
which such Director agrees to both (i) repay such amount if it is proven by
clear and convincing evidence in a court of competent jurisdiction that his
action or failure to act involved an act or omission undertaken with deliberate
intent to cause injury to the Corporation or undertaken with reckless disregard
to the best interests of the Corporation, and (ii) reasonably cooperate with the
Corporation concerning the action, suit or proceeding.
SECTION 5. The Corporation may pay expenses, including
attorney's fees incurred in defending any action, suit or proceeding referred to
in Paragraph (a) or (b) of Section 1 of this Article as they are incurred in
advance of the final disposition of such action, suit or proceeding, as
authorized by the Directors in the specific case upon receipt of an undertaking
by or on behalf of the Trustee, Director, Officer, Employee or Agent to repay
such amount if it ultimately is determined that he is not entitled to be
indemnified by the Corporation as authorized in this Article.
SECTION 6. The rights of indemnification herein authorized
shall be severable, shall not be deemed exclusive of, and shall be in addition
to, any other rights granted to those seeking indemnification under the Articles
of Incorporation or any agreement, vote of shareholders or disinterested
Directors, or otherwise, both as to actions in the official capacity of the
person seeking indemnity, and as to actions in another capacity while holding
such office and shall continue as to a person who has ceased to be a Director,
Officer, Trustee, Agent or Employee and shall inure to the benefit of the heirs,
executors and administrators of such a person.
SECTION 7. The Corporation may purchase and maintain insurance
or furnish similar protection, including but not limited to, trust funds,
letters of credit or self-insurance, on behalf of or for any person who is or
was a Director, Officer, Employee or Agent of the Corporation, or is or was
serving at the request of the Corporation as a Director, Officer, Trustee,
Employee or Agent of another corporation, domestic or foreign, nonprofit or for
profit, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under this Article. Insurance may
be purchased from or maintained with a person in which the Corporation has a
financial interest.
SECTION 8. The Corporation's authority to indemnify persons
pursuant to paragraphs (a) and (b) of Section 1 of this Article does not limit
the payment of expenses as they are incurred, indemnification, insurance or
other protection that may be provided pursuant to Sections 5, 6, and 7 of this
Article; paragraphs (a) and (b) of Section 1 of this Article do not create any
obligation to repay or return payments made by the Corporation pursuant to
Sections 5, 6, or 7 or this Article.
SECTION 9. As used in this Article, references to
"Corporation" include all constituent corporations in a consolidation or merger
and the new or surviving corporation, so that any person who is or was a
Director, Officer, Employee or Agent of such a constituent corporation, or is or
was serving at the request of such constituent corporation as a Director,
12
<PAGE> 87
Officer, Trustee, Employee or Agent of another corporation, domestic or foreign,
nonprofit or for profit, partnership, joint venture, trust or other enterprise
shall stand in the same position under this Article with respect to the new or
surviving corporation as he would if he had served the new or surviving
corporation in the same capacity.
SECTION 10. The provisions of this Article shall apply to
actions, suits and proceedings, whether civil (including, but not limited to,
actions by or in the right of the Corporation), criminal, administrative or
investigative, commenced or threatened after the adoption of this Article,
whether arising from acts or omissions to act occurring before or after its
adoption.
SECTION 11. Notwithstanding the foregoing, the Corporation
shall, to the extent permitted by the Ohio Revised Code, as amended from time to
time, indemnify and reimburse all persons whom it may indemnify and reimburse
pursuant thereto. The indemnification provided for in this Article shall not be
deemed exclusive of any other rights to which those entitled to receive
indemnification or reimbursement hereunder may be entitled under the Articles of
the Corporation, agreement, vote of shareholders or disinterested directors or
otherwise.
ARTICLE IX - FISCAL YEAR
------------------------
The fiscal year of the Corporation shall be determined by the
Directors of the Corporation.
ARTICLE X - AMENDMENTS
----------------------
These Regulations may be amended or repealed or new
Regulations adopted at any meeting of shareholders by the affirmative vote of
the holders of record of shares entitling them to exercise two-thirds of the
voting power of the Corporation on such proposal, or may be adopted without a
meeting by the written consent of the holders of shares entitling them to
exercise two-thirds of the voting power on such proposal; provided, however,
that if the Regulations are amended or new Regulations are adopted at any
meeting of shareholders, notice of the proposed new Regulations, or the proposed
amendment or repeal, shall be included in the notice of such meeting, or if the
Regulations are amended or new Regulations are adopted without a meeting of the
shareholders, the Secretary of the Corporation shall mail a copy of the
amendment or the new Regulations to each shareholder who would have been
entitled to vote thereon and did not participate in the adoption thereof.
13
<PAGE> 88
SCHEDULE 12.1
EXISTING LIENS
1. See the attached UCC-11 Lien Search Summary dated October 12, 1990 and
attached hereto as Attachment A. The aggregate Indebtedness represented
by all of the liens listed in Attachment A does not exceed One Million
Four Hundred Thousand Dollars ($1,400,000).
2. Mortgage and security interest of the County of Montgomery, Ohio, dated
December 1, 1979, relating to the Two Million Two Hundred Thousand
Dollar ($2,200,000) Industrial Development First Mortgage Revenue Bonds
(Pioneer-Standard Electronics, Inc. Project). The outstanding principal
balance as of October 31, 1990, is One Million Two Hundred Thousand
Dollars ($1,200,000).
3. Mortgage and security interest of The Equitable Life Assurance Company,
dated March 27, 1980, securing indebtedness in the original principal
amount of Five Hundred Thousand Dollars ($500,000). The outstanding
principal balance as of October 31, 1990, is approximately Three
Hundred Eighty-Four Thousand Three Hundred Sixty-Two and 48/100 Dollars
($384,362.48).
12.1-1
<PAGE> 89
Private Placement Number: 723877 A# 3
EXHIBIT A
[Form of Note]
PIONEER-STANDARD ELECTRONICS, INC.
9.79% SENIOR NOTE
DUE NOVEMBER 1, 2000
R- ____________________, _____
$ New York, New York
PIONEER-STANDARD ELECTRONICS, INC. (the "Company"), an Ohio
corporation, for value received, hereby promises to pay to
______________________________ or registered assigns, the principal sum of
_________________________________________ on November 1, 2000; and to pay
interest (computed on the basis of a 360-day year of twelve 30-day months) on
the unpaid principal balance thereof from the date of this Note at the rate of
9.79% per annum, semiannually on each May 1 and November 1, commencing May 1,
1991, until the principal amount hereof shall become due and payable, and to
pay, on demand, interest on any overdue principal, including any overdue
prepayment of principal and premium, if any, and (to the extent permitted by
applicable law) on any overdue installment of interest, at the rate of 11.79%
per annum.
Payment of principal, premium, if any, and interest shall be
made to the registered holder hereof in such coin or currency of the United
States of America as at that time of payment shall be legal tender for the
payment of public and private debts, at the office of the Company at 4800 East
131st Street, Cleveland, Ohio 44105, or at such other location designated under
Section 9.1 of the Purchase Agreement referred to below, in each case subject to
the right of the registered holder hereof under said Purchase Agreement to
receive direct payment in immediately available funds.
This Note is one of the 9.79% Senior Notes due November 1,
2000 of the Company issued in an aggregate principal amount limited to
$20,000,000 pursuant to the Purchase Agreement dated as of October 1 1990,
between the Company and the original purchaser of tire Notes (the "Purchase
Agreement") and is entitled to the benefits thereof.
As and to the extent provided in the Purchase Agreement this
Note is, in certain cases, subject to required prepayment, in whole or in part
without premium, and in other cases, to optional prepayment, in whole with
premium. The Company agrees to make required prepayments on account of said
Notes in accordance with the provisions of the Purchase Agreement.
A-1
<PAGE> 90
Under certain circumstances, as specified in the Purchase
Agreement, the principal of and accrued interest on this Note may be declared
due and payable in the manner and with the effect provided in the Purchase
Agreement.
This Note has not been registered under the Securities Act of
1933, as amended, or the laws of any state and may be transferred in whole or in
part only pursuant to an effective registration under such Act or under an
exemption from such registration available under such Act. Subject to the
foregoing, transfers of this Note shall be registered upon registration books
maintained for such purpose by or on behalf of the Company as provided in the
Purchase Agreement. Prior to presentation of this Note for registration of
transfer, the Company shall treat the person in whose name this Note is
registered as the owner and holder of this Note for the purpose of receiving all
payments of principal and interest hereon and for all other purposes whatsoever,
whether or not this Note shall be overdue, and the Company shall not be affected
by notice to the contrary.
The Company agrees to perform and observe duly and punctually
each of the covenants and agreements set forth in the Purchase Agreement. All
such covenants and agreements are incorporated by reference in this Note, and
this Note shall be interpreted and construed as if all such covenants and
agreements were set forth in full in this Note at this place. All capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Purchase Agreement.
This Note shall be governed by and construed in accordance
with the law of the State of New York.
IN WITNESS WHEREOF, PIONEER-STANDARD ELECTRONICS, INC. has
caused this Note to be duly executed on its behalf by its officer thereunto duly
authorized.
PIONEER-STANDARD
ELECTRONICS, INC.
By:
-------------------------
Title:
A-2
<PAGE> 91
EXHIBIT B
CONSENTS
NONE.
B-1
<PAGE> 92
EXHIBIT C
PERMITTED AFFILIATE TRANSACTIONS
1. Any rights, duties or obligations of the Company under that certain
Stock Purchase Agreement dated as of July 24, 1986, among the Company,
Pioneer/Technologies and certain individual shareholders of
Pioneer/Technologies.
2. The "computer system sharing" arrangement between the Company and
Pioneer/Technologies set forth in that certain Agreement, dated April
4, 1984 between the Company and Pioneer/Technologies (f/k/a Pioneer
Washington Electronics, Inc.) pursuant to such Agreement the Company
has agreed to allow Pioneer/Technologies access to the Company's
computer system.
3. The "inventory swap" arrangement between the Company and
Pioneer/Technologies pursuant to which each party may purchase the
other party's products (other than certain excluded products) at such
other party's cost plus a service charge of $4.00 per line item
purchased.
4. Any business referrals between the Company and Pioneer/Technologies
regarding their respective customers. The Company and
Pioneer/Technologies generally refer potential customers to one another
based upon vendor considerations, product service considerations,
inventory location considerations, demand for products, and customer
convenience.
C-1
<PAGE> 1
EXHIBIT 5.1
[CALFEE, HALTER & GRISWOLD LLP LETTERHEAD]
May 8, 1997
Pioneer-Standard Electronics, Inc.
4800 East 131st Street
Cleveland, Ohio 44105
In connection with the filing by Pioneer-Standard Electronics, Inc., an
Ohio corporation (the "Company"), with the Securities and Exchange Commission
under the provisions of the Securities Act of 1933, as amended, of a
Registration Statement on Form S-3 with respect to up to 220,000 of the
Company's Common Shares, without par value (the "Common Shares"), to be sold by
Wachovia Bank of North Carolina, N.A. as trustee (the "Trustee") of The Pioneer
Stock Benefit Trust (the "Trust") established by the Share Subscription
Agreement and Trust, dated July 2, 1996, between the Company and the Trustee
(the "Agreement"), we have examined the following:
(i) the Amended Articles of Incorporation and the Amended Code of
Regulations of the Company, each as currently in effect;
(ii) the form of Registration Statement on Form S-3 (including
Exhibits thereto) referred to above and to be filed with the
Securities and Exchange Commission (the "Registration
Statement");
(iii) the Agreement; and
(iv) such other documents as we deemed it necessary to examine as a
basis for the opinions hereinafter expressed.
Based upon the foregoing, we are of the opinion that the Common Shares
to be sold by the Trustee are duly authorized and validly issued and, when
payment for such shares is received as provided in the Agreement, will be fully
paid and nonassessable.
We are attorneys licensed to practice law in the State of Ohio. The
opinions expressed herein are limited solely to the federal law of the United
States of America and the laws of the State of Ohio. We express no opinion as to
the effect or applicability of the laws of any other jurisdiction.
This opinion is delivered to you solely in connection with the filing
of the Registration Statement with respect to the Common Shares, and this letter
and the opinions stated herein may not be relied upon for any other purpose or
by any persons other than the Directors and executive officers of the Company.
We consent to the filing of this opinion with the Registration
Statement and to the use of our name therein under the caption "Validity of
Shares."
Respectfully submitted,
CALFEE, HALTER & GRISWOLD LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of Pioneer-Standard
Electronics, Inc. for the registration of 220,000 Common Shares and to the
incorporation by reference therein of our reports dated May 1, 1996, with
respect to the consolidated financial statements and schedule of
Pioneer-Standard Electronics, Inc. incorporated by reference and included in its
Annual Report (Form 10-K) for the year ended March 31, 1996, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Cleveland, Ohio
May 8, 1997
<PAGE> 1
EXHIBIT 24.1
PIONEER-STANDARD ELECTRONICS, INC.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Pioneer-Standard Electronics, Inc.
hereby constitutes and appoints James L. Bayman, Arthur Rhein, John V. Goodger,
William A. Papenbrock or Edward W. Moore, or any one or more of them, its
attorneys-in-fact and agents, each with full power of substitution and
resubstitution for it in any and all capacities to sign any or all amendments or
post-effective amendments to this Registration Statement and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each of such attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary in connection with such matters and hereby
ratifying and confirming all that each of such attorneys-in-fact and agents or
his substitute or substitutes may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this Power of Attorney has been signed at
Cleveland, Ohio this 7th day of May, 1997.
PIONEER-STANDARD ELECTRONICS, INC.
By /s/ John V. Goodger
------------------------
John V. Goodger,
Vice President, Treasurer
and Assistant Secretary
<PAGE> 2
EXHIBIT 24.1
(CONTINUED)
PIONEER-STANDARD ELECTRONICS, INC.
CERTIFIED RESOLUTION
I, John V. Goodger, Assistant Secretary of Pioneer-Standard
Electronics, Inc., an Ohio corporation (the "Company"), do hereby certify that
the following is a true copy of a resolution adopted by the Board of Directors
on November 5, 1996 and that the same has not been changed and remains in full
force and effect.
RESOLVED FURTHER: That James L. Bayman, John V. Goodger, Arthur Rhein,
William A. Papenbrock and Edward W. Moore, be, and each of them hereby is
appointed as the attorney of the Company with full power of substitution and
resubstitution for and in the name, place and stead of the Company to sign,
attest and file a Registration Statement on Form S-3 or any other appropriate
form that may be used from time to time, with respect to the Shares issued in
connection with the Trust and any and all amendments, post-effective amendments
and exhibits to such Registration Statement and any and all applications or
other documents to be filed with the Securities and Exchange Commission and any
and all applicable applications or other documents in connection with inclusion
on the National Association of Securities Dealers Automated Quotation System of
the Shares or any and all applications or other documents to be filed with any
governmental or private agency or official relative to the issuance of said
Shares, with full power and authority to do and perform any and all acts and
things whatsoever requisite and necessary to be done in the premises, hereby
ratifying and approving the acts of such attorneys or any such substitute or
substitutes and, without implying limitation, including in the above the
authority to do the foregoing things on behalf of the Company in the name of any
duly authorized officer of the Company; and the Chief Executive Officer of the
Company or any Vice President be, and they hereby are authorized for and on
behalf of the Company to execute a Power of Attorney evidencing the foregoing
appointments.
/s/ John V. Goodger
-------------------------------
John V. Goodger,
Assistant Secretary
Dated: May 7, 1997
