<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM 10-K
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the Fiscal Year Ended April 1, 1995
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from ____________
to ________________.
Commission file number 0-14643
KENT ELECTRONICS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Texas 74-1763541
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
7433 Harwin Drive 77036-2015
Houston, Texas (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (713) 780-7770
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, without par value New York Stock Exchange, Inc.
(Title of each class) (Name of each exchange on
which registered)
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/
The aggregate market value of the voting stock held by non-affiliates
of the Registrant as of May 9, 1995 was approximately $280,564,096.
As of May 9, 1995 there were outstanding 9,804,743 shares of Common
Stock, without par value.
DOCUMENTS INCORPORATED BY REFERENCE
The Proxy Statement for the 1995 Annual Meeting of Shareholders of the
Registrant (Sections entitled "Common Stock Outstanding and Principal Holders
Thereof," "Proposal No. 1 - Election of Directors" and "Executive Officers") is
incorporated by reference in Part III of this Report.
================================================================================
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
Kent Electronics Corporation (the "Company") is a leading national
specialty distributor of electronic products and a manufacturer of custom-made
electronic assemblies. The Company, through its Kent Components Distribution
division ("Components"), distributes electronic connectors, electronic wire and
cable, and other passive and electromechanical products and interconnect
assemblies used in assembling and manufacturing electronic equipment. The
Company, through its wholly owned subsidiary K*TEC Electronics Corporation
("K*TEC"), also manufactures custom-made electronic interconnect assemblies,
battery power packs and other sub-assemblies that are built to customers'
specifications. Through Kent Datacomm ("Datacomm"), the Company offers a broad
range of premise wiring products directly to commercial end-users and
professionals who install and service voice and data communications networks,
including local area networks (LANs).
The Company's customers are primarily industrial users and original
equipment manufacturers, or "OEMs," served by the Company's 21 sales offices
and distribution facilities in Texas, California, Minnesota and 14 other
states, and by its manufacturing facilities in Houston and Dallas, Texas and
the San Jose, California area. In 1987, the Company made its first substantial
expansion out of Texas by entering the southern California market through the
acquisition of Electro-Sonic Components ("Electro- Sonic"). In 1990, the
Company's West Coast operations were further expanded with the purchase of
Pyramid Electronics Supply, Inc. ("Pyramid"), thereby adding a manufacturing
facility in the San Jose area and distribution facilities in California and
Washington. In January 1992, the Company acquired Shelley-Ragon, Inc.
("Shelley-Ragon"), a privately-held specialty distributor of connectors,
capacitors, resistors and electromechanical components based in St. Paul,
Minnesota. The Company's OEM customers serve many industries, including the
computer and data processing, telecommunications, medical instrumentation,
aerospace systems and energy industries.
The Company has chosen not to participate in the semiconductor
products and computer hardware segments of the electronics distribution
industry. The market for the Company's products has historically remained more
stable than that for semiconductors and computer hardware and has not been
affected to the same degree by technological changes or price fluctuations. A
majority of the products distributed by the Company are readily adaptable to
various end-users in a wide range of industries.
The Company has concentrated its efforts on certain market niches and
has not attempted to be a broad-line distributor. Moreover, it has followed a
strategy of distributing the products of a relatively small group of leading
suppliers. The Company believes that these factors provide its marketing
personnel with the advantage of greater familiarity with the products they
sell.
- 2 -
<PAGE> 3
Unless the context indicates otherwise, all references to the
"Company" include Kent Electronics Corporation and all of its subsidiaries.
DISTRIBUTION
GENERAL. The principal focus of the Company's distribution business,
conducted through its Components division, is to provide its industrial and OEM
customers with rapid and reliable deliveries of specialty wiring and connector
products and other electronic components and assembled parts as well as a wide
variety of materials management services. The Company utilizes a computerized
system of inventory control to assist in the marketing of its products and
coordinate purchases from suppliers with sales to customers. The Company's
computer system provides detailed on-line information regarding the
availability of the Company's entire stock of inventory located at its stocking
facilities and also on-line access to the inventories of most of the Company's
major suppliers. Through the Company's integrated real-time information
system, customers' orders can readily be tracked through the entire process of
entering the order, reserving products to fill the order, ordering components
from suppliers, if necessary, and shipping products to customers on scheduled
dates. The Company is thus able to provide the type of distributor service
required by its OEM customers that have adopted the "just-in-time" method of
inventory procurement. The "just-in-time" method is utilized in an effort to
operate more efficiently and profitably by relying on scheduled deliveries of
such components at the time they are needed in the production process and
thereby reducing inventories of components.
The principal products the Company distributes consist of connectors,
receptacles and sockets, which collectively accounted for approximately 19%,
20% and 20% of the Company's total sales in its fiscal years ended in 1995,
1994 and 1993, respectively, and other electronic connecting components, such
as cable and wiring products, which accounted for approximately 8%, 8% and 9%
of the Company's total sales in such years. In addition, the Company
distributes capacitors, resistors and electromechanical parts.
As is customary in the electronic distribution industry, the Company
has no long-term contracts with its suppliers, and instead operates under
short-term contracts. In the Company's past experience, such contracts have
typically been renewed from year to year. In the year ended April 1, 1995, the
Company's purchases from AMP represented approximately 24% of its total
purchases. Although the Company believes that it may be able to obtain
competitive products of comparable quality from other suppliers, the loss of
such supplier could have an adverse impact on the Company's operations.
AFTERMARKET OPERATIONS. Datacomm serves the voice and data
communications after-market. Through a focused sales effort, Datacomm offers a
broad range of premise wiring products to commercial end-users and
professionals who install or service voice and data communications networks.
Through such a marketing approach, the Company believes it is able to
participate directly in the large and rapidly growing market for connection
devices, reflecting the increasing use of microcomputers in LANs and the
continued growth in networking and
- 3 -
<PAGE> 4
cabling needs of minicomputer and mainframe users. Datacomm can provide
customers with immediate off-the-shelf delivery of voice and data
communications wiring products. The Company, through Datacomm, is an
authorized distributor of AMP, AT&T, Belden, Cabletron and other LAN systems.
Datacomm serves numerous industries, including those in the manufacturing,
airline, government, food, medical, media, financial and aerospace areas.
MANUFACTURING
K*TEC manufactures a wide variety of wiring harnesses, cable
assemblies, other subassemblies and custom battery power packs, all of which
are built to the specifications of individual customers. The Company has
developed innovative material requirements planning (MRP) relationships with a
select group of OEMs in the data processing, telecommunications, medical
instrumentation and energy industries. These relationships are supported by
sophisticated in-house product design and technical support capabilities.
K*TEC support teams work closely with K*TEC's customers through all stages of
product planning and production to apply the latest design and production
technology. K*TEC's computer systems have a computer aided design capability
that allows its engineers to be on-line with an OEMs engineer when developing
and changing product designs.
K*TEC's quality control standards provide another means of serving the
needs of the Company's just-in-time customers, since an important aspect of the
just-in-time method is that OEMs rely on suppliers to assure quality control
for subassemblies rather than providing such quality control themselves. The
Company believes that K*TEC's adherence to strict quality control standards and
investment in state-of-the-art production facilities and equipment have
attracted and retained important customers who have established extremely rigid
product quality standards.
Substantially all of the Company's manufacturing business is contract
manufacturing. The contract manufacturing business is generally characterized
by close working relationships with a relatively small number of customers.
Sales of K*TEC's products represented approximately 38%, 34%, and 33% of the
Company's total sales for the fiscal years ended in 1995, 1994 and 1993,
respectively. The Company believes that its profit margins from sales of
manufactured products is generally greater than its profit margin on sales of
distributed products.
ACQUISITIONS
ACQUISITION OF SHELLEY-RAGON. In January 1992, the Company acquired
Shelley-Ragon, a privately-held specialty distributor of connectors,
capacitors, resistors and electromechanical components based in St. Paul,
Minnesota, by merging Shelley-Ragon into the Company. Shelley-Ragon had sales
of approximately $46 million in its fiscal year ended November 2, 1991. Prior
to the acquisition by the Company, the Company assisted Shelley-Ragon in
achieving improved operating profit. The operations of Shelley- Ragon have
been fully integrated into the Company's operations.
- 4 -
<PAGE> 5
MARKETING
The Company's sales representatives undergo continuous training and
attend classes in order to enhance both their technical expertise and sales
techniques. Sales associates are compensated primarily on a commission basis.
The Company uses direct mailings of brochures and catalogs as well as
advertising in trade journals in the marketing of its products.
The Company's strategy has been to concentrate its efforts in certain
market niches in which it only distributes the products of a relatively small
number of leading suppliers. In addition, because sales personnel specialize
within related product groupings, they are able to develop a high degree of
technical expertise.
COMPETITION
The Company faces substantial competition from a large number of
distributors, suppliers and manufacturers, some of which are larger, have
greater financial resources, broader name recognition, and may, in some
instances, have lower manufacturing costs than the Company.
The Company's manufacturing operations encounter competition from both
domestically manufactured products and products manufactured outside the United
States. Such foreign-manufactured products are often sold at prices below the
Company's prices for comparable products. The Company's products are not
protected from competition by virtue of any proprietary rights such as trade
secrets or patents. The Company competes by providing its customers with
reliable, rapid delivery of products that are priced at competitive levels and
meet strict quality control standards.
BACKLOG
Based upon the Company's internal backlog tracking system, and
including verbal orders from customers as well as written purchase orders, the
Company believes its backlog was approximately $39 million and $29 million at
April 1, 1995 and April 2, 1994, respectively. Backlog consists of orders the
Company believes to be firm, a substantial portion of which are scheduled for
shipment within three months. Customers are generally permitted to modify,
reschedule or cancel their orders without penalty. Although historically the
Company's backlog figures have provided an indication of sales in the short
term, due to the nature of the Company's business, backlog may not be a
reliable indicator of future sales.
EMPLOYEES
At April 1, 1995, the Company employed 957 persons, all on a full time
basis. The Company's employees are not subject to any collective bargaining
agreement. In addition to its employees, the Company uses other workers on a
contract basis, as its needs require.
- 5 -
<PAGE> 6
TRADEMARKS
The Company has registered a number of trademarks and service marks
relating to the operation of its business. These have been of value to the
Company in the past and are expected to be of value in the future. The loss of
a single trademark or service mark other than "KE Kent Electronics" or "K*TEC
Electronics," in the opinion of management, would not have a material adverse
effect on the conduct of its business.
ITEM 2. PROPERTIES
The Company's headquarters are located in a 66,000 square foot office
facility in Houston, Texas, of which approximately 56,000 square feet are
presently used by the Company. The Company also owns a 2.7 acre tract of
vacant land adjacent to the office facility. In nearby office, sales, stocking
and manufacturing facilities, the Company uses approximately 15,000 square feet
of space for office purposes and approximately 156,000 square feet for
warehousing and manufacturing operations. The Company owns a 10.8 acre tract
of land adjoining these Houston facilities. The distribution and manufacturing
facilities in Dallas, Texas are located in approximately 34,000 square feet of
space and are subject to a lease expiring in May 1999. The Company has a lease
expiring in April 1998 in the San Jose, California area covering approximately
40,000 square feet for manufacturing facilities. The Company's San Jose,
California distribution facility contains approximately 13,000 square feet with
a lease expiring in February 2000. The Company's St. Paul, Minnesota
distribution facilities comprise approximately 22,000 square feet subject to a
lease expiring in October 1997. At the end of fiscal 1995, the Company's other
facilities, located in Austin, Texas; Fountain Valley, California; Seattle,
Washington; Wallingford, Connecticut; Baltimore, Maryland; Rome, New York;
Orlando, Florida; San Diego, California; Phoenix, Arizona; Denver, Colorado;
Kansas City, Kansas; Cedar Rapids, Iowa; Huntsville, Alabama; Chicago,
Illinois; Boston, Massachusetts; Portland, Oregon; and Pine Brook, New Jersey
occupied an aggregate of approximately 87,000 square feet subject to leases
expiring at various times through 1999. Most of the leases are subject to
renewal at the option of the Company for a term at least equal to the initial
term, but at a newly determined rental rate.
In March 1995, the Company purchased a 66 acre parcel of land and
acquired a four-year option to purchase an adjacent 30 acres in Sugar Land,
Texas. A 250,000 square foot manufacturing, warehouse and administrative
facility is currently under construction at this site. The Company's
facilities are adequate for its current operations. As the Company's
operations expand, the Company expects to continue to expand its facilities.
- 6 -
<PAGE> 7
ITEM 3. LEGAL PROCEEDINGS
The Company is engaged in litigation occurring in the normal course of
business. In the opinion of management, based upon advice of counsel, the
ultimate outcome of these lawsuits will not have a material impact on the
Company's consolidated financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
COMMON STOCK PRICE RANGE
The Company's Common Stock is listed on the New York Stock Exchange
and trades under the symbol KNT. The following table presents the high and low
closing prices for the Company's Common Stock for each fiscal quarter of the
Company's fiscal years ended 1994 and 1995 and for a portion of the Company's
current quarter, as reported by the New York Stock Exchange.
<TABLE>
<CAPTION>
HIGH LOW
------ -------
<S> <C> <C>
FISCAL YEAR ENDED 1994
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . $18.17 $13.92
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . 17.25 13.67
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . 19.09 17.17
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . 21.17 17.83
FISCAL YEAR ENDED 1995
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . $21.33 $17.83
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . 24.33 20.33
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . 26.67 22.83
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . 30.75 25.84
FISCAL YEAR ENDED 1996
First Quarter (through May 9) . . . . . . . . . . . . . . . . . $30.38 $28.13
</TABLE>
On May 9, 1995, there were approximately 1,057 holders of record of
the Company's Common Stock.
- 7 -
<PAGE> 8
DIVIDEND POLICY
Historically, the Company has reinvested earnings available to Common
Stock in its business and, accordingly, has not paid any dividends on its
Common Stock. On March 1, 1995, the Company's Common Stock was split
three-for-two to shareholders of record on February 15, 1995, and was effected
as a 50% stock dividend. Although the Company intends to continue to invest
future earnings in its business, it may determine at some future date that
payment of cash dividends on Common Stock would be desirable. The payment of
any such dividends would depend, among other things, upon the earnings and
financial condition of the Company.
ITEM 6. SELECTED FINANCIAL DATA
The following table summarizes selected consolidated financial data of
the Company and should be read in conjunction with the "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
Consolidated Financial Statements included elsewhere herein.
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------------------------------------------------------
April 1, April 2, April 3, March 28, March 30,
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
(Dollars in thousands, except per share and percentage amounts)
<S> <C> <C> <C> <C> <C>
Operating Statement Data:
Net sales . . . . . . . . . . . $ 253,484 $ 192,887 $ 154,677 $ 94,695 $ 71,013
Gross profit . . . . . . . . . 64,877 50,648 42,270 26,489 20,493
Earnings before income taxes. . 22,075 15,379 12,162 9,166 6,026
Income taxes . . . . . . . . . 8,689 5,844 4,439 3,397 2,250
Net earnings . . . . . . . . . $ 13,386 $ 9,535 $ 7,723 $ 5,769 $ 3,776
Net earnings as a percentage
of net sales . . . . . . . . . 5.3% 5.0% 5.0% 6.1% 5.3%
Earnings per share . . . . . . $ 1.32 $ .96 $ .80 $ .69 $ .63
Weighted average shares . . . . 10,138 9,881 9,675 8,420 6,002
</TABLE>
<TABLE>
<CAPTION>
April 1 April 2, April 3, March 28, March 30,
1995 1994 1993 1992 1991
------- -------- -------- --------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total assets . . . . . . . . . $ 133,890 $ 114,507 $ 98,390 $ 84,581 $ 35,868
Long-term debt, less current
maturities . . . . . . . . . -- -- -- -- 733
Stockholders' equity . . . . . 108,800 92,519 81,695 71,592 28,106
</TABLE>
- 8 -
<PAGE> 9
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table presents, as a percentage of sales, certain
selected consolidated financial data for each of the three years, as indicated.
<TABLE>
<CAPTION>
Fiscal Year Ended
------------------------------------------
April 1, April 2, April 3,
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Manufacturing . . . . . . . . . . . . . . . . . . . 38.0% 34.4% 33.2%
Distribution . . . . . . . . . . . . . . . . . . . 62.0 65.6 66.8
----- ----- -----
Net sales . . . . . . . . . . . . . . . . . . . . . 100.0 100.0 100.0
Cost of sales . . . . . . . . . . . . . . . . . . . 74.4 73.7 72.7
----- ----- -----
Gross profit . . . . . . . . . . . . . . . . . . . 25.6 26.3 27.3
Selling, general and administrative expenses . . . 17.3 18.7 19.9
----- ----- -----
Operating profit . . . . . . . . . . . . . . . . . 8.3 7.6 7.4
Other income (expense)
Interest expense . . . . . . . . . . . . . . -- -- --
Other - net (principally interest and
dividend income) . . . . . . . . . . . . . . 0.4 0.4 0.5
----- ----- -----
Earnings before income taxes . . . . . . . . . . . 8.7 8.0 7.9
Income taxes . . . . . . . . . . . . . . . . . . . 3.4 3.0 2.9
----- ----- -----
Net earnings . . . . . . . . . . . . . . . . . . . 5.3% 5.0% 5.0%
===== ===== =====
</TABLE>
COMPARISON OF FISCAL YEAR 1995 WITH FISCAL YEAR 1994
Net sales for the fiscal year ending April 1, 1995, increased
$60,596,687, or 31.4%, compared to the prior year. The sales increase
reflected internal growth, primarily from increased demand from existing
customers and an expanded customer base.
Gross profit increased $14,229,197, or 28.1%, when compared to the
prior year. Gross profit as a percentage of sales decreased to 25.6% from
26.3% compared to the previous year. The decline in the gross profit
percentage is primarily due to the highly competitive conditions in the
electronics and personal computer industries, creating downward pressure on
margins. The increase in gross profit was primarily due to increased sales,
partially offset by a slight decline in the gross profit percentage.
Selling, general and administrative expenses increased $7,904,923, or
22.0%, when compared to the preceding year. As a percentage of sales, expenses
decreased to 17.3% from 18.7% when compared to the previous year. The decline
reflects the Company's continued focus on cost containment to reduce expenses
as a percentage of sales. The increase in expense was primarily due to the
expenses necessary to support the growth of the Company's existing operations.
- 9 -
<PAGE> 10
Other-net consists principally of interest income generated by cash,
cash equivalents and trading securities. The increase in interest income was
due to the Company shifting a portion of available funds into a higher yielding
taxable investment vehicle from a tax-exempt municipal money market fund and
higher interest rates.
The Company's effective tax rate increased due to an increase in
operating income and taxable interest income. The increase in operating
income, along with the increase in taxable interest income, subjected the
Company to a higher graduated federal income tax rate.
Net earnings increased $3,851,048, or 40.4%, when compared to the
prior year. The improved profitability was primarily due to the incremental
profit associated with the increase in sales volume.
COMPARISON OF FISCAL YEAR 1994 WITH FISCAL YEAR 1993
Net sales for the fiscal year ended April 2, 1994 increased
$38,210,145, or 24.7%, when compared to the fiscal year ending April 3, 1993.
The sales increase was attributable to increased demand from existing customers
and an expanding customer base.
Gross profit increased $8,377,901, or 19.8% compared to the preceding
year. Gross profit as a percentage of sales decreased to 26.3% from 27.3% in
the previous year. The decline in gross profit percentage was primarily due to
the highly competitive condition in the electronics and personal computer
industries, creating a downward pressure on margins. The increase in gross
profit was primarily due to increased sales, partially offset by a slight
decline in the gross profit percentage.
Selling, general and administrative expenses increased $5,206,121, or
16.9%, compared to the prior fiscal year. However, as a percentage of sales,
expenses declined to 18.7% from 19.9% the preceding year. The decline as a
percentage of sales reflected the Company's continued focus on cost
containment. The increase in expense was primarily due to the expenses
necessary to support the growth in the Company's existing operations.
Other-net consisted principally of interest income generated by cash,
cash equivalents and short-term investments. The increase in interest and
dividend income was primarily due to the Company shifting a greater portion of
its available funds from a tax-exempt to a taxable investment vehicle which
provided an increased yield. The increase in interest and dividend income was
also due to an increase in funds available for investing.
The Company's effective tax rate increased in fiscal year 1994 due to
an increase in federal income tax rates and a decline in the amount of tax-free
interest income. The decrease in tax-free interest income made a greater
portion of the Company's income subject to income taxes.
- 10 -
<PAGE> 11
Net earnings increased $1,811,871, or 23.5%, when compared to the
prior year. The additional profit from the increased sales was the primary
factor in the improved profitability.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at April 1, 1995 was $66,318,424, an increase of
$10,431,615 from April 2, 1994.
Included in the Company's working capital at April 1, 1995 are
investments of $23,227,892. The Company's investment strategy is low risk and
short-term, keeping the funds readily available to meet capital requirements as
they arise in the normal course of business. The Company's primary investment
vehicle is a managed fund consisting primarily of taxable, high quality
corporate debt instruments and is compatible with the Company's stated
investment strategy.
The Company intends to apply its capital resources to expand its
business by establishing or acquiring similar distribution and manufacturing
operations in geographic areas that are attractive to the Company, by acquiring
new facilities and by enlarging or improving existing facilities. In addition
to the capital required to purchase existing businesses or to fund start-up
operations, the expansion of the Company's operations at both new and existing
locations will require greater levels of capital to finance the purchase of
additional equipment, increased levels of inventory and greater accounts
receivable.
The Company is currently expanding its manufacturing capacity by
building a new facility on a recently purchased 66-acre parcel of land in Sugar
Land, Texas. Facility construction and equipment will require working capital
resources of approximately $13 million. Management believes that current
resources, along with funds generated from operations, should be sufficient to
meet its current capital requirements and those anticipated in the near future.
- 11 -
<PAGE> 12
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Kent Electronics Corporation
We have audited the consolidated balance sheets of Kent Electronics
Corporation and Subsidiaries as of April 1, 1995 and April 2, 1994, and the
related consolidated statements of earnings, cash flows and stockholders'
equity for each of the three years in the period ended April 1, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Kent
Electronics Corporation and Subsidiaries as of April 1, 1995 and April 2, 1994,
and the consolidated results of their operations and cash flows for each of the
three years in the period ended April 1, 1995, in conformity with generally
accepted accounting principles.
GRANT THORNTON LLP
Houston, Texas
May 8, 1995
- 12 -
<PAGE> 13
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 1, 1995 AND APRIL 2, 1994
<TABLE>
<CAPTION>
ASSETS 1995 1994
-------------- --------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents (including temporary investments
of $6,395,425 in 1995 and $9,826,122 in 1994) . . . . . . . . $ 4,434,457 $ 11,382,179
Trading securities, net . . . . . . . . . . . . . . . . . . . . 16,832,467 --
Short-term investments, net . . . . . . . . . . . . . . . . . . -- 15,184,179
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . 33,963,810 26,038,081
Inventories
Materials and purchased products . . . . . . . . . . . . . . . 30,080,372 19,985,035
Work in process . . . . . . . . . . . . . . . . . . . . . . . 3,039,140 3,214,825
-------------- --------------
33,119,512 23,199,860
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . 2,778,348 2,070,197
-------------- --------------
Total current assets . . . . . . . . . . . . . . . . . . 91,128,594 77,874,496
PROPERTY AND EQUIPMENT
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,089,838 2,558,983
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,697,207 6,558,289
Equipment, furniture and fixtures . . . . . . . . . . . . . . . 26,205,888 21,053,980
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . 1,362,806 1,254,485
-------------- --------------
41,355,739 31,425,737
Less accumulated depreciation and amortization . . . . . (13,620,455) (10,284,224)
-------------- --------------
27,735,284 21,141,513
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . 838,000 1,270,000
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,022,244 689,339
COST IN EXCESS OF NET ASSETS ACQUIRED, less accumulated amortization of
$1,629,122 in 1995 and $1,264,634 in 1994 . . . . . . . . . . . 13,166,859 13,531,347
-------------- --------------
$ 133,890,981 $ 114,506,695
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . $ 15,479,278 $ 16,389,611
Accrued compensation . . . . . . . . . . . . . . . . . . . . . . 4,579,595 2,521,902
Other accrued liabilities . . . . . . . . . . . . . . . . . . . 3,057,149 2,020,416
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 1,694,148 1,055,758
-------------- --------------
Total current liabilities . . . . . . . . . . . . . . . 24,810,170 21,987,687
LONG-TERM LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . 281,205 --
COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
STOCKHOLDERS' EQUITY
Preferred stock, $1 par value; authorized 2,000,000 shares;
none issued . . . . . . . . . . . . . . . . . . . . . . -- --
Common stock, no par value; authorized 30,000,000 shares;
issued and outstanding 9,804,743 shares in 1995
and 9,687,559 shares in 1994 . . . . . . . . . . . . . . 34,742,597 32,702,560
Additional paid-in capital . . . . . . . . . . . . . . . . . . . 25,213,946 24,359,507
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . 48,843,063 35,456,941
-------------- --------------
108,799,606 92,519,008
-------------- --------------
$ 133,890,981 $ 114,506,695
============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
- 13 -
<PAGE> 14
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED APRIL 1, 1995, APRIL 2, 1994, AND APRIL 3, 1993
<TABLE>
<CAPTION>
1995 1994 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . $ 253,483,742 $ 192,887,055 $ 154,676,910
Cost of sales . . . . . . . . . . . . . . . . . 188,606,215 142,238,725 112,406,481
-------------- -------------- --------------
Gross profit . . . . . . . . . 64,877,527 50,648,330 42,270,429
Selling, general and administrative
expenses . . . . . . . . . . . . . . . 43,917,091 36,012,168 30,806,047
-------------- -------------- --------------
Operating profit . . . . . . . 20,960,436 14,636,162 11,464,382
Other income (expense)
Interest expense . . . . . . . . . . . (18,000) (15,000) (15,000)
Other-net (principally interest and
dividend income) . . . . . . . . . . . 1,132,686 757,912 712,821
-------------- -------------- --------------
Earnings before income taxes . 22,075,122 15,379,074 12,162,203
Income taxes . . . . . . . . . . . . . . . . . 8,689,000 5,844,000 4,439,000
-------------- -------------- --------------
NET EARNINGS . . . . . . . . . $ 13,386,122 $ 9,535,074 $ 7,723,203
============== ============== ==============
Earnings per share . . . . . . . . . . . . . . $ 1.32 $ .96 $ .80
============== ============== ==============
Weighted average shares . . . . . . . . . . . . 10,137,500 9,881,000 9,675,300
============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
- 14 -
<PAGE> 15
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
YEARS ENDED APRIL 3, 1993, APRIL 2, 1994 AND APRIL 1, 1995
<TABLE>
<CAPTION>
Common Stock Additional
--------------------------- Paid-in Retained
Shares Amount Capital Earnings
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance at March 28, 1992 . . . . . . . . 9,414,583 $ 30,180,661 $ 23,212,580 $ 18,198,664
Common stock issued upon exercise of
employee stock options, including tax 209,601 1,855,008 -- --
effect . . . . . . . . . . . . . . . .
Amortization of unearned compensation
related to stock option plans . . . . . -- -- 524,473 --
Net earnings for the year . . . . . . . . -- -- -- 7,723,203
---------- ------------ ------------ ------------
Balance at April 3, 1993 . . . . . . . . 9,624,184 32,035,669 23,737,053 25,921,867
Common stock issued upon exercise of
employee stock options, including tax
effect . . . . . . . . . . . . . . . . 63,375 666,891 -- --
Amortization of unearned compensation
related to stock option plans . . . . . -- -- 622,454 --
Net earnings for the year . . . . . . . . -- -- -- 9,535,074
---------- ------------ ------------ ------------
Balance at April 2, 1994 . . . . . . . . 9,687,559 32,702,560 24,359,507 35,456,941
Common stock issued upon exercise of
employee stock options, including tax
effect . . . . . . . . . . . . . . . . 117,601 2,040,037 -- --
Common stock split fractional shares . . (417) -- (16,325) --
Amortization of unearned compensation
related to stock option plans . . . . . -- -- 870,764 --
Net earnings for the year . . . . . . . . -- -- -- 13,386,122
---------- ------------ ------------ ------------
Balance at April 1, 1995 . . . . . . . . 9,804,743 $ 34,742,597 $ 25,213,946 $ 48,843,063
========== ============ ============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
- 15 -
<PAGE> 16
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED APRIL 1, 1995, APRIL 2, 1994 AND APRIL 3, 1993
<TABLE>
<CAPTION>
1995 1994 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Cash flows from operating activities
Net earnings . . . . . . . . . . . . . . . . . . . . . . . $ 13,386,122 $ 9,535,074 $ 7,723,203
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation and amortization . . . . . . . . . . . 3,806,652 3,202,761 2,833,955
Provision for losses on accounts receivable . . . . 163,171 334,691 224,165
(Gain) loss on sale of property, plant
and equipment . . . . . . . . . . . . . . . . . . (268) 6,688 74
Stock option expense . . . . . . . . . . . . . . . . 870,764 622,454 524,473
Provision for unrealized losses on trading 224,684 -- --
securities . . . . . . . . . . . . . . . . . . . .
Provision for unrealized losses on short-term -- 77,300 --
investments . . . . . . . . . . . . . . . . . . .
Net purchases of trading securities . . . . . . . . (1,872,972) -- --
Change in assets and liabilities
Increase in accounts receivable . . . . . . . . . (8,088,900) (4,212,860) (4,846,791)
Increase in inventories . . . . . . . . . . . . . (9,919,652) (5,819,343) (3,407,722)
Increase in prepaid expenses and other . . . . . . (708,151) (375,091) (251,743)
(Increase) decrease in other assets . . . . . . . (421,951) 3,942 25,935
Decrease in deferred income taxes . . . . . . . . 432,000 812,000 488,228
Increase (decrease) in accounts payable . . . . . (910,333) 4,514,425 3,241,812
Increase (decrease) in accrued compensation . . . 2,057,693 288,398 (348,604)
Increase (decrease) in other accrued
liabilities . . . . . . . . . . . . . . . . . . 1,036,733 399,723 (121,368)
Increase in income taxes . . . . . . . . . . . . . 638,390 89,495 682,122
Increase in long-term liabilities . . . . . . . . 281,205 -- --
-------------- -------------- --------------
Net cash provided by operating activities . . 975,187 9,479,657 6,767,739
Cash flows from investing activities
Capital expenditures . . . . . . . . . . . . . . . . . . . (9,960,471) (5,751,781) (9,191,249)
Net purchases of short-term investments . . . . . . . . . . -- (15,261,479) --
Proceeds from sale of property and equipment . . . . . . . 13,850 16,223 890
Additional Shelley-Ragon acquisition costs . . . . . . . . -- -- (98,038)
-------------- -------------- --------------
Net cash used by investing activities . . . . (9,946,621) (20,997,037) (9,288,397)
Cash flows from financing activities
Issuance of common stock . . . . . . . . . . . . . . . . . 1,526,037 365,167 1,112,132
Payment for fractional shares . . . . . . . . . . . . . . . (16,325) -- --
Tax effect of common stock issued upon exercise of
employee stock options. . . . . . . . . . . . . . . . . . 514,000 301,724 742,876
-------------- -------------- --------------
Net cash provided by financing activities . . 2,023,712 666,891 1,855,008
-------------- -------------- --------------
Net decrease in cash . . . . . . . . . . . . . . . . . . . . (6,947,722) (10,850,489) (665,650)
Cash and cash equivalents at beginning of year . . . . . . . 11,382,179 22,232,668 22,898,318
-------------- -------------- --------------
Cash and cash equivalents at end of year . . . . . . . . . . $ 4,434,457 $ 11,382,179 $ 22,232,668
============== ============== ==============
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest . . . . . . . . . . . . . . . . . . . $ 18,000 $ 15,000 $ 15,000
Income taxes . . . . . . . . . . . . . . . . . $ 7,713,610 $ 4,813,667 $ 1,062,118
</TABLE>
In 1993, additional Shelley-Ragon acquisition costs of $98,038 were paid and
non-cash adjustments of $286,131, $155,404, $81,635 and $31,110 were made to
income taxes payable, inventory, property and equipment, and accrued
liabilities, respectively.
The accompanying notes are an integral part of these statements.
- 16 -
<PAGE> 17
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 1, 1995, APRIL 2, 1994 AND APRIL 3, 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies:
Principles of Consolidation
Kent Electronics Corporation consolidates its accounts with those of
its wholly-owned subsidiaries. All material intercompany transactions have
been eliminated.
Fiscal Year
The Company's fiscal year ends on the Saturday closest to the end of
March. The fiscal years ended April 1, 1995 and April 2, 1994 both consisted
of 52 weeks. The fiscal year ended April 3, 1993 consisted of 53 weeks.
Cash and Cash Equivalents
The Company's presentation of cash includes cash equivalents. Cash
equivalents are defined as short-term investments with maturity dates at
purchase of ninety days or less.
Cash equivalents at April 1, 1995 and April 2, 1994 include
approximately $1,118,000 and $3,874,000, respectively, invested in an
institutional money market fund managed by a company holding approximately 4%
of the Company's common stock.
Securities purchased under agreements to resell (reverse repurchase
agreements) result from transactions that are collateralized by negotiable
securities and are carried at the amounts at which the securities will
subsequently be resold. It is the policy of the Company not to take possession
of securities purchased under agreements to resell. At April 2, 1994,
agreements to resell securities in the amount of $3,552,000 with a four-day
maturity were outstanding.
Trading Securities and Short-Term Investments
In 1995, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity
Securities. This statement established standards of financial accounting and
reporting for investments in equity securities that have a readily determinable
fair value and for all investments in debt securities. The Company has
classified all investment securities as trading securities which are measured
at fair value in the financial statements with unrealized gains and losses
included in earnings. Net
- 17 -
<PAGE> 18
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
unrealized holding losses on trading securities of $224,700 are included in net
earnings for 1995 as indicated in the following table:
<TABLE>
<S> <C>
Net unrealized loss on trading securities at
beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 77,300
Increase in unrealized loss included in
earnings during year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224,700
--------------
Net unrealized loss on trading securities at end of year . . . . . . . . . . . . $ 302,000
==============
</TABLE>
In 1994, under the Company's previous policy, short-term investments
were carried at the lower of their aggregate cost or market.
Trading securities include an investment in an institutional mutual
fund managed by a company holding approximately 4% of the Company's common
stock and U.S. Treasury Notes maturing in December 1996.
Accounts Receivable
The Company's allowance for doubtful accounts was $979,000 at April 1,
1995 and $955,000 at April 2, 1994.
Inventories
Inventories are valued at the lower of cost (first-in, first-out) or
market.
Property and Equipment
Property and equipment are stated at cost.
Depreciation and amortization are provided using the straight-line
method over the estimated useful lives of the related assets.
Leasehold improvements are amortized over the life of the lease or the
service life of the improvements, whichever is shorter.
- 18 -
<PAGE> 19
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Costs in Excess of Net Assets Acquired
Costs in excess of net assets acquired represents the excess of the
purchase price over the value of net assets acquired for previous acquisitions,
and is being amortized on a straight-line basis over 40 years. On an ongoing
basis, management reviews the valuation and amortization of the cost in excess
of net assets. As part of this review, the Company considers the current and
future levels of net income generated by the related acquisition to determine
that no impairment has occurred.
Reclassifications
Certain accounts in the fiscal 1994 and 1993 financial statements have
been reclassified to conform with the fiscal 1995 presentation.
2. INCOME TAXES
The Company accounts for income taxes using the liability method.
Under the liability method, deferred tax assets and liabilities are determined
based on the difference between the financial statement and tax bases of assets
and liabilities as measured by the enacted tax rates which will be in effect
when these differences reverse. Deferred tax expense is the result of changes
in deferred tax assets and liabilities.
The provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
------------------------------------------------------------
1995 1994 1993
----------------- ----------------- -----------------
<S> <C> <C> <C>
Currently payable . . . . . . . . . . . $ 8,308,000 $ 4,978,000 $ 2,115,000
Tax reduction for exercise
of stock options credited to
stockholders' equity . . . . . . . . . 514,000 302,000 743,000
Deferred . . . . . . . . . . . . . . . (133,000) 564,000 1,581,000
----------------- ----------------- -----------------
Total . . . . . . . . . . . . $ 8,689,000 $ 5,844,000 $ 4,439,000
================= ================= =================
</TABLE>
- 19 -
<PAGE> 20
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A reconciliation of income taxes computed at the statutory Federal income tax
rate and income taxes reported in the consolidated statements of earnings
follows:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
--------------------------------------------------
1995 1994 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Tax at statutory rate . . . . . . . . . . . . . $ 7,726,000 $ 5,229,000 $ 4,135,000
Increases (reductions)
State income taxes, net of
Federal tax effect . . . . . . . . . . . . . 742,000 482,000 374,000
Tax free income . . . . . . . . . . . . . . . (47,000) (119,000) (206,000)
Other - net . . . . . . . . . . . . . . . . . 268,000 252,000 136,000
-------------- -------------- --------------
Income taxes as reported . . . . . . . . . $ 8,689,000 $ 5,844,000 $ 4,439,000
============== ============== ==============
</TABLE>
Deferred tax assets and liabilities at April 1, 1995 and April 2, 1994
consist of the following:
<TABLE>
<CAPTION>
1995 1994
---------------- -----------------
<S> <C> <C>
CURRENT DEFERRED ASSET
Allowance for doubtful accounts . . . . . . . . $ 392,000 $ 347,000
Capitalization of additional inventory costs. . 672,000 347,000
Accrued expenses not currently deductible,
net of reversals . . . . . . . . . . . . . . . 320,000 179,000
Net operating losses . . . . . . . . . . . . . 330,000 330,000
Other . . . . . . . . . . . . . . . . . . . . . 157,000 59,000
---------------- -----------------
$ 1,871,000 $ 1,262,000
================ =================
</TABLE>
- 20 -
<PAGE> 21
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
1995 1994
---------------- -----------------
<S> <C> <C>
LONG-TERM DEFERRED ASSET
Depreciation . . . . . . . . . . . . . . . . . $ (1,763,000) $ (1,264,000)
Fixed asset bases difference . . . . . . . . . 697,000 670,000
Deductible acquisition costs . . . . . . . . . (48,000) (50,000)
Stock compensation . . . . . . . . . . . . . . 861,000 494,000
Net operating losses . . . . . . . . . . . . . 1,091,000 1,420,000
---------------- -----------------
$ 838,000 $ 1,270,000
================ =================
</TABLE>
Acquired net operating losses are approximately $4,058,000 at April 1,
1995, expire in various amounts through 2003, and are subject to annual usage
limitations.
3. COMMITMENTS
The Company conducts a portion of its operations in leased office,
warehouse, and manufacturing facilities and leases transportation equipment.
Rent expense for 1995, 1994 and 1993 was approximately $1,695,000, $1,472,000
and $1,565,000, respectively.
The following is a schedule by years of minimum future rentals as of
April 1, 1995:
<TABLE>
<CAPTION>
Fiscal years
ending in Amount
------------ ------------
<S> <C>
1996 $ 1,543,000
1997 1,231,000
1998 936,000
1999 476,000
2000 184,000
Thereafter 3,000
------------
Total minimum future rentals $ 4,373,000
============
</TABLE>
The Company has instituted a self-insurance program for employees'
major medical coverages. Claims under the self-insurance program are insured
for amounts greater than $50,000 per employee. The aggregate annual amount
self-insured varies based on participant
- 21 -
<PAGE> 22
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
levels and was limited to approximately $2,000,000 as of April 1, 1995. Claims
are accrued as incurred and the total expense under the program was
approximately $2,121,000, $1,258,000 and $1,051,000 in 1995, 1994 and 1993,
respectively.
The Company is engaged in litigation occurring in the normal course of
business. In the opinion of management, based upon advice of counsel, the
ultimate outcome of these lawsuits will not have a material impact on the
Company's consolidated financial statements.
4. SALES TO MAJOR CUSTOMERS
Sales to two customers represented 11.2% and 10.3% of net sales in
1995. No customer constituted 10% of net sales in 1994 or 1993.
5. STOCKHOLDERS' EQUITY
Fair Price Provision
The Company has adopted a fair price provision relating to certain
business combinations. The fair price provision provides that, except in
certain circumstances, a business combination between the Company and an
interested shareholder must be approved by the affirmative vote of the holders
of 80% of the outstanding voting stock, unless certain pricing and procedural
requirements regarding the business combination are satisfied.
Stockholder Rights Plan
The Company has adopted a stockholder rights plan, declaring a
distribution of one equity purchase right on each outstanding share of the
Company's common stock. Upon the occurrence of certain events, each right
would entitle the holder to purchase, at a price of $26.67, one one-hundredth
of a share of the Company's Series A Preferred Stock. Additionally, under
certain circumstances, the holder of rights may be entitled to purchase either
the Company's common stock or securities of an acquiring entity at half of
market value.
- 22 -
<PAGE> 23
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Stock Split
The Company's Common Stock was split three-for-two to stockholders of
record on February 15, 1995, and was effected as a 50% stock dividend. All
issued and outstanding shares, stock option data and earnings per share amounts
in the consolidated financial statements have been restated to give effect to
the stock split.
6. BENEFIT PLANS
Stock Options
At April 1, 1995, the Company had non-qualified stock option plans
which allow for the grant of 2,887,500 common shares for options, of which
1,079,879 are available for future grants. Options granted under the plans
have a maximum term of 15 years and are exercisable under the terms of the
respective option agreements. Under some plans, options may be granted with
exercise prices of less than the stock's market value at the date of grant.
<TABLE>
<CAPTION>
Number of Option price
shares range
under option per share
------------ -----------------
<S> <C> <C>
Outstanding at March 28, 1992 . . . . . . . . . 663,450 $ 3.75 - $14.50
Granted . . . . . . . . . . . . . . . 188,625 6.92 - 17.59
Exercised . . . . . . . . . . . . . . (209,601) 3.75 - 10.67
Lapsed/forfeited . . . . . . . . . . . (12,000) 7.33 - 11.33
--------- ----------------
Outstanding at April 3, 1993 . . . . . . . . . 630,474 4.00 - 17.59
Granted . . . . . . . . . . . . . . . 614,250 7.17 - 19.25
Exercised . . . . . . . . . . . . . . (63,375) 4.00 - 14.50
Lapsed/forfeited . . . . . . . . . . . (23,300) 4.09 - 17.17
--------- ----------------
Outstanding at April 2, 1994 . . . . . . . . . 1,158,049 4.67 - 19.25
Granted . . . . . . . . . . . . . . . 71,625 18.25 - 27.75
Exercised . . . . . . . . . . . . . . (117,601) 4.67 - 17.59
Lapsed/forfeited . . . . . . . . . . . (21,751) 13.92 - 13.92
--------- ----------------
Outstanding at April 1, 1995 . . . . . . . . . 1,090,322 $ 6.87 - $27.75
========= ================
</TABLE>
At April 1, 1995, options representing 179,072 shares were exercisable.
- 23 -
<PAGE> 24
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Tax-Deferred Savings and Retirement Plan and Trust
The Company sponsors a Tax-Deferred Savings and Retirement Plan (the
Plan) covering substantially all employees. Under the Plan, a participating
employee may allocate up to 12% of salary, and the Company makes matching
contributions of up to 3% thereof. Additionally, the Company may elect to make
additional contributions at its option. Such contributions accrue to employee
accounts regardless of whether they have elected to participate in the salary
deferral option of the Plan. The Company contributed approximately $639,000,
$514,000 and $469,000 to the Plan in fiscal years ended April 1, 1995, April 2,
1994 and April 3, 1993, respectively.
The Company has a deferred compensation plan for a select group of
management or highly compensated employees of the Company. Each year a
participant may elect to defer from 3% to 25% of their compensation. The
Company will match the participant compensation amount, limited to 50% of the
first 6% of compensation deferred. Participants become vested in the Company
matching contributions at the rate of 10% per plan year or vest fully at age
60. At April 1, 1995, the Company has accrued $281,000 for participant and
Company contributions and is recorded as long-term liabilities on the Balance
Sheet.
In fiscal 1995, the Company adopted a spousal salary continuation
plan. In the event of the death of the Chief Executive Officer (CEO), the plan
provides for the payment of 60% of the CEO's monthly base salary for 180
consecutive months to a designated beneficiary. The Company has purchased life
insurance with the intent to fund this obligation.
7. EARNINGS PER SHARE
Earnings per share are based upon the weighted average number of
common shares outstanding during each year. Options are included in periods
where they have a dilutive effect.
- 24 -
<PAGE> 25
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of unaudited quarterly financial data for
fiscal years 1995, 1994 and 1993:
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
---------- ---------- ---------- ----------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Year ended April 1, 1995
Net sales . . . . . . . $ 56,527 $ 60,335 $ 64,462 $ 72,160
Gross profit . . . . . . 14,524 15,440 16,480 18,433
Net earnings . . . . . . 2,831 3,215 3,466 3,874
Earnings per share . . . .28 .32 .34 .38
Year ended April 2, 1994
Net sales . . . . . . . $ 43,245 $ 46,914 $ 49,238 $ 53,490
Gross profit . . . . . . 11,532 12,434 12,935 13,747
Net earnings . . . . . . 2,073 2,293 2,509 2,660
Earnings per share . . . .21 .23 .25 .27
Year ended April 3, 1993
Net sales . . . . . . . $ 34,524 $ 37,011 $ 39,216 $ 43,926
Gross profit . . . . . . 9,485 10,134 10,756 11,895
Net earnings . . . . . . 1,846 1,907 1,937 2,033
Earnings per share . . . .19 .20 .20 .21
</TABLE>
- 25 -
<PAGE> 26
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
In accordance with paragraph (3) of General Instruction G to Form
10-K, Part III of this Report is omitted because the Registrant has filed with
the Securities and Exchange Commission, not later than 120 days after April 1,
1995, a definitive proxy statement pursuant to Regulation 14A involving the
election of directors. Reference is made to the sections of such proxy
statement entitled "Common Stock Outstanding and Principal Holders Thereof,"
"Proposal No. 1 -- Election of Directors" and "Executive Officers," which
sections of such proxy statement are incorporated herein.
- 26 -
<PAGE> 27
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Certified Public Accountants . . . . . . . . . . . . . . . . . . . 12
Consolidated balance sheets at April 1, 1995 and April 2, 1994 . . . . . . . . . . . . . 13
Consolidated statements of earnings for the years ended April 1, 1995, April 2, 1994
and April 3, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Consolidated statement of stockholders' equity for the years ended April 3, 1993,
April 2, 1994 and April 1, 1995 . . . . . . . . . . . . . . . . . . . . . . . . 15
Consolidated statements of cash flows for the years ended April 1, 1995, April 2, 1994
and April 3, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Notes to consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
2. FINANCIAL STATEMENT SCHEDULE:
Schedule II--Allowance for Doubtful Receivables for the years
ended April 3, 1993, April 2, 1994 and April 1, 1995
3. EXHIBITS:
3.1* -- Articles of Incorporation of Kent Electronics
Corporation, including amendments thereto filed
through July 2, 1987. Incorporated by reference to
Exhibit 3.1 to the Company's Annual Report on Form
10-K for the Fiscal Year Ended April 2, 1988.
3.2* -- Articles of Amendment to Articles of Incorporation of
Kent Electronics Corporation. Incorporated by
reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (Registration No.
33-24018) filed with the Securities and Exchange
Commission ("SEC") on August 26, 1988.
3.3* -- Certificate of Designation, Preferences and Rights of
Series A Preferred Stock. Incorporated by reference
to Exhibit 3.3 to the Company's Annual Report on Form
10-K for the Fiscal Year Ended March 30, 1991 (the
"1991 Form 10-K").
- 27 -
<PAGE> 28
3.4* -- Articles of Amendment to Articles of Incorporation of
Kent Electronics Corporation. Incorporated by
reference to Exhibit 3.4 to 1991 Form 10-K.
3.5* -- Bylaws of Kent Electronics Corporation. Incorporated
by reference to Exhibit 3.4 to the Company's
Registration Statement on Form S-1 (Registration No.
33-5371) filed with the SEC on May 2, 1986.
3.6* -- Amendments to Bylaws of Kent Electronics Corporation.
Incorporated by reference to Exhibit 3.4 to the
Company's Annual Report on Form 10-K for the Fiscal
Year Ended March 31, 1990.
3.7* -- Amendments to Bylaws of Kent Electronics Corporation.
Incorporated by reference to Exhibit 3.7 to 1991 Form
10-K.
3.8* -- Amendments to Bylaws of Kent Electronics Corporation.
Incorporated by reference to Exhibit 3.8 to the
Company's Annual Report on Form 10-K for the Fiscal
Year Ended March 28, 1992 (the "1992 Form 10-K").
4.1* -- Specimen stock certificate for the Common Stock of
Kent Electronics Corporation. Incorporated by
reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-2 (Registration No.
33-40066) filed with the SEC on April 19, 1991 (the
"1991 Registration Statement").
4.2* -- Rights Agreement dated as of May 14, 1990 between
Kent Electronics Corporation and Ameritrust Company
National Association. Incorporated by reference to
Exhibit 4 to the Company's Current Report on Form 8-K
dated May 14, 1990.
4.3* -- First Amendment to Rights Agreement dated as of May
14, 1990 between Kent Electronics Corporation and
Ameritrust Company National Association.
Incorporated by reference to Exhibit 4.3 to 1992 Form
10-K.
10.1* -- Chief Executive Stock Option Plan and Agreement
between Kent Electronics Corporation and Morrie K.
Abramson dated July 24, 1991. Incorporated by
reference to Exhibit 10.1 to 1992 Form 10-K.(1)
10.2* -- Amendment to Chief Executive Stock Option Plan
between Kent Electronics Corporation and Morrie K.
Abramson dated June 26, 1992. Incorporated by
reference to Exhibit 10.2 to the Company's Annual
Report on Form 10-K for the Fiscal Year Ended April
3, 1993 (the "1993 Form 10-K").(1)
- 28 -
<PAGE> 29
10.3* -- Chief Operating Officer Stock Option Plan and
Agreement between Kent Electronics Corporation and
James F. Corporron dated May 15, 1992. Incorporated
by reference to Exhibit 10.3 to 1993 Form 10-K.(1)
10.4 -- Amendment to Chief Executive Officer Stock Option
Plan and Agreement between Kent Electronics
Corporation and Morrie K. Abramson dated June 30,
1994.(1)
10.5 -- Amendment to Chief Operating Officer Stock Option
Plan and Agreement between Kent Electronics
Corporation and James F. Corporron dated June 30,
1994.(1)
10.6* -- K*TEC President Stock Option Plan and Agreement
between Kent Electronics Corporation and Randy J.
Corporron dated May 1, 1993. Incorporated by
reference to Exhibit 10.4 to 1993 Form 10-K.(1)
10.7* -- K*TEC General Manager Stock Option Plan and Agreement
between Kent Electronics Corporation and Rodney J.
Corporron dated May 1, 1993. Incorporated by
referenced to Exhibit 10.5 to 1993 Form 10-K.(1)
10.8* -- 1991 Non-Employee Director Stock Option Plan, as
amended. Incorporated by reference to Exhibit 10.2
to 1992 Form 10-K.(1)
10.9* -- Amended and Restated 1987 Stock Option Plan.
Incorporated by reference to Exhibit 10.3 to 1992
Form 10- K.(1)
10.10* -- Amendments of Amended and Restated 1987 Stock Option
Plan. Incorporated by reference to Exhibit 10.8 to
1993 Form 10-K.(1)
10.11 -- Kent Electronics Corporation Stock Option Plan and
Agreement for the Company's Executive Vice President
Sales-Distribution between Kent Electronics
Corporation and Larry D. Olson dated May 8, 1995.(1)
10.12 -- Kent Electronics Corporation Stock Option Plan and
Agreement for the Company's Executive Vice President
Operations-Distribution between Kent Electronics
Corporation and Mark A. Zerbe dated May 8, 1995.(1)
10.13 -- Kent Electronics Corporation Stock Option Plan and
Agreement for the Company's Vice President, Secretary
and Treasurer between Kent Electronics Corporation
and Stephen J. Chapko dated May 8, 1995.(1)
10.14* -- Kent Electronics Corporation Tax-Deferred Savings and
Retirement Plan and Trust. Incorporated by reference
to Exhibit 4 to the Company's Registration Statement
on Form S-8 (Registration No. 33-18527) filed with
the SEC on November 16, 1987.(1)
- 29 -
<PAGE> 30
10.15 -- Kent Electronics Corporation Deferred Compensation
Plan dated July 28, 1994.(1)
10.16 -- Trust Agreement for Kent Electronics Corporation
Deferred Compensation Plan dated July 28, 1994.(1)
10.17* -- Contracts between Kent Electronics Corporation and
AMP Products Corporation effective as of July 22,
1988 and July 31, 1986, respectively, and addendums
thereto. Incorporated by reference to Exhibit 10.5
to the Company's Annual Report on Form 10-K for the
Fiscal Year Ended April 1, 1989.
10.18* -- Executive Agreements by and between Kent Electronics
Corporation and each of Messrs. Morrie K. Abramson,
James F. Corporron and Clarence J. Metzger.
Incorporated by reference to Exhibit 10.14 to
Amendment No. 1 to the 1987 Registration Statement.(1)
10.19* -- Form of Amendment to Executive Agreements by and
between Kent Electronics Corporation and each of
Messrs. Morrie K. Abramson, James F. Corporron and
Clarence J. Metzger dated March 16, 1993.
Incorporated by reference to Exhibit 10.20 to 1993
Form 10-K.(1)
10.20* -- Form of Agreement by and between Kent Electronics
Corporation and each of Messrs. Morrie K. Abramson,
James F. Corporron and Clarence J. Metzger dated
March 16, 1993. Incorporated by reference to Exhibit
10.21 to 1993 Form 10-K.(1)
10.21* -- Form of Executive Health Care Benefits and Consulting
Agreement by and between Kent Electronics Corporation
and each of Messrs. Morrie K. Abramson, James F.
Corporron and Clarence J. Metzger dated January 27,
1993. Incorporated by reference to Exhibit 10.22 to
1993 Form 10-K.(1)
10.22 -- Spousal Salary Continuation Plan between Kent
Electronics Corporation and Morrie K. Abramson dated
October 10, 1994.
10.23 -- Special Warranty Deed from Sugarland Properties
Incorporated to Kent Electronics Corporation dated
March 7, 1995 for 51 acres of land.
10.24 -- Special Warranty Deed from Sugarland Properties
Incorporated to Kent Electronics Corporation dated
March 7, 1995 for 15 acres of land.
10.25 -- Development and Construction Management Agreement by
and between Sugarland Properties Incorporated and
Kent Electronics Corporation dated April 21, 1995.
- 30 -
<PAGE> 31
10.26 -- Irrevocable Standby Letter of Credit with Texas
Commerce Bank National Association dated May 2, 1995.
10.27 -- Employment Agreement dated April 3, 1995 by and
between Kent Electronics Corporation and James F.
Corporron.(1)
11 -- Computation of earnings per share.
21 -- Subsidiaries of Kent Electronics Corporation.
23.1 -- Consent of Independent Certified Public Accountants.
27 -- Financial Data Schedule
_____________________________
* Incorporated by reference.
(1) Management contract or compensatory plan or agreement
(b) REPORTS ON FORM 8-K:
1. Current Report on Form 8-K dated March 13, 1995,
reporting the acquisition of land for expansion.
- 31 -
<PAGE> 32
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf of the undersigned, thereunto duly authorized.
KENT ELECTRONICS CORPORATION
(Registrant)
By: /s/ Morrie K. Abramson
-------------------------------------
Morrie K. Abramson
Chairman of the Board, Chief
Executive Officer and President
(Principal Executive Officer)
Date: June 13, 1995
-32-
<PAGE> 33
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, this report has been signed by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Morrie K. Abramson Chairman of the Board, Chief Executive Officer, June 13, 1995
---------------------------------- President and Director (Principal Executive
Morrie K. Abramson Officer)
/s/ Stephen J. Chapko Vice President, Treasurer and Secretary June 13, 1995
---------------------------------- (Principal Financial Officer and Principal
Stephen J. Chapko Accounting Officer)
/s/ Max S. Levit Director June 13, 1995
----------------------------------
Max S. Levit
/s/ David Siegel Director June 13, 1995
----------------------------------
David Siegel
/s/ Richard C. Webb Director June 13, 1995
----------------------------------
Richard C. Webb
/s/ Alvin L. Zimmerman Director June 13, 1995
----------------------------------
Alvin L. Zimmerman
</TABLE>
-33-
<PAGE> 34
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS ON SCHEDULE
Board of Directors and Stockholders
Kent Electronics Corporation
In connection with our audit of the consolidated financial statements
of Kent Electronics Corporation and Subsidiaries for the year ended April 1,
1995, we have also audited Schedule II for each of the three years in the
period ended April 1, 1995. In our opinion, this consolidated schedule
presents fairly, in all material respects, the information required to be set
forth therein.
GRANT THORNTON LLP
Houston, Texas
May 8, 1995
S-1
<PAGE> 35
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED APRIL 3, 1993, APRIL 2, 1994 AND APRIL 1, 1995
ALLOWANCE FOR DOUBTFUL RECEIVABLES
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- --------------------------------------------------------------------------------------------------------------
Additions Deductions
------------------------- -----------
(1) (2)
Charged Charged
Balance at to costs to other Balance at
beginning and accounts Amounts end of
Description of period expenses recoveries written-off period
------------------------------- ---------- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Year ended April 3, 1993 . . $ 679,717 $ 224,165 $ 14,735 $ 119,933 $ 798,684
Year ended April 2, 1994 . . 798,684 334,691 16,199 194,836 954,738
Year ended April 1, 1995 . . 954,738 163,171 0 139,024 978,885
</TABLE>
S-2
<PAGE> 36
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. ITEM NUMBERED PAGES
- ---------- ---- --------------
<S> <C> <C>
10.4 Amendment to Chief Executive Officer Stock Option Plan and
Agreement between Kent Electronics Corporation and Morrie
K. Abramson dated June 30, 1994
10.5 Amendment to Chief Operating Officer Stock Option Plan and
Agreement between Kent Electronics Corporation and James F.
Corporron dated June 30, 1994.
10.11 Kent Electronics Corporation Stock Option Plan and
Agreement for the Company's Executive Vice President
Sales-Distribution between Kent Electronics Corporation and
Larry D. Olson dated May 8, 1995
10.12 Kent Electronics Corporation Stock Option Plan and
Agreement for the Company's Executive Vice President
Operation-Distribution between Kent Electronics Corporation
and Mark A. Zerbe dated May 8, 1995
10.13 Kent Electronics Corporation Stock Option Plan and
Agreement for the Company's Vice President, Secretary and
Treasurer between Kent Electronics Corporation and
Stephen J. Chapko dated May 8, 1995
10.15 Kent Electronics Corporation Deferred Compensation Plan
dated July 28, 1994
10.16 Trust Agreement for Kent Electronics Corporation Deferred
Compensation Plan dated July 28, 1994
10.22 Spousal Salary Continuation Plan between Kent Electronics
Corporation and Morrie K. Abramson dated October 10, 1994.
10.23 Special Warranty Deed from Sugarland Properties
Incorporated to Kent Electronics Corporation dated March 7,
1995 for 51 acres of land
10.24 Special Warranty Deed from Sugarland Properties
Incorporated to Kent Electronics Corporation dated March 7,
1995 for 15 acres of land
10.25 Development and Construction Management Agreement by and
between Sugarland Properties Incorporated and Kent
Electronics Corporation dated April 21, 1995
10.26 Irrevocable Standby Letter of Credit with Texas Commerce
Bank National Association dated May 2, 1995
</TABLE>
<PAGE> 37
<TABLE>
<S> <C>
10.27 Employment Agreement dated April 3, 1995 by and between Kent
Electronics Corporation and James F. Corporron
11 Computation of earnings per share.
21 Subsidiaries of Kent Electronics Corporation.
23.1 Consent of Independent Certified Public Accountants.
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.4
AMENDMENT TO CHIEF EXECUTIVE OFFICER
STOCK OPTION PLAN AND AGREEMENT
This Amendment to Chief Executive Officer Stock Option Plan and
Agreement (the "Plan"), is effective as of the 30th day of June, 1994 (the
"Effective Date"), between Kent Electronics Corporation, a Texas corporation
(the "Company"), and Morrie K. Abramson (the "Optionee").
WHEREAS, the Company adopted the Plan effective July 24, 1991; and
WHEREAS, on May 10, 1994, the Compensation Committee of the Board of
Directors approved certain amendments to the Plan and such amendments were
approved and adopted by the shareholders of the Company on June 30, 1994;
NOW, THEREFORE, for and in consideration of the premises herein, this
Amendment to the Plan further evidences the amendment of the Plan as follows:
1. Amendment of the Plan. The Plan is hereby amended as set forth on
Exhibit A hereto.
2. Full Force and Effect. The Plan, as amended by the Amendment set
forth herein, shall remain in full force and effect.
IN WITNESS WHEREOF, the Company has caused this Amendment to the Plan
to be signed on its behalf by the undersigned, thereunto duly authorized.
KENT ELECTRONICS CORPORATION
By: /s/ James F. Corporron
------------------------------------
James F. Corporron
President
ACCEPTED AND AGREED TO
AS OF THE EFFECTIVE DATE:
Optionee:
/s/ Morrie K. Abramson
- ------------------------------
Morrie K. Abramson
<PAGE> 2
EXHIBIT A
AMENDMENT TO CHIEF EXECUTIVE OFFICER STOCK OPTION PLAN
AND AGREEMENT, AS AMENDED
The first sentence of Section 3 shall be deleted and the following
sentence shall be added in lieu thereof:
"Except as otherwise provided herein, this Option may be exercised as
to 190,000 shares on and after May 1, 1996."
<PAGE> 1
EXHIBIT 10.5
AMENDMENT TO CHIEF OPERATING OFFICER
STOCK OPTION PLAN AND AGREEMENT
This Amendment to Chief Operating Officer Stock Option Plan and
Agreement (the "Plan"), is effective as of the 30th day of June, 1994 (the
"Effective Date"), between Kent Electronics Corporation, a Texas corporation
(the "Company"), and James F. Corporron (the "Optionee").
WHEREAS, the Company adopted the Plan effective May 15, 1992; and
WHEREAS, on May 10, 1994, the Compensation Committee of the Board of
Directors approved certain amendments to the Plan and such amendments were
approved and adopted by the shareholders of the Company on June 30, 1994;
NOW, THEREFORE, for and in consideration of the premises herein, this
Amendment to the Plan further evidences the amendment of the Plan as follows:
1. Amendment of the Plan. The Plan is hereby amended as set forth on
Exhibit A hereto.
2. Full Force and Effect. The Plan, as amended by the Amendment set
forth herein, shall remain in full force and effect.
IN WITNESS WHEREOF, the Company has caused this Amendment to the Plan
to be signed on its behalf by the undersigned, thereunto duly authorized.
KENT ELECTRONICS CORPORATION
By: /s/ Morrie K. Abramson
---------------------------------
Morrie K. Abramson
Chief Executive Officer
ACCEPTED AND AGREED TO
AS OF THE EFFECTIVE DATE:
Optionee:
/s/ James F. Crorporron
- ------------------------------
James F. Corporron
<PAGE> 2
EXHIBIT A
AMENDMENT TO CHIEF OPERATING OFFICER STOCK OPTION PLAN
AND AGREEMENT
The first sentence of Section 3 shall be deleted and the following
sentence shall be added in lieu thereof:
"Except as otherwise provided herein, this Option may be exercised as
to 95,000 shares on and after May 1, 1996."
<PAGE> 1
EXHIBIT 10.11
KENT ELECTRONICS CORPORATION
STOCK OPTION PLAN AND AGREEMENT
FOR EXECUTIVE VICE PRESIDENT OF SALES-DISTRIBUTION
1. Grant. Under the terms, provisions, and conditions of this Stock
Option Plan and Agreement by and between Kent Electronics Corporation (the
"Company"), and Larry D. Olson (the "Optionee"), the Company hereby grants to
Optionee the option to purchase 37,500 shares of the Company's Common Stock,
without par value (the "Stock"), at the option price specified herein, subject
to adjustment as provided herein (the "Option"). The Option is not an "incentive
stock option" as described in Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
2. Duration of Option and Option Price. The Option shall be for a term
commencing on the date hereof and ending fifteen (15) years from the date
hereof. The option price payable by the Optionee upon exercise of the Option as
to each share subject to the Option will be $14.50, which equals one-half of the
closing price of one share of the Stock, as reported by the New York Stock
Exchange, on the date hereof.
3. Amount Exercisable and Schedule of Exercisability. Except as
otherwise provided herein, this Option may be exercised as to 3,750 shares, on
and after May 1, 1999; as to an additional 7,500 shares, on and after May 1,
2000; as to an additional 11,250 shares, on and after May 1, 2001; and as to all
remaining shares, on and after May 1, 2002. This Option shall immediately become
fully vested and exercisable as to all shares subject hereto upon the death or
Disability (as hereinafter defined) of Optionee, or upon the occurrence of a
"Change in Control" (as hereinafter defined), or upon the Company's termination
of its employment of Optionee at the election of the Company, or upon Optionee's
termination of his employment by the Company for "Good Reason" (as defined
herein at Section 11), or such earlier date as set forth in Section 9 hereof.
The Option may be exercised, so long as it is valid and outstanding, from time
to time in whole (as to shares then exercisable) or in part; provided, however,
no fractional shares of Stock shall be issued. The Option is cumulative, and may
be exercised as to any or all shares of Stock covered hereby from and after the
time it becomes exercisable as to such shares through the date of termination of
the Option.
4. Exercise of Options. The Option shall be exercisable, in whole or in
part, by the delivery of written notice to the Company setting forth the number
of shares of Stock with respect to which the Option is to be exercised. In order
to be effective, such written notice shall be accompanied at the time of its
delivery to the Company by payment of the option price for such shares of Stock,
which payment shall be made (a) in cash or by personal check, cashier's check,
certified check, or postal or express money order payable to the order of the
Company in an amount (in United States dollars) equal to the option price
multiplied by the number of shares of Stock with respect to which the Option is
exercised or (b) in shares of Stock as set forth in this Section 4. Such notice
may be delivered in person or by messenger or courier service to the Secretary
of the Company, or shall be sent by registered mail, return receipt requested,
to the Secretary of the Company, and in all such cases delivery shall be deemed
to have been made on the date such notice is received.
<PAGE> 2
At the time when the Optionee (or other holder of the Option pursuant
to Section 5) makes payment to the Company for the shares of Stock issuable upon
the exercise of the Option, the Company may require the Optionee to pay to the
Company an additional amount equal to any federal, state or local taxes (which
the Company deems necessary or appropriate to be withheld in connection with the
exercise of such Option) in such forms of payment as are described in the first
paragraph of this Section 4. In the event that Optionee does not pay to the
Company any such amount required for withholding taxes, to the extent
applicable, the employer (for payroll tax purposes) of Optionee shall have the
right to withhold such required amount from any sum payable, or to become
payable, to Optionee, upon such terms and conditions as the Company in its
discretion shall prescribe.
Payment of the option price may be made, in whole or in part, in shares
of Stock previously held by the Optionee (or other holder of the Option pursuant
to Section 5). If payment is made in whole or in part in shares of Stock, then
the Optionee (or other holder of the Option pursuant to Section 5) shall deliver
to the Company, in payment of the option price of the shares of Stock with
respect to which such Option is exercised, (i) certificates registered in the
name of such Optionee (or other holder of the Option pursuant to Section 5)
representing a number of shares of Stock legally and beneficially owned by such
Optionee (or other holder of the Option pursuant to Section 5), free of all
liens, claims and encumbrances of every kind, such certificates to be
accompanied by stock powers duly endorsed in blank by the record holder of the
shares represented by such certificates; and (ii), if the option price of the
shares of Stock with respect to which such Option is to be exercised exceeds the
fair market value of such shares of Stock, cash or a personal check, cashier's
check, certified check, or postal or express money order payable to the order of
the Company in an amount (in United States dollars) equal to the amount of such
excess. If the fair market value of such Shares of Stock delivered to the
Company exceeds the option price of the shares of Stock with respect to which
such Option is to be exercised, the Company shall promptly deliver, or cause to
be delivered, to Optionee a replacement share certificate representing the
number of shares of Stock in excess of those surrendered in payment of the
option price.
As promptly as practicable after the receipt by the Company of (i) such
written notice from the Optionee (or other holder of the Option pursuant to
Section 5) setting forth the number of shares of Stock with respect to which
such Option is to be exercised, (ii) payment of the option price of such shares
in the form required by the foregoing provisions of this Section 4, and (iii) an
amount equal to any federal, state or local taxes which the Company deems
necessary or appropriate to be withheld incident to the exercise of the Option,
the Company shall cause to be delivered to such Optionee (or other holder of the
Option pursuant to Section 5) certificates representing the number of shares of
Stock with respect to which such Option has been so exercised.
All proceeds received pursuant to the exercise of the Option shall be
added to the general funds of the Company to be used for any corporate purpose.
-2-
<PAGE> 3
For purposes of determining the value of shares of Stock delivered in
payment of all or any portion of the option price pursuant to this Section 4,
the "fair market value" of such shares shall equal the average of the daily
averages of the high and low sales price per share of the Stock as reported by
the New York Stock Exchange (or such other principal exchange or market on which
the Stock is traded as of the applicable dates) on each day on which such trades
are reported of the five trading days prior to Optionee's exercise of the
Option.
5. Transferability of Option. The Option shall not be subject to sale,
assignment or transfer, other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Code. The designation of a beneficiary by Optionee shall not constitute a
transfer. The Option shall be exercisable (i) during Optionee's lifetime, only
by Optionee (or in the event of his incapacity, by his legal representative) or
(ii) following Optionee's death, by such persons as set forth in Section 6.
6. Termination of Options in Certain Cases. In the event of the death
of the Optionee while in the employ of the Company (or while affiliated with the
Company in the discretion of the Board), the Option shall become fully vested
and shall terminate on the earlier of (i) the date of expiration of the Option,
or (ii) twelve (12) months following the date of Optionee's death. After the
death of the Optionee, his executors, administrators or any person(s) to whom
the Option was transferred by will or by the laws of descent and distribution,
shall have the right, at any time prior to the expiration of the period
described in the first sentence of this paragraph, to exercise the Option.
If, before the date of expiration of the Option, the Optionee shall be
retired in good standing from the employ of the Company (or from another
affiliation with the Company in the discretion of the Board) including
retirement for reasons of Disability, the Option shall terminate on the earlier
of (i) the date of expiration of the Option, or (ii) three (3) years following
the date of such retirement. As used herein, the term "Disability" shall mean a
total and permanent disability resulting from a mental or physical incapacity
which prevents Optionee from performing the full scope of his duties for the
Company (as such duties exist on the date immediately prior to the occurrence of
such incapacity) and lasting or expected to last for a period of at least 180
days. Disability shall be determined in good faith by the Board of Directors of
the Company based on the opinion of a licensed physician. In the event of such
retirement, the Optionee (or, in the event of his incapacity, his legal
representative) shall have the right, at any time prior to the expiration of the
period described in the first sentence of this paragraph, to exercise the Option
to the same extent to which he was entitled to exercise it immediately prior to
such retirement (and, in the case of retirement for Disability or under
circumstances constituting a termination of Optionee's employment by the Company
at the Company's election, the Option shall fully vest and become exercisable,
as set forth herein).
If, before the date of expiration of the Option, the Optionee's
employment by the Company shall be terminated by the Company at its election, or
shall be terminated by Optionee for Good Reason, this Option shall immediately
vest fully and become exercisable as to all shares covered hereby. In such
event, Optionee shall have the right to exercise the Option at
-3-
<PAGE> 4
any time prior to the earlier of (i) the date of expiration of the Option or
(ii) twelve (12) months following the date of such termination of employment.
If, before the date of expiration of the Option, the Optionee's
employment or other affiliation with the Company terminates at the election of
Optionee for any reason other than Good Reason (other than in connection with
Optionee's retirement in accordance with the second paragraph of this Section
6), the Option shall terminate on the earlier of (i) the date of expiration of
such Option, or (ii) ninety (90) days after the date of termination of the
Optionee's employment or other affiliation with the Company. In such event, the
Option shall be exercisable and shall vest as to all shares that, pursuant to
the schedule set forth in Section 3 hereof, become exercisable on or prior to
the date of termination of the Option.
For purposes of this Stock Option Plan and Agreement, employment by the
Company shall include employment by any subsidiary of the Company.
7. No Rights as Shareholder. No holder of the Option shall have any
rights as a shareholder with respect to shares covered by the Option until the
date of exercise of the Option as to such shares; and, except as otherwise
provided in Section 9 hereof, no adjustment for dividends, or otherwise, shall
be made if the record date therefor is prior to the date of such exercise.
8. Employment or Affiliation Obligation. The grant of this Option shall
not impose upon the Company any obligation to employ or to continue any
employment or other affiliation with the Optionee. The right of the Company to
terminate its employment or affiliate relationship with any person, including
the Optionee, shall not be diminished or affected by reason of the fact that
this Option has been granted.
9. Changes in the Company's Capital Structure. The existence of the
Option shall not affect in any way the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock ahead of, or affecting,the Stock
or the rights thereof, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
The number of shares covered by this Option and the price per share
thereof shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Stock resulting from the subdivision or consolidation
of shares or any other capital adjustment, the payment of a stock dividend or
any other increase in such shares effected without receipt of consideration by
the Company or any other decrease therein effected without a distribution of
cash, property, or other securities in connection therewith.
-4-
<PAGE> 5
If (i) the Company is merged into or consolidated with another
corporation under circumstances where the Company is not the surviving
corporation or where the Stock is converted into other securities, cash or other
property in connection with such merger or consolidation, (ii) the Company is
recapitalized in such a manner that shares of Stock are converted into or
exchanged for other securities of the Company, (iii) the Company sells or
otherwise disposes of substantially all its assets to another person,
corporation or entity, or (iv) a tender offer is announced that, if successfully
completed, would result in a Change in Control, then in any such case, on a date
at least 30 days prior to the effective date of any such merger, consolidation,
recapitalization, exchange, sale or acquisition or tender offer (or, in the case
of such tender offer, on such later date as is practicable, but in any such case
at least ten days prior to the termination of such tender offer), as the case
may be, any limitations as to amount exercisable each year shall be modified so
that Option from and after such date shall be exercisable in full. In addition,
with respect to any event described in the preceding sentence, after the
effective date of such merger, consolidation, recapitalization, exchange, sale
or acquisition, as the case may be, Optionee shall be entitled, upon exercise of
such Option to receive in lieu of shares of Stock, shares of such stock or other
securities of the Company or the surviving or acquiring corporation or such
other property at the rate per share as the holders of shares of Stock received
pursuant to the terms of the merger, consolidation, exchange, recapitalization,
sale or acquisition.
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class or securities convertible into shares of stock of
any class for cash or property or for labor or services, either upon direct sale
or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number, class or price of shares of Stock then
subject to the Option.
10. Change in Control. A "Change in Control" shall be deemed to have
occurred on the earliest of the following dates:
(i) The date any entity or person (including a "group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934) shall have
become the beneficial owner of, or shall have obtained voting control
over, thirty percent (30%) or more of the outstanding common shares of
the Company;
(ii) The date the shareholders of the Company approve a definitive
agreement (A) to merge or consolidate the Company with or into another
corporation, in which the Company is not the continuing or surviving
corporation or pursuant to which any common shares of the Company would
be converted into cash, securities or other property of another
corporation, other than a merger of the Company in which holders of
common shares immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger as immediately before, or (B) to sell or
otherwise dispose of substantially all the assets of the Company; or
-5-
<PAGE> 6
(iii) The first date as of which Continuing Directors (as defined
in Article IX of the Company's Articles of Incorporation) fail to
constitute a majority of the members of the Company's Board of
Directors.
11. Termination of Employment by Optionee for Good Reason. For purposes
of this Stock Option Plan and Agreement a termination of Optionee's employment
for "Good Reason" shall be deemed to occur if Optionee tenders his resignation
to the Board of Directors after there has been a significant and material
diminishment in the nature and scope of the authority, power, function and duty
attached to Optionee's management position with the Company as of the effective
date of this Agreement (which shall include, but not be limited to, the
appointment of any officer to whom Optionee shall report other than the Chairman
of the Board and Chief Executive Officer or the President and Chief Operating
Officer), and such diminishment lasts for at least thirty (30) consecutive days
and is not cured or corrected by the Company within ten (10) days after Optionee
provides notice of same to the Company pursuant to the notice provisions hereof.
Executive's termination of his employment with the Company for Good Reason may
take place at any time after the events set forth in the preceding sentence have
occurred, and such termination need not be effected within any specified time
period after the occurrence of such events. Such termination for Good Reason
shall result in the Option immediately becoming fully vested and exercisable as
to all shares covered hereby.
12. Limited Stock Appreciation Rights. Notwithstanding any other
provisions in this Stock Option Plan and Agreement, upon the occurrence of any
Change in Control, and thereafter so long as this Option is in effect, Optionee
shall have the right to require the Company (or if the Company is not the
survivor of a merger, consolidation or reorganization, such survivor) to
purchase from him any or all unexercised options granted under this Stock Option
Plan and Agreement at a purchase price equal to (i) the excess of the Change in
Control Price (as hereinafter defined) per share over the option price per share
multiplied by (ii) the number of shares subject to the Option specified by the
Optionee for purchase in a written notice to the Company or such survivor,
addressed to the attention of the Corporate Secretary.
For purposes of this Stock Option Plan and Agreement, the term "Change
in Control Price" of shares of Stock shall mean (a) except in the case of a
Change in Control that results from a merger, consolidation or reorganization in
which the Company is not the survivor or shares of Stock are converted into cash
or other securities or other assets (a "Termination Merger"), the higher of (I)
the highest sales price per share of the Stock on the New York Stock Exchange
(or if the Company's Stock is not then traded on the New York Stock Exchange, on
the principal exchange or market where such Stock is actively traded) on the
trading days during the thirty (30) days immediately preceding the date the
Optionee so notified the Company of his election pursuant to the preceding
paragraph or (II) the highest sales price per share of the Stock on the New York
Stock Exchange (or if the Company's Stock is not then traded on the New York
Stock Exchange, on the principal exchange or market where such stock is actively
traded) on the trading days during the thirty (30) days immediately preceding
the date of the Change in Control; and (b) in the case of a Change in Control
that results from a Termination Merger, the higher of (I) the fair market value
of the consideration receivable per share by holders of Stock
-6-
<PAGE> 7
of the Company in such Termination Merger (which fair market value as to any
securities included in such consideration shall be the highest sales price per
unit of such security on the principal exchange or market where such security is
actively traded on the trading days during the thirty (30) days immediately
preceding the date of the Termination Merger, and as to any such security not
actively traded in any market, and as to all other property included in such
consideration, shall be the fair market value determined by the Committee
(hereinafter defined) in good faith exercised in a reasonable manner) or (II)
the amount determined pursuant to clause (a)(II) of this Section 12. The amount
payable to Optionee by the Company or the survivor in a Termination Merger, as
the case may be, shall be paid in cash or by certified check, and shall be
reduced by the amount of any taxes required to be withheld.
13. Administration. This Stock Option Plan and Agreement shall be
administered by a committee of at least two persons to be appointed by the Board
of Directors of the Company (the "Committee"). All members of the Committee
shall be persons who are "disinterested persons," as set forth in Rule 16b-3
under the Securities Exchange Act of 1934, as amended, or any successor rule
thereto ("Rule 16b-3"). Meetings shall be held at such times and places as shall
be determined by the Committee. A majority of the members of the Committee shall
constitute a quorum for the transaction of business, and the vote of a majority
of those members present at any meeting shall decide any question brought before
the meeting. No member of the Committee shall be liable for any act or omission
of any other member of the Committee or for any act or omission on his own part,
including but not limited to the exercise of any power or discretion given to
him under this Stock Option Plan and Agreement, except those resulting from his
own gross negligence or willful misconduct.
14. Notices. Any notice, consent, request or other communication
("Notice") required or permitted to be given hereunder shall be in writing. Such
Notice shall be (a) personally delivered or delivered by messenger, or (b)
mailed by certified mail, return receipt requested, postage prepaid, or (c) sent
by telecopy or the equivalent (provided, however, that the original Notice of
which a facsimile has been transmitted shall in all cases be delivered to the
addressee within two (2) business days following such transmission). Notices
given hereunder shall be addressed as follows:
If to Company: If to Optionee:
Kent Electronics Corporation Larry D. Olson
7433 Harwin Drive Kent Electronics Corporation
Houston, Texas 77036 7433 Harwin Drive
Attention: Secretary Houston, Texas 77036
Any Notice given in accordance herewith shall be deemed effective and
to have been received by the party to whom such Notice is directed (a) upon
delivery, if delivered personally or by messenger or sent by telecopy or the
equivalent, or (b) three (3) days after the date of deposit in the U.S. Mail, if
sent by mail and the return receipt is received by the sender, or
-7-
<PAGE> 8
upon actual receipt by the party receiving Notice in the event that such
return receipt is not received by the sender.
15. Amendment. This Stock Option Plan and Agreement may be modified or
amended only by a written instrument executed by Company and Optionee, and any
such modification or amendment may be authorized on behalf of the Company by the
Committee; provided, however, that so long as Optionee and the Company desire
that this Stock Option Plan and Agreement comply with Rule 16b-3, or any
successor or similar provisions thereto, any such amendment that would require
the vote or approval of a specified percentage of the Company's shareholders in
order to assure that this Stock Option Plan and Agreement complies with Rule
16b-3, or any successor or similar provisions thereto, shall only be made upon
obtaining such required shareholder vote, or taking such other action in
connection with such amendment as the Board of Directors or such authorized
Committee deems advisable to operate this Stock Option Plan and Agreement in
accordance with Rule 16b-3 or such successor or similar rule. However, no
termination or amendment of this Stock Option Plan and Agreement may, without
the consent of the Optionee, adversely affect the rights of Optionee as to any
portion of the Option then outstanding.
16. Severability. In the event that any provision of this Stock Option
Plan and Agreement shall be held illegal, invalid, or unenforceable for any
reason, such provision shall be fully severable, but shall not affect the
remaining provisions hereof, and this Stock Option Plan and Agreement shall be
construed and enforced as if the illegal, invalid, or unenforceable provision
had not been included herein.
17. Gender, Tense and Headings. Whenever the context so requires, words
of the masculine gender used herein shall include the feminine and neuter, and
words used in the singular shall include the plural. Section headings as used
herein are inserted solely for convenience and reference and are not to be
interpreted as part of the construction of this Stock Option Plan and Agreement.
18. Governing Law. The provisions of this Stock Option Plan and
Agreement shall be construed according to the laws of the State of Texas, except
as superseded by federal law. This Agreement is performable in Harris County,
Texas. In the event that any dispute arises under this Agreement, the Optionee
shall have the right, in addition to all other rights and remedies provided by
law, at his election to seek arbitration in Houston, Texas under the rules of
the American Arbitration Association by serving a notice to arbitrate upon the
Company, or to institute a judicial proceeding in a court of competent
jurisdiction located in Harris County, Texas. In the event that the Company
institutes any legal proceeding against the Optionee to resolve a dispute under
this Agreement, the Optionee shall have the right either to seek arbitration in
Houston, Texas or to institute a judicial proceeding in a court located in
Harris County, Texas, as provided in the preceding sentence, and the Company
shall dismiss its proceeding or take such other action as may be reasonably
requested by the Optionee in order for such proceeding to be brought in the
forum selected by the Optionee in accordance with the preceding sentence.
-8-
<PAGE> 9
19. Shareholder Approval. This Stock Option Plan and Agreement is
subject to approval and ratification by the vote of the holders of a majority of
shares of Stock present in person or by proxy and entitled to vote at a meeting
of shareholders of the Company. If such shareholder approval is not received on
or before December 31, 1995, the Option shall be null and void.
20. Requirement of Bonus Payment In Certain Circumstances. 2. In the
event that the Optionee is deemed to have received an excess parachute payment
(as such term is defined in Section 280G(b) of the Internal Revenue Code of
1986, as amended (the "Code")) which is subject to the excise taxes (the "Excise
Taxes") imposed by Section 4999 of the Code in respect of any payment of
compensation to the Optionee from the Company pursuant to this Stock Option Plan
and Agreement, whether in the form of cash, property, stock, stock options,
securities or otherwise, the Company shall make the Bonus Payment to the
Optionee promptly after the date on which the Optionee received or is deemed to
have received any excess parachute payments.
(b) (i) The term "Bonus Payment" means a cash payment in an amount
equal to the sum of (A) all Excise Taxes payable by the Optionee, plus
(B) all additional Excise Taxes and federal or state income taxes to
the extent such taxes are imposed in respect of the Bonus Payment, such
that the Optionee shall be in the same after-tax position and shall
have received the same benefits that he would have received if the
Excise Taxes had not been imposed. For purposes of calculating any
income taxes attributable to the Bonus Payment, the Optionee shall be
deemed for all purposes to be paying income taxes at the highest
marginal federal income tax rate, taking into account any applicable
surtaxes and other generally applicable taxes which have the effect of
increasing the marginal federal income tax rate and, if applicable, at
the highest marginal state income tax rate to which the Bonus Payment
and the Optionee are subject.
(ii) An example of the calculation of the Bonus Payment is set
forth below: Assume that the Excise Tax rate is 20%, that the highest
federal marginal income tax rate is 36% and that the Optionee is not
subject to state income taxes. Assume that the Optionee has received an
excess parachute payment in the amount of $1,000,000, on which $200,000
in Excise Taxes are payable. The amount of the required Bonus Payment
is $454,545.45. The Bonus Payment, less Excise Taxes of $90,909.09 and
income taxes of $163,636.36, yields $200,000.00, the amount of the
Excise Taxes payable in respect of the excess parachute payment.
(c) The Optionee agrees to cooperate reasonably with the Company to
minimize the amount of the excess parachute payments, including without
limitation assisting the Company in establishing that some or all of the
payments received by the Optionee contingent on a change described in Section
280G(b)(2)(A)(i) of the Code are reasonable compensation for personal services
actually rendered by the Optionee before the date of such change or to be
rendered by the Optionee on or after the date of such change. In the event that
the Company is able to establish that the amount of the excess parachute
payments is less than originally anticipated by
-9-
<PAGE> 10
the Optionee, the Optionee shall refund to the Company any excess Bonus Payment
to the extent not required to pay Excise Taxes or income taxes (including those
incurred in respect of the payment of the Bonus Payment). Notwithstanding the
foregoing, the Optionee shall not be required to take any actions which his tax
advisor advises him in writing (i) is improper or (ii) exposes the Optionee to
material personal liability, and the Optionee may require the Company to deliver
to the Optionee an indemnification agreement in form and substance satisfactory
to the Optionee as a condition to taking any action required by this Section 3.
(d) The Company shall make any payment required to be made under this
Agreement in cash and on demand. Any payment required to be paid by the Company
under this Agreement which is not paid within five days of receipt by the
Company of the Optionee's demand therefor shall thereafter be deemed delinquent,
and the Company shall pay to the Optionee immediately upon demand interest at
the highest nonusurious rate per annum allowed by applicable law from the date
such payment becomes delinquent to the date of payment of such delinquent sum.
(e) In the event that there is any change to the Code which results in
the recodification of Section 280G or Section 4999 of the Code, or in the event
that either such section of the Code is amended, replaced or supplemented by
other provisions of the Code of similar import ("Successor Provisions"), then
this Agreement shall be applied and enforced with respect to such new Code
provisions in a manner consistent with the intent of the parties as expressed
herein, which is to assure that the Optionee is in the same after-tax position
and has received the same benefits that he would have been in and received if
any taxes imposed by Section 4999 or any Successor Provisions had not been
imposed.
(f) There shall be no right of set-off or counterclaim, in respect of
any claim, debt or obligation, against any payments required under this Section
20 to the Optionee provided for in this Agreement. No right or interest to or in
any payments required under this Section 20 shall be assignable by the Optionee;
provided, however, that this provision shall not preclude him from designating
one or more beneficiaries to receive any amount that may be payable after his
death and shall not preclude the legal representative of his estate from
assigning any right hereunder to the person or persons entitled thereto under
his will or, in the case of intestacy, to the person or persons entitled thereto
under the laws of intestacy applicable to his estate. The term "beneficiary" as
used in this Agreement shall mean a beneficiary or beneficiaries so designated
to receive any such amount or, if no beneficiary has been so designated, the
legal representative of the Optionee's estate. No right, benefit or interest
under this Section 20 shall be subject to anticipation, alienation, sale,
assignment, encumbrance, charge, pledge, hypothecation, or set-off in respect of
any claim, debt or obligation, or to execution, attachment, levy or similar
process, or assignment by operation of law. Any attempt, voluntary or
involuntary, to effect any action specified in the immediately preceding
sentence shall, to the full extent permitted by law, be null, void and of no
effect.
21. Successors to the Company. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of the Company and
any successor of the
-10-
<PAGE> 11
Company, including, without limitation, any corporation or other entity
acquiring directly or indirectly all or substantially all of the assets of the
Company whether by merger, consolidation, sale or otherwise (and such successor
shall thereafter be deemed "the Company" for the purposes of this Agreement),
but shall not otherwise be assignable by the Company.
IN WITNESS WHEREOF, this Stock Option Plan and Agreement is executed,
subject to shareholder approval as set forth herein, effective as of the 8th day
of May, 1995.
KENT ELECTRONICS CORPORATION
By: /s/ Morrie K. Abramson
---------------------------------
Morrie K. Abramson, Chairman and
Chief Executive Officer
OPTIONEE
/s/ Larry D. Olson
------------------------------------
Larry D. Olson
-11-
<PAGE> 1
EXHIBIT 10.12
KENT ELECTRONICS CORPORATION
STOCK OPTION PLAN AND AGREEMENT
FOR EXECUTIVE VICE PRESIDENT OF OPERATIONS - DISTRIBUTION
1. Grant. Under the terms, provisions, and conditions of this
Stock Option Plan and Agreement by and between Kent Electronics Corporation
(the "Company"), and Mark A. Zerbe (the "Optionee"), the Company hereby grants
to Optionee the option to purchase 37,500 shares of the Company's Common Stock,
without par value (the "Stock"), at the option price specified herein, subject
to adjustment as provided herein (the "Option"). The Option is not an
"incentive stock option" as described in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
2. Duration of Option and Option Price. The Option shall be for
a term commencing on the date hereof and ending fifteen (15) years from the
date hereof. The option price payable by the Optionee upon exercise of the
Option as to each share subject to the Option will be $14.50, which equals
one-half of the closing price of one share of the Stock, as reported by the New
York Stock Exchange, on the date hereof.
3. Amount Exercisable and Schedule of Exercisability. Except as
otherwise provided herein, this Option may be exercised as to 3,750 shares, on
and after May 1, 1999; as to an additional 7,500 shares, on and after May 1,
2000; as to an additional 11,250 shares, on and after May 1, 2001; and as to
all remaining shares, on and after May 1, 2002. This Option shall immediately
become fully vested and exercisable as to all shares subject hereto upon the
death or Disability (as hereinafter defined) of Optionee, or upon the
occurrence of a "Change in Control" (as hereinafter defined), or upon the
Company's termination of its employment of Optionee at the election of the
Company, or upon Optionee's termination of his employment by the Company for
"Good Reason" (as defined herein at Section 11), or such earlier date as set
forth in Section 9 hereof. The Option may be exercised, so long as it is valid
and outstanding, from time to time in whole (as to shares then exercisable) or
in part; provided, however, no fractional shares of Stock shall be issued. The
Option is cumulative, and may be exercised as to any or all shares of Stock
covered hereby from and after the time it becomes exercisable as to such shares
through the date of termination of the Option.
4. Exercise of Options. The Option shall be exercisable, in
whole or in part, by the delivery of written notice to the Company setting
forth the number of shares of Stock with respect to which the Option is to be
exercised. In order to be effective, such written notice shall be accompanied
at the time of its delivery to the Company by payment of the option price for
such shares of Stock, which payment shall be made (a) in cash or by personal
check, cashier's check, certified check, or postal or express money order
payable to the order of the Company in an amount (in United States dollars)
equal to the option price multiplied by the number of shares of Stock with
respect to which the Option is exercised or (b) in shares of Stock as set forth
in this Section 4. Such notice may be delivered in person or by messenger or
courier service to the Secretary of the Company, or shall be sent by registered
mail, return receipt requested, to the Secretary of the Company, and in all
such cases delivery shall be deemed to have been made on the date such notice
is received.
<PAGE> 2
At the time when the Optionee (or other holder of the Option pursuant
to Section 5) makes payment to the Company for the shares of Stock issuable
upon the exercise of the Option, the Company may require the Optionee to pay to
the Company an additional amount equal to any federal, state or local taxes
(which the Company deems necessary or appropriate to be withheld in connection
with the exercise of such Option) in such forms of payment as are described in
the first paragraph of this Section 4. In the event that Optionee does not pay
to the Company any such amount required for withholding taxes, to the extent
applicable, the employer (for payroll tax purposes) of Optionee shall have the
right to withhold such required amount from any sum payable, or to become
payable, to Optionee, upon such terms and conditions as the Company in its
discretion shall prescribe.
Payment of the option price may be made, in whole or in part, in
shares of Stock previously held by the Optionee (or other holder of the Option
pursuant to Section 5). If payment is made in whole or in part in shares of
Stock, then the Optionee (or other holder of the Option pursuant to Section 5)
shall deliver to the Company, in payment of the option price of the shares of
Stock with respect to which such Option is exercised, (i) certificates
registered in the name of such Optionee (or other holder of the Option pursuant
to Section 5) representing a number of shares of Stock legally and beneficially
owned by such Optionee (or other holder of the Option pursuant to Section 5),
free of all liens, claims and encumbrances of every kind, such certificates to
be accompanied by stock powers duly endorsed in blank by the record holder of
the shares represented by such certificates; and (ii), if the option price of
the shares of Stock with respect to which such Option is to be exercised
exceeds the fair market value of such shares of Stock, cash or a personal
check, cashier's check, certified check, or postal or express money order
payable to the order of the Company in an amount (in United States dollars)
equal to the amount of such excess. If the fair market value of such Shares of
Stock delivered to the Company exceeds the option price of the shares of Stock
with respect to which such Option is to be exercised, the Company shall
promptly deliver, or cause to be delivered, to Optionee a replacement share
certificate representing the number of shares of Stock in excess of those
surrendered in payment of the option price.
As promptly as practicable after the receipt by the Company of (i)
such written notice from the Optionee (or other holder of the Option pursuant
to Section 5) setting forth the number of shares of Stock with respect to which
such Option is to be exercised, (ii) payment of the option price of such shares
in the form required by the foregoing provisions of this Section 4, and (iii)
an amount equal to any federal, state or local taxes which the Company deems
necessary or appropriate to be withheld incident to the exercise of the Option,
the Company shall cause to be delivered to such Optionee (or other holder of
the Option pursuant to Section 5) certificates representing the number of
shares of Stock with respect to which such Option has been so exercised.
All proceeds received pursuant to the exercise of the Option shall be
added to the general funds of the Company to be used for any corporate purpose.
-2-
<PAGE> 3
For purposes of determining the value of shares of Stock delivered in
payment of all or any portion of the option price pursuant to this Section 4,
the "fair market value" of such shares shall equal the average of the daily
averages of the high and low sales price per share of the Stock as reported by
the New York Stock Exchange (or such other principal exchange or market on
which the Stock is traded as of the applicable dates) on each day on which such
trades are reported of the five trading days prior to Optionee's exercise of
the Option.
5. Transferability of Option. The Option shall not be subject to
sale, assignment or transfer, other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Code. The designation of a beneficiary by Optionee shall not constitute a
transfer. The Option shall be exercisable (i) during Optionee's lifetime, only
by Optionee (or in the event of his incapacity, by his legal representative) or
(ii) following Optionee's death, by such persons as set forth in Section 6.
6. Termination of Options in Certain Cases. In the event of the
death of the Optionee while in the employ of the Company (or while affiliated
with the Company in the discretion of the Board), the Option shall become fully
vested and shall terminate on the earlier of (i) the date of expiration of the
Option, or (ii) twelve (12) months following the date of Optionee's death.
After the death of the Optionee, his executors, administrators or any person(s)
to whom the Option was transferred by will or by the laws of descent and
distribution, shall have the right, at any time prior to the expiration of the
period described in the first sentence of this paragraph, to exercise the
Option.
If, before the date of expiration of the Option, the Optionee shall be
retired in good standing from the employ of the Company (or from another
affiliation with the Company in the discretion of the Board) including
retirement for reasons of Disability, the Option shall terminate on the earlier
of (i) the date of expiration of the Option, or (ii) three (3) years following
the date of such retirement. As used herein, the term "Disability" shall mean
a total and permanent disability resulting from a mental or physical incapacity
which prevents Optionee from performing the full scope of his duties for the
Company (as such duties exist on the date immediately prior to the occurrence
of such incapacity) and lasting or expected to last for a period of at least
180 days. Disability shall be determined in good faith by the Board of
Directors of the Company based on the opinion of a licensed physician. In the
event of such retirement, the Optionee (or, in the event of his incapacity, his
legal representative) shall have the right, at any time prior to the expiration
of the period described in the first sentence of this paragraph, to exercise
the Option to the same extent to which he was entitled to exercise it
immediately prior to such retirement (and, in the case of retirement for
Disability or under circumstances constituting a termination of Optionee's
employment by the Company at the Company's election, the Option shall fully
vest and become exercisable, as set forth herein).
If, before the date of expiration of the Option, the Optionee's
employment by the Company shall be terminated by the Company at its election,
or shall be terminated by Optionee for Good Reason, this Option shall
immediately vest fully and become exercisable as to all shares covered hereby.
In such event, Optionee shall have the right to exercise the Option at
-3-
<PAGE> 4
any time prior to the earlier of (i) the date of expiration of the Option or
(ii) twelve (12) months following the date of such termination of employment.
If, before the date of expiration of the Option, the Optionee's
employment or other affiliation with the Company terminates at the election of
Optionee for any reason other than Good Reason (other than in connection with
Optionee's retirement in accordance with the second paragraph of this Section
6), the Option shall terminate on the earlier of (i) the date of expiration of
such Option, or (ii) ninety (90) days after the date of termination of the
Optionee's employment or other affiliation with the Company. In such event,
the Option shall be exercisable and shall vest as to all shares that, pursuant
to the schedule set forth in Section 3 hereof, become exercisable on or prior
to the date of termination of the Option.
For purposes of this Stock Option Plan and Agreement, employment by
the Company shall include employment by any subsidiary of the Company.
7. No Rights as Shareholder. No holder of the Option shall have
any rights as a shareholder with respect to shares covered by the Option until
the date of exercise of the Option as to such shares; and, except as otherwise
provided in Section 9 hereof, no adjustment for dividends, or otherwise, shall
be made if the record date therefor is prior to the date of such exercise.
8. Employment or Affiliation Obligation. The grant of this
Option shall not impose upon the Company any obligation to employ or to
continue any employment or other affiliation with the Optionee. The right of
the Company to terminate its employment or affiliate relationship with any
person, including the Optionee, shall not be diminished or affected by reason
of the fact that this Option has been granted.
9. Changes in the Company's Capital Structure. The existence of
the Option shall not affect in any way the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock ahead of, or affecting,the
Stock or the rights thereof, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
The number of shares covered by this Option and the price per share
thereof shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Stock resulting from the subdivision or
consolidation of shares or any other capital adjustment, the payment of a stock
dividend or any other increase in such shares effected without receipt of
consideration by the Company or any other decrease therein effected without a
distribution of cash, property, or other securities in connection therewith.
-4-
<PAGE> 5
If (i) the Company is merged into or consolidated with another
corporation under circumstances where the Company is not the surviving
corporation or where the Stock is converted into other securities, cash or
other property in connection with such merger or consolidation, (ii) the
Company is recapitalized in such a manner that shares of Stock are converted
into or exchanged for other securities of the Company, (iii) the Company sells
or otherwise disposes of substantially all its assets to another person,
corporation or entity, or (iv) a tender offer is announced that, if
successfully completed, would result in a Change in Control, then in any such
case, on a date at least 30 days prior to the effective date of any such
merger, consolidation, recapitalization, exchange, sale or acquisition or
tender offer (or, in the case of such tender offer, on such later date as is
practicable, but in any such case at least ten days prior to the termination of
such tender offer), as the case may be, any limitations as to amount
exercisable each year shall be modified so that Option from and after such date
shall be exercisable in full. In addition, with respect to any event described
in the preceding sentence, after the effective date of such merger,
consolidation, recapitalization, exchange, sale or acquisition, as the case may
be, Optionee shall be entitled, upon exercise of such Option to receive in lieu
of shares of Stock, shares of such stock or other securities of the Company or
the surviving or acquiring corporation or such other property at the rate per
share as the holders of shares of Stock received pursuant to the terms of the
merger, consolidation, exchange, recapitalization, sale or acquisition.
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class or securities convertible into shares of stock of
any class for cash or property or for labor or services, either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number, class or price of shares of Stock
then subject to the Option.
10. Change in Control. A "Change in Control" shall be deemed to
have occurred on the earliest of the following dates:
(i) The date any entity or person (including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934)
shall have become the beneficial owner of, or shall have obtained
voting control over, thirty percent (30%) or more of the outstanding
common shares of the Company;
(ii) The date the shareholders of the Company approve a
definitive agreement (A) to merge or consolidate the Company with or
into another corporation, in which the Company is not the continuing
or surviving corporation or pursuant to which any common shares of the
Company would be converted into cash, securities or other property of
another corporation, other than a merger of the Company in which
holders of common shares immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger as immediately before, or (B) to sell or
otherwise dispose of substantially all the assets of the Company; or
-5-
<PAGE> 6
(iii) The first date as of which Continuing Directors (as
defined in Article IX of the Company's Articles of Incorporation) fail
to constitute a majority of the members of the Company's Board of
Directors.
11. Termination of Employment by Optionee for Good Reason. For
purposes of this Stock Option Plan and Agreement a termination of Optionee's
employment for "Good Reason" shall be deemed to occur if Optionee tenders his
resignation to the Board of Directors after there has been a significant and
material diminishment in the nature and scope of the authority, power, function
and duty attached to Optionee's management position with the Company as of the
effective date of this Agreement (which shall include, but not be limited to,
the appointment of any officer to whom Optionee shall report other than the
Chairman of the Board and Chief Executive Officer or the President and Chief
Operating Officer), and such diminishment lasts for at least thirty (30)
consecutive days and is not cured or corrected by the Company within ten (10)
days after Optionee provides notice of same to the Company pursuant to the
notice provisions hereof. Executive's termination of his employment with the
Company for Good Reason may take place at any time after the events set forth
in the preceding sentence have occurred, and such termination need not be
effected within any specified time period after the occurrence of such events.
Such termination for Good Reason shall result in the Option immediately
becoming fully vested and exercisable as to all shares covered hereby.
12. Limited Stock Appreciation Rights. Notwithstanding any other
provisions in this Stock Option Plan and Agreement, upon the occurrence of any
Change in Control, and thereafter so long as this Option is in effect, Optionee
shall have the right to require the Company (or if the Company is not the
survivor of a merger, consolidation or reorganization, such survivor) to
purchase from him any or all unexercised options granted under this Stock
Option Plan and Agreement at a purchase price equal to (i) the excess of the
Change in Control Price (as hereinafter defined) per share over the option
price per share multiplied by (ii) the number of shares subject to the Option
specified by the Optionee for purchase in a written notice to the Company or
such survivor, addressed to the attention of the Corporate Secretary.
For purposes of this Stock Option Plan and Agreement, the term "Change
in Control Price" of shares of Stock shall mean (a) except in the case of a
Change in Control that results from a merger, consolidation or reorganization
in which the Company is not the survivor or shares of Stock are converted into
cash or other securities or other assets (a "Termination Merger"), the higher
of (I) the highest sales price per share of the Stock on the New York Stock
Exchange (or if the Company's Stock is not then traded on the New York Stock
Exchange, on the principal exchange or market where such Stock is actively
traded) on the trading days during the thirty (30) days immediately preceding
the date the Optionee so notified the Company of his election pursuant to the
preceding paragraph or (II) the highest sales price per share of the Stock on
the New York Stock Exchange (or if the Company's Stock is not then traded on
the New York Stock Exchange, on the principal exchange or market where such
stock is actively traded) on the trading days during the thirty (30) days
immediately preceding the date of the Change in Control; and (b) in the case of
a Change in Control that results from a Termination Merger, the higher of (I)
the fair market value of the consideration receivable per share by holders of
Stock
-6-
<PAGE> 7
of the Company in such Termination Merger (which fair market value as to any
securities included in such consideration shall be the highest sales price per
unit of such security on the principal exchange or market where such security
is actively traded on the trading days during the thirty (30) days immediately
preceding the date of the Termination Merger, and as to any such security not
actively traded in any market, and as to all other property included in such
consideration, shall be the fair market value determined by the Committee
(hereinafter defined) in good faith exercised in a reasonable manner) or (II)
the amount determined pursuant to clause (a)(II) of this Section 12. The
amount payable to Optionee by the Company or the survivor in a Termination
Merger, as the case may be, shall be paid in cash or by certified check, and
shall be reduced by the amount of any taxes required to be withheld.
13. Administration. This Stock Option Plan and Agreement shall be
administered by a committee of at least two persons to be appointed by the
Board of Directors of the Company (the "Committee"). All members of the
Committee shall be persons who are "disinterested persons," as set forth in
Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or any
successor rule thereto ("Rule 16b-3"). Meetings shall be held at such times
and places as shall be determined by the Committee. A majority of the members
of the Committee shall constitute a quorum for the transaction of business, and
the vote of a majority of those members present at any meeting shall decide any
question brought before the meeting. No member of the Committee shall be
liable for any act or omission of any other member of the Committee or for any
act or omission on his own part, including but not limited to the exercise of
any power or discretion given to him under this Stock Option Plan and
Agreement, except those resulting from his own gross negligence or willful
misconduct.
14. Notices. Any notice, consent, request or other communication
("Notice") required or permitted to be given hereunder shall be in writing.
Such Notice shall be (a) personally delivered or delivered by messenger, or (b)
mailed by certified mail, return receipt requested, postage prepaid, or (c)
sent by telecopy or the equivalent (provided, however, that the original Notice
of which a facsimile has been transmitted shall in all cases be delivered to
the addressee within two (2) business days following such transmission).
Notices given hereunder shall be addressed as follows:
If to Company: If to Optionee:
Kent Electronics Corporation Mark A. Zerbe
7433 Harwin Drive Kent Electronics Corporation
Houston, Texas 77036 7433 Harwin Drive
Attention: Secretary Houston, Texas 77036
Any Notice given in accordance herewith shall be deemed effective and
to have been received by the party to whom such Notice is directed (a) upon
delivery, if delivered personally or by messenger or sent by telecopy or the
equivalent, or (b) three (3) days after the date of deposit in the U.S. Mail,
if sent by mail and the return receipt is received by the sender, or
-7-
<PAGE> 8
upon actual receipt by the party receiving Notice in the event that such return
receipt is not received by the sender.
15. Amendment. This Stock Option Plan and Agreement may be
modified or amended only by a written instrument executed by Company and
Optionee, and any such modification or amendment may be authorized on behalf of
the Company by the Committee; provided, however, that so long as Optionee and
the Company desire that this Stock Option Plan and Agreement comply with Rule
16b-3, or any successor or similar provisions thereto, any such amendment that
would require the vote or approval of a specified percentage of the Company's
shareholders in order to assure that this Stock Option Plan and Agreement
complies with Rule 16b-3, or any successor or similar provisions thereto, shall
only be made upon obtaining such required shareholder vote, or taking such
other action in connection with such amendment as the Board of Directors or
such authorized Committee deems advisable to operate this Stock Option Plan and
Agreement in accordance with Rule 16b-3 or such successor or similar rule.
However, no termination or amendment of this Stock Option Plan and Agreement
may, without the consent of the Optionee, adversely affect the rights of
Optionee as to any portion of the Option then outstanding.
16. Severability. In the event that any provision of this Stock
Option Plan and Agreement shall be held illegal, invalid, or unenforceable for
any reason, such provision shall be fully severable, but shall not affect the
remaining provisions hereof, and this Stock Option Plan and Agreement shall be
construed and enforced as if the illegal, invalid, or unenforceable provision
had not been included herein.
17. Gender, Tense and Headings. Whenever the context so requires,
words of the masculine gender used herein shall include the feminine and
neuter, and words used in the singular shall include the plural. Section
headings as used herein are inserted solely for convenience and reference and
are not to be interpreted as part of the construction of this Stock Option Plan
and Agreement.
18. Governing Law. The provisions of this Stock Option Plan and
Agreement shall be construed according to the laws of the State of Texas,
except as superseded by federal law. This Agreement is performable in Harris
County, Texas. In the event that any dispute arises under this Agreement, the
Optionee shall have the right, in addition to all other rights and remedies
provided by law, at his election to seek arbitration in Houston, Texas under
the rules of the American Arbitration Association by serving a notice to
arbitrate upon the Company, or to institute a judicial proceeding in a court of
competent jurisdiction located in Harris County, Texas. In the event that the
Company institutes any legal proceeding against the Optionee to resolve a
dispute under this Agreement, the Optionee shall have the right either to seek
arbitration in Houston, Texas or to institute a judicial proceeding in a court
located in Harris County, Texas, as provided in the preceding sentence, and the
Company shall dismiss its proceeding or take such other action as may be
reasonably requested by the Optionee in order for such proceeding to be brought
in the forum selected by the Optionee in accordance with the preceding
sentence.
-8-
<PAGE> 9
19. Shareholder Approval. This Stock Option Plan and Agreement is
subject to approval and ratification by the vote of the holders of a majority
of shares of Stock present in person or by proxy and entitled to vote at a
meeting of shareholders of the Company. If such shareholder approval is not
received on or before December 31, 1995, the Option shall be null and void.
20. Requirement of Bonus Payment In Certain Circumstances. (a) In
the event that the Optionee is deemed to have received an excess parachute
payment (as such term is defined in Section 280G(b) of the Internal Revenue
Code of 1986, as amended (the "Code")) which is subject to the excise taxes
(the "Excise Taxes") imposed by Section 4999 of the Code in respect of any
payment of compensation to the Optionee from the Company pursuant to this Stock
Option Plan and Agreement, whether in the form of cash, property, stock, stock
options, securities or otherwise, the Company shall make the Bonus Payment to
the Optionee promptly after the date on which the Optionee received or is
deemed to have received any excess parachute payments.
(b) (i) The term "Bonus Payment" means a cash payment in an
amount equal to the sum of (A) all Excise Taxes payable by the
Optionee, plus (B) all additional Excise Taxes and federal or state
income taxes to the extent such taxes are imposed in respect of the
Bonus Payment, such that the Optionee shall be in the same after-tax
position and shall have received the same benefits that he would have
received if the Excise Taxes had not been imposed. For purposes of
calculating any income taxes attributable to the Bonus Payment, the
Optionee shall be deemed for all purposes to be paying income taxes at
the highest marginal federal income tax rate, taking into account any
applicable surtaxes and other generally applicable taxes which have
the effect of increasing the marginal federal income tax rate and, if
applicable, at the highest marginal state income tax rate to which the
Bonus Payment and the Optionee are subject.
(ii) An example of the calculation of the Bonus Payment is
set forth below: Assume that the Excise Tax rate is 20%, that the
highest federal marginal income tax rate is 36% and that the Optionee
is not subject to state income taxes. Assume that the Optionee has
received an excess parachute payment in the amount of $1,000,000, on
which $200,000 in Excise Taxes are payable. The amount of the
required Bonus Payment is $454,545.45. The Bonus Payment, less Excise
Taxes of $90,909.09 and income taxes of $163,636.36, yields
$200,000.00, the amount of the Excise Taxes payable in respect of the
excess parachute payment.
(c) The Optionee agrees to cooperate reasonably with the Company
to minimize the amount of the excess parachute payments, including without
limitation assisting the Company in establishing that some or all of the
payments received by the Optionee contingent on a change described in Section
280G(b)(2)(A)(i) of the Code are reasonable compensation for personal services
actually rendered by the Optionee before the date of such change or to be
rendered by the Optionee on or after the date of such change. In the event
that the Company is able to establish that the amount of the excess parachute
payments is less than originally anticipated by
-9-
<PAGE> 10
the Optionee, the Optionee shall refund to the Company any excess Bonus Payment
to the extent not required to pay Excise Taxes or income taxes (including those
incurred in respect of the payment of the Bonus Payment). Notwithstanding the
foregoing, the Optionee shall not be required to take any actions which his tax
advisor advises him in writing (i) is improper or (ii) exposes the Optionee to
material personal liability, and the Optionee may require the Company to
deliver to the Optionee an indemnification agreement in form and substance
satisfactory to the Optionee as a condition to taking any action required by
this Section 3.
(d) The Company shall make any payment required to be made under
this Agreement in cash and on demand. Any payment required to be paid by the
Company under this Agreement which is not paid within five days of receipt by
the Company of the Optionee's demand therefor shall thereafter be deemed
delinquent, and the Company shall pay to the Optionee immediately upon demand
interest at the highest nonusurious rate per annum allowed by applicable law
from the date such payment becomes delinquent to the date of payment of such
delinquent sum.
(e) In the event that there is any change to the Code which
results in the recodification of Section 280G or Section 4999 of the Code, or
in the event that either such section of the Code is amended, replaced or
supplemented by other provisions of the Code of similar import ("Successor
Provisions"), then this Agreement shall be applied and enforced with respect to
such new Code provisions in a manner consistent with the intent of the parties
as expressed herein, which is to assure that the Optionee is in the same
after-tax position and has received the same benefits that he would have been
in and received if any taxes imposed by Section 4999 or any Successor
Provisions had not been imposed.
(f) There shall be no right of set-off or counterclaim, in respect
of any claim, debt or obligation, against any payments required under this
Section 20 to the Optionee provided for in this Agreement. No right or
interest to or in any payments required under this Section 20 shall be
assignable by the Optionee; provided, however, that this provision shall not
preclude him from designating one or more beneficiaries to receive any amount
that may be payable after his death and shall not preclude the legal
representative of his estate from assigning any right hereunder to the person
or persons entitled thereto under his will or, in the case of intestacy, to the
person or persons entitled thereto under the laws of intestacy applicable to
his estate. The term "beneficiary" as used in this Agreement shall mean a
beneficiary or beneficiaries so designated to receive any such amount or, if no
beneficiary has been so designated, the legal representative of the Optionee's
estate. No right, benefit or interest under this Section 20 shall be subject
to anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
21. Successors to the Company. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
Company and any successor of the
-10-
<PAGE> 11
Company, including, without limitation, any corporation or other entity
acquiring directly or indirectly all or substantially all of the assets of the
Company whether by merger, consolidation, sale or otherwise (and such successor
shall thereafter be deemed "the Company" for the purposes of this Agreement),
but shall not otherwise be assignable by the Company.
IN WITNESS WHEREOF, this Stock Option Plan and Agreement is executed,
subject to shareholder approval as set forth herein, effective as of the 8th
day of May, 1995.
KENT ELECTRONICS CORPORATION
By: /s/ Morrie K. Abramson
--------------------------------
Morrie K. Abramson, Chairman and
Chief Executive Officer
OPTIONEE
/s/ Mark A. Zerbe
------------------------------------
Mark A. Zerbe
-11-
<PAGE> 1
EXHIBIT 10.13
KENT ELECTRONICS CORPORATION
STOCK OPTION PLAN AND AGREEMENT
FOR VICE PRESIDENT, SECRETARY AND TREASURER
1. Grant. Under the terms, provisions, and conditions of this
Stock Option Plan and Agreement by and between Kent Electronics Corporation
(the "Company"), and Stephen J. Chapko (the "Optionee"), the Company hereby
grants to Optionee the option to purchase 18,750 shares of the Company's Common
Stock, without par value (the "Stock"), at the option price specified herein,
subject to adjustment as provided herein (the "Option"). The Option is not an
"incentive stock option" as described in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
2. Duration of Option and Option Price. The Option shall be for
a term commencing on the date hereof and ending fifteen (15) years from the
date hereof. The option price payable by the Optionee upon exercise of the
Option as to each share subject to the Option will be $14.50, which equals
one-half of the closing price of one share of the Stock, as reported by the New
York Stock Exchange, on the date hereof.
3. Amount Exercisable and Schedule of Exercisability. Except as
otherwise provided herein, this Option may be exercised as to 1,875 shares, on
and after May 1, 1999; as to an additional 3,750 shares, on and after May 1,
2000; as to an additional 5,625 shares, on and after May 1, 2001; and as to all
remaining shares, on and after May 1, 2002. This Option shall immediately
become fully vested and exercisable as to all shares subject hereto upon the
death or Disability (as hereinafter defined) of Optionee, or upon the
occurrence of a "Change in Control" (as hereinafter defined), or upon the
Company's termination of its employment of Optionee at the election of the
Company, or upon Optionee's termination of his employment by the Company for
"Good Reason" (as defined herein at Section 11), or such earlier date as set
forth in Section 9 hereof. The Option may be exercised, so long as it is valid
and outstanding, from time to time in whole (as to shares then exercisable) or
in part; provided, however, no fractional shares of Stock shall be issued. The
Option is cumulative, and may be exercised as to any or all shares of Stock
covered hereby from and after the time it becomes exercisable as to such shares
through the date of termination of the Option.
4. Exercise of Options. The Option shall be exercisable, in
whole or in part, by the delivery of written notice to the Company setting
forth the number of shares of Stock with respect to which the Option is to be
exercised. In order to be effective, such written notice shall be accompanied
at the time of its delivery to the Company by payment of the option price for
such shares of Stock, which payment shall be made (a) in cash or by personal
check, cashier's check, certified check, or postal or express money order
payable to the order of the Company in an amount (in United States dollars)
equal to the option price multiplied by the number of shares of Stock with
respect to which the Option is exercised or (b) in shares of Stock as set forth
in this Section 4. Such notice may be delivered in person or by messenger or
courier service to the Secretary of the Company, or shall be sent by registered
mail, return receipt requested, to the Secretary of the Company, and in all
such cases delivery shall be deemed to have been made on the date such notice
is received.
<PAGE> 2
At the time when the Optionee (or other holder of the Option pursuant
to Section 5) makes payment to the Company for the shares of Stock issuable
upon the exercise of the Option, the Company may require the Optionee to pay to
the Company an additional amount equal to any federal, state or local taxes
(which the Company deems necessary or appropriate to be withheld in connection
with the exercise of such Option) in such forms of payment as are described in
the first paragraph of this Section 4. In the event that Optionee does not pay
to the Company any such amount required for withholding taxes, to the extent
applicable, the employer (for payroll tax purposes) of Optionee shall have the
right to withhold such required amount from any sum payable, or to become
payable, to Optionee, upon such terms and conditions as the Company in its
discretion shall prescribe.
Payment of the option price may be made, in whole or in part, in
shares of Stock previously held by the Optionee (or other holder of the Option
pursuant to Section 5). If payment is made in whole or in part in shares of
Stock, then the Optionee (or other holder of the Option pursuant to Section 5)
shall deliver to the Company, in payment of the option price of the shares of
Stock with respect to which such Option is exercised, (i) certificates
registered in the name of such Optionee (or other holder of the Option pursuant
to Section 5) representing a number of shares of Stock legally and beneficially
owned by such Optionee (or other holder of the Option pursuant to Section 5),
free of all liens, claims and encumbrances of every kind, such certificates to
be accompanied by stock powers duly endorsed in blank by the record holder of
the shares represented by such certificates; and (ii), if the option price of
the shares of Stock with respect to which such Option is to be exercised
exceeds the fair market value of such shares of Stock, cash or a personal
check, cashier's check, certified check, or postal or express money order
payable to the order of the Company in an amount (in United States dollars)
equal to the amount of such excess. If the fair market value of such Shares of
Stock delivered to the Company exceeds the option price of the shares of Stock
with respect to which such Option is to be exercised, the Company shall
promptly deliver, or cause to be delivered, to Optionee a replacement share
certificate representing the number of shares of Stock in excess of those
surrendered in payment of the option price.
As promptly as practicable after the receipt by the Company of (i)
such written notice from the Optionee (or other holder of the Option pursuant
to Section 5) setting forth the number of shares of Stock with respect to which
such Option is to be exercised, (ii) payment of the option price of such shares
in the form required by the foregoing provisions of this Section 4, and (iii)
an amount equal to any federal, state or local taxes which the Company deems
necessary or appropriate to be withheld incident to the exercise of the Option,
the Company shall cause to be delivered to such Optionee (or other holder of
the Option pursuant to Section 5) certificates representing the number of
shares of Stock with respect to which such Option has been so exercised.
All proceeds received pursuant to the exercise of the Option shall be
added to the general funds of the Company to be used for any corporate purpose.
-2-
<PAGE> 3
For purposes of determining the value of shares of Stock delivered in
payment of all or any portion of the option price pursuant to this Section 4,
the "fair market value" of such shares shall equal the average of the daily
averages of the high and low sales price per share of the Stock as reported by
the New York Stock Exchange (or such other principal exchange or market on
which the Stock is traded as of the applicable dates) on each day on which such
trades are reported of the five trading days prior to Optionee's exercise of
the Option.
5. Transferability of Option. The Option shall not be subject to
sale, assignment or transfer, other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Code. The designation of a beneficiary by Optionee shall not constitute a
transfer. The Option shall be exercisable (i) during Optionee's lifetime, only
by Optionee (or in the event of his incapacity, by his legal representative) or
(ii) following Optionee's death, by such persons as set forth in Section 6.
6. Termination of Options in Certain Cases. In the event of the
death of the Optionee while in the employ of the Company (or while affiliated
with the Company in the discretion of the Board), the Option shall become fully
vested and shall terminate on the earlier of (i) the date of expiration of the
Option, or (ii) twelve (12) months following the date of Optionee's death.
After the death of the Optionee, his executors, administrators or any person(s)
to whom the Option was transferred by will or by the laws of descent and
distribution, shall have the right, at any time prior to the expiration of the
period described in the first sentence of this paragraph, to exercise the
Option.
If, before the date of expiration of the Option, the Optionee shall be
retired in good standing from the employ of the Company (or from another
affiliation with the Company in the discretion of the Board) including
retirement for reasons of Disability, the Option shall terminate on the earlier
of (i) the date of expiration of the Option, or (ii) three (3) years following
the date of such retirement. As used herein, the term "Disability" shall mean
a total and permanent disability resulting from a mental or physical incapacity
which prevents Optionee from performing the full scope of his duties for the
Company (as such duties exist on the date immediately prior to the occurrence
of such incapacity) and lasting or expected to last for a period of at least
180 days. Disability shall be determined in good faith by the Board of
Directors of the Company based on the opinion of a licensed physician. In the
event of such retirement, the Optionee (or, in the event of his incapacity, his
legal representative) shall have the right, at any time prior to the expiration
of the period described in the first sentence of this paragraph, to exercise
the Option to the same extent to which he was entitled to exercise it
immediately prior to such retirement (and, in the case of retirement for
Disability or under circumstances constituting a termination of Optionee's
employment by the Company at the Company's election, the Option shall fully
vest and become exercisable, as set forth herein).
If, before the date of expiration of the Option, the Optionee's
employment by the Company shall be terminated by the Company at its election,
or shall be terminated by Optionee for Good Reason, this Option shall
immediately vest fully and become exercisable as to all shares covered hereby.
In such event, Optionee shall have the right to exercise the Option at
-3-
<PAGE> 4
any time prior to the earlier of (i) the date of expiration of the Option or
(ii) twelve (12) months following the date of such termination of employment.
If, before the date of expiration of the Option, the Optionee's
employment or other affiliation with the Company terminates at the election of
Optionee for any reason other than Good Reason (other than in connection with
Optionee's retirement in accordance with the second paragraph of this Section
6), the Option shall terminate on the earlier of (i) the date of expiration of
such Option, or (ii) ninety (90) days after the date of termination of the
Optionee's employment or other affiliation with the Company. In such event,
the Option shall be exercisable and shall vest as to all shares that, pursuant
to the schedule set forth in Section 3 hereof, become exercisable on or prior
to the date of termination of the Option.
For purposes of this Stock Option Plan and Agreement, employment by
the Company shall include employment by any subsidiary of the Company.
7. No Rights as Shareholder. No holder of the Option shall have
any rights as a shareholder with respect to shares covered by the Option until
the date of exercise of the Option as to such shares; and, except as otherwise
provided in Section 9 hereof, no adjustment for dividends, or otherwise, shall
be made if the record date therefor is prior to the date of such exercise.
8. Employment or Affiliation Obligation. The grant of this
Option shall not impose upon the Company any obligation to employ or to
continue any employment or other affiliation with the Optionee. The right of
the Company to terminate its employment or affiliate relationship with any
person, including the Optionee, shall not be diminished or affected by reason
of the fact that this Option has been granted.
9. Changes in the Company's Capital Structure. The existence of
the Option shall not affect in any way the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock ahead of, or affecting,the
Stock or the rights thereof, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
The number of shares covered by this Option and the price per share
thereof shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Stock resulting from the subdivision or
consolidation of shares or any other capital adjustment, the payment of a stock
dividend or any other increase in such shares effected without receipt of
consideration by the Company or any other decrease therein effected without a
distribution of cash, property, or other securities in connection therewith.
-4-
<PAGE> 5
If (i) the Company is merged into or consolidated with another
corporation under circumstances where the Company is not the surviving
corporation or where the Stock is converted into other securities, cash or
other property in connection with such merger or consolidation, (ii) the
Company is recapitalized in such a manner that shares of Stock are converted
into or exchanged for other securities of the Company, (iii) the Company sells
or otherwise disposes of substantially all its assets to another person,
corporation or entity, or (iv) a tender offer is announced that, if
successfully completed, would result in a Change in Control, then in any such
case, on a date at least 30 days prior to the effective date of any such
merger, consolidation, recapitalization, exchange, sale or acquisition or
tender offer (or, in the case of such tender offer, on such later date as is
practicable, but in any such case at least ten days prior to the termination of
such tender offer), as the case may be, any limitations as to amount
exercisable each year shall be modified so that Option from and after such date
shall be exercisable in full. In addition, with respect to any event described
in the preceding sentence, after the effective date of such merger,
consolidation, recapitalization, exchange, sale or acquisition, as the case may
be, Optionee shall be entitled, upon exercise of such Option to receive in lieu
of shares of Stock, shares of such stock or other securities of the Company or
the surviving or acquiring corporation or such other property at the rate per
share as the holders of shares of Stock received pursuant to the terms of the
merger, consolidation, exchange, recapitalization, sale or acquisition.
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class or securities convertible into shares of stock of
any class for cash or property or for labor or services, either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number, class or price of shares of Stock
then subject to the Option.
10. Change in Control. A "Change in Control" shall be deemed to
have occurred on the earliest of the following dates:
(i) The date any entity or person (including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934)
shall have become the beneficial owner of, or shall have obtained
voting control over, thirty percent (30%) or more of the outstanding
common shares of the Company;
(ii) The date the shareholders of the Company approve a
definitive agreement (A) to merge or consolidate the Company with or
into another corporation, in which the Company is not the continuing
or surviving corporation or pursuant to which any common shares of the
Company would be converted into cash, securities or other property of
another corporation, other than a merger of the Company in which
holders of common shares immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger as immediately before, or (B) to sell or
otherwise dispose of substantially all the assets of the Company; or
-5-
<PAGE> 6
(iii) The first date as of which Continuing Directors (as
defined in Article IX of the Company's Articles of Incorporation) fail
to constitute a majority of the members of the Company's Board of
Directors.
11. Termination of Employment by Optionee for Good Reason. For
purposes of this Stock Option Plan and Agreement a termination of Optionee's
employment for "Good Reason" shall be deemed to occur if Optionee tenders his
resignation to the Board of Directors after there has been a significant and
material diminishment in the nature and scope of the authority, power, function
and duty attached to Optionee's management position with the Company as of the
effective date of this Agreement (which shall include, but not be limited to,
the appointment of any officer to whom Optionee shall report other than the
Chairman of the Board and Chief Executive Officer or the President and Chief
Operating Officer), and such diminishment lasts for at least thirty (30)
consecutive days and is not cured or corrected by the Company within ten (10)
days after Optionee provides notice of same to the Company pursuant to the
notice provisions hereof. Executive's termination of his employment with the
Company for Good Reason may take place at any time after the events set forth
in the preceding sentence have occurred, and such termination need not be
effected within any specified time period after the occurrence of such events.
Such termination for Good Reason shall result in the Option immediately
becoming fully vested and exercisable as to all shares covered hereby.
12. Limited Stock Appreciation Rights. Notwithstanding any other
provisions in this Stock Option Plan and Agreement, upon the occurrence of any
Change in Control, and thereafter so long as this Option is in effect, Optionee
shall have the right to require the Company (or if the Company is not the
survivor of a merger, consolidation or reorganization, such survivor) to
purchase from him any or all unexercised options granted under this Stock
Option Plan and Agreement at a purchase price equal to (i) the excess of the
Change in Control Price (as hereinafter defined) per share over the option
price per share multiplied by (ii) the number of shares subject to the Option
specified by the Optionee for purchase in a written notice to the Company or
such survivor, addressed to the attention of the Corporate Secretary.
For purposes of this Stock Option Plan and Agreement, the term "Change
in Control Price" of shares of Stock shall mean (a) except in the case of a
Change in Control that results from a merger, consolidation or reorganization
in which the Company is not the survivor or shares of Stock are converted into
cash or other securities or other assets (a "Termination Merger"), the higher
of (I) the highest sales price per share of the Stock on the New York Stock
Exchange (or if the Company's Stock is not then traded on the New York Stock
Exchange, on the principal exchange or market where such Stock is actively
traded) on the trading days during the thirty (30) days immediately preceding
the date the Optionee so notified the Company of his election pursuant to the
preceding paragraph or (II) the highest sales price per share of the Stock on
the New York Stock Exchange (or if the Company's Stock is not then traded on
the New York Stock Exchange, on the principal exchange or market where such
stock is actively traded) on the trading days during the thirty (30) days
immediately preceding the date of the Change in Control; and (b) in the case of
a Change in Control that results from a Termination Merger, the higher of (I)
the fair market value of the consideration receivable per share by holders of
Stock
-6-
<PAGE> 7
of the Company in such Termination Merger (which fair market value as to any
securities included in such consideration shall be the highest sales price per
unit of such security on the principal exchange or market where such security
is actively traded on the trading days during the thirty (30) days immediately
preceding the date of the Termination Merger, and as to any such security not
actively traded in any market, and as to all other property included in such
consideration, shall be the fair market value determined by the Committee
(hereinafter defined) in good faith exercised in a reasonable manner) or (II)
the amount determined pursuant to clause (a)(II) of this Section 12. The
amount payable to Optionee by the Company or the survivor in a Termination
Merger, as the case may be, shall be paid in cash or by certified check, and
shall be reduced by the amount of any taxes required to be withheld.
13. Administration. This Stock Option Plan and Agreement shall be
administered by a committee of at least two persons to be appointed by the
Board of Directors of the Company (the "Committee"). All members of the
Committee shall be persons who are "disinterested persons," as set forth in
Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or any
successor rule thereto ("Rule 16b-3"). Meetings shall be held at such times
and places as shall be determined by the Committee. A majority of the members
of the Committee shall constitute a quorum for the transaction of business, and
the vote of a majority of those members present at any meeting shall decide any
question brought before the meeting. No member of the Committee shall be
liable for any act or omission of any other member of the Committee or for any
act or omission on his own part, including but not limited to the exercise of
any power or discretion given to him under this Stock Option Plan and
Agreement, except those resulting from his own gross negligence or willful
misconduct.
14. Notices. Any notice, consent, request or other communication
("Notice") required or permitted to be given hereunder shall be in writing.
Such Notice shall be (a) personally delivered or delivered by messenger, or (b)
mailed by certified mail, return receipt requested, postage prepaid, or (c)
sent by telecopy or the equivalent (provided, however, that the original Notice
of which a facsimile has been transmitted shall in all cases be delivered to
the addressee within two (2) business days following such transmission).
Notices given hereunder shall be addressed as follows:
If to Company: If to Optionee:
Kent Electronics Corporation Stephen J. Chapko
7433 Harwin Drive Kent Electronics Corporation
Houston, Texas 77036 7433 Harwin Drive
Attention: Secretary Houston, Texas 77036
Any Notice given in accordance herewith shall be deemed effective and
to have been received by the party to whom such Notice is directed (a) upon
delivery, if delivered personally or by messenger or sent by telecopy or the
equivalent, or (b) three (3) days after the date of deposit in the U.S. Mail,
if sent by mail and the return receipt is received by the sender, or
-7-
<PAGE> 8
upon actual receipt by the party receiving Notice in the event that such return
receipt is not received by the sender.
15. Amendment. This Stock Option Plan and Agreement may be
modified or amended only by a written instrument executed by Company and
Optionee, and any such modification or amendment may be authorized on behalf of
the Company by the Committee; provided, however, that so long as Optionee and
the Company desire that this Stock Option Plan and Agreement comply with Rule
16b-3, or any successor or similar provisions thereto, any such amendment that
would require the vote or approval of a specified percentage of the Company's
shareholders in order to assure that this Stock Option Plan and Agreement
complies with Rule 16b-3, or any successor or similar provisions thereto, shall
only be made upon obtaining such required shareholder vote, or taking such
other action in connection with such amendment as the Board of Directors or
such authorized Committee deems advisable to operate this Stock Option Plan and
Agreement in accordance with Rule 16b-3 or such successor or similar rule.
However, no termination or amendment of this Stock Option Plan and Agreement
may, without the consent of the Optionee, adversely affect the rights of
Optionee as to any portion of the Option then outstanding.
16. Severability. In the event that any provision of this Stock
Option Plan and Agreement shall be held illegal, invalid, or unenforceable for
any reason, such provision shall be fully severable, but shall not affect the
remaining provisions hereof, and this Stock Option Plan and Agreement shall be
construed and enforced as if the illegal, invalid, or unenforceable provision
had not been included herein.
17. Gender, Tense and Headings. Whenever the context so requires,
words of the masculine gender used herein shall include the feminine and
neuter, and words used in the singular shall include the plural. Section
headings as used herein are inserted solely for convenience and reference and
are not to be interpreted as part of the construction of this Stock Option Plan
and Agreement.
18. Governing Law. The provisions of this Stock Option Plan and
Agreement shall be construed according to the laws of the State of Texas,
except as superseded by federal law. This Agreement is performable in Harris
County, Texas. In the event that any dispute arises under this Agreement, the
Optionee shall have the right, in addition to all other rights and remedies
provided by law, at his election to seek arbitration in Houston, Texas under
the rules of the American Arbitration Association by serving a notice to
arbitrate upon the Company, or to institute a judicial proceeding in a court of
competent jurisdiction located in Harris County, Texas. In the event that the
Company institutes any legal proceeding against the Optionee to resolve a
dispute under this Agreement, the Optionee shall have the right either to seek
arbitration in Houston, Texas or to institute a judicial proceeding in a court
located in Harris County, Texas, as provided in the preceding sentence, and the
Company shall dismiss its proceeding or take such other action as may be
reasonably requested by the Optionee in order for such proceeding to be brought
in the forum selected by the Optionee in accordance with the preceding
sentence.
-8-
<PAGE> 9
19. Shareholder Approval. This Stock Option Plan and Agreement is
subject to approval and ratification by the vote of the holders of a majority
of shares of Stock present in person or by proxy and entitled to vote at a
meeting of shareholders of the Company. If such shareholder approval is not
received on or before December 31, 1995, the Option shall be null and void.
20. Requirement of Bonus Payment In Certain Circumstances. (a) In
the event that the Optionee is deemed to have received an excess parachute
payment (as such term is defined in Section 280G(b) of the Internal Revenue
Code of 1986, as amended (the "Code")) which is subject to the excise taxes
(the "Excise Taxes") imposed by Section 4999 of the Code in respect of any
payment of compensation to the Optionee from the Company pursuant to this Stock
Option Plan and Agreement, whether in the form of cash, property, stock, stock
options, securities or otherwise, the Company shall make the Bonus Payment to
the Optionee promptly after the date on which the Optionee received or is
deemed to have received any excess parachute payments.
(b) (i) The term "Bonus Payment" means a cash payment in an
amount equal to the sum of (A) all Excise Taxes payable by the
Optionee, plus (B) all additional Excise Taxes and federal or state
income taxes to the extent such taxes are imposed in respect of the
Bonus Payment, such that the Optionee shall be in the same after-tax
position and shall have received the same benefits that he would have
received if the Excise Taxes had not been imposed. For purposes of
calculating any income taxes attributable to the Bonus Payment, the
Optionee shall be deemed for all purposes to be paying income taxes at
the highest marginal federal income tax rate, taking into account any
applicable surtaxes and other generally applicable taxes which have
the effect of increasing the marginal federal income tax rate and, if
applicable, at the highest marginal state income tax rate to which the
Bonus Payment and the Optionee are subject.
(ii) An example of the calculation of the Bonus Payment is
set forth below: Assume that the Excise Tax rate is 20%, that the
highest federal marginal income tax rate is 36% and that the Optionee
is not subject to state income taxes. Assume that the Optionee has
received an excess parachute payment in the amount of $1,000,000, on
which $200,000 in Excise Taxes are payable. The amount of the
required Bonus Payment is $454,545.45. The Bonus Payment, less Excise
Taxes of $90,909.09 and income taxes of $163,636.36, yields
$200,000.00, the amount of the Excise Taxes payable in respect of the
excess parachute payment.
(c) The Optionee agrees to cooperate reasonably with the Company
to minimize the amount of the excess parachute payments, including without
limitation assisting the Company in establishing that some or all of the
payments received by the Optionee contingent on a change described in Section
280G(b)(2)(A)(i) of the Code are reasonable compensation for personal services
actually rendered by the Optionee before the date of such change or to be
rendered by the Optionee on or after the date of such change. In the event
that the Company is able to establish that the amount of the excess parachute
payments is less than originally anticipated by
-9-
<PAGE> 10
the Optionee, the Optionee shall refund to the Company any excess Bonus Payment
to the extent not required to pay Excise Taxes or income taxes (including those
incurred in respect of the payment of the Bonus Payment). Notwithstanding the
foregoing, the Optionee shall not be required to take any actions which his tax
advisor advises him in writing (i) is improper or (ii) exposes the Optionee to
material personal liability, and the Optionee may require the Company to
deliver to the Optionee an indemnification agreement in form and substance
satisfactory to the Optionee as a condition to taking any action required by
this Section 3.
(d) The Company shall make any payment required to be made under
this Agreement in cash and on demand. Any payment required to be paid by the
Company under this Agreement which is not paid within five days of receipt by
the Company of the Optionee's demand therefor shall thereafter be deemed
delinquent, and the Company shall pay to the Optionee immediately upon demand
interest at the highest nonusurious rate per annum allowed by applicable law
from the date such payment becomes delinquent to the date of payment of such
delinquent sum.
(e) In the event that there is any change to the Code which
results in the recodification of Section 280G or Section 4999 of the Code, or
in the event that either such section of the Code is amended, replaced or
supplemented by other provisions of the Code of similar import ("Successor
Provisions"), then this Agreement shall be applied and enforced with respect to
such new Code provisions in a manner consistent with the intent of the parties
as expressed herein, which is to assure that the Optionee is in the same
after-tax position and has received the same benefits that he would have been
in and received if any taxes imposed by Section 4999 or any Successor
Provisions had not been imposed.
(f) There shall be no right of set-off or counterclaim, in respect
of any claim, debt or obligation, against any payments required under this
Section 20 to the Optionee provided for in this Agreement. No right or
interest to or in any payments required under this Section 20 shall be
assignable by the Optionee; provided, however, that this provision shall not
preclude him from designating one or more beneficiaries to receive any amount
that may be payable after his death and shall not preclude the legal
representative of his estate from assigning any right hereunder to the person
or persons entitled thereto under his will or, in the case of intestacy, to the
person or persons entitled thereto under the laws of intestacy applicable to
his estate. The term "beneficiary" as used in this Agreement shall mean a
beneficiary or beneficiaries so designated to receive any such amount or, if no
beneficiary has been so designated, the legal representative of the Optionee's
estate. No right, benefit or interest under this Section 20 shall be subject
to anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
21. Successors to the Company. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
Company and any successor of the
-10-
<PAGE> 11
Company, including, without limitation, any corporation or other entity
acquiring directly or indirectly all or substantially all of the assets of the
Company whether by merger, consolidation, sale or otherwise (and such successor
shall thereafter be deemed "the Company" for the purposes of this Agreement),
but shall not otherwise be assignable by the Company.
IN WITNESS WHEREOF, this Stock Option Plan and Agreement is executed,
subject to shareholder approval as set forth herein, effective as of the 8th
day of May, 1995.
KENT ELECTRONICS CORPORATION
By: /s/ Morrie K. Abramson
--------------------------------
Morrie K. Abramson, Chairman and
Chief Executive Officer
OPTIONEE
/s/ Stephen J. Chapko
------------------------------------
Stephen J. Chapko
-11-
<PAGE> 1
EXHIBIT 10.15
KENT ELECTRONICS CORPORATION
DEFERRED COMPENSATION PLAN
Kent Electronics Corporation (hereinafter referred to as the "Company")
hereby establishes the following Plan:
W I T N E S S E T H:
WHEREAS, the Company desires to establish an executive deferred
compensation plan primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated Associates of the
Company; and
WHEREAS, it is the intention of the Company that the plan and the
related grantor trust will be considered to be unfunded for tax purposes and for
purposes of Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and that all benefits paid under the plan shall be payable
either from the related grantor trust or the general assets of the Employer.
NOW, THEREFORE, the Company does hereby establish the Kent Electronics
Corporation Deferred Compensation Plan ("Plan") to provide for certain deferred
compensation benefits to a select group of management or highly compensated
Associates.
ARTICLE 1.
DEFINITIONS
The following definitions shall govern this Plan:
(a) ASSOCIATE shall mean a person who is employed by the Company.
(b) BENEFICIARY means the person or persons designated in writing to
receive benefits, if any, upon the death of the Participant. If no such
designation is made or if the designated person is not living at the death of
the Participant, the designated Beneficiary shall be the deceased Participant's
spouse, if living, otherwise the children born of the marriage of the Associate
and spouse, and any children legally adopted by them, if living, otherwise the
personal representative, executors, or administrators of the Participant's
estate. Notwithstanding the preceding sentence, the designated Beneficiary of a
Participant married at date of death shall be the Participant's spouse unless
the Associate's spouse has consented in writing to the Participant's naming a
non-spouse Beneficiary. The consent of the spouse to a non-spouse Beneficiary
shall be irrevocable by the spouse. In the event an unmarried Participant
marries, such Participant's designated Beneficiary shall be the Participant's
spouse regardless of an
1
<PAGE> 2
existing Beneficiary designation which shall be deemed revoked as of the date of
marriage unless consented to in writing by the Participant's spouse.
(c) BOARD OF DIRECTORS shall mean the Board of Directors of Kent
Electronics Corporation.
(d) CHANGE IN CONTROL shall mean a Change in Control, as defined in the
Trust Agreement.
(e) COMMITTEE shall mean the administrative committee appointed by the
Board of Directors to administer the Plan. The initial committee members shall
be Morrie K. Abramson and James F. Corporron.
(f) COMPANY shall mean Kent Electronics Corporation.
(g) COMPENSATION shall mean the Participant's total wages, salaries,
fees for professional service and other amounts received for personal services
actually rendered in the course of employment with the Company, including
commissions, compensation based on a percentage of profits, tips, bonuses and
elective contributions. Elective contributions are amounts excludable from the
Participant's gross income under Section Section 125, 402(e)(3), 402(h) or
403(b) and contributed by the Company, at the Participant's election, to a
Section 401(k) arrangement, a Simplified Employee Pension, a cafeteria plan or a
tax-sheltered annuity.
(h) DEFERRED COMPENSATION ACCOUNT (hereinafter the "Account") means the
liability account maintained by the Company on behalf of the Participant in
order to recognize and account for the benefits payable under the Plan.
(i) DISABILITY means a Disability, as determined by the Kent
Electronics Corporation Group Long Term Disability Plan.
(j) PARTICIPANT means each Associate whom the Committee has determined
to be part of a select group of management or highly compensated Associates of
the Company. Only those Associates who are determined to be Participants shall
be eligible to participate in the Plan.
(k) PLAN shall mean this Kent Electronics Corporation Deferred
Compensation Plan.
(l) PLAN YEAR means the Company's fiscal year (i.e., the 12-month
period which begins on the Sunday following the Saturday which is closest to
March 31, and ends on the Saturday which is closest to the following March 31).
However, the first Plan Year shall be from July 3, 1994 to the Saturday closest
to March 31, 1995.
(m) SALARY means the portion of a Participant's Compensation other than
bonuses.
2
<PAGE> 3
(n) TRUST shall mean the grantor trust established pursuant to the
Trust Agreement.
(o) TRUST AGREEMENT shall mean the Trust Agreement for Kent Electronics
Corporation Deferred Compensation Plan entered into on July 28, 1994, by and
between the Company and Texas Commerce Bank National Association.
(p) TRUSTEE shall mean Texas Commerce Bank National Association or any
successor Trustee under the Trust Agreement.
ARTICLE 2.
DEFERRED COMPENSATION
PARTICIPANT DEFERRALS: Each Plan Year, a Participant may elect to defer
receipt of a portion of the Compensation otherwise payable to the Participant by
the Company. The Participant may elect to defer a specified dollar amount or
percentage of the Participant's Salary which would otherwise be payable to the
Participant by the Company during such Plan Year. Such deferred amount shall not
be less than 3% of the Participant's Salary for the Plan Year. Such deferral
election shall be in writing, shall be signed by the Participant, and shall be
delivered to the Company prior to the first day of the Plan Year in which the
Salary to be deferred would otherwise be earned unless the Participant first
becomes eligible under this Plan during the Plan Year, in which event the
Participant may enter into a deferral agreement during the Plan Year, but such
agreement shall only be effective with respect to Salary to be earned after the
date such agreement has been executed and delivered to the Company.
The Participant may also elect to defer a portion of any bonus earned
during the Plan Year (regardless of whether such bonus is paid during or after
the Plan Year). Such deferral election shall be in writing, shall be signed by
the Participant, and shall be delivered to the Company prior to the first day of
the Plan Year for which the bonus to be deferred would otherwise be earned.
Notwithstanding anything herein to the contrary, a Participant's total
Participant Deferrals for a Plan Year shall not exceed 25% of the Participant's
total Compensation earned during the Plan Year (the "Maximum Deferral"). As of
the later of (i) the last day of the Plan Year, or (ii) the earliest
date on which the actual amount of each Participant's Compensation with respect
to such Plan Year can be determined, the Committee shall calculate the Maximum
Deferral for each Participant. If the total Participant Deferrals elected by any
Participant exceed that Participant's Maximum Deferral for that Plan Year, the
excess shall be treated in the following manner:
1) To the extent the Participant has elected to defer a portion of
any bonus which has not yet been paid, such deferral shall be
reduced (but not below 0) by the amount of the excess; and
3
<PAGE> 4
2) An amount equal to the excess remaining after application of
paragraph 1 above shall be distributed to the Participant from the
Participant's Account. For accounting purposes, distribution of
excess deferrals shall be made on a "last in, first out" basis.
An election by the Participant to defer Compensation shall be
irrevocable with respect to Compensation earned which would otherwise be payable
for a particular Plan Year. A Participant's election to defer Compensation shall
continue in full force and effect in subsequent Plan Years unless an Participant
elects in writing to modify or revoke such election by furnishing written notice
of such modification or revocation to the Company prior to the first day of the
Plan Year for which such modification or revocation is to apply. In the event
the Participant ceases to defer Compensation under the Plan, distribution of the
Participant's Account shall not be made until such time as the Participant would
otherwise be entitled to a distribution in accordance with Article 6, but such
Account shall continue to be adjusted on each Allocation Date (as defined in
Article 3) in accordance with the provisions described herein.
COMPANY MATCHING CONTRIBUTION: Participants who elect to defer a
portion of their Compensation shall have their Account credited with a Company
Matching Contribution equal to 50% of the first 6% of Compensation which the
Participant elects to defer; provided, however, that the Participant must elect
to defer at least 6% of the Participant's Salary to receive a Company Matching
Contribution with respect to any bonus amounts deferred.
ARTICLE 3.
ACCOUNTING AND EARNINGS
ON DEFERRED COMPENSATION
Compensation deferred by a Participant pursuant to this Plan shall be
credited to the Participant's Account as of the date or dates on which such
Compensation would have been paid in accordance with the Employer's normal
payroll practices. Company Matching Contributions shall be credited to the
Participant's Account as of the date or dates on which the Compensation being
matched would have been paid in accordance with such payroll practices (provided
the Participant is eligible for such Company Matching Contribution). Participant
Deferrals (and the Hypothetical Earnings or Losses thereon) shall be accounted
for separately from Company Matching Contributions (and any Hypothetical
Earnings thereon).
Within a reasonable period of time after the last day of each Plan
Year, the Company shall furnish the Participant with an annual statement of the
Participant's Account as of the last day of such Plan Year. The Company shall
credit the Participant's Account with the Hypothetical Earnings or Losses
allocable to the Participant's Account as of the last day of each quarter of
each Plan Year (the "Allocation Date"). For purposes of the foregoing
allocation, Hypothetical Earnings or Losses shall mean the return, net of
investment fee and fund expenses, which would have been earned had the
Participant Deferrals portion of the Participant's Account
4
<PAGE> 5
(and any Hypothetical Earnings or Losses previously allocated thereto) been
invested in the Pacific Mutual Fund(s) selected by the Participant, and had the
Company Matching Contributions portion of such Account (and any Hypothetical
Earnings previously allocated thereto) been invested in a fund which earned
interest equal to the average of the Moody's Bond Index Rate for the prior
calendar year.
Participants shall be allowed to elect, prior to the first day of each
Plan Year, the Pacific Mutual Fund(s) upon which Hypothetical Earnings or Losses
on the Participant Deferrals portion of the Participant's Account for the
upcoming Plan Year shall be based. A Participant may elect to have all or any
portion (in 10% increments) of the Participant Deferrals portion of his Account
credited with earnings or losses at the return rate, net of investment fee and
fund expenses, of the following funds (determined on the basis of the average
return for the prior quarter):
Managed Bond Fund
Government Securities Fund
Long Term Growth Fund
Equity Income Fund
International Fund
ARTICLE 4.
GENERAL CREDITOR STATUS OF PARTICIPANT
ASSET OWNERSHIP
The Participant shall be regarded as an unsecured general creditor of
the Company with respect to any rights derived by the Participant from the
existence of this Plan or the existence of the Trust.
Legal title to and beneficial ownership of any assets which the Company
may use to pay deferred compensation benefits hereunder, including assets held
by the Trustee in the Trust, shall at all times remain with the Company. The
Participant and his designated Beneficiary shall not have any property interest
whatsoever in any specific assets of the Company by virtue of this Plan or the
Trust.
5
<PAGE> 6
ARTICLE 5.
VESTING
Participants shall at all times be fully vested in all Participant
Deferrals (and the Hypothetical Earnings or Losses thereon).
Participants shall become vested in Company Matching Contributions (and
the Hypothetical Earnings thereon) at the rate of 10% per Plan Year of
participation in the Plan. However, a Participant shall be fully vested in all
amounts credited to the Participant's Account upon the Participant's death,
disability or attainment of age 60, or upon a Change of Control. For these
purposes, a "Plan Year of participation" means (i) any Plan Year or portion
thereof for which a Participant elects to defer a portion of the Participant's
Compensation pursuant to the Plan, or (ii) any full Plan Year during which the
Participant has an Account balance pursuant to the Plan.
ARTICLE 6.
PAYMENT OF DEFERRED COMPENSATION
Distribution of the Participant's Trust Account shall be made in
accordance with the following:
(a) DISTRIBUTION UPON EXPIRATION OF PRE-DETERMINED DEFERRAL PERIOD. If,
with respect to any election to defer Compensation for a Plan Year, the
Participant elected at the time of such deferral to receive such deferred
amounts upon the expiration of a pre-determined deferral period (not less than 2
years, measured from the 1st day of the Plan Year for which such deferral
election is made), the Participant shall receive a lump-sum distribution of the
amounts so deferred under such election, unadjusted for Hypothetical Earnings or
Losses. The amount distributed will not exceed the lesser of (i) the amount
deferred, or (ii) the Participant's Account balance as of that date. Such
distribution shall be made within 60 days of the expiration of the
pre-determined deferral period.
(b) DISTRIBUTION UPON DEATH, DISABILITY OR SEVERANCE PRIOR TO AGE 60:
Upon termination of employment with the Company by reason of death, disability
or severance of employment prior to attaining the age of sixty (60), the
Participant, or the Beneficiary of the Participant, shall be entitled to receive
a lump-sum distribution of the Participant's vested Account balance within the
sixty (60) day period following the Allocation Date which coincides with or
which next follows the date of death, disability or termination of employment,
with such balance to be determined as of such Allocation Date (including any
Hypothetical Earnings or Losses allocated as of that date).
6
<PAGE> 7
(c) DISTRIBUTION UPON SEVERANCE AFTER AGE 60: Upon termination of
employment (other than by reason of death or disability) after age sixty (60),
the Participant shall be entitled to receive a distribution of the Participant's
Account in equal annual installments over a period of 15 years. The Hypothetical
Earnings credited to a Participant's Account during any installment payout
period shall be based upon the average Moody's Bond Index Rate for the calendar
year immediately preceding the date of the first payment. Such distribution
shall be made or commence within the sixty (60) day period following the
Allocation Date which coincides with or next follows the Participant's
termination of employment.
The Committee shall have the complete control and authority to
determine the existence, nonexistence, nature, and amounts of the rights and
interests of the Participant under the terms of the Plan. At such time as the
Participant is entitled to a payment or the receipt of benefits from the Plan,
such Participant shall be entitled to receive hereunder the benefit in cash or
property, as the case may be, to which he is entitled under the terms of the
Plan in accordance with the timing and manner of payment provided hereunder.
Except as otherwise provided herein, the Trustee shall not make any
payments from the Trust without the written direction of the Company stipulating
the time and amount to which the Participant is entitled under the Plan. The
Trustee shall promptly make payment in accordance with the Company's direction
without any requirement to engage in its own independent investigation regarding
the payment, but shall provide the Company with written confirmation of the fact
and amount of such payment after it is made in a form suitable to the Company.
Distribution to a minor or person under disability may, in the sole
discretion of the Trustee, be made (a) directly to said person; or (b) to either
one or both of his parents; or (c) to the spouse or any relative of such person;
(d) to the legal guardian or conservator of said person; or (e) to a custodian
under the Uniform Gifts or Uniform Transfers to Minors Act of any jurisdiction;
or (f) to any other person or persons for the maintenance, support or education
of said person. The receipt by a person of a payment as hereby authorized shall
constitute full and complete discharge of the liability of the Company and/or
the Trustee for such payment.
ARTICLE 7.
SPECIAL PROVISIONS
The Committee may, in its sole discretion, allow for the early payment
of benefits in the case of an "unforeseeable emergency." The amount of such
distribution shall not exceed the lesser of (i) the amount necessary to
satisfy the unforeseeable emergency (including any federal income tax
liabilities associated with such payment), or (ii) the vested balance of the
Participant's account. An "unforeseeable emergency" is an unanticipated
emergency that is (i) caused by an event beyond the control of a Participant,
and (ii) would result in severe financial hardship to the Participant if early
payment of benefits were not permitted. To constitute an unforeseeable
emergency, the Committee must find that the Participant has a severe financial
7
<PAGE> 8
hardship resulting from a sudden or unexpected illness or accident of the
Participant or of a dependent (as defined in Section 152(c) of the Code) of the
Participant, loss of the Participant's property due to casualty, or other
similarly extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. Payment may not be made to the
extent the hardship could be relieved by:
(i) reimbursement or compensation by insurance or otherwise;
(ii) liquidation of the Participant's assets (to the extent such
liquidation would not of itself cause severe financial
hardship); or
(iii) cessation of deferrals under the Plan.
The Committee may also, in its sole discretion, allow a Participant to
waive or suspend deferrals for the remaining portion of any Plan Year in the
event of an "unforeseeable emergency." However, the Participant need not
demonstrate that such hardship could not be relieved by reimbursement or
compensation through insurance or by liquidation of the Participant's assets.
The Committee will allow a Participant to make a withdrawal of the
Participant's entire vested Account balance following either (i) a Change in
Control, or (ii) the Participant's termination of employment after age 60;
PROVIDED, HOWEVER, THAT SUCH DISTRIBUTION WILL BE SUBJECT TO A 10% PENALTY FOR
EARLY WITHDRAWAL. Following such withdrawal, the Participant shall not be
allowed to make additional deferrals under the Plan.
The Committee may, in its sole discretion, distribute a Participant's
entire vested Account to the Participant in a lump sum distribution (rather than
in installments) upon the Participant's termination of employment after age 60.
ARTICLE 8.
NON-ASSIGNMENT
The right of the Participant, or designated Beneficiary of the
Participant, to any benefit or payment hereunder shall not be subject in any
manner to attachment or other legal process for the debts of such Participant or
designated Beneficiary. Any rights, benefits, or payment hereunder shall not be
subject to anticipation, alienation, sale, transfer, assignment or encumbrance
except by will, intestacy laws, or other laws of descent and distribution.
8
<PAGE> 9
ARTICLE 9.
PLAN BINDING
This Plan shall be binding upon and inure to the benefit of the parties
hereto and their successors, assigns, heirs, executors, administrators, and
legal representatives.
ARTICLE 10.
AMENDMENT/PLAN TERMINATION/
SUCCESSOR ORGANIZATION
This Plan may be amended by the Board of Directors at any time, without
the consent of the Participant or his designated Beneficiary; provided, however,
that no amendment shall divest any Participant or designated Beneficiary of the
amounts credited to the Participant's Account, or of any rights to which the
Participant or designated Beneficiary would have been entitled if the Plan had
terminated immediately prior to the effective date of the amendment.
The Board of Directors may terminate the Plan at any time, without the
consent of the Participant or his designated Beneficiary. Upon termination of
the Plan, all Participants shall become 100% vested in their Account balances.
Distribution of amounts credited to the Participant's Account shall be made in
accordance with Article 6; provided that no additional deferrals or Company
Matching Contributions shall be made (or credited) to the Participant's Account,
but Hypothetical Earnings or Losses on any remaining Account balance shall
continue to be credited in accordance with Article 3. However, the Committee
may, in its sole discretion, distribute all Participants' Account balances in a
lump-sum within a reasonable time after the termination of the Plan.
In the event of a Change in Control, a Participant's Account shall
become 100% vested. However, distribution of amounts credited to the
Participant's Account shall be made in accordance with Article 6 of the Plan.
If, in the event of a Change in Control, the successor organization to
the Company by acquisition, merger, consolidation, or otherwise, fails or
refuses to expressly assume the obligations of the Company hereunder in writing
as of the date of such acquisition, merger, or consolidation, the Participant's
Account as of the date of failure of the successor organization to assume such
liability shall be immediately distributable. The Participant shall receive a
lump-sum distribution of the Participant's Account within thirty (30) days of
such acquisition, merger, or consolidation.
9
<PAGE> 10
ARTICLE 11.
NO GUARANTEE OF EMPLOYMENT
Any payments under this Plan shall be independent of, and in addition
to, those under any other plan, program or agreement which may be in effect
between the parties hereto, or any other Compensation payable to the Participant
or the Participant's designee by the Company or any other employer. This Plan
shall not be construed as a contract of employment nor does it restrict the
right of the Company to discharge the Participant at will or the right of the
Participant to terminate employment.
ARTICLE 12.
CLAIMS SUBMISSION AND REVIEW PROCEDURE
Within 60 days after the Participant retires or otherwise becomes
eligible for a distribution of all or a portion of his Account, the Company
shall give notice in writing by mail to the Participant or his/her Beneficiary,
stating the amount of the benefit to which the person is entitled. If the
Participant disagrees with the Company's computation, such person shall file
with the Company, in writing and sent by registered or certified mail, such
claim for the benefit. If no claim is received by the Company within 60 days
after the Participant receives notification of his entitlement to a benefit from
the Company, no such claim shall be permitted and the Company's computation
shall be final. In the event such a claim is filed, the Company shall exercise
its best efforts to act upon such claim within 60 days after its receipt. If
such claim is denied, in all or in part, the Company shall give notice in
writing, by mail, of such denial to the Participant, setting forth (i) the
specific reasons for such denial; (ii) specific reference to pertinent Plan
provisions on which the denial is based; (iii) a description of any additional
material or information necessary for the Participant to perfect the claim and
an explanation of why such material or information is necessary; and (iv) advice
to the effect that the Participant may request a full review of such claim by
filing with the Company, within 60 days after such notice has been mailed, a
request for such review. In the event such request is submitted, the Company
shall review the claim within 60 days and the Participant shall be given written
notice of the result of such review. Such notice shall include specific reasons
for the decision.
10
<PAGE> 11
ARTICLE 13.
CONSTRUCTION
This Plan shall be construed in accordance with and governed by the
laws of the State of Texas applicable to contracts made and to be wholly
performed within the State of Texas, except to the extent subject to federal
law.
IN WITNESS WHEREOF, the parties hereto have executed this agreement on
the day and year first above written in several original counterparts each of
which shall be deemed the original, and each of which shall constitute but one
and the same document.
KENT ELECTRONICS CORPORATION
By: /s/ Stephen J. Chapko
---------------------------
Name: Stephen J. Chapko
Title: Vice President and Treasurer
11
<PAGE> 12
KENT ELECTRONICS CORPORATION
DEFERRED COMPENSATION PLAN
BENEFICIARY DESIGNATION
As a Participant in the Kent Electronics Corporation Deferred
Compensation Plan, I hereby acknowledge that I have been informed of the
following:
(a) In the event of my death prior to my retirement, my spouse shall
receive my death benefit under the Plan;
(b) I have the right to designate someone other than my spouse as the
beneficiary of my death benefit if my spouse consents in writing to such
designation; and
(c) I can revoke any beneficiary designation made by me and designate
my spouse as beneficiary at any time without my spouse's consent.
(d) If I am not married, my death benefit will be payable to my
beneficiary named below in the form of payment allowed by the Plan. I understand
that if I become married my spouse will automatically become my beneficiary
regardless of the designation made on this form, and I hereby consent to such
automatic change of beneficiary.
(e) If I designate someone other than my spouse as the sole direct
Beneficiary of my preretirement death benefit, such designation is not valid
unless my spouse consents in writing to such designation on the reverse side of
this form.
AS OF THIS DATE, I AM: / / MARRIED / / NOT MARRIED
DESIGNATED BENEFICIARY:
- ----------------------------------- -------------------------
Name Relationship
IF LIVING AT THE TIME OF MY DEATH, OR, IF NOT LIVING, THEN:
- ----------------------------------- -------------------------
Name Relationship
- ----------------------------------- -------------------------
Name Relationship
1
<PAGE> 13
EXECUTED THIS ______ day of _____________________, _______.
I understand this Beneficiary designation is not binding unless
delivered to both the Company and to the Trustee of the Plan.
- ----------------------------------- -------------------------
Witness Participant
SPOUSE'S CONSENT
/ / I hereby consent to the designation made by my spouse to have the death
benefit under the Plan paid to the named beneficiary specified hereon.
My spouse's beneficiary designation has been explained to me, and I
hereby acknowledge that I understand that (1) the effect of such
designation is to cause my spouse's death benefit to be paid to a
beneficiary other than me; (2) such beneficiary designation is not valid
unless I consent to it; and (3) my consent is irrevocable.
EXECUTED THIS ______ day of ____________________, ______.
-------------------------------------
Spouse's Signature
2
<PAGE> 14
KENT ELECTRONICS CORPORATION
DEFERRED COMPENSATION PLAN
CONTRIBUTION ELECTION
Pursuant to the Kent Electronics Corporation Deferred Compensation
Plan, I hereby elect to defer a portion of my compensation for the Plan Year
commencing ___________, ________ as follows:
1. _____% of the compensation (other than bonuses) to which I may
become entitled;
2. _____% of any bonus to which I may become entitled;
3. $_______ per pay period of the compensation (other than bonuses)
to which I may become entitled with respect to (check either (a)
or (b) below):
(a) _____ all pay periods during the Plan Year
(b) _____ the following pay periods (specify):___________________
_______________________________________________________
_______________________________________________________
4. $_______ of any bonuses to which I may become entitled.
I hereby authorize the above amounts to be deducted and deferred
through payroll deduction/reduction by the Company. I understand this election
will remain in effect for subsequent calendar years unless modified or revoked
by me in writing.
DISTRIBUTION OF BENEFITS
I hereby elect that my benefits under the plan be distributed as
follows: (check one of the following methods of distribution):
/ / DISTRIBUTION UPON EXPIRATION OF PRE-DETERMINED DEFERRAL PERIOD:
All amounts deferred with respect to the above Plan Year shall be
distributed in a lump sum ______ (not less than 2) years after the
first day of the Plan Year to which this election applies.
/ / DISTRIBUTION UPON DEATH, DISABILITY OR SEVERANCE OF EMPLOYMENT:
All amounts deferred with respect to the above Plan Year shall be
distributed in accordance with the provisions of Article 6(b) and
(c) of the Plan.
________________________________
Participant
________________________________
Date
1
<PAGE> 15
Date:
CERTIFIED MAIL
Top Hat Plan Exemption
PWBA
Room N-5644
U. S. Department of Labor
200 Constitution Avenue, NW
Washington, D. C. 20210
FROM: Kent Electronics Corporation; 7433 Harwin Drive, Houston, Texas
77036-2015 EIN ______________________
This document constitutes the statement required by Section 2520.104-23 CFR, to
be filed with the Secretary of Labor in respect to nonqualified deferred
compensation plans maintained by the above Employer.
The Employer currently maintains a nonqualified deferred compensation plan for
executives who are a select group of management or who are highly compensated.
The number of such plans maintained by the Employer is: 1.
The number of Participants in such Plan is: --
The above Employer is willing to furnish document with respect to the above
plans if requested by the Secretary of Labor.
KENT ELECTRONICS CORPORATION
By:_________________________
Name:_______________________
Title:______________________
2
<PAGE> 1
EXHIBIT 10.16
TRUST AGREEMENT FOR KENT ELECTRONICS CORPORATION
DEFERRED COMPENSATION PLAN
This Agreement is made this 28th day of July, 1994, by and between
Kent Electronics Corporation (the "Company") and Texas Commerce Bank
National Association (the Trustee).
WHEREAS, the Company has adopted the nonqualified deferred
compensation plan known as the Kent Electronics Corporation Deferred
Compensation Plan (the "Plan");
WHEREAS, the Company has incurred or expects to incur liability under
the terms of such Plan with respect to the individuals participating in such
Plan;
WHEREAS, the Company wishes to establish a trust (hereinafter called
the "Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of the Company's creditors in the event of the Company's
Insolvency, as herein defined, until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in the Plan;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plan
as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated Associates
for purposes of Title I of the Employee Retirement Income Security Act of 1974
("ERISA"); and;
WHEREAS, it is the intention of the Company to make contributions to
the Trust to provide itself with a source of funds to assist it in the meeting
of its liabilities under the Plan;
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
SECTION 1. ESTABLISHMENT OF TRUST.
(a) The Company hereby deposits with the Trustee in trust
$1,000.00, which shall become the principal of the Trust to be held,
administered and disposed of by the Trustee as provided in this Trust
Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which the
Company is the grantor, within the meaning of subpart E, part I, subchapter J,
chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and
shall be construed accordingly.
<PAGE> 2
(d) The principal of the Trust, and any earnings thereon, shall be
held separate and apart from other funds of the Company and shall be used
exclusively for the uses and purposes of Plan participants and general
creditors as herein set forth. Plan participants and their beneficiaries shall
have no preferred claim on, or any beneficial ownership interest in, any assets
of the Trust. Any rights created under the Plan and this Trust Agreement shall
be mere unsecured contractual rights of Plan participants and their
beneficiaries against the Company. Any assets held by the Trust will be
subject to the claims of the Company's general creditors under federal and
state law in the event of Insolvency, as defined in Section 3(a) herein.
(e) The Company, in its sole discretion, may at any time, or from
time to time, make additional deposits of cash or other property in trust with
the Trustee to augment the principal to be held, administered and disposed of
by the Trustee as provided in this Trust Agreement.
(f) Upon a Change of Control, as defined herein, the Company may,
within a reasonable time after the Change of Control, make an irrevocable
contribution to the Trust in an amount that is sufficient to pay each Plan
participant or beneficiary the benefits to which such Plan participants or
their beneficiaries would be entitled pursuant to the terms of the Plan as of
the date on which the Change of Control occurred.
(g) The Company will provide the Trustee any reconciliation,
allocation, investment or other information concerning, or representation with
respect to, the cash and/or property contributed to the Trust as the Trustee
may require. The Trustee shall have no duty or authority to (1) require any
deposits to be made under the Plan or to the Trustee, (2) compute any amount to
be deposited under the Plan to the Trustee, or (3) determine whether amounts
received by the Trustee comply with the Plan. Assets of the Trust may, in the
Trustee's discretion, be held in an account with an affiliate of the Trustee.
SECTION 2. PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES.
(a) The Company shall deliver to the Trustee a schedule (the
"Payment Schedule") that (i) indicates the amounts payable in respect of each
Plan participant (and his or her beneficiaries), and (ii) provides a formula or
other instructions acceptable to the Trustee for determining the amounts so
payable, the form in which such amount is to be paid (as provided for or
available under the Plan) and the time of commencement for payment of such
amounts. Except as otherwise provided herein, the Trustee shall make payments
to the Plan participants and their beneficiaries in accordance with such
Payment Schedule. The Payment Schedule shall be delivered to the Trustee not
more than 30 business days nor fewer than 15 business days prior to the first
date on which a payment is to be made to the Plan participant. Any change to a
Payment Schedule shall be delivered to the Trustee not more than 30 days nor
fewer than 15 days prior to the date on which the first payment is to be made
in accordance with the changed Payment Schedule. The Trustee shall make
provision for the withholding of any federal, state or local taxes that may be
required to be withheld with respect to the payment of benefits pursuant to the
terms of the Plan, it being understood among the parties hereto that (1) the
2
<PAGE> 3
Company shall on a timely basis provide the Trustee specific information as to
the amount of taxes to be withheld, and (2) the Company shall be obligated to
receive such withheld taxes from the Trustee and properly pay and report such
amounts to the appropriate taxing authorities.
(b) The entitlement of a Plan participant or his or her
beneficiaries to benefits under the Plan shall be determined by the Company or
such party as it shall designate under the Plan, and any claim for such
benefits shall be considered and reviewed under the procedures set out in the
Plan.
(c) The Company may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under the terms of the
Plan. The Company shall notify the Trustee of its decision to make payment of
benefits directly prior to the time amounts are payable to participants or
their beneficiaries. In addition, if the principal of the Trust, and any
earnings thereon, are not sufficient to make payments of benefits in accordance
with the terms of the Plan, the Company shall make the balance of each such
payment as it falls due. The Trustee shall notify the Company where principal
and earnings are not sufficient to make a directed payment in full.
(d) The Trustee shall have no responsibility to determine whether
the Trust is sufficient to meet the liabilities under the Plan, and shall not
be liable for payments or Plan liabilities in excess of the value of the
Trust's assets.
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST
BENEFICIARY WHEN THE COMPANY IS INSOLVENT.
(a) The Trustee shall cease payment of benefits to Plan
participants and their beneficiaries if the Company is Insolvent. The Company
shall be considered Insolvent for purposes of this Trust Agreement if (i) the
Company is unable to pay its debts as they become due, or (ii) the Company is
subject to a pending proceeding as a debtor under the United States Bankruptcy
Code.
(b) At all times during the continuance of this Trust, as provided
in Section 1(d) hereof, the principal and income of the Trust shall be subject
to claims of general creditors of the Company under federal and state law as
set forth below.
(1) The Committee (as defined in the Plan) shall have the
duty to inform the Trustee in writing of the Company's Insolvency. If a person
claiming to be a creditor of the Company alleges in writing to the Trustee that
the Company has become Insolvent, the Trustee shall determine whether the
Company is Insolvent and, pending such determination, the Trustee shall
discontinue payment of benefits to Plan participants or their beneficiaries.
(2) Unless the Trustee has actual knowledge of the
Company's Insolvency, or has received notice from the Company or a person
claiming to be a creditor alleging that the
3
<PAGE> 4
Company is Insolvent, the Trustee shall have no duty to inquire whether the
Company is Insolvent. The Trustee may in all events rely on such evidence
concerning the Company's solvency as may be furnished to the Trustee and that
provides the Trustee with a reasonable basis for making a determination
concerning the Company's solvency. The Trustee shall be reimbursed for all
reasonable costs to make such determination.
(3) If at any time the Trustee has determined that the
Company is Insolvent, the Trustee shall discontinue payments to Plan
participants or their beneficiaries and shall hold the assets of the Trust for
the benefit of the Company's general creditors. Nothing in this Trust
Agreement shall in any way diminish any rights of Plan participants or their
beneficiaries to pursue their rights as general creditors of the Company with
respect to benefits due under the Plan or otherwise.
(4) The Trustee shall resume the payment of benefits to
Plan participants or their beneficiaries in accordance with Section 2 of this
the Trustee Agreement only after the Trustee has determined that the Company is
not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if the Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3(b)
hereof and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any payments made to Plan
participants or their beneficiaries by the Company in lieu of the payments
provided for hereunder during any such period of discontinuance; provided that
the Company has given the Trustee the information with respect to such payments
made during the period of discontinuance prior to resumption of payments by the
Trustee.
SECTION 4. PAYMENTS TO THE COMPANY.
Except as provided in this Section 4 (and in Section 3) hereof, the
Company shall have no right or power to direct the Trustee to return to the
Company or to divert to others any of the Trust assets before all payment of
benefits have been made to Plan participants and their beneficiaries pursuant
to the terms of the Plan. Notwithstanding the foregoing, the Company shall
have the right to direct the Trustee to return to the Company all or a portion
of the Excess Assets, and the Trustee shall be entitled to rely on such
direction as being proper. The term "Excess Assets" shall mean those assets in
excess of 125% of the Plan liabilities as of any Plan Allocation date.
4
<PAGE> 5
SECTION 5. INVESTMENT AUTHORITY.
(a) The Trustee shall have the authority and discretion to invest
and reinvest the assets of the Trust, except to the extent directed to do so by
the Plan Committee. In the event of a Change of Control, the Trustee shall
have the sole responsibility and authority to invest and reinvest the assets of
the Trust for a period of five (5) years following such Change in Control.
(b) In no event may the Trustee invest in securities (including
stock or rights to acquire stock) or obligations issued by the Company, other
than a de minimis amount held in common investment vehicles in which the
Trustee invests. All rights associated with assets of the Trust shall be
exercised by the Trustee or the person designated by the Trustee, and shall in
no event be exercisable by or rest with Plan participants.
(c) The Company shall have the right, at anytime, and from time to
time in its sole discretion, to substitute assets of equal fair market value
for any asset held by the Trust.
(d) The Trustee, or the Trustee's designee, is authorized and
empowered:
(1) To invest and reinvest Trust assets, together with
the income therefrom, in common stock, preferred stock, convertible preferred
stock, bonds, debentures, convertible debentures and bonds, mortgages, notes,
commercial paper and other evidences of indebtedness (including those issued by
the Trustee), shares of mutual funds (which funds may be sponsored, managed or
offered by an affiliate of the Trustee), guaranteed investment contracts, bank
investment contracts, other securities, policies of life insurance, annuity
contracts, options, options to buy or sell securities or other assets, and all
other property of any type (personal, real or mixed, and tangible or
intangible);
(2) To deposit or invest all or any part of the assets of
the Trust in savings accounts or certificates of deposit or other deposits in a
bank or savings and loan association or other depository institution, including
the Trustee or any of its affiliates, provided with respect to such deposits
with the Trustee or an affiliate the deposits bear a reasonable interest rate;
(3) To hold, manage, improve, repair and control all
property, real or personal, forming part of the Trust; to sell, convey,
transfer, exchange, partition, lease for any term, even extending beyond the
duration of this Trust, and otherwise dispose of the same from time to time;
(4) To hold in cash, without liability for interest, such
portion of the Trust as is pending investments, or payment of expenses, or the
distribution of benefits;
(5) To settle, compromise or abandon all claims and
demands in favor of or against the Trust, and
5
<PAGE> 6
(6) To exercise all of the further rights, powers,
options and privileges granted, provided for, or vested in trustees generally
under the laws of the State of Texas, so that the powers conferred upon the
Trustee herein shall not be in limitation of any authority conferred by law,
but shall be in addition thereto.
(e) To the extent necessary or which it deems appropriate to
implement its powers under Section 5 or otherwise to fulfill any of its duties
and responsibilities as trustee of the Trust, the Trustee shall have the
following additional powers and authority:
(1) To register securities, or any other property, in its
name or in the name of any nominee, including the name of any affiliate or the
nominee name designated by any affiliate, with or without indication of the
capacity in which property shall be held, or to hold securities in bearer form
and to deposit any securities or other property in a depository or clearing
corporation;
(2) To designate and engage the services of, and to
delegate powers and responsibilities to, such agents, representatives,
advisers, attorneys and accountants as the Trustee considers necessary or
appropriate, any of whom may be an affiliate of the Trustee or a person who
renders services to the Trustee or an affiliate, and, as a part of its
administrative expenses under this Trust Agreement, to pay their reasonable
expenses and compensation from the Trust;
(3) To make, execute and deliver, as the Trustee, any and
all deeds, leases, mortgages, conveyances, waivers, releases or other
instruments in writing necessary or appropriate for the accomplishment of any
of the powers listed in this Trust Agreement; and
(4) Generally to do all other acts which the Trustee
deems necessary or appropriate for the protection of the Trust.
SECTION 6. DISPOSITION OF INCOME.
During the term of this Trust, all income received by the Trust, net
of expenses and taxes, shall be accumulated and reinvested.
6
<PAGE> 7
SECTION 7. ACCOUNTING BY THE TRUSTEE.
The Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions required to be
made, including such specific records as shall be agreed upon in writing
between the Company and the Trustee. Within 60 days following the close of
each calendar year and within 60 days after the removal or resignation of the
Trustee, the Trustee shall deliver to the Company a written account of its
administration of the Trust during such year or during the period from the
close of the last preceding year to the date of such removal or resignation,
setting forth all investments, receipts, disbursements and other transactions
effected by it, including a description of all securities and investments
purchased and sold with the cost or net proceeds of such purchases or sales
(accrued interest paid or receivable being shown separately), and showing all
cash, securities and other property held in the Trust at the end of such year
or as of the date of such removal or resignation, as the case may be.
SECTION 8. RESPONSIBILITY OF THE TRUSTEE; INDEMNIFICATION.
(a) The Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent person acting
in like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that the
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by the Company which is contemplated by,
and in conformity with, the terms of the Plan or this Trust and is given in
writing by the Company. The Trustee shall incur no liability to any person for
any failure to act in the absence of direction, request or approval from the
Company which is contemplated by, and in conformity with, the terms of this
Trust Agreement. In the event of a dispute between the Company and a party,
the Trustee may apply to a court of competent jurisdiction to resolve the
dispute.
(b) If the Trustee undertakes or defends any litigation arising in
connection with this Trust, the Company agrees to indemnify the Trustee against
the Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If the Company does not pay such costs, expenses and
liabilities in a reasonably timely manner, the Trustee may obtain payment from
the Trust.
(c) The Trustee may consult with legal counsel (who may also be
counsel for the Company generally) with respect to any of its duties or
obligations hereunder.
(d) The Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals to assist it
in performing any of its duties or obligations hereunder.
(e) The Trustee shall have, without exclusion, all powers
conferred on the Trustees by applicable law, unless expressly provided
otherwise herein, provided, however, that if an
7
<PAGE> 8
insurance policy is held as an asset of the Trust, the Trustee shall have no
power to name a beneficiary of the policy other than the Trust, to assign the
policy (as distinct from conversion of the policy to a different form) other
than to a successor Trustee, or to loan to any person the proceeds of any
borrowing against such policy.
(f) Notwithstanding any powers granted to the Trustee pursuant to
this Trust Agreement or to applicable law, the Trustee shall not have any power
that could give this Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of section 301.7701-2 of the Procedure
and Administrative Regulations promulgated pursuant to the Internal Revenue
Code.
(g) The Company hereby indemnifies the Trustee and each of its
affiliates (collectively, the "Indemnified Parties") against, and shall hold
them harmless from, any and all losses, claims, liabilities, damages, costs and
expenses, including reasonable attorneys' fees, imposed upon or incurred by any
Indemnified Party as a result of any acts taken, or any failure to act, in
accordance with directions from the Company or any designee of the Company, or
by reason of the Indemnified Party's execution of its duties with respect to
the Trust, including, but not limited to, its holding of assets of the Trust.
The Company's obligations described in the preceding sentence are to be
satisfied promptly by the Company; provided, however, in the event the loss,
claim, liability, damage, cost or expense involved is determined by a no longer
appealable final judgment entered in a lawsuit or other proceeding to have
resulted from the gross negligence or willful misconduct of the Trustee, the
Trustee shall promptly upon request thereafter return to the Company any amount
previously received by the Trustee under this subsection with respect to such
loss, claim, liability, damage, cost or expense. If the Company does not pay
such amounts due hereunder in a reasonably timely manner, the Trustee may
obtain payment from the Trust without direction from the Company.
SECTION 9. COMPENSATION AND EXPENSES OF THE TRUSTEE.
The Company shall promptly pay all administrative and Trustee's fees
and expenses, including taxes on trust income. If not so paid, the fees and
expenses shall be paid from the Trust by the Trustee without direction from the
Company.
SECTION 10. RESIGNATION AND REMOVAL OF THE TRUSTEE.
(a) The Trustee may resign at any time by written notice to the
Company, which shall be effective 30 days after receipt of such notice unless
the Company and the Trustee agree otherwise.
(b) The Trustee may be removed by the Company on 30 days notice or
upon shorter notice accepted by the Trustee.
8
<PAGE> 9
(c) Upon a Change of Control, as defined herein, the Trustee may
not be removed by the Company for 5 years without the approval of a majority of
the Plan participants; provided, however, the Trustee may still resign.
(d) If the Trustee resigns within 5 years after a Change of
Control, as defined herein, the Company shall select a successor Trustee, but
such successor Trustee must be approved by a majority of the Plan participants.
(e) Upon resignation or removal of the Trustee and appointment of
a successor Trustee, all assets shall subsequently be transferred to the
successor Trustee. The transfer shall be completed within 60 days after
receipt of notice of resignation, removal or transfer, unless the Company
extends the time limit, provided that the Trustee is provided assurance by the
Company satisfactory to the Trustee that all fees and expenses reasonably
anticipated will be promptly paid or reimbursed.
(f) If the Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective date of
resignation or removal under paragraphs(s) (a) or (b) of this section. If no
such appointment has been made, the Trustee may apply to a court of competent
jurisdiction for appointment of a successor or for instructions. All expenses
of the Trustee in connection with the proceeding shall be allowed as
administrative expenses of the Trust.
(g) Upon settlement of the account and transfer of the Trust
assets to the successor Trustee, all rights and privileges under this Trust
Agreement shall vest in the successor Trustee and all responsibility and
liability of the Trustee with respect to the Trust and assets thereof shall
fully terminate subject only to the requirement that the Trustee execute all
necessary documents to transfer the Trust assets to the successor Trustee.
SECTION 11. APPOINTMENT OF SUCCESSOR.
(a) If the Trustee resigns or is removed in accordance with
Section 10(a) or (b) hereof, the Company may appoint any third party, such as a
bank trust department or other party that may be granted corporate trustee
powers under state law, as a successor to replace the Trustee upon resignation
or removal. The appointment shall be effective when accepted in writing by the
new Trustee, who shall have all of the rights and powers of the former Trustee,
including ownership rights in the Trust assets. The former Trustee shall
execute any instrument necessary or reasonably requested by the Company or the
successor Trustee to evidence the transfer.
(b) If the Trustee resigns pursuant to the provisions of Section
10(d) hereof and the Company selects a successor Trustee, the Company may
appoint any third party such as a bank trust department or other party that may
be granted corporate trustee powers under state law. The appointment of a
successor Trustee shall be effective when approved by a majority of the
9
<PAGE> 10
Participants and accepted in writing by the new Trustee. The new Trustee shall
have all the rights and powers of the former Trustee, including ownership
rights in Trust assets. The former Trustee shall execute any instrument
necessary or reasonably requested by the successor Trustee to evidence the
transfer.
(c) The successor Trustee need not examine the records and acts of
any prior Trustee and may retain or dispose of existing Trust assets, subject
to Sections 7 and 8 hereof. The successor Trustee shall not be responsible for
and the Company shall indemnify and defend the successor Trustee from any claim
or liability resulting from any action or inaction of any prior Trustee or from
any other past event, or any condition existing at the time it becomes
successor Trustee.
SECTION 12. AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written instrument
executed by the Trustee and the Company. Notwithstanding the foregoing, no
such amendment shall conflict with the terms of the Plan or shall make the
Trust revocable.
(b) The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits
pursuant to the terms of the Plan. Upon termination of the Trust, any assets
remaining in the Trust shall be returned to the Company.
(c) This Trust Agreement may not be amended by the Company for 5
years following a Change of Control, as defined herein.
SECTION 13. MISCELLANEOUS.
(a) Any provision of this Trust Agreement prohibited by law shall
be ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Plan participants and their beneficiaries
under this Trust Agreement may not be anticipated, assigned (either at law or
in equity), alienated, pledged, encumbered or subjected to attachment,
garnishment, levy, execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the state of Texas.
(d) For purposes of this Trust, Change of Control shall mean the
purchase or other acquisition by any person, entity or group of persons, within
the meaning of section 13(d) or 14(d) of the Securities Exchange Act of 1934
("Act"), or any comparable successor provisions, of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Act) of 30 percent or
more of either the outstanding shares of common stock or the combined voting
power
10
<PAGE> 11
of the Company's then outstanding voting securities entitled to vote generally,
or the approval by the stockholders of the Company of a reorganization, merger,
or consolidation, in each case, with respect to which persons who were
stockholders of the Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than 50 percent of the
combined voting power entitled to vote generally in the election of directors
of the reorganized, merged or consolidated Company's then outstanding
securities, or a liquidation or dissolution of the Company or of the sale of
all or substantially all of the Company's assets.
(e) The provisions of Section 8(g) of this Trust Agreement shall
survive termination of this Agreement.
(f) The rights, duties, responsibilities, obligations and
liabilities of the Trustee are set forth in this Trust Agreement, and no
provision of the Plan or any other documents shall affect such rights,
responsibilities, obligations and liabilities. If there is a conflict between
provisions of the Plan and this Trust Agreement with respect to any subject
involving the Trustee, including but not limited to the responsibility,
authority or powers of the Trustee, the provisions of this Trust Agreement
shall be controlling.
SECTION 14. EFFECTIVE DATE.
The effective date of this Trust Agreement shall be July 3, 1994.
IN WITNESS WHEREOF, this Trust Agreement has been executed by the
parties hereto as of the day and year first above written in several original
counterparts each of which shall be deemed the original, and each of which
shall constitute but one and the same document.
KENT ELECTRONICS CORPORATION
(the "Company")
By: /s/ Stephen J. Chapko
-----------------------------------
Name: Stephen J. Chapko
Title: Vice President and Treasurer
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION (THE "TRUSTEE")
By: /s/ Luke Provenzano
-----------------------------------
Name: Luke Provenzano
Title: Vice President
11
<PAGE> 1
EXHIBIT 10.22
1994 KENT ELECTRONICS CORPORATION
SPOUSAL SALARY CONTINUATION PLAN
On this 10th day of October, 1994, Kent Electronics Corporation ("Kent")
adopts the following Salary Continuation Plan:
1. Recipient: The person designated by Morrie K. Abramson on the
Designation of Benefit form or in the manner prescribed in his Last
Will and Testament
2. Name of Plan: 1994 Kent Electronics Corporation Spousal Salary
Continuation Plan
3. Effective Date: June 10, 1994
4. Terms of Plan:
a. As a condition precedent to any payment under this Plan, Morrie
K. Abramson must be an employee of Kent Electronics Corporation
at the date of his death.
b. Assuming the conditions precedent in paragraph 4.a. above are
met, Kent Electronics Corporation shall pay to whomsoever Morrie
K. Abramson designates in his Last Will and Testament or as
specified on his Designation of Benefit form attached hereto,
60 percent of Morrie K. Abramson's monthly base salary as paid
in Kent's fiscal year preceding his death as shown on the payroll
records of Kent. As an example, if his monthly base salary were
$30,000 per month, then the benefit paid would be $18,000 per
month.
c. The term of payment under this Plan is 180 consecutive months
following the month in which Morrie K. Abramson dies; e.g., using
the example in paragraph 4.b. above, his beneficiary would
receive $18,000 per month for 180 consecutive months.
d. This Plan supersedes, replaces, and is in lieu of the previously
adopted Three-Year Salary Continuation Plan for Morrie K.
Abramson.
e. The fiduciary of this Plan is Kent Electronics Corporation, 7433
Harwin, Houston, Texas 77036.
f. The Plan shall be funded out of the general assets of the
Company.
g. This Plan may be amended by the Board of Directors of the Company
prior to the death of Morrie K. Abramson, but not thereafter,
only with the written consent of Morrie K. Abramson.
h. The procedure for a claim denial under this Plan is as set forth
below:
(1) CLAIM. If a Participant or his Beneficiary ("Claimant") is
denied all or any portion of an expected Plan benefit for
any reason, he may file a claim with the person or office
designated by the Committee to receive claims. Under normal
circumstances, a final decision will be made as to a claim
within 60 days after receipt of the claim. If the Committee
notifies the Claimant in
<PAGE> 2
writing during the initial 60-day period, it may extend
the period up to 120 days after initial receipt of the
claim. The written notice must contain the circumstances
necessitating the extension and the anticipated date for
the final decision. If a claim is denied during the claims
period, the Committee must notify the Claimant in
writing. The denial must include the specific reasons for
it, the Plan provisions upon which the denial is based,
and the claims review procedure. If no action is taken
during the claims period, the claim is treated as if it
were denied on the last day of the claims period.
(2) REVIEW PROCEDURE. If a Participant's or Beneficiary's
claim is denied and he wants a review, he must apply
to the Committee in writing. That application can
include any comment or argument the Claimant wants to
make. The Claimant can either represent himself or appoint
a representative, either of whom has the right to inspect
all documents pertaining to the claim and its denial. The
Committee can schedule any meeting with the Claimant or
his representative that it finds necessary or appropriate
to complete its review.
(3) FINAL DECISION. The request for a review must be filed
within 60 days after the denial. If it is not, the denial
becomes final. If a timely request is made, the Committee
must make its decision, under normal circumstances, within
60 days of the receipt of the request for a review.
However, if the Committee notifies the Claimant prior
to the expiration of the initial review period, it can
extend the period of a review up to 120 days following the
initial receipt of the request for a review. All decisions
of the Committee must be in writing and must include the
specific reasons for their action and the Plan provisions
on which their decision is based. If a decision is not
given to the Claimant within the review priod, the claim
is treated as if it were denied on the last day of the
review period.
i. This Plan is governed by the laws of the state of Texas and is
enforceable in Houston, Texas.
j. This Plan is enforceable and binding upon and shall inure to the
benefit of the successors, representatives, heirs, and assigns
of the parties.
KENT ELECTRONICS CORPORATION
By: /s/ James F. Corporron
-----------------------------
James F. Corporron,
President
APPROVED AND ACCEPTED:
By: /s/ Morrie K. Abramson
-----------------------------
Morrie K. Abramson
-2-
<PAGE> 3
DESIGNATION OF BENEFITS
PURSUANT TO the 1994 Kent Electronics Corporation Spousal Salary
Continuation Plan ("Plan"), I, the undersigned, designate as Beneficiary of the
benefits under the Plan, Rolaine Segal Abramson, during her life; and, if she
dies during the 15-year payout, then any remaining payments shall be distributed
in accordance with the Last Will and Testament of Rolaine Segal Abramson.
10-18-94 Morrie K. Abramson
- --------------- -----------------------------------
Date Morrie K. Abramson
STATE OF TEXAS )
)
COUNTY OF HARRIS )
This Designation of Benefits was acknowledged before me on October 18,
1994.
(SEAL) Kathy R. King
-----------------------------------
Notary Public - State of Texas
<PAGE> 1
EXHIBIT 10.23
SPECIAL WARRANTY DEED
---------------------
GRANTOR: SUGARLAND PROPERTIES INCORPORATED,
a Texas corporation
GRANTOR'S MAILING ADDRESS
(including county): 4665 Sweetwater Blvd., Suite 100
Sugar Land, Texas 77479
Fort Bend County, Texas
GRANTEE: KENT ELECTRONICS CORPORATION,
a Texas corporation
GRANTEE'S MAILING ADDRESS
(INCLUDING COUNTY): 7433 Harwin Drive
Houston, Texas 77036
Harris County, Texas
CONSIDERATION:
TEN AND NO/100 DOLLARS ($10.00) and other good and valuable
consideration.
PROPERTY:
That certain tract or parcel of land containing fifty-one (51) acres
of land, more or less, out of the Brown and Belknap League, Abstract
Number 15, Fort Bend County, Texas, and being all of Commercial
Reserve "A" of SUGAR LAND BUSINESS PARK TRACT 130 AND 131, a
Commercial Development situated within the City of Sugar Land, Texas,
according to the map or plat thereof recorded under Slide Number
1356/B of the Plat Records of Fort Bend County, Texas, together with
all and singular the improvements thereon, and the rights,
appurtenances, benefits, and privileges pertaining thereto and
Grantor's right, title, and interest (if any) in and to any strips and
gores and Grantor's reversionary right, title and interest (if any) in
and to the centerline of adjacent roads, streets, and rights-of-way.
RESERVATIONS FROM AND EXCEPTIONS TO CONVEYANCE AND WARRANTY:
A. All those encumbrances, exceptions, and matters of record
affecting the Property which are set forth in Exhibit A attached hereto and
made a part hereof for all purposes as if fully set out herein, to the extent
same are valid and subsisting and affect title to the Property (the "Permitted
Exceptions").
-1-
<PAGE> 2
B. All those covenants, conditions, and restrictions affecting
the Property which are set forth in Exhibit B attached hereto and made a part
hereof for all purposes as if fully set out herein (the "Restrictive
Covenants"). Such Restrictive Covenants shall be deemed covenants running with
title to the Property and shall be binding upon and inure to the benefit of
Grantor and Grantee and their respective legal representatives, successors and
assigns.
C. The reservation of the following rights in favor of Grantor,
its successors and assigns:
1. Grantor reserves and shall have the right (the
"Commencement Repurchase Right"), but not the obligation, to
repurchase the Property if Grantee fails to pour the foundation slab
("Commencement of Construction") for a building on the Property within
eighteen (18) months of the effective date hereof (plus a period of
time equal to the duration of any delay caused by reason of fire, act
of God, shortage of labor or material, strike, lockout, casualty, or
other condition beyond Grantee's control). The repurchase price shall
be equal to the purchase price paid for the Property by Grantee to
Grantor, less any taxes, liens, and assessments unpaid as of the date
of such repurchase, plus any real estate ad valorem taxes paid by
Grantor with respect to the Property prior to the date of such
repurchase. The Commencement Repurchase Right shall be exercised by
Grantor by written notice to Grantee within six (6) months from the
date it accrues, or the same shall automatically terminate. Closing
of such repurchase transaction shall be completed within thirty (30)
days from the date of Grantor's notice to Grantee of its election to
exercise its Commencement Repurchase Right. The Commencement
Repurchase Right shall automatically terminate upon Commencement of
Construction.
2. Grantor reserves and shall have the right (the
"Completion Repurchase Right"), but not the obligation, to repurchase
the Property if Grantee fails to obtain an architect's certificate of
substantial completion for the building to be built on the Property
within twenty-four (24) months after Commencement of Construction
(plus a period of time equal to the duration of any delay caused by
reason of fire, act of God, shortage of labor or material, strike,
lockout, casualty, or other condition beyond Grantee's control). The
repurchase price shall be equal to the purchase price paid by Grantee
to Grantor for the Property, less any taxes, liens, and assessments
unpaid as of the date of the repurchase, plus all costs of any nature
whatsoever (including without limitation, construction, architectural,
and engineering costs and fees, permitting costs, utility-related
costs, and other costs and expenses) of or associated with the
Property and any improvements either completed or then under
construction. The Completion Repurchase Right shall be exercised by
written
-2-
<PAGE> 3
notice to Grantee within sixty (60) days of the date it accrues, or
the same shall automatically terminate. Closing upon such repurchase
transaction shall be completed within thirty (30) days from the date
of Grantor's notice to Grantee of its election to exercise its
Completion Repurchase Right. The Completion Repurchase Right shall
automatically terminate upon Grantor's receipt of an architect's
certificate of substantial completion, unless such certificate is
received by Grantor after Grantor has notified Grantee of its election
to exercise its Completion Repurchase Rights.
3. If the Property has not been improved by a building,
no interest in the Property shall be sold or transferred (except to
the "Mortgagee" as defined below, or to any company owned or
controlled by, owning or controlling, or under common ownership or
control with, Grantee ["Affiliate"]) by Grantee unless and until
Grantee shall have first offered to sell such interest in the Property
to Grantor and Grantor shall have waived its right to purchase the
Property (the "Right of First Refusal"). Grantor reserves and shall
have the right and the Property shall hereby be encumbered by a
continuing right of first refusal in Grantor as hereinafter set forth.
a. If Grantee intends to make a bona fide sale
of the Property or any interest therein (other than a sale or
transfer to the Mortgagee as hereinafter provided, or to any
Affiliate of Grantor) before the Property shall have been
improved with a building, Grantee shall deliver to Grantor
notice of such intention, together with a copy of a bona fide
proposed contract of sale from a third party ("Proposed
Contract"). Within twenty (20) days of receipt of such notice
and proposed Contract, Grantor, if it chooses to exercise its
Right of First Refusal, shall deliver to Grantee an agreement
to purchase the Property or any interest therein upon the
following terms:
(i) The price to be paid and the
terms of payment shall be equivalent or better than
those stated in the Proposed Contract;
(ii) The sale shall be closed
within thirty (30) days after the delivery by Grantor
of said agreement to purchase (or at Grantee's
option, on the last date for closing contemplated by
the Proposed Contract, assuming for such purpose that
the Proposed Contract had been executed as of the
date the Proposed Contract was sent to Grantor); and
-3-
<PAGE> 4
(iii) In all other respects such agreement
to purchase shall be as favorable to Grantee as the
Proposed Contract.
b. If Grantor shall elect to waive its Right of
First Refusal, or shall fail to exercise said right within
twenty (20) days of receipt of the Proposed Contract, Grantee
shall be entitled to consummate the sale to the Proposed
Contract purchaser free of any right of Grantor. Grantor's
waiver shall be evidenced by a certificate executed by Grantor
in recordable form which shall be delivered to the Proposed
Contract purchaser and recorded in the Public Records of Fort
Bend County, Texas; provided, however, in the event Grantor
fails or refuses to deliver such certificate, Grantor's waiver
of the Right of First Refusal shall be deemed to have occurred
upon Grantor's failure to deliver to Grantee an agreement to
purchase the Property within the time period provided herein.
c. Any sale of the Property or any interest
therein (other than to the Mortgagee as hereinafter provided,
or to any Affiliate of Grantee), which is made prior to the
construction of a building thereon, and without (i) notice to
Grantor, (ii) a waiver of Grantor's Right of First Refusal as
aforesaid, or (iii) a failure by Grantor to exercise its Right
of First Refusal within the aforesaid twenty (20) days, shall
be void.
4. If Grantee should execute a deed of trust to secure a
loan made to Grantee in connection with the purchase and/or
construction of improvements on the Property, and the beneficiary of
such deed of trust (the "Mortgagee") should give notice to Grantor of
the name and identity of such Mortgagee, then in such event and at any
time Grantor considers that Grantee is in default under either
Paragraphs (1) or (2) above, Grantor shall give written notice thereof
to Mortgagee at the address furnished, and Mortgagee shall thereupon
have a reasonable time within which to foreclose its lien and acquire
title to, and possession of, the Property, and have reasonable time
within which to comply with the provisions of this Deed. While
Mortgagee is attempting in good faith to accomplish the foregoing,
Grantor shall not exercise either the Commencement Repurchase Right or
the Completion Repurchase Right; but if Mortgagee should fail to cause
such default by Grantee to be cured, then Grantor shall have the
option to exercise its repurchase rights. The repurchase price
hereunder shall be paid to Mortgagee to the extent of the amount
theretofore advanced by Mortgagee on said loan to the extent that such
amount has been applied to the purchase of the Property and/or the
cost of improvements either completed or
-4-
<PAGE> 5
then under construction upon the Property. Said amount advanced by
Mortgagee, as described in the preceding sentence, shall be delivered
to Mortgagee and, upon receipt thereof, Mortgagee shall release the
deed of trust and any other instruments securing payment of the loan,
and the remainder of the repurchase price shall be paid to Grantee.
5. Closing of any of the repurchase transactions
described above shall be accomplished by Grantee's reconveyance of the
Property to Grantor, its successors and assigns, by special warranty
deed, free and clear of any liens and encumbrances other than those
encumbrances existing on the date of this conveyance, and any
additional encumbrances which do not materially adversely affect the
value or intended use of the Property. In the event that Grantor
should exercise its right to repurchase, then upon revestment of title
in Grantor, all covenants, conditions, restrictions, and reservations
imposed by Grantor in this Deed shall automatically terminate and be
of no further force or effect.
D. Ad valorem taxes and assessments for the current year (which
have been prorated as of the Effective Date hereof), the payment of which
Grantee assumes.
E. All set-back lines, restrictions, easements, and other matters
affecting the Property, as set forth in the map or plat recorded under Slide
No. 1356/B of the Plat Records of Fort Bend County, Texas.
F. The reservation and exception by Grantor unto itself, its
successors, assigns and predecessors in title in accordance with their
respective interests of record of all oil, gas, and other minerals in, on, and
under, and that may be produced and saved from the Property. Grantor hereby
releases and relinquishes, for itself and its successors and assigns, all of
its rights to use the surface of the Property for exploring and drilling for
and producing of, and all other rights to use of the surface which Grantor may
have in connection with, such oil, gas, or other minerals from the mineral
estate owned and retained by Grantor; reserving, however, the right to drill
under and through the subsurface of the Property below the depth of two hundred
feet (200') by well located on the surface of land outside the boundaries of
the Property, and the right to pool and combine the Property with other land
for the purpose of exploring and drilling for and producing of such oil, gas,
or other minerals.
G. At such time as Grantee commences construction of improvements
on the Property, Grantee covenants to construct, if required pursuant to
applicable law by the City of Sugar Land, Texas (the "City"), a sidewalk
meeting the requirements of the City's Subdivision Ordinance.
-5-
<PAGE> 6
Grantor, for the consideration and subject to the reservations from
and exceptions to conveyance and warranty, hereby grants, sells, and conveys to
Grantee the Property, together with all and singular the rights and
appurtenances thereto in any wise belonging, to have and to hold unto Grantee,
Grantee's legal representatives, successors and assigns forever. Grantor
hereby binds Grantor and Grantor's legal representatives and successors to
warrant and forever defend all and singular the Property, subject to the
reservations from and exceptions to conveyance and warranty set forth in this
deed, to Grantee and Grantee's legal representatives, successors and assigns,
against every person whomsoever lawfully claiming or to claim the same or any
part thereof, by, through, or under Grantor, but not otherwise.
EXECUTED on the date of the acknowledgement hereinafter set forth, but
made effective as of the 7th day of March, 1995 (the "Effective Date").
SUGARLAND PROPERTIES INCORPORATED
("Grantor")
By: /s/ Les A. Newton
------------------------------
Les A. Newton
President
ATTEST:
/s/ Carl P. Favre
- -----------------------------------
Carl P. Favre, Secretary
ATTACHMENTS:
Exhibit A - Permitted Exceptions
Exhibit B - Restrictive Covenants
THE STATE OF TEXAS )
)
COUNTY OF FORT BEND )
This instrument was acknowledged before me on the 7th day of March,
1995, by LES A. NEWTON, President of SUGARLAND PROPERTIES INCORPORATED, a Texas
corporation, on behalf of said corporation.
[NOTARY PUBLIC SEAL] /s/ Melia L. Burciaga
----------------------------------
Notary Public, State of Texas
-6-
<PAGE> 7
EXHIBIT A
TO
SPECIAL WARRANTY DEED
PERMITTED EXCEPTIONS
1. Restrictions recorded in Slide No. 1356/B in the Plat Records of Fort
Bend County, Texas.
2. A temporary drainage easement 15 feet wide granted to Fort Bend County
Municipal Utility District No. 21 as set forth by instrument dated
June 11, 1992 recorded in Volume 2416, Page 1550 of the Official
Records of Fort Bend County, Texas and as reflected by the plat
recorded in Slide No. 1356/B of the Plat Records of Fort Bend County,
Texas.
3. An easement 10 feet wide together with an unobstructed aerial easement
10 feet wide from a plane 16 feet above the ground upward, granted to
Houston Lighting and Power Company, the location shown on Sketch No.
W84-446 attached thereto as set forth in instrument recorded in Volume
1597, Page 232 of the Official Records of Fort Bend County, Texas and
as reflected by the plat recorded in Slide No. 1356/B of the Plat
Records of Fort Bend County, Texas..
4. A temporary drainage easement granted to Fort Bend County Municipal
Utility District No. 21 as set forth by instrument recorded in Volume
2503, Page 567 of the Official Records of Fort Bend County, Texas and
as reflected by the plat recorded in Slide No. 1356/B of the Plat
Records of Fort Bend County, Texas.
5. A temporary drainage easement 50 feet in width running in a north and
south direction through the east portion of subject property, granted
to Fort Bend County Municipal Utility District No. 21, as set forth by
instrument recorded in Volume 2712, Page 1259 of the Official Records
of Fort Bend County, Texas, and as reflected by the plat recorded in
Slide No. 1356/B of the Plat Records of Fort Bend County, Texas.
6. An easement 10 feet wide together with an unobstructed aerial easement
11 feet 5 inches wide from a plane 16 foot above the ground upward
granted to Houston Lighting & Power Company; the location shown on
Sketch No. W-84-446 attached thereto as set forth in instrument
recorded in Volume 1597, Page 236 of the Official Records of Fort Bend
County, Texas and as reflected by the plat recorded in Slide No.
1356/B of the Plat Records of Fort Bend County, Texas.
(Page 1 of 2 Pages)
<PAGE> 8
7. A drainage easement 60 feet wide along the south property line, as
reflected by the plat recorded in Slide No. 1356/B of the Plat Records
of Fort Bend County, Texas.
8. A storm sewer easement 20 feet wide along the east property line, as
reflected by the plat recorded in Slide No. 1356/B of the Plat Records
of Fort Bend County, Texas.
9. An easement for drainage purposes extending a distance of 20 feet on
each side of the center line of all natural water courses, if any,
reflected by the plat recorded in Slide No. 1356/B of the Plat Records
of Fort Bend County, Texas.
10. A 1/32nd non-participating royalty interest in and to all the oil,
gas, and other minerals on, in, under, or that may be produced from
the subject property, as set forth in instrument recorded in Volume
236, Page 9 of the Deed Records of Fort Bend County, Texas.
11. A 50% non-participating royalty interest in and to all the oil, gas,
and other minerals on, in, under, or that may be produced from subject
property, as set forth in instrument recorded in Volume 607, Page 80
of the Deed Records of Fort Bend County, Texas.
12. Building set back line of 25 feet along the south and east property
lines, as set out on the plat recorded in Slide No. 1356/B of the Plat
Records of Fort Bend County, Texas.
(Page 2 of 2 Pages)
<PAGE> 9
EXHIBIT B
TO
SPECIAL WARRANTY DEED
RESTRICTIVE COVENANTS
The following covenants, conditions, and restrictions (the
"Restrictive Covenants") shall run with title to the Property (as hereinafter
defined), and shall be binding upon and inure to the benefit of the Association
(as defined below), Grantor, Grantee, and their respective legal
representatives, successors and assigns.
The purpose of these Restrictive Covenants is to protect the
Association, Grantor, Grantee, any future owner of all or any portion of the
Property, and other owners of land in the Sugar Land Business Park from and
against the improper development and use of the Property; to assure the
compatibility of design of improvements located within Sugar Land Business
Park; to secure and preserve sufficient setbacks of space within the Sugar Land
Business Park so as to create an aesthetically pleasing environment; and to
provide for landscaping on the Property and the maintenance thereof.
1. Definitions. The following words when used herein (unless the
context otherwise requires) shall have the following meanings:
"Approved Building" means the assembly, manufacturing, office,
warehousing, distribution, light industrial, commercial processing, research or
servicing facility, or other facility for a use permitted hereby, to be
constructed by Grantee on the Property with the prior approval of the ARC, as
well as any other improvement approved by the ARC and constructed on the
Property by any future owner of all or any portion of the Property.
"ARC" means the Architectural Review Committee of the Association.
"Association" means the Sugar Land Business Park Association, Inc., a
Texas non-profit corporation, or any successor or assign, which will administer
and enforce the covenants, conditions, restrictions, and assessments
encumbering the Property and other land located within the Sugar Land Business
Park subject to the Association's jurisdiction.
"Board" means the Board of Directors of the Association.
"Building Site" means each parcel of land (including the Property)
located within the Sugar Land Business Park and subject to the Association's
jurisdiction as designated by Grantor or the Association, or those lands
annexed thereto, and established for the purpose of constructing thereon
office, retail, commercial,
(Page 1 of 11 Pages)
<PAGE> 10
educational, municipal, governmental, warehouse, light industrial,
manufacturing, assembly, or other similar structures; provided, however, that
Grantee and its legal representatives, successors and assigns shall have the
right to combine the Property, and any adjacent property or properties owned by
Grantee, its affiliates, or its or their legal representatives, successors and
assigns, into a single Building Site for purposes of these Restrictive
Covenants, by notice to the Association.
"Deed" means that Special Warranty Deed with respect to the Property
from Sugarland Properties Incorporated, a Texas corporation ("Grantor"), to
KENT ELECTRONICS CORPORATION, a Texas corporation ("Grantee"), to which this
"Exhibit B" has been attached and made a part for all purposes.
"Owner" means Grantee, its legal representatives, successors and
assigns, or any future record owner of all or any portion of the Property, or
if any portion of the Property is made subject to a ground lease, the ground
lessee, whether one or more persons, of such portion of the Property, but
notwithstanding any applicable theory of mortgage, not a mortgagee unless and
until such mortgagee has acquired title to the fee or leasehold estate in a
grant pursuant to foreclosure, by deed, or by any proceeding in lieu of
foreclosure.
"Property" means that certain tract or parcel of land containing
fifty-one (51) acres of land, more or less, situated within the City of Sugar
Land, Fort Bend County, Texas, as more particularly described in the Deed.
"Set Back Area" means the area of the Property between a Set Back Line
as set forth in Section 5 hereof, and the boundary line(s), street
curb-line(s), or other line(s) to which such Set Back Line relates.
"Set Back Line" or "Set Back Lines" means those lines established
pursuant to Section 5 hereof.
All capitalized terms not specifically defined herein shall have the
definitions and meanings set forth in the Deed, unless the context otherwise
requires.
2. Use Permitted: The Property shall be used solely for office,
commercial processing, research, servicing, light industrial, assembly,
manufacturing, warehousing, and distribution purposes and services ancillary to
such uses, all under the conditions hereinafter set forth, and for no other
purpose or purposes unless the Owner first obtains the written and recorded
approval of Grantor or the ARC, which approval shall not be unreasonably
withheld. No restaurant, gasoline service station, or convenience store which
is open to the public will be permitted except as
(Page 2 of 11 Pages)
<PAGE> 11
Grantor or the ARC, in the exercise of its sole discretion, shall first approve
in writing. In addition to the foregoing permitted uses, from and after twenty
(20) years from the date hereof, the Property may be used, in whole or in part,
for any other commercial uses, but if the Property is used for such other
commercial uses, then (i) all buildings or structures erected or maintained
thereon shall be substantially similar to and in harmony with the buildings or
structures located on adjoining land which is subject to the covenants,
conditions, and restrictions applicable to the Property, and (ii) such other
uses of the Property shall be compatible with uses on such adjoining land.
No use shall be permitted which is offensive by reason of odor, fumes,
dust, smoke, noise, or pollution, or which is hazardous by reason of excessive
danger of fire or explosion or which otherwise constitutes a nuisance, which is
dangerous or unsafe or which is calculated to injure the reputation of the
Property, or any neighboring Building Site, or which is in violation of city,
county, state, or federal laws. Written approval by the ARC of a particular
use shall be conclusive evidence of compliance with this Restrictive Covenant.
3. Plan Approval Required: Prior to construction or material
external alteration of any building or other structure located on the Property,
two (2) complete sets of building and landscaping plans and specifications
shall be submitted to the ARC. No building, structure, or other improvement
shall be constructed, externally altered, or placed upon any part of the
Property until the location, design, plans, and specifications for same
(including landscaping) have been first approved in writing by the ARC, such
approval not to be unreasonably withheld. The failure by the ARC to notify
Owner of the disapproval or approval (or combination thereof) of such plans and
specifications within forty-five (45) days after their submission to the ARC
shall be conclusively deemed to constitute the ARC's approval thereof for all
purposes hereunder.
4. Construction Standards: Construction or external alteration
of any building shall meet the standards set forth in these Restrictive
Covenants. For the purposes of these Restrictive Covenants, when a
construction material is specified herein, another material may be used in lieu
thereof, provided such material is not materially inferior in appearance to any
such material specified herein and is first approved in writing by the ARC.
All buildings shall have exterior walls of face brick, exposed
aggregate concrete, or painted concrete ( i.e., tilt wall construction) or of
an equivalent, permanent material. No building shall be covered with sheet or
corrugated aluminum, asbestos, iron, or steel.
(Page 3 of 11 Pages)
<PAGE> 12
5. Setback Lines and Areas:
a. Setback Lines are established with respect to the Property
(measured from the applicable boundary line of the Property):
<TABLE>
<CAPTION>
Building Surface Parking
Setback Line Setback Line
------------ --------------
Applicable Boundary Line (in feet) (in feet)
------------------------ ------------ --------------
<S> <C> <C>
Jess Pirtle 40' 40'
Proposed Gillingham Lane 40' 25'
Side Property Line 10' 6'
Rear Property Line 10' 6'
</TABLE>
b. No Improvements on or above natural ground level may be
located within a Setback Area other than utility installations,
landscaping (including berms or other sculptured landscaping), signs,
lighting, sidewalks, walkways, streets, driveways, drives, running
tracks, benches, bus shelters, water amenities with water fountains,
and drinking fountains, as approved by the ARC.
6. Parking: Parking shall be provided in (a) the minimum ratio
of one (1) permanently-paved, off-street passenger car parking space for each
one thousand square feet (1,000 s.f.) of warehouse building area, for each five
hundred square feet (500 s.f.) of manufacturing building area, and for each two
hundred fifty square feet (250 s.f.) of office building area, or (b) the
minimum ratio of one (1) passenger car parking space for every two (2)
employees, whichever ratio shall result in the greater number of parking
spaces. No use shall be made of the Property or any building constructed
thereon which requires or is reasonably expected to require or attract parking
in excess of capacity of the facilities maintained therefor on the Property.
Parking will not be permitted on any street or at any place other than
the paved parking spaces provided in accordance with the foregoing, and Owner
and any lessee of any portion of the Property shall be responsible for
compliance by their respective employees and visitors.
7. Landscaping: When a Building Site is developed, all open,
unpaved space on the developed portion of the Building Site including, but not
limited to, front, side, and rear building setback areas of the developed
portion of the Building Site shall be grassed and landscaped. Likewise, a
sprinkler system of approved design shall be installed in all grassed and
landscaped areas on the developed portion of the Building Site. Landscaping in
accordance with the plans approved by the ARC must be installed on the
developed portion of the Building Site within thirty (30) days following the
occupancy of any building constructed on the Property. This period will be
extended in the event of delays
(Page 4 of 11 Pages)
<PAGE> 13
caused by adverse weather conditions or other causes beyond reasonable control.
The foregoing notwithstanding, the undeveloped portions of a Building Site will
not need to be sprinklered or landscaped, but instead, shall only be seeded or
sodded with grass, and such grass need not be mowed or brush-hogged more
frequently than once every three (3) weeks during the months of February
through November and once each in December and January (or such less frequent
basis as shall be the basis used by the Association for mowing or brush-hogging
undeveloped land).
8. Screening: The right of Owner or a lessee of any portion of
the Property to use any building or buildings shall not be construed to permit
the keeping of articles, goods, materials, incinerators, storage tanks, refuse
containers, or like equipment in the open or exposed to public view, or view
from adjacent Building Sites. If it shall become necessary to store or keep
such materials or equipment in the open, they shall be screened (including
berming) from view in a manner first approved in writing by the ARC. Such
screen shall be of a height at least equal to that of the materials or
equipment being stored but in no event less than six feet (6') in height.
Added screening must also be provided to shield such stored materials and
equipment from view from adjacent buildings.
Water towers, storage tanks, processing equipment, stand fans,
skylights, cooling towers, communication towers, vents, and any other
structures or equipment shall be architecturally compatible or effectively
shielded from public view by an architecturally-sound method which shall be
approved in writing by the ARC prior to the construction or erection of said
structures or equipment.
9. Roof Top Equipment: All equipment mounted on the roof of any
building within any Building Site shall be screened on all sides with material
compatible with the exterior surface of said building or painted in the manner
prescribed by the ARC.
10. Signs: All signs shall be of a design and material reasonably
approved by the ARC. Unless otherwise approved in writing by the ARC, all
signs must be attached to a building, parallel to and contiguous with its wall,
and not project above its roof line. No sign of a flashing nature or moving
character shall be installed and no sign shall be painted on a building wall.
The ARC shall use the signage design guidelines adopted by it (which may, at
the Association's option, be the same as or similar to the First Colony Signage
Design Guidelines) in evaluating all signs on a Building Site.
11. Illumination: Any buildings constructed on the Property shall
have exterior illumination facilities for their front and side walls of a power
and design sufficient to measure a minimum of one and one-half (1-1/2) foot
candles to all property lines during
(Page 5 of 11 Pages)
<PAGE> 14
the night, and upon completion of each such building said illumination
facilities shall remain in full operation until ten o'clock each night (10:00
p.m.).
12. Loading Docks: Any loading docks built or maintained on the
street side of any building constructed on the Property must be set back at
least fifty feet (50') from all streets. Loading docks must be screened with a
fence or by landscaping planted between the loading docks and the streets
adjoining the side of the building not facing the street.
13. Maintenance: Owner and any lessee of any portion of the
Property agrees in favor of the Association to keep the Property in a
well-maintained, clean, and attractive condition at all times, subject as
otherwise provided in the last sentence of Section 7 hereof. If, in the
reasonable opinion of the Association, Owner or lessee is failing in this duty
and responsibility, then the Association may give Owner or lessee, or both,
notice of such fact, and Owner or lessee must, within ten (10) days of such
notice, commence to prosecute to completion the care and maintenance required
to restore the Property to a clean, and attractive condition, and must
thereafter diligently prosecute same to completion. Should Owner or any lessee
fail to fulfill his duty and responsibility after such notice, then the
Association shall have the right and power to perform such care and
maintenance, and the Owner or lessee (and both of them) of the portion of the
Property on which such work is performed by the Association shall be liable for
the cost of any such work and shall promptly reimburse the Association for the
cost thereof. If Owner or lessee shall fail to so reimburse the Association
within thirty (30) days after being billed therefor by the Association, such
cost shall constitute a lien on the portion of the Property upon which such
maintenance was performed and shall be enforceable in the same manner as the
assessment lien provided for in these Restrictive Covenants.
14. Standards and Procedures. The ARC may establish and
promulgate reasonable "Development Guidelines", which the ARC may modify or
amend as it reasonably deems necessary and appropriate for the orderly
development of the Property and the Sugar Land Business Park, including, but
not limited to, those portions of the Development Guidelines regarding
workmanship, materials, building methods, observance of requirements concerning
installation and maintenance of public utility facilities and services and
compliance with governmental regulations. The Development Guidelines may be
reasonably amended by the ARC without notice, but shall not be applied
retroactively to reverse or otherwise adversely affect in any manner whatsoever
a prior approval granted by the ARC or the Association to any Owner or
prospective purchaser of any Building Site, or to apply to any improvements
contemplated by or constructed or under construction pursuant to any such prior
approval.
(Page 6 of 11 Pages)
<PAGE> 15
Subject as hereinabove provided, the rules, standards and procedures set forth
in the Development Guidelines, as same may be amended, shall be binding and
enforceable against each Owner in the same manner as any other restriction set
forth herein.
15. Variances. The Board, upon the recommendation of the ARC, may
authorize variances from compliance with any of the architectural provisions of
these Restrictive Covenants, including restrictions upon height, size,
placement of structures, or similar restrictions, when circumstances such as
topography, natural obstructions, hardship, aesthetic or environmental
considerations may require. Such variances must be evidenced in writing, must
be signed by at least a majority of the Board of Directors, and shall become
effective upon their execution. If such variances are granted, no violation of
the covenants, conditions, and restrictions contained in these Restrictive
Covenants shall be deemed to have occurred with respect to the matter for which
the variance was granted. The granting of such a variance shall not operate to
waive any of the terms and provisions of these Restrictive Covenants for any
purpose except as to the particular provision hereof covered by the variance,
nor shall it affect in any way the Owner's obligation to comply with all
governmental laws and regulations.
16. Limitation of Liability. Neither the Grantor, the
Association, the ARC, or the Board, nor any of their officers, partners,
directors, or members, or any of their respective successors and assigns shall
be liable in damages or otherwise to anyone who submits matters for approval to
any of the above-mentioned parties or to any Owner affected by these
Restrictive Covenants by reason of mistake of judgment, negligence, or
nonfeasance arising out of or in connection with the approval or disapproval or
failure to approve or disapprove any matters requiring approval hereunder.
17. Enforcement Assessment. The Board of Directors may, by
majority vote, elect to assess the Property for the amount of costs incurred by
the Association in successfully enforcing, as against Grantor's noncompliance,
these Restrictive Covenants or any other covenants, conditions, or restrictions
imposed on the Property by Grantor in the Deed. To the extent the Association
prevails in any of its enforcement proceedings, the enforcement assessment,
together with late fees (calculated from the due date at the rate of twelve per
cent (12%) per annum or a rate equal to the highest lawful rate, whichever is
lower) and reasonable attorneys' fees, shall constitute a lien on the Property
enforceable in the same manner as the assessment lien provided for in these
Restrictive Covenants.
(Page 7 of 11 Pages)
<PAGE> 16
18. Sugar Land Business Park Maintenance Assessment. The Property
shall be subject to the Sugar Land Business Park Maintenance Assessment, as
follows:
A. Creation. Payment of the Sugar Land Business Park
Maintenance Assessment shall be the obligation of Owner and shall
constitute a lien on the Property, binding and enforceable as provided
herein.
B. Rate. The initial Sugar Land Business Park
Maintenance Assessment established by the Association shall not exceed
the aggregate sum of THREE AND 35/100THS DOLLARS ($3.35) per linear
front foot abutting any public road right-of-way which has been
dedicated and constructed and is open for public use.
C. Commencement. For purposes of calculation, the
initial Sugar Land Business Park Maintenance Assessment shall commence
on either the first day of the first month following the date of
conveyance of the Property to Owner, or the first day of the month
following the date when a building permit is issued or building
construction commences, whichever first occurs.
D. Proration. The initial Sugar Land Business Park
Maintenance Assessment shall be made for the balance of the calendar
year as determined on a pro-rata basis and shall become due and
payable on the commencement date described above. The Sugar Land
Business Park Maintenance Assessment for any year after the first year
shall be due and payable on the first day of January or such other
date as the Board of Directors of the Association may in its sole
discretion designate.
E. Levying of the Assessment. The Sugar Land Business
Park Maintenance Assessment shall be levied at the sole discretion of
the Association. The Board of Directors of the Association shall
determine the sufficiency or insufficiency of the then current Sugar
Land Business Park Maintenance Assessment to reasonably meet the
expenses for providing services and capital improvements in the Sugar
Land Business Park and may, at its sole discretion, increase or
decrease the annual Sugar Land Business Park Maintenance Assessment in
an amount up to fifteen percent (15%) over or under the previous
year's Sugar Land Business Park Maintenance Assessment. The Sugar
Land Business Park Maintenance Assessment may only be increased by
more than fifteen percent (15%) over the preceding year's assessment
if such increase is approved by a majority of the total voting units
of the membership of the Association. The Sugar Land Business Park
Maintenance Assessment shall not be increased or decreased more than
once
(Page 8 of 11 Pages)
<PAGE> 17
in any calendar year, nor shall any increase be construed to take
effect retroactively.
F. Collection and Remedies for Assessments.
(i) The assessments provided in these Restrictive
Covenants, together with late charges and reasonable
attorney's fees as necessary for collection, shall be a charge
on and a continuing lien upon the land against which each such
assessment is made. Each such assessment, together with late
charges and reasonable attorney's fees, shall also be the
personal obligation of the person who was the Owner of the
land at the time when the assessment became due. The personal
obligation for delinquent assessments shall not pass to
successors in title unless expressly assumed by them.
(ii) Any assessment not paid within thirty (30) days
after the due date shall bear interest from the due date at
the lesser of (i) eighteen percent (18%) per annum or (ii) the
maximum rate of interest permitted by law. The Association
may bring an action at law against the Owner personally
obligated to pay the same and/or foreclose the lien against
the Property as provided under Texas law. No Owner may waive
or otherwise escape liability for the assessments provided for
herein by reason of non-use or abandonment.
G. Subordination of the Lien to Mortgages. The
assessment lien shall be subordinate to the lien of any first
mortgage. Sale or transfer of the Property or any Building Site shall
not affect the assessment lien. However, the sale or transfer of any
Building Site pursuant to mortgage foreclosure or any proceeding in
lieu thereof, shall extinguish the lien of any assessments which
became due prior to such sale or transfer, but otherwise the lien
shall survive such foreclosure or proceedings. Sale or transfer shall
not relieve any Building Site from the liability of any subsequent
assessments or from the lien thereof.
H. Exempt Properties. All properties dedicated to and
accepted by a municipal, county, federal, or other governmental
authority and all properties owned by charitable or non-profit
organizations, which are exempt from taxation by Federal laws and the
laws of the State of Texas shall be exempt from the assessments
created herein and the Owners thereof shall have no voting rights with
respect thereto. The Board may make other exceptions where in its
reasonable determination there is a beneficial result to the
development plan for the Sugar Land Business Park.
(Page 9 of 11 Pages)
<PAGE> 18
19. Term; Modification and Termination of Covenants: These
Restrictive Covenants shall terminate on January 1, 2035, unless extended or
sooner terminated, as hereinafter provided. Each restriction and covenant
contained in these Restrictive Covenants may be amended, modified, extended, or
terminated by the filing of a recorded instrument executed by Grantor, Grantee,
and the Association (except that the joinder of Grantor shall only be necessary
for amendments, modifications, extensions, and terminations prior to, but not
after, January 1, 2005) or their respective legal representatives, successors,
or assigns. Likewise, if the Owner of the Property and the owners of Building
Sites representing a majority of the linear front street, road, or highway
footage within the Sugar Land Business Park and whose Building Sites are
encumbered with covenants, conditions, and restrictions which are substantially
equivalent to these Restrictive Covenants (the "Majority Owners") so desire,
they may deliver to the Board of Directors of the Association at any time a
written declaration ("Declaration") altering, amending, extending, or
terminating the restrictions and covenants contained in these and similar
Restrictive Covenants binding their respective properties. Upon the
Association's joinder and approval of said Declaration, the Declaration shall
be signed and acknowledged by the parties thereto and recorded in the Public
Records of Fort Bend County, Texas, whereupon these Restrictive Covenants shall
be null and void except as may be otherwise provided in the Declaration and the
Property thereafter shall be made subject to covenants, conditions, and
restrictions in the Declaration. The right to alter, amend, extend, or
terminate the restrictions and covenants contained in these and similar
Restrictive Covenants, running with title to property located within the Sugar
Land Business Park, shall continue until the termination of such Restrictive
Covenants.
20. Enforcement of Covenants: In the event of a violation of the
restrictions and covenants contained in these Restrictive Covenants with
respect to the Property or any portion thereof, it shall be lawful for the
Association, Grantor, or any person or persons owning an interest in the
Property or any Building Site to prosecute proceedings at law or in equity
against Owner or any other person violating or attempting to violate any such
restriction or covenant in order to prevent him or them from so doing, to
correct such violation, or to recover damages or other relief for such
violation. Invalidation of any one or any part of these Restrictive Covenants
by judgment or court order shall in no way affect any of the other provisions
or parts of provisions which shall remain in full force and effect. Neither
the Association nor Grantor warrants hereby to Owner that any Building Site
located adjacent to the Property or anywhere within the Sugar Land Business
Park is currently subject or will be made subject in the future to these
Restrictive Covenants or to the jurisdiction of the Association.
(Page 10 of 11 Pages)
<PAGE> 19
21. Severability and Term. The invalidity of any one or more of
the provisions of these Restrictive Covenants shall not affect the validity of
the other provisions hereof. The provisions set forth in these Restrictive
Covenants shall remain in full force and effect, unless otherwise modified or
terminated as provided in Section 19 above, to the full extent and as to all
situations and persons to which they may be legally enforceable.
22. Compliance with Laws. At all times, each Owner shall comply
with all applicable federal, state, county, and municipal laws, ordinances,
rules and regulations with respect to the use, occupancy and condition of the
Property and any improvements thereon.
23. Gender and Number. The singular wherever used herein shall be
construed to mean or include the plural when applicable, and vice versa (unless
otherwise clearly indicated by the context), and the necessary grammatical
changes required to make the provisions hereof apply either to corporations (or
other entities) or individuals, male or female, shall in all cases be assumed
as though in each case fully expressed.
24. Headings. The titles and captions for these Restrictive
Covenants and sections contained herein are for convenience only and shall not
be used to construe, interpret, or limit the meaning of any term or provision
contained in these Restrictive Covenants.
25. GOVERNING LAW; VENUE. THE PROVISIONS IN THESE RESTRICTIVE
COVENANTS SHALL BE GOVERNED BY AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS, AND VENUE SHALL LIE EXCLUSIVELY IN FORT BEND COUNTY, TEXAS.
(Page 11 of 11 Pages)
<PAGE> 1
EXHIBIT 10.24
SPECIAL WARRANTY DEED
GRANTOR: SUGARLAND PROPERTIES INCORPORATED,
a Texas corporation
GRANTOR'S MAILING ADDRESS
(including county): 4665 Sweetwater Blvd., Suite 100
Sugar Land, Texas 77479
Fort Bend County, Texas
GRANTEE: KENT ELECTRONICS CORPORATION,
a Texas corporation
GRANTEE'S MAILING ADDRESS
(INCLUDING COUNTY): 7433 Harwin Drive
Houston, Texas 77036
Harris County, Texas
CONSIDERATION:
TEN AND NO/100 DOLLARS ($10.00) and other good and valuable
consideration.
PROPERTY:
That certain tract or parcel of land containing fifteen (15) acres of
land, more or less, out of the Brown and Belknap League, Abstract
Number 15, Fort Bend County, Texas, and being all of Commercial Reserve
"A" of SUGAR LAND BUSINESS PARK TRACT 132, a Commercial Development
situated within the City of Sugar Land, Texas, according to the map or
plat thereof recorded under Slide Number 1380/A of the Plat Records of
Fort Bend County, Texas, together with all and singular the
improvements thereon, and the rights, appurtenances, benefits, and
privileges pertaining thereto and Grantor's right, title, and interest
(if any) in and to any strips and gores and Grantor's reversionary
right, title and interest (if any) in and to the centerline of adjacent
roads, streets, and rights-of-way.
RESERVATIONS FROM AND EXCEPTIONS TO CONVEYANCE AND WARRANTY:
A. All those encumbrances, exceptions, and matters of record affecting
the Property which are set forth in Exhibit A attached hereto and made a
part hereof for all purposes as if fully set out herein, to the extent same are
valid and subsisting and affect title to the Property (the "Permitted
Exceptions").
-1-
<PAGE> 2
B. All those covenants, conditions, and restrictions affecting the
Property which are set forth in Exhibit B attached hereto and made a
part hereof for all purposes as if fully set out herein (the "Restrictive
Covenants"). Such Restrictive Covenants shall be deemed covenants running with
title to the Property and shall be binding upon and inure to the benefit of
Grantor and Grantee and their respective legal representatives, successors and
assigns.
C. The reservation of the following rights in favor of Grantor, its
successors and assigns:
1. Grantor reserves and shall have the right (the "Commencement
Repurchase Right"), but not the obligation, to repurchase the Property
if Grantee fails to pour the foundation slab ("Commencement of
Construction") for a building on the Property within sixty (60) months
of the effective date hereof (plus a period of time equal to the
duration of any delay caused by reason of fire, act of God, shortage of
labor or material, strike, lockout, casualty, or other condition beyond
Grantee's control). The repurchase price shall be equal to the purchase
price paid for the Property by Grantee to Grantor, less any taxes,
liens, and assessments unpaid as of the date of such repurchase, plus
any real estate ad valorem taxes paid by Grantor with respect to the
Property prior to the date of such repurchase. The Commencement
Repurchase Right shall be exercised by Grantor by written notice to
Grantee within six (6) months from the date it accrues, or the same
shall automatically terminate. Closing of such repurchase transaction
shall be completed within thirty (30) days from the date of Grantor's
notice to Grantee of its election to exercise its Commencement
Repurchase Right. The Commencement Repurchase Right shall automatically
terminate upon Commencement of Construction.
2. Grantor reserves and shall have the right (the "Completion
Repurchase Right"), but not the obligation, to repurchase the Property
if Grantee fails to obtain an architect's certificate of substantial
completion for the building to be built on the Property within
twenty-four (24) months after the Commencement of Construction (plus a
period of time equal to the duration of any delay caused by reason of
fire, act of God, shortage of labor or material, strike, lockout,
casualty, or other condition beyond Grantee's control). The repurchase
price shall be equal to the purchase price paid by Grantee to Grantor
for the Property, less any taxes, liens, and assessments unpaid as of
the date of the repurchase, plus all costs of any nature whatsoever
(including without limitation, construction, architectural, and
engineering costs and fees, permitting costs, utility-related costs,
and other costs and expenses) of or associated with the Property and
any improvements either completed or then under construction. The
Completion Repurchase Right shall be exercised by written
-2-
<PAGE> 3
notice to Grantee within sixty (60) days of the date it accrues, or the
same shall automatically terminate. Closing upon such repurchase
transaction shall be completed within thirty (30) days from the date of
Grantor's notice to Grantee of its election to exercise its Completion
Repurchase Right. The Completion Repurchase Right shall automatically
terminate upon Grantor's receipt of an architect's certificate of
substantial completion, unless such certificate is received by Grantor
after Grantor has notified Grantee of its election to exercise its
Completion Repurchase Rights.
3. If the Property has not been improved by a building, no
interest in the Property shall be sold or transferred (except to the
"Mortgagee" as defined below, or to any company owned or controlled by,
owning or controlling, or under common ownership or control with,
Grantee ["Affiliate"]) by Grantee unless and until Grantee shall have
first offered to sell such interest in the Property to Grantor and
Grantor shall have waived its right to purchase the Property (the
"Right of First Refusal"). Grantor reserves and shall have the right
and the Property shall hereby be encumbered by a continuing right of
first refusal in Grantor as hereinafter set forth.
a. If Grantee intends to make a bona fide sale of the
Property or any interest therein (other than a sale or transfer
to the Mortgagee as hereinafter provided, or to any Affiliate
of Grantor) before the Property shall have been improved with a
building, Grantee shall deliver to Grantor notice of such
intention, together with a copy of a bona fide proposed
contract of sale from a third party ("Proposed Contract").
Within twenty (20) days of receipt of such notice and proposed
Contract, Grantor, if it chooses to exercise its Right of First
Refusal, shall deliver to Grantee an agreement to purchase the
Property or any interest therein upon the following terms:
(i) The price to be paid and the terms of payment
shall be equivalent or better than those stated in the
Proposed Contract;
(ii) The sale shall be closed within thirty (30) days
after the delivery by Grantor of said agreement to purchase
(or at Grantee's option, on the last date for closing
contemplated by the Proposed Contract, assuming for such
purpose that the Proposed Contract had been executed as of
the date the Proposed Contract was sent to Grantor); and
(iii) In all other respects such agreement to purchase
shall be as favorable to Grantee as the Proposed Contract.
-3-
<PAGE> 4
b. If Grantor shall elect to waive its Right of First
Refusal, or shall fail to exercise said right within twenty
(20) days of receipt of the Proposed Contract, Grantee shall be
entitled to consummate the sale to the Proposed Contract
purchaser free of any right of Grantor. Grantor's waiver shall
be evidenced by a certificate executed by Grantor in recordable
form which shall be delivered to the Proposed Contract
purchaser and recorded in the Public Records of Fort Bend
County, Texas; provided, however, in the event Grantor fails or
refuses to deliver such certificate, Grantor's waiver of the
Right of First Refusal shall be deemed to have occurred upon
Grantor's failure to deliver to Grantee an agreement to
purchase the Property within the time period provided herein.
c. Any sale of the Property or any interest therein (other
than to the Mortgagee as hereinafter provided, or to any
Affiliate of Grantee), which is made prior to the construction
of a building thereon, and without (i) notice to Grantor, (ii)
a waiver of Grantor's Right of First Refusal as aforesaid, or
(iii) a failure by Grantor to exercise its Right of First
Refusal within the aforesaid twenty (20) days, shall be void.
4. If Grantee should execute a deed of trust to secure a loan
made to Grantee in connection with the purchase and/or construction of
improvements on the Property, and the beneficiary of such deed of trust
(the "Mortgagee") should give notice to Grantor of the name and
identity of such Mortgagee, then in such event and at any time Grantor
considers that Grantee is in default under either Paragraphs (1) or (2)
above, Grantor shall give written notice thereof to Mortgagee at the
address furnished, and Mortgagee shall thereupon have a reasonable time
within which to foreclose its lien and acquire title to, and possession
of, the Property, and have reasonable time within which to comply with
the provisions of this Deed. While Mortgagee is attempting in good
faith to accomplish the foregoing, Grantor shall not exercise either
the Commencement Repurchase Right or the Completion Repurchase Right;
but if Mortgagee should fail to cause such default by Grantee to be
cured, then Grantor shall have the option to exercise its repurchase
rights. The repurchase price hereunder shall be paid to Mortgagee to
the extent of the amount theretofore advanced by Mortgagee on said loan
to the extent that such amount has been applied to the purchase of the
Property and/or the cost of improvements either completed or then under
construction upon the Property. Said amount advanced by Mortgagee, as
described in the preceding sentence, shall be delivered to Mortgagee
and, upon receipt thereof, Mortgagee shall release the deed of trust
and any other instruments securing payment of the loan, and the
remainder of the repurchase price shall be paid to Grantee.
-4-
<PAGE> 5
5. Closing of any of the repurchase transactions described
above shall be accomplished by Grantee's reconveyance of the Property
to Grantor, its successors and assigns, by special warranty deed, free
and clear of any liens and encumbrances other than those encumbrances
existing on the date of this conveyance, and any additional
encumbrances which do not materially adversely affect the value or
intended use of the Property. In the event that Grantor should exercise
its right to repurchase, then upon revestment of title in Grantor, all
covenants, conditions, restrictions, and reservations imposed by
Grantor in this Deed shall automatically terminate and be of no further
force or effect.
D. Ad valorem taxes and assessments for the current year (which have
been prorated as of the Effective Date hereof), the payment of which Grantee
assumes.
E. All set-back lines, restrictions, easements, and other matters
affecting the Property, as set forth in the map or plat recorded under Slide No.
1380/A of the Plat Records of Fort Bend County, Texas.
F. The reservation and exception by Grantor unto itself, its
successors, assigns and predecessors in title in accordance with their
respective interests of record of all oil, gas, and other minerals in, on, and
under, and that may be produced and saved from the Property. Grantor hereby
releases and relinquishes, for itself and its successors and assigns, all of its
rights to use the surface of the Property for exploring and drilling for and
producing of, and all other rights to use of the surface which Grantor may have
in connection with, such oil, gas, or other minerals from the mineral estate
owned and retained by Grantor; reserving, however, the right to drill under and
through the subsurface of the Property below the depth of two hundred feet
(200') by well located on the surface of land outside the boundaries of the
Property, and the right to pool and combine the Property with other land for the
purpose of exploring and drilling for and producing of such oil, gas, or other
minerals.
G. At such time as Grantee commences construction of improvements on
the Property, Grantee covenants to construct, if required pursuant to applicable
law by the City of Sugar Land, Texas (the "City"), a sidewalk meeting the
requirements of the City's Subdivision Ordinance.
Grantor, for the consideration and subject to the reservations from and
exceptions to conveyance and warranty, hereby grants, sells, and conveys to
Grantee the Property, together with all and singular the rights and
appurtenances thereto in any wise belonging, to have and to hold unto Grantee,
Grantee's legal representatives, successors and assigns forever. Grantor hereby
binds Grantor and Grantor's legal representatives and successors to warrant and
forever defend all and singular the Property, subject
-5-
<PAGE> 6
to the reservations from and exceptions to conveyance and warranty set forth in
this deed, to Grantee and Grantee's legal representatives, successors and
assigns, against every person whomsoever lawfully claiming or to claim the same
or any part thereof, by, through, or under Grantor, but not otherwise.
EXECUTED on the date of the acknowledgement hereinafter set forth, but
made effective as of the 7th day of March, 1995 (the "Effective Date").
SUGARLAND PROPERTIES INCORPORATED
("Grantor")
By: /s/ Les A. Newton
-------------------------------
Les A. Newton
President
ATTEST:
/s/ Carl P. Favre
- -----------------------------------
Carl P. Favre, Secretary
ATTACHMENTS:
Exhibit A - Permitted Exceptions
Exhibit B - Restrictive Covenants
THE STATE OF TEXAS )
)
COUNTY OF FORT BEND )
This instrument was acknowledged before me on the 7th day of March,
1995, by LES A. NEWTON, President of SUGARLAND PROPERTIES INCORPORATED, a Texas
corporation, on behalf of said corporation.
/s/ Melia L. Burciaga
------------------------------------
Notary Public, State of Texas
[NOTARY PUBLIC SEAL]
-6-
<PAGE> 7
EXHIBIT A
TO
SPECIAL WARRANTY DEED
PERMITTED EXCEPTIONS
1. Restrictions recorded in Slide No. 1380/A, of the Plat Records of Fort
Bend County, Texas.
2. An easement 8 feet wide along the north portion of the east property
line, granted to Fort Bend County Municipal Utility District No. 21 as
set forth by instrument recorded in Volume 1026, Pages 283 and 289 of
the Deed Records of Fort Bend County, Texas and as reflected by the
plat recorded in Slide No. 1380/A of the Plat Records of Fort Bend
County, Texas.
3. An easement 8 feet wide along the north portion of the east property
line for the use of public utilities, as set forth by instrument
recorded in Volume 1071, Page 52 of the Deed Records of Fort Bend
County, Texas and as reflected by the plat recorded in Slide No. 1380/A
of the Plat Records of Fort Bend County, Texas.
4. An easement 8 feet wide along the south portion of the east property
line for the use of public utilities, as set forth in instrument
recorded in Volume 1073, Page 315 of the Deed Records of Fort Bend
County, Texas and as reflected by the plat recorded in Slide No. 1380/A
of the Plat Records of Fort Bend County, Texas.
5. An easement 8 feet wide along the south portion of the east property
line together with an aerial easement 7' wide adjoining both sides of
said easement granted to Houston Lighting & Power Company as set forth
by instrument recorded in Volume 1107, Page 146 of the Deed Records of
Fort Bend County, Texas and as reflected by the plat recorded in Slide
No. 1380/A of the Plat Records of Fort Bend County, Texas.
6. A sanitary sewer easement 5 feet wide along the west property line, as
reflected by plat recorded in Slide No. 1356/B of the Plat Records of
Fort Bend County, Texas.
7. A water line easement 10 feet wide along Bournewood Drive, as reflected
by plat recorded in Slide No. 1380/A of the Plat Records of Fort Bend
County, Texas.
8. A 1/32nd non-participating royalty interest in and to all the oil, gas
and other minerals in, on, under or that may be produced from subject
property, as set forth in instrument recorded in Volume 236, Page 9 of
the Deed Records of Fort Bend County, Texas.
(Page 1 of 2 Pages)
<PAGE> 8
9. A 50% non-participating royalty interest in and to all the oil, gas and
other minerals in, on, under or that may be produced from subject
property, as set forth in instrument recorded in Volume 607, Page 80 of
the Deed Records of Fort Bend County, Texas.
10. Building set back line of 5 feet along the north and south property
line, as set out on plat recorded in Slide No. 1380/A of the Plat
Records of Fort Bend County, Texas.
11. Building set back line of 25 feet along the west property line, as set
out on plat recorded in Slide No. 1380/A of the Plat Records of Fort
Bend County, Texas.
12. Building set back line of 25 feet along Bournewood Drive, as set out on
plat recorded in Slide No. 1380/A of the Plat Records of Fort Bend
County, Texas.
(Page 2 of 2 Pages)
<PAGE> 9
EXHIBIT B
TO
SPECIAL WARRANTY DEED
RESTRICTIVE COVENANTS
The following covenants, conditions, and restrictions (the "Restrictive
Covenants") shall run with title to the Property (as hereinafter defined), and
shall be binding upon and inure to the benefit of the Association (as defined
below), Grantor, Grantee, and their respective legal representatives, successors
and assigns.
The purpose of these Restrictive Covenants is to protect the
Association, Grantor, Grantee, any future owner of all or any portion of the
Property, and other owners of land in the Sugar Land Business Park from and
against the improper development and use of the Property; to assure the
compatibility of design of improvements located within Sugar Land Business Park;
to secure and preserve sufficient setbacks of space within the Sugar Land
Business Park so as to create an aesthetically pleasing environment; and to
provide for landscaping on the Property and the maintenance thereof.
1. Definitions. The following words when used herein (unless the
context otherwise requires) shall have the following meanings:
"Approved Building" means the assembly, manufacturing, office,
warehousing, distribution, light industrial, commercial processing, research or
servicing facility, or other facility for a use permitted hereby, to be
constructed by Grantee on the Property with the prior approval of the ARC, as
well as any other improvement approved by the ARC and constructed on the
Property by any future owner of all or any portion of the Property.
"ARC" means the Architectural Review Committee of the Association.
"Association" means the Sugar Land Business Park Association, Inc., a
Texas non-profit corporation, or any successor or assign, which will administer
and enforce the covenants, conditions, restrictions, and assessments encumbering
the Property and other land located within the Sugar Land Business Park subject
to the Association's jurisdiction.
"Board" means the Board of Directors of the Association.
"Building Site" means each parcel of land (including the Property)
located within the Sugar Land Business Park and subject to the Association's
jurisdiction as designated by Grantor or the Association, or those lands annexed
thereto, and established for the purpose of constructing thereon office, retail,
commercial,
(Page 1 of 11 Pages)
<PAGE> 10
educational, municipal, governmental, warehouse, light industrial,
manufacturing, assembly, or other similar structures; provided, however, that
Grantee and its legal representatives, successors and assigns shall have the
right to combine the Property, and any adjacent property or properties owned by
Grantee, its affiliates, or its or their legal representatives, successors and
assigns, into a single Building Site for purposes of these Restrictive
Covenants, by notice to the Association.
"Deed" means that Special Warranty Deed with respect to the Property
from Sugarland Properties Incorporated, a Texas corporation ("Grantor"), to KENT
ELECTRONICS CORPORATION, a Texas corporation ("Grantee"), to which this
"Exhibit B" has been attached and made a part for all purposes.
"Owner" means Grantee, its legal representatives, successors and
assigns, or any future record owner of all or any portion of the Property, or if
any portion of the Property is made subject to a ground lease, the ground
lessee, whether one or more persons, of such portion of the Property, but
notwithstanding any applicable theory of mortgage, not a mortgagee unless and
until such mortgagee has acquired title to the fee or leasehold estate in a
grant pursuant to foreclosure, by deed, or by any proceeding in lieu of
foreclosure.
"Property" means that certain tract or parcel of land containing
fifteen (15) acres of land, more or less, situated within the City of Sugar
Land, Fort Bend County, Texas, as more particularly described in the Deed.
"Set Back Area" means the area of the Property between a Set Back Line
as set forth in Section 5 hereof, and the boundary line(s), street curb-line(s),
or other line(s) to which such Set Back Line relates.
"Set Back Line" or "Set Back Lines" means those lines established
pursuant to Section 5 hereof.
All capitalized terms not specifically defined herein shall have the
definitions and meanings set forth in the Deed, unless the context otherwise
requires.
2. Use Permitted: The Property shall be used solely for office,
commercial processing, research, servicing, light industrial, assembly,
manufacturing, warehousing, and distribution purposes and services ancillary to
such uses, all under the conditions hereinafter set forth, and for no other
purpose or purposes unless the Owner first obtains the written and recorded
approval of Grantor or the ARC, which approval shall not be unreasonably
withheld. No restaurant, gasoline service station, or convenience store which is
open to the public will be permitted except as Grantor or the ARC, in the
exercise of its sole discretion, shall first approve in writing. In addition to
the foregoing permitted
(Page 2 of 11 Pages)
<PAGE> 11
uses, from and after twenty (20) years from the date hereof, the Property may be
used, in whole or in part, for any other commercial uses, but if the Property is
used for such other commercial uses, then (i) all buildings or structures
erected or maintained thereon shall be substantially similar to and in harmony
with the buildings or structures located on adjoining land which is subject to
the covenants, conditions, and restrictions applicable to the Property, and (ii)
such other uses of the Property shall be compatible with uses on such adjoining
land.
No use shall be permitted which is offensive by reason of odor, fumes,
dust, smoke, noise, or pollution, or which is hazardous by reason of excessive
danger of fire or explosion or which otherwise constitutes a nuisance, which is
dangerous or unsafe or which is calculated to injure the reputation of the
Property, or any neighboring Building Site, or which is in violation of city,
county, state, or federal laws. Written approval by the ARC of a particular use
shall be conclusive evidence of compliance with this Restrictive Covenant.
3. Plan Approval Required: Prior to construction or material external
alteration of any building or other structure located on the Property, two (2)
complete sets of building and landscaping plans and specifications shall be
submitted to the ARC. No building, structure, or other improvement shall be
constructed, externally altered, or placed upon any part of the Property until
the location, design, plans, and specifications for same (including landscaping)
have been first approved in writing by the ARC, such approval not to be
unreasonably withheld. The failure by the ARC to notify Owner of the disapproval
or approval (or combination thereof) of such plans and specifications within
forty-five (45) days after their submission to the ARC shall be conclusively
deemed to constitute the ARC's approval thereof for all purposes hereunder.
4. Construction Standards: Construction or external alteration of any
building shall meet the standards set forth in these Restrictive Covenants. For
the purposes of these Restrictive Covenants, when a construction material is
specified herein, another material may be used in lieu thereof, provided such
material is not materially inferior in appearance to any such material specified
herein and is first approved in writing by the ARC.
All buildings shall have exterior walls of face brick, exposed
aggregate concrete, or painted concrete (i.e., tilt wall construction) or of an
equivalent, permanent material. No building shall be covered with sheet or
corrugated aluminum, asbestos, iron, or steel.
(Page 3 of 11 Pages)
<PAGE> 12
5. Setback Lines and Areas:
a. Setback Lines are established with respect to the Property (measured
from the applicable boundary line of the Property):
<TABLE>
<CAPTION>
Building Surface Parking
Setback Line Setback Line
------------ -------------
Applicable Boundary Line (in feet) (in feet)
------------------------ ------------ ---------------
<S> <C> <C>
Proposed Gillingham Lane 40' 25'
Side Property Line 10' 6'
Rear Property Line 10' 6'
</TABLE>
b. No Improvements on or above natural ground level may be located
within a Setback Area other than utility installations, landscaping
(including berms or other sculptured landscaping), signs, lighting,
sidewalks, walkways, streets, driveways, drives, running tracks,
benches, bus shelters, water amenities with water fountains, and
drinking fountains, as approved by the ARC.
6. Parking: Parking shall be provided in (a) the minimum ratio of one
(1) permanently-paved, off-street passenger car parking space for each one
thousand square feet (1,000 s.f.) of warehouse building area, for each five
hundred square feet (500 s.f.) of manufacturing building area, and for each two
hundred fifty square feet (250 s.f.) of office building area, or (b) the minimum
ratio of one (1) passenger car parking space for every two (2) employees,
whichever ratio shall result in the greater number of parking spaces. No use
shall be made of the Property or any building constructed thereon which requires
or is reasonably expected to require or attract parking in excess of capacity of
the facilities maintained therefor on the Property.
Parking will not be permitted on any street or at any place other than
the paved parking spaces provided in accordance with the foregoing, and Owner
and any lessee of any portion of the Property shall be responsible for
compliance by their respective employees and visitors.
7. Landscaping: When a Building Site is developed, all open, unpaved
space on the developed portion of the Building Site including, but not limited
to, front, side, and rear building setback areas of the developed portion of the
Building Site shall be grassed and landscaped. Likewise, a sprinkler system of
approved design shall be installed in all grassed and landscaped areas on the
developed portion of the Building Site. Landscaping in accordance with the plans
approved by the ARC must be installed on the developed portion of the Building
Site within thirty (30) days following the occupancy of any building constructed
on the Property. This period will be extended in the event of delays caused by
adverse weather conditions or other causes beyond reasonable control. The
foregoing notwithstanding, the undeveloped
(Page 4 of 11 Pages)
<PAGE> 13
portions of a Building Site will not need to be sprinklered or landscaped, but
instead, shall only be seeded or sodded with grass, and such grass need not be
mowed or brush-hogged more frequently than once every three (3) weeks during the
months of February through November and once each in December and January (or
such less frequent basis as shall be the basis used by the Association for
mowing or brush-hogging undeveloped land).
8. Screening: The right of Owner or a lessee of any portion of the
Property to use any building or buildings shall not be construed to permit the
keeping of articles, goods, materials, incinerators, storage tanks, refuse
containers, or like equipment in the open or exposed to public view, or view
from adjacent Building Sites. If it shall become necessary to store or keep such
materials or equipment in the open, they shall be screened (including berming)
from view in a manner first approved in writing by the ARC. Such screen shall be
of a height at least equal to that of the materials or equipment being stored
but in no event less than six feet (6') in height. Added screening must also be
provided to shield such stored materials and equipment from view from adjacent
buildings.
Water towers, storage tanks, processing equipment, stand fans,
skylights, cooling towers, communication towers, vents, and any other structures
or equipment shall be architecturally compatible or effectively shielded from
public view by an architecturally-sound method which shall be approved in
writing by the ARC prior to the construction or erection of said structures or
equipment.
9. Roof Top Equipment: All equipment mounted on the roof of any
building within any Building Site shall be screened on all sides with material
compatible with the exterior surface of said building or painted in the manner
prescribed by the ARC.
10. Signs: All signs shall be of a design and material reasonably
approved by the ARC. Unless otherwise approved in writing by the ARC, all signs
must be attached to a building, parallel to and contiguous with its wall, and
not project above its roof line. No sign of a flashing nature or moving
character shall be installed and no sign shall be painted on a building wall.
The ARC shall use the signage design guidelines adopted by it (which may, at the
Association's option, be the same as or similar to the First Colony Signage
Design Guidelines) in evaluating all signs on a Building Site.
11. Illumination: Any buildings constructed on the Property shall have
exterior illumination facilities for their front and side walls of a power and
design sufficient to measure a minimum of one and one-half (1-1/2) foot candles
to all property lines during the night, and upon completion of each such
building said illumination facilities shall remain in full operation until ten
o'clock each night (10:00 p.m.).
(Page 5 of 11 Pages)
<PAGE> 14
12. Loading Docks: Any loading docks built or maintained on the street
side of any building constructed on the Property must be set back at least fifty
feet (50') from all streets. Loading docks must be screened with a fence or by
landscaping planted between the loading docks and the streets adjoining the side
of the building not facing the street.
13. Maintenance: Owner and any lessee of any portion of the Property
agrees in favor of the Association to keep the Property in a well-maintained,
clean, and attractive condition at all times, subject as otherwise provided in
the last sentence of Section 7 hereof. If, in the reasonable opinion of the
Association, Owner or lessee is failing in this duty and responsibility, then
the Association may give Owner or lessee, or both, notice of such fact, and
Owner or lessee must, within ten (10) days of such notice, commence to prosecute
to completion the care and maintenance required to restore the Property to a
clean, and attractive condition, and must thereafter diligently prosecute same
to completion. Should Owner or any lessee fail to fulfill his duty and
responsibility after such notice, then the Association shall have the right and
power to perform such care and maintenance, and the Owner or lessee (and both of
them) of the portion of the Property on which such work is performed by the
Association shall be liable for the cost of any such work and shall promptly
reimburse the Association for the cost thereof. If Owner or lessee shall fail to
so reimburse the Association within thirty (30) days after being billed therefor
by the Association, such cost shall constitute a lien on the portion of the
Property upon which such maintenance was performed and shall be enforceable in
the same manner as the assessment lien provided for in these Restrictive
Covenants.
14. Standards and Procedures. The ARC may establish and promulgate
reasonable "Development Guidelines", which the ARC may modify or amend as it
reasonably deems necessary and appropriate for the orderly development of the
Property and the Sugar Land Business Park, including, but not limited to, those
portions of the Development Guidelines regarding workmanship, materials,
building methods, observance of requirements concerning installation and
maintenance of public utility facilities and services and compliance with
governmental regulations. The Development Guidelines may be reasonably amended
by the ARC without notice, but shall not be applied retroactively to reverse or
otherwise adversely affect in any manner whatsoever a prior approval granted by
the ARC or the Association to any Owner or prospective purchaser of any Building
Site, or to apply to any improvements contemplated by or constructed or under
construction pursuant to any such prior approval. Subject as hereinabove
provided, the rules, standards and procedures set forth in the Development
Guidelines, as same may be amended, shall be binding and enforceable against
each Owner in the same manner as any other restriction set forth herein.
(Page 6 of 11 Pages)
<PAGE> 15
15. Variances. The Board, upon the recommendation of the ARC, may
authorize variances from compliance with any of the architectural provisions of
these Restrictive Covenants, including restrictions upon height, size, placement
of structures, or similar restrictions, when circumstances such as topography,
natural obstructions, hardship, aesthetic or environmental considerations may
require. Such variances must be evidenced in writing, must be signed by at least
a majority of the Board of Directors, and shall become effective upon their
execution. If such variances are granted, no violation of the covenants,
conditions, and restrictions contained in these Restrictive Covenants shall be
deemed to have occurred with respect to the matter for which the variance was
granted. The granting of such a variance shall not operate to waive any of the
terms and provisions of these Restrictive Covenants for any purpose except as to
the particular provision hereof covered by the variance, nor shall it affect in
any way the Owner's obligation to comply with all governmental laws and
regulations.
16. Limitation of Liability. Neither the Grantor, the Association, the
ARC, or the Board, nor any of their officers, partners, directors, or members,
or any of their respective successors and assigns shall be liable in damages or
otherwise to anyone who submits matters for approval to any of the
above-mentioned parties or to any Owner affected by these Restrictive Covenants
by reason of mistake of judgment, negligence, or nonfeasance arising out of or
in connection with the approval or disapproval or failure to approve or
disapprove any matters requiring approval hereunder.
17. Enforcement Assessment. The Board of Directors may, by majority
vote, elect to assess the Property for the amount of costs incurred by the
Association in successfully enforcing, as against Grantor's noncompliance, these
Restrictive Covenants or any other covenants, conditions, or restrictions
imposed on the Property by Grantor in the Deed. To the extent the Association
prevails in any of its enforcement proceedings, the enforcement assessment,
together with late fees (calculated from the due date at the rate of twelve per
cent (12%) per annum or a rate equal to the highest lawful rate, whichever is
lower) and reasonable attorneys' fees, shall constitute a lien on the Property
enforceable in the same manner as the assessment lien provided for in these
Restrictive Covenants.
18. Sugar Land Business Park Maintenance Assessment. The Property shall
be subject to the Sugar Land Business Park Maintenance Assessment, as follows:
A. Creation. Payment of the Sugar Land Business Park Maintenance
Assessment shall be the obligation of Owner and shall constitute a lien
on the Property, binding and enforceable as provided herein.
(Page 7 of 11 Pages)
<PAGE> 16
B. Rate. The initial Sugar Land Business Park Maintenance
Assessment established by the Association shall not exceed the
aggregate sum of THREE AND 35/100THS DOLLARS ($3.35) per linear front
foot abutting any public road right-of-way which has been dedicated and
constructed and is open for public use.
C. Commencement. For purposes of calculation, the initial Sugar
Land Business Park Maintenance Assessment shall commence on either the
first day of the first month following the date of conveyance of the
Property to Owner, or the first day of the month following the date
when a building permit is issued or building construction commences,
whichever first occurs.
D. Proration. The initial Sugar Land Business Park Maintenance
Assessment shall be made for the balance of the calendar year as
determined on a pro-rata basis and shall become due and payable on the
commencement date described above. The Sugar Land Business Park
Maintenance Assessment for any year after the first year shall be due
and payable on the first day of January or such other date as the Board
of Directors of the Association may in its sole discretion designate.
E. Levying of the Assessment. The Sugar Land Business Park
Maintenance Assessment shall be levied at the sole discretion of the
Association. The Board of Directors of the Association shall determine
the sufficiency or insufficiency of the then current Sugar Land
Business Park Maintenance Assessment to reasonably meet the expenses
for providing services and capital improvements in the Sugar Land
Business Park and may, at its sole discretion, increase or decrease the
annual Sugar Land Business Park Maintenance Assessment in an amount up
to fifteen percent (15%) over or under the previous year's Sugar Land
Business Park Maintenance Assessment. The Sugar Land Business Park
Maintenance Assessment may only be increased by more than fifteen
percent (15%) over the preceding year's assessment if such increase is
approved by a majority of the total voting units of the membership of
the Association. The Sugar Land Business Park Maintenance Assessment
shall not be increased or decreased more than once in any calendar
year, nor shall any increase be construed to take effect retroactively.
F. Collection and Remedies for Assessments.
(i) The assessments provided in these Restrictive Covenants,
together with late charges and reasonable attorney's fees as
necessary for collection, shall be a charge on and a continuing
lien upon the land against which each such assessment is made. Each
such assessment, together with late charges and reasonable attor-
(Page 8 of 11 Pages)
<PAGE> 17
ney's fees, shall also be the personal obligation of the person who
was the Owner of the land at the time when the assessment became
due. The personal obligation for delinquent assessments shall not
pass to successors in title unless expressly assumed by them.
(ii) Any assessment not paid within thirty (30) days after the
due date shall bear interest from the due date at the lesser of (i)
eighteen percent (18%) per annum or (ii) the maximum rate of
interest permitted by law. The Association may bring an action at
law against the Owner personally obligated to pay the same and/or
foreclose the lien against the Property as provided under Texas
law. No Owner may waive or otherwise escape liability for the
assessments provided for herein by reason of non-use or
abandonment.
G. Subordination of the Lien to Mortgages. The assessment lien
shall be subordinate to the lien of any first mortgage. Sale or
transfer of the Property or any Building Site shall not affect the
assessment lien. However, the sale or transfer of any Building Site
pursuant to mortgage foreclosure or any proceeding in lieu thereof,
shall extinguish the lien of any assessments which became due prior to
such sale or transfer, but otherwise the lien shall survive such
foreclosure or proceedings. Sale or transfer shall not relieve any
Building Site from the liability of any subsequent assessments or from
the lien thereof.
H. Exempt Properties. All properties dedicated to and accepted by a
municipal, county, federal, or other governmental authority and all
properties owned by charitable or non-profit organizations, which are
exempt from taxation by Federal laws and the laws of the State of Texas
shall be exempt from the assessments created herein and the Owners
thereof shall have no voting rights with respect thereto. The Board may
make other exceptions where in its reasonable determination there is a
beneficial result to the development plan for the Sugar Land Business
Park.
19. Term; Modification and Termination of Covenants: These Restrictive
Covenants shall terminate on January 1, 2035, unless extended or sooner
terminated, as hereinafter provided. Each restriction and covenant contained in
these Restrictive Covenants may be amended, modified, extended, or terminated by
the filing of a recorded instrument executed by Grantor, Grantee, and the
Association (except that the joinder of Grantor shall only be necessary for
amendments, modifications, extensions, and terminations prior to, but not after,
January 1, 2005) or their respective legal representatives, successors, or
assigns. Likewise, if the Owner of the Property and the owners of Building Sites
representing a majority of the linear front street, road, or highway footage
within the Sugar Land Business Park and whose Building Sites are
(Page 9 of 11 Pages)
<PAGE> 18
encumbered with covenants, conditions, and restrictions which are substantially
equivalent to these Restrictive Covenants (the "Majority Owners") so desire,
they may deliver to the Board of Directors of the Association at any time a
written declaration ("Declaration") altering, amending, extending, or
terminating the restrictions and covenants contained in these and similar
Restrictive Covenants binding their respective properties. Upon the
Association's joinder and approval of said Declaration, the Declaration shall be
signed and acknowledged by the parties thereto and recorded in the Public
Records of Fort Bend County, Texas, whereupon these Restrictive Covenants shall
be null and void except as may be otherwise provided in the Declaration and the
Property thereafter shall be made subject to covenants, conditions, and
restrictions in the Declaration. The right to alter, amend, extend, or terminate
the restrictions and covenants contained in these and similar Restrictive
Covenants, running with title to property located within the Sugar Land Business
Park, shall continue until the termination of such Restrictive Covenants.
20. Enforcement of Covenants: In the event of a violation of the
restrictions and covenants contained in these Restrictive Covenants with respect
to the Property or any portion thereof, it shall be lawful for the Association,
Grantor, or any person or persons owning an interest in the Property or any
Building Site to prosecute proceedings at law or in equity against Owner or any
other person violating or attempting to violate any such restriction or covenant
in order to prevent him or them from so doing, to correct such violation, or to
recover damages or other relief for such violation. Invalidation of any one or
any part of these Restrictive Covenants by judgment or court order shall in no
way affect any of the other provisions or parts of provisions which shall remain
in full force and effect. Neither the Association nor Grantor warrants hereby to
Owner that any Building Site located adjacent to the Property or anywhere within
the Sugar Land Business Park is currently subject or will be made subject in the
future to these Restrictive Covenants or to the jurisdiction of the Association.
21. Severability and Term. The invalidity of any one or more of the
provisions of these Restrictive Covenants shall not affect the validity of the
other provisions hereof. The provisions set forth in these Restrictive Covenants
shall remain in full force and effect, unless otherwise modified or terminated
as provided in Section 19 above, to the full extent and as to all situations and
persons to which they may be legally enforceable.
22. Compliance with Laws. At all times, each Owner shall comply with
all applicable federal, state, county, and municipal laws, ordinances, rules and
regulations with respect to the use, occupancy and condition of the Property and
any improvements thereon.
(Page 10 of 11 Pages)
<PAGE> 19
23. Gender and Number. The singular wherever used herein shall be
construed to mean or include the plural when applicable, and vice versa (unless
otherwise clearly indicated by the context), and the necessary grammatical
changes required to make the provisions hereof apply either to corporations (or
other entities) or individuals, male or female, shall in all cases be assumed as
though in each case fully expressed.
24. Headings. The titles and captions for these Restrictive Covenants
and sections contained herein are for convenience only and shall not be used to
construe, interpret, or limit the meaning of any term or provision contained in
these Restrictive Covenants.
25. GOVERNING LAW; VENUE. THE PROVISIONS IN THESE RESTRICTIVE COVENANTS
SHALL BE GOVERNED BY AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS, AND VENUE SHALL LIE EXCLUSIVELY IN FORT BEND COUNTY, TEXAS.
(Page 11 of 11 Pages)
<PAGE> 1
EXHIBIT 10.25
DEVELOPMENT
AND
CONSTRUCTION
MANAGEMENT
AGREEMENT
by
and
between
SUGARLAND PROPERTIES INCORPORATED
and
KENT ELECTRONICS CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
I. Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
II. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
III. Project Team, SPI Representative, and Kent Representative . . . . . . . . . . . . . . . . . 2
A. Project Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
B. SPI Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
C. Kent Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
D. Meetings Between Representatives . . . . . . . . . . . . . . . . . . . . . . . . 3
IV. Development and Construction Management Services . . . . . . . . . . . . . . . . . . . . . . 3
A. Project Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
B. Initial Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
C. Contract Documents and Construction and Development Documents . . . . . . . . . 5
D. Construction and Development Services . . . . . . . . . . . . . . . . . . . . . 6
E. Accounting Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
F. Assignment of SPI's Rights under Contract Documents and Construction
and Development Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
G. Performance Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
V. Kent's Payment Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
VI. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
A. Fixed Development and Construction Management Fee . . . . . . . . . . . . . . . 11
B. Additional Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
C. Early Completion Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
VII. Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
A. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
B. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
C. Termination by Kent Without Cause . . . . . . . . . . . . . . . . . . . . . . . 13
VIII. Limitation of Liability of SPI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
A. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
B. Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
IX. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
A. Kent Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
B. SPI Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
C. General Contractor's Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 15
D. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
E. Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
- i -
<PAGE> 3
<TABLE>
<S> <C>
X. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
A. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
B. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
C. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
D. No Third-Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . 19
E. Excusable Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
F. No Ownership Interest; No Partnership . . . . . . . . . . . . . . . . . . . . 20
G. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
H. Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
I. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
J. Ownership of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
K. Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
L. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
M. Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
SCHEDULE OF DEFINITIONS
The following capitalized terms defined in the provisions of this Agreement are
listed below:
"AGREEMENT" means this Development and Construction Management Agreement.
"CONSTRUCTION AND DEVELOPMENT DOCUMENTS" is defined in Paragraph IV.2.C.
"CONTRACT DOCUMENTS" is defined in Paragraph IV.1.C.
CONTRACT TIME" is defined in Paragraph IV.A.
"CONTRACTOR(S)" is defined in Article III.
"FINAL COMPLETION" is defined in Article II.
"FINALLY COMPLETED" is defined in Article II.
"FIXED DEVELOPMENT AND CONSTRUCTION MANAGEMENT FEE" is defined in Paragraph
VI.A.
"KENT" means Kent Electronics Corporation, a Texas corporation.
"LETTER AGREEMENT" is defined in Paragraph 6 of the Recitals.
"OPTION AGREEMENT" is defined in Paragraph 1 of the Recitals.
- ii -
<PAGE> 4
"PROJECT" is defined in Paragraph 3 of the Recitals.
"PROJECT ARCHITECT" means House Reh Burwell Architects as set forth in Article
III.
"PROJECT COST BUDGET" is defined in Paragraph IV.B.2.
"PROJECT SCHEDULE" is defined in the first grammatical paragraph of Paragraph
IV.A.
"PROJECT TEAM" is defined in Article III.
"PUNCHLIST ITEMS" is defined in the second grammatical paragraph of Paragraph
IV.A.
"PURCHASE AND SALE AGREEMENT" is defined in Paragraph 1 of the Recitals.
"SPI" means Sugarland Properties Incorporated, a Texas corporation.
"SPI GROUP" is defined in Paragraph VIII.A.
"SUBSTANTIAL COMPLETION" is defined in the second grammatical paragraph of
Paragraph IV.A.
"TERM" is defined in Article II.
"TOTAL PROJECT COSTS" is defined in Paragraph VI.A.
SCHEDULE OF EXHIBITS
Exhibit "A" -- Description of Plans and Specifications
Exhibit "B" -- Project Schedule
Exhibit "C" -- Metes and Bounds description of the Land
Exhibit "D" -- Project Cost Budget
Exhibit "E" -- Qualifications to Plans
Exhibit "F" -- Letter of Credit Drafting Statement
- iii -
<PAGE> 5
DEVELOPMENT AND CONSTRUCTION MANAGEMENT AGREEMENT
THIS DEVELOPMENT AND CONSTRUCTION MANAGEMENT AGREEMENT (this
"Agreement") is dated as of April 21, 1995, between SUGARLAND PROPERTIES
INCORPORATED, a Texas corporation (hereafter referred to as "SPI"), and KENT
ELECTRONICS CORPORATION, a Texas corporation (hereafter referred to as "Kent"),
as follows:
R E C I T A L S:
1. SPI and Kent have entered into that certain Purchase and Sale
Agreement ("Purchase and Sale Agreement") dated as of March 2, 1995, pursuant
to which Kent had the right to purchase several tracts, including that certain
tract of land comprising approximately 51 acres of land described by metes and
bounds on Exhibit "C" which is attached hereto and incorporated herein for all
purposes (the "Land"). The Land is located in Fort Bend County, Texas and is
also known as Tract 130, Commercial Reserve "A" of the Final Plat of Sugar Land
Business Park Tract 130 and Tract 131, a subdivision in the City of Sugar Land,
Texas according to the map or plat thereof recorded under Slide No. 1356/B of
the Plat Records of Fort Bend County Texas. SPI and Kent have also entered
into that certain agreement ("Option Agreement") pursuant to which Kent has the
option to purchase the land described therein.
2. On March 7, 1995, Kent purchased the Land.
3. Kent desires to develop office, assembly and light
manufacturing, warehouse and/or office/distribution facilities, and associated
facilities and betterments on the Land (the "Project").
4. Kent desires to retain the services of SPI to organize,
coordinate, arrange, supervise and administer the development of the Project,
and to perform certain other services hereafter set forth.
5. The purpose of this Agreement is to set forth the mutual
understandings and responsibilities of the parties with respect to the Project.
6. SPI and Kent have, prior to the date of this Agreement,
entered into that certain letter agreement dated September 14, 1994, as amended
by a first amendment thereto dated December 6, 1994 (as so amended, the "Letter
Agreement").
AGREEMENT:
NOW, THEREFORE, for valuable consideration, SPI and Kent hereby agree
as follows:
<PAGE> 6
I. ENGAGEMENT
Subject to the terms and provisions of this Agreement, and for the
"Term" (hereafter defined) of this Agreement, Kent hereby engages SPI as Kent's
prime contractor, and grants to SPI the sole and exclusive right to supervise,
administer, and manage the performance of the development and construction of
the Project (but the foregoing shall not be construed to preclude Kent, its
agents, representatives and contractors, and their respective officers and
employees from inspecting the Project during construction at any time or
times). Subject to the terms and provisions of this Agreement and in
consideration of the compensation herein provided, SPI hereby accepts such
engagement and, acting as an independent contractor, shall, during the Term,
supervise, administer, and manage the development and construction of the
Project pursuant to the terms, conditions and provisions of this Agreement.
II. TERM
The term of this Agreement (the "Term") shall commence as of the date
of this Agreement and shall continue until the Project is "Finally Completed"
(hereafter defined) or this Agreement is earlier terminated as set forth herein
(or such later date as may be provided for elsewhere in this Agreement). For
the purposes hereof, the Project will be "Finally Completed" (or,
alternatively, the Project will have achieved "Final Completion") when
"Substantial Completion" (hereafter defined) of the Project has occurred and
all "punchlist items" (hereafter defined) and other conditions precedent to
achieving final completion pursuant to the provisions of the master
construction contract for the Project have been completed, all in accordance
with said construction contract and this Agreement, and when the landscaping
contemplated for the Project will have been installed. SPI and Kent
acknowledge that the landscaping will not be installed until completion of
construction of the remainder of the Project has occurred. When the landscape
contractor has achieved final completion of its work in the manner described in
such contractor's contract, the Project will be considered to be finally
completed for purposes of determining the expiration of the Term of this
Agreement.
III. PROJECT TEAM, SPI REPRESENTATIVE, AND KENT REPRESENTATIVE
A. PROJECT TEAM. SPI shall provide a project team (the "Project
Team") to enable SPI to perform its duties hereunder, which Project Team shall
be the responsibility of SPI, subject to the limitations provided herein. The
Project Team, as well as any party providing any assistance to SPI in
performing its duties hereunder, shall be collectively referred to as the
"Contractor." While Kent's approval of the Project Team is not required, Kent
acknowledges that it has previously approved the use of the following (who are
the current Project Team): (i) Rust Lichliter as (a) surveyor for the Project,
(b) drainage engineer for the Project, and (c) civil engineer for the Project
(including the design of the drainage ditch and paving and utility design
associated with the expansion of Gillingham Road); (ii) House Reh Burwell
Architects ("Project Architect"), as architect for the Project; (iii) E. E.
Reed, as general contractor for the Project; and (iv) Dabney Engineering, as
the MEP engineer for the Project. SPI may, from time to time upon notice to
Kent, replace any member of the Project Team with a well-qualified
- 2 -
<PAGE> 7
individual or firm designated by SPI that is acceptable to Kent in the exercise
of reasonable judgment.
B. SPI REPRESENTATIVE. SPI shall designate a representative (the
"SPI Representative") to act on behalf of SPI when recommendations, approvals,
or commitments from SPI are required under this Agreement and to function as
the principal source of liaison and communication with Kent. Kent hereby
approves SPI's designation of Steven H. Mercadal as the initial SPI
Representative. SPI may, from time to time upon notice to Kent, replace the
SPI Representative with a well-qualified individual designated by SPI who is
acceptable to Kent in the exercise of reasonable judgment.
C. KENT REPRESENTATIVE. Kent shall designate an individual (the
"Kent Representative") to act for and on behalf of Kent when approvals or
commitments from Kent are required under this Agreement, and to function as the
principal source of liaison and communication with SPI. SPI hereby approves
Kent's designation of Cathy Felts as the initial Kent Representative. Kent
may, from time to time upon notice to SPI, replace the Kent Representative with
an individual designated by Kent and acceptable to SPI in the exercise of
reasonable judgment.
D. MEETINGS BETWEEN REPRESENTATIVES. SPI will meet with Kent
throughout the term of this Agreement promptly following the request of Kent to
discuss any matter relating to the Project, and Kent will meet with SPI
throughout the term of this Agreement promptly following the request of SPI to
discuss any matter relating to the Project.
IV. DEVELOPMENT AND CONSTRUCTION MANAGEMENT SERVICES
SPI shall cause the Project to be constructed, and shall supervise,
administer, and manage the development and construction of the Project (such
services being herein referred to collectively as the "Development and
Construction Management Services") in accordance with this Agreement, including
the following provisions:
A. PROJECT SCHEDULE. Kent and SPI hereby approve the project
schedule that is attached hereto and incorporated herein for all purposes as
Exhibit "B," which project schedule requires that "Substantial Completion"
(hereafter defined) of the Project occur by December 15, 1995. Final
Completion of the Project shall occur not later than thirty (30) days following
Substantial Completion of the Project. Such project schedule, (as amended and
revised from time to time in accordance with this Agreement, the "Project
Schedule") may need to be amended and revised from time to time in accordance
with the completion time extension provisions of the "Construction Contracts"
(hereafter defined), including the terms of change orders issued pursuant to
the Construction Contracts. The date of Substantial Completion provided for in
the Project Schedule, as amended from time to time pursuant to the provisions
of this Agreement, is herein referred to as the "Contract Time".
- 3 -
<PAGE> 8
For purposes of this Agreement, "Substantial Completion" shall be
deemed achieved when SPI has caused the general contractor to obtain and
deliver to Kent all final inspection tags, permits and other consents from all
governmental authorities that are required for Kent's occupancy and use of the
Project. The phrase "Kent's occupancy and use of the Project", as used in the
preceding sentence, shall mean the physical occupancy, use and operation of the
Project as an office, light manufacturing, assembly, warehouse and/or
distribution facility, it being understood that certain minor finishing items
or adjustments may still be required by the general contractor (which items or
adjustments are herein referred to as "punchlist items") and that Kent may not
be able to use the Project until Kent has installed all of its furniture and
equipment. SPI will use its best efforts to allow Kent to install its
furniture and equipment at the Project prior to Substantial Completion,
provided that Kent does not unreasonably interfere with the progress of
construction of the Project, Kent accepts all risk of damage to its furniture
and equipment and insures such furniture and equipment for not less than eighty
percent (80%) of its replacement value, and further subject to any requirements
of applicable law.
If SPI fails to cause the general contractor to achieve Substantial
Completion of the Project by December 15, 1995, as such date may be extended
pursuant to the provisions of this Paragraph IV.A of this Agreement and/or by
any "Event of Force Majeure" (hereafter defined), Kent, as its sole remedy
except as provided below, shall be entitled to retain or recover from SPI, as
liquidated damages and not as a penalty, the following amounts: (i) One
Thousand Dollars ($1,000) per day commencing upon the first day following
expiration of the Contract Time allotted for Substantial Completion and
continuing until Substantial Completion of the Project is achieved by SPI, up
to thirty (30) days after the expiration of the Contract Time allotted for
Substantial Completion; and (ii) Two Thousand Dollars ($2,000) per day
commencing upon the thirty-first (31st) day following expiration of the
Contract Time allotted for Substantial Completion and continuing until
Substantial Completion of the Project is achieved by SPI. Such liquidated
damages are hereby agreed to be a reasonable pre-estimate of the damages Kent
will incur as a result of delay of Substantial Completion of the Project. Kent
may deduct the liquidated damages from any unpaid amounts then or thereafter
due SPI under this Agreement. Any liquidated damages not so deducted from any
unpaid amounts due SPI shall be payable to Kent upon the written demand of
Kent, together with interest from the date of the demand at the lesser of
twelve percent (12%) per annum or the maximum lawful rate. Notwithstanding
anything contained in this grammatical paragraph to the contrary, in the event
Substantial Completion of the Project is not achieved within sixty (60) days
after December 15, 1995, as such date may be extended pursuant to the
provisions of this Paragraph IV.A and/or by any Event of Force Majeure, then
(1) Kent shall continue to be entitled to liquidated damages for the first
sixty (60) days as hereinabove provided, but shall recover regular contract
damages for SPI's failure to achieve Substantial Completion within sixty (60)
days following the Contract Time allotted for Substantial Completion, subject,
however, to a maximum of the total "Fixed Development and Construction Fee"
(hereinafter defined), minus the amount of liquidated damages paid by SPI to
Kent pursuant to the provisions of this Agreement and be entitled to exercise
any other remedies provided herein for same and (2) such failure shall be an
"Event of Default" (hereafter defined) by SPI not subject to the notice and
cure provisions of Article VII.
- 4 -
<PAGE> 9
B. INITIAL PLANNING. In connection with the planning of the
Project:
1. SPI has performed a facility needs analysis for Kent,
reviewed proposed designs for the Project with Kent, and identified
Kent's needs as reflected in the "Contract Documents" (hereafter
defined). SPI also has coordinated the efforts of all Contractors
involved in the design and engineering services required to describe
the Project in detail, including all parties involved in the
preparation of the "Construction and Development Documents" (hereafter
defined); and
2. SPI has prepared and submitted to Kent, and Kent has
approved, a comprehensive budget for the Project for the various costs
to be incurred in the development of the Project, which budget is
attached hereto as Exhibit "D" and made a part hereof for all
purposes. It is understood that such budget may need to be amended
and revised from time to time, particularly as the Project is
constructed, which amendments and revisions shall be made by SPI in
its reasonable business judgment but subject to the prior written
approval of Kent (such budget, as so amended and revised from time to
time, is herein referred to as the "Project Cost Budget"). Any
changes in the Project Cost Budget shall be submitted in writing by
SPI to Kent, and Kent shall approve or disapprove such changes within
two (2) business days thereafter. If Kent fails to approve or
disapprove such changes within said two (2) business day period, the
Contract Time allotted for Substantial Completion shall be extended by
one (1) day for each day that Kent is late in approving or
disapproving such changes. If Kent disapproves such changes, Kent
hereby agreeing to exercise good faith in granting or denying approval
with respect to such changes, Kent shall indicate the reason for such
disapproval in reasonable detail. The Project Cost Budget includes a
contingency line item in the amount of Two Hundred Thousand Dollars
($200,000) to cover items reasonably inferable from the Contract
Documents or otherwise necessary to complete the Project not otherwise
covered by the Construction and Development Documents or change
orders. The contingency line item shall not be used for change
orders, unless otherwise approved in writing by SPI and Kent. SPI
shall provide Kent with a contingency use summary on a monthly basis.
Kent shall not be obligated to pay costs in the development of the
Project which exceed the overall Project Cost Budget; provided,
however, that SPI reserves the right to reallocate line items in the
Project Cost Budget whenever SPI determines that such adjustments are
necessary and appropriate.
C. CONTRACT DOCUMENTS AND CONSTRUCTION AND DEVELOPMENT DOCUMENTS.
In connection with the Contract Documents and the Construction and Development
Documents:
1. SPI and Kent have approved the plans, specifications,
and construction drawings for the Project prepared by the Project
Architect, described in Exhibit "A" attached hereto and incorporated
herein for all purposes, subject to the qualifications listed in
Exhibit"E" which is attached hereto and incorporated herein for all
purposes. SPI shall review and monitor, and make recommendations to
Kent concerning the further refinement and revision of the plans,
specifications and construction drawings for the
- 5 -
<PAGE> 10
Project prepared by the Project Architect (the "Contract Documents",
as amended from time to time in accordance with the provisions of this
Agreement) to clarify and resolve the qualifications; and all
amendments and revisions thereto involving a material design change,
causing an extension of the Project Schedule or an increase in the
overall Project Cost Budget shall be subject to the prior written
approval of Kent; provided, however, that the general contractor may
commence site work in accordance with plans, specifications and
construction drawings for the site work approved in writing by Kent
prior to approval by Kent of the final Contract Documents. The
Contract Documents approved by Kent shall establish the scope of the
Project and the work to be completed by the general contractor under
SPI's supervision.
2. SPI shall review, analyze, negotiate, execute, and
administer all contracts for the development and construction of the
Project, including, but not limited to, construction contracts (herein
sometimes referred to individually and collectively as the
"Construction Contracts"), engineering contracts, landscape
agreements, and architectural agreements (collectively, "Construction
and Development Documents"). SPI covenants and agrees that the
warranty provisions of the Construction Contracts shall be consistent
with the warranty requirements of the Construction and Development
Documents and that the change order provisions of the Construction
Contracts shall be consistent with the change order provisions of this
Agreement. Once the Construction and Development Documents have been
executed by SPI, it is understood and agreed that SPI shall have the
authority to amend the same or approve change orders, without the
approval of Kent so long as such amendments or change orders are made
in SPI's reasonable business judgment and are consistent with the
Contract Documents, Construction and Development Documents, Project
Cost Budget, Project Schedule and this Agreement. SPI agrees to
promptly furnish Kent with copies of all executed Construction and
Development Documents, including, without limitation, any amendments
of the Construction and Development Documents on or prior to the date
hereof, or if hereafter executed, promptly after the execution hereof.
3. Upon request by Kent, SPI shall consult with Kent
and/or the Project Architect and/or other members of the Project Team.
D. CONSTRUCTION AND DEVELOPMENT SERVICES. Following Kent's
approval of the Contract Documents, SPI shall manage the construction and
development of the Project, including:
1. Obtaining a building permit from the City of Sugar
Land, and any other necessary permits which may be required for the
construction of the Project.
2. Monitoring, supervising, and reviewing the work and
other Project-related activities of the general contractor and other
Contractors to insure compliance with the Project Schedule, Project
Cost Budget, and the Construction and Development Documents, as
amended from time to time in accordance with this Agreement, and
- 6 -
<PAGE> 11
requiring the general contractor and any other Contractors responsible
for defective or incomplete work or work not otherwise in compliance
with the Construction and Development Documents to promptly correct
such deficiencies and/or complete their respective work in accordance
with this Agreement and the Construction and Development Documents.
3. Implementing a system for reviewing, processing and
documenting change orders for the construction of the Project,
including the maintenance of necessary field records reflecting
construction changes requested or approved by Kent or otherwise
required to be made to the Project. If change orders are necessary to
accomplish what is provided for in the Contract Documents approved by
Kent, and such change orders do not involve an increase in the overall
Project Cost Budget or contract amount of the Construction Contracts,
or an extension of the Contract Time or other required time for
performance by a Contractor, it shall not be necessary for Kent to
approve such change orders. If, however, a change order is issued to
perform any work not required or reasonably inferable from the
approved Contract Documents, and such change order involves an
increase in the contract amount of any Construction Contract or in the
overall Project Cost Budget, or an extension of the Contract Time or
other required time for performance by a Contractor, then such change
order shall include or be accompanied by a statement specifying the
amount and nature of such increase or extension, or both, and such
change order shall be subject to the approval by Kent in the exercise
of reasonable judgment.
4. Implementing a procedure approved by Kent for
reviewing and processing applications for payment submitted by the
general contractor (AIA G-702 payment application form) and other
Contractors in the form submitted by SPI and acceptable to Kent in the
exercise of reasonable judgment, pursuant to which procedure SPI shall
review and approve or disapprove applications for payment (based upon
the sufficiency of work performed with respect to quality and quantity
and compliance with the requirements of this Agreement and the
Construction and Development Documents). Applications for payment
which are approved by SPI shall be delivered to Kent for approval on
or about the first (1st) day of each month for work performed during
the preceding calendar month. Such delivery shall be made to the
persons specified for receipt of notices by Kent pursuant to Article
X. Notwithstanding the foregoing provisions of Article X, all
applications for payment and requests or demands for payment sent to
Kent pursuant to this Agreement shall be considered to have been
effectively given only upon actual delivery to Kent. Kent, within
nine (9) calendar days thereafter, shall then review and approve
and/or disapprove all or any portion of such applications for payment
and shall pay the portion of such applications for payment to which it
does not reasonably object (with the concurrence of the Project
Architect as described below). At any time during the first five (5)
days of such nine (9) calendar day period, SPI will meet with Kent
upon Kent's request to review and clarify any concerns of Kent with
respect to any application for payment. If Kent objects to all or any
portion of an application for payment, Kent shall indicate its
objections in writing in
- 7 -
<PAGE> 12
reasonable detail. If Kent fails or refuses to approve or disapprove
all or any portion of the pending applications for payment submitted
by the general contractor and other Contractors within such nine (9)
calendar day period, Kent shall be deemed to have approved those
applications for payment as to which no exceptions were made by Kent.
If SPI and Kent are not able to agree upon the amount of the
applications for payment to be approved within the first five (5) days
of the said nine (9) calendar day period, then the determination of
the portion, if any, of the pending applications for payment which
shall be withheld due to defective work or materials shall be
submitted to the Project Architect for determination prior to the
expiration of said nine (9) day period and SPI and Kent agree to abide
by the Project Architect's decision, subject, however, to Kent's
reservation of rights with respect to whether such work or materials
were, in fact, defective.
5. Causing the Project Architect to conduct observation
visits to the Project no less often than monthly, in order to review
the progress of the Project.
6. Preparing periodic progress reports, construction
schedules and estimates of monthly cash requirements on a monthly
basis, and at such other times as Kent may reasonably request, and
arranging construction progress meetings as and when reasonably
requested by Kent.
7. Providing sufficient administrative, management,
supervisory, and clerical services, and a sufficient number of
capable, qualified and competent administrative, management,
supervisory and clerical personnel, to carry out the duties and
responsibilities of SPI as set forth in this Agreement.
E. ACCOUNTING SERVICES. With respect to accounting and financial
reporting for the Project, SPI shall:
1. prepare monthly requests for payments; and
2. provide any accounting information as may be
reasonably required from time to time by Kent.
Kent shall have the right to inspect the books and records of SPI
relating to the Project, and to conduct audits of SPI's books, records and
statements and payment applications relating to the Project, upon request and
at reasonable times and intervals, and SPI shall provide reasonable cooperation
therewith. Kent shall bear the costs incurred by Kent in connection with each
such inspection or audit, unless such inspection or audit reveals any
"material" (hereinafter defined) misrepresentation by SPI to Kent or any
material overcharge of Kent, in which event, SPI shall reimburse Kent upon
demand for the costs incurred by Kent in connection with such inspection or
audit and such overcharge. "Material", as used in this Paragraph IV.E, shall
mean (a) a single cost item with a variance adverse to Kent's interest of not
less than the greater of (i) five percent (5%) or (ii) Five Thousand Dollars
($5,000); or (b) one or more cost items with
- 8 -
<PAGE> 13
variances adverse to Kent's interest exceeding Twenty-Five Thousand Dollars
($25,000), in the aggregate; and, in the event that a misrepresentation or
overcharge by SPI is material, SPI shall be obligated to reimburse Kent for the
costs incurred by Kent in connection with such inspection or audit. In any
event, SPI shall be obligated to reimburse Kent upon demand for all items
subject to such misrepresentations and overcharges, whether material or not.
F. ASSIGNMENT OF SPI'S RIGHTS UNDER CONTRACT DOCUMENTS AND
CONSTRUCTION AND DEVELOPMENT DOCUMENTS. Upon the Substantial Completion of the
entire Project, SPI, provided that Kent has paid SPI all amounts required to be
paid to SPI under this Agreement, will assign to Kent all of SPI's right, title
and interest in and to the Contract Documents and Construction and Development
Documents, subject, however, to SPI's reservation of the non-exclusive right to
enforce the Construction Contracts, including, for a period of one (1) year
after Substantial Completion, any warranty provided by any general contractors
(and subcontractors and suppliers, if not covered by the general contractor's
warranty) pursuant to the Construction Contracts, and the provisions of all
other Construction and Development Documents in the event of a default by one
of the Contractors discovered during the one (1) year period following
Substantial Completion. During the one (1) year period following Substantial
Completion, SPI shall use its best efforts to enforce the provisions of each
warranty provided by any general contractors (and subcontractors and suppliers,
if not covered by the general contractor's warranty) pursuant to the
Construction Contracts.
G. PERFORMANCE STANDARDS. SPI will, in good faith, exercise
reasonable diligence in the performance of its services and obligations under
this Agreement.
V. KENT'S PAYMENT OBLIGATIONS
Kent shall fund when due the cost of all services, materials, and
labor necessary to design, develop and construct the Project, including,
without limitation, all amounts payable to the Project Team. Sums due to
Contractors under the Construction and Development Documents shall be paid by
Kent to SPI when due in accordance with the procedure established pursuant to
Paragraph IV.D.4, provided that such sums are properly due and payable pursuant
to the Construction and Development Documents and this Agreement, are in
accordance with the Project Cost Budget, and do not result from fraud, willful
misconduct, or breach of this Agreement by SPI. The funds advanced by Kent to
SPI will be used solely to pay all the general contractors and all other
Contractors providing assistance in the performance of SPI's duties hereunder.
SPI agrees to pay the general contractor and all other Contractors the amounts
payable to such parties out of the funds advanced by Kent or the funds received
by SPI under the "L/C" (hereinafter defined) within five (5) business days
following SPI's receipt of such funds. If SPI fails or refuses to pay the
general contractor and/or other Contractors within such five (5) business day
period, then (in addition to any other remedies available to Kent for such
default) SPI shall be obligated to pay Kent interest on the funds received from
Kent or pursuant to the L/C and not timely delivered to the general contractor
and/or other Contractors at a rate per annum equal to the lesser of twelve
percent (12%) per annum or the maximum lawful rate from and after the sixth
(6th) business day following SPI's receipt of such funds until such funds
- 9 -
<PAGE> 14
are paid to the general contractor and/or other Contractors. Additionally, at
any time that SPI is in default under this Agreement for failing to pay the
general contractor and/or other Contractors with funds delivered by or for
Kent, Kent may pay any future applications for payment directly to the general
contractor and other Contractors. Kent's obligation to fund the sums due under
the Construction and Development Documents shall be secured by an irrevocable
letter of credit ("L/C") issued by Texas Commerce Bank National Association
("TCB"), or any other bank chosen by Kent and reasonably acceptable to SPI, to
SPI in the amount of Two Million Five Hundred Thousand Dollars ($2,500,000),
said L/C to be issued within fourteen (14) days after the date of this
Agreement, and to be in a form consistent with the drafting requirements
outlined in Exhibit "F" attached hereto and incorporated herein for all
purposes. If Kent fails or refuses to deliver the L/C to SPI within such
fourteen (14) day period, SPI may, but shall not be obligated to, stop work on
the Project at any time thereafter until the L/C complying with the
requirements of this Agreement has been delivered to SPI, and SPI shall be
entitled to an extension of the Contract Time allotted for Substantial
Completion by one (1) day for each day that Kent is late in delivering the L/C.
Additionally, if Kent is more than thirty (30) days late in delivering the L/C,
Kent shall be deemed to be in Material default under this Agreement and SPI may
exercise its remedies for such default, including, without limitation, the
termination of this Agreement. If SPI stops work on the Project as a result of
such default and thereafter recommences the work, Kent shall be responsible for
reimbursing SPI for all costs incurred under the Construction Contracts as a
result of such work stoppage, including, without limitation, reasonable
shut-down costs and start-up costs incurred by the general contractor and other
Contractors, the payment of which costs shall be made by Kent in the manner
described in Paragraph VII.B. If Kent fails or refuses to pay an approved (or
deemed approved) application for payment within the required nine (9) calendar
day period and such default is continuing upon the expiration of the applicable
ten (10) day notice and cure period provided in Article VII, SPI shall be
entitled to submit a sight draft to TCB, payable to the Contractor or other
party (including SPI) to whom the defaulted payment should have been made by
Kent, for the amount of the subject draw request and by delivering to TCB a
copy of any approved (or deemed approved) application for payment (which
application for payment has been approved by the Project Architect) and SPI's
certification that such application for payment is due and owing in accordance
with the Construction and Development Documents and this Agreement and has not
been paid and containing such additional certifications and complying with such
other requirements as are set forth on Exhibit "F" attached hereto. If SPI
draws funds under the L/C to pay the general contractor or other Contractors,
Kent shall not be deemed to be in default under this Agreement as a result of
Kent's non-payment if Kent, within ten (10) business days thereafter, shall
deliver an amendment of ("L/C Amendment") of the L/C (in form and substance
acceptable to SPI in the exercise of reasonable judgment) increasing the amount
available to be drawn under the L/C, if necessary, to an amount equal to
twenty-five percent (25%) of the unadvanced portion of the Project Cost Budget.
The failure of Kent to timely deliver the L/C Amendment shall constitute a
Material default by Kent, and SPI may exercise its remedies for such default,
including, without limitation, stopping work on the Project.
Additionally, if SPI, due to a default by Kent, makes any advance to
or for the account of Kent which Kent or SPI was obligated to pay any
Contractor pursuant to this Agreement in
- 10 -
<PAGE> 15
connection with the construction of the Project, such amount shall be payable
by Kent to SPI within five (5) days after demand therefor, together with
interest thereon at the lesser of: (i) twelve percent (12%) per annum or (ii)
the maximum lawful rate from the date of SPI's written demand until repaid by
Kent.
VI. COMPENSATION
A. FIXED DEVELOPMENT AND CONSTRUCTION MANAGEMENT FEE. In
consideration of the performance by SPI of its duties under this Agreement,
Kent agrees to pay to SPI a project administration fee (the "Fixed Development
and Construction Fee") of two and one-half percent (2 1/2%) of the Total
Project Costs (hereafter defined). SPI and Kent acknowledge that SPI has earned
the Fifty Thousand Dollars ($50,000) previously paid by Kent under the Letter
Agreement as the initial payment of, and to be credited against, the Fixed
Development and Construction Fee. The remaining portion of the Fixed
Development and Construction Fee shall be deemed earned by SPI as and to the
extent Total Project Costs are incurred and payable by Kent, and shall be paid
by Kent to SPI prorata with payment of the Total Project Costs. "Total Project
Costs" means the total cost of developing and completing the Project, as shown
in the Project Cost Budget and as detailed in the Construction and Development
Documents, exclusive of the Fixed Development and Construction Fee and additive
change orders, and any "due diligence" and closing costs in connection with the
investigation, analysis and acquisition of the Land.
B. ADDITIONAL FEE. Kent shall pay to SPI a fee (the "Additional
Fee") equal to two and one-half percent (2 1/2%) of the amount of all additive
change orders to the Construction and Development Documents in excess of Two
Hundred Fifty Thousand Dollars ($250,000) which are made in accordance with the
Construction and Development Documents and this Agreement. The Additional Fee
shall be payable by Kent to SPI prorata when the payment by Kent to the
Contractor with respect to such additive change order is due.
C. EARLY COMPLETION FEE. In the event that SPI shall cause
Substantial Completion to occur in accordance with this Agreement and the
Construction and Development Documents prior to the expiration of the Contract
Time allotted for Substantial Completion, Kent shall pay to SPI, as additional
compensation for SPI's services, a fee (the "Early Completion Fee") as follows:
1. Two Thousand Dollars ($2,000) per day for the number
of days in excess of thirty (30) days by which SPI has caused
Substantial Completion to occur in advance of the Contract Time
allotted for Substantial Completion; and
2. One Thousand Dollars ($1,000) per day for each day up
to thirty (30) days by which SPI has caused Substantial Completion to
occur prior to the Contract Time allotted for Substantial Completion.
The Early Completion Fee, if earned by SPI in accordance with the foregoing,
shall be paid by Kent to SPI within thirty (30) days after the occurrence of
such Substantial Completion.
- 11 -
<PAGE> 16
VII. DEFAULT
A. EVENTS OF DEFAULT.
1. MONETARY DEFAULTS. The failure of either SPI or Kent
to pay any amount due under this Agreement and the failure of such
defaulting party to pay the same after ten (10) days' written notice
of such failure from the non- defaulting party to the defaulting party
shall constitute an "Event of Default" under this Agreement.
2. NON-MONETARY DEFAULTS. The failure of either Kent or
SPI to perform, keep, or fulfill any of the "Material" (hereafter
defined) covenants, undertakings, obligations, or conditions set forth
in this Agreement (other than any default described in Paragraph
VII.A.1 above), and the failure of the defaulting party to remedy any
such default within ten (10) days after written notice of said failure
from the non-defaulting party to the defaulting party shall constitute
an "Event of Default" under this Agreement; provided, however, that if
the failure of SPI to perform, keep or fulfill any such Material
covenant, undertaking, obligation or condition is a result of the act
or omission of a third party, such as the general contractor and one
of the other Contractors, not in SPI's employment nor otherwise under
SPI's control, then as long as SPI has made written demand of
performance by such defaulting party of such covenant, undertaking,
obligation or condition and is exercising reasonable diligence to
cause such defaulting party or a substitute party to cure such
default, then SPI shall not be deemed to be in default with respect to
such failure under this Agreement. If SPI is negligent in the
selection of (i) a replacement member for any current member of the
Project Team or (ii) any other Contractor and the Contractor described
in (i) or (ii), above, causes SPI to fail to perform, keep or fulfill
a Material covenant, undertaking, obligation or condition, then such
negligent action shall likewise constitute an Event of Default by SPI
and SPI, in order to cure such Material default, shall replace such
Contractor with a well-qualified individual or firm (acceptable to
Kent in the exercise of reasonable judgment) not later than ten (10)
days after receipt of written notice of such Material default.
"Material", as used herein with respect to defaults, shall refer to
any failure to perform or other failure to fulfill a covenant or
obligation involving more than Ten Thousand Dollars ($10,000) in
actual or potential value, damages, costs or losses.
B. REMEDIES. Subject to the limitations described in Paragraph
IV.A and this Paragraph VII.B and Article VIII, if an Event of Default occurs
by either Kent or SPI, the other party ("Non-Defaulting Party"), for so long as
said Event of Default continues uncured, may exercise any remedy at law or in
equity against the defaulting party, including, without limitation, the
termination of this Agreement and recovery of any damages suffered by the
Non-Defaulting Party as a result of the Event of Default and, in the case of an
Event of Default by Kent, SPI's stoppage of the work on the Project by any of
the Contractors, including the general contractor, until such Event of Default
is cured. Additionally, if a breach of this Agreement by either party involves
less than Ten Thousand Dollars ($10,000) in actual or potential value, damages,
costs or losses, the Non-Defaulting Party shall be entitled to exercise any
remedy at
- 12 -
<PAGE> 17
law or in equity against the defaulting party, excluding only the termination
of this Agreement by either party or a work stoppage by SPI. In the event of a
work stoppage by SPI as a result of an Event of Default by Kent under this
Agreement, in the event that work on the Project is resumed, Kent shall be
responsible for reasonable shut-down costs and start-up costs incurred by the
general contractor and other Contractors, which additional amounts shall be
payable by Kent to SPI within ten (10) days following written demand therefor,
together with invoices from the general contractor and other Contractors
itemized in reasonable detail. Additionally, in no event shall Kent or SPI, as
applicable, be liable to the Non-Defaulting Party for damages suffered by the
Non- Defaulting Party as a result of an Event of Default by the defaulting
party in excess of the Fixed Development and Construction Fee, except for (i)
claims asserted against the Non-Defaulting Party by third parties as a result
of such Event of Default by Kent or SPI, as applicable, and (ii) any damages
suffered by the Non-Defaulting Party as a result of an Event of Default
involving fraud or the willful misconduct of the defaulting party. Therefore,
in the event that an Event of Default involves the circumstances described in
(i) or (ii) of the preceding sentence, the limitation on damages set forth in
the preceding provisions of this sentence shall not apply. In the event of
SPI's termination of this Agreement as a result of an Event of Default by Kent,
SPI also shall have the right to terminate the Contract Documents or the
Construction and Development Documents, and Kent agrees to indemnify, defend
and hold SPI harmless from any liability of SPI to the Contractors reasonably
incurred in accordance with this Agreement which results from SPI's termination
of the Contract Documents and/or the Construction and Development Documents.
In the event of Kent's termination of this Agreement, whether as a result of an
Event of Default by SPI or without cause, Kent shall have the right (but no
obligation) to assume SPI's rights under any or all of the Construction
Contracts and Construction and Development Documents by written notice thereof
to SPI and SPI agrees to promptly assign such rights to Kent. SPI shall cause
all of the Contractors to agree to such assignment in their respective
contracts. Except where otherwise provided in this Agreement, all remedies
under this Agreement are cumulative of each other and of those provided by
applicable law.
C. TERMINATION BY KENT WITHOUT CAUSE. Provided that Kent is not
then in default under this Agreement, Kent may also terminate this Agreement at
any time without cause by giving SPI thirty (30) days' prior notice thereof.
If Kent terminates this Agreement without cause, then SPI shall be entitled to
the following amounts, which amounts shall be immediately due and payable upon
receipt of such thirty (30) days' notice from Kent: (i) any unpaid portion of
the Fixed Development and Construction Fee which has accrued hereunder and the
balance of Fixed Development and Construction Fee to have been paid to SPI
based upon the then current estimate of the Total Project Costs; (ii) any
unpaid portion of the Additional Fee which has accrued hereunder; (iii) all
accrued but unpaid amounts which are owed to the Contractors for goods and/or
services theretofore provided or for materials theretofore ordered and not
subject to cancellation in connection with the development of the Project under
the Construction and Development Documents; (iv) any amounts required to be
paid in accordance with this Agreement to the Contractors who are providing
goods and/or services in connection with the development of the Project under
the Construction and Development Documents to terminate the Construction and
Development Documents, unless Kent expressly assumes the performance of
- 13 -
<PAGE> 18
such obligations of SPI under the Construction and Development Documents,
including, without limitation, agreeing to indemnify, defend and hold SPI
harmless from any future liability to Contractors which SPI may have in
accordance with this Agreement under the Construction and Development
Documents. Additionally, SPI shall be entitled to keep all previous amounts
paid by Kent to SPI (including, without limitation, all portions of the Fixed
Development and Construction Fee and Additional Fee previously paid) pursuant
to this Agreement.
Since Kent has the right to terminate this Agreement at any time
without cause upon thirty (30) days written notice to SPI, SPI will use good
faith efforts to obtain thirty (30) day cancellation provisions in all of the
Contract Documents and the Construction and Development Documents; provided,
however, that if SPI is not successful in obtaining such thirty (30) day
cancellation rights, then KENT SHALL INDEMNIFY, DEFEND AND HOLD SPI HARMLESS
FROM ANY LOSS OR LIABILITY UNDER THE CONSTRUCTION AND DEVELOPMENT DOCUMENTS
RESULTING FROM KENT'S TERMINATION OF THIS AGREEMENT WITHOUT CAUSE.
VIII. LIMITATION OF LIABILITY OF SPI
A. GENERAL. Except as limited pursuant to the provisions of this
Article VIII, SPI shall be liable to Kent for any costs or liabilities incurred
by Kent as a result of or arising out of or relating to any default by SPI
under or pursuant to this Agreement, including, without limitation, (i) SPI
failing to cause the Project Team to develop Contract Documents for the Project
so that the Project will properly perform the function for which it is intended
in accordance with Kent's express written requirements (provided, however, that
if SPI timely and in good faith submits any written qualifications to Kent with
respect to changes in the design and/or construction of the Project required by
Kent which SPI believes will adversely affect the use and development of the
Project for the intended purposes, SPI will not be liable for the effect of
such changes required by Kent, SPI hereby acknowledging that no such
qualifications have been heretofore given by SPI to Kent) and/or (ii) the
failure of the general contractor to timely construct the Project in accordance
with this Agreement and the Contract Documents. However, SPI shall incur no
liability to Kent for defects or other deficiencies in the Project discovered
within one (1) year following Substantial Completion of the entire Project as
long as SPI directly, or through the general contractor and/or the other
Contractors, is diligently attempting to correct such defects or deficiencies
following receipt of written notice thereof. From and after one (1) year
following Substantial Completion, SPI shall not be liable to Kent for any
defects or deficiencies thereafter discovered in the Project, provided that SPI
has assigned (or, if applicable, released any reservation of) all of its rights
under the Contract Documents and Construction and Development Documents to
Kent. In no event shall Kent make any claim hereunder against SPI's affiliates
and SPI's and SPI's affiliates' shareholders, officers, directors, employees,
or agents (collectively, the "SPI Group") on account of any default hereunder
by SPI, it being understood that Kent may assert claims only against SPI with
respect to SPI's obligations hereunder, and under no circumstances shall any
other member of the SPI Group be personally liable for any of the obligations
of SPI; provided, however, that if any of SPI's affiliates provide services
under this Agreement or any of the Construction and Development Documents, such
- 14 -
<PAGE> 19
affiliate, but not such affiliate's shareholders, officers, directors,
employees or agents, shall be personally liable for the obligations of such
affiliate with respect to the Project. The foregoing provisions of this
Paragraph A shall not exculpate SPI from responsibility for any failure to
perform any of its express obligations under this Agreement, nor to exculpate
SPI's affiliates from liability for their own acts or omissions with respect to
the Project.
B. LAND. Except as expressly set forth in the Purchase and Sale
Agreement, Kent agrees that neither SPI nor any member of the SPI Group shall
have any responsibility or liability for or arising out of the existing
condition of, or existing materials on, the Land, including, but not limited to
any environmental hazards which may exist thereon.
IX. INSURANCE
A. KENT INSURANCE. Kent shall procure and maintain at all times
during the Term commercial general liability insurance with a limit of Five
Million Dollars ($5,000,000), either as primary with excess liability or
primary only, and with general aggregate applicable to the Project for the full
limits, including contractual liability coverage, including all
indemnifications contained in this Agreement, and any other insurance of such
types and in such amounts as Kent and SPI mutually agree to be advisable, all
of which policies shall name SPI as an additional insured.
B. SPI INSURANCE. At all times during the Term (and where
hereafter indicated after the Term), SPI shall maintain the following
insurance: Commercial general liability insurance with a limit of Five Million
Dollars ($5,000,000), either as primary with excess liability or primary only,
on an "occurrence" basis, including all major divisions of coverage which are
available, including (i) premises - operations coverage; (ii) independent
contractors coverage; (iii) products and completed operations coverage (such
coverage to be maintained until not less than one (1) year after the date of
Substantial Completion); (iv) personal injury and advertising injury coverage;
and (v) contractual liability coverage, including all indemnifications
contained in this Agreement. SPI also shall maintain workers compensation
insurance satisfying the statutory limits and maintain its existing employer's
liability insurance during the Term. Kent shall be named an additional insured
under all policies required to be maintained by SPI (except for SPI's workers
compensation insurance and employer's liability insurance).
C. GENERAL CONTRACTOR'S INSURANCE. Except as may be otherwise
specifically waived by Kent in writing, SPI shall require the general
contractor involved in construction of the Project to procure and maintain at
all times during the Term "all risk" builder's risk insurance for the full
insurable value of all labor and materials incorporated into the construction
of the Project, while at the construction site or staging area awaiting
erection and during erection, until completion and acceptance. Such builder's
risk insurance shall cover real and personal property after its receipt at the
construction site, staging area or stored off-site or in transit. Such
builder's risk policy shall insure Kent, SPI and all subcontractors as their
interests may appear. The general contractor also shall procure and maintain
at all times during the Term
- 15 -
<PAGE> 20
the following insurance: workers' compensation for the statutory limits and
employer's liability insurance with limits of One Million Dollars ($1,000,000)
each occurrence for accident, One Million Dollars ($1,000,000) each employee
for disease, and One Million Dollars ($1,000,000) each policy for disease;
automobile liability insurance with limits of One Million Dollars ($1,000,000)
combined single limit coverage; unless waived by Kent in writing, performance
and payment bonds for the full amount of the Construction Contract, naming Kent
as one of the obligees; Contractor's equipment coverage to the extent currently
maintained by the general contractor; and general contractor's commercial
general liability insurance policies (containing, at a minimum, the same
divisions of coverage as are contemplated by Paragraph IX.B and providing for
products and completed operations coverage to be maintained for at least three
[3] years after Substantial Completion) with limits of Ten Million Dollars
($10,000,000), either as primary with excess liability or as primary only, and
with general aggregate applicable to the Project for the full limits. Kent and
SPI shall be named as an additional insured on all such policies, except
workers' compensation policies and employer's liability insurance. SPI shall
use reasonable, diligent efforts to ensure that the general contractor complies
and stays in compliance with the insurance and bonding requirements of this
Agreement during the Term. If requested by Kent, SPI shall cause the general
contractor to obtain a waiver of subrogation endorsement with respect to its
workers compensation coverage and Kent shall pay for the reasonable cost of
such endorsement.
With respect to all other Contractors involved in the construction of
the Project, such Contractors shall maintain commercial general liability
insurance policies (containing, at a minimum, the same divisions of coverage as
are contemplated by Paragraph IX.B) with limits of One Million Dollars
($1,000,000) each, either as primary with excess liability or as primary only
and workers compensation with statutory limits and their current employer's
liability insurance. Kent and SPI shall be named as an additional insured on
all such policies, except workers' compensation policies and employer's
liability insurance. SPI shall use reasonable, diligent efforts to insure that
such Contractors comply and stay in compliance with the insurance requirements
of this Agreement during the Term. If requested by Kent, SPI shall cause the
Contractors to obtain a waiver of subrogation endorsement with respect to their
workers compensation coverage and Kent shall pay for the reasonable cost of
such endorsement. In addition, each Contractor who is an architect or engineer
shall provide a limit of at least One Million Dollars ($1,000,000) in their
commercial general liability insurance coverage and shall provide professional
errors and omission coverage specific to the Project with limits of at least
One Million Dollars ($1,000,000), which coverage shall be maintained for the
Project for at least one (1) year after Substantial Completion, and thereafter
for so long as such Contractor maintains such professional errors and omission
coverage.
D. GENERAL PROVISIONS. Each party hereto shall provide to the
other party hereto certificates of insurance or copies of complete policies
proving its maintenance of the insurance required to be maintained by it
hereunder on the date hereof and reasonably satisfactory evidence of its
renewal or replacement of such insurance no later than ten (10) days prior to
each policy termination date. Each such policy of insurance shall require
thirty (30) days prior notice of cancellation, non-renewal or material
modification to the other party hereto. Each policy of
- 16 -
<PAGE> 21
insurance and bond required under Paragraphs IX.B and IX.C hereof shall be
issued by companies acceptable to Kent in the exercise of reasonable judgment
(except as may be otherwise specified in this Agreement) and shall be in
amounts and coverages and issued by companies acceptable to Kent in the
exercise of reasonable judgment. If any party providing the insurance required
hereunder incurs additional premium costs for insurance not already carried by
such party or required to be carried by such party under its contract
(including the addition of any endorsements to their existing policies) or,
with respect to the Contractor's professional errors and omissions coverage,
such coverage discontinued after the Term, such additional costs shall be
included in the Project Cost Budget (except in the case of insurance carried by
Kent) and paid for by Kent, if Kent, within ten (10) days following written
notice from any party providing the insurance required hereunder that such
party will incur additional premium costs for such additional insurance or, in
the case of the Contractors, continuing professional errors and omissions
coverage one (1) year after the Term, requests that such party obtain or
continue, as applicable, such required insurance. If Kent fails or refuses to
request such party to provide such insurance as required in the preceding
grammatical sentence, then Kent will be deemed to have waived the requirement
that such party obtain such insurance. All notices from any party of increased
insurance costs due to providing additional insurance or continuing coverage
after the Term (in the case of the Contractor's professional errors and
omissions coverage), shall include a written proposal from such party's
insurance agent describing the additional coverage to be obtained and the cost
of such additional coverage.
E. WAIVER OF SUBROGATION. Anything contained in this Agreement
to the contrary notwithstanding, each party hereto ("Waiving Party") hereby
waives any and all rights of recovery, claims, actions and causes of action
against the other party, its agents, officers and employees for any bodily
injury, personal injury or death that may occur to persons, or for any loss or
damage that may occur to the Project or any part thereof, or to any personal
property of the Waiving Party therein or thereon, by reason of fire, the
elements, or any other cause insured against under the terms of the policies of
property insurance, including automobile physical damage, casualty insurance or
workers' compensation insurance that either party is required to maintain
hereunder or otherwise maintains, to the extent, and only to the extent, of any
proceeds actually received by the Waiving Party with respect thereto,
regardless of cause or origin, including the negligence of the other party
hereto, its agents, officers, or employees, and each party covenants that no
insurer shall have any right of subrogation or assignment against the other
party, and that its policies of insurance required to be maintained hereunder
shall be endorsed to recognize such waiver of subrogation to the extent a
waiver of subrogation endorsement is available and necessary to provide the
intended benefits. With respect to the waiver of subrogation endorsement under
any workers compensation policy, the party requesting such waiver of
subrogation shall reimburse the party providing such endorsement for the cost
of such endorsement.
X. MISCELLANEOUS
A. ASSIGNMENT. SPI may not assign or otherwise transfer all or
any portion of its interest in this Agreement or delegate its duties hereunder
without the prior consent of Kent,
- 17 -
<PAGE> 22
except that SPI may assign its right to receive proceeds under this Agreement
to TCB, SPI's commercial lender. Kent shall not assign or otherwise transfer
all or any portion of its interest in this Agreement or delegate its duties
hereunder without the prior consent of SPI.
B. NOTICES. Any notices, approvals or other communications
between SPI and Kent pursuant to this Agreement shall be in writing and shall
be deemed to be effective upon personal delivery or (except as otherwise
provided in this Agreement) two business days after being placed in the United
States Mail, postage prepaid, certified, and properly addressed as follows (it
being understood that either party may, from time to time by notice to the
other party, change its address):
If to Kent: Kent Electronics Corporation
c/o K*TEC Electronics Corporation
5610 Bonhomme
Houston, Texas 77036
Attention: Ms. Karla Stepanski
Phone (713) 954-8407
Fax: (713) 975-3108
With copy to: Kent Electronics Corporation
7433 Harwin
Houston, Texas 77036
Attention: Mr. Kim Johnson
Phone (713) 780-7770
Fax: (713) 978-5892
With copy to: Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
3400 Texas Commerce Tower
Houston, Texas 77002
Attention: Mr. Scott Hunsaker
Phone (713) 226-1279
Fax: (713) 223-3717
If to SPI: Sugarland Properties Incorporated
4665 Sweetwater Boulevard, Suite 100
Sugar Land, Texas 77479-3000
Attention: Mr. Steve Mercadal
Phone (713) 242-2000
Fax: (713) 242-2718
- 18 -
<PAGE> 23
With copy to: Sugarland Properties Incorporated
4665 Sweetwater Boulevard, Suite 100
Sugar Land, Texas 77479-3000
Attention: Mr. Carl P. Favre
Phone (713) 242-2000
Fax: (713) 242-2718
With copy to: Dow, Cogburn & Friedman, P.C.
9 Greenway Plaza, Suite 2300
Houston, Texas 77046
Attention: Mr. Bruce W. Merwin
Phone (713) 626-5800
Fax: (713) 940-6099
C. INTERPRETATION. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and negotiations with respect thereto. This
Agreement may be amended only by a written instrument signed by the party to be
charged. Neither Kent nor SPI makes any representations, warranties or
agreements except as set forth in this Agreement. As used in this Agreement,
"including" means "including by way of example only and not limitation." All
remedies under this Agreement are cumulative of each other and of those
provided by applicable law, except where otherwise herein expressly provided to
be limited. This Agreement shall be governed by, and construed and interpreted
in accordance with, the laws of the State of Texas, except its conflicts of
laws rules.
D. NO THIRD-PARTY BENEFICIARY. Any agreement to pay any amount
and any assumption of liability herein contained, express or implied, shall be
only for the benefit of the undersigned parties and their respective successors
and permitted assigns, and such agreements and assumptions shall not inure to
the benefit of the obligees of any indebtedness or any other party, whomsoever,
it being the intention of the undersigned that no one shall be or deemed to be
a third-party beneficiary of this Agreement.
E. EXCUSABLE DELAY. Except as otherwise expressly provided in
this Agreement, neither party hereto shall be obligated to perform and neither
shall be deemed to be in default hereunder, if and for so long as the
performance of a nonmonetary obligation shall be prevented by the occurrence of
any of the following, other than as the result of the financial inability of
the party obligated to perform (herein called "Force Majeure" and "Event of
Force Majeure"): acts of God, strikes, lockouts, other industrial
disturbances, acts of a public enemy, changes in laws occurring after the
effective date of this Agreement, inclement weather not reasonably
anticipatable (it being agreed for purposes hereof that the Project Schedule
contemplates fourteen [14] days of inclement weather preventing construction
activity for more than one-half [1/2] day, and that neither said amount of
inclement weather nor any lesser amount shall constitute Force Majeure or an
Event of Force Majeure), wars or warlike action (whether dejure or de facto),
arrest or other restraint of government (civil or military), blockades,
insurrections, riots,
- 19 -
<PAGE> 24
epidemics, landslides, lightning, earthquakes, fires, hurricanes, storms,
floods, washouts, sink holes, civil disturbances, explosions, breakage or
accident to equipment or machinery, confiscation or seizure by any government
or public authority, nuclear reaction or radiation, radioactive contamination
or any other causes, whether of the kind herein enumerated, or otherwise, in
each case only to the extent to which same are not reasonably within the
control of the party claiming the right to delay performance on account of such
occurrence. In no event shall the financial inability of a party to perform a
monetary obligation under this Agreement be deemed to be an Event of Force
Majeure. In the event an Event of Force Majeure shall prevent the performance
of a non- monetary obligation by SPI for more than ninety (90) days, Kent may
terminate this Agreement at any time thereafter that such Event of Force
Majeure is continuing upon written notice to SPI. A termination by Kent
pursuant to the provisions of this Paragraph E shall constitute a termination
without cause.
F. NO OWNERSHIP INTEREST; NO PARTNERSHIP. SPI shall not and does
not by this Agreement in any way or for any purpose become or have any right to
become an equity owner in the Project, a partner of Kent in the conduct of its
business relating to the Project or otherwise, or a joint venturer of or a
member of a joint enterprise with Kent. SPI is and shall be, for all purposes
of this Agreement, an independent contractor of Kent.
G. SUCCESSORS AND ASSIGNS. Subject to Paragraph X.A hereof, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
H. FURTHER ACTIONS. Each party hereto shall, as often as
reasonably requested by the other party hereto, take such further actions not
inconsistent with the terms of this Agreement as may be reasonably necessary in
order to carry out the purposes of this Agreement.
I. AUTHORIZATION. Each party represents and warrants to the
other that its execution, delivery, and performance of this Agreement has been
duly authorized by all necessary corporate action, and that this Agreement
represents the legal, valid, and binding obligation of such party, enforceable
against such party in accordance with its terms.
J. OWNERSHIP OF DOCUMENTS. To the extent SPI has or acquires any
documents related to the Project (including any plans, specifications, books
and records), such documents shall be and remain the sole and exclusive
property of Kent, and SPI shall have no rights in such documents, other than
the right to retain copies of such materials for use in connection with the (i)
performance of SPI's obligations hereunder and (ii) defense of any claims or
lawsuits.
K. INVALIDITY. In case any one or more provisions set forth in
this Agreement shall for any reason be held invalid, illegal or unenforceable
in any respect, any such invalidity, illegality or unenforceability shall not
affect any other provision of this Agreement, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
incorporated herein.
- 20 -
<PAGE> 25
L. COUNTERPARTS. This Agreement may be executed in any number of
original counterparts, each of which shall be an original for all purposes, and
of which when taken together shall constitute one and the same document,
without the necessity of each party hereto executing the same counterpart.
M. TIME OF THE ESSENCE. Time is of the essence of the
performance of the parties' obligations pursuant to this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed in multiple
counterparts to be effective as of the day and year first above written.
SUGARLAND PROPERTIES KENT ELECTRONICS CORPORATION
INCORPORATED
By:/s/ Les A. Newton By:/s/ Randy J. Corporron
------------------------------ -----------------------------
Name: LES A. NEWTON Name: Randy J. Corporron
Title: PRESIDENT Title: Executive Vice President
EXECUTION PAGE TO DEVELOPMENT AND
CONSTRUCTION MANAGEMENT AGREEMENT
- 21 -
<PAGE> 26
EXHIBIT A
K*TEC MANUFACTURING FACILITY DRAWINGS
HOUSE REH BURWELL ARCHITECTS
================================================================================
<TABLE>
<CAPTION>
BUILDING PACKAGE
<S> <C>
CIVIL/SITE
C1.1 GEOMETRIC LAYOUT PLAN (EAST) 2-03-95
C1.2 GEOMETRIC LAYOUT PLAN (WEST) 2-03-95
C2.1 SITE CIVIL CONSTRUCTION NOTES/DRAINAGE CALCULATIONS 2-03-95
C3.1 SITE DRAINAGE AREA MAP 2-03-95
C4.1 SITE GRADING PLAN (EAST) 2-03-95
C4.2 SITE GRADING PLAN (WEST) 2-03-95
C5.1 SITE STORM DRAINAGE PLAN (EAST) 2-03-95
C5.2 SITE STORM DRAINAGE PLAN (WEST) 2-03-95
C6.1 SITE SANITARY/WATER PLAN (EAST) 2-03-95
C6.2 SITE SANITARY/WATER PLAN (WEST) 2-03-95
C7.1 SERVICE DRIVE AT JESS PIRTLE BLVD. 2-03-95
C8.1 POLLUTION PREVENTION PLAN 2-03-95
C9.1 MISCELLANEOUS PAVING DETAILS 2-03-95
C9.2 MISCELLANEOUS DRAINAGE DETAILS 2-03-95
C9.3 MISCELLANEOUS SANITARY/WATER DETAILS 2-03-95
C10.1 SITE PAVING JOINT LAYOUT (EAST) 2-03-95
C10.2 SITE PAVING JOINT LAYOUT (WEST) 2-03-95
L2.1 LANDSCAPE PLANTING PLAN 2-03-95
L2.2 LANDSCAPE IRRIGATION PLAN 2-03-95
ARCHITECTURAL
A0.1 INFORMATION SHEET 2-03-95
A0.2 HANDICAP ACCESS 2-03-95
A1.1 SITE PLAN 2-03-95
A2.1 FIRST FLOOR PLAN 2-03-95
A2.2 FIRST FLOOR PLAN 2-03-95
A2.3 MEZZANINE FLOOR PLAN 2-03-95
A2.4 FIRST FLOOR - RCP 2-13-95 ORC#1
A2.5 MEZZANINE - RCP 2-13-95 ORC#1
A2.6 FIRST FLOOR - FINISH PLAN 2-03-95
A2.7 MEZZANINE - FINISH PLAN 2-03-95
A2.8 ROOF PLAN 2-03-95
A3.1 ENLARGED PLAN - STAIRS 2-03-95
A3.2 ENLARGED PLAN - BATHROOMS 2-03-95
A4.1 ELEVATIONS 2-03-95
A5.1 WALL SECTIONS 2-03-95
A5.2 WALL SECTIONS 2-03-95
</TABLE>
<PAGE> 27
Page 2 - EXHIBIT A
K*TEC Manufacturing Facility Drawings
<TABLE>
<S> <C>
A5.3 STAIR SECTIONS 2-03-95
A6.1 INTERIOR ELEVATIONS 2-03-95
A6.2 INTERIOR ELEVATIONS 2-03-95
A6.3 INTERIOR ELEVATIONS 2-03-95
A6.4 INTERIOR ELEVATIONS 2-03-95
A6.5 INTERIOR ELEVATIONS 2-03-95
A7.1 DOOR SCHEDULES 2-03-95
A8.1 EXTERIOR DETAILS 2-03-95
A8.2 WAREHOUSE WALL SECTION DETAILS 2-03-95
A8.3 EXTERIOR DETAILS 2-03-95
A8.4 EXTERIOR DETAILS 2-03-95
A9.1 PARTITION TYPES 2-13-95 ORC#1
A9.2 INTERIOR DETAILS 2-03-95
A9.4 INTERIOR DETAILS 2-03-95
A9.5 INTERIOR DETAILS 2-03-95
STRUCTURAL
S1.0 GENERAL NOTES AND EMBED ITEMS 2-03-95
S2.0 FOUNDATION PLAN-MANUFACTURING AREA 2-03-95
S2.1 FOUNDATION PLAN-OFFICE AREA 2-03-95
S3.0 ROOF FRAMING PLAN-MANUFACTURING AREA 2-03-95
S3.1 MEZZANINE FLOOR FRAMING PLAN-OFFICE AREA 2-03-95
S3.2 ROOF FRAMING PLAN-OFFICE AREA 2-03-95
S4.0 FOUNDATION DETAILS 2-03-95
S4.1 FOUNDATION DETAILS 2-03-95
S5.0 MEZZANINE FLOOR FRAMING DETAILS 2-03-95
S6.0 ROOF FRAMING DETAILS 2-03-95
S6.1 BRACE ELEVATIONS AND DETAILS 2-03-95
S7.0 TILT WALL PANEL ELEVATIONS 2-03-95
S7.1 TILT WALL PANEL ELEVATIONS 2-03-95
S7.2 TILT WALL PANEL ELEVATIONS 2-03-95
S7.3 TILT WALL PANEL ELEVATIONS 2-03-95
S7.4 TILT WALL PANEL DETAILS & NOTES 2-03-95
MECHANICAL
M2.1 MANUFACTURING FLOOR PLAN-MECHANICAL 2-03-95
M2.2 OFFICE FLOOR PLAN-MECHANICAL 2-03-95
M2.3 OFFICE MEZZANINE PLAN-MECHANICAL 2-03-95
M3.1 MANUFACTURING ROOF PLAN-MECHANICAL 2-03-95
M3.2 OFFICE ROOF PLAN-MECHANICAL 2-03-95
M4.1 ENLARGED PLAN & DETAILS-MECHANICAL 2-03-95
M5.1 MECHANICAL SCHEDULES 2-03-95
</TABLE>
<PAGE> 28
Page 3 - EXHIBIT A
K*TEC Manufacturing Facility Drawings
<TABLE>
<S> <C>
ELECTRICAL
E1.1 ELECTRICAL SITE PLAN 3-10-95 AD#4
E2.1A WAREHOUSE/FACTORY BUILDING-POWER 3-10-95 AD#4
E2.1B WAREHOUSE/FACTORY BUILDING-LIGHTING 2-03-95
E2.1C WAREHOUSE/FACTORY BUILDING/LIGHTING 2-13-95 AD#1
E2.2 FIRST FLOOR OFFICE PLAN-POWER 3-10-95 AD#4
E2.3 MEZZANINE FLOOR OFFICE PLAN-POWER 3-10-95 AD#4
E2.4 FIRST FLOOR OFFICE PLAN-LIGHTING 2-13-95 AD#1
E2.5 MEZZANINE FLOOR OFFICE PLAN-LIGHTING 2-03-95
E2.6 WAREHOUSE/FACTORY BUILDING ROOF PLAN-ELECTRICAL 2-03-95
E2.7 OFFICE BUILDING ROOF PLAN-ELECTRICAL 2-03-95
E3.1 ENLARGED PLANS-ELECTRICAL 3-10-95 AD#4
E4.1 RISER DIAGRAMS AND DETAILS-ELECTRICAL 2-13-95 AD#1
E5.1 ELECTRICAL EQUIPMENT SCHEDULES 2-13-95 AD#1
E5.2 ELECTRICAL PANEL SCHEDULES 2-13-95 AD#1
E5.3 ELECTRICAL PANEL SCHEDULES 2-13-95 AD#1
E5.4 ELECTRICAL PANEL SCHEDULES 2-13-95 AD#1
E5.5 ELECTRICAL PANEL SCHEDULES 2-13-95 AD#1
E5.6 ELECTRICAL PANEL SCHEDULES 2-03-95
E5.7 ELECTRICAL PANEL SCHEDULES 2-03-95
E5.8 ELECTRICAL PANEL SCHEDULES 2-13-95 AD#1
PLUMBING
P1.1 SITE PLAN-PLUMBING 2-03-95
P2.1 MANUFACTURING FLOOR PLAN-PLUMBING 2-03-95
P2.2 OFFICE FLOOR PLAN-PLUMBING 2-03-95
P2.3 OFFICE MEZZANINE PLAN-PLUMBING 2-03-95
P3.1 MANUFACTURING ROOF PLAN-PLUMBING 2-03-95
P3.2 OFFICE ROOF PLAN-PLUMBING 2-03-95
P4.1 ENLARGED FLOOR PLANS-PLUMBING 2-03-95
P5.1 PLUMBING DETAILS AND SCHEDULES 2-03-95
P5.2 PLUMBING RISER DIAGRAMS 2-03-95
</TABLE>
<PAGE> 29
PAGE 4 - EXHIBIT A
K*TEC MANUFACTURING FACILITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Section Title No. Pages
<S> <C> <C>
BIDDING REQUIREMENTS, CONTRACT FORMS, AND CONDITIONS OF THE CONTRACT
00700 General Conditions............................................. 1
00800 Supplementary Conditions....................................... 5
DIVISION 1 - GENERAL REQUIREMENTS
01030 Alternates..................................................... 1
01050 Field Engineering.............................................. 2
01090 Reference Standards............................................ 6
01200 Project Meetings............................................... 3
01340 Shop Drawings, Product Data, Samples........................... 3
01380 Construction Photographs....................................... 1
01410 Testing Laboratory Services.................................... 9
01510 Temporary Facilities........................................... 5
01610 Transportation and Handling.................................... 1
01620 Storage and Protection......................................... 2
01630 Substitutions.................................................. 1
01631 Substitution Request Form...................................... 2
01700 Project Closeout............................................... 3
01710 Cleaning....................................................... 2
01725 Project Record Documents....................................... 2
DIVISION 2 - SITEWORK
02000 Geotechnical Report............................................ 2
1 Clearing Grubbing and Stripping................................ 2
2 Diversion Ditch Excavation..................................... 2
3 Fill........................................................... 2
4 Concrete....................................................... 8
5 Lime Stabilization............................................. 1
6 Concrete Pavement.............................................. 8
7 Cement Stabilized Crushed Stone Base Course.................... 1
8 Reinforcing Steel.............................................. 4
9 Dewatering..................................................... 1
10 Storm Drainage................................................. 2
11 Sanitary Sewerage Collection................................... 4
12 Separation Distances 31 T.A.C., 317.13,
Appendix E and 290.44(e)....................................... 2
13 Water Distribution............................................. 4
14 Cenebt Stabilized Sand......................................... 2
15 Trench Backfill and Trench Safety.............................. 1
16 Riprap Erosion Protection...................................... 1
17 Hydro-Mulch Seeding and Fine Grading........................... 3
Item No. 4211 Filter Fabric Fence.......................................... 3
Item No. 4511 Inlet Protection Barriers.................................... 2
Item No. 4811 General Source Controls...................................... 3
02370 Drilled Piers..................................................... 4
</TABLE>
ISSUED FOR CONSTRUCTION K*TEC MANUFACTURING FACILITY
11 JANUARY 1995 SUGAR LAND, TEXAS
<PAGE> 30
Page 5 - Exhibit A
K*TEC Manufacturing Facility
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Section Title No. Pages
<S> <C> <C>
DIVISION 3 - CONCRETE
03100 Concrete Formwork.............................................. 5
03200 Concrete Reinforcement......................................... 5
03250 Concrete Accessories........................................... 4
03300 Cast-In-Place Concrete......................................... 11
03470 Tilt-Up Concrete............................................... 9
03600 Grout.......................................................... 3
DIVISION 4 - MASONRY
(Not Used)
DIVISION 5 - METALS
05120 Structural Steel............................................... 7
05210 Steel Joists................................................... 3
05300 Steel Decking.................................................. 4
05400 Cold-Formed Metal Framing...................................... 3
05510 Metal Stairs................................................... 5
05520 Pipe and Tube Railing.......................................... 4
05999 Miscellaneous Metal............................................ 8
DIVISION 6 - WOOD AND PLASTIC
06100 Rough Carpentry................................................ 4
06400 Architectural Woodwork......................................... 5
DIVISION 7 - THERMAL AND MOISTURE PROTECTION
07200 Insulation..................................................... 4
07410 Metal Wall Panels.............................................. 3
07510 Built-Up Asphalt Roofing....................................... 4
07532 Mechanically-Fastened Single-Ply Roof.......................... 5
07600 Metal Flashing and Sheet Metal................................. 3
07670 Elastomeric Flashing........................................... 3
07724 Roof and Floor Hatches......................................... 2
07900 Joint Sealers.................................................. 6
</TABLE>
ISSUED FOR CONSTRUCTION K*TEC MANUFACTURING FACILITY
11 JANUARY 1995 SUGAR LAND, TEXAS
<PAGE> 31
Page 6 - Exhibit A
K*TEC Manufacturing Facility
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Section Title No. Pages
<S> <C> <C>
DIVISION 8 - DOORS AND WINDOWS
08100 Hollow Metal Doors and Frames.................................. 6
08250 Interior Aluminum Frames and Trim.............................. 4
08305 Access Doors................................................... 2
08360 Sectional Overhead Doors....................................... 3
08410 Glazed Aluminum Doors and Frames............................... 5
08700 Door Hardware.................................................. 4
08800 Glass and Glazing.............................................. 5
08810 Mirrors........................................................ 2
08920 Curtain Wall System............................................ 5
DIVISION 9 - FINISHES
09200 Lath and Plaster............................................... 6
09250 Gypsum Board Systems........................................... 8
09310 Interior Ceramic Tile.......................................... 6
09511 Acoustical Ceilings............................................ 4
09650 Resilient Tile Flooring........................................ 4
09665 Resilient Sheet Flooring....................................... 3
09667 Resilient Wall Base............................................ 3
09680 Carpet......................................................... 4
09900 Painting....................................................... 8
09955 Vinyl Wallcovering............................................. 4
09975 Fabric Wallcovering............................................ 4
DIVISION 10 - SPECIALTIES
10166 Plastic Laminate Toilet Compartments........................... 4
10171 Solid Phenotic Toilet Compartments............................. 4
10270 Access Flooring................................................ 4
10500 Metal Lockers.................................................. 4
10520 Fire Extinguishers............................................. 3
10650 Operable Partitions............................................ 3
10800 Toilet and Related Accessories................................. 4
DIVISION 11 - EQUIPMENT
11161 Dock Levelers.................................................. 3
11165 Dock Bumpers................................................... 2
</TABLE>
ISSUED FOR CONSTRUCTION K*TEC MANUFACTURING FACILITY
11 JANUARY 1995 SUGAR LAND, TEXAS
<PAGE> 32
Page 7 - Exhibit A
K*TEC Manufacturing Facility
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Section Title No. Pages
<S> <C> <C>
DIVISION 12 - FURNISHINGS
12512 Horizontal Louver Blinds....................................... 3
DIVISION 13 - SPECIAL CONSTRUCTION
(Not Used)
DIVISION 14 - CONVEYING SYSTEMS
14212 Hydraulic Elevators............................................ 17
</TABLE>
ADDENDA:
ADDENDUM NO. 1 FEBRUARY 3, 1995 ATTACHED
ADDENDUM NO. 2 FEBRUARY 14, 1995 ATTACHED
ADDENDUM NO. 3 FEBRUARY 15, 1995 ATTACHED
ISSUED FOR CONSTRUCTION K*TEC MANUFACTURING FACILITY
11 JANUARY 1995 SUGAR LAND, TEXAS
<PAGE> 33
[HOUSE REH BURWELL ARCHITECTS LETTERHEAD]
Addendum No. 1
to the General Contractor
BID DOCUMENTS FOR:
PROJECT X
HRBA No. 94097
February 13, 1995
This Addendum shall be considered part of the plans and specifications for the
above named project as though it had been issued at the same time and
incorporated integrally with such plans and specifications. Where provisions of
the following supplementary plans and specifications contained in the addenda
from the provisions of the original plans and specifications, the provisions in
this addendum shall govern and take precedence.
SPECIFICATIONS
Section 01030
Item 1.1
Add an Alternate No. 9: SEE MEP SECTION OF THIS ADDENDUM
Item 1.2
Add an Alternate No. 10; SEE MEP SECTION OF THIS ADDENDUM
Item 1.3
Add an Alternate No. 11; SEE MEP SECTION OF THIS ADDENDUM
Item 1.4
Add an Alternate No. 12;
Provide Schuller PERMA-PLY IV (41-IG) system in lieu of specified
roofing system. There will be no change in the insulation or deck
material of the roof. Roof details shall conform to those
specified by manufacturer. Warranty to be the same as that
specified with original system. (see section 1740 for general
warranty requirements - it is issued as part of this addendum)
Roof shall conform to FM 1-90.
Item 1.5
Add an Alternate No. 13;
Provide Firestone APP 180 system in lieu of specified system.
<PAGE> 34
Insulated deck shall conform to Firestone specification I-M18-M
using Firestone ISO 95-insulation 2.3 inches attached to meet
FM I-90 specifications.
Details shall conform to those specified by manufacturer.
Warranty to be the same as that specified with original system.
(see section 1740 for general warranty requirements - it is
issued as part of this addendum). Roof shall conform to FM I-90.
Item 1.6
Add an Alternate No. 14;
Use BEST Inc. removable core locks in lieu of Schlage system
specified. Function, appearance and quality shall be equal to
Schlage system specified.
Item 1.7
NOTICE
Contractors are notified that these alternates should be submitted
in accordance with specification section 01630.
Item 1.8
Section 08250
Paragraph 2.03.A. change to read;
A. Type: Raco 375 Classic Prestige...
in lieu of the 225 system specified.
Item 1.9
Section 01740 shall be added to the index of sections.
Item 1.10
Add section 01740. It is attached as Appendix A.
Item 1.11
Section 08700
Paragraph 3.02;
Change Paragraph to read:
3.02 HARDWARE SCHEDULE
(refer to drawings)
Item 1.12
Section 07600
Section shall be revised to clearly state that pre-finished
galvanized coil stock shall be used for all sheet metal
flashing.
Paragraph 1.02;
Omit item C.
Paragraph 1.04.B.4
Omit
Paragraph 2.04A
Add number 13.
<PAGE> 35
Sheet metal stock shall be galvanized steel with Kynar 500
factory applied finish, equal to Berridge products coil
stock, designed for continuous onsite forming.
Paragraph 2.03, A.2
Omit
Paragraph 2.04, A.1
Change to read: "Gutter/Downspout shall be butt joint with
backup lap joint construction."
Paragraph 2.04, A.8
Omit
Paragraph 2.04, A.9 change the word "welded" to "lapped".
Paragraph 3.01 Add: 9.
9. Remove protective film immediately after
installation of piece.
Item 1.13
Section 08250
Add paragraph 2.03,B.3 and 2.03,B.4
3. All interior aluminum glass partitions.
4. All interior aluminum doors - narrow stile type.
Item 1.14
Section 06400:
Notice: there have been questions on the suitability of
melamine as a liner material. Melamine is acceptable under
paragraph 2.02,E.3
Omit Paragraph 2.03,E.4. Color will be as shown on the drawings.
Item 1.15
Section 12512
Add paragraph 3.01.E;
E. Locate one blind for each pane of vision glass in exterior
walls of office.
DRAWINGS
Item 1.16
Cover Sheet:
Developer's telephone numbers are:
Voice: 242-2000
Fax: 242-2710
Item 1.17
Architect's new address and number are:
The Houston Club Building
811 Rusk
Suite 101
Houston, TX 77002
713-227-0811 ph
713-227-0812 fx
<PAGE> 36
Item 1.18
Sheet A1.1 change note on sidewalk at property line: 4 feet 0 inches
sidewalk.
Item 1.19
Sheet A2.1 Add partition keys in warehouse walls: See Sketch A dated
13 FEB 1995 attached
Item 1.20
Sheet A2.2 Add Telecommunications riser closet (TEL/DATA RISER room
171A) See Sketch B dated 13 FEB 1995 attached. This room
shall receive a 4x8 sheet of plywood mounted to furring
channels and attached to concrete tilt panel.
Item 1.21
Sheet A2.4 This sheet has been re-issued and now indicates partition
keys.
Item 1.22
Sheet A2.5 This sheet has been re-issued and now indicates partition
keys.
Item 1.23
Sheet A2.5.1 The controller's room has walls to deck on North, South and
West sides. See sketch D dated 13 FEB 1995 attached.
Item 1.23
Sheet A2.6 Clarification from bidder's question: Finish W6 is NOT
used. The indication will be removed from the schedule.
No drawing will be issued at this time.
Item 1.24
Sheet A2.7 Base B6 is NOT used. The indication will be removed from
the schedule. No drawing is issued at this time.
Item 1.25
Sheet A2.8 Roof expansion joints are shown. See Sketch C dated 13 FEB
1995. Roofing contractors for each type of roofing alternate
shall verify that these locations for their membrane are
acceptable, or propose alternate locations in the alternate
bid.
Item 1.26
Sheet A2.1 Indicate extent of wood base at rear of warehouse. See
sketch E dated 13 FEB 1995 attached.
Item 1.27
Sheet A3.2 Drawing 4: Napkin Disposals should be indicated on
drawing as recessed.
Drawing 5: Indicate Napkin Disposals (item #2) in both
women's restrooms, one per stall.
<PAGE> 37
Drawing 6: Indicate Napkin Disposals (item #2) in
women's restrooms, one per stall.
Item 1.28
Sheet A4.1 Drawing 03,04: Warehouse elevations indicate the current
locations of downspouts. These are incorrect. Move the
existing location of downspouts 15 feet 0 inches to the
rear (West) elevation of the building. That is to say
that the downspouts will occur at each panel joint in the
manufacturing area walls that are NOT on the grid lines.
Item 1.29
Sheet A3.2 Phenolic toilet partitions shall be indicated for all
restrooms within the manufacturing area. Rooms: 174, 181,
173, 166. These restrooms shall also receive one toilet
seat cover dispenser (Item 12 in schedule) per stall.
The schedule will be changed to indicate one per STALL in
lieu of "handicapped only".
Laminate toilet partitions shall be indicated where they
occur in the office area of the building. Rooms: 130,133
Item 1.30
Sheet A3.2 A question has been asked about the mirrors indicated on
this sheet:
Which sub-contractor is to supply/install full size restroom
mirrors?
Mirrors indicated on plans shall be provided by appropriate
contractor as determined by the general contractor.
(Typically this is the glazing contractor, but it is totally
at the GC's discretion, please confirm with him.) Framed
mirrors are indicated as an accessory and should probably be
supplied by that contractor. (see caveat above - again).
Item 1.31
Sheet A6.1 Details 6/ A6.1:
Cabinets added over sink, drawing changed. See Sketch F
dated 13 FEB 1995.
Detail 7/ A6.1
Drawing changed (Cad Layer was turned off) See Sketch G
dated 13 FEB 1995.
Detail 9/ A6.1
Drawing changed (Cad Layer was turned off) See Sketch H
dated 13 FEB 1995.
Detail 16/ A6.1
Drawing changed (Cad Layer was turned off) See Sketch J
dated 13 FEB 1995.
<PAGE> 38
Item 1.32
Sheet A6.4 Detail 10/A6.4
Drawing changed - At the suggestion of cabinetry supplier,
doors have been decreased in width to 1 foot 4 inches.
This should allow the use of the specified hinges. See
Detail K dated 13 FEB 1995.
Item 1.33
Sheet A8.2 Detail A11/A8.2 Detail revised to indicate size of gutter.
See Sketch L 13 FEB 1995 (attached).
Item 1.34
Sheet A8.4 Detail 02/A8.2 Detail of downspout attachment changed. See
Sketch M dated 13 FEB 1995.
Item 1.35
Sheet A9.3 Detail 13/A9.3 added. Indicates termination of 1/2 inch
aluminum reveal. This detail was referenced in drawing
4/A6.1, but not included in the last issue. See Sketch N
dated 13 FEB 1995 attached.
Item 1.36
Sheet A9.5 Details - General
Cabinet construction shall be depicted as flush overlay, not
stile and rail as currently shown.
All splash members shall meet the countertop with a square
in lieu of a cove edge.
Item 1.37
Sheet A6.3 Detail 10/A6.3. Shelves may be painted in storerooms 108
and 137. This is a response to a question by a bidder.
Item 1.38
Sheet A8.2 Question on Detail 4/A8.2:
Is base shown in this detail from Millwork supplier?
Answer:
This is at general contractor's discretion.
Item 1.39
Question on Civil Drawings:
Civil drawings require No. 4 rebar for paving areas. Is this
correct? I think we were assuming No. 3 previously.
Answer (from Telephone conversation with Scott Slora, Rust
Lichliter Jameson)
The following alternate rebar schemes are acceptable:
Reinforcing for 5 inch thick paving:
#4's at 24 inch ctrs.
Reinforcing for 7 inch think paving:
<PAGE> 39
#4's at 18 inch centers.
Item 1.40
Question on light boxes shown in architectural plans:
Is there a standard supplier?
Answer:
No. Try approaching this as a backlit building directroy of
the type which SIGN manufacturers can custom make and not as
a light fixture.
<PAGE> 40
Item 1.41
Sheet A 7.1
Corrections to Door and Hardware schedule:
Door 134 Hardware set #2.
Door 164A Add this door for TEL/DATA RISER closet (See sketch B) This
door is identical to door 164.
Door 170 Delete Removable Mullion, this door is a PAIR.
Door 202 Door is a PAIR
Door 203 Door has 90 minute rating.
Door 213
Door 214 All three have hardware set #3.
Door 215
<PAGE> 41
[HOUSE REH BURWELL ARCHITECTS LETTERHEAD]
SKETCHES
<PAGE> 42
[GRAPHIC - FLOOR PLAN A2.1]
<PAGE> 43
[GRAPHIC - FLOOR PLAN A2.8]
<PAGE> 44
[GRAPHIC - FLOOR PLAN A2.1]
<PAGE> 45
[GRAPHIC - FLOOR PLAN A2.2]
<PAGE> 46
[GRAPHIC - FLOOR PLAN A2.5]
<PAGE> 47
[GRAPHIC - FLOOR PLAN A6.1 WEST]
<PAGE> 48
[GRAPHIC - FLOOR PLAN A6.1 EAST]
<PAGE> 49
[GRAPHIC - FLOOR PLAN A6.1 SOUTH]
<PAGE> 50
[GRAPHIC - FLOOR PLAN A6.1 SOUTH]
<PAGE> 51
[GRAPHIC - FLOOR PLAN A6.4]
<PAGE> 52
[GRAPHIC - FLOOR PLAN A8.2]
<PAGE> 53
[GRAPHIC - FLOOR PLAN A8.4]
<PAGE> 54
[GRAPHIC - FLOOR PLAN A9.3]
<PAGE> 55
[HOUSE REH BURWELL ARCHITECTS LETTERHEAD]
APPENDIX A
<PAGE> 56
HRBA Project 94097 WARRANTIES
SECTION 01740
PAGE 1
- -------------------------------------------------------------------------------
1.01 GENERAL
A. This section specifies general administrative and procedural
requirements for warranties required by the Contract Documents, in
addition to requirements of the AIA A201 - 1967 General Conditions.
1. Refer to General Conditions for terms of Contractor's warranty of
workmanship and materials.
2. General closeout requirements are included in Section
01700/Project Closeout.
3. Specific requirements for warranties for the Work, and products
and installations that are specified to be warranted, are
included in the individual Sections of Division 2 through 16.
4. Certifications and other commitments and agreements for
continuing services to Owner are specified elsewhere in the
Contract Documents.
B. Disclaimers and Limitations:
1. Manufacturer's disclaimers and limitations on product warranties
do not relieve the Contractor of the warranty on the Work that
incorporates the products, nor does it relieve suppliers,
manufacturers, and subcontractors required to countersign special
warranties with the Contractor.
1.02 DEFINITIONS
A. Standard Product Warranties are preprinted written warranties
published by individual manufacturers for particular products and are
specifically endorsed by the manufacturer to the Owner.
B. Special Warranties are written warranties required by or incorporated
in the Contract Documents, either to extend time limits provided by
standard warranties or to provide greater rights for the Owner.
1.03 WARRANTY REQUIREMENTS
A. The Contractor warrants to the Owner and Architect that materials and
equipment furnished under the Contract will be of good quality and new
unless otherwise required or permitted by the Contract Documents, that
the work will be free from defects not inherent in the quality
required or permitted, and that the work will conform with the
requirements of the Contract Documents.
1. Work not conforming to these requirements, including
substitutions not properly approved and authorized, may be
considered defective.
2. The Contractor's warranty excludes remedy for damage or defect
caused by abuse, modifications not executed by the Contractor,
improper or insufficient maintenance, improper operation, or
normal wear and tear under normal usage. If required by the
Architect, the Contractor shall furnish satisfactory evidence as
to the kind and quality of materials and equipment.
B. Related Damages and Losses:
1. When correcting warranted Work that has failed, remove and
replace other Work that has been damaged as result of such
failure or that must be removed and replaced to provide access
for correction warranted Work.
OFFICES FOR PROJECT X
SUGAR LAND, TEXAS
ISSUED FOR CONSTRUCTION
<PAGE> 57
HRBA Project 94097 WARRANTIES
SECTION 01740
Page 2
- --------------------------------------------------------------------------------
C. Reinstatement of Warranty:
1. When Work covered by a warranty has failed and been corrected by
replacement or rebuilding, reinstate the warranty by written
endorsement.
2. The reinstated warranty shall be equal to the original warranty
with an equitable adjustment for depreciation.
D. Replacement Cost:
1. Upon determination that Work covered by a warranty has failed,
replace or rebuild the Work to an acceptable condition complying
with requirements of Contract Documents.
2. The Contractor is responsible for the cost of replacing or
rebuilding defective Work regardless of whether the Owner has
benefitted from use of the Work through a portion of its
anticipated useful service life.
E. Owner's Recourse:
1. Written warranties made to the Owner are in addition to implied
warranties, and shall not limit the duties, obligations, rights
and remedies otherwise available under the law, nor shall
warranty periods be interpreted as limitations on time in which
the Owner can enforce such other duties, obligations, rights, or
remedies.
2. The Owner reserves the right to reject warranties and to limit
selections to products with warranties not in conflict with
requirements of the Contract Documents.
3. The Owner reserves the right to refuse to accept Work for the
Project where a special warranty, certification, or similar
commitment is required on such Work or part of the Work, until
evidence is presented that unites required to countersign such
commitments are willing to do so.
1.04 SUBMITTALS
A. Submit written warranties to Architect prior to the date certified for
Substantial Completion.
1. If Architect's Certificate of Substantial Completion designates a
commencement date for warranties other than date of Substantial
Completion for Work, or a designated portion of the Work, submit
written warranties upon request of Architect.
2. When a designated portion of the Work is completed and occupied
or used by Owner, by separate agreement with the Contractor
during construction period, submit properly executed warranties
to Architect within 15 days of completion of that designated
portion of the Work.
B. When a special warranty is required to be executed by the Contractor,
or Contractor and a subcontractor, supplier or manufacturer, prepare a
written document that contains appropriate terms and identification,
ready for execution by the required parties.
1. Submit a draft to the Owner through Architect for approval prior
to final execution.
C. Forms for special warranties are included at the end of this Section.
1. Prepare a written document utilizing the appropriate form, ready
for execution by the Contractor, or the Contractor and
subcontractor, supplier or manufacturer.
2. Submit a draft to Owner through Architect for approval prior to
final execution.
3. Refer to individual Sections of Division 2 through 16 for
specific content requirements, and particular requirements for
submittal of special warranties.
OFFICES FOR PROJECT X
SUGAR LAND, TEXAS
ISSUED FOR CONSTRUCTION
<PAGE> 58
HRBA Project 94097 WARRANTIES
SECTION 01740
Page 3
- --------------------------------------------------------------------------------
D. Form of Submittal:
1. At Final Completion compile 2 copies of each required warranty
properly executed by the Contractor, or by the Contractor,
subcontractor, supplier, or manufacturer.
2. Organize the warranty documents into an orderly sequence based on
the Table of Contents of the Project Manual.
E. Bind warranties and bonds in heavy-duty, commercial quality, durable
3-ring vinyl covered loose-leaf binders, thickness as necessary to
accommodate contents, and sized to receive 8-1/2" by 11" paper.
1. Provide heavy paper dividers with celluloid covered tabs for each
separate warranty. Mark the tab to identify the product or
installation, including the name of the product, and the name,
address and telephone number of the installer.
2. Identify each binder on the front and the spine with the typed or
printed title "WARRANTIES", the project title or name, and the
name of the Contractor.
F. When operating and maintenance manuals are required for warranted
construction, provide additional copies of each required warranty, as
necessary, for inclusion in each required manual.
END OF SECTION
OFFICES FOR PROJECT X
SUGAR LAND, TEXAS
ISSUED FOR CONSTRUCTION
<PAGE> 59
[HAYNES WHALEY ASSOCIATES, INC. LETTERHEAD]
K*Tec Electronics
Addendum No. 1
February 13, 1995
STRUCTURAL ITEMS
SHEET S5.0
1. On Detail 11 and 12 of this sheet, add a piece of continuous angle
3 x 3 x 3/16" along the floor to serve as a pour stop.
SHEET S7.0 THRU S7.4
1. Add cost for various embedded weld plates not yet shown on wall
panel drawings:
2 - Plate Type "E"
20 - Plate Type "A"
10 - Plate Type "H"
SHEET S7.3
1. On spandrel panels SP1-A thru SP10-A, the upper row of embedded
weld plates are shown as Plate Type "A". These should be Plate
Type "H" (66 Total).
END OF ADDENDUM
<PAGE> 60
DATE: February 13, 1995
ADDENDUM NO: One (1)
PROJECT: K-Tec Electronics
LOCATION: Sugar Land, Texas
JOB: 3413991
NOTICE TO BIDDERS
The Addendum shall be considered part of the Contract Documents for the above
mentioned project as though it had been issued at the same time and incorporated
integrally therewith. Where provisions of the following supplementary data
differ from those of the original Contract Documents, this Addendum shall govern
and take precedence.
Bidders are hereby notified that they shall make the necessary adjustments in
their estimates on account of this Addendum. It will be construed that each
Bidder's Proposal is submitted with full knowledge of all modifications and
supplemental data specified herein.
MECHANICAL
SHEET M-2.2 - OFFICE FIRST FLOOR PLAN - MECHANICAL
1. Room 141, H.R. Payroll: Added a 6x6 sheetmetal return air transfer duct
through the North wall of the office above the ceiling and Keyed Note 21
to explain it.
SHEET M-2.3 - OFFICE MEZZANINE FLOOR PLAN - MECHANICAL
1. Added fire dampers to the six ducts that penetrate the demising wall
between the Office and Manufacturing (column line 4)
2. Added "Add Alternate #10" as follows:
IN LEIU OF RELOCATING THE EXISTING COMPUTER ROOM AIR CONDITIONING UNIT
THE MECHANICAL CONTRACTOR SHALL PROVIDE A NEW LEIBERT MODEL FH/UH 245A
NOMINAL 15 TON AIR COOLED COMPUTER ROOM AIR CONDITIONING SYSTEM WITH
ELECTRIC HEAT AND A ROOF MOUNTED, REMOTE AIR COOLED CONDENSING UNIT.
480 VOLT, THREE PHASE.
<PAGE> 61
SHEET M-4.1 - PARTIAL PLAN AND DETAILS - MECHANICAL
1. Revise the note on Detail 2 that refers to the supply air branch duct
to read:
SUPPLY AIR BRANCH DUCT
FOR ROOF TOP UNIT 44
ONLY. PROVIDE VOLUME
DAMPERS AS SHOWN ON ROOF
TOP UNIT 44 ONLY.
SHEET M-5.1 - MECHANICAL SCHEDULES
1. Revise the Air Device Schedule by changing type "G" to read as follows:
G PRICE SERIES LBP-16A LINEAR BAR GRILLE. 1-1/2" WIDE WITH 1/4" SPACING,
1/8" BARS AND 15 DEGREES DEFLECTION, REFER TO THE ARCHITECTURAL REFLECTED
CEILING PLANS FOR THE EXACT LOCATION AND LENGTH. PROVIDE WITH A FULL
SIZED BY 12" INSULATED SHEETMETAL PLENUM WITH THREE EQUALLY SPACED 6"
DIAMETER TAPS, 3/4" WIDE BORDER TYPE 750 FOR SURFACE MOUNTING AND EITHER
OFF-WHITE FINISH "B13" OR BRUSHED FINISH #66 TO BE DETERMINED BY THE
ARCHITECT.
ELECTRICAL
SHEET E1.1 - ELECTRICAL SITE PLAN
Refer to revised drawing for the following:
1. Revised telephone service conduits. Added conduits to provide
communications services to future adjacent property developments.
2. Revised pole foundation detail to eliminate requirement for rigid
conduit ells.
SHEET E2.1A - WAREHOUSE/FACTORY BUILDING - POWER
Refer to revised drawing for the following:
1. Relocated trash compactor
2. Added second trash compactor.
3. Revised distribution equipment to reflect distribution changes.
<PAGE> 62
SHEET E2.1B - WAREHOUSE/FACTORY BUILDINGS - LIGHTING
1. Add a second type SA dock light at each dock so that there are 6 at each
of the two dock locations.
SHEET E2.1C - WAREHOUSE/FACTORY BUILDING- ALTERNATE 11
New drawing added to show the following:
1. Added entire sheet to set to show alternate fluorescent lighting scheme.
SHEET E2.2 - FIRST FLOOR OFFICE PLAN - POWER
Refer to revised drawing for the following:
1. Revised circuiting in the first floor office areas to move IG computer
receptacles to a new UPS panel.
2. Revised circuiting in the first floor office areas and break areas to put
the office system on standby (generator) power while leaving the break
on normal power. Panelboards were also revised and relocated to accomodate
this change.
3. Revised circuiting in the first floor office areas based on a future
modular furniture change from 3 circuit to 4 circuit.
4. Revised telephone service conduits.
SHEET E2.3 - SECOND FLOOR OFFICE PLAN - POWER
Refer to revised drawing for the following:
1. Revised circuiting in the second floor office areas to move IG computer
receptacles to a new UPS panel.
2. Revised circuiting in the second floor office areas to put the office
system on standby (generator) power.
3. Revised circuiting on the second floor based on a future modular furniture
change form 3 circuit to 4 circuit.
4. Revised telephone service conduits.
5. Added note for alternate for UPS system being added to the construction
contract.
6. Added UPS panels which will now serve IG computer outlets on the first and
second floors. Panels will be fed by feed from UPS which is not in this
contract.
<PAGE> 63
SHEET E2.4 - FIRST FLOOR OFFICE PLAN - LIGHTING
Refer to revised drawing for the following:
1. Added light in new telephone riser closet.
2. Add switch to vending lights.
SHEET E2.5 - MEZZANINE FLOOR OFFICE PLAN - LIGHTING
1. Connect type F4 which is on column line 4, and between J and K to nearest
circuit.
SHEET E3.1 - ENLARGED PLANS - ELECTRICAL
Refer to revised drawing for the following:
1. Added transfer switch and relocated emergency panels as a part of the
change to accommodate the addition of the office building onto standby
power.
SHEET E4.1 - ELECTRICAL RISER DIAGRAMS
Refer to revised drawing for the following:
1. Revised riser.
SHEET E5.1 - ELECTRICAL EQUIPMENT SCHEDULE AND LOAD ANALYSIS
Refer to revised drawing for the following:
1. Revised building load analysis to reflect changes made throughout this
addendum.
2. Revised generator load analysis to reflect changes and to more clearly
subtotal loads to accommodate planning for future generator.
3. Clarified symbol legend to more clearly identify floor outlets on first
floor.
4. Revised note on short circuit schedule.
5. Revised transformer schedule based on distribution revisions.
6. Corrected note on wattage on type HA lighting fixture.
<PAGE> 64
SHEET E5.2 - PANEL SCHEDULES
Refer to revised drawing for the following:
1. Revised panel schedules reflecting distribution revisions.
2. Removed two duplicate schedules inadvertently shown on previous printing.
SHEET E5.3 - PANEL SCHEDULES
Refer to revised drawing for the following:
1. Revised panel schedules reflecting distribution revisions.
SHEET E5.4 - PANEL SCHEDULES
Refer to revised drawing for the following:
1. Revised panel schedules reflecting distribution revisions.
SHEET E5.5 - PANEL SCHEDULES
Refer to revised drawing for the following:
1. Revised panel schedules reflecting distribution revisions.
SHEET E5.8 - PANEL SCHEDULES
Refer to revised drawing for the following:
1. Revised panel schedules reflecting distribution revisions.
PLUMBING
SHEET P5.1 - PLUMBING DETAILS AND SCHEDULES
1. Add the following to the PLUMBING FIXTURE SCHEDULE.
FCO J.R. SMITH NO. 4020-Y, FINISHED FLOOR CLEANOUT WITH STAMPED CLEANOUT
MARKER OR J.R. SMITH NO. 4051, TILE FINISHED FLOOR CLEANOUT.
CONTRACTOR TO INSTALL MARKER TYPE IN CARPET FLOOR AREAS AND TILE TYPE
IN TILE FLOOR AREAS.
<PAGE> 65
SPECIFICATIONS
SECTION 15250 - INSULATION
1. Replace Article 2.04 A 1 with the following:
All indoor pipe and fittings.
2. Replace Article 2.06 A 1 with the following:
See also Section 15840 - DUCTWORK to determine where duct insulation is
required. All concealed supply ductwork insulation shall be external. All
exposed supply ductwork and all return ductwork insulation shall be
internal.
3. Remove Article 2.06 C.
SECTION 15764 - COMPUTER ROOM PROCESS COOLING
1. Replace Paragraph 1.01 B with the following:
B. Includes:
1. Under the base bid, relocate the existing computer room process
cooling unit complete with humidifier, filters, and factory wired
control system.
2. Under Alternate No. 10, provide a new process cooling system. Refer
to drawing addendum items to determine requirements of new unit.
SECTION 15840 - DUCTWORK
1. Replace Article 1.05 C with the following:
Exceptions: Exposed supply ductwork routed in the Manufacturing Area does
not require duct sealant.
2. Replace Article 1.06 B 3 with the following:
Insulation: 1-1/2 inch thick duct wrap (Concealed ducts).
3. Add Article 1.06 B 4 with the following:
Insulation: 1 inch thick duct liner (Exposed ducts).
<PAGE> 66
SECTION 15900 - CONTROLS
1. Article 2.02 ACCEPTABLE MANUFACTURERS: Add the following to the end of
Paragraph A.
6. CSI.
7. ASI.
2. Article 2.05 ROOFTOP UNIT CONTROLS: Replace paragraph B.1. with the
following:
1. ANALOG INPUT POINTS
a. Outside air temperature. One location only required.
b. Supply air temperature
c. Zone temperature
d. Return air temperature
e. Active setpoint
f. Not used.
g. Not used.
h. Not used.
3. Article 2.05 ROOFTOP UNIT CONTROLS: Replace paragraph B.2. with the
following:
2. BINARY INPUT POINTS
a. Smoke/fire alarm status.
b. Heating status
c. Not used.
d. Not used.
e. Supply fan on/off status
f. Compressor lockout
g. Supply fan failure
h. Not used.
4. Article 4.01 ROOF TOP UNITS: Replace paragraph G with the following:
G. Not used.
5. Article 4.01 ROOF TOP UNITS: Replace paragraph J with the following:
J. Not used.
<PAGE> 67
SECTION 16140 - WIRING DEVICES
Replace Article 2.09 with the following:
2.09 FLOOR OUTLETS
A. Flush Floor Outlets: Equal to Walker Walkerbox Resource RFB with the
following:
1. General: Provide flush floor outlets complete with all mounting
accessories and trim appurtenances required, including flange
assemblies and trim plates required for the specific outlet in the
specific floor.
2. Receptables: Provide a 15A-125V duplex receptacles unless the
drawings indicate a special device rating.
3. Telephone Outlets: Modular telephone outlet or wiring compartment
for connection use by telephone installers.
4. Cover: Provide undercarpet recessed activation through metal or
polycarbonate hatches, equal to Walker RAK or RAKM. Where box will
be used for future furniture feed -- power, telephone, and data --
provide cover equal to Walker RFB4-FBF.
B. Poke Through Floor Outlets: Flush type. Provide combination duplex and
telephone outlet with fire rated poke through assembly designed to
maintain the floor fire rating. Similar to Walker 1500 series with
services required by application.
C. Acceptable Manufacturers: One of the following:
1. Raceway Components.
2. Walker.
3. Hubbell.
SECTION 16170 - MAIN SWITCHBOARS
1. Rewrite Article 2.07 MAIN PROTECTIVE DEVICES - A. to read the following:
Devices greater than 1200 amps: . . .
2. Rewrite Article 2.07 MAIN PROTECTIVE DEVICES - B. to read the following:
Devices 1200 amps and lower: . . .
<PAGE> 68
[HOUSE REH BURWELL ARCHITECTS LETTERHEAD]
END OF ADDENDUM
<PAGE> 69
[HOUSE REH BURWELL ARCHITECTS LETTERHEAD]
Addendum No. 2
to the General Contractor
BID DOCUMENTS FOR:
PROJECT X
HRBA No. 94097
February 14, 1995
This Addendum shall be considered part of the plans and specifications for
the above named project as though it had been issued at the same time and
incorporated integrally with such plans and specifications. Where provisions
of the following supplementary plans and specifications contained in the
addenda from the provisions of the original plans and specifications, the
provisions in this addendum shall govern and take precedence.
SPECIFICATIONS
Item 2.1
Section 6400
Architectural Woodwork
Change Paragraph 2.02, E.3 to read:
Melamine Backing Sheet (Liner): 120 gram paper on MDF core from
MEDITE or equal - white pine particle fiber only.
Item 2.2
Section 10650
Operating Partition
Change Paragraph 2.03, A to read:
Type: Modernfold "Acousti Seal" 932 Series Bi-Fold Series
complete with.........
Item 2.3
Section 10650
Operating Partition
Change Paragraph 2.03, A.3 to read:
Panel Finish: Fabric, Maharem Tekwall 1000, color to be
selected by architect.
Item 2.4
Section 10650
Operating Partition
Change Paragraph 2.03, C.3 to read:
Floor Seals: Modernfold "Automatic Floor Seals"
Item 2.5
Section 09900
<PAGE> 70
Painting
Change Paragraph 2.04, A.5 to read:
Dry Fog shall be applied in manufacturing area to the exposed
deck, joists, columns (to the floor) HVAC ducts and devices,
miscellaneous conduit, etc. but not lighting fixtures. Color
shall be high reflectance white, 60% sheen.
Item 2.6
Section 6400
Architectural Woodwork
Omit paragraph 2.02, E.4.
Item 2.7
Addendum No. 1.
Clarification on BEST locks:
Item 1.6 Alternate No. 14 should read: Use BEST Inc.,
removable core locks OR EQUAL......
DRAWINGS
Item 2.8
Sheet A2.6 & 2.7
See Attached Clarification of Finishes and Alternates to
Finishes.
Item 2.9
Sheet A7.1
Equipment (appliance) schedule:
DW should be: G.E. GSD 1130 L
MW should be: JEM26 WH
Last column of chart indicates quantity.
<PAGE> 71
[HOUSE REH BURWELL ARCHITECTS LETTERHEAD]
CLARIFICATION
Finishes and Alternates
Sheets A2.6 and A2.7 have several inconsistancies which have generated
many questions. This clarification will attempt to answer them.
Materials:
Final finishes have not been approved at this time. The architect is
attempting to establish a scope of work and quality of material for
this bid. Several alternate materials will be examined to fit the
owner's budget.
Standard materials listed are not exclusive, they merely establish a
standard of quality and price.
Standard materials for the base bid as indicated on the drawing are
either allowances or a particular material. Exceptions to this are:
Base materials are shown on the plans as B2, W2, etc. Requested
alternates are listed in the schedule (W2 alt.) and should be
calculated by stating the price difference to replace W2 with that
specified in the alternate
<TABLE>
<CAPTION>
<S> <C> <C>
Floors:
F3 Alternate 1: Vinyl Composition Tile: Armstrong Premium Ex
Excelon color to be
selected.
F3 Alternate 2: Ceramic Tile: Buchtel Caesar Standard
color to be selected.
B4 Alternate Ceramic Tile: Buchtel Caesar Standard
color to be selected
</TABLE>
<PAGE> 72
<TABLE>
<CAPTION>
<S> <C>
W2 Alternate BFG Koroseal Muratone
Type II
W8 Alternate BFG Koroseal Muratone
Type II
</TABLE>
Please use this form for alternate calculation on interior finishes.
<TABLE>
<CAPTION>
ALTERNATE DESCRIPTION $/($)
----------------------------------------------------------------------
<S> <C>
F1(alt.) Carpet Upgrade
F3 (alt. 1.) Use VCT in area shown as F3
F3 (alt. 2.) Use Ceramic Tile in lieu of F3
B4 (alt.) Use ceramic base to match F3 alt2
where B4 is shown - only used in
with F3 alt2
W2 alt Use VWC in lieu of polymix paint at locations
of W2A; W2B, W2C, W2D
W8alt Use VWC in lieu og polymix paint at locations
of W8 (std. paint)
</TABLE>
Ceilings:
Omit any alternate listed on the ceiling section of these drawings.
We will be considering ALTERNATE No. 4 only for ceilings.
Omit door references from these drawings, use the door schedule
provided on A7.1
Base B4
See attached sketch A and B dated 14 FEB 95 to show where this base is
scheduled.
END OF CLARIFICATION
<PAGE> 73
[HOUSE REH BURWELL ARCHITECTS LETTERHEAD]
SKETCHES
<PAGE> 74
[GRAPHIC - FLOOR PLAN A2.6]
<PAGE> 75
[GRAPHIC - FLOOR PLAN A2.7]
<PAGE> 76
DATE: February 14, 1995
ADDENDUM NO.: Two (2)
PROJECT K-Tec Electronics
LOCATION: Sugar Land, Texas
JOB: 3413991
NOTICE TO BIDDERS
The Addendum shall be considered part of the Contract Documents for the above
mentioned project as though it had been issued at the same time and incorporated
integrally therewith. Where provisions of the following supplementary data
differ from those of the original Contract Documents, this Addendum shall govern
and take precedence.
Bidders are hereby notified that they shall make the necessary adjustments in
their estimates on account of this Addendum. It will be construed that each
Bidder's Proposal is submitted with full knowledge of all modifications and
supplemental data specified herein.
MECHANICAL
SHEET M-2.2 OFFICE FIRST FLOOR PLAN - MECHANICAL
1. Change all type "C" air devices to type "F".
2. Change all two type "G" air devices in the Elevator Lobby to type "F", 8"
diameter, 200 cfm.
SHEET M-2.3 OFFICE MEZZANINE FLOOR PLAN - MECHANICAL
1. Change all type "C" air devices to type "F".
2. Change the three type "G" air devices in the Elevator Lobby to type "F", 8"
diameter, 250 cfm.
SHEET M-5.1 MECHANICAL SCHEDULES
Make the following changes to the AIR DEVICE SCHEDULE.
1. Revise air device type "C" to read "NOT USED."
<PAGE> 77
2. Revise air device type "F" to read as follows:
PRICE SERIES RCDE, TWO POSITION, ROUND CONE SUPPLY DIFFUSER WITH VCR-7
STEEL DAMPER. STEEL CONSTRUCTION. NECK SIZE NOTED ON DRAWINGS. DUCT OR
SURFACE MOUNTED. PROVIDE WITH FINISH "PC15" ALUMINUM PRIME COAT SUITABLE
FOR FIELD PAINTING.
3. Remove air device type "G".
4. Remove air device type "H".
ELECTRICAL
SHEET E5.1 - PANEL SCHEDULES
Refer to revised drawing for the following:
1. Omit digital metering on distribution switchboards "DAA" and "DBA".
Provide digital metering in emergency distribution switchboard "ME" for
main feeder and separate digital metering for each of four (4) branch
devices.
2. Change circuit breaker for distribution panel "DBB" from 600 amp to 800
amp. Change feeder to two sets of 4-500KCMIL, 1-#1/O GND, 4"C.
3. Change distribution panel "DBB" from 600 amp MLO to 800 amp MLO. Change
circuit breaker for distribution panel "DBH" from 100 amp to 400 amp.
Changed feeder to 4-500KCMIL, 1-#1/OGND., 4"C.
4. Change distribution panel "DBH" from 600 amp MLO to 400 amp MLO.
<PAGE> 78
[HOUSE REH BURWELL ARCHITECTS LETTERHEAD]
END OF ADDENDUM
<PAGE> 79
[HOUSE REH BURWELL ARCHITECTS LETTERHEAD]
Addendum No. 3
to the General Contractor
BID DOCUMENTS FOR:
PROJECT X
HRBA No. 94097
February 15, 1995
This Addendum shall be considered part of the plans and specifications for the
above named project as though it had been issued at the same time and
incorporated integrally with such plans and specifications. Where provisions of
the following supplementary plans and specifications contained in the addenda
from the provisions of the original plans and specifications, the provisions in
this addendum shall govern and take precedence.
SPECIFICATIONS
Item 3.1
Section 07510
Change 2.04, C,2 to 2.5" Fesco Foam Isocyanurate Composite
board.
Item 3.2
Section 07532 & ALTERNATE No. 7
Insulating value of the insulation in this roof must meet a
minimum of R-19.
Insulation shall be fastened with I-90 fastening requirements.
Item 3.3
ALTERNATE No. 13
Insulating value of the insulation in this roof must meet a
minimum of R-19.
Change ISO 95+ insulation thickness to 2.5" in lieu of 2.3".
Item 3.4
ALTERNATE No. 8
Change Roofing system to Schuller 4 C I D using type IV felts and
Dyna Kap FR.
Change Roof Insulation to 2.5" Fesco Foam Isocyanurate Composite
and 3/4" Fesco Board. Compy with I-90 fastening requirements.
DRAWINGS
Item 3.5
Various Drawings
Change Drawing notations to delete 1/2" perlite board above metal
deck - polyisocyanurate composite board lays directly on metal
deck.
Change Polyisocyanurate composite board from 2.3" to 2.5" thick
on various roof details.
<PAGE> 80
DATE: February 15, 1995
ADDENDUM NO: Three (3)
PROJECT: K-Tec Electronics
LOCATION: Sugar Land, Texas
JOB: 3413991
NOTICE TO BIDDERS
The Addendum shall be considered part of the Contract Documents for the above
mentioned project as though it had been issued at the same time and incorporated
integrally therewith. Where provisions of the following supplementary data
differ form those of the following supplementary data differ form those of the
original Contract Documents, this Addendum shall govern and take precedence.
Bidders are hereby notified that they shall make the necessary adjustments in
their estimates on account of this Addendum. It will be construed that each
Bidder's Proposal is submitted with full knowledge of all modifications and
supplemental data specified herein.
MECHANICAL
SHEET M-2.3 - OFFICE MESSANINE FLOOR PLAN - MECHANICAL
1. Revise Sheet M-2.3 addendum No.1, item 2 which added a new Liebert computer
room air conditioning system. Reduce tonnage from 15 tons to 8 tons.
PLUMBING
SHEET P-2.1 - MANUFACTURING FLOOR PLAN - PLUMBING
1. Delete all condensate roof captors and all associated piping including
Keyed Notes #10 and #11.
SHEET P-3.1 - MANUFACTURING ROOF PLAN - PLUMBING
1. Delete condensate roof captors (4"RC-1), from roof plan, including Keyed
Note #5.
<PAGE> 81
SHEET P-5.1 - PLUMBING DETAILS AND SCHEDULES
1. Delete "RC-1" specification from the PLUMBING FIXTURE SCHEDULE.
<PAGE> 82
[HOUSE REH BURWELL ARCHITECTS LETTERHEAD]
END OF ADDENDUM
<PAGE> 83
EXHIBIT B
K*TEC ELECTRONICS, INC.
[GRAPH - K*TEC ELECTRONICS HIGHLIGHT SCHEDULE]
Schedule Notes:
1. Contractor reserves the right to revise activity sequence and duration as
necessary.
2. Schedule allows for (14) work days lost to inclement weather.
<PAGE> 84
EXHIBIT C
December 26, 1994
Job No. 67609.006
DESCRIPTION OF
51.0000 ACRES
TRACT 130
Being 51.0000 acres of land located in the Brown & Belknap League, Abstract
No. 15, Fort Bend County, Texas, being a portion of that certain 1303.637 acre
tract of land conveyed to Sugarland Properties Incorporated by instrument of
record in Volume 607, Page 80, Deed Records, Fort Bend County, Texas and more
particularly being all of Tract "130", Commercial Reserve "A" of Sugar Land
Business Park, Tract 130 and 131, a subdivision of record under Slide No. 1356B,
Plat Records, Fort Bend County, Texas, said 51.0000 acres being more
particularly described by metes and bounds as follows ( all bearings referenced
to the Texas Coordinate System, South Central Zone);
COMMENCING for reference at an "X" cut in concrete found marking the
southwest corner of Crown Cork & Seal, Sugar Land, Texas, a plat of record in
Slide No. 1252A, Plat Records, Fort Bend County, Texas, same being on the north
right-of-way line of Jess Pirtle Boulevard (100 feet wide) of record in Volume
26, Page 11, Plat Records, Fort Bend County, Texas;
Thence, with said northerly right-of-way line of Jess Pirtle Boulevard, the
following four (4) courses:
1. South 87 degrees 44 minutes 17 seconds West, 70.51 feet to a point;
2. 38.74 feet along the arc of a tangent curve to the left having a
radius of 2050.00 feet, a central angle of 01 degrees 04 minutes 58
seconds and a chord that bears South 87 degrees 11 minutes 48
seconds West, 38.74 feet to a 5/8-inch iron rod set for corner, the
POINT OF BEGINNING;
3. 678.21 feet along the arc of a tangent curve to the left having a
radius of 2050.00 feet, a central angle of 18 degrees 57 minutes 19
seconds and a chord that bears South 77 degrees 10 minutes 39
seconds West, 675.12 feet to a 5/8-inch iron rod set for corner;
4. South 67 degrees 42 minutes 00 seconds West, 178.27 feet to a
5/8-inch iron rod set for corner on the easterly line of Drainage
Reserve "C";
Page 1 of 3
<PAGE> 85
51.0000 Acres December 16, 1994
Job No. 67609.006
Thence, with said easterly line, the following three (3) courses:
1. North 02 degrees 30 minutes 08 seconds West, 626.07 feet to a
5/8-inch iron rod set for corner;
2. South 87 degrees 29 minutes 52 seconds West, 330.00 feet to a
5/8-inch rod set for corner;
3. North 02 degrees 30 minutes 08 seconds West, 1446.52 feet to a
5/8-inch iron rod set for corner, same being the southwest corner of
Tract "131", Commercial Reserve "B" of said Sugar Land Business
Park, Tract 130 and 131;
Thence, leaving said easterly line, with the south line of said Tract
"131", Commercial Reserve "B", North 87 degrees 44 minutes 17 seconds East,
1234.09 feet to a 5/8-inch rod set for corner on the westerly right-of-way line
of Gillingham Lane (width varies), same being the southeast corner of said Tract
"131", Commercial Reserve "B";
Thence, with said westerly right-of-way line, the following six (6)
courses:
1. South 02 degrees 15 minutes 43 seconds East, 1371.30 feet to a
5/8-inch iron rod set for corner, the beginning of a curve;
2. 34.25 feet along the arc of a tangent curve to the right having a
radius of 535.00 feet, a central angle of 03 degrees 40 minutes 04
seconds and a chord that bears South 00 degrees 25 minutes 41
seconds East, 34.24 feet to a 5/8-inch iron rod set for corner;
3. South 01 degrees 24 minutes 21 seconds West, 356.55 feet to a
5/8-inch rod set for corner, the beginning of a curve;
4. 34.25 feet along the arc of a tangent curve to the left having a
radius of 535.00 feet, a central angle of 03 degrees 40 minutes 04
seconds and a chord that bears South 00 degrees 25 minutes 41
seconds East, 34.24 feet to a 5/8-inch iron rod set for corner; -
5. South 02 degrees 15 minutes 43 seconds East, 50.82 feet to a
5/8-inch iron rod set for corner, the beginning of a curve;
Page 2 of 3
<PAGE> 86
51.0000 Acres December 26, 1994
Job No. 67609.006
6. 62.08 feet along the arc of tangent curve to the right having a
radius of 40.00 feet, a central angle of 88 degrees 55 minutes 02
seconds and a chord that bears South 42 degrees 11 minutes 48
seconds West, 56.03 feet to the POINT OF BEGINNING and containing
51.0000 acres of land.
This description is based on a boundary survey and plat prepared by the
undersigned dated December 26, 1994.
RUST LICHLITER/JAMESON
/s/Keith W. Monroe
- -------------------------------------
Keith W. Monroe
Registered Professional Land Surveyor
Texas Registration No. 4797
[GRAPHIC - STATE OF TEXAS SEAL]
Page 3 of 3
<PAGE> 87
EXHIBIT D
HEADING 1
PROJECT COST BUDGET
K*Tec Manufacturing Facility
4-14-95
<TABLE>
<CAPTION>
Series Sub- Cost Anchor
Title Title Code Description Budget
<S> <C> <C> <C> <C>
1000 LAND
1100 Land Cost 0
2000 ARCHITECTURAL AND ENGINEERING
2100 Design Architecture
2113 Design Arch-Contract Docs 108,000
2119 Design Arch-Reimbursables 24,000
2120 Landscape Architecture 15,000
Architectural Computer Graphics 10,000
Interior Design 10,000
2300 ENGINEERING - SITE PREPARATION
2320 Environmental Studies by K-TEC 0
2340 Geotechnical Testing 20,000
2350 Surveys by SPI
2360 Platting by SPI
2370 Civil Engineering
2371 Civil Eng-Design 30,000
2372 Civil Eng-Construction 5,000
2500 ENGINEERING - BUILDING CONSTRUCTION
2510 Structural Engineering 47,000
2520 MEP Engineering 75,000
2540 Materials Testing 75,000
Roof Inspection 15,000
3000 SITE PREPARATION
3100 Earthwork incl w/4100 0
3300 Utility Construction incl w/4100 0
3500 Paving Construction incl w/4100 0
4000 BUILDING CONSTRUCTION
4100 Building Shell* 250,750sf at $36.49/sf 9,149,035
4300 Building Interior incl w/4100 0
4500 Grounds
4510 Landscaping 100,000
4520 Lighting incl w/4100 0
4530 Interior Graphics Allowance 15,000
4540 Irrigation 50,000
4700 Fees
4710 Building Permits incl w/4100 0
4720 Bonds incl w/4100 0
4730 NCC Submittal Fees 2,000
4740 State Handicap Review 1,000
4902 Legal Fees 15,000
5000 CARRYING COSTS
5100 Construction Loan Interest 0
5300 Ad Valorem Taxes 0
5500 POA Assessments 0
8000 PROJECT MANAGEMENT
8100 Development Fees 2.50% 244,151
8900 Other
8901 Other
8999 Contingency 200,000
PROJECT TOTAL $/BLDG SF = 40.71858 10,210,186
</TABLE>
* For recap of this amount see Exhibit D-1.
<PAGE> 88
EXHIBIT D-1
K-TEC ELECTRONICS
PRELIMINARY RECAP
4/13/95
<TABLE>
<S> <C> <C>
Base Bid (3/10/95) $9,073,416.00
V.E. Alternate No. 1: (Revised)
Revise paving reinforcing to be No. 3
rebar at 18 inches o.c.e.w. at 5 inches
paving and No. 4 rebar at 24 inches
o.c.e.w. at 7 inches paving in lieu of
utilizing No. 4 rebar throughout. DEDUCT $ (24,186.00)
V.E. Alternate No. 4:
Revise gas piping system for roof top
units to utilize 1 inch pipe at (5)
pound pressure to all units. System
to utilize an individual regulator at
each unit in lieu of the (2) large
regulators specified. DEDUCT $ (3,691.00)
V.E. Alternate No. 5:
Revise site and building sanitary
sewer pipe system as follows:
Delete all sanitary sewer piping
below the slab as shown on plan page
P2.1. Relocate sanitary sewer
manholes No. 1 and 2 (60) feet west.
Eliminate 199 linear feet of 6 inches
sanitary sewer pipe serving the office
plumbing (C6.1). Enter the building
with sanitary piping at two locations:
once at column line A5 and again at
column line A13 to collect all sanitary
piping. DEDUCT $ (8,595.00)
V.E. Alternate No. 6:
Revise the site domestic water service
as follows:
Relocate the domestic water meter
approximately 200 feet north, install
the 4 inch domestic water line and
meter in grass area.
</TABLE>
<PAGE> 89
Page -2-
<TABLE>
<S> <C> <C>
on north side of service road. Install
approximately 350 linear feet of 4 inch
piping west of meter, and 200 linear feet
of 4 inch piping south to meet domestic
water entry point to the building as
shown on plans. Additionally, install
30 linear feet of 6 inch PVC sleeve under
paving at approximately storm sewer
manhole D-10 to allow for future Phase II
water service extension. DEDUCT $ (4,397.00)
Revise roof drain underground storm to
utilize 12 inch pipe for storm sewer
collection in lieu of 18 inch pipe.
Substitute 12 inch PVC, SDR 35 storm
sewer pipe for 12 inch RCP pipe for use
in all areas in storm sewer piping system.
V.E. Alternate No. 13: (Revised)
Provide an alternate manufacturer for
all floor drains, cleanouts, and roof
drains. (Specified floor drain to remain
in office area.) DEDUCT $ (2,301.00)
V.E. Alternate No. 14:
Provide an alternate manufacturer for
the air valves. DEDUCT $ (2,183.00)
Provide 1 inch fiberglass duct board
in all office areas that are concealed
on supply and return air in lieu of
specified sheet metal ducts. Sheet
metal with a 1 inch liner will be
utilized through the roof.
</TABLE>
<PAGE> 90
Page -3-
<TABLE>
<S> <C> <C>
V.E. Alternate No. 17:
Provide belt driven fans in lieu of
direct drives as specified on exhaust
fan numbers 12 through 20. DEDUCT $ (1,548.00)
V.E. Alternate No. 22:
Provide an alternate electrical fixture
package in lieu of the specified
manufacturer. Alternate package to be
equal to performance as specified
manufacturer. (Allows multiple
manufacturer bids in lieu of sole
source specified.) DEDUCT $ (18,823.00)
Alternate No. 4:
Provide 2 x 2 ceiling grid and tile for
office areas in lieu of 2 x 4 tile
shown. Tile manf. and pattern to
remain as scheduled. ADD $ 2,500.00
Alternate No. 5:
Add Infrared sensors for toilets and
urinals as specified in MEP section. ADD $ 21,991.00
Alternate No. 6:
Provide pre-action sprinkler in lieu of
FM-200 system in computer rooms as
specified. DEDUCT $ (7,200.00)
Alternate No. 7:
Provide a mechanically-fastened single-
ply roofing system/Section 07532
instead of asphalt built-up roofing
system specified in Section 07510 as
Base Bid. (Includes 20 Year Material,
and 15 Year Labor and Material,
Warranty.) DEDUCT $ (18,000.00)
Alternate No. 14:
Use Best, Inc., removable core locks in
lieu of system specified. ADD $ 2,992.00
</TABLE>
<PAGE> 91
Page -4-
<TABLE>
<S> <C> <C>
Alternate No. 18:
Provide VWC in lieu of polymix paint
at locations of W2A, W2B, W2C, W2D. DEDUCT $ (354.00)
Alternate No. 19:
Provide VWC in lieu of standard paint at
locations of W8. ADD $ 22,910.00
Alternate No. 20
Provide Payment and Performance Bond,
if required. ADD $ 78,200.00
Earthwork Change Proposal (CP#1)
Provide lime stabilization of building
pad subgrade at a rate of 50#/SY at 9
inches deep. Stabilized subgrade to
count towards 3 foot select fill
requirement ADD $ 38,304.00
=============
TOTAL $9,149,035.00
=============
</TABLE>
<PAGE> 92
EXHIBIT E
K*TEC MANUFACTURING FACILITY
QUALIFICATIONS TO PLANS AND SPECIFICATIONS
1. Contract form between E.E. Reed Construction Company ("EER") and Sugarland
Properties, Inc. ("SPI") shall utilize terms and conditions similar to
previous EER/SPI contracts (i.e. AIA Lump Sum).
2. Proposal excludes demolition and/or removal of underground obstructions.
3. Proposal excludes soil poisoning (termite treatment).
4. Proposal includes an allowance of $150,000 for all landscape and irrigation
work.
5. Proposal is based upon utilizing 22 gauge painted steel roof deck in lieu of
galvanized roof deck.
6. Proposal excludes Dow-Seal TS CPE waterproofing membrane beneath ceramic
tile floors.
7. Proposal excludes any fill in the Phase II building pad limits. This area
will be brought to an elevation of 82 feet by the ditch contractor after
which SPI/EER will swale to drain to within limits.
8. Proposal excludes temporary fire lane per response from deputy Fire Marshall
that it was not needed.
9. Proposal acknowledges House Reh Burwell revised paving scheme at the two
truck court areas in which approximately 35,000 SF of paving was deleted.
Savings have been incorporated into the proposal amount but the change will
be shown on revision #5.
10. Proposal excludes glass and aluminum entry doors at reception 102. A single
plastic laminate-clad door with electric strike is provided at this area.
11. Proposal is based upon providing McGuire dock levelers (25,000 pound
capacity) or equal.
12. Proposal is based upon utilizing standard weight steel hinges with brushed
chrome finish; and utilizing plain bearing hinges at doors without closers.
13. Proposal excludes current specification for hot water heater. Specification
to comply with specifications provided in November pricing.
14. Proposal excludes shock arresters on domestic water piping system.
15. Proposal excludes any tnemic paint for structural or miscellaneous steel.
16. Proposal is based upon providing one (1) shop coat of red oxide paint for
all steel, joists, stairs, handrails, and all miscellaneous steel and metal.
17. Proposal excludes filling of erection bolt holes.
18. Proposal includes providing standard isoboard in lieu of composite
polyisocyanurate insulation.
19. Site caulking to be based upon W.R. Meadows Hi Spec hot pour rubberized
asphalt with joints prepared with sandblasting and cleaning prior to
caulking. Quantity of joints will be revised/increased in revision #5.
20. Proposal excludes providing shop drawings for acoustical ceilings.
21. Proposal is based upon allowing for the billing for and payment of off-site
stored materials provided that insurance certificates accompany such
billings.
22. Proposal is based upon SPI and EER standard insurance policy and limits.
Additional insurance, if obtainable, will be paid for by owner.
23. Proposal includes W-8 paint finish to be standard paint as stated on drawing
A2.6 in lieu of that stated in the alternate listing.
24. Proposal excludes:
-ad valorem taxes
-Sugar Land Business Park property assessments
-Furnishing, fixtures and equipment not contained in the contract
documents or designated as furnished by others
-moving expenses
-fit-up of equipment or fixtures not contained in the contract documents
or designated as furnished by others
-financing or the cost of financing
<PAGE> 93
-security system or equipment
-audio visual system or equipment
-computer system or equipment not contained in the contract documents
-telephone system or equipment not contained in the contract documents
-changes to the documents required by the City of Sugar Land, State of
Texas, American Disability Act, or SBCCI.
25. Proposal is based upon value engineering alternates and alternates listed in
Exhibit "D-1".
26. Proposal is based upon owner furnished and installed UPS and Leibert HVAC in
the computer room.
27. Proposal is based upon one 1000KW owner furnished emergency generator.
28. Proposal includes an allowance of $15,000 for interior graphics.
29. Proposal excludes creating a berm along the ditch located on the Western
property line.
<PAGE> 94
EXHIBIT F
LETTER OF CREDIT REQUIREMENTS
Draw Requirements
1. Written, sworn certifications of (i) two (2) officers of SPI on behalf
of SPI as to items (a) through (h) below, and (ii) an officer of the Project
Architect on behalf of the Project Architect as to item (b) below:
a. One or more members of the Project Team ("Contractor") have
delivered an application for payment to SPI, in accordance with the
construction contract or other contract between such respective Contractors
and SPI ("Contract"), in an amount equal to or greater than the amount SPI
is requesting to draw under the letter of credit (the "Draw Amount"), and
the draw under the letter of credit is being requested in connection with
such application for payment.
b. The Draw Amount is properly due and owing by SPI to the
Contractor pursuant to and in accordance with the Contract for work
performed by the Contractor in respect of the construction project
("Project") described in the Development and Construction Management
Agreement between SPI and Kent ("Agreement").
c. SPI is obligated to pay the Draw Amount to the Contractor.
d. The Draw Amount is properly due and owing by Kent to SPI pursuant
to and in accordance with the Agreement, and Kent is obligated to pay such
amount to SPI.
e. SPI delivered to Kent an application for payment of the Draw
Amount in connection with the Contractor's application, and presented to
Kent the documentation required in connection therewith by the Agreement,
all in accordance with the Agreement, and such application was not paid
on or before nine (9) days thereafter, or thereafter.
f. SPI sent notice of such default to Kent in accordance with the
Agreement, and Kent failed to cure such default on or before ten (10) days
after receiving such notice, or thereafter.
g. The Draw Amount remains unpaid by Kent, and SPI has made no other
request for a draw under the letter of credit with respect to the Draw Amount.
<PAGE> 95
h. True, correct and complete copies of the Contractor's application
for payment to SPI, and SPI's application for payment to Kent, are
attached to the certificate.
The certification by SPI as to items (c) and (d) above may be followed, at
SPI's option, by the following qualification: "The preceding certification by
SPI is made to the best of SPI's knowledge and belief, based upon reasonably
diligent investigation by SPI."
2. A sight draft in an amount not to exceed the Draw Amount, addressed to
the issuer of the letter of credit.
Additional Provisions
1. Term of letter of credit to be one year from the date of the
Agreement; all draw requests, sight drafts and other documentation must be
presented to the issuer of the letter of credit prior to expiration of the
letter of credit. If, however, the Project has not been finally completed and
the Agreement has not been terminated one year from the date of the Agreement,
the letter of credit, in the then current amount, shall be extended until
thirty (30) days after the then estimated date of Final Completion pursuant to
the then current Project Schedule. The failure to extend the letter of credit
as provided above shall constitute and Event of Default under the Agreement and
SPI shall have the same remedies as provided in Article V of the Agreement for
Kent's failure to deliver the initial letter of credit.
2. Letter of credit to be surrendered upon final payment of all amounts
due from Kent pursuant to the Agreement, or upon expiration of the letter of
credit, whichever first occurs.
Exhibit F
<PAGE> 1
EXHIBIT 10.26
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
DOCUMENTARY SERVICES DIVISION
P. O. Box 2558, Houston, Texas 77252-8300
717 Travis Street, Houston, Texas 77002-8300
Telex: 166053 TCB
Issue Date: May 02, 1995
L/C No. I-452737
ADVISING BANK APPLICANT
**************Direct**************** Kent Electronics Corporation
7433 Harwin Drive
Houston, Texas 77036
BENEFICIARY
Sugarland Properties, Inc. Amount: USD 2,500,000.00
4665 Sweetwater Blvd., Suite 100 (Two Million Five Hundred Thousand
Sugar Land, Texas 77479 and 00/100 United States Dollars)
Gentlemen:
We hereby establish our irrevocable Letter of Credit No. I-452737 in
your favor at the request and for the account of Kent Electronics Corporation
for an amount not exceeding $2,500,000.00 (U.S. Dollars Two Million Five
Hundred Thousand and 00/100).
This Letter of Credit is available by your draft drawn at sight on
Texas Commerce Bank N.A. Houston, duly signed, endorsed, and marked: "Drawn
under Texas Commerce Bank N.A. Houston Letter of Credit No. I-452737 dated May
2, 1995" accompanied by the following documents:
1. Written, sworn certifications of (i) two (2) officers of Sugarland
Properties, Inc. ("SPI") on behalf of SPI as to items (A) through (H) below,
and (ii) an officer of House REH Burwell Architects (the "Project
Architect") on behalf of the Project Architect as to item (B) below.
A. One or more members of the project team ("Contractor") have delivered
an application for payment to SPI, in accordance with the
construction contract or other contract between such respective
contractors and SPI ("Contract") in an amount equal to or greater
than the amount SPI is requesting to draw under the Letter of Credit
(the "Draw Amount"), and the draw under the Letter of Credit is being
requested in connection with such application for payment. "Project
Team" has the meaning ascribed
<PAGE> 2
Page 2
to it in the Development and Construction Management Agreement
("Agreement") between Kent Electronics Corporation ("Kent") and SPI.
B. The Draw Amount is properly due and owing by SPI to the Contractor
pursuant to and in accordance with the Contract for work performed by
the Contractor in respect of the construction project ("Project")
described in the Agreement.
C. SPI is obligated to pay the Draw Amount to the Contractor.
D. The Draw Amount is properly due and owing by Kent to SPI pursuant to
and in accordance with the Agreement, and Kent of obligated to pay
such amount to SPI.
E. SPI delivered to Kent an application for payment of the Draw Amount
in connection with the Contractor's application, and presented to
Kent the documentation required in connection therewith by the
Agreement, all in accordance with the Agreement, and such application
was not paid on or before nine (9) days thereafter, or thereafter.
F. SPI sent notice of such default to Kent in accordance with the
Agreement, and Kent failed to cure such default on or before ten (10)
days after receiving such notice, or thereafter.
G. The Draw Amount remains unpaid by Kent, and SPI has made no other
request for a draw under the Letter of Credit with respect to the
Draw Amount.
H. True, correct and complete copies of the Contractor's application for
payment to SPI, and SPI's application for payment to Kent, are
attached to the certificate.
The certification by SPI as to items (C) and (D) above may be followed, at
SPI's option, by the following qualification:
"The preceding certification by SPI is made to the best of SPI's
knowledge and belief, based upon reasonably diligent investigation by
SPI."
Partial drawings are allowed.
This Letter of Credit expires at our counters on April 21, 1996.
<PAGE> 3
Page 3
The original of this Letter of Credit and subsequent amendments, if any,
must accompany all drawings.
We hereby engage with you that all drafts drawn under and in compliance with
the terms of this Letter of Credit will be duly honored if presented at 717
Travis, 3rd floor TCB-S 300, Houston, Texas 77002.
Please contact us at (713) 216-5665 or (713) 216-4739 if you have any
questions concerning this Letter of Credit.
/s/
-------------------------------------
Authorized Signature
<PAGE> 1
EXHIBIT 10.27
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of the
3rd day of April, 1995 between Kent Electronics Corporation, a Texas corporation
(the "Corporation"), and James F. Corporron ("Consultant").
WHEREAS, the Corporation values the knowledge, management expertise
and other skills of Consultant with regard to the present and future assets,
customers and business of the Corporation (the "Business"); and
WHEREAS, the Corporation desires to employ Consultant for, and
Consultant desires to provide to the Corporation, consulting and advisory
services with respect to the Business under the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Engagement. The Corporation agrees to employ Consultant, and
Consultant agrees to act, as a general business consultant and advisor to the
Corporation regarding the Business.
(A) Duties. The services to be performed by Consultant
hereunder shall include (i) assisting the Corporation with strategic market
planning with respect to the Business; (ii) advising the Corporation with
respect to various customers of the Business as requested by the Corporation
from time to time; (iii) assisting the Corporation generally in its business
and customer development efforts with respect to the Business; (iv) advising
the Corporation regarding its operations; and (v) such other services with
respect to the Business as the chief executive officer and the Board of
Directors of the Corporation shall designate from time to time. Consultant
shall be indemnified by the Company with respect to all services provided by
him pursuant to this Section 1 to the same extent applicable during
Consultant's service as an officer of the Company. Consultant warrants that
all services provided by Consultant hereunder will be performed in a good,
workmanlike and professional manner. Consultant shall incur no liability to
the Company for any acts or omissions by him in connection with this Section 1
to the extent Consultant acts in good faith in providing any services pursuant
hereto. Consultant shall not be authorized to act or appear to act as an
officer or other authorized representative of the Corporation, whether in
performing the services hereunder or otherwise.
(B) Extent of Duties. The Corporation and Consultant
agree that during the first two (2) years of this Agreement, the Corporation
shall have first call upon Consultant's services not to exceed twelve 8-hour
days of service per calendar quarter unless Consultant otherwise expressly
consents. The Corporation and Consultant agree that during the last six (6)
<PAGE> 2
years of this Agreement, the Corporation shall have first call upon Consultant's
services not to exceed six 8-hour days of service per calendar quarter unless
Consultant otherwise expressly consents. However, Consultant need not be
available during (i) reasonable vacation periods each year, (ii) periods of
illness or other incapacity of Executive or his spouse, or (iii) reasonable
times allocated to his personal affairs.
(C) Additional Duties. In the event the chief executive
officer of the Corporation shall be unable to perform his duties by reason of
illness, disability or otherwise, Consultant may, if requested by the Board of
Directors of the Corporation, serve as the temporary replacement for such
period of time and on such terms as mutually determined by the Board of
Directors and Consultant.
(D) Expenses. The Corporation shall reimburse Consultant
for reasonable expenses which Consultant determines to be necessary in the
performance of his duties hereunder. Such reimbursement shall be made as soon
as administratively practicable following presentment by Consultant of itemized
accounts of expenditures and approval thereof by the Corporation, which
approval shall not be unreasonably withheld.
(E) Working Facilities. Consultant shall be provided
with office space and appropriate support services at the Corporation's Houston
offices as needed to fulfill his duties hereunder.
(F) Independent Contractor. After June 30, 1996, it is
expressly understood and agreed that Consultant shall act as an independent
contractor in the undertaking of his duties hereunder. It is expressly
understood and agreed that, with respect to such duties after June 30, 1996, no
employee-employer relationship shall exist between the Corporation and the
Consultant with respect to Consultant's provision of consulting services
hereunder. After June 30, 1996, the Company shall have no right or
responsibility to withhold from Consultant's compensation any federal income
tax withholding, FICA taxes, unemployment taxes, or other taxes or amounts
required to be withheld from the compensation of employees under any state or
federal law or regulation. At the end of each such calendar year after June
30, 1996, during the term of this Agreement, the Corporation shall provide IRS
Forms 1099 (or its successor) to Consultant, as applicable, that show the
amounts paid hereunder to Consultant during the calendar year that are required
to be included in the taxable income of Consultant for such year.
2. Compensation. As compensation for services rendered
hereunder, Consultant shall receive the sum of Two Hundred Thousand Dollars
($200,000) per year for the first two (2) years of this Agreement and One
Hundred Thousand Dollars ($100,000) per year for the next six (6) years of this
Agreement. Until June 30, 1996, such compensation shall be paid in accordance
with the Corporation's customary payroll procedures. After June 30, 1996, such
compensation shall be paid in equal monthly installments on the last day of
each month or in such other installments as may be mutually agreed by
Consultant and the Corporation. In addition to such compensation, for the
entire term of this Agreement, Consultant shall be entitled
2
<PAGE> 3
to receive at no cost to Consultant the same employee health and welfare plan
benefits that will be received by Consultant under Paragraph 2 of that certain
Executive Health Benefits and Consulting Agreement dated January 27, 1993 by
and between the Corporation and Consultant (the "Benefits Agreement"). The
term of the Benefits Agreement shall not commence until the termination of this
Agreement.
Anything to the contrary notwithstanding, all payments required to be
made by the Corporation hereunder to Consultant or his estate or personal
representative shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the Corporation may reasonably
determine it should withhold pursuant to any applicable law or regulation.
3. Confidential Information; Security.
(A) Restrictions. The parties acknowledge that in
connection with his services hereunder, Consultant will receive Confidential
Information (defined hereafter). Consultant, using utmost care, shall hold in
trust for the Corporation and shall not use or disclose to any other party or
allow any other party to inspect, copy or use any Confidential Information
which may be disclosed to Consultant by the Corporation in connection with this
Agreement or Consultant's performance of services for the Corporation.
(B) Definition of Confidential Information. As used
herein, "Confidential Information" shall mean any information in any form,
including, without limitation, printed or verbal communications and information
stored in printed or electromagnetic format, which relates to computer or data
processing programs, electronic data processing applications, information which
incorporates or is based upon proprietary information of the Corporation, or
information concerning the business or financial affairs, product pricing,
marketing, customers, and any other confidential, financial and business
information and methods of operation or proposed methods of operation,
accounts, transactions, proposed transactions or security procedures of the
Corporation, all Affiliates (defined hereafter), their vendors, or their
customers; provided, however, that Confidential Information shall not include
such information which is in the public domain at the time of its disclosure to
Consultant, which Consultant rightfully received from a third party without
restrictions, or which the Corporation has agreed to permit Consultant to
disclose to third parties. As used herein, "Affiliates" shall mean any person
or entity who, directly or indirectly, controls, is controlled by or is under
common control with the Corporation or a purchaser of substantially all the
assets of the Corporation.
(C) Security Procedures. At all times during the
performance of this Agreement, Consultant shall abide by all applicable
Corporation security standards, guidelines and procedures.
(D) Return of Corporation Property. Upon the termination
of this Agreement, Consultant shall provide or return to the Corporation any
and all keys, identification cards,
3
<PAGE> 4
equipment, manuals, reports, tapes, disks, negatives, data or other
documentation provided by the Corporation or any Affiliates to Consultant or
created by Consultant in connection with the services provided hereunder.
(E) Survival. The obligations imposed by this Section 3
shall survive the expiration or termination of this Agreement for any reason.
4. Corporation's Proprietary Rights. All services performed and
work created hereunder, including, without limitation, all writings,
information, data, formulas, models, drawings, photographs, and design
concepts, and all other documentation developed for or relating to the
Corporation, and all data and other information of any kind, including
information incorporating, based upon, or derived from the foregoing, and
reports and notes prepared by Consultant hereunder (whether or not completed),
either solely or jointly with others, together with all modifications,
revisions, changes, copies, partial copies, translations, compilations, partial
copies with modifications and derivative works shall all constitute
"Corporation Property" and are, shall be and shall remain the sole and
exclusive property of the Corporation and may not be used by Consultant for any
other purpose except for the benefit of the Corporation. Consultant shall not
sell, transfer, publish, disclose, display, license or otherwise make available
to others any part of such Corporation Property or copies thereof. Upon the
termination of this Agreement, Consultant shall immediately turn over to the
Corporation all such materials and Corporation Property developed pursuant
hereto and no copies thereof shall be retained by Consultant without the prior
written consent of the Corporation.
5. Covenant Not to Compete. Consultant and the Corporation
hereby agree that during the term of this Agreement and for a period of one
year after the termination of this Agreement, Consultant will not engage,
directly or indirectly, whether as an employee, officer, director, partner or
shareholder, in any business similar to or competitive with the Business.
Consultant shall not be restricted from making passive investments in stocks or
securities of companies filing periodic reports under Section 13 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which
investments are not required to be reported on a Schedule 13D under the
Exchange Act.
6. Right of Injunction. In the event of a breach or threatened
breach of the provisions of Sections 3, 4, or 5 hereunder, damages to be
suffered by the Corporation will not be fully compensable in money damages
alone, and accordingly, the Corporation shall, in addition to other available
legal or equitable remedies, be entitled to an order enjoining Consultant from
such breach pending litigation, as well as a final determination thereof,
without the requirement to post bond.
7. Term and Termination.
(A) Term. The term of this Agreement shall be eight (8)
years from the date hereof. Notwithstanding the foregoing, this Agreement
shall terminate (i) immediately upon the
4
<PAGE> 5
death of Consultant; (ii) immediately upon the onset of Disability (defined
hereafter) of Consultant; or (iii) at any time pursuant to Subsections B or C
of this Section 7. As used herein, "Disability" shall mean inability of
Consultant to perform his normal business activities by reason of a mental or
physical illness or injury for a period of 180 consecutive days.
(B) Consultant's Termination Rights. Consultant, at his
sole election, may terminate this Agreement and shall have no further
obligations to the Corporation under this Agreement (except for Sections 3, 4
and 5 herein); provided, however, at such time, the Corporation shall have no
further obligations to compensate Consultant except as set forth herein.
(C) Corporation's Termination Rights. The Corporation,
at its sole election, may terminate this Agreement and shall have no further
obligations to Consultant hereunder if Consultant (i) shall fail to perform his
obligations hereunder to the reasonable satisfaction of the Board of Directors
of the Corporation, or (ii) shall fail to observe or perform any material
covenant or agreement contained in this Agreement, for ten (10) days after
written notice of such failure has been given by the Corporation to Consultant.
(D) Payment. Notwithstanding anything to the contrary
contained in this Agreement, if this Agreement is terminated by either party
for any reason (including without limitation the death or Disability of
Consultant, but excluding a voluntary termination of this Agreement by
Consultant when there has not been any breach hereof by the Corporation) at any
time during the first three (3) years of this Agreement, the Corporation shall
continue to compensate Consultant or his estate or personal representative, as
the case may be, as provided herein until the third anniversary date of this
Agreement.
8. Notices. Except as otherwise expressly provided herein, any
notice, request, consent, demand or other communication required or permitted
to be given by this Agreement shall be in writing and shall be personally
served or sent by telecopy (with a copy by prepaid registered or certified air
mail sent on that same day), commercial courier service or prepaid registered
or certified air mail. Any written notice delivered by telecopy shall be
deemed to have been given on the day telecopied to the other party. Any
written notice given by commercial courier service or registered or certified
mail shall be deemed communicated as of actual receipt. For purposes of this
Agreement, the addresses of the parties, until notice of a change thereof,
shall be as set forth below.
If to the Corporation:
Kent Electronics Corporation
7433 Harwin Drive
Houston, Texas 77036
Attn: Corporate Secretary
5
<PAGE> 6
If to the Consultant:
Mr. James F. Corporron
2023 Greengrass
Houston, TX 77008
9. Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without regard to
Texas' principles of conflicts of laws, and of the United States of America.
10. Jurisdiction and Venue. Suit to enforce any provision of this
Agreement or to obtain any remedy with respect hereto shall be brought in the
United States District Court for the Southern District of Texas, Houston
Division, or any court of the State of Texas located in Harris County. Each
party hereby irrevocably submits in any suit, action or proceeding arising out
of or relating to this Agreement or any of the transactions contemplated hereby
to the jurisdiction and venue of the United States District Court for the
Southern District of Texas, Houston Division, and the jurisdiction and venue of
any court of the State of Texas located in Harris County and waives any and all
objections to jurisdiction and review or venue that it may have under the laws
of Texas or the United States of America.
11. Attorneys' Fees. The prevailing party in any legal
proceedings brought by the other party to enforce any provision of this
Agreement shall be entitled to recover against the non-prevailing party the
reasonable attorneys' fees, court costs and other expenses incurred by the
prevailing party.
12. Severability. If any term, provision or part of this
Agreement is to any extent held invalid, void or unenforceable by an arbitrator
appointed hereunder or by a court of competent jurisdiction, the remainder of
this Agreement shall not be impaired or affected thereby, and each term,
provision and part shall continue in full force and effect, and shall be valid
and enforceable to the fullest extent permitted by law.
13. Assignment. Neither party may assign any of its rights or
duties under this Agreement without the prior written consent of the other
party, and any assignment made in contravention of this Section 13 shall be
null and void for all purposes; provided, however, that the Corporation may
assign this Agreement to any Affiliate without the consent of Consultant, but
any such assignment shall not relieve the Corporation of its obligations
hereunder.
14. Waiver. The forbearance or failure of one of the parties
hereto to insist upon strict compliance by the other with any provisions of
this Agreement, whether continuing or not, shall not be construed as a waiver
of any rights or privileges hereunder. No waiver of any right or privilege of
a party arising from any default or failure hereunder shall affect such party's
rights or privileges in the event of a further default or failure of
performance.
6
<PAGE> 7
15. Binding Effect. Except as provided herein, this Agreement
shall be binding on and inure to the benefit of their respective successors and
permitted assigns.
16. Entire Agreement. THIS AGREEMENT CONSTITUTES THE ENTIRE
AGREEMENT AND UNDERSTANDING OF THE PARTIES HERETO IN RESPECT OF THE SUBJECT
MATTER CONTAINED HEREIN AND SUPERSEDES ALL PRIOR AGREEMENTS, CONSENTS AND
UNDERSTANDINGS RELATING TO SUCH SUBJECT MATTER. THE PARTIES AGREE THAT THERE
IS NO ORAL OR OTHER AGREEMENT BETWEEN THE PARTIES WHICH HAS NOT BEEN
INCORPORATED INTO THIS AGREEMENT. This Agreement may be modified or amended
only by a duly authorized written instrument executed by the parties hereto.
This Agreement shall have no effect on the Benefits Agreement, other than to
defer the commencement of the term of the Benefits Agreement until the
termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
KENT ELECTRONICS CORPORATION
By: /s/ Morrie K. Abramson
------------------------
Name: Morrie K. Abramson
------------------------
Title: Chief Executive Officer
------------------------
/s/ James F. Corporron
----------------------------
James F. Corporron
7
<PAGE> 1
EXHIBIT 11
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------------------------------------------------------------------
April 1, 1995 April 2, 1994 April 3, 1993
------------------------- ----------------------- -----------------------
Fully Fully Fully
Primary Diluted Primary Diluted Primary Diluted
----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net earnings..................... $13,386,122 $13,386,122 $9,535,074 $9,535,074 $7,723,203 $7,723,203
=========== =========== ========== ========== ========== ==========
Weighted average number of
common shares outstanding........ 9,746,000 9,746,000 9,651,000 9,651,000 9,508,200 9,508,200
Excess of shares issuable
upon exercise of stock
options over shares
deemed retired utilizing the
treasury stock method............ 391,500 446,700 230,000 286,200 167,100 196,500
----------- ----------- ---------- ---------- ---------- ----------
10,137,500 10,192,700 9,881,000 9,937,200 9,675,300 9,704,700
----------- ----------- ---------- ---------- ---------- ----------
Earnings per share............... $ 1.32 $ 1.31 $ .96 $ .96 $ .80 $ .80
=========== =========== ========== ========== ========== ==========
</TABLE>
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF KENT ELECTRONICS CORPORATION
<TABLE>
<CAPTION>
State of
Subsidiary Incorporation
---------- -------------
<S> <C>
K * TEC Electronics Corporation Delaware
Kent Datacomm Corporation Texas
Kent Electronics Corporation-West Texas
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have issued our reports dated May 8, 1995, accompanying the
consolidated financial statements and schedule included in the Annual Report of
Kent Electronics Corporation and Subsidiaries on Form 10-K for the year ended
April 1, 1995. We hereby consent to the incorporation by reference of said
reports in the Registration Statements of Kent Electronics Corporation on Form
S-3, File No. 33-59108 and 33-48434, and Forms S-8, File Nos. 33-12028,
33-17821, 33-18527 and 33-66030.
/s/ GRANT THORNTON LLP
- ----------------------------
GRANT THORNTON LLP
Houston, Texas
May 8, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000793024
<NAME> KENT ELECTRONICS CORP.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-01-1995
<PERIOD-END> APR-01-1995
<CASH> 4,434,457
<SECURITIES> 16,832,467
<RECEIVABLES> 34,942,695
<ALLOWANCES> 978,885
<INVENTORY> 33,119,512
<CURRENT-ASSETS> 91,128,594
<PP&E> 41,355,739
<DEPRECIATION> 13,620,455
<TOTAL-ASSETS> 133,890,981
<CURRENT-LIABILITIES> 24,810,170
<BONDS> 0
<COMMON> 34,742,597
0
0
<OTHER-SE> 74,057,009
<TOTAL-LIABILITY-AND-EQUITY> 133,890,981
<SALES> 253,483,742
<TOTAL-REVENUES> 253,483,742
<CGS> 188,606,215
<TOTAL-COSTS> 188,606,215
<OTHER-EXPENSES> 43,917,091
<LOSS-PROVISION> 163,171
<INTEREST-EXPENSE> 18,000
<INCOME-PRETAX> 22,075,122
<INCOME-TAX> 8,689,000
<INCOME-CONTINUING> 13,386,122
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,386,122
<EPS-PRIMARY> 1.32
<EPS-DILUTED> 1.31
</TABLE>
