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Exhibit 2
Final
Conformed Copy prepared by
Hengeler Mueller Mueller Weitzel Wirtz
Notarial Deed No. 3564/2000
of the Notary Dr. Norbert Zimmermann
in Dusseldorf/Germany
SHARE PURCHASE AGREEMENT
among
VEBA Electronics GmbH
EBV Verwaltungs GmbH i.L.
Viterra Grundstucke Verwaltungs GmbH
VEBA Electronics LLC
VEBA Electronics Beteiligungs GmbH
VEBA Electronics (UK) Plc
Raab Karcher Electronics Systems Plc
and
E.ON AG
and
Arrow Electronics, Inc.
Avnet, Inc.
Cherrybright Limited
dated August 7, 2000
regarding the sale and purchase of the VEBA electronics distribution group
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Table of Contents Page
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Recitals .................................................................................... 8
Article 1 Sale and Purchase ........................................................... 14
1.1 Agreement to Sell and Purchase ............................. 14
1.2 Transfer ................................................... 16
1.3 Economic Effective Date; Dividend Rights ................... 17
Article 2 Purchase Price .............................................................. 17
2.1 Certain Definitions ........................................ 17
2.2 Purchase Price Formula ..................................... 21
2.3 Allocation ................................................. 22
2.4 Payment on the Closing Date ................................ 22
2.5 Effect of Payment; Discharge of VEBA Liabilities ........... 24
2.6 Settlement Payments after the Closing Date ................. 24
2.7 Sample Calculation ......................................... 25
2.8 No Set-Off/Retention ....................................... 25
Article 3 Effective Date Financial Statements;
Effective Date and Closing Certificates ..................................... 25
3.1 Preparation of Effective Date Financial Statements
and Effective Date and Closing Certificates ................ 25
3.2 Accounting Principles ...................................... 26
3.3 Review of Effective Date Financial Statements
and Effective Date and Closing Certificates ................ 27
3.4 Dispute Resolution ......................................... 27
3.5 Access and Information ..................................... 28
Article 4 Closing ..................................................................... 28
4.1 Time and Place of Closing .................................. 28
4.2 Conditions to Closing ...................................... 28
4.3 Regulatory Filings ......................................... 32
4.4 Actions on Closing Date .................................... 35
4.5 Staggered Closing .......................................... 35
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Article 5 Representations and Warranties of Sellers ................................... 38
5.1 Organization of Sellers and the Group ...................... 39
5.2 Ownership of Shares; Shareholdings ......................... 40
5.3 Authorization of Sellers, Non-Contravention ................ 40
5.4 Financial Statements ....................................... 42
5.5 Assets, Encumbrances ....................................... 43
5.6 Intellectual Property Rights ............................... 45
5.7 Permits; Compliance with Laws .............................. 47
5.8 Environmental Matters ...................................... 47
5.9 Litigation, Disputes ....................................... 48
5.10 Employee and Labour Matters ................................ 49
5.11 Employee Benefits and Pension Obligations .................. 50
5.12 Material Agreements ........................................ 54
5.13 Finders' Fees .............................................. 57
5.14 Intercompany Accounts and Pre-Closing
Non-Recurring Charges ...................................... 57
5.15 Key Suppliers .............................................. 57
5.16 Insurance Coverage ......................................... 58
5.17 No Undisclosed Material Liabilities ........................ 58
5.18 Conduct of Business since December 31, 1999 ................ 59
5.19 Certain Anti-trust Undertakings and Orders ................. 61
5.20 Insolvency and Liquidation Proceedings ..................... 61
5.21 Terms of supply ............................................ 62
5.22 IT Systems ................................................. 62
5.23 No Other Representations and Warranties .................... 63
Article 6 Representations and Warranties of Purchasers ................................ 63
6.1 Authorization of Purchasers, Non-Contravention ............. 64
6.2 Litigation ................................................. 64
6.3 Financial Capability ....................................... 64
6.4 Finders' Fees .............................................. 65
6.5 Purchaser .................................................. 65
Article 7 Covenants; Certain Indemnities .............................................. 65
7.1 Conduct of Business ........................................ 65
7.2 Preparation of Additional Financial Statements;
Access to Information ...................................... 69
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7.3 Inter-Group Debt ........................................... 71
7.4 Resignations ............................................... 72
7.5 Covenant not to Compete; Covenant not to Solicit ........... 72
7.6 Confidentiality ............................................ 74
7.7 Use of Certain Marks and Names ............................. 74
7.8 Release of VEBA Comfort Letters ............................ 74
7.9 Termination of Control and Profit Transfer Agreements ...... 75
7.10 Certain Indemnities ........................................ 75
7.11 Avnet Indemnity ............................................ 77
7.12 Wyle/Avnet Litigation ...................................... 78
7.13 Poing Warehouse ............................................ 79
7.14 Environmental Indemnity .................................... 79
7.15 Further Assurances ......................................... 81
7.16 Certain Assets Owned by the E.ON Group ..................... 82
7.17 Notices under Insurance Policies ........................... 82
7.18 Employee Bodies ............................................ 82
7.19 APRISA ..................................................... 83
7.20 Satisfaction of Memec Financing Conditions ................. 83
7.21 Memec Acquisitions ......................................... 83
7.22 Hyperion Licence ........................................... 83
7.23 VEBA Electronics LLC Employees ............................. 84
7.24 Forex and Hedging Contracts ................................ 85
7.25 US 401 (k) Plans ........................................... 86
Article 8 Indemnification .............................................................. 88
8.1 Indemnification by Sellers ................................. 88
8.2 Indemnification by Purchaser ............................... 90
8.3 Limitation Periods ......................................... 91
8.4 Indemnification Procedures ................................. 92
8.5 No Additional Rights or Remedies ........................... 95
Article 9 Taxes ........................................................................ 96
9.1 Definitions ................................................ 96
9.2 Tax Representations ........................................ 97
9.3 Preparation of Tax Returns and Payment of Tax .............. 98
9.4 Tax Refunds and Recoveries ................................. 99
9.5 Tax Covenant ............................................... 99
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9.6 Third Party Recovery ....................................... 105
9.7 Procedures ................................................. 106
9.8 Certain Tax Matters Relating to Germany .................... 108
9.9 Limitation Period .......................................... 109
9.10 Co-operation on Tax Matters ................................ 110
9.11 UK Tax Matters ............................................. 110
9.12 Certain Tax Matters relating to the U.S .................... 111
9.13 Section 338(h)(10) Election ................................ 112
9.14 Allocation of Purchase Price ............................... 114
Article 10 Termination .................................................................. 114
10.1 Right to Terminate ......................................... 114
10.2 Consequences of Termination ................................ 115
Article 11 Miscellaneous ................................................................ 116
11.1 Liability of Sellers and Purchaser ......................... 116
11.2 Assumption of Liability by E.ON AG ......................... 117
11.3 Notices .................................................... 117
11.4 Successors and Assigns ..................................... 119
11.5 Third Party Beneficiaries .................................. 120
11.6 Public Disclosure .......................................... 120
11.7 Taxes and Expenses ......................................... 120
11.8 Entire Agreement; Confidentiality Undertaking .............. 121
11.9 Amendments and Waivers ..................................... 121
11.10 Governing Law; Competent Courts ............................ 122
11.11 Interpretation; Exhibits ................................... 122
11.12 Definitions ................................................ 122
11.13 Severability ............................................... 126
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EXHIBITS
Exhibit R-1 Corporate chart of the Group
Exhibit R-2 Description of the companies of the Group
Exhibit 1.1 Assumed Material Agreements of VEBA Electronics LLC
Exhibit 2.3 Allocation
Exhibit 2.4 Estimates of Preliminary Share Purchase Price
Exhibit 2.7 Sample calculation
Exhibit 3.2 Specific accounting principles
Exhibit 4.2 Description of closing conditions under Committed Credit
Facilities
Exhibit 4.3 Regulatory Compliance Schedule
Exhibit 4.4 Actions on Closing Date
Exhibit 5 (a) Disclosure letter
Exhibit 5 (b) Sellers' knowledge (persons whose knowledge is attributed to
Sellers)
Exhibit 5 (c) Sellers' knowledge (inquiry)
Exhibit 5.1 (c) Control and profit transfer agreements
Exhibit 5.1 (d) List of articles of association, by-laws or similar
organisational documents of the Companies
Exhibit 5.2 (a) Third-party rights in shares
Exhibit 5.3 Canada and Mexico Financial Information
Exhibit 5.4 (a) 1999 German GAAP Group Balance Sheet
Exhibit 5.4 (b) 1998 and 1999 US GAAP Group Financial Statements
Exhibit 5.4 (c) March 2000 Group Accounts
Exhibit 5.4 (d) March 2000 Divisional Accounts
Exhibit 5.4 (e) Facts which would require a material change of financial
statements
Exhibit 5.5 (b) Encumbrances and security rights
Exhibit 5.5 (f) Properties and leases
Exhibit 5.6 (a) List of material intellectual property rights
Exhibit 5.8 Environmental issues
Exhibit 5.9 Litigation, disputes
Exhibit 5.10 (a) Collective bargaining agreements, agreements with workers'
councils, certain labour disputes
Exhibit 5.10 (b) List of employment contracts with senior management
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Exhibit 5.10 (c) Stock option plans and redundancy schemes
Exhibit 5.10 (d) Certain changes of terms of employment
Exhibits 5.11 (a) Pension and similar benefits
Exhibit 5.11 (b) Employee benefit plans of U.S. Companies
Exhibit 5.11 (c) EPU Schemes
Exhibit 5.12 Material Agreements
Exhibit 5.14(a) List of intercompany balances as of the Effective Date and
credit lines under VEBA cash management
Exhibit 5.14(b) Memec bank accounts
Exhibit 5.15 Supplier relationships
Exhibit 5.16 Insurance coverage
Exhibit 5.17 Certain material liabilities
Exhibit 5.18 Conduct of business since December 31, 1999
Exhibit 5.20 Insolvency and Liquidation Proceedings
Exhibit 7.1 Conduct of business to the Closing Date
Exhibit 7.3 Terms and conditions for Inter-Group Debt
Exhibit 7.4 Resignations of certain board members
Exhibit 7.5 Existing competing activities of the E.ON Group
Exhibit 7.8 VEBA comfort letters
Exhibit 7.13 Amendments to lease agreements for Poing warehouse
Exhibit 7.23 HQ Employees
Exhibit 8.1 Purchasers' knowledge
Exhibit 9.2 Tax representations
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This Share Purchase Agreement is entered into on this 7th day of August 2000, by
and between (i) VEBA Electronics GmbH, a limited liability company incorporated
under German law, registered in the commercial register of the local court of
Dusseldorf/Germany under no. HRB 33598, (ii) EBV Verwaltungs GmbH i.L., a
limited liability company incorporated under German law, registered in the
commercial register of the local court of Dusseldorf/Germany under no. HRB 37915
and in the process of (solvent) liquidation, (iii) VEBA Electronics LLC, a
limited liability company incorporated under the laws of Delaware, USA, (iv)
Viterra Grundstucke Verwaltungs GmbH ("VITERRA"), a limited liability company
incorporated under German law, registered in the commercial register of the
local court of Bochum/Germany under no. HRB 6559, (v) VEBA Electronics
Beteiligungs GmbH, a limited liability company incorporated under German law,
registered in the commercial register of the local court of Dusseldorf/Germany
under no. HRB 36645, (vi) VEBA Electronics (U.K.) Plc, a public limited company
incorporated under the laws of England and Wales with registered no. 01148485,
(vii) Raab Karcher Electronic Systems Plc, a public limited company incorporated
under the laws of England and Wales with registered no. 03087431 (VEBA
Electronics GmbH, EBV Verwaltungs GmbH i.L., VEBA Electronics LLC, VEBA
Electronics Beteiligungs GmbH, VEBA Electronics (U.K.) Plc., Raab Karcher
Electronic Systems Plc and Viterra collectively hereinafter referred to as
"SELLERS") (viii) Arrow Electronics, Inc., a corporation incorporated under the
laws of the State of New York, ("ARROW") (ix) Avnet, Inc., a corporation
incorporated under the laws of the State of New York ("AVNET") and (x)
Cherrybright Limited, a private limited liability company incorporated under the
laws of England and Wales with registered no. 3985629 ("MEMEC PURCHASER")
(Arrow, Avnet and Memec Purchaser together being referred to hereinafter as
"PURCHASERS" and each of them being a "PURCHASER") and (xi) E.ON AG, a stock
corporation incorporated under German law, registered in the commercial register
of the local court of Dusseldorf/Germany under no. HRB 22315 ("E.ON AG"). The
Sellers, the Purchasers and E.ON AG are hereinafter collectively referred to as
the "PARTIES".
RECITALS
1. The Sellers hold and immediately prior to Closing (as defined in
Section 4.1 below) will hold directly or indirectly all shares of the
companies of the VEBA electronics distribution group, a distributor of
electronic systems (e.g., monitors and servers) and electronic
components (e.g., semiconductors), save as expressly set out in Exhibit
R-2. The VEBA electronics distribution group consists of the following
seven divisions (the "DIVISIONS"), whose main operating companies are
indicated in parentheses:
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Electronic systems business:
(1) RKE Systems (Raab Karcher Elektronik GmbH, Germany) ("RKE
DIVISION");
(2) Wyle Systems (Wyle Systems LLC, USA) ("WYLE SYSTEMS
DIVISION").
Electronic components business:
(3) EBV, Germany (EBV-Elektronik GmbH and WBC GmbH, Germany) ("EBV
DIVISION");
(4) Memec (Memec (Memory and Electronic Components) Plc, UK
("MEMEC PLC") and Memec LLC, USA) ("MEMEC DIVISION");
(5) Wyle Components (Wyle Electronics, USA) ("WYLE COMPONENTS
DIVISION");
(6) Atlas Europe (Atlas Logistik Services GmbH, Germany) ("ATLAS
EUROPE DIVISION"); and
(7) Atlas US (Atlas Services LLC and Atlas Business Services LLC,
USA) ("ATLAS US DIVISION").
The headquarters of the VEBA electronics distribution group (VEBA
Electronics LLC) are located in Santa Clara, California, USA.
2. VEBA Electronics GmbH owns and will immediately prior to Closing own
(a) one fully paid share, free and clear of any encumbrance, in
the nominal amount of DM 100,000 (constituting the entire
registered share capital of DM 100,000) in Raab Karcher
Elektronik GmbH, Nettetal/Germany, a limited liability company
incorporated under German law and registered in the commercial
register of the local court of Nettetal under no. HRB 938;
(b) 999,988 fully paid shares, free and clear of any encumbrance,
in the nominal amount of FF 49,999,400 (constituting 99.9% of
the entire registered share capital of FF 50,036,950) in Memec
Sud Europe SA, Rungis, France, a stock corporation
incorporated under French law and registered in the commercial
register (R.C.S.) Creteil under no. B 632 011 227; of the
remaining 751 shares in the aggregate nominal amount of FF
37,050, three shares are owned by David Ashworth and 748
shares are owned by other shareholders; such 748 shares will
be transferred on or prior to the Closing Date to VEBA
Electronics GmbH and certain persons associated with Memec Sud
Europe SA, as set out in Exhibit R-2;
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immediately prior to the Closing, VEBA Electronics GmbH will
own 1,000,716 shares and certain directors and employees of
the Memec Division (as set out in Exhibit R-2) will own the
remaining 23 shares; and
(c) the entire limited partnership interest in the registered
nominal amount of DM 100,000, free and clear of any
encumbrance, in Raab Karcher Grundstucke GmbH & Co. Elektronik
Immobilien KG ("RAAB KARCHER IMMOBILIEN"), Essen/ Germany, a
limited partnership incorporated under German law and
registered in the commercial register of the local court of
Essen under no. HRA 6295.
Viterra is the sole managing and general partner (without any
capital contribution) of Raab Karcher Immobilien.
3. EBV Verwaltungs GmbH i.L. owns and will immediately prior to Closing
own seven fully paid shares, free and clear of any encumbrance, in the
nominal amount of DM 17,300, DM 14,000, DM 5,200, DM 5,200, DM 5,200,
DM 2,800 and DM 2,300 (constituting all of the issued shares in the
aggregate nominal amount of DM 52,000) in EBV-Elektronik GmbH,
Kirchheim/Germany, a limited liability company incorporated under
German law and registered in the commercial register of the local court
of Munich/ Germany under no. HRB 42104. The entire registered capital
of EBV-Elektronik GmbH amounts to DM 500,000. A share in the nominal
amount of DM 448,000 was redeemed (eingezogen) and cancelled in 1994.
4. VEBA Electronics LLC owns and will immediately prior to Closing own:
(a) the entire membership interest, free and clear of any
encumbrance, in Memec LLC, a limited liability company
incorporated under the laws of Delaware, USA, with its
business seat in San Diego, California, USA;
(b) 100 fully paid shares and constituting all of the issued
shares, free and clear of any encumbrance, in EBV Electronics
Holdings, Inc., a corporation established under the laws of
Delaware, USA;
(c) the entire membership interest, free and clear of any
encumbrance, in ATLAS Business Services LLC, a limited
liability company incorporated under the laws of Delaware,
USA; and
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(d) the entire membership interest, free and clear of any
encumbrance, in ATLAS Services LLC, a limited liability
company incorporated under the laws of Delaware, USA.
5. VEBA Electronics Beteiligungs GmbH owns and will immediately prior to
Closing own:
(a) four fully paid shares, free and clear of any encumbrance, in
the nominal amount of DM 100,000, DM 50,000, DM 50,000 and DM
50,000 (constituting all of the issued shares in the aggregate
nominal amount of DM 250,000) in Memec GmbH, Nettetal/Germany,
a limited liability company incorporated under German law and
registered in the commercial register of the local court of
Nettetal under no. HRB 1004;
(b) 6,400 fully paid shares, free and clear of any encumbrance, in
Memec Belgium NV, a limited liability company incorporated
under Belgian law and registered in the commercial register of
Mechelen under no. 86.900; the remaining 100 shares of the
entire registered share capital being held by Memec GmbH;
(c) 99 fully paid shares and constituting all (but one) of the
issued shares, free and clear of any encumbrance, in Memec AG,
a stock corporation incorporated under Swiss law and
registered in the commercial register of Langenthal-Oberaargau
under no. CH-053.3.003.052-6; the remaining share is owned by
Peter Hess;
(d) 226,891 fully paid shares and constituting all of the issued
shares, free and clear of any encumbrance, in Memec Nederland
BV, a limited liability company incorporated in the
Netherlands and registered in the commercial register of
Oost-Brabrant under no. 17085007;
(e) 4,000 fully paid shares and constituting all of the issued
shares, free and clear of any encumbrance, in Okura
Electronics Co. Limited, a limited liability company
incorporated in Japan and registered under company no. 020066;
(f) 18,152 fully paid shares and constituting all of the issued
shares, free and clear of any encumbrance, in Memec Holding
BV, a limited liability company incorporated in the
Netherlands and registered in the commercial register of
Oost-Brabrant under no. 17096269;
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(g) a fully paid share in the nominal amount of DM 100,000
(constituting all of the issued share capital), free and clear
of any encumbrance, in Atlas Logistik Services GmbH, a limited
liability company incorporated under German law and registered
in the commercial register of the local court of Munich under
no. HRB 118579; and
(h) a fully paid share in the nominal amount of DM 100,000
(constituting the entire issued share capital), free and clear
of any encumbrance, in Distron Elektronik GmbH, a limited
liability company incorporated under German law and registered
in the commercial register of the local court of Munich under
no. HRB 119649.
6. VEBA Electronics (UK) Plc owns and will immediately prior to Closing
own all shares (constituting the entire issued share capital of GBP
2,796,045.40, with the exception of one share in the nominal amount of
GBP 0.10 jointly owned by it and Roy Stevenson), free and clear of any
encumbrance, in Memec (Memory and Electronic Components) Plc, a public
limited company incorporated under the laws of England and Wales and
registered under no. 01507861.
7. Raab Karcher Electronic Systems Plc owns and will immediately prior to
Closing own
(a) 1,500 fully paid shares (constituting the entire issued share
capital of GBP 1,500), free and clear of any encumbrance, in
RK Distribution Limited, a limited liability company
incorporated under the laws of England and Wales and
registered under no. 00409579;
(b) 3,046 fully paid shares (constituting the entire issued share
capital of GBP 3,046), free and clear of any encumbrance, in
Midwich Limited, a limited liability company incorporated
under the laws of England and Wales and registered under no.
01436289;
(c) 80,000 fully paid shares (constituting the entire issued share
capital of GBP 80,000), free and clear of any encumbrance, in
Transformation Software Limited, a limited liability company
incorporated under the laws of England and Wales and
registered under no. 01745656;
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(d) 123,285 fully paid shares (constituting the entire issued
share capital of GBP 123,285), free and clear of any
encumbrance, in Professional Display Systems Limited, a
limited liability company incorporated under the laws of
England and Wales and registered under no. 02493132.
8. The corporate structure of the VEBA electronics distribution group
including all companies which are part of such group is set forth in
the corporate chart attached as Exhibit R-1 and the list attached as
Exhibit R-2. Except as expressly indicated in Exhibit R-2, all
companies which are part of the Group (as defined in section 9 below)
are owned and will immediately prior to Closing be wholly owned,
directly or indirectly, by one of the companies whose shares are to be
sold and purchased pursuant to Article 1.
9. The companies whose shares are to be sold and acquired pursuant to
Article 1 of this Agreement (including Raab Karcher Immobilien) are
hereinafter collectively referred to as the "COMPANIES". The companies
and other entities of the VEBA electronics distribution group as set
forth in Exhibits R-1 and R-2 other than the Companies and the Sellers
and the holding companies of the Sellers (as outlined in bold in the
chart in Exhibit R-1) are hereinafter collectively referred to as the
"SUBSIDIARIES". The Companies and the Subsidiaries are hereinafter
collectively referred to as the "GROUP COMPANIES" or the "GROUP" and
each of them being referred to as a "GROUP COMPANY". Exhibit R-1
indicates which Companies and Subsidiaries form part of each of the
Divisions.
E.ON AG and all companies or corporations controlled by E.ON AG at the
relevant time (other than the Companies and Subsidiaries) within the
meaning of Section 18 German Stock Corporation Act are referred to
herein as the "E.ON GROUP" or the "VEBA GROUP".
10. Sellers wish to divest themselves of the Group, and Purchasers (or
subsidiaries of any Purchaser nominated by it prior to Closing) wish to
acquire the Group, with each Purchaser (or its nominated subsidiaries)
acquiring the Divisions set opposite its name below:
Arrow Wyle Components Division
Wyle Systems Division
Atlas US Division
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Avnet EBV Division
RKE Division
Atlas Europe Division
Memec Purchaser Memec Division
Now, therefore, subject to and on the terms and conditions set forth herein, the
Parties agree as follows:
ARTICLE 1
SALE AND PURCHASE
1.1 AGREEMENT TO SELL AND PURCHASE
Subject to the terms and conditions set forth herein:
(a) (i) VEBA Electronics GmbH hereby sells to Avnet,
and Avnet hereby purchases from VEBA
Electronics GmbH, all the shares in issue in
Raab Karcher Elektronik GmbH as well as the
limited partnership interest in Raab Karcher
Immobilien, as set forth in section 2 of the
Recitals;
(ii) VEBA Electronics GmbH hereby sells to Memec
Purchaser and Memec Purchaser hereby
purchases from VEBA Electronics GmbH the
shares in issue owned by VEBA Electronics
GmbH on the Closing Date (1,000,716 shares)
in Memec Sud Europe S.A., as set forth in
section 2 of the Recitals;
(iii) Viterra hereby sells to Avnet, and Avnet
hereby purchases from Viterra, the general
partner interest in Raab Karcher Immobilien,
as set forth in section 2 of the Recitals;
(iv) VEBA Electronics LLC hereby sells to Memec
Purchaser and Memec Purchaser hereby
purchases from VEBA Electronics LLC the
entire membership interest in Memec LLC, as
set forth in section 4 of the Recitals;
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(v) VEBA Electronics LLC hereby sells to Arrow
and Arrow hereby purchases from VEBA
Electronics LLC all the shares in issue in
EBV Electronic Holdings, Inc. and the entire
membership interests in ATLAS Business
Services LLC and ATLAS Services LLC, each as
set forth in section 4 of the Recitals;
(vi) VEBA Electronics Beteiligungs GmbH hereby
sells to Memec Purchaser and Memec Purchaser
hereby purchases from VEBA Electronics
Beteiligungs GmbH all the shares in issue
owned by it in Memec GmbH, Memec Belgium NV,
Memec AG, Memec Nederland BV, Okura
Electronics Co. Limited and Memec Holding
BV, as set forth in section 5 of the
Recitals;
(vii) VEBA Electronics (UK) Plc hereby sells to
Memec Purchaser, and Memec Purchaser hereby
purchases from VEBA Electronics (UK) Plc,
the shares in issue owned by it in Memec
(Memory and Electronic Components) Plc and
its interest in the share jointly owned with
Roy Stevenson, as set forth in section 6 of
the Recitals;
(viii) VEBA Electronics Beteiligungs GmbH hereby
sells to Avnet, and Avnet hereby purchases
from VEBA Electronics Beteiligungs GmbH, all
shares in issue in Atlas Logistik Services
GmbH and in Distron Elektronik GmbH, as set
out in section 5 of the Recitals;
(ix) EBV Verwaltungs GmbH i.L. hereby sells to
Avnet, and Avnet hereby purchases from EBV
Verwaltungs GmbH i.L., all the shares in
issue in EBV-Elektronik GmbH, as set forth
in section 3 of the Recitals; and
(x) Raab Karcher Electronic Systems Plc hereby
sells to Avnet, and Avnet hereby purchases
from Raab Karcher Electronic Systems Plc,
all the shares in issue in RK Distribution
Limited, Midwich Limited, Transformation
Software Limited and Professional Display
Systems Limited, as set forth in section 7
of the Recitals.
The shares, membership interests and partnership
interests sold pursuant to this Section 1.1 are
hereinafter referred to as the "SOLD SHARES".
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(b) VEBA Electronics LLC hereby sells to Arrow, and Arrow hereby
purchases from VEBA Electronics LLC, all computer systems,
software and office equipment owned by VEBA Electronics LLC
and located in the offices on the premises of Wyle Electronics
in Santa Clara. Arrow shall, with effect as of the Closing,
(i) assume all agreements (including all rights, obligations
and liabilities thereunder) entered into by VEBA Electronics
LLC with respect to any computer systems, software and office
equipment, in each case leased or licenced by VEBA Electronics
LLC and located in such offices (except for any agreements
which would have to be disclosed in Exhibit 5.12 if VEBA
Electronics LLC were a Group Company and which are not
disclosed in Exhibit 1.1) and (ii) be responsible for the HQ
Employees in accordance with Section 7.23 below.
(c) The Sold Shares (and the assets referred to in Section 1.1 (b)
to be purchased by Arrow) shall be transferred free of any
mortgage, charge, pledge, lien, option, restriction, right of
first refusal, right of pre-emption, third party right or
interest or any other encumbrance or security interest of any
kind, or another type of preferential arrangement (including,
without limitation, a title transfer or retention arrangement)
having similar effect.
(d) Any Purchaser shall be entitled to nominate one or more of its
subsidiaries to acquire title to any of the Sold Shares and/or
any of the assets referred to in Section 1.1 (b) which such
Purchaser agrees to purchase under this Article 1. Such
nomination shall be made in writing to the Sellers at least
five business days prior to the Closing Date. In the case of
Avnet, Avnet has nominated Avnet EMG GmbH in respect of the
Sold Shares described in Sections 1.1 (a) (i), (viii) and (ix)
and Avnet Alfapower GmbH in respect of the Sold Shares
described in Section 1.1 (a) (iii), and Avnet EMG GmbH and
Avnet Alfapower GmbH shall have the right to demand that the
relevant Sold Shares shall be transferred to them.
1.2 TRANSFER
The Sellers shall transfer to the relevant company nominated by the
relevant Purchaser in accordance with Section 1.1 (d) (or to the extent
that no such nomination is made, to the relevant Purchaser) the Sold
Shares and the assets and liabilities referred to in Section 1.1 (b) on
the Closing Date (as defined in Section 4.1 below) in accordance with
Section 4.4 (a) below.
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1.3 ECONOMIC EFFECTIVE DATE; DIVIDEND RIGHTS
The Sold Shares shall be sold and transferred to the relevant company
nominated by the relevant Purchaser in accordance with Section 1.1 (d)
(or to the extent that no such nomination is made, to the relevant
Purchaser) with all rights and obligations pertaining thereto at the
date of this Agreement, including the dividend rights for the fiscal
year ended on December 31, 2000, with retroactive economic effect as of
March 31, 2000, 24:00 hours/April 1, 2000, 0:00 hours (the "EFFECTIVE
DATE").
ARTICLE 2
PURCHASE PRICE
2.1 CERTAIN DEFINITIONS
For the purposes of this Agreement, in particular the purchase price
formula contained in Section 2.2,
"EFFECTIVE DATE CASH" means the aggregate amount, as at the Effective
Date, of any cash, cash equivalents and balances (including all highly
liquid investments with an original maturity of three months or less
from the date of purchase and money market funds) which (i) are freely
remittable without any exchange or other approvals or significant costs
or (ii) if the cash is not so freely remittable, amount to less than $
500,000 in aggregate for all Divisions to be acquired by each Purchaser
(provided that if and to the extent that there is cash which is not so
freely remittable and which exceeds such threshold, the relevant
Purchaser shall cause the Group Companies to assign such cash to
Sellers in the country in which the relevant cash is located, free of
any consideration), but excluding, for the avoidance of doubt, amounts
attributable to cash balances of Group Companies on bank accounts
operated within a pooling arrangement with accounts of any member of
the E.ON Group which have been taken into account in the calculation of
Inter-Group Debt. For the avoidance of doubt, cash and cash balances
shall be determined by reference to the cash books of the Group
Companies.
"EFFECTIVE DATE EXTERNAL DEBT" means the External Debt as at the
Effective Date.
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"EXTERNAL DEBT" means the aggregate of:
(a) all borrowings of any nature of any member of the Group (other
than borrowings from either (i) other members of the Group or
(ii) members of the E.ON Group (as the case may be)),
including loans granted by suppliers, but excluding, for the
avoidance of doubt, (i) deferred payment arrangements with
suppliers and other supplier items, which are in each case
included in accounts payable (as reflected in the Effective
Date Financial Statements) and (ii) accruals for inventory
received but not yet invoiced;
(b) all obligations under finance leases (as defined under German
GAAP);
and
(c) (i) all accrued or unpaid interest and charges due in respect
of any of the above and (ii) any prepayment or repayment
penalties, charges or costs which actually arise and become
payable on repayment of any of the above at Closing or within
45 days after the Closing Date;
in each case, to the extent that any amounts referred to above are in
amounts other than United States Dollars, such amounts shall be
exchanged into United States Dollars at the exchange rates prevailing
on the Closing Date;
"CLOSING DATE INTER-GROUP DEBT" means the Inter-Group Debt as at the
Closing Date, payable in United States Dollars, calculated (in respect
of any Inter-Group Debt incurred in currencies other than United States
Dollars) at the exchange rates as at the Effective Date, except for any
Inter-Group Debt incurred after the Effective Date in accordance with
Section 7.3, to which the exchange rates as at the Closing Date shall
apply;
"EFFECTIVE DATE INTER-GROUP DEBT" means the Inter-Group Debt as at the
Effective Date;
"ESTIMATED CLOSING DATE INTER-GROUP DEBT" means the estimate of the
Closing Date Inter-Group Debt calculated (in respect of any Inter-Group
Debt incurred in currencies other than United States Dollars) at the
exchange rates as at the Effective Date, except for any Inter-Group
Debt incurred after the Effective Date in accordance with Section 7.3,
to
<PAGE> 19
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which the exchange rates as at the business day two business days
before the Closing Date shall apply;
"INTER-GROUP DEBT" means the net balance (including any accrued or
unpaid interest thereon in accordance with Section 7.3), as at the
relevant date, of the inter-group liabilities and inter-group
receivables under any (short-term or long-term) borrowings between any
of the Group Companies and any member of the E.ON Group (other than,
for the avoidance of doubt, trade receivables and trade payables
arising in the ordinary course of trading);
"EFFECTIVE DATE WORKING CAPITAL TARGET AMOUNT" means an amount equal to
22.5 per cent of the aggregate amount of the net sales of the Group
(net sales as shown in the profit and loss account included in the
Effective Date Financial Statements) for the period from and including
January 1, 2000 up to and including the Effective Date multiplied by
four;
"EFFECTIVE DATE WORKING CAPITAL" means the balance of the line item
terms net inventory and trade accounts receivables less trade accounts
payables as at the Effective Date (as determined in accordance with
Article 3 below) and does not include, for the avoidance of doubt, any
other working capital items (in particular other assets and other
liabilities) or accruals for inventory received but not yet invoiced;
"EFFECTIVE DATE TAXATION LIABILITY" means the tax liabilities in
respect of income, profits and gains (excluding any deferred tax
liabilities and deferred tax assets) for all periods of the Companies
and Subsidiaries ending on or before the Effective Date (as determined
by assuming that the Effective Date is the end of a fiscal or taxable
period);
"POST EFFECTIVE DATE INTER-GROUP INTEREST PORTION" means the aggregate
of (i) 50 per cent of the interest accruing or paid on any Effective
Date Inter-Group Debt (other than interest referred to in (ii) below)
at the rates set out in Exhibit 7.3 from the Effective Date up to and
including the Closing Date or, if Closing occurs after September 30,
2000, up to and including September 30, 2000, (ii) to the extent that
the interest rates exceed the relevant interest rates set out in
Exhibit 7.3 or there are fees or charges, 100 per cent of any fees and
charges and 100 per cent of any interest in excess of such rates, in
each case accrued or paid on any Inter-Group Debt since the Effective
Date and (iii) 100 per cent of any interest accrued or paid (such
amount to be determined on an after-tax basis, using a flat tax rate of
32.5%) on any Inter-Group Debt incurred in order to finance or
refinance
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any Pre-Closing Distributions to any member of the E.ON Group since the
Effective Date. For the avoidance of doubt, the Post Effective Date
Inter-Group Interest Portion shall not include any interest accruing in
respect of the period up to and including the Effective Date.
"POST EFFECTIVE DATE EXTERNAL INTEREST PORTION" means 50 per cent of
any interest paid or accruing on any External Debt in respect of the
period from the Effective Date up to and including the Closing Date or,
if Closing occurs after September 30, 2000, up to and including
September 30, 2000 (excluding, for the avoidance of doubt, any interest
accruing on any External Debt in respect of the period up to and
including the Effective Date);
"PRE-CLOSING DISTRIBUTIONS" means the aggregate amount of any dividends
or distributions of any nature whatsoever (whether of cash or assets)
in respect of any shares of capital stock or shares in the capital of
any Group Company or any repurchase, redemption, repayment or other
acquisition by any Group Company of any of its own shares of capital
stock, issued shares or other securities or withdrawals or repayment of
capital or partnership interests by any Group Company or transfer of
profit by any Group Company (other than any of the foregoing to the
extent it comprises a payment to another Group Company) paid, declared
or agreed to be paid by any Group Company to any member of the E.ON
Group from (but excluding) the Effective Date up to and including the
Closing Date, excluding the dividend of GBP 138 million (paid in cash
on July 24, 2000) relating to the proceeds of the sale of VEBA
Electronics US Holding GmbH to VEBA Electronics (U.K.) Plc.
"PRE-CLOSING NON-RECURRING CHARGES" means any charges or liabilities
paid or incurred by any Group Company to any member of the E.ON Group
since the Effective Date to and including the Closing Date, except for
those arising under (i) trading and supply agreements with respect to
goods or utilities in the ordinary course of business on arm's length
terms and (ii) the service agreements and other agreements with the
E.ON Group, which are on arm's length terms and referred to in Exhibit
5.12;
"UNFUNDED PENSION LIABILITY" is a fixed amount equal to $ 18,600,000;
in each case (to the extent relevant) as shown on the Effective Date
Financial Statements and the Effective Date Certificates or the Closing
Certificates (as the case may be), as determined in accordance with
Article 3.
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2.2 PURCHASE PRICE FORMULA
The aggregate purchase price to be paid for the Sold Shares shall be an
amount equal to
(i) $ 2,350,000,000 (in words: US Dollars two billion three
hundred and fifty million) (the "BASE AMOUNT");
(ii) plus an amount equal to the Effective Date Cash;
(iii) minus an amount equal to the Effective Date External Debt;
(iv) minus an amount equal to the Effective Date Inter-Group Debt;
(v) minus an amount (if any) equal to the amount by which the
Effective Date Working Capital Target Amount exceeds the
Effective Date Working Capital;
(vi) minus an amount equal to the Effective Date Taxation
Liability;
(vii) minus an amount equal to the Unfunded Pension Liability;
(viii) minus a fixed amount of $ 25,000,000 (equal to a purchase
price reduction agreed between the Parties with respect to
payment obligations of the Group under EPU schemes which may
arise as a result of the transactions contemplated hereby,
obligations which may arise in respect of software consultancy
fees and the write off of aged accounts receivables of Wyle
Systems Division);
(ix) minus an amount equal to the aggregate of the Post Effective
Date Inter-Group Interest Portion and the Post Effective Date
External Interest Portion;
(x) minus an amount equal to the aggregate of the Pre-Closing
Distributions and the Pre-Closing Non-Recurring Charges;
(xi) plus an amount equal to 12% of $ 600,000,000 multiplied by the
number of days from and including October 1, 2000 to, but
excluding, the Closing Date divided by 365 (the "ADDITIONAL
AMOUNT").
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The amount of the aggregate purchase price as calculated above is
referred to as the "FINAL SHARE PURCHASE PRICE".
2.3 ALLOCATION
The Base Amount and the purchase price for the Sold Shares shall be
allocated as set out in Exhibit 2.3 (Part I). The Preliminary Share
Purchase Price, Final Share Purchase Price, Inter-Group Debt, External
Debt and any adjustments to be made in accordance with Section 2.6
shall be determined on a Division by Division basis in accordance with
the basis of allocation set out in Exhibit 2.3 (Part II). Any downward
adjustments (including any adjustments as a result of any payments made
by the Sellers with respect to claims under Articles 7, 8 and 9) to the
Final Share Purchase Price shall be allocated to the relevant Sold
Shares, save that the Final Share Purchase Price in respect of the Sold
Shares of any Group Company shall not be reduced below $ 1 and any
excess adjustment shall be applied in reducing the allocated amount, in
the case of the Memec Purchaser, to the shares in Memec Plc, in the
case of Avnet to the shares in Raab Karcher Elektronik GmbH and
EBV-Elektronik GmbH in equal proportions and, in the case of Arrow, to
the shares of EBV Electronic Holdings, Inc. To the extent of any
further reduction, the Sellers shall procure the capitalisation of an
equal amount of Closing Date Inter-Group Debt and any shares arising on
such capitalisation shall be treated as Sold Shares and sold for an
aggregate consideration of $ 1.
2.4 PAYMENT ON THE CLOSING DATE
(a) On the Closing Date, the Purchasers shall
(i) procure to be paid to the respective members of the
E.ON Group by or on behalf of the relevant Group
Companies such amounts as are required to satisfy the
Inter-Group Debt Closing Condition as referred to in
Section 4.2(a)(v); and
(ii) following satisfaction of the Inter-Group Debt
Closing Condition, pay to the Sellers an amount equal
to an estimate of the Final Share Purchase Price, as
determined in accordance with Sections 2.4(b) or (c)
(as the case may be) (the "PRELIMINARY SHARE PURCHASE
PRICE"),
<PAGE> 23
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such payments to be made or procured to be made by each of the
Purchasers in respect of the Divisions to be acquired by it.
(b) If the Effective Date Financial Statements and the Effective
Date Certificates have been finally determined in accordance
with Article 3 at least ten business days prior to the Closing
Date, the Preliminary Share Purchase Price shall be equal to
(i) the Base Amount,
(ii) plus/minus each of the amounts set out in Sections
2.2(ii) to (viii), as adjusted by the Effective Date
Financial Statements and Effective Date Certificates,
(iii) minus the amount equal to the estimate provided
pursuant to Section 2.4(d) below of the aggregate of
the Post Effective Date Inter-Group Interest Portion
and the Post Effective Date External Interest Portion
(item (ix) of Section 2.2) and the Pre-Closing
Distributions and the Pre-Closing Non-Recurring
Charges (item (x) of Section 2.2); and
(iv) plus the Additional Amount (item (xi) of Section
2.2).
(c) If the Effective Date Financial Statements have not been
finally determined in accordance with Article 3 at least ten
business days prior to the Closing Date, the Preliminary Share
Purchase Price shall be equal to the amount of the estimate
provided pursuant to Section 2.4 (d) below.
(d) The Sellers shall deliver to the Purchasers their good faith
estimate of the Preliminary Share Purchase Price, the
Estimated Closing Inter-Group Debt (as defined in Section 4.2
(a)(v) below) and estimates of each of the items specified in
(ix) and (x) of Section 2.2 not later than ten business days
prior to the Closing Date. The Preliminary Share Purchase
Price and the Estimated Closing Date Inter-Group Debt shall be
paid, value as of the Closing Date, by two separate wire
transfers (to be made in the order as set out in Section 2.4
(a)) of immediately available funds into the bank account no.
3941770 USD with Deutsche Bank AG, Dusseldorf, bank
identification code (BLZ) 300 700 10, and such
<PAGE> 24
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payments shall fully discharge all obligations of the
Purchasers under this Section 2.4 and Section 4.2(a)(v).
2.5 EFFECT OF PAYMENT; DISCHARGE OF VEBA LIABILITIES
(a) The Sellers agree, and shall procure that the relevant members
of the E.ON Group agree, that the payments by or procured by
the Purchasers under this Article 2 and Section 4.2(a)(v)
shall fully satisfy all liabilities of any Group Company in
respect of the Closing Date Inter-Group Debt and all other
liabilities of or incurred by any Group Company to any member
of the E.ON Group in respect of the period up to and including
the Closing Date, except for trading or supply agreements with
respect to goods or utilities in the ordinary course of
business on arm's length terms and the lease agreements
referred to in Section 7.13. All agreements between any Group
Company and any member of the E.ON Group (other than trade or
supply agreements with respect to goods or utilities in the
ordinary course of business on arm's length terms and the
lease agreements referred to in Section 7.13) shall terminate
on Closing, unless otherwise agreed in writing with the
relevant Purchaser, and the Purchasers and the Group Companies
shall have no liability thereunder for amounts payable in
respect of periods prior to the Closing Date. If required by
the Purchasers, the Sellers shall procure the delivery to the
Purchasers of an acknowledgement, discharge and confirmation
of termination from the relevant member of the E.ON Group in
accordance with the preceding sentences. Nothing in this
Section 2.5 shall prejudice any claims in respect of the
period prior to Closing in connection with any insurance
arrangements with the E.ON Group.
(b) The Purchasers agree, and shall procure, that upon payment of
the Closing Date Inter-Group Debt (as finally determined in
accordance with Article 3), no member of the E.ON Group shall
have any liability to any Group Company with respect to any
Inter-Group Debt.
2.6 SETTLEMENT PAYMENTS AFTER THE CLOSING DATE
(a) If the Final Share Purchase Price or the actual amount of the
Closing Date Inter-Group Debt with respect to a Division (as
determined after the Closing Date in accordance with Article 3
below) is higher or lower than the Preliminary Share Purchase
Price or the Estimated Closing Inter-Group Debt paid at
Closing, the
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Sellers and the relevant Purchaser shall settle, or cause the
relevant members of the E.ON Group or the relevant Group
Companies (as the case may be) to settle any differences
within ten business days after which the Effective Date
Financial Statements and the Closing Certificates have been
finally determined in accordance with Article 3, provided
that, to the extent relevant, the payments to be made pursuant
to this Section 2.6(a) with respect to a Division acquired by
the relevant Purchaser shall be set-off against each other and
the balancing payment alone shall be payable.
(b) The amount of any payment to be made pursuant to this Section
2.6 shall bear interest from and including the Closing Date to
but excluding the date of payment at a rate of 6 per cent per
annum. Such interest shall be payable at the same time as the
payment to which it relates and shall be calculated daily on
the basis of a year of 365 days and the actual number of days
elapsed.
2.7 SAMPLE CALCULATION
A sample calculation of the Final Share Purchase Price and the
aggregate amount payable by Purchasers at Closing (including the
Closing Inter-Group Debt) is attached hereto as Exhibit 2.7.
2.8 NO SET-OFF/RETENTION
Subject to the proviso in Section 2.6(a) neither the Purchasers nor
the Sellers shall have any right of set-off or retention right with
respect to their obligations to pay the purchase price, the Inter-Group
Debt or any adjustment payment under this Article 2.
ARTICLE 3
EFFECTIVE DATE FINANCIAL STATEMENTS; EFFECTIVE DATE AND CLOSING CERTIFICATES
3.1 PREPARATION OF EFFECTIVE DATE FINANCIAL STATEMENTS AND EFFECTIVE DATE
AND CLOSING CERTIFICATES
(a) Sellers shall prepare, or cause to be prepared, and deliver to
each of Purchasers (i) combined financial statements
(comprising a balance sheet as at the Effective Date and a
profit and loss account for the period from and including
January 1,
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2000 to the Effective Date) of the Group and of each Division,
together with an audit report by PricewaterhouseCoopers LLP on
the combined financial statements of the Group and of each
Division (the "EFFECTIVE DATE FINANCIAL STATEMENTS") (provided
that the costs of PricewaterhouseCoopers LLP in the
preparation and audit of all such financial statements (but,
for the avoidance of doubt, not for the resolution of any
disputes) shall be borne as to 50% by the Sellers and as to
50% by the Purchasers), and (ii) certificates based on such
financial statements setting forth Sellers' calculation of the
Effective Date External Debt, the Effective Date Cash, the
Effective Date Inter-Group Debt, the Effective Date Working
Capital and the Effective Date Taxation Liability (the
"EFFECTIVE DATE CERTIFICATES"), in each case on a consolidated
basis for the Group and for each Division. Sellers shall use
their best efforts to ensure that the Effective Date Financial
Statements and the Effective Date Certificates will be
delivered to Purchasers by no later than two months after the
date hereof.
(b) The Purchasers shall cause the Companies to prepare and
deliver, as soon as reasonably practicable, but not later than
60 days after Closing, to the Sellers (i) a certificate of the
Closing Date Inter-Group Debt for the Group and each Division,
(ii) a certificate of the Pre-Closing Distributions and the
Pre-Closing Non-Recurring Charges and (iii) a certificate of
the Post Effective Date Inter-Group Interest Portion and the
Post Effective Date External Interest Portion for the Group
and each Division (together the "CLOSING CERTIFICATES").
3.2 ACCOUNTING PRINCIPLES
The Effective Date Financial Statements and the Closing Certificates
shall (i) be prepared in accordance with generally accepted accounting
principles as applied in Germany ("GERMAN GAAP") on a basis consistent
with those used in the preparation of the 1999 German GAAP Group
Balance Sheet (as defined in Section 5.4(a) below) and using the
principles set forth in Exhibit 3.2, provided that in the event of any
inconsistency between the provisions of Exhibit 3.2 and the basis
applied in the preparation of the 1999 German GAAP Group Balance Sheet,
the provisions of Exhibit 3.2 shall prevail, and (ii) include line
items consistent with those in the 1999 German GAAP Group Balance
Sheet.
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3.3 REVIEW OF EFFECTIVE DATE FINANCIAL STATEMENTS AND EFFECTIVE DATE AND
CLOSING CERTIFICATES
If the Purchasers believe that any item or amount contained in the
Effective Date Financial Statements or the Effective Date Certificates
(as delivered by Sellers pursuant to Section 3.1) or Sellers believe
that any item or amount contained in the Closing Certificates (as
delivered by Purchasers pursuant to Section 3.1) does not comply with
Articles 2 and 3, the Purchasers or Sellers (as the case may be) may,
within 45 days after delivery of the relevant documents referred to in
Section 3.1, deliver a notice to Sellers or Purchasers (as the case may
be) disagreeing with Sellers' or Purchasers' (as the case may be)
calculation and setting forth Purchasers' or Sellers' (as the case may
be) calculation of the relevant items or amounts. Any such notice of
disagreement shall specify those items or amounts as to which the
Purchasers or Sellers (as the case may be) disagree, and Purchasers and
Sellers (as the case may be) shall be deemed to have agreed with all
other items and amounts contained in the Effective Date Financial
Statements, the Effective Date Certificates or the Closing Certificates
(as the case may be).
3.4 DISPUTE RESOLUTION
If the Purchasers or Sellers (as the case may be) have duly delivered a
notice of disagreement in accordance with Section 3.3, the Parties
shall, during the 30 days following such delivery, use their reasonable
efforts to reach agreement on the disputed items or amounts in order to
determine the Final Share Purchase Price or the actual amount of the
Closing Inter-Group Debt. If and to the extent that, at any time after
the end of such period, the Parties are unable to reach such agreement,
any Party may refer the remaining differences to an internationally
recognized firm of international independent public accountants (the
"CPA FIRM"). If the Parties cannot mutually agree upon the CPA Firm
within two weeks after any Party has requested its appointment, the CPA
Firm shall be appointed, upon request of any Party, by the Institute of
Chartered Accountants (Institut der Wirtschaftsprufer) in Dusseldorf.
The CPA Firm shall, acting as an expert (Schiedsgutachter) and not as
an arbitrator, determine on the basis of the standards set forth in
Articles 2 and 3, and only with respect to the remaining differences
submitted to it and within the range in dispute between the Parties,
whether and to what extent the Effective Date Financial Statements, the
Effective Date Certificates or the Closing Date Certificates (as the
case may be) require adjustment. The Parties shall instruct the CPA
Firm, before giving its opinion, to give the Parties a reasonable
opportunity to present their views and to deliver its written opinion
to them no later than
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four weeks after the remaining differences are referred to it. The
decision of the CPA Firm shall be conclusive and binding on the Parties
(within the limits set forth in Section 319 German Civil Code) and
shall not be subject to any appeal. The fees and disbursements of the
CPA Firm shall be borne as to 50 per cent by the Sellers and as to 50
per cent by the Purchasers.
3.5 ACCESS AND INFORMATION
The Purchasers and Sellers agree that they will, and agree to cause
their respective independent accountants and each Group Company to,
cooperate and assist in the preparation of the Effective Date Financial
Statements, Effective Date Certificates or Closing Certificates (as the
case may be) and in the conduct of the audits and reviews referred to
in this Article 3, including without limitation, the making available
to each other and the CPA Firm to the extent necessary of books,
records, work papers and personnel and access, during normal working
hours, to the Group's premises.
ARTICLE 4
CLOSING
4.1 TIME AND PLACE OF CLOSING
The closing of the transactions contemplated by this Agreement (the
"CLOSING") shall take place on the fourteenth business day after the
day on which the conditions set forth in Section 4.2(a)(i) below are
met, subject to the further conditions set forth in Section 4.2(a)
being complied with on such day, at 10 a.m. at the offices of Hengeler
Mueller Weitzel Wirtz in Dusseldorf or at any other time and place as
the Parties may mutually agree. The date on which the Closing is to be
consummated is referred to herein as the "CLOSING DATE".
4.2 CONDITIONS TO CLOSING
(a) Subject to Section 4.4, the obligations of the Purchasers and
Sellers to consummate the Closing are subject to the
satisfaction (or, with respect to (iii) below, the waiver by
the Purchasers) of the following conditions precedent:
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(i) Subject to Exhibit 4.3, the consummation of the
transaction contemplated hereby shall be permitted
pursuant to applicable merger control laws in the
United States of America and clearance in respect of
such consummation shall have been obtained pursuant
to applicable merger control laws in all relevant
jurisdictions within the European Union (including
pursuant to the EU Merger Regulation) (or any
applicable waiting periods in the relevant
jurisdictions referred to above shall have expired
with the effect that the transaction may be
consummated without violation of applicable merger
control laws in any such jurisdiction); and
(A) in the case of the Divisions to be acquired
by Arrow, the information as set forth in
Exhibit 5.3 shall be accurate (save where
any inaccuracy in such information would not
result in any approvals being required under
merger control laws in Canada or Mexico);
and
(B) in the case of the Divisions to be acquired
by Avnet, (x) approvals of the consummation
of the acquisitions by Avnet shall have been
obtained (or applicable waiting periods have
expired, as referred to above) under such
merger control laws in the relevant
jurisdictions in the European Union
(including pursuant to the EU Merger
Regulation) without the requirement for any
Resolutions (as defined in Exhibit 4.3)
being given by Avnet (or any of its
subsidiaries, together with Avnet the "AVNET
GROUP"), the Divisions to be acquired by
Avnet or the Sellers, or (y) the outstanding
approvals under applicable merger control
laws in jurisdictions other than in the
European Union (and other than pursuant to
the EU Merger Regulation) may reasonably be
anticipated to be forthcoming without
Resolutions being given which, when taken
together with any Resolutions already given
by the Avnet Group, the Divisions to be
acquired by Avnet or the Sellers, would have
a Material Adverse Effect (as defined in
Exhibit 4.3) or require the Avnet Group
(including the Divisions to be acquired by
Avnet) to incur out-of-pocket costs or
expenses equal to or exceeding $ 75 million
in the aggregate.
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The conditions precedent in this subsection (i) will
not be satisfied unless satisfied with respect to at
least two Purchasers. If the conditions precedent
contained in this subsection (i) are satisfied with
respect to the Divisions to be acquired by two
Purchasers, subject to the satisfaction of all other
conditions set out in this Section 4.2(a) applicable
to such Purchasers, the Closing shall be completed
with respect to such Purchasers in accordance with
Section 4.5.
(ii) No enforceable judgement, injunction, order or decree
(an "INJUNCTION") has been issued, made or entered
into by any court or governmental authority in any
jurisdiction which prohibits the consummation of the
Closing, provided that, (A) if any Injunction affects
the ability of a Purchaser to close with respect to a
portion of any of the Divisions to be acquired by
such Purchaser but would not have a Material Adverse
Effect (as defined in the introductory part of
Section 5) on that Division, then the Closing shall
be completed by the Sellers and such Purchaser with
respect to all portions of those Divisions that can
be completed without violating the Injunction and (B)
if any Injunction affects the ability to close with
respect to only one Purchaser, but no Injunction
affects the ability to close with respect to the
other Purchasers, the Parties agree, subject to
satisfaction of all other conditions set out in this
Section 4.2(a) applicable to such Purchasers, to
complete the Closing with respect to the two
Purchasers that can be completed in accordance with
Section 4.5. In such event, the relevant Parties
agree to use their reasonable efforts to have such
Injunction overturned or otherwise resolved so that
the Closing can be completed with respect to the
Division (or any portion of a Division) that has not
been completed.
(iii) The representations and warranties (except for the
representation and warranty in Section 5.3(b),
second sentence, in respect of which subsection (i)
(A)applies), covenants and other obligations of the
Sellers contained in this Agreement shall, from and
including the date hereof to the Closing Date, not be
breached in a manner which would reasonably be
expected to result in indemnification claims by the
Purchasers under this Agreement in an aggregate
amount of more than $ 300 million (before taking
account of any limitations under Article 8). For the
avoidance of
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doubt, Closing shall in no way prejudice any Party's
ability to make any claim for breach of this
Agreement.
(iv) The facilities to be provided pursuant to the terms
of the committed facility agreements referred to in
Part (A) of Exhibit 4.2 ("COMMITTED FACILITIES")
shall have become unconditionally available for draw
down in accordance with the relevant terms of such
agreements (as attached hereto as Part (B) of Exhibit
4.2) by Memec Purchaser and/or the relevant Group
Companies, provided that, if this condition precedent
is not satisfied on the day when all conditions set
out in this Section 4.2(a) have been satisfied (A)
with respect to Avnet and Arrow, then the Closing
shall be completed with respect to Avnet and Arrow in
accordance with Section 4.5, or (B) with respect to
only either Avnet or Arrow, then the Sellers may
choose, at their discretion, to complete the Closing
with respect to Arrow or Avnet (as the case may be)
or not to complete the Closing unless and until the
closing conditions with respect to at least two
Purchasers have been satisfied. In the event that the
Sellers choose to complete the Closing with respect
to only one Purchaser (Arrow or Avnet), such Closing
shall be conditional upon the Purchasers (other than
Memec Purchaser and any Purchaser in respect of which
this Agreement has been terminated in accordance with
Article 10) and the Sellers having agreed mutually
acceptable Transitional and Separation Arrangements
(as defined in Section 4.5(e) below) without referral
to the Expert.
(v) Each Purchaser shall have procured payment to the
respective members of the E.ON Group of an amount
equal to the Estimated Closing Date Inter-Group Debt
in respect of the Divisions to be acquired by it. The
condition set out in this subsection (a)(v) is
referred to herein as the "INTER-GROUP DEBT CLOSING
CONDITION".
(b) In connection with the condition set out in Section 4.2(a)
(iv), Memec Purchaser undertakes:
(i) to use all reasonable endeavours to satisfy any
conditions precedent to draw down under the Committed
Facilities to the extent such matters are within the
reasonable control of it or its subsidiaries, and
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(ii) to enforce its right under the Committed Facilities
to draw down the funds available thereunder.
4.3 REGULATORY FILINGS
(a) Each of the Sellers and the Purchasers agree, as soon as
practicable after the date of this Agreement, to make all
appropriate filings under any applicable merger control laws
in the European Union (including under the EU Merger
Regulation) and any other applicable antitrust laws in any
other jurisdictions (for the avoidance of doubt not including
Canada or Mexico) and to file a Notification and Report Form
pursuant to the United States Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT") with
respect to the transactions contemplated hereby. The HSR Act
and the applicable merger control and antitrust laws in the
European Union and any other jurisdiction as referred to in
the preceding sentence are referred to herein as the
"ANTITRUST LAWS". Each of the Sellers and each relevant
Purchaser agrees to supply to any relevant competent
authorities as promptly as practicable any additional
information and documentary material that may be requested
pursuant to any Antitrust Laws and (subject to Exhibit 4.3) to
take all other actions necessary to obtain all requisite
approvals and authorizations and to cause the expiration or
termination of the applicable waiting periods (or similar
requirements) under such laws as soon as practicable.
(b) Subject to Exhibit 4.3 in order to obtain all requisite
approvals and authorisations for the transactions contemplated
by this Agreement under the merger control laws in the
European Union, the HSR Act and any other Antitrust Law, the
relevant Purchaser and the Sellers shall (i) co-operate in all
respects with each other in connection with any filing or
submission and in connection with any investigation or other
inquiry, including any proceeding initiated by a private
party, (ii) keep the Sellers or relevant Purchaser (as the
case may be) informed in all material respects of any material
communication received by such party from, or given by such
party to, any relevant competent authorities and of any
material communication received or given in connection with
any proceeding by a private party, in each case regarding any
of the transactions contemplated hereby and (iii) permit the
Sellers or relevant Purchaser (as the case may be) a
reasonable opportunity to be consulted in advance of any
meeting or conference with any such competent authority or in
connection with any proceeding by a private party.
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(c) If any objections are asserted with respect to the
transactions contemplated hereby under any Antitrust Law or if
any suit is instituted by any competent authority (including
the European Commission) or any private party challenging any
of the transactions contemplated hereby as violative of any
Antitrust Law, then, subject to Exhibit 4.3, the relevant
Purchaser and the Sellers shall be obligated to (i) take all
necessary steps to resolve such objections or challenge as
such competent authority or private party may have to such
transactions under such Antitrust Law so as to permit
consummation of the transactions contemplated by this
Agreement and (ii) pursue a resolution with any competent
authority and, if acceptable to any competent authority, enter
into a settlement, consent, decree or other agreement with
such competent authority necessary to permit the transactions
contemplated by this Agreement.
(d) If a competent authority decides to deny its approval, as
required under any applicable Antitrust Law, of the
transactions contemplated hereby or any administrative or
judicial action or proceeding, including any proceeding by a
private party, is instituted (or threatened to be instituted)
challenging any transaction contemplated by this Agreement as
violative of any Antitrust Law, (subject to Exhibit 4.3) the
relevant Purchaser and the Sellers shall co-operate in all
respects with each other and shall contest any such decision,
action or proceeding and take all necessary steps to have
vacated, lifted, reversed or overturned any decree, judgement,
injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or
restricts consummation of the transactions contemplated by
this Agreement under any applicable Antitrust Law, including,
without limitation, defending in litigation on the merits any
claim asserted in any court through a final and non-appealable
judgement.
(e) If the failure to satisfy the requirements of any Antitrust
Law in any jurisdiction, other than in any jurisdiction within
the European Union (including pursuant to the EU Merger
Regulation) or the United States of America, prevents the
Closing in respect of the shares in any Group Company, then
(in the case of Arrow subject to the closing condition in
Section 4.2(a)(i)(A)) the relevant Purchaser and the Sellers
shall be obliged to comply with their respective obligations
on Closing (save to the extent that such obligations relate to
the acquisition of such shares), and the Purchasers'
obligations to pay the full purchase price for the
<PAGE> 34
34
portions of the Group acquired by each of them at Closing
shall not be affected thereby, provided that Closing on such
basis does not violate any Antitrust Laws. The relevant
Parties shall endeavour to agree, upon request of any of them,
on any appropriate action or suitable amendment to this
Agreement in order to ensure, as far as practicable, that the
Closing does not so violate any Antitrust Laws. Following
Closing, the relevant Purchaser and the Sellers shall
endeavour to obtain any necessary approval in respect of
Antitrust Laws to enable the relevant shares to be transferred
to the relevant Purchaser without payment of any further
consideration and as soon as such approval is available the
Sellers shall complete such transfer. Pending completion of
such transfer the relevant Purchaser and the Sellers shall
enter into such arrangements (subject to compliance with
Antitrust Laws) as give commercial effect to the intent of the
Parties to close the sales of each Group Company to be
purchased by a Purchaser simultaneously. If the approval is
not obtained within six months after Closing with the relevant
Purchaser, the Sellers shall procure the sale of the relevant
business or shares (after consultation with the relevant
Purchaser) and shall pay to the relevant Purchaser any
proceeds of sale, net of any taxes and reasonable expenses.
(f) If (a) either Arrow or Avnet are unable to complete the
acquisition of the relevant Group Companies to be purchased by
them as a result of the conditions in Section 4.2(a)(i) not
having been satisfied by February 28, 2001 but (b) the
acquisition by the other Purchasers (including Memec
Purchaser) of the Group Companies to be purchased by them
shall close on or prior to such date and (c) either Arrow or
Avnet (as the case may be) terminate this Agreement in respect
of either Arrow or Avnet (as the case may be) in accordance
with Article 10 as a result of such failure of the conditions
in Article 4.2(a) or the Sellers terminate this Agreement
after May 15, 2001 in respect of either Arrow or Avnet (as the
case may be) in accordance with Article 10 as a result of such
failure, (i) each Purchaser that is unable to complete the
acquisition shall pay to the Sellers an amount of $ 25 million
in aggregate as a fee for such termination and each Purchaser
that is able to complete the acquisition of the relevant Group
Companies shall, on Closing of such acquisition or, if Closing
has already occurred, within five business days of being
notified in writing, pay an additional amount of $ 25 million
by way of increase in the Final Share Purchase Price, which
shall be allocated, in the case of Memec Purchaser, to the
shares in Memec
<PAGE> 35
35
LLC, in the case of Avnet, to the shares in EBV-Elektronik
GmbH, and in the case of Arrow, to the shares in EBV
Electronic Holdings Inc. Notwithstanding any other provisions
of this Agreement, the payments by each Purchaser under this
paragraph (f) shall be in full and final discharge of all
liabilities of it in respect of its obligations under this
Article 4.3 and all obligations of such Purchaser under or in
respect of Article 4.3 shall cease upon termination of this
Agreement in respect of such Purchaser in accordance with
Article 10. This paragraph (f) shall not apply if both Arrow
and Avnet are unable to complete the acquisitions contemplated
hereby as a result of the failure to satisfy the conditions in
Section 4.2(a)(i) on or before the date specified in Section
10.1(e), but in this case Purchasers or Sellers may terminate
this Agreement in its entirety in accordance with that
Section.
4.4 ACTIONS ON CLOSING DATE
(a) On the Closing Date, the Parties shall take, or cause to be
taken, the actions set out in Exhibit 4.4, which shall be
taken simultaneously.
(b) No Purchaser and no Seller shall be obliged to close this
Agreement unless:
(i) Sellers and the relevant Purchaser comply with all
their obligations under Section 4.4 in respect of the
Divisions to be acquired by that Purchaser (provided
that, if two Purchasers do not comply with such
obligations, Sellers may, at their discretion, decide
not to close this Agreement in its entirety); and
(ii) subject to Sections 4.2(a)(ii)(A) and 4.3(e), the
purchase of all the Sold Shares in respect of the
Divisions to be acquired by that Purchaser is
completed simultaneously,
provided that no Seller or Purchaser shall be entitled to rely
on its own default under Section 4.4 in order to avoid its
obligation to close this Agreement.
4.5 STAGGERED CLOSING
If, pursuant to Sections 4.1 and 4.2, the Closing is completed with
only two Purchasers ("CLOSING I"), the following shall apply:
<PAGE> 36
36
(a) Sections 4.1 and 4.4 shall only apply to such Purchasers (the
"COMPLETING PURCHASERS") and not to the Purchaser who is
unable to complete (the "NON-COMPLETING PURCHASER") until the
conditions set out in Section 4.2 are satisfied with respect
to such non-completing Purchaser (subject to Article 10).
(b) Amounts to be paid in accordance with Article 2 shall be
determined in respect of the Divisions to be acquired by each
Completing Purchaser (and, in the event that there is a
subsequent Closing in relation to the Non-Completing Purchaser
("CLOSING II"), the Non-Completing Purchaser) on the basis of
the allocation set out in Exhibit 2.3 (Part II). In respect of
the Divisions to be acquired by the Completing Purchasers, the
Additional Amount payable (if any) shall be calculated up to,
but excluding, the date of Closing I on the basis of an amount
of $200,000,000 for each Completing Purchaser. In respect of
the Non-Completing Purchaser, the Additional Amount payable
(if any) in respect of the Divisions to be acquired by it
shall be calculated up to, but excluding, the date of Closing
II on the basis of an amount of $200,000,000.
(c) The Final Share Purchase Price for the Sold Shares transferred
to the Completing Purchasers (and the Non-Completing Purchaser
at Closing II, if any) and the Closing Date Inter-Group Debt
in respect of the Divisions acquired by the Completing
Purchasers (and the Non-Completing Purchaser at Closing II, if
any) shall be determined on the basis of the Effective Date
Financial Statements and the Effective Date Certificates (to
be prepared in respect of the Group and all Divisions, as
contemplated by Article 3) and the Closing Date Certificates
(to be prepared in respect of the Divisions acquired by the
Completing Purchasers or, in respect of Closing II, the
Non-Completing Purchaser). For the avoidance of doubt, where
relevant, the adjustments shall be determined from the
Effective Date Financial Statements in respect of the Group as
indicated in Exhibit 2.3 (Part II).
(d) Where the context so requires, references to the "Group" shall
be deemed to be made to the Divisions to be transferred to the
relevant Purchasers, and the other Divisions in respect of
which this Agreement has been terminated shall be deemed to be
part of the E.ON Group. Any reference to a time period
determined by reference to "Closing" shall be determined by
reference to Closing I or Closing II as the case may be.
<PAGE> 37
37
(e) In accordance with paragraph (f) below, the Purchasers and the
Sellers shall enter into mutually acceptable arrangements (the
"TRANSITIONAL AND SEPARATION ARRANGEMENTS") on arm's length
terms with respect to:
(i) the transitional arrangements to apply in the period
between Closing I and the first to occur of Closing
II and the termination of this Agreement pursuant to
Article 10 in respect of the Non-Completing Purchaser
with respect to the ongoing relationship between the
Divisions transferred to the Completing Purchasers at
Closing I and the other Divisions to be acquired by
the Non-Completing Purchaser; and
(ii) the arrangements (including appropriate service and
separation arrangements) to be put in place between
the E.ON Group (in this case including the Divisions
retained by the Sellers) and the Completing
Purchasers in the event that any of the conditions to
Closing set out in Section 4.2 is not satisfied with
respect to the Non-Completing Purchaser and this
Agreement is terminated by or in respect of such
Non-Completing Purchaser in accordance with Article
10.
(f) The Purchasers shall, as soon as reasonably practicable after
the date hereof, prepare a proposal for the Transitional and
Separation Arrangements based (with any adjustments deemed
appropriate by the Purchasers) on the principles negotiated
and agreed among the Purchasers in respect of the separation
of the Group by the Purchasers after the Closing. As soon as
there is reasonable evidence that the Closing may not be
completed in respect of all three Purchasers simultaneously,
Purchasers shall deliver that proposal to the Sellers, and the
Parties shall negotiate in good faith to finalise the
Transitional and Separation Arrangements on arm's length terms
and using the Purchasers' proposal as a basis for such
negotiations. The Parties shall use all reasonable endeavours
to finalise such negotiations within one month after Closing I
has been completed. If the Transitional and Separation
Arrangements have not been finally agreed within such one
month period, the Sellers or the Purchasers may each refer the
remaining differences to an expert arbitrator (the "EXPERT").
The Expert shall (unless otherwise agreed between the Parties)
be a recently retired person who held a senior position in the
electronics distribution industry. If the Parties cannot
mutually agree upon the Expert within such one month period,
the Expert shall be
<PAGE> 38
38
appointed, upon request of any Party, by the Chamber of
Commerce in Frankfurt am Main. The Expert shall first seek to
resolve the remaining differences with the Parties by way of
mediation and, if no mutually acceptable agreement can be
reached within a reasonable time (not to exceed four weeks),
determine the outstanding terms and conditions of the
Transitional and Separation Arrangements as an expert
arbitrator (Schiedsgutachter). The Expert shall decide at its
equitable discretion, on the basis of arm's length principles,
but within the range of the proposals made by the Parties. The
terms and conditions as agreed between the Parties or
determined by the Expert shall apply with retroactive effect
as of Closing I or Closing II (as the case may be). The last
three sentences of Section 3.4 and the provisions contained in
Section 3.5 shall apply with the necessary changes, provided
that the four week period referred to in Section 3.4 shall not
begin until the mediation as referred to above has failed.
(g) Where this Section 4.5 applies, references in this Agreement
to "Purchasers" shall be construed as a reference to all the
Purchasers, the Completing Purchasers or the Non-Completing
Purchasers and any reference to "Closing" shall be construed
as a reference to Closing I or Closing II, in each case as the
context requires.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers represent and warrant to each of the Purchasers (and any company
nominated by the relevant Purchaser pursuant to Section 1.1(d)) by way of an
independent guarantee (selbstandiges Garantieversprechen) that, except as set
forth in the disclosure letter attached hereto as Exhibit 5(a) or in any other
exhibits referred to in this Article 5 (and, in each case, disclosed in respect
of a specific statement set forth in this Article 5 or to the extent it is
reasonably clear that the disclosure is also relevant for any other statement
set forth in this Article 5), the statements set forth in this Article 5 are
true and correct as of the date hereof and will be true and correct as of the
Closing Date, provided, however, that (i) representations and warranties which
are subject to the Sellers' knowledge shall only be true and correct as of the
date hereof and (ii) representations and warranties which are expressly made as
of a specific date shall be true and correct only as of such date. Each Warranty
is to be construed independently and (except where this Agreement provides
otherwise) is not limited by a provision of this Agreement or another
representation and warranty. Except as set forth in Section 8.1(g), none of
<PAGE> 39
39
the representations and warranties shall be treated as qualified by any actual
or constructive knowledge on the part of any Purchaser or any of their agents.
References in this Article 5 to the Sellers' knowledge or awareness are to the
actual knowledge, as of the date hereof, of the persons listed in Exhibit 5 (b),
after inquiry with the persons listed in Exhibit 5(c).
The Sellers covenant that they shall as soon as reasonably practicable inform
the Purchasers of any breach of the representations and warranties of which any
person listed in Exhibit 5(b) becomes aware in the period between the date
hereof and the Closing Date (provided that they shall have no obligation to make
any inquiry with the Companies' and Subsidiaries' management during that
period).
For the purpose of this Agreement (other than Exhibit 4.3), "MATERIAL ADVERSE
EFFECT" means any change or effect that is materially adverse to the financial
condition, results of operations or business operations of a Division, taken as
a whole.
5.1 ORGANIZATION OF SELLERS AND THE GROUP
(a) Except as disclosed in Exhibits R-1 and R-2, each Seller, each
Company and each Subsidiary is a corporation, limited
liability company or partnership (in each case, as indicated
in Exhibits R-1 and R-2), duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of
incorporation and has all corporate powers to carry on its
business as now conducted.
(b) All Companies and Subsidiaries and their respective
jurisdictions of incorporation are identified in Exhibit R-2
and no company of the Group holds any interests in any company
or entity other than as set forth in Exhibit R-2.
(c) Except as set forth in Exhibit 5.1(c), none of the Companies
or Subsidiaries is a party to any agreement which would permit
any third party (other than the Companies or Subsidiaries) to
control such Company or Subsidiary or obligate it to transfer
its profits or (other than as a result of transactions within
the ordinary course of its business) any part of its assets to
any such third party.
(d) Exhibit 5.1(d) contains a true and correct list of the
articles of association, by-laws or similar organisational
documents of the Companies as presently in effect.
<PAGE> 40
40
True and complete copies of such documents have been delivered
to the Purchasers prior to the execution of this Agreement.
5.2 OWNERSHIP OF SHARES; SHAREHOLDINGS
(a) The ownership of the shares and interests in the Companies and
the Subsidiaries is set forth in the Recitals and in Exhibits
R-1 and R-2. The Sold Shares and the shares or interests in
the Subsidiaries (to the extent such shares or interests are
indirectly sold under this Agreement) are free and clear of
any liens, encumbrances or other rights of third parties, and
there are no pre-emptive rights, rights of first refusal,
options or other rights of any third party (other than any
Company or Subsidiary) to purchase or acquire any of the Sold
Shares, except as disclosed in Exhibit 5.2(a). Except as
otherwise set forth in Exhibits R-1 or R-2, the Sold Shares
and the shares in the other Companies and Subsidiaries set out
in such exhibits represent all of the issued share capital of
the respective Companies and Subsidiaries, and no options or
rights to acquire or subscribe to any additional shares or
convertible securities in respect of shares of any Company or
Subsidiary have been granted to, or otherwise agreed with, any
third party (other than any Company or Subsidiary).
(b) The Sold Shares are duly authorized, validly issued and are
fully paid. The Sold Shares are non-assessable (i.e. there is
no shareholder obligation to make an additional capital
contribution).
(c) Except as expressly otherwise indicated in Exhibit R-2, the
minority shareholdings in the Companies and Subsidiaries as
referred to in Exhibit R-2 are owned, or will be owned at the
Closing Date, by directors, officers or employees of the Group
as set forth in Exhibit R-2 (or any other persons agreed with
the relevant Purchaser) for the account of the relevant
majority shareholder of such Companies and Subsidiaries, in
order to comply with requirements of local corporate law.
5.3 AUTHORIZATION OF SELLERS, NON-CONTRAVENTION
(a) The execution, delivery and performance by each Seller and by
E.ON AG of this Agreement and the consummation of the
transactions contemplated hereby are within each Seller's and
E.ON AG's corporate powers and have been duly
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authorized by all necessary corporate action on the part of
each Seller and of E.ON AG. This Agreement constitutes a valid
and binding agreement of each Seller and E.ON AG and is
enforceable by each Purchaser, assuming that it has been
validly executed on behalf of such Purchaser.
(b) The execution, delivery and performance by each Seller and by
E.ON AG of this Agreement and the consummation of the
transactions contemplated hereby require no action by any
Seller or E.ON AG in respect of, or filing by any Seller or
E.ON AG with, any governmental body, agency or official other
than the compliance with any applicable requirements under
merger control laws as set forth in Sections 4.2 and 4.3. With
respect to Canada and Mexico, the financial information
relating to the Divisions to be acquired by Arrow and
contained in Exhibit 5.3 is accurate (provided that this
representation is only given for the purposes of Purchasers'
evaluation of any antitrust requirements in those countries).
(c) The execution, delivery and performance by each Seller and by
E.ON AG of this Agreement and the consummation of the
transactions contemplated hereby do not and will not:
(i) violate the certificate of incorporation or bylaws of
any Seller, Company, Subsidiary or E.ON AG,
(ii) assuming compliance with any applicable merger
control laws, violate any applicable law, rule,
regulation, judgement, injunction, order or decree to
which a Seller or E.ON AG is subject,
(iii) require any consent or other action by any third
party or constitute a default under any agreement or
other instrument binding upon any Seller or E.ON AG,
or
(iv) require, as at the date hereof, any filing or
consultation with or consent from any works council,
economic committee, trade union or employee
representative or body.
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5.4 FINANCIAL STATEMENTS
(a) Exhibit 5.4(a) contains the combined (German GAAP) balance
sheet of the Group as of December 31, 1999 (the "1999 GERMAN
GAAP GROUP BALANCE SHEET"). Except as disclosed in Exhibit
5.4(a) , the 1999 German GAAP Group Balance Sheet has been
prepared in accordance with German GAAP, as interpreted by the
VEBA accounting standards and the principles set forth in
Exhibit 3.2, applied on a consistent basis, and fairly
presents, in accordance with the above policies and
principles, in all material respects the combined financial
position of the Group as at December 31, 1999.
(b) Exhibit 5.4(b) contains the combined (US GAAP) financial
statements (including notes thereto) of the Group as of and
for the financial years ended December 31, 1998 and 1999
(collectively, the "1998 AND 1999 US GAAP GROUP FINANCIAL
STATEMENTS") together with the audit reports by
PricewaterhouseCoopers LLP on such financial statements.
Except as disclosed in Exhibit 5.4(b), the 1998 and 1999 US
GAAP Group Financial Statements have been prepared in
accordance with US GAAP and the principles set forth in
Exhibit 3.2, applied on a consistent basis, and fairly
present, in accordance with the above policies and principles,
in all material respects the combined financial condition and
the results of the combined operations of the Group as at and
in respect of the financial periods ending on December 31,
1998 and 1999.
(c) To the Sellers' knowledge, the (unaudited) combined accounts
of the Group consisting of a balance sheet and income
statement as at and for the period from January 1, 2000 to
March 31, 2000 as contained in Exhibit 5.4(c) (the "MARCH
2000 GROUP ACCOUNTS") have been prepared in accordance with
German GAAP, as interpreted by VEBA accounting standards, and
fairly present, in accordance with the above policies and
principles, in all material respects the financial position
and results of operations of the Group in respect of the
financial period from January 1, 2000 to March 31, 2000.
(d) The divisional accounts as of March 31, 2000, consisting of a
balance sheet for each Division, as set out in Exhibit 5.4(d)
(the "MARCH 2000 DIVISIONAL ACCOUNTS"), are neither reviewed
nor audited and were not prepared by management for audit
purposes. They were derived from the March 2000 Group Accounts
in order to show the allocation to the Divisions. The Sellers
are not
<PAGE> 43
43
aware that there are any material misstatements in the March
2000 Divisional Accounts.
(e) Except as disclosed in Exhibit 5.4(e), none of the Sellers is
aware of any facts which would require a material change to
the 1999 German GAAP Group Balance Sheet, the 1998 and 1999 US
GAAP Group Financial Statements, the March 2000 Group Accounts
or the March 2000 Divisional Accounts if such facts had been
known at the time when any of such financial statements (as
appropriate) were adopted.
5.5 ASSETS, ENCUMBRANCES
(a) The Companies and the Subsidiaries have good title to, or in
the case of leased or licensed property and assets have valid
leasehold interests or licenses in, or otherwise legally
possess, hold, or have a legal right to use, all property and
assets (whether real, personal, tangible or intangible)
reflected on the 1999 US GAAP Group Financial Statements and
all property and assets acquired after December 31, 1999 or
otherwise in use by the Companies and Subsidiaries, except, in
each case, for (i) properties and assets disposed of since
December 31, 1999 in the ordinary course of business
consistent with past practices and (ii) any assets (other than
those owned by VEBA Electronics LLC and sold to Arrow pursuant
to Section 1.1(b) of this Agreement) which are owned by any
member of the E.ON Group. Each Division owns, leases, licences
or otherwise legally possesses, holds or has a legal right to
use, all fixed or current assets necessary for the conduct of
its business as carried on at the date hereof, save to the
extent that any other Division owns, leases, licences or
otherwise legally possesses, holds or has a legal right to
use, any such assets and provided that this representation
shall not extend to the adequacy of the level of the current
assets or working capital.
(b) The (fixed and current) assets owned by the Companies and
Subsidiaries as referred in Section 5.5(a) are not encumbered
with any liens, pledges or other rights or encumbrances in
favour of any third party, except for (i) retention of title
rights (or equivalent rights in any jurisdiction) in favour of
any supplier arising in connection with the supply of goods to
a Company or Subsidiary by that person or any of its
affiliates, (ii) liens, pledges or other security rights in
favour of a mechanic, workman, carrier or the like arising by
operation of law or in the
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ordinary course of business in respect of assets in the
possession of such person, (iii) security rights of any kind
granted to banks and other financial institutions over cash
deposited with such banks and financial institutions in
respect of financial debt shown in the Effective Date
Financial Statements, (iv) statutory liens and other statutory
security rights in favour of tax authorities or other
governmental entities in respect of taxes and other public
charges which have not become due and payable and which do not
impair any Division's ability to conduct its business as
currently conducted, (v) customary easements and similar
rights in real property which do not impair any Division's
ability to conduct its business as presently conducted and
(vi) the rights and encumbrances listed in Exhibit 5.5(b).
(c) All inventories maintained by the Companies and Subsidiaries
as of the date hereof have been acquired or manufactured in
the ordinary course of business, consistent with past
practice.
(d) Any trade accounts receivable arising since the Effective Date
have arisen as a result of sales or services made in the
ordinary course of business of the Divisions.
(e) Except as disclosed in Exhibit 5.12, no Company or Subsidiary
uses any material asset owned by the E.ON Group for the
conduct of its business.
(f) The real properties of which particulars appear in Exhibit
5.5(f) (the "PROPERTIES") are the only real properties owned,
controlled, used or occupied by the Companies and the
Subsidiaries and which are either (i) freehold or (ii)
leasehold with annual lease obligations of more than $ 100,000
(in respect of each lease). The relevant Company or Subsidiary
specified in Exhibit 5.5(f) is the legal and beneficial owner
of each freehold Property or has a valid and enforceable lease
in respect of each leasehold Property and, in either case, is
in exclusive occupation of each Property. In respect of each
of the Properties which are freehold, the relevant Company or
Subsidiary has a good and marketable title to each Property
free from encumbrances (other than those permitted under
Section 5.5(b) (iv) and (v) or disclosed in Exhibit 5.5(b))
or third party rights of any kind whatsoever.
<PAGE> 45
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(g) There is no covenant, restriction, burden, stipulation or
obligation affecting, in a material manner, the current use of
any Property by the relevant Group Company. No Group Company
is in material breach of any covenant, restriction,
stipulation or obligation affecting the use of any Property or
the value of the freehold. In the case of any outstanding
leasehold interest in respect of any Property, the rent in
respect of such leasehold Property has been paid up to date
when due.
(h) There are no disputes to which any Group Company is a party
regarding boundaries, easements, covenants or other matters
relating to any Property or its use.
(i) To the Sellers' knowledge, the current use of each Property
is, in all material respects, the lawful use under the
planning or zoning law applicable and the permissions
authorising that use are unconditional and permanent.
(j) The relevant Company or Subsidiary has not received any notice
or order affecting any Property from any Government
department, any authority or any third party and is not aware
of any proposals on the part of any Government department or
any authority which would in either such case adversely affect
the use of the Property or the value of the freehold or (if
any) leasehold interest in respect of any Property.
(k) No Company or Subsidiary has sold, assigned, surrendered or
transferred any property in respect of which it entered into
any covenant which continues to bind it without having
received a full and effective release or indemnity in respect
of its liability under that covenant, nor is there any
subsisting contractual liability under any provision of any
legal agreement in respect of any property formerly owned or
occupied by it.
5.6 INTELLECTUAL PROPERTY RIGHTS
(a) Exhibit 5.6(a) contains a list of (i) all intellectual
property rights owned or licensed and used or held for use by
any Company or Subsidiary and registered in favour of or filed
for registration by any Company or Subsidiary which constitute
all such registered rights necessary for the conduct of the
business as carried on by the Companies and the Subsidiaries
and (ii) all unregistered intellectual property rights
(including, without limitation, internet domain names, but
<PAGE> 46
46
excluding the names VEBA and Raab Karcher and licences of, and
similar rights in, application software and know-how) owned or
licensed and used or held for use by any Company or Subsidiary
and which constitute all such rights which are material to the
conduct of the business as carried on by the Companies and the
Subsidiaries (together, the "INTELLECTUAL PROPERTY RIGHTS"),
specifying as to each, as applicable: (i) the nature of such
Intellectual Property Right, (ii) the registered or beneficial
owner or applicant for registration of such Intellectual
Property Right and (iii) the jurisdictions in which such
Intellectual Property Right has been registered or in which an
application for such issuance or registration has been filed
and the registration or application numbers. Each Group
Company has all necessary know-how to carry on its business as
carried on at the date hereof.
Except as disclosed in Exhibit 5.6(a), the Group Companies
have done everything necessary to validly make or maintain all
registrations with and applications to governmental or
regulatory authorities in respect of the registered
Intellectual Property Rights.
(b) No Intellectual Property Right is subject to any outstanding
judgement, injunction, order, decree or agreement restricting
the use thereof by the Group or restricting the licensing
thereof by the Group to any third party.
(c) To the Sellers' knowledge, the Companies and Subsidiaries do
not currently infringe and have not at any time during the
period of three years prior to the date of this Agreement
infringed any intellectual property rights of any third party.
(d) To the Sellers' knowledge, there is not, and there has not
been at any time during the period of three years prior to the
date of this Agreement, an infringement or unauthorised use of
any of the Intellectual Property Rights.
(e) Except as disclosed in Exhibit 5.6(a), no Company or
Subsidiary has granted nor is obliged to grant a licence,
assignment, consent, undertaking, security interest or other
right in respect of any of the Intellectual Property Rights.
(f) Neither the Company nor any Subsidiary is, or has received any
notice that it is in default (or with the giving of notice or
lapse of time or both, would be in default) under any
agreement to use the Intellectual Property Rights.
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5.7 PERMITS; COMPLIANCE WITH LAWS
(a) Each of the Companies and Subsidiaries has all governmental
and other legally required permits, licenses, authorizations
and consents which are required by it in order to operate its
business and are material for the conduct of the business of
the relevant Division (the "PERMITS"). No Permit has been
revoked from any Company or Subsidiary and the Sellers are not
aware of any facts which may result in the cancellation or
revocation of any Permit.
(b) The business of each of the Companies and Subsidiaries is, and
within a period of three years prior to the date hereof has
been, conducted in all material respects in compliance with
all applicable laws, regulations, rules or orders of
government entities or public authorities ("APPLICABLE LAWS")
and all Permits in each jurisdiction in the European Union and
the United States of America and, to the Sellers' knowledge,
in any other jurisdiction in which the Group operates or has
operated. No Company or Subsidiary has received notice of any
failure to comply with any Applicable Laws.
5.8 ENVIRONMENTAL MATTERS
(a) For the purposes of this Section 5.8, "ENVIRONMENTAL LAWS"
means the U.S. Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 and U.S. Resource
Conservation and Recovery Act of 1976, each as amended, and
any other law, regulation, directive or order applicable in
any jurisdiction and relating to or imposing liability,
standards of conduct for the protection of the environment or
the use, handling, generation, manufacturing, distribution,
collection, transportation, storage, disposal, cleanup or
release or threatened release of hazardous materials.
(b) Except as disclosed in Exhibit 5.8, to the knowledge of the
Sellers:
(i) no written notice, request for information, order,
complaint or penalty has been received, and there are
no judicial, administrative or other actions, suits
or proceedings pending or threatened which allege a
violation of or liability under any Environmental
Law, in each case relating to any Company or
Subsidiary;
<PAGE> 48
48
(ii) each Company and Subsidiary has all permits required
under Environmental Laws necessary for its operations
to comply with all applicable Environmental Laws and
is in compliance with the terms of such permits and
with all other applicable Environmental Laws;
(iii) there has been no written environmental audit
conducted within the past three years by any Seller
or Company or Subsidiary of any property currently
owned or leased by any Company or Subsidiary which
has not been delivered to Purchasers prior to the
date hereof; and
(iv) the Companies and the Subsidiaries have not caused
any pollution or contamination of the environment
which requires, under the Environmental Laws as in
effect on the Closing Date, any clean-up or other
remedial measures by the Companies or Subsidiaries.
5.9 LITIGATION, DISPUTES
Except as disclosed in Exhibit 5.9 and, in respect of the Divisions to
be acquired by Arrow and Memec Purchaser, except for debt collection
actions brought by a Group Company in the normal course of business and
claims by related third parties arising in connection therewith, no
Company or Subsidiary is involved in any lawsuit or other proceeding
pending against it before any court, arbitral tribunal or governmental
agency involving an amount in excess of $ 100,000. No such lawsuit or
proceeding has been threatened in writing against any Company or any
Subsidiary, and no Company or Subsidiary is subject to any governmental
or court order or decree that limits its ability to operate its
business in the ordinary course. To the Sellers' knowledge, unless
otherwise disclosed in Exhibit 5.9 or, in respect of the Divisions to
be acquired by Arrow and Memec Purchaser, except for debt collection
matters (as described above), there are no facts or circumstances which
are likely to result in any lawsuit or other proceeding initiated
against any Company or Subsidiary by any third party and involving an
amount in excess of $ 100,000. There is to the Sellers' knowledge, no
current, pending or threatened governmental or other judicial or
regulatory investigation, enquiry or disciplinary proceeding concerning
any Company or Subsidiary.
<PAGE> 49
49
5.10 EMPLOYEE AND LABOUR MATTERS
(a) Exhibit 5.10(a) contains a true and correct list, as of the
date hereof, of all collective bargaining agreements and all
material agreements with unions, workers' councils and similar
organisations to which any Company or Subsidiary is bound.
Except as disclosed in Exhibit 5.10 (a), as of the date
hereof, no Company and no Subsidiary is experiencing and, to
the Sellers' knowledge, there is no basis to expect any
Company or Subsidiary to experience (i) any strike, slowdown,
picketing or work stoppage by or lockout of its employees or,
in the United States of America, any union organising
activity, or (ii) any suit relating to the alleged violation
of any law or order and relating to labour relations or
employment matters (including any charge or complaint filed by
an employee or union with the U.S. National Labor Relations
Board or Equal Employment Opportunity Commission or any other
comparable governmental authority).
(b) Exhibit 5.10(b) sets forth, as of the date hereof, a true and
complete list of (i) the employment, consultancy or
appointment contracts of all directors and officers of the
Companies and Subsidiaries and all other employees and
consultants of each Company and Subsidiary and each HQ
Employee and (ii) all employees of the Companies and
Subsidiaries and HQ Employees whose employment is based on
employment-at-will-letters, in each case whose annual base
salary or base compensation (excluding, for the avoidance of
doubt, performance-related payments and bonuses) exceeds $
100,000 as well as of certain other key employees specified in
such exhibit. Copies of (i) such contracts providing for an
annual base salary in excess of more than $ 140,000 in respect
of the Divisions acquired by Memec Purchaser, (ii) all such
contracts (excluding any employment-at-will letters, where the
employment relationship has been established solely on the
basis of such letters) in respect of the Divisions acquired by
Arrow and (iii) all such contracts in respect of the Divisions
acquired by Avnet have been disclosed to the relevant
Purchasers. For the purposes of this paragraph (b),
consultancy contracts shall exclude contracts with companies
or professional firms which are generally in the business of
providing consultancy services or advice to companies and
businesses (including companies and businesses other than the
Group).
(c) Exhibit 5.10(c) sets forth, as of the date hereof, a true and
complete list of (i) all stock option plans of the Companies
and Subsidiaries or applying to any HQ
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Employee to the extent not disclosed in any of the employment
contracts disclosed to Purchasers pursuant to Section 5.10(b)
and (ii) all redundancy schemes of the Companies and
Subsidiaries which constitute or, in respect of the non-German
Companies and Subsidiaries would constitute, a change of
operations (Betriebsanderung) within the meaning of Sec. 111
Shop Constitution Act (Betriebsverfassungsgesetz).
(d) Exhibit 5.10(d) sets forth a true and complete list of all
directors, officers or employees of the Group and all HQ
Employees whose terms of employment or engagement:
(i) include any payment or benefit which will be payable
or arise (directly or indirectly) as a result of the
transactions contemplated by this Agreement; or
(ii) have been varied (either by way of amendment or the
exercise of any discretion) since July 1, 1999 (other
than variations made in the ordinary course of
business and consistent with past practice of the
relevant Company or Subsidiary over the last three
years),
provided that the representation in subsection (ii) shall only
apply to directors, officers or employees with an annual base
salary in excess of $ 100,000 and/or in respect of employees
whose terms of employment or engagement have been varied as
part of a scheme applying to 20 employees or more.
Copies of all such terms have been provided to the Purchasers.
5.11 EMPLOYEE BENEFITS AND PENSION OBLIGATIONS
(a) With respect to Raab Karcher Elektronik GmbH, Raab Karcher
Immobilien, EBV-Elektronik GmbH and Atlas Logistik Service
GmbH, Distron Elektronik GmbH, Memec (Memory and Electronic
Components) Plc, Memec Sud Europe SA, Memec GmbH, Memec
Belgium NV, Memec AG, Memec Nederland BV, Okura Electronics
Co. Ltd., Memec Holding B.V. and their respective
Subsidiaries, and the Group Companies sold by Raab Karcher
Electronics Systems Plc, the following shall apply:
<PAGE> 51
51
Except for (i) employer's contributions to statutory pension
schemes, health and unemployment insurance, (ii) benefits
provided by the agreements referred to in Section 5.10(a) or
the employment contracts of the employees referred to in
Exhibit 5.10(b), (iii) vacation or sick pay, (iv) any funded
(defined contribution) benefit schemes currently providing for
annual commitments by the employer of not more than $100,000
per benefit scheme and (v) the arrangements disclosed in
Exhibit 5.11 (a) (the "ARRANGEMENTS"), none of the Companies
or Subsidiaries referred to above is under any obligation to
pay or contribute towards pensions or any other retirement,
death, sickness, medical or disability benefit to or in
respect of any of its employees or former employees (or any
dependent thereof) and has not paid or contributed towards any
pension or any such benefit on a customary or voluntary basis.
All contributions and other payments due from the
participating employers and employees have been paid to the
Arrangements, except for any amounts relating to periods after
May 31, 2000 to the extent that those amounts are still in
course of calculation and are not at the date of this
Agreement due in accordance with normal collection procedures
for that Arrangement and in accordance with the law applicable
to that Arrangement. The consummation of the transactions
contemplated hereby will not result in an increase in the
amount of any benefit or accelerate the vesting, timing,
funding or payment of any benefit under any of the
Arrangements. Since December 31, 1999, and except as set forth
in any written Arrangement made available to the Purchasers,
no enhancement has been made to any existing benefit schemes
in respect of any Arrangement and no new benefit of the type
covered by this Section 5.11(a) has been introduced or
provided by any Group Company, excluding the inclusion of any
new directors, officers and employees in any of the
Arrangements or enhancements based on promotions of employees,
in each case within the ordinary course of business,
consistent with past practice.
(b) With respect to VEBA Electronics LLC, Wyle Electronics, and
Atlas Services LLC, Atlas Business Services LLC, EBV
Electronics Holdings, Inc., Memec LLC and their respective
Subsidiaries (collectively, the "U.S. COMPANIES") the
following shall apply:
Exhibit 5.11(b) contains a complete and accurate list of all
material employee benefit plans (within the meaning of section
3(3) of the Employee Retirement Income Security Act of 1974,
as amended (together with related regulations) ("ERISA")),
including, without limitation, multiemployer plans within the
<PAGE> 52
52
meaning of ERISA section 3(37)), stock purchase, stock
option, severance, employment, change-in-control, fringe
benefit, bonus, incentive, deferred compensation and all other
employee benefit plans, agreements, programs, policies or
other arrangements, whether or not subject to ERISA (including
any funding mechanism therefor now in effect or required in
the future as a result of the transaction contemplated by this
Agreement or otherwise), whether formal or informal, oral or
written under which any of the U.S. Companies has or could
have any present or future liability or obligation. All such
plans, agreements, programs, policies and arrangements shall
be collectively referred to as the "U.S. COMPANY PLANS".
Copies of each U.S. Company Plan, as well as the most recent
summary plan description, annual report (IRS Form 5500
series), summary annual report, financial statements,
actuarial report and IRS favorable determination letter for
each Company Plan listed (to the extent applicable) have been
made available to the Purchasers prior to the date hereof.
(i) Except as disclosed in Exhibit 5.11(b), in the case
of each U.S. Company Plan listed on Exhibit 5.11(b):
(A) the plan (and each related trust or
insurance policy) complies in form and in
operation in all respects with the
applicable requirements of ERISA and the
Internal Revenue Code, and related
regulations (the "INTERNAL REVENUE CODE" or
the "CODE");
(B) Each plan intended to be qualified within
the meaning of section 401(a) of the Code
has received a favorable determination
letter, or is pending or has time remaining
in which to file, an application for such
determination from the Internal Revenue
Service and no reason or condition has
occured or exists that could reasonably be
expected to result in the revocation or
refusal to issue any of such letters or in
the disqualification of any such plans;
(C) all required contributions to or premiums or
other payments in respect of the plan have
been paid, and all required reports and
descriptions have been filed with the proper
governmental authority or distributed to
participants as appropriate at the times and
in the manner required by ERISA or the
Internal Revenue Code;
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53
(D) there have been no "reportable events" (as
defined in Section 4043 of ERISA)
"accumulated funding deficiency" (as defined
in Section 302 ERISA and section 412 of the
Code), whether or not waived or "prohibited
transactions" (as defined in Section 406 of
ERISA and Section 4975 of the Internal
Revenue Code) in respect of the plan; and
(E) no suit in respect of the plan or the
investment of plan assets is pending or, to
any Sellers' knowledge, threatened, and to
Sellers' knowledge, there is no basis for
any such suit.
(ii) Except as disclosed in Exhibit 5.11(b) or required
by Section 4980B of the Internal Revenue Code, no
Company and no U.S. Company Plan provides health or
other welfare benefits to any retired or former
employee and is not obligated to provide health or
other welfare benefits to any active employee
following his or her retirement or other termination
of service.
(iii) Except for the Amended and Restated Wyle Electronics
Retirement Plan (the "WYLE ELECTRONICS PENSION PLAN
no U.S. Company maintains an Employee Benefit Plan
that is subject to Title IV of ERISA.
(iv) No Company contributes to or has ever contributed to
or been required to contribute to any "multiemployer
plan" (as defined in Section 3(37) of ERISA),
incurred any "withdrawal liability" (as defined in
Section 4021 of ERISA) in respect of any
multiemployer plan or withdrawn from any
multiemployer plan in a "complete withdrawal" or a
"partial withdrawal" (as respectively defined in
Sections 4203 and 4205 of ERISA).
(v) Except for the Wyle Electronics Pension Plan, no U.S.
Company has or could reasonably be expected to have
any liability under Title IV of ERISA with respect to
any benefit plan maintained or previously maintained
by any U.S. Company or any entity which is or has
been under common control, or which is or has been
treated as a single employer, with any U.S. Company
under Section 414 of the Code.
(vi) Except as disclosed in Exhibit 5.10(d), no U.S.
Company Plan exists that could result in the payment
to any present or former employee of any of
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54
the U.S. Companies of any money or other property or
accelerate or provide any other rights or benefits to
any present or former employee of any of the U.S.
Companies as a result of the transactions
contemplated by this Agreement, whether or not such
payment would constitute a parachute payment within
the meaning of Code section 280G.
(vii) Each U.S. Company Plan may be amended and terminated
in accordance with its terms.
(viii) Without limiting any other provision of this Section
5.11, no event has occurred and no condition exists,
with respect to any U.S. Company Plan, that has
subjected or could subject any U.S. Company, or any
U.S. Company Plan or any successor thereto, to any
tax, lien, penalty or other liability (other than a
liability arising in the normal course to make
contributions or payments, as applicable, when
ordinarily due under a U.S. Company Plan with respect
to employees of any U.S. Company and other than any
such tax, fine, lien, penalty or other liability that
is not material).
(c) Exhibit 5.11(c) contains a true and correct list, as of the
date hereof, of all Employee Performance Unit schemes or
shadow option schemes implemented or undertaken to be
implemented by all Companies and Subsidiaries or in respect of
any HQ Employee together with a list of all employees who have
(or have been promised) rights thereunder and their
entitlements (that is the number of units granted or promised
to them), including any entitlements arising from the exercise
of any discretion under any such scheme. No promises or other
commitments have been made with respect to any Employee
Performance Unit scheme and there exists no reason why any
participant in any such scheme could have any entitlement to
any benefit thereunder, other than as provided in the scheme
and the applicable written award agreement with respect
thereto.
5.12 MATERIAL AGREEMENTS
(a) Exhibit 5.12 contains a true and correct list, as of the date
hereof, of all of the following written or unwritten contracts
and agreements (including all amendments thereto) to which any
Company or Subsidiary is a party and which have not yet been
completely fulfilled (the "MATERIAL AGREEMENTS"):
<PAGE> 55
55
(1) agreements relating to the acquisition or sale of
interests in other companies or businesses or
business units providing, in each case, for a
consideration of $5,000,000 or more; agreements for
the sale, lease, licence or other disposal of any
material assets or property, except for agreements in
the ordinary course of business consistent with past
practice;
(2) joint venture, partnership and shareholder agreements
relating to the conduct of a material part of a
Division's business;
(3) rental and lease agreements relating to real estate
which, individually, provide for annual payments of
$500.000 or more;
(4) loan agreements (other than intercompany debt towards
any company of the E.ON Group as referred to in
Section 5.14), including loans granted by suppliers
(other than extended payment arrangements); bonds,
notes or any other instruments of debt issued by any
of the Companies or Subsidiaries;
(5) all guarantees, comfort letters or other sureties
issued by any of the Companies or Subsidiaries for
any debt, obligation or liability of any party, other
than debt of another Company or a Subsidiary;
(6) any agreement that limits the freedom of any Company
or Subsidiary to compete in any line of business or
with any third party, excluding (i), for the
avoidance of doubt, territorial restrictions in
supplier or reseller agreements which restrict the
ability of the contracting Company or Subsidiary to
distribute the product to which such agreements
relate, (ii) agreements which impose restrictions
exclusively upon the contracting Group Company
(provided that such company is not material to a
Division), but do not otherwise limit the Division's
freedom to operate in the relevant line of business
or to compete with the relevant third party or (iii)
agreements which may be terminated by the relevant
Company or Subsidiary within three months after the
Closing Date without any penalty, cost or expense
(other than any compensation claims of resellers
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56
under mandatory law) and which are not material to
the business of a Division;
(7) frame or master agreements in respect of the top 10
suppliers of each Division (other than Atlas Europe
Division and Atlas US Division) (based on the
aggregate sales in 1999);
(8) agreements with E.ON AG or any other company of the
E.ON Group other than trading or supply agreements
with respect to goods or utilities made in the
ordinary course of the relevant Group Company's
business on arm's length terms;
(9) agreements or commitments not made in the ordinary
course of business;
(10) consultancy agreements with expected annual fees or
with an agreed flat or minimum fee in excess of
$250,000 or which are likely to result in annual fees
in excess of such amount;
(11) long-term agreements (Dauerschuldverhaltnisse) that
cannot be terminated by any Company or Subsidiary
with less than 6 months notice as from the Closing
Date without any liabilities in excess of $500,000
(per agreement), excluding, however, any type of
agreements referred to in paragraphs (1) to (5), (7),
(8) and (10) of this Section 5.12 (a) and customer
agreements;
(12) any currency or hedging agreements which cannot be
terminated without liability to any Division of more
than $100,000 in the aggregate in respect of all
such agreements.
(b) Except as otherwise indicated in Exhibit 5.12, true and
complete copies of all written Material Agreements have been
disclosed to Purchasers prior to the execution of this
Agreement and true and not misleading summaries of the
principal terms of any non-written Material Agreements are
contained in Exhibit 5.12. To the Sellers' knowledge, unless
otherwise disclosed in Exhibit 5.12, each Material Agreement
is in full force and effect and neither the Companies or
Subsidiaries nor any third party are in material default or
material breach under any such agreement. Except as provided
in any written agreement
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57
disclosed to the Purchasers in accordance with this Section
5.12(b) or as disclosed in Exhibit 5.12, no third party is
entitled to terminate or materially amend any Material
Agreement (other than the Material Agreements referred to in
subsection (a)(8) above, which shall be terminated in
accordance with, and except to the extent specified in,
Section 2.5) as a result of the transactions contemplated by
this Agreement. The agreements referred to in subsection (a)
(8) above were made in the ordinary course of business on
arm's length terms.
5.13 FINDERS' FEES
Except for Merrill Lynch International, whose fees will be paid by the
Sellers, no Seller or Company or Subsidiary has any obligation or
liability to pay any fees or commissions to any broker, finder or agent
with respect to any of the transactions contemplated by this Agreement.
5.14 INTERCOMPANY ACCOUNTS AND PRE-CLOSING NON-RECURRING CHARGES
(a) Exhibit 5.14 (a) contains complete lists of (i) all
intercompany balances (under any borrowings including all
Effective Date Inter-Group Debt) as of the Effective Date
between each Company and Subsidiary (or Division, as indicated
in the exhibit), on the one hand, and E.ON AG and any other
company of the E.ON Group, on the other hand and (ii) all
credit lines under the VEBA cash management system and all
other intercompany loans granted to the Group, as of the date
hereof, by E.ON AG and any other company of the E.ON Group.
Since the Effective Date there have been no Pre-Closing
Non-Recurring Charges.
(b) The information included in Exhibit 5.14 (b) on the bank
accounts and balances with respect to the Memec Division was
true and accurate in all material respects as at the date on
which the information was produced as identified in the
Exhibit.
5.15 KEY SUPPLIERS
Except as disclosed in Exhibit 5.15, to the Sellers' knowledge, none of
the suppliers listed in Exhibit 5.12 has indicated, as of the date
hereof, to the management of any of the Companies or Subsidiaries in
writing or orally (provided that any such oral indication has been
made, in an express and unambiguous manner, by one or more directors,
officers or duly authorized senior executives of the supplier and is
referred to in any memorandum,
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minutes or other written document prepared by the management of a
Company or Subsidiary for circulation to the CEO of the main operating
companies (as set forth in section 1 of the Recitals) of any Division)
that it intends to terminate or reduce its business dealings with any
of the Divisions as a result of the transactions contemplated by this
Agreement.
5.16 INSURANCE COVERAGE
Exhibit 5.16 contains a true and complete list of all material
insurance policies and fidelity bonds relating to the assets, business
or operations of the Companies and the Subsidiaries, indicating any
policies and bonds which will terminate or may be terminated by the
insurer as a result of the consummation of the transaction contemplated
by this Agreement. To the Sellers' knowledge, all such policies and
bonds are in full force and effect, all due premiums in respect thereof
have been paid and there are no material claims by any Company or
Subsidiary pending under any of such policies or bonds. None of these
policies and bonds will terminate, as a result of the transaction
contemplated hereby, prior to the Closing Date.
5.17 NO UNDISCLOSED MATERIAL LIABILITIES
To the Sellers' knowledge, there are no liabilities of any Company or
Subsidiary of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, which (i) would, as of
the date hereof, be required by U.S. GAAP to be disclosed or included
on a combined balance sheet of the Group or (ii) have been incurred
outside the ordinary course of the Companies' or the Subsidiaries'
business and, in either case, individually or in the aggregate, have,
or may reasonably be expected to have, a material adverse effect on the
financial position of any Division (and for these, Wyle Components
Division, Wyle Systems Division and Atlas US Division shall be regarded
as one Division), other than:
(a) liabilities provided for in, or disclosed in the notes to, the
1999 US GAAP Group Financial Statements, 1999 German GAAP
Group Balance Sheet, March 2000 Group Accounts or March 2000
Divisional Accounts;
(b) liabilities disclosed in Exhibit 5.17;
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(c) other undisclosed liabilities that individually do not exceed
$1,000,000 or in the aggregate do not exceed $10,000,000; or
(d) liabilities arising in respect of any matter which is the
subject of any other representation or warranty (other than
the representations and warranties set forth in Section 5.4)
or of any indemnity contained in this Agreement.
5.18 CONDUCT OF BUSINESS SINCE DECEMBER 31, 1999
Except as disclosed in Exhibit 5.18 and except for any transactions,
facts or events expressly referred to in this Agreement, in the period
between December 31, 1999 and the date hereof, (i) the business of each
Division has been operated in the ordinary course in a manner
consistent with past practice, (ii) the Group has used its reasonable
efforts to preserve intact its business organizations and relationships
with third parties and to keep available the services of its present
officers and employees, (iii) capital expenditure has been maintained
in the ordinary course of the Group's business (taken as a whole),
consistent with past practice, and (without prejudice to paragraph (h)
below) any capital expenditure necessary to continue to conduct the
business of any Division in the ordinary course has been made and (iv)
there have not been (or any commitment made in respect of):
(a) any damage, destruction or other casualty loss, liability or
cost (whether or not covered by insurance) adversely affecting
the business or assets of any Company or Subsidiary which,
individually or in the aggregate, has had or could reasonably
be expected to have a Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock
or shares in the capital of any Company or Subsidiary, or any
repurchase, redemption, repayment or other acquisition by any
Company or Subsidiary of any outstanding shares of capital
stock, issued shares or other securities of any Company or
Subsidiary, in each case, other than any of the foregoing to
the extent it relates to any other Group Company;
(c) any amendment of any term of any outstanding or issued share
or security of any Company or Subsidiary;
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(d) any incurrence, assumption or guarantee by any Company or
Subsidiary of any indebtedness for borrowed money other than
(i) indebtedness incurred under existing credit lines as
disclosed in Exhibit 5.12 or (ii) the Inter-Group Debt;
(e) any creation or other incurrence by any Company or Subsidiary
of any encumbrance on any asset other than in the ordinary
course of trading consistent with past practices;
(f) any making of any loan, advance or capital contributions to or
investment by any Company or Subsidiary in any company, entity
or other person (other than any Company or Subsidiary)
exceeding in respect of any Division $100,000 in aggregate;
(g) any change in any method of accounting or accounting practice
or policy by any Company except for any such change required
by reason of a concurrent change in generally accepted
accounting principles and disclosed in Exhibit 3.2 or Exhibit
5.4 (a) - (d);
(h) any capital expenditure, or commitments for capital
expenditure, by additions or improvements to property, plant
and equipment, IT software or hardware in excess of $
15,000,000 in aggregate (such amount excluding the costs of
the J.D. Edwards software as referred to in Exhibit 5.18) for
the Divisions to be acquired by each respective Purchaser;
(i) any change in or any commitment to change (which, for these
purposes, shall include the exercise or agreement to exercise
any discretion) the compensation (including deferred
compensation) or other benefits payable to or the obligations
or rights of:
(i) any director or officer of any Company or Subsidiary
or any of the employees referred to in Section 5.10
(b); or
(ii) a significant part of the workforce of a Division,
in each case other than changes made in the ordinary course of
business consistent with past practice;
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(j) any lockouts, strikes, slowdowns, work stoppages or threats
thereof by or with respect to any employees of any Company or
Subsidiary that has, or could reasonably be expected to have,
a Material Adverse Effect;
(k) any redundancies in respect of the Companies and Subsidiaries
which have constituted, or in respect of any non-German
Companies and Subsidiaries would have constituted, a change of
operations (Betriebsanderung) within the meaning of Sec. 111
German Shop Constitution Act (Betriebsverfassungsgesetz);
(l) any sale, lease, licence or other disposal of any material
assets or property except pursuant to contracts or commitments
existing prior to December 31, 1999 or otherwise in the
ordinary course of business consistent with past practice at
December 31, 1999;
(m) any (i) amendment of the certificate or articles of
incorporation or by-laws (or other comparable corporate
charter documents) of any Company or any Subsidiary, (ii)
recapitalization, reorganisation, liquidation, corporate
restructuring or dissolution of any Company or any Subsidiary
or (iii) merger or other business combination involving any
Company or any Subsidiary and any other person; or
(n) any transfer or payment pursuant to any profit transfer
agreement referred to in Section 7.9 below.
5.19 CERTAIN ANTI-TRUST UNDERTAKINGS AND ORDERS
No Company or Subsidiary has given any undertaking to any
regulatory authority and no order has been made against or in
relation to any Company or Subsidiary pursuant to any
anti-trust or similar legislation in any jurisdiction in which
they carry on business or have assets or sales.
5.20 INSOLVENCY AND LIQUIDATION PROCEEDINGS
Except as set forth in Exhibit 5.20,
(a) no liquidator, administrator, receiver or administrative
receiver or other insolvency practitioner (or the equivalent
in any jurisdiction) has been appointed
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in respect of any Company or Subsidiary or in respect of the
whole or any part of the assets or undertaking of any Company
or Subsidiary. No meeting has been convened at which a
resolution shall be proposed, no resolution has been passed,
no petition or order (or the equivalent in any jurisdiction)
has been presented or made for the administration,
receivership, winding up or liquidation of any Company or
Subsidiary;
(b) no Company or Subsidiary has stopped or suspended payment of
its debts, become unable to pay its debts or otherwise become
insolvent in any relevant jurisdiction;
(c) no scheme for the benefit of creditors generally has been
proposed or implemented in respect of any Company or
Subsidiary, whether or not under the protection of the court
and whether or not involving a reorganisation or rescheduling
of debt; and
(d) no event has occurred which would give rise to any of the
events or circumstances referred to in any of (a) to (c)
above.
5.21 TERMS OF SUPPLY
Except as required by law, none of the standard terms of supply of any
Company or Subsidiary provide for any liability in respect of any
defective product sold or delivered by it which liability is more
onerous than those provided by the supplier of the relevant product to
the Company or Subsidiary concerned.
5.22 IT SYSTEMS
(a) The Group owns or uses under current licences all information
and computer systems necessary for it to conduct its business
as carried out at the date of this Agreement and is not in
breach of any such licences in any material respect.
(b) The Group (i) owns or has access to all source codes (but only
with respect to software specifically designed for any member
of the Group which is material for the business of any
Division or main operating company (as referred to in section
1 of the Recitals)) and (ii) owns, licences or otherwise has a
legal right to
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use all software, in each case required to operate and
maintain the information and computer systems used by it.
(c) Each Division operates and maintains appropriate data storage
and disaster recovery plans designed to enable the Division to
carry on and maintain the conduct of its business in line with
normal prudent commercial practice.
5.23 NO OTHER REPRESENTATIONS AND WARRANTIES
Sellers and E.ON AG make no representations and warranties with respect
to the Group, its business and the transactions contemplated hereby
other than those expressly set forth in this Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Each of the Purchasers for itself and not on behalf of any of the other
Purchasers severally represents and warrants to each of the Sellers as follows,
in each case as of the date hereof and the Closing Date:
6.1 AUTHORISATION OF PURCHASERS, NON-CONTRAVENTION
(a) Such Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of the
jurisdiction in which it was incorporated and has all
corporate powers and all material governmental licenses,
authorizations, permits, consents and approvals required to
carry on its business as now conducted.
(b) The execution, delivery and performance by such Purchaser of
this Agreement and the consummation of the transactions
contemplated hereby are within the corporate powers of such
Purchaser and have been duly authorized by all necessary
corporate action on the part of such Purchaser. This Agreement
constitutes a valid and binding agreement of such Purchaser.
(c) The execution, delivery and performance by such Purchaser of
this Agreement and the consummation of the transactions
contemplated hereby require no
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material action by such Purchaser in respect of, or material
filing by such Purchaser with, any governmental body, agency
or official other than the compliance with any applicable
requirements under merger control laws as set forth in
Sections 4.2 and 4.3.
(d) The execution, delivery and performance by such Purchaser of
this Agreement and the consummation by it of the transactions
contemplated hereby do not and will not (i) violate the
certificate of incorporation or bylaws of such Purchaser, (ii)
assuming compliance with any applicable merger control laws,
violate any applicable law, rule, regulation, judgement,
injunction, order or decree to which the relevant Purchaser is
subject, or (iii) require any consent or other action by any
person under any agreement or other instrument binding upon
such Purchaser.
6.2 LITIGATION
As at the date hereof there is no action, suit, investigation or
proceeding (other than merger control proceedings (if any) in respect
of the transaction contemplated hereby) pending against, or to the
actual knowledge of such Purchaser, threatened against or affecting
such Purchaser before any court or arbitrator or any governmental body,
agency or official which in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the transactions contemplated by this
Agreement.
6.3 FINANCIAL CAPABILITY
Such Purchaser (except Memec Purchaser) has or will at Closing have
sufficient immediately available funds or binding and unconditional
financing commitments to pay the amounts referred to in Section 2.4 to
the extent it relates to the Divisions to be acquired by such
Purchaser. True and complete copies of the Committed Facilities for
Memec Purchaser have been disclosed to Sellers. These agreements have
been duly executed on behalf of Memec Purchaser and so far as Memec
Purchaser is aware they have been duly executed on behalf of the
financing banks.
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6.4 FINDERS' FEES
Such Purchaser does not have any obligation or liability to pay any
fees or commissions to any broker, finder or agent with respect to any
of the transactions contemplated by this Agreement for which the
Sellers could become liable.
6.5 PURCHASER
Such Purchaser is purchasing the Sold Shares for investment for its own
account and not with a view to, or for sale in connection with, any
distribution thereof. Such Purchaser (either alone or together with its
advisors) has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks
of its investment in the Sold Shares and is capable of bearing the
economic risks of such investment. The Sellers acknowledge that the
sole purpose of this Section 6.5 is to ensure that the sale of the Sold
Shares does not contravene any US securities law and that the
representation and warranty in this Section 6.5 shall in no way limit
or restrict the right of any Purchaser to enforce any rights or recover
under this Agreement.
ARTICLE 7
COVENANTS; CERTAIN INDEMNITIES
7.1 CONDUCT OF BUSINESS
From the date hereof until and including the Closing Date, the Sellers
shall cause the Companies and the Subsidiaries to conduct their
businesses in the ordinary course consistent with past practice and to
use their reasonable efforts to preserve intact their business
organizations and relationships with third parties and to keep
available the services of the Group's present officers and employees
(it being understood that subject to the compliance by Sellers with the
covenants in this Section 7.1, the risk of supplier, customer and
employee defections after the date hereof shall be borne by
Purchasers). Without limiting the generality of the foregoing, from the
date hereof until and including the Closing Date, except as disclosed
in Exhibit 7.1 or contemplated by this Agreement, the Sellers will (i)
cause each Division to maintain capital expenditure in the ordinary
course of each Division's business, consistent with past practice, (ii)
cause each Division to maintain all policies of insurance in respect of
all risks covered and in place as at
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December 31, 1999 at levels of coverage equal to or in excess of those
maintained at that date, and (iii) will ensure that no Company or
Subsidiary will:
(a) adopt or propose any change in its certificate of
incorporation or bylaws or pass any other shareholder
resolutions (other than in respect of matters expressly
contemplated by this Agreement) or amend any term of any
outstanding or issued share or security of any Company or
Subsidiary;
(b) merge or consolidate with any other person, enter into any
recapitalization, reorganization, corporate restructuring,
liquidation or dissolution, or acquire, lease, license or
otherwise purchase a material amount of assets or property
from any other person (except for inventory purchased in the
ordinary course of trading);
(c) incur, assume or guarantee any indebtedness for borrowed money
other than (i) indebtedness incurred under existing credit
lines as disclosed in Exhibit 5.12 up to a maximum amount
equal to the aggregate of any borrowings under such credit
lines as at March 31, 2000 or (ii) the Inter-Group Debt
incurred in accordance with Section 7.3 below;
(d) sell, lease, license or otherwise dispose of any material
assets or property except pursuant to contracts or commitments
existing at the Effective Date or otherwise in the ordinary
course of business consistent with past practice; or create or
permit to be created any encumbrance on any asset other than
in the ordinary course of trading consistent with past
practices;
(e) make any loan, advance or capital contribution to or
investment in any company, entity or other person (other than
any Company or Subsidiary) exceeding in respect of any
Division $ 100,000 in the aggregate;
(f) change any method of accounting or accounting practice or
policy except as required by reason of a concurrent change in
generally accepted accounting principles;
(g) reduce or change the existing insurance coverage, except for
normal changes within the ordinary course of business which do
not adversely affect the insurance coverage under a certain
policy;
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(h) close the warehouse of Memec Plc at Thame, U.K.;
(i) amend the existing agreements between the Companies and
Subsidiaries and the Atlas Europe Division or the Atlas US
Division, except for non-material adjustments within the
ordinary course, consistent with past practice; or
(j) appoint, employ or elect (or cause to be elected) any new
director or officer or (except for employment engagements
which are made to replace employees or are otherwise necessary
or appropriate in order to continue the business within the
ordinary course) employee who would, if employed or acting in
such position at the date of this Agreement, be listed in
Exhibit 5.10 (b) or terminate the employment or relationship
of any such director, officer or employee (other than for
cause, including operational or personal reasons or bad
performance); or change (which, for these purposes, shall
include the exercise or agreement to exercise any discretion)
the compensation (including deferred compensation) or other
benefits payable to or the obligations or rights of:
(i) any director or officer of any Company or Subsidiary
or any of the employees referred to in Section 5.10
(b); or
(ii) a significant part of the workforce of a Division,
in each case other than changes made in the ordinary course of
business consistent with past practice;
(k) increase or reduce the number of employees engaged in any
Division to any material degree or make any redundancies in
respect of the Companies and Subsidiaries which constitute, or
in respect of any non-German Companies and Subsidiaries would
constitute, a change of operations (Betriebsanderung) within
the meaning of Sec. 111 German Shop Constitution Act
(Betriebsverfassungs-gesetz);
(l) create, allot or issue or grant any option over or other right
to subscribe or purchase, or redeem or purchase, any share of
any Company or Subsidiary or securities convertible into such
shares;
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(m) declare, set aside or pay any dividend or other distribution
(including any payments under a profit transfer agreement)
with respect to any shares of capital stock or shares in the
capital of any Company or Subsidiary or issue, sell, purchase,
redeem or repurchase, repay or otherwise acquire any equity
securities or other shares, stock or securities of any of the
Companies or Subsidiaries (in each case other than any of the
foregoing to the extent it relates to any other Group
Company);
(n) make any financial or contractual commitment or capital
expenditure in respect of any information or computer system,
IT software or hardware or roll-out any information or
computer system or IT software or hardware, other than in the
ordinary course and subject always to a maximum aggregate
amount of $ 1,000,000 per Division (which amount shall include
any costs of the J.D. Edwards software as referred to in
Exhibit 5.18, except for any such costs incurred by the Wyle
Systems Division and not exceeding $ 1,000,000 per month);
(o) incur, suffer or make any Pre-Closing Non-Recurring Charge;
(p) make any capital expenditures, by additions or improvements to
property, plant and equipment in excess of $ 15,000,000 in the
aggregate (such amount excluding any amounts paid or incurred
under paragraph (n)) for the Divisions to be acquired by each
respective Purchaser, in each case for the period from the
date hereof up to February 28, 2001 and each subsequent seven
month period;
(q) use cash other than in the ordinary course of business or to
reduce External Debt or Inter-Group Debt;
(r) settle the litigation referred to in section IV. 4 of Exhibit
5.9 (Lemelson);
(s) continue the marketing and roll-out of the Wyle brand under
the contract with the Idea Lab;
(t) grant (i) any bonuses relating to the sale of the Group or
stay bonuses or (ii) any other bonuses (other than in the
ordinary course and consistent with past practice) to
directors, officers or employees of any Group Company or to
any HQ Employee;
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(u) agree to any arrangements under which (i) Sig. F. Corrella
Mirabet is granted any option, or right to subscribe, or right
to purchase, any shares or other securities in the capital of
any Group Company in the RKE Division or (ii) any Group
Company purchases the shares held by Sig. F. Corrella Mirabet
in RK Distribucion de Componentes S.A. for an amount exceeding
$ 20,000 in aggregate; or
(v) agree or commit to do any of the foregoing.
The Sellers covenant that promptly after the date hereof they will
instruct the senior management of the Divisions to ensure that the
Companies and Subsidiaries will not, as from the date hereof, permit
any transfer of employment of any employee of any Division to another
Division.
7.2 PREPARATION OF ADDITIONAL FINANCIAL STATEMENTS; ACCESS TO INFORMATION
(a) Sellers shall at the Sellers' cost cause the Companies to
prepare, without undue delay after the date hereof and in any
event by no later than two months after the date hereof, US
GAAP financial statements of each Division for the period
ended on December 31, 1999, and cause that they are audited by
PricewaterhouseCoopers LLP. Sellers shall use their best
efforts to procure that such financial statements, together
with the audit report by PricewaterhouseCoopers LLP, will be
available by no later than two months after the date hereof.
In addition, upon the Purchasers' request, the Sellers shall,
at the relevant Purchaser's cost, cause the Companies to
prepare, as soon as practicable, and to cause the same to be
audited by PriceWaterhouseCoopers LLP, US GAAP financial
statements with respect to periods prior to 1999. Any
financial statements prepared in accordance with this Section
7.2 (a) shall be prepared in accordance with the accounting
principles used in the preparation of the 1999 US GAAP Group
Financial Statements.
If and to the extent the Closing has not occurred by December
31, 2000, upon the Purchasers' request, Sellers shall instruct
the Companies to prepare, at the relevant Purchaser's cost and
as soon as practicable, US GAAP financial statements of the
relevant Divisions for the period ended on December 31, 2000
and to cause that they are audited by PricewaterhouseCoopers
LLP. These
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financial statements shall be prepared in accordance with the
accounting principles used in the preparation of the relevant
divisional financial statements for the period ended on
December 31, 1999, as referred to above.
(b) In the period between the date hereof and the Closing Date,
the Sellers will afford promptly to the Purchasers and their
advisers and representatives reasonable access, upon
reasonable advance notice, to books of account, financial and
other records (including, without limitation, accountant's
work papers), information, employees, facilities and auditors
of the Group Companies including, without limitation, (i) for
Purchasers to review the Effective Date Financial Statements,
the Effective Date Certificates and the financial statements
as referred to in subsection (a) above, (ii) in connection
with any Purchaser's financing arrangements and/or (iii) to
assist any Purchaser in the preparation of an opening balance
sheet as at Closing and the interim unaudited financial
statements for the period prior to Closing; provided that any
such access by Purchasers shall be at Purchasers' cost and
shall not unreasonably interfere with the conduct of the
business of Sellers or the Group.
(c) After the Closing Date, each Purchaser and the Sellers (as the
case may be) will afford promptly to the Sellers and each
Purchaser (as the case may be) and their respective advisers
and representatives reasonable access, upon reasonable advance
notice, to books of account, financial and other records
(including, without limitation, accountant's work papers),
information, employees and auditors of the Divisions acquired
by the relevant Purchaser or of the E.ON Group (as the case
may be) to the extent necessary for Sellers and the relevant
Purchaser in connection with any reasonable audit or other
regulatory requirement of the E.ON Group or the relevant
Purchaser or the Divisions acquired by the relevant Purchaser
(other than in connection with any dispute or litigation in
respect of any of the transactions contemplated by this
Agreement) and to assist the Purchasers in the preparation of
an opening balance sheet as at Closing and interim unaudited
financial statements for the period prior to Closing; provided
that any such access or assistance shall be at the cost of the
Party being given access or assistance and shall not
unreasonably interfere with the conduct of the business of
Sellers or of the relevant Purchaser or the Divisions acquired
by it and provided further that any such access by Purchaser
to books, records, information, employees and auditors of the
E.ON Group shall include only information to the extent that
it relates to the Group.
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7.3 INTER-GROUP DEBT
(a) During the period between the Effective Date and the Closing
Date, Sellers covenant that they have ensured and shall ensure
that the existing credit lines as referred to in Section 5.14
have been and will continue to be made available to the Group
on the terms and conditions set out in Exhibit 7.3 and that
the E.ON Group has not and shall not permit any increase in
the Inter-Group Debt other than on the terms and conditions
set out in such Exhibit 7.3. Following the date of this
Agreement up to the Closing Date, Sellers shall procure that
the E.ON Group shall make available to the Divisions
additional Inter-Group Debt up to the agreed levels set out in
Exhibit 7.3, provided that the Inter-Group Debt of the
Divisions to be acquired by any Purchaser shall not be
increased beyond the agreed levels set out in Exhibit 7.3. If
any Pre-Closing Distribution is paid, the Sellers shall
procure that the E.ON Group shall, on payment of the
Pre-Closing Distribution, make available to the relevant Group
Company Inter-Group Debt equal to the amount of that
Pre-Closing Distribution, and the amount of such Inter-Group
Debt shall not be taken into account in determining whether
the limits referred to in Exhibit 7.3 have been exceeded.
(b) To the extent Inter-Group Debt at the Closing Date is
increased above the Effective Date Inter-Group Debt in
accordance with the terms and conditions referred to in
Section 7.3 (a), the Sellers (or the relevant members of the
E.ON Group) shall be entitled, in accordance with Section 7.3
(a), to receive interest at the rates referred to in Exhibit
7.3 (calculated on a daily basis and on the basis of a 365 day
year) on the amount of such increase. Such interest (to the
extent accrued but unpaid at Closing) shall be included in the
calculation of Closing Date Inter-Group Debt.
(c) During the period between the Effective Date and the Closing
Date, the Sellers covenant that no Group Company has increased
or will increase the amount of or will incur any additional
External Debt, save as permitted under Section 7.1 (c), and
they will ensure that no Group Company will make any such
increase for the purpose of repaying Inter-Group Debt.
(d) The Sellers shall procure that as at the Closing Date, the net
debt and cash balances as between any Division and another
Division shall be nil and a Division
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is provided with adequate Inter-Group Debt to facilitate
payments required to ensure that such inter-divisional
balances are nil.
7.4 RESIGNATIONS
On the Closing Date, the Sellers will deliver to the Purchasers the
resignations, effective at or prior to the Closing Date, of the board
members of the Companies listed in Exhibit 7.4. Such resignations shall
be achieved at no cost to the Purchasers or the Group.
7.5 COVENANT NOT TO COMPETE; COVENANT NOT TO SOLICIT
(a) For a period of two years after the Closing Date, the Sellers
shall not (and shall cause the other companies of the E.ON
Group from time to time, for so long as they continue to be
part of the E.ON Group, not to) be directly or indirectly
engaged or have an interest in any business which is
competitive with the business of any member of the Group as
conducted as of the Closing Date; provided, however, that
(i) any activities of the E.ON Group which (A) are
carried on at the Closing Date (provided that they
are described in Exhibit 7.5) or (B) consist only of
interests in or securities of any other company or
entity which do not exceed 10% of the equity or votes
in such company or entity, provided that no member of
the E.ON Group or any representative of it has a
significant influence on the management of such
company or entity;
(ii) the acquisition (including by way of a merger) of an
equity interest of under 10% in an entity primarily
engaged in a competing business provided that such
interest remains under 10% and no member of the E.ON
Group or any representative of it has a significant
influence on the management of such company or
entity;
(iii) the acquisition (including by way of merger) of a
controlling or non-controlling equity interest in an
entity or group not primarily involved in a competing
business (provided that the earnings before interest,
taxes, depreciation and amortization (EBITDA) of the
competing business in the last financial year
preceding the acquisition does not exceed 10% of the
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aggregate EBITDA of the acquired entity or group in
such financial year); and
(iv) any activities of any Division retained by the
Sellers (in the event that and as long as this
Agreement is not consummated in respect of any such
Division);
shall be exempt from this covenant not to compete.
(b) Subject to Section 7.23, for a period of two years after the
Closing Date, the Sellers shall not, and shall cause the other
companies of the E.ON Group at the relevant time not to
(except in respect of publicly listed stock corporations
comprised in the E.ON Group (other than E.ON AG) at the
relevant time, where the Sellers shall use their reasonable
efforts to cause those other companies not to) for so long as
they continue to be part of the E.ON Group (i) solicit or
contact with a view to his engagement or employment by another
person, any employee of any Group Company or any HQ Employee
or (ii) engage or employ any senior employee of any Group
Company or any HQ Employee employed by any Group Company or
Purchaser or any of its affiliates. This covenant shall not
apply to employees who have been laid off or terminated by any
Group Company (or, if they are employed by any Purchaser or
affiliate of any Purchaser, laid off or terminated by such
Purchaser or affiliate of such Purchaser).
(c) After the Closing Date the Sellers shall not, and shall cause
the other companies of the E.ON Group from time to time, for
so long as they continue to be part of the E.ON Group not to,
use or (insofar as it can reasonably do so) allow to be used
any trade name used by a Company or a Subsidiary at Closing or
any other name intended or likely to be confused with such a
trade name (other than VEBA or Raab Karcher).
(d) References to a member of the Group include its successors in
business.
(e) Each undertaking in this Section 7.5 constitutes an entirely
independent undertaking and if one or more of the undertakings
is held to be against the public interest or unlawful or in
any way an unreasonable restraint of trade the remaining
undertakings shall continue to bind the Sellers.
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(f) If any of the restrictions set out in this Section 7.5 is void
but would be valid if some part of the restrictions were
deleted the restriction in question shall apply with such
modification as may be necessary to make it valid.
(g) The Sellers acknowledge that the above provisions of Section
7.5 are no more extensive than is reasonable to protect the
Purchasers as the purchasers of the Sold Shares.
7.6 CONFIDENTIALITY
From the date hereof and for a period of five years after the Closing
Date, the Sellers and E.ON AG shall (and shall procure that the E.ON
Group from time to time shall) keep confidential and not disclose to
any third party any business or trade secrets of the Group, other than
those which have become publicly known through no fault of the Sellers,
E.ON AG or any other companies of the E.ON Group.
7.7 USE OF CERTAIN MARKS AND NAMES
After the Closing Date, the Purchasers shall not permit the Group to
use the names VEBA and Raab Karcher, save that the Purchasers shall be
entitled for a period of six months after Closing to allow any Company
or Subsidiary to use any brochure, sales literature or letterhead or
sell any products which contain or carry such names, to use those names
or any of those marks or names as part of its internet domain and to
use those names in describing the businesses acquired by the
Purchasers. E.ON AG covenants that neither it nor any member of the
E.ON Group will object to the use by Avnet or any of its affiliates or
any of the Group Companies in the Divisions to be purchased by Avnet of
the abbreviations "RK" or "RKE".
7.8 RELEASE OF VEBA COMFORT LETTERS
With effect as of the Closing Date, the relevant Purchaser shall
indemnify and hold harmless all members of the E.ON Group from all
guarantees, comfort letters and other securities of any kind which
relate to the business of the Divisions as transferred to the relevant
Purchaser (or any company nominated by the relevant Purchaser pursuant
to Section 1.1(d)) and which have been provided by the E.ON Group in
favor of any Company or Subsidiary in the relevant Divisions acquired
by such Purchaser to banks,
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other financial institutions, suppliers, customers or other third
parties and listed in Exhibit 7.8 (together, the "VEBA COMFORT
LETTERS").
With effect as of the Closing Date, E.ON AG shall indemnify and hold
harmless each of the Purchasers (and any company nominated by the
relevant Purchaser pursuant to Section 1.1(d)) and each Company and
Subsidiary in the relevant Divisions acquired by the relevant Purchaser
against all liabilities, costs and expenses arising from any
guarantees, comfort letters or other securities of any kind provided by
any such Company or Subsidiary in respect of any obligations of any
member of the E.ON Group.
7.9 TERMINATION OF CONTROL AND PROFIT TRANSFER AGREEMENTS
VEBA Electronics GmbH or VEBA Electronics Beteiligungs GmbH (as the
case may be) and Avnet or Memec Purchaser (as the case may be) shall
ensure that the control and profit transfer agreements referred to in
Exhibit 5.1 (c) will be terminated on and with effect from the Closing
Date, for cause (aus wichtigem Grund) as a result of the change of
ownership or by agreement. If and to the extent that any control and
profit transfer agreement cannot be terminated as from the Closing
Date, the relevant Parties shall terminate such agreement with effect
as of the end of the current fiscal year, but will treat each other as
if such agreement had been terminated as from the Closing Date. With
effect from the Closing Date, each of such Purchasers (as the case may
be) shall indemnify and hold harmless VEBA Electronics GmbH or VEBA
Electronics Beteiligungs GmbH (as the case may be) from (i) any
obligation under German law in connection with the termination of the
control and profit transfer agreements to provide security to creditors
of the relevant Group Company in respect of liabilities related to the
time prior to the Closing Date, except to the extent that Sellers have
to indemnify and hold harmless Purchasers (and any company nominated by
the relevant Purchaser pursuant to Section 1.1(d)) from the underlying
obligations and liabilities under this Agreement, and (ii) any
obligation pursuant to Section 302 German Stock Corporation Act to
compensate the relevant Group Companies for any net loss (as shown on
the relevant individual financial statements) arising in the financial
year 2000.
7.10 CERTAIN INDEMNITIES
Sellers shall indemnify and hold harmless each of the Purchasers (and
any company nominated by the relevant Purchaser pursuant to Section 1.1
(d)) and each member of the Group from and against any of the following
liabilities:
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(a) any liability or cost relating to or arising from:
(i) any payments or benefits made or promised to any
current or former director, officer or employee of
any Group Company or any HQ Employee which are or
will be payable or arise directly (excluding payments
or benefits which are payable or arise only in the
event that the employment agreement is terminated, to
the extent that such payments or benefits are, or
would not have to be, listed in Exhibit 5.10 (d)) as
a result of the transactions contemplated by this
Agreement, except, however, for payments (if any)
under the EPU schemes referred to in Section 5.11
(d); for the avoidance of doubt, the indemnity in
this subsection (i) shall include the bonuses payable
to S. Biddiscombe and referred to in the emails of
February 2, 2000 and May 15, 2000 referred to in
Exhibit 5.10 (d);
(ii) any bonus payments made or promised after the date of
this Agreement to any current or former director,
officer or employee of any Group Company or any HQ
Employee, other than bonus payments made or promised
in the ordinary course of business and consistent
with past practice over the last three years;
(iii) any payments to any HQ Employees as a result of the
transformation of the variable portion of their
salary into fixed salary, as referred to in the last
paragraph of Exhibit 5.10 (d) VIII; and
(iv) the employment or termination of employment of any of
Dr. Pohl, Mr. Borsboom, Mr. Fecher and Ms
Oestreicher, including in respect of any bonus or EPU
entitlement of any such person,
provided that subsection (i) of this indemnity shall not
extend to any stay bonus (being a bonus that has been granted
as an incentive to remain employed, but is not dependent on
the change of control of any member of the Group) that has
been granted to any person before the date of this Agreement;
(b) any losses, liabilities, damages, costs and expenses
(including any claims for taxation) whether current or
contingent, which relate to the disposal of any
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business by any member of the Group prior to the Effective
Date which business does not relate to the distribution of
electronic systems or electronics components;
(c) losses, liabilities or costs which relate to any business of
any member of the E.ON Group other than the businesses carried
on by the Divisions; and
(d) any losses, liabilities, costs and expenses arising out of or
relating to any liability or obligation of VEBA Electronics
LLC, other than those liabilities or obligations assumed by
Arrow or any other Purchaser pursuant to Section 1.1 (b) or
Section 7.23.
7.11 AVNET INDEMNITY
(a) Subject to subsection (b) below, the Sellers shall indemnify
and hold harmless Avnet and any company nominated by Avnet
pursuant to Section 1.1(d) and any Group Company to be
purchased by Avnet (or any such nominated company) and any
subsidiary of any such Group Company (other than the RKE
Division) (the "AVNET INDEMNIFIED PARTIES") from all
(after-tax) liabilities, damages and reasonable costs and
expenses (excluding, for the avoidance of doubt, lost profits
or consequential damages, other than to the extent that the
lost profits or consequential damages are the subject of a
claim by or liability to a third party) suffered or incurred
before or after Closing in connection with any matter referred
to in Part X of Exhibit 5 (a).
(b) Each of the Purchasers (or any company nominated by the
relevant Purchaser under Section 1.1(d)) shall bear 10% of any
liability under this Section 7.11 and the Sellers shall bear
70% of any such liability provided that:
(i) the maximum liability of any Purchaser (together with
any such nominated company) under this Section 7.11
shall not exceed $3,500,000 and any excess shall be
borne by the Sellers;
(ii) if this Agreement is terminated in respect of Memec
Purchaser or Arrow, such liability of Memec Purchaser
or Arrow (or any such nominated company) shall not
apply to any such Purchaser who does not complete the
Closing of this Agreement and the percentage of the
liability under
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this Section 7.11 borne by each of the Purchasers who
complete the Closing of this Agreement shall increase
from 10% to 15%; and
(iii) if a claim is made under this Section 7.11 more than
7 years (but not more than 10 years) after Closing in
respect of Avnet, such liability of Memec Purchaser
and Arrow (or any such nominated company) shall not
apply and such liability shall be borne by the
Sellers.
7.12 WYLE/AVNET LITIGATION
(a) In respect of the legal action Avnet Inc. v. John Imman et al.
(claim reference 13th Jud.Cir., Fla., Div.D., No. 93 4396)
including claims for costs and/or attorney fees (the
"WYLE/AVNET LITIGATION"), the Sellers shall as promptly as
practicable after the date hereof (and using their best
efforts to do so within five business days after the date
hereof) cause all relevant members of the E.ON Group and all
relevant Group Companies, and use all reasonable efforts to
cause the individual parties to the Wyle/Avnet Litigation, and
Avnet shall agree to take all actions necessary to settle all
proceedings in respect of the Wyle/Avnet Litigation and all
claims and liabilities in respect of it with no payment being
made by any party to the Wyle/Avnet Litigation to any other
such party in respect thereof.
(b) If any individual party to the Wyle/Avnet Litigation does not
settle (in accordance with subsection (a) above) and any
attorney's fees and expenses are awarded by the competent
court and paid to any such individual by Avnet, the Sellers
shall procure that to the extent that:
(i) any member of the E.ON Group; or
(ii) Wyle Electronics (but only in the event that this
Agreement is terminated in respect of Arrow),
is paid any sum in respect of such amount by or on behalf of
any such individual, such sum shall be paid forthwith to Avnet
(or as it may direct) by the Sellers or by Wyle Electronics,
as the case may be.
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7.13 POING WAREHOUSE
The Sellers and Avnet shall procure on the Closing Date that the
existing lease agreements between Viterra Aktiengesellschaft
(previously Raab Karcher AG) and (i) EBV-Elektronik GmbH (dated October
18/26, 1999) and (ii) Atlas Logistik Services GmbH (dated May 14/25,
1999) shall be amended, with effect as of the Closing Date, as set
forth in Exhibit 7.13.
7.14 ENVIRONMENTAL INDEMNITY
(a) Subject to the conditions set forth in this Section 7.14,
Sellers hereby agree to indemnify each of the Purchasers (and
any company nominated by the relevant Purchaser pursuant to
Section 1.1(d)), the Companies and the Subsidiaries against
(i) any Clean-Up Costs relating to Environmental Pollution
(both as defined below) and (ii) Non-Compliance Costs (as
defined below). The indemnification obligation of Sellers
under this Section 7.14 (a) shall in each case be limited to
85% of such costs and Purchasers shall bear the remaining 15%,
but only up to a maximum aggregate amount of $3 million for
all indemnification claims of Purchasers under this Section
7.14 (a). To the extent such claims exceed $3 million in
aggregate, the Sellers shall be liable for the excess. Sellers
shall only be liable for any claims for any Clean-Up Costs or
Non-Compliance Costs if the liability for such costs exceeds,
with respect to each individual matter, an amount of $
100,000, in which case the whole of (and not merely the excess
over) $100,000 shall be recoverable (subject to the cost
sharing provision above). For this purpose, any liability
arising out of similar or related circumstances and related to
the same property shall be aggregated. Except for Sections 8.1
(e), 8.3 (c) and paragraphs (f), (h), (i) and (j) of this
Section 7.14, which shall apply, none of the limitations in
this Agreement shall apply to any Clean-Up Costs and
Non-Compliance Costs related to the matters disclosed in
Exhibit 5.8.
(b) "ENVIRONMENTAL POLLUTION" shall mean any pollution for which
any of the Companies or Subsidiaries is responsible or liable
of the land, buildings, structures or ground or surface water
and which existed or arose on or before the Closing Date.
(c) "CLEAN-UP COSTS" shall be any expenditures and costs of any of
the Companies or Subsidiaries:
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- for investigating, delineating, limiting, containing,
removing or disposing of Environmental Pollution,
including the transportation, storage and treatment
of polluted soil and building materials; and
- which have been incurred after the Effective Date in
order to satisfy or comply with legal requirements,
provided that, in respect of the period after the
Closing Date, they have taken all reasonable steps to
keep such expenditures and costs as low as reasonably
practicable.
(d) "NON-COMPLIANCE COSTS" shall be any costs and expenditures
reasonably incurred after the Effective Date by any of the
Companies or Subsidiaries and relating to the failure to
comply by any of the Companies or Subsidiaries with, or any
breach by any Companies or Subsidiaries of, in each case, for
periods prior to the Closing Date, any permits, licences,
authorisations, consents, applicable laws, regulations, orders
or decrees relating to the environment, preservation or
reclamation of natural resources, or to the production, use,
storage, labelling, transportation, management or disposal of
hazardous substances to the extent such costs and expenditures
are not Clean-Up Costs (such failure to comply being
"NON-COMPLIANCE"), provided that after the Closing Date the
Purchasers shall use their reasonable endeavours to mitigate
the Non-Compliance Costs.
(e) Sellers shall only be obligated to indemnify the Purchasers
(and any company nominated by the relevant Purchaser pursuant
to Section 1.1(d)), the Companies and the Subsidiaries from
any Clean-Up Costs or Non-Compliance Costs if and to the
extent that (i) the Companies' or Subsidiaries' liability with
respect to Clean-Up Costs or Non-Compliance Costs has been
established by an enforceable decision, order, directive,
consent, agreement or similar action by any court or
governmental authority or (ii) proceedings against a Company
or Subsidiary are pending before any court or governmental
authority and there is a reasonable likelihood that such a
decision, order of directive will be forthcoming. For this
purpose, proceedings will be deemed to have been commenced if
any such court or authority has served any notice or demand in
respect of any such costs.
(f) Sellers shall be given verifiable evidence of any costs in
accordance with Sections 7.14 (c) and 7.14 (d). Sellers are
entitled to have the costs checked by their own authorised
agent or by an expert who, on request, shall be allowed
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reasonable access to the relevant properties, documentation
and personnel for the purposes of verification.
(g) If, in case of property leased by a Group Company, there is
reasonable evidence that the Environmental Pollution has not
been caused by a Company or Subsidiary but that any landlord
of the leased property is liable to the Company or the
Subsidiary for the Environmental Pollution, the relevant
Purchaser shall first use all reasonable efforts (including
litigation) to recover the relevant Clean-Up Costs from the
landlord, unless such efforts would not have any reasonable
chance of success (e.g. in case of the landlord's bankruptcy).
(h) The Purchasers shall procure that any Company or Subsidiary
that has any claim against any third party (other than the
landlord or member of the E.ON Group) in respect of Clean-Up
Costs shall assign such claim to the relevant Seller, provided
that the Sellers have reimbursed the Purchasers or relevant
Company or Subsidiary in respect of those Clean-Up Costs and
reasonable external costs in respect of such claim.
(i) The amount of indemnification/reimbursement paid or due by the
Sellers under this Section 7.14 will be repaid or reduced to
the extent of any compensation claims the Companies or
Subsidiaries successfully recover against third parties (net
of reasonable costs of recovery from the third party).
(j) In the event of administrative proceedings or third party
claims relating to Environmental Pollution or Non-Compliance
as described above, the Purchasers shall keep and shall
procure that the Companies and the Subsidiaries keep the
Sellers informed about the status of such proceedings or such
third party claims and notify the Sellers as soon as
practicable in writing of the issuance of any administrative
order and any claims made by third parties relating to
Environmental Pollution or Non-Compliance.
7.15 FURTHER ASSURANCES
Subject to the terms and conditions of this Agreement, Purchasers and
Sellers will use their respective reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things
necessary under applicable laws and regulations to consummate the
transactions contemplated by this Agreement. Sellers and Purchasers
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agree, and Sellers, prior to the Closing, and Purchasers, after the
Closing, agree to cause the Group (and Sellers shall cause the E.ON
Group), to execute and deliver such other documents, certificates,
agreements and other writings and to take such other actions as may be
necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by this Agreement. Sellers
shall cause the Companies and Subsidiaries to cooperate with
Purchasers, in the period between the date hereof and the Closing Date,
in order to ensure, to the extent possible and practicable, continuity
in the supplier, customer and employee relationships of the Group.
Nothing in this Section 7.15 shall apply in connection with any
applicable merger control laws or any requirement of any authority with
regard to any merger control process or proceeding.
7.16 CERTAIN ASSETS OWNED BY THE E.ON GROUP
Except for any assets leased or licenced by any member of the E.ON
Group to any Group Company (provided that the respective lease or
licence agreements are expressly disclosed in this Agreement) and
except as expressly otherwise provided in this Agreement, the Sellers
covenant that to the extent any member of the E.ON Group owns any
assets used primarily by or in connection with the business of any of
the Divisions, the Sellers shall cause the relevant member of the E.ON
Group to notify the relevant Purchaser and shall transfer at or prior
to Closing any such asset to a Group Company nominated by such
Purchaser without charge.
7.17 NOTICES UNDER INSURANCE POLICIES
The Sellers shall cause to be given all notices required to be given
under any policy of insurance maintained in respect of the assets,
business or liabilities of any Group Company to ensure that such
assets, business or liabilities continue to be covered under such
policies in respect of claims relating to or arising in the period up
to and including Closing notwithstanding the execution of this
Agreement or Closing.
7.18 EMPLOYEE BODIES
The Sellers shall inform the Purchasers prior to the Closing Date if
any workers' council, economic committee or other employee body at any
Group Company is established between the date hereof and the Closing
Date and shall procure that the relevant Group Company will comply with
any legal requirement to inform, or consult with, any works'
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council, economic committee or other employee body in connection with
this Agreement or the transactions contemplated hereby.
7.19 APRISA
The Sellers shall co-operate with Memec Purchaser in implementing the
arrangements agreed with APRISA, Inc. in relation to the assignment to
Memec LLC of the exclusive marketing and distribution agreement dated
April 12, 2000, between APRISA, Inc. and VEBA Electronics LLC and the
transfer of all of the shares held by VEBA Electronics LLC in APRISA,
Inc. to Memec LLC prior to or at Closing.
7.20 SATISFACTION OF MEMEC FINANCING CONDITIONS
Prior to Closing the Sellers shall co-operate and procure that the
relevant Group Companies shall provide such co-operation to Memec
Purchaser as may be reasonably requested by Memec Purchaser to enable
such Purchaser to satisfy the condition set out in Section 4.3 (a)
(iv), provided, however, that Sellers shall be under no obligation to
assume any liability to Memec Purchaser or the financing banks.
7.21 MEMEC ACQUISITIONS
The Sellers shall not take any action prior to Closing which would
prohibit or otherwise prevent any member of the Memec Division from
entering into any agreement or completing any of the acquisitions
referred to in Exhibit 7.1.
7.22 HYPERION LICENCE
VEBA Electronics LLC shall, and the Sellers shall procure that any
relevant member of the E.ON Group shall, (i) to the extent requested by
the Purchasers, cooperate with the relevant Purchasers in the
assumption by the relevant Purchasers of the Software Licence
Agreement, dated August 10, 1999, between VEBA Electronics LLC and
Hyperion Solutions Corporations and (ii) use commercially reasonable
efforts to continue to provide the relevant Group Companies with access
to, and use of, the systems subject to the Hyperion licence for a
period of nine months following Closing. The relevant Purchasers shall
indemnify VEBA Electronics LLC and any relevant members of the E.ON
Group from any liabilities, losses, damages, costs and expenses
incurred by it as a result of the access to and use of these systems by
Group Companies during this period.
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7.23 VEBA ELECTRONICS LLC EMPLOYEES
(a) Except to the extent indemnified by the Sellers under Section
7.10 (a), as from the Closing Date, Arrow (or any other
Purchaser, if the Purchasers so decide) shall reimburse VEBA
Electronics LLC for all costs of employment (which have been,
or would not have to be, disclosed to Purchasers under Section
5.10 (b)) of the HQ Employees (as defined in paragraph (d)
below) relating to the period between the Effective Date and
the Closing Date, provided, however, that, if only Arrow or
Avnet completes the Closing, such costs of employment shall be
dealt with in the Transitional and Separation Arrangements to
be agreed as a condition of such Closing without reference to
the Expert.
(b) Prior to the Closing Date, Arrow (or any other Purchaser) may
offer to employ any of the HQ Employees, as defined below,
with effect as of the Closing Date. VEBA Electronics LLC shall
co-operate with the Purchasers in the making of any such
offers. From the day of this Agreement until the Closing Date,
the Sellers shall not, and shall procure that no member of the
E.ON Group shall, without the prior written consent of the
Purchasers, hold any discussions with any of the HQ Employees
regarding employment by any member of the E.ON Group.
(c) If, for any reason (including as a result of the Purchasers'
failure to make an offer in accordance with paragraph (b) or
the relevant HQ Employee's rejection of such offer), any of
the HQ Employees are not employed by any Purchaser, then,
without prejudice to the rights of such employees against any
party, Arrow (or, if the transactions contemplated hereby
cannot be consummated in respect of Arrow, any other Purchaser
as agreed in the Transitional and Separation Agreements) shall
indemnify VEBA Electronics LLC from any compensation
(including any bonuses, payments under EPU schemes or
benefits) relating to the period after the Closing Date and
any severance benefits and notice pay with respect to such HQ
Employees, in each case under applicable employment agreements
and severance policies of VEBA Electronics LLC in effect as of
the date hereof, provided that such compensation, severance
benefit and notice pay are, or would not have to be, disclosed
in Exhibit 5.10 (b) (save for amounts referred to in Section
7.10 (a) (i) and (ii)). This paragraph (b) shall not apply
with respect to any HQ Employee who remains in the employment
of any member of the E.ON Group after a period of two months
after the Closing Date, unless
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notice to terminate such employment has been given by the E.ON
Group to the relevant HQ Employee within such period and the
employment is so terminated as soon as possible and in any
event no later than the expiry of the notice period applicable
to the relevant employee.
(d) For purposes of this Agreement, the term "HQ EMPLOYEES" shall
mean those individuals employed by VEBA Electronics LLC as
listed in Exhibit 7.23.
(e) The Sellers shall use their reasonable efforts to procure
that, until the expiry of a period of 3 months from the date
on which the Closing Certificates are determined in accordance
with Article 3, (i) Maria Oestreicher shall devote such of her
time to the affairs of the Group (including in respect of the
Effective Date Financial Statements, Effective Date
Certificates and the Closing Certificates) and (ii) the
Purchasers shall have access to her, in each case as the
Purchasers shall reasonably request.
(f) For the purposes of this Agreement, references to Arrow or any
other Purchaser offering to employ or employing any HQ
Employee shall include any such offer of employment by any
affiliate of such Purchaser.
7.24 FOREX AND HEDGING CONTRACTS
(a) The Sellers shall indemnify the Purchasers (and any company
nominated by the relevant Purchaser pursuant to Section
1.1(d)) and each of the Group Companies against any losses
arising from any foreign exchange, interest rate hedging or
similar arrangements ("FOREX AND HEDGING CONTRACTS") entered
into by any Group Company prior to the Closing Date.
(b) To the extent that any Group Company makes any gain on any
Forex and Hedging Contract entered into by any Group Company
prior to the Closing Date, the relevant Purchaser (and any
company nominated by the relevant Purchaser pursuant to
Section 1.1(d)) shall (or procure that the relevant Group
Company shall) make a payment to the relevant Seller of an
amount equal to such gain (after deduction of any tax and
expenses incurred on any such gain).
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(c) Paragraphs (a) and (b) shall not apply to the extent
(determined by reference to the specific amount) the relevant
Forex or Hedging Contracts were entered into in connection
with any matching contract or arrangement.
7.25 US 401 (k) PLANS
(a) Except as provided below in Section 7.25(c), as soon as
practicable after the Closing Date, (i) Arrow shall establish
or designate an individual account plan (the "ARROW PLAN") and
related trust for the benefit of the current and former
employees (the "VEBA EMPLOYEES") of VEBA Electronics LLC, Wyle
Electronics, Atlas Services LLC, Atlas Business Services LLC,
and EBV Electronics Holdings, Inc. and their respective
Subsidiaries who were participants in the VEBA Electronics LLC
401 (k) Plan (the "VEBA PLAN") as of the Closing Date (and
their beneficiaries) and (ii) Sellers shall cause the trustee
under the VEBA Plan to transfer to the trust under the Arrow
Plan, in the form of cash (or such other form as may be agreed
by the sponsor of the Arrow Plan), the full account balances
of the VEBA Employees under the VEBA Plan and Arrow shall take
all actions necessary to cause the Arrow Plan and related
trust to accept such transfer. As a condition to the transfer
provided herein, if so requested, Arrow shall provide to
Sellers with respect to the Arrow Plan, and Sellers shall
provide Arrow with respect to the VEBA Plan, a copy of an IRS
determination letter (or, in the absence of a current
determination letter, an affidavit stating that to the
knowledge of the plan sponsor no basis exists that would cause
the plan to fail to qualify under the Code). Notwithstanding
anything to the contrary, the requirements of this Section
shall be void if the Sellers and Arrow agree in writing that
the transfer provided in this Section shall not be made
(provided that Arrow shall not unreasonably withhold its
agreement to any reasonable request by Sellers that the
transfer not be made). In consideration for the transfer of
assets described herein, Arrow shall, effective as of the date
of such transfer, assume all of the obligations of Sellers and
any of their affiliates in respect of the account balances
accumulated by VEBA Employees under the VEBA Plan.
(b) As soon as practicable after the Closing Date (i) Memec
Purchaser shall establish or designate an individual account
plan (the "MEMEC PLAN") and related trust for the benefit of
the current and former employees (the "MEMEC EMPLOYEES") of
Memec LLC and, to the extent provided in Section 7.25 (c),
Atlas Services LLC and Atlas Business Services LLC and their
respective Subsidiaries who were
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participants in the VEBA Plan as of the Closing Date (and
their beneficiaries) and (ii) Sellers shall cause the trustee
under the VEBA Plan to transfer to the trust under the Memec
Plan, in the form of cash (or such other form as may be agreed
by the sponsor of the Memec Plan), the full account balances
of the Memec Employees under the VEBA Plan and the Memec
Purchaser shall take all actions necessary to cause the Memec
Plan and related trust to accept such transfer. As a condition
to the transfer provided herein, if so requested, the Memec
Purchaser shall provide to Sellers with respect to the Memec
Plan, and Sellers shall provide the Memec Purchaser with
respect to the VEBA Plan, a copy of an IRS determination
letter (or, in the absence of a current determination letter,
an affidavit stating that to the knowledge of the plan sponsor
no basis exists that would cause the plan to fail to qualify
under the Code). Notwithstanding anything to the contrary, the
requirements of this Section shall be void if the Sellers and
the Memec Purchaser agree in writing that the transfer
provided in this Section shall not be made (provided that the
Memec Purchaser shall not unreasonably withhold their
agreement to any reasonable request by Sellers that the
transfer not be made). In consideration for the transfer of
assets described herein, the Memec Purchaser shall, effective
as of the date of such transfer, assume all of the obligations
of Sellers and any of their affiliates in respect of the
account balances accumulated by Memec Employees under the VEBA
Plan.
(c) Notwithstanding anything to the contrary contained in Sections
7.25(a) and (b), with respect to each of the current and
former employees of Atlas Services LLC and Atlas Business
Services LLC, Arrow and the Memec Purchaser shall together
determine which of the Arrow Plan and the Memec Plan should
accept the transfer of such employees' account balances,
provided, however, that if Arrow and the Memec Purchaser do
not agree on which of the Arrow Plan and the Memec Plan will
accept the transfer of any such current or former employee's
account, such account shall be transferred to the Arrow Plan.
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ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION BY SELLERS
(a) The Sellers shall indemnify and hold harmless each Purchaser,
any company nominated by the relevant Purchaser pursuant to
Section 1.1(d) and each member of the Group from and against
any liabilities, damages (including lost profits, but
excluding any unreasonably remote lost profits or any other
indirect consequential damages, such as lost profits or other
consequential damages which are determined on the basis of
earnings projections or price-earnings ratios for any
Divisions,) and reasonable costs and expenses (collectively
the "LOSSES"), free of and without any rights of counterclaim
or set-off and without deduction or withholding on any grounds
whatsoever, save to the extent that they relate to matters
expressly provided for in this Article 8 in respect of the
determination of Losses or the procedure for claiming such
Losses, asserted against, suffered or incurred by any
Purchaser, any company nominated by a relevant Purchaser
pursuant to Section 1.1(d) or any member of the Group which
arises out of a breach of any representation, warranty,
covenant or agreement of the Sellers or any of them contained
in this Agreement. The Sellers shall not be liable for any
Losses to the extent that such Losses are reflected in any
adjustment of the purchase price under Article 2.
(b) The Sellers shall only be liable for any Losses (arising from
a breach of any representation and warranty contained in
Article 5 or of any covenant contained in Section 7.1 or Tax
Losses (arising under Section 9.5 (a) (iii)), if (i) any such
Losses or Tax Losses with respect to an individual matter
exceed an amount of $ 200,000 for Losses under Article 5
(other than in respect of Section 5.18 in respect of the
period since the Effective Date) or $ 100,000 for Losses under
Section 5.18 in respect of the period since the Effective Date
or under Section 7.1 or Tax Losses under Section 9.5 (a) (iii)
(provided that in each such case for this purpose, Losses or
Tax Losses arising out of similar or related circumstances
shall be aggregated) in which case the whole of (and not
merely the excess over) $ 200,000 or $ 100,000 (as the case
may be) shall be recoverable and (ii) to the extent that the
aggregate of all Losses (other than those where liability is
excluded as referred to in (i) above) arising from a breach of
the representations and warranties contained in Article 5 and
all Tax Losses arising under Section 9.5 (a)
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(iii) exceed $ 20,000,000. Section 8.1 (b) (ii) shall not
apply to the Sellers' liability arising from a breach of the
representations and warranties in Section 5.18 in respect of
the period on or after the Effective Date.
(c) If any Tax Losses under any of the indemnities contained in
Article 9 other than Section 9.5 (a) (iii) arise from any Tax
audit or other Tax related proceedings, the Sellers shall only
be liable for such Tax Losses if they exceed in each case $
100,000 (in which case the entire amount shall be
recoverable), provided, however, that the Sellers shall only
be entitled to apply this threshold to five such Tax audits or
Tax related proceedings. This paragraph (c) shall not apply to
Tax Losses with respect to any Tax payable in Germany, the
United Kingdom or the United States of America, in respect of
which no threshold for claims shall apply.
(d) The Sellers' liability for the breach of any representation
and warranty, covenant, indemnity and other agreement
contained in this Agreement and under the indemnities in
Section 7.10, except for any liability under Section 7.5
(Covenant Not to Compete, Covenant not to Solicit), Section
7.12 (Environmental Indemnity) and Article 9 (Taxes), shall be
limited to an aggregate amount of $ 750 million.
(e) Subsections (b) and (d) of this Section 8.1 shall not apply to
the Sellers' liability under Section 1 (Agreement to Sell and
Purchase) or arising from a breach of the representations and
warranties contained in Sections 5.1, 5.2 and 5.3 (corporate
organization, share ownership and
authorization/non-contravention) or in respect of the
indemnity in Section 7.11 (Avnet Indemnity), provided,
however, that such liability of the Sellers shall be limited,
together with any other liability under this Agreement, to an
aggregate amount equal to the sum of the Final Share Purchase
Price and the Closing Date Inter-Group Debt payable by
Purchasers under Article 2.
(f) None of the limitations contained in subsections (b), (c) and
(d) of this Section 8.1 or in Section 8.3 shall apply to the
Sellers' liability arising under this Agreement in cases of
fraud or deliberate concealment by any Seller or E.ON AG or
any of their respective officers, agents, employees or
advisers (excluding, for the avoidance of doubt, any directors
(other than any directors referred to in Section 7.4),
officers or employees of the Group) who have acted on behalf
of
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any Seller or E.ON AG in connection with the negotiation or
conclusion of this Agreement.
(g) The legal concepts set out in sections 460 and 464 of the BGB
shall not apply to this Agreement. Sellers shall, however, not
be liable for the breach of any representation and warranty
contained in Section 5 of this Agreement if and to the extent
that any Purchaser, based on its knowledge of the matter
giving rise to the breach and assuming its knowledge of this
Agreement, knew or ought reasonably to have known at the date
of this Agreement that there was a breach of a representation
and warranty relating to any of the Divisions acquired by such
Purchaser. Purchasers' knowledge is defined as the actual
knowledge of the persons listed against such Purchaser's name
in Exhibit 8.1 (Part 1), after inquiry with such Purchaser's
officers, employees, representatives and advisers listed in
Exhibit 8.1 (Part 2). Without limiting the generality of the
foregoing, such Purchaser shall be deemed to have knowledge of
all matters which are disclosed, in reasonably sufficient
detail, in any due diligence report prepared for it by such
Purchasers' employees, representatives or advisers prior to
the date hereof. For the avoidance of doubt, the knowledge of
a Purchaser (after such inquiry) shall not be attributed to
any other Purchaser.
(h) Unless expressly otherwise provided in this Agreement, the
Losses to be compensated hereunder shall be determined as
provided under applicable law (including, to the extent
provided under such applicable law, by taking into account any
offset of future advantages or benefits arising as a result of
the event or circumstances causing such Losses).
8.2 INDEMNIFICATION BY PURCHASER
Subject to the provisions contained in Sections 8.3 to 8.5 (inclusive),
each Purchaser shall indemnify and hold harmless the Sellers from and
against any Losses asserted against, suffered or incurred by the
Sellers which arise out of a breach of any representation, warranty,
covenant or agreement by that Purchaser contained in this Agreement. In
addition, Arrow (or the relevant Purchaser with respect to HQ Employees
employed by such Purchaser in accordance with Section 7.23) agrees to
indemnify and hold harmless the Sellers and E.ON AG from and against
any Losses asserted against, suffered or incurred by the Sellers or
E.ON AG which arise out of or in connection with (i) any asset,
agreement, obligation or liability of VEBA Electronics LLC assumed by
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Arrow pursuant to Section 1.1 (b) of this Agreement, and (ii) the
liabilities with respect to any compensation, benefits and severance
payments to any HQ Employees who accept an offer of employment made by
any Purchaser pursuant to Section 7.23 (a) under this Agreement (save
for amounts referred to in Section 7.10 (a) (i) and (ii)), provided
that VEBA Electronics LLC shall assign, or cause to be assigned, to
Arrow (or any other relevant Purchaser (or any company nominated by the
relevant Purchaser pursuant to Section 1.1(d)) any benefits provided
under arrangements which are insured, either through stop-loss coverage
or otherwise.
8.3 LIMITATION PERIODS
The representations and warranties, covenants, indemnities and other
agreements of the Parties (including all claims and remedies with
respect thereto) under this Agreement shall be subject to the following
limitation periods:
(a) Subject to paragraphs (c) and (d) below, all representations
and warranties of the Parties in Articles 5 and 6 and the
Sellers' covenants in Section 7.1 (including all claims and
remedies with respect thereto) shall be time-barred upon
expiration of a period of 18 months after the Closing Date.
(b) The representations and warranties of the Sellers under
Section 5.2 (a) (ownership of shares and absence of
third-party rights in shares) and the indemnity in Section
7.11 shall be subject to a limitation period of ten years
after the Closing Date (in the case of Section 7.11, the
Closing Date being in respect of the Closing with Avnet).
(c) The representations, warranties and indemnities under Article
9 (Taxes) shall be time-barred as set forth in Section 9.9
below.
(d) The representations, warranties and indemnities under Section
5.8 (Environmental Matters) and 7.14 (Environmental Indemnity)
shall be subject to a limitation period of five years after
the Closing Date.
(e) All other covenants, indemnities and agreements hereunder
shall be subject to a limitation period of five years after
the Closing Date.
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Any such limitation period will be interrupted (unterbrochen) (a) in
respect of any claim (other than any claim under any indemnity in
Article 7 or 9) in the event that a notice of the claim has been given
in accordance with Section 8.4 below or (b) in respect of any claim
under Article 7 or 9 in the event that notice of the claim has been
given to the Sellers describing the claim in reasonable detail (as
available) and, to the extent then reasonably feasible, setting forth
the estimated amount of such claim. In case of such a notice, a new
limitation period of one year following such notice shall apply in
respect of the relevant claim, which shall expire on the later of (i)
the first anniversary following such notice and (ii) the applicable
limitation period set forth in paragraphs (a) - (e) of this Section
8.3. The new limitation period can only be interrupted in accordance
with applicable law (e.g. by filing a claim with the competent court).
8.4 INDEMNIFICATION PROCEDURES
(a) In the event of a breach of a representation, warranty or
covenant of a Party (an "INDEMNIFYING PARTY") contained in
this Agreement (other than any indemnity in Article 7 or 9),
any person to be indemnified hereunder (the "INDEMNIFIED
PARTY") (or any of the Purchasers, where a company nominated
by the relevant Purchaser under Section 1.1(d) or a member of
the Group is an Indemnified Party) shall (i) as soon as
reasonably practicable after the Indemnified Party becomes
aware of the relevant breach, notify the Indemnifying Party of
such breach, describe its claim in reasonable detail (as
available) and, to the extent then reasonably feasible, set
forth the estimated amount of such claim, provided that the
failure to provide such notification shall not prevent any
claim being made by or on behalf of the Indemnified Party in
respect of such breach, but the Indemnifying Party shall not
be liable in respect of such breach to the extent that its
ability to mitigate the liability shall have been prejudiced
by any delay in providing the notification, and (ii) to the
extent the breach is capable of remedy, give the Indemnifying
Party the opportunity to remedy the breach within a reasonable
period of time not exceeding two weeks. The Indemnified Party
shall further use its reasonable endeavours to mitigate the
Losses suffered by it as a result of the breach in accordance
with applicable law.
(b) In the event that any claim or demand for which an
Indemnifying Party is likely to be liable under Article 5 or 6
or any indemnity under Section 7.10 is asserted by a third
party against an Indemnified Party, the Indemnified Party (or
the Purchaser, where the Indemnified Party is a company
nominated under Section
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1.1(d) or a Group Company) shall notify the Indemnifying Party
of such claim or demand in accordance with paragraph (a) (or
Section 8.3 in the case of a claim under Section 7.10) and the
following shall apply:
(i) If the Indemnifying Parties acknowledge in writing to
the Indemnified Parties (or the Purchasers, where a
company has been nominated by the relevant Purchaser
pursuant to Section 1.1(d) or a member of the Group
is an Indemnified Party) that they accept liability
under the Indemnified Party's claim under this
Agreement within two weeks after receipt of the
notice pursuant to subsection (a) (or Section 8.3, in
the case of a claim under Section 7.10), the
Indemnified Parties shall give the Indemnifying
Parties the opportunity to defend the Indemnified
Parties against such claim at the expense of the
Indemnifying Parties and the following provisions of
this sub-clause shall apply. The Indemnifying Parties
shall have the right to defend the Indemnified
Parties by all appropriate proceedings and shall have
the sole power to direct and control such defence. In
particular, but without limitation, the Indemnifying
Parties may participate in and direct all
negotiations and correspondence with the third party,
appoint counsel and request that the claim be
litigated or settled in accordance with the
Indemnifying Parties' instructions. In no event shall
the Indemnified Parties be entitled to acknowledge or
settle the claim, or permit any such acknowledgement
or settlement, without the Indemnifying Parties'
written consent. The Indemnified Parties shall use
their respective reasonable endeavours to cooperate
and cause the Group to use its reasonable endeavours
to cooperate with the Indemnifying Parties in the
defence of any third-party claim.
(ii) If sub-clause (i) above applies, the Indemnified
Parties shall in each case provide the Indemnifying
Parties' representatives reasonable access upon
reasonable notice, during normal business hours, to
all relevant business records and documents and
permit the Indemnifying Parties and their
representatives a reasonable opportunity to consult
with the directors, employees and representatives of
the Indemnified Parties or the Group (as the case may
be).
(iii) If sub-clause (i) does not apply, the Indemnified
Party shall keep and shall procure that the Companies
and the Subsidiaries keep the Sellers
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informed about the status of any third-party claims
and shall take all reasonable actions in connection
with the defence in order to mitigate the Losses.
(iv) If subsection (i) applies, the Indemnifying Party
shall provide to the Indemnified Parties (or the
Purchasers where a company nominated by the relevant
Purchaser pursuant to Section 1.1(d) or any member of
the Group is an Indemnified Party) copies of all
documents and notify them in advance of all material
proposed steps in connection with the defence or
conduct referred to in subsection (i).
(v) The Indemnifying Parties will indemnify and hold
harmless the Indemnified Parties in respect of all
costs or expenses (other than management time of any
officer or employee of any Indemnified Party)
reasonably incurred by any of the Indemnified Parties
in connection with any defence, conduct or
cooperation referred to in subsection (i).
(vi) Notwithstanding any other provision of this Section
8.4, the Indemnifying Party will not consent to the
entry of any judgement or enter into any settlement
without the written consent of the Indemnified Party,
unless such judgement or settlement provides only for
the payment of monetary damages or compensation and
for a full release of the Indemnified Party from all
liabilities with respect thereto.
(c) In the event that any claim or demand for which the Sellers
are likely to be liable under Section 7.11 is asserted by a
third party against Avnet or any Avnet Indemnified Party (as
defined in Section 7.11 (a)), Avnet shall keep and shall
procure that the Avnet Indemnified Parties keep the Sellers
informed about the status of any such third-party claim and
shall take all reasonable actions in connection with the
defence of such third-party claim in order to mitigate the
liability or damage in respect thereof and Avnet shall give
the Sellers a reasonable opportunity to be consulted in
respect of the conduct or the claim and shall take account of
the comments of the Sellers in respect of the conduct to the
extent reasonable. If a supplier makes a claim against any of
the Avnet Indemnified Parties in respect of a matter which is
the subject of the indemnity in Section 7.11 and, as a result
of that matter, the supplier terminates its relationship with
all the Group Companies who comprise Avnet Indemnified
Parties, Avnet shall procure
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that such claim shall not be settled without the prior consent
of the Sellers, such consent not to be unreasonably withheld
or delayed.
(d) Avnet shall procure that no senior vice president or more
senior officer of Avnet shall approach (or procure that any
approach is made to) any supplier to discuss any matter
referred to in Part X of Exhibit 5 (a) prior to any claim in
respect of any such matter being made by such supplier,
without the prior consent of the Sellers, such consent not to
be unreasonably withheld or delayed.
8.5 NO ADDITIONAL RIGHTS OR REMEDIES
(a) The Parties agree that the rights and remedies which the
Sellers on the one hand and Purchasers (or any company
nominated by the relevant Purchaser pursuant to Section 1.1
(d)) on the other hand may have in respect of the breach of a
representation, warranty, covenant or agreement contained in
this Agreement are limited to the rights and remedies
explicitly contained herein without prejudice to any claim for
specific performance or for any injunction or court order to
enforce any rights set forth in this Agreement. In particular,
without limitation, no Party shall have a right to rescind,
cancel or otherwise terminate this Agreement or exercise any
right or remedy which would have a similar effect, except for
the termination rights set forth in Article 10 below.
(b) Other than the rights and remedies explicitly set forth herein
and without prejudice to any claim for specific performance or
for any injunction or court order to enforce any rights set
forth in this Agreement, Purchasers (and any company nominated
by the relevant Purchaser pursuant to Section 1.1(d)) and
Sellers hereby waive any and all rights and remedies of any
nature (contractual, quasi-contractual, tort or otherwise),
including any claims under statutory representations and
claims for negligent misrepresentation, which they may
otherwise have against each other in connection with this
Agreement or the transactions contemplated hereby, except for
any rights and remedies under the Confidentiality Agreement
dated February 3, 2000.
(c) The provisions of this Section 8.5 shall not apply to (i)
rights and remedies which the Sellers may have under
applicable law as a result of any Purchaser's failure to pay
the purchase price or any portion thereof in accordance with
this Agreement, (ii) rights and remedies which the Purchasers
(or any company nominated by the
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relevant Purchaser pursuant to Section 1.1(d)) may have under
applicable law arising from Sellers' failure to transfer the
Sold Shares, free and clear of any encumbrances and rights of
third parties, to Purchasers (or any company nominated by the
relevant Purchaser pursuant to Section 1.1(d)) on the Closing
Date (iii) rights and remedies which Avnet (or any company so
nominated by it) may have under applicable law arising from
any breach of the representation, warranty and covenant in
Section 11.2, and (iv) any rights and remedies of any Party
for fraud or wilful misconduct (Vorsatz).
ARTICLE 9
TAXES
9.1 DEFINITIONS
The following terms, as used herein, have the following meanings:
"PRE-CLOSING TAX PERIOD" means any Tax period ending on or before the
close of business on the Closing Date.
"TAX" or "TAXATION" means (i) all taxes, including without limitation,
income, gross receipts, ad valorem, value-added, excise, real property,
personal property, sales, use, transfer, withholding, employment,
social and franchise taxes, together with interest, penalties,
surcharges and additional tax, imposed by any governmental authority (a
"TAXING AUTHORITY") responsible for the imposition of such tax and (ii)
any amounts paid or payable to any person (including a Taxing
Authority) arising out of an indemnity or covenant to pay in respect of
Tax.
"TAX ASSET" means any loss, relief, allowance, set off, deduction,
right to repayment or credit or other relief of a similar nature
granted by or available in relation to Tax to the extent that it either
arises in respect of an event occuring after the Effective Date or was
taken into account in the Effective Date Financial Statements as an
asset.
"TAX RETURN" means any return, declaration, report, claim for refund,
information return, statement, schedule, notice, form or other document
or information relating to Tax, including any schedule or attachment
thereto, and including any amendment thereof.
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In this Article a reference to "relevant Purchaser", "relevant Seller",
"relevant Company" or "relevant Subsidiary" is a reference to the
entity to which a right or obligation or a liability under this Article
or in respect of Tax relates.
9.2 TAX REPRESENTATIONS
Sellers represent and warrant to Purchasers (or any company nominated
by the relevant Purchaser pursuant to Section 1.1 (d)) as of the date
hereof and as of the Closing Date that, except as otherwise disclosed
in Exhibit 9.2,
(a) all material Tax Returns required to be filed with any Taxing
Authority on or prior to the Closing Date by or on behalf of
any of the Companies or Subsidiaries have been filed when due
in accordance with all applicable laws;
(b) as of the time of filing, the Tax Returns were true and
complete in all material respects;
(c) all material Tax due and payable by the Companies or
Subsidiaries has been timely paid, or withheld and remitted,
to the appropriate Taxing Authority;
(d) there has been no formal or informal notice of any claim,
action, suit, proceeding, or investigation now pending against
or with respect to any of the Companies or Subsidiaries in
respect of any material Tax;
(e) no Company or Subsidiary is a member of any consolidated or
unitary group or a party to any arrangement with any third
party (other than any member of the Group or of the VEBA
Group) as a result of which any income, loss, asset or
liability of any of the Companies or Subsidiaries is
attributed for Tax purposes to any such third party or is
otherwise taken into account in determining any Tax payable by
any third party, or vice versa;
(f) no Company is a "United States Real Property Holding
Corporation" within the meaning of section 897 (c) (2) of the
Internal Revenue Code;
(g) except as provided in the Effective Date Financial Statements
no Company or Subsidiary is or will be under any obligation to
make or repay any payment for the surrender of losses or other
amounts that may be surrendered;
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(h) no Company or Subsidiary is subject to an adjustment pursuant
to section 481 of the Internal Revenue Code;
(i) no Taxing Authority in a jurisdiction where a Company or
Subsidiary is not paying Tax has made a claim or assertion
that the Company or Subsidiary is or may be subject to Tax by
such jurisdiction, otherwise than by deduction of Tax at
source;
(j) all Companies and Subsidiaries that are corporations formed
under US state law being purchased are members of a US
consolidated Tax group of which VEBA Corporation is the
consolidated group parent.
9.3 PREPARATION OF TAX RETURNS AND PAYMENT OF TAX
Sellers shall (i) prepare and file, or cause the Companies and the
Subsidiaries to prepare and file, all Tax Returns required to be filed
by or on behalf of the Companies or Subsidiaries on or before the
Closing Date and (ii) Sellers shall prepare and file at the Sellers'
expense all Tax Returns which include the Companies and Subsidiaries
and which are to be filed by the Sellers on a consolidated basis after
the Closing Date. The relevant Purchasers shall procure the Companies
and the Subsidiaries to prepare such information as is required for the
purpose of consolidated Tax Returns to be filed by Sellers at the
relevant Purchaser's expense and the relevant Purchaser shall have the
right to review the portion of such consolidated Tax Returns relating
to the Companies and the Subsidiaries. The relevant Purchaser shall at
the relevant Purchaser's expense prepare and file all Tax Returns
required to be filed by or on behalf of any of the Companies or
Subsidiaries after the Closing Date subject, in the case of any Tax
Returns for a Tax period beginning before the Closing Date, to the
review of Sellers and the relevant Purchaser shall incorporate
reasonable comments made by the Sellers concerning the preparation and
filing of such Tax Returns. The Sellers or relevant Purchaser, as the
case may be, shall ensure that any Tax Return to be reviewed by the
other party will be made available to such other party no later than 30
days prior to the due date for the filing of such Tax Return and any
comments must be given by the other party within 15 days of receipt.
The relevant Purchaser shall pay all Taxes shown as due on any Tax
Return to be filed by the relevant Purchaser under this Section 9.3 but
such payment shall not prejudice any claims the relevant Purchaser has
or may have under Section 9.5. Sellers shall timely pay or cause to be
paid all Tax for which Sellers are liable with respect to
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any Tax Return to be filed by Sellers under this Section 9.3 subject to
the relevant Purchaser procuring that any of the Companies and the
Subsidiaries included in a Tax Return to be filed on a consolidated
basis shall collectively have paid an amount equal to the Tax liability
of all such Companies and Subsidiaries in respect of such Tax Returns
to the Seller to the extent that such Tax (i) was taken into account in
calculating the amount of the Effective Date Taxation Liability or (ii)
which was incurred in the ordinary course of business and is
attributable to the portion of a Tax period beginning on or after the
Effective Date and ending on the Closing Date (such tax to be computed
by treating the Companies and Subsidiaries as a separate sub-group), in
each case not later than 5 days prior to the date for the filing of the
Tax Return.
9.4 TAX REFUNDS AND RECOVERIES
The relevant Purchaser shall pay to the Sellers an amount equal to any
refunds received in cash with respect to Tax of the Companies or
Subsidiaries for Tax periods ending on or before the Effective Date
except for those refunds taken into account as an asset in the
Effective Date Financial Statements.
9.5 TAX COVENANT
(a) Subject to the provisions of Sections 8.1 (b) and 8.1 (c), the
Sellers covenant to pay to each of the relevant Purchaser or a
company nominated by the relevant Purchaser pursuant to
Section 1.1(d) an amount equal to any
(i) Tax of any of the Companies or the Subsidiaries
(whether or not they are primarily liable for the
same) attributable to any Tax period or portion
thereof ending on or before the Effective Date;
(ii) Tax of the Companies or the Subsidiaries (whether or
not they are primarily liable for the same)
attributable to any Tax period or portion thereof
ending on or before the Closing Date as the result of
any act, transaction or event outside the ordinary
course of business of the Companies or the
Subsidiaries;
(iii) liability for Tax arising from a breach of any Tax
representation or warranty contained in Section 9.2;
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(iv) loss or reduction of any Tax Asset taken into account
in the Effective Date Financial Statements as an
asset;
(v) set off of any Tax Asset arising after the Effective
Date against Tax if and to the extent the Purchaser
would have had a claim under Section 9.5 (a) (i),
(ii) or (iii) had such set off not reduced or
extinguished such liability to Tax, provided that the
Purchaser shall procure that any reliefs, deductions
or credits other than a Tax Asset are used, so far as
reasonably practicable, to offset any such liability
to Tax;
(vi) Tax attributable to the triggering of a deferred
intercompany gain or excess loss account for U.S.
federal state or local tax purposes as the result of
the transfer of the shares of the Companies from the
Sellers to the Purchasers on the Closing Date;
(vii) liability for Tax arising in consequence of an act,
omission, transaction or event occurring at any time
for which the Company or Subsidiary is not primarily
liable but for which it is liable only as a result of
having at any time on or before the Closing Date been
a member of a group for Tax purposes or by virtue of
having been at any time before the Closing Date
controlled by any person;
(viii) any reasonable costs and expenses incurred by the
Purchasers or the Companies or the Subsidiaries in
connection with prosecuting any claim under Article 9
to the extent to which the Sellers are liable for
such claim (the sum of (i) to (viii) being referred
to herein as a "TAX LOSS" or "TAX LOSSES" which may
be adjusted pursuant to Section 9.5(c)) provided that
to the extent that the Sellers are not liable in
respect of such claim the Purchasers shall reimburse
the Sellers for any reasonable costs and expenses
incurred by the Sellers in respect of defending
against such claim.
Notwithstanding any of the foregoing to the contrary, this
Section 9.5 shall not apply to any Tax governed by Section
11.7.
(b) For the purposes of this Article 9 the following shall,
without limitation, be considered to be outside the ordinary
course of business:
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(i) the payment of any dividend or the making of any
distribution; or
(ii) the disposal, realisation or acquisition of any asset
(including, without limitation, trading stock) in
circumstances where, and only to the extent that, the
consideration (if any) actually received (or due to
be received) or given (or due to be given) for such
disposal, realisation or acquisition is less than (or
in case of an acquisition, more than) the
consideration deemed to be or have been received or
given for Tax purposes; or
(iii) the supply or receipt of any service or business
facility of any kind (including, without limitation,
a loan of money or the letting, hiring, licensing or
creation of any tangible or intangible property or
rights) in circumstances where, and only to the
extent that, the consideration received (or due to be
received) or given (or due to be given) is less than
(or in the case of receipt of a service, more than)
the consideration which is deemed to be received or
given for Tax purposes; or
(iv) any act, transaction or event which gives rise to
deemed (as opposed to actual) income, profits or
gains; or
(v) any act, omission, transaction or event which results
in a Company or Subsidiary becoming liable to or bear
a liability to Tax directly or primarily chargeable
against or attributable to another person; or
(vi) a Company or Subsidiary ceasing, for Tax purposes to
be the member of any group or associated with any
other Company or Subsidiary or a change of residence
of any Company or Subsidiary for Tax purposes; or
(vii) any disposition of a capital asset in violation of
Section 7.1 (d) and any disposition of shares of
capital stock of any corporation; or
(viii) any material restructuring of the handling and
ownership of inventory including, without limitation
the centralization of warehousing and related
matters; or
(ix) the entering into, performance of or closing of this
Agreement; or
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(x) any reorganization of the Companies or Subsidiaries
including a change in entity classification; or
(xi) any disallowance of any interest expense deduction in
respect of the Effective Date Inter-Group Debt and
Effective Date External Debt (for the avoidance of
doubt, interest paid or accrued on loans extended by
E.ON AG or a company of the E.ON Group after the
Effective Date shall be considered to be paid in the
ordinary course of business); or
(xii) any gain or other income attributable to the sale of
assets or deemed sale of assets by Sellers to
Purchasers pursuant to this Agreement, it being
understood that Incremental Tax cost, if any, shall
be payable by the Purchaser pursuant to Section 9.13.
(c) Where an amount of Tax paid by the Company or Subsidiary has
resulted in a relief (the "RELEVANT RELIEF") and the Seller
has made a payment to the Purchaser in respect of that Tax in
satisfaction of a claim made under this Section 9.5, the
relevant Purchaser shall where the claim is less than $100,000
pay or procure that the relevant Company or relevant
Subsidiary pays to the Seller an amount equal to the net
present value of the Relevant Relief within 5 days of the
auditors for the time being of the Company or Subsidiary
confirming at the request and expense of the Seller that such
Relevant Relief is actually available to the Company or
Subsidiary and where the claim is in excess of $100,000 pay to
the Seller an amount equal to the amount of Tax saved within 5
days of the auditors for the time being of the Company or
Subsidiary confirming at the request and expense of the Seller
that such Relevant Relief has actually been utilised.
(d) The covenant contained in Section 9.5 shall not apply to the
extent that:
(i) the Tax was taken into account in calculating the
amount of the Effective Date Taxation Liability which
has been taken into account in determining the Final
Share Purchase Price;
(ii) the Tax arises as a result of any change in rates of
tax made after Closing or of any change in law (or a
change in interpretation on the basis of case
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law), regulation, directive or requirement, or the
published practice of any Taxing Authority, occurring
after Closing;
(iii) the Tax would not have arisen except as a direct
consequence of a transaction, action or omission
outside the ordinary course of business carried out
or effected by any of the Purchasers, the Companies
or Subsidiaries or any other person connected with
any of them apart from the E.ON Group, which the
Purchasers, the Companies or the Subsidiaries knew or
ought reasonably to have known would give rise to
such liability to Tax at any time after Closing,
except that this exclusion shall not apply where any
such transaction, action or omission is carried out
or effected by the Company or Subsidiary concerned
pursuant to a legally binding commitment created on
or before Closing or pursuant to any change in law
(or change in interpretation on the basis of case
law), regulation, directive or requirement, or the
published practice of any Taxing Authority;
(iv) the Tax arises solely as a result of a change after
Closing in any accounting policy, any tax reporting
practice, or the length of any accounting or
financial period for Tax purposes, of the Company or
any Subsidiary except any changes made to comply with
generally accepted accounting principles in existence
at Closing or required by a Taxing Authority;
(v) such Tax arises solely as a result of the Companies
or Subsidiaries failing to submit the returns and
computations required to be made by them or not
submitting such returns and computations within the
appropriate time limits or submitting such returns
and computations otherwise than on a proper basis, in
each case after Closing except to the extent that
such failure is as a result of any act or omission of
the Sellers;
(vi) the Tax would not have arisen but for:
(A) the making of a claim, election, surrender
or disclaimer, the giving of a notice or
consent relating to Tax, in each case after
Closing and by the Purchasers, the
Companies, the Subsidiaries or any person
connected with any of them (except the E.ON
Group) other
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than where the making of such claim,
election, surrender or disclaimer is taken
into account in the Effective Date Financial
Statements; or
(B) the failure or omission on the part of the
Companies or the Subsidiaries to make any
such valid claim, election, surrender or
disclaimer, or to give any such notice or
consent or to do any other such thing, in
circumstances where the making, giving or
doing of which was taken into account in
calculating the amount of the Effective Date
Taxation Liability and which were notified
by the Sellers to the Purchasers, the
Company or the Subsidiary not less than 30
days prior to the last date upon which such
claim election, surrender or disclaimer
should take place;
(vii) the Tax exceeds 50% of the Tax which arises under
section 179 of the Taxation of Chargeable Gains
Act 1992 in respect of a deemed disposal by any
of RK Distributions Limited, Midwich Limited,
Transformation Software Limited and Professional
Display Systems Limited as a consequence of any of
those companies ceasing to be a member of a group
within section 170 of that Act with a company
within the E.ON Group as the principal company in
that group;
(viii) the liability relates to a Tax arising under Section
9.5 (a)(iii) which Tax is attributable to a Tax
period or portion thereof beginning or deemed to
begin on or after the Closing Date.
(e) (i) For the purposes of this paragraph a reference to an
"OVERPROVISION" is a reference to:
(A) the understatement of the value of a Tax
Asset; and
(B) the overstatement of the Effective Date
Taxation Liability
in the Effective Date Financial Statements except to
the extent that such Overprovision is caused by the
utilization of a Tax Asset arising after the
Effective Date and applying the same accounting
policies, principles and practices adopted in
relation to the preparation of the Effective Date
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Financial Statements and ignoring the effect of any
change in law (or change in interpretation on the
basis of case law), regulation, directive or
requirement, or the published practice of any Taxing
Authority or action taken by the relevant Purchaser
or any relevant Company or relevant Subsidiary after
the Closing Date.
(ii) Any Overprovision shall first be set against any
payment then due from the Seller to the relevant
Purchaser under this Article 9. To the extent there
is an excess, a refund shall be made to the Seller by
the relevant Purchaser of any previous payment or
payments made by the Seller to the relevant Purchaser
under this Article 9 (and not previously refunded) up
to the amount of the excess. To the extent that the
excess is not thereby exhausted, the remainder of
that excess shall be carried forward and set against
any future payment or payments which become due from
the Seller to the relevant Purchaser under this
Article 9 and to the extent that any excess remains
at the end of the limitation period set out in
Section 9.9 such excess shall be paid to the Seller.
(iii) For this purpose, the Seller, at its request and
expense, may request the auditors for the time being
of any Company or Subsidiary to certify the existence
and amount of any Overprovision and the relevant
Purchaser shall provide, or procure that each Company
and Subsidiary shall provide, any reasonable
information or assistance for the purpose of
production by the auditors of a certificate to that
effect.
9.6 THIRD PARTY RECOVERY
At the request and expense of the Sellers, the relevant Purchasers, the
relevant Companies and the relevant Subsidiaries will take all
reasonable steps to make a claim in respect of Tax from a person other
than the Sellers, the relevant Purchasers, the relevant Companies or
the relevant Subsidiaries and the relevant Purchaser shall pay or
procure that the relevant Company or the relevant Subsidiary pay to the
Seller an amount equal to the lesser of (i) the amount recovered from
the third party and (ii) the amount paid by the Seller pursuant to a
claim under Section 9.5, in each case, after deducting from the amount
recovered from the third party any Tax incurred or to be incurred by
the relevant Purchaser, the relevant Company or any relevant Subsidiary
upon receipt of such
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recovery from the third party, within 5 days of receipt of such amount
by any of the relevant Purchaser, the relevant Companies or the
relevant Subsidiaries.
9.7 PROCEDURES
(a) Subject to at least 14 days prior written notice from the
relevant Purchaser stating that any Tax Loss has been or is to
be paid or suffered by that Purchaser or any Company or
Subsidiary and the amount thereof and of the covenanted
payment requested, and for the avoidance of doubt, a failure
to give notice within the period set out above shall not cause
any claim to fail. Any payment to be made by Sellers pursuant
to Section 9.5 shall be made to the relevant Purchaser not
later than 5 days prior to the date upon which the Tax (or
costs and expenses) is due and payable or where no Tax becomes
payable as a result of the loss, reduction or set off of any
Tax Asset
(i) which is a Tax Asset shown as an asset in the
Effective Date Financial Statements seven days after
notice given by the relevant Purchaser to the effect
that the Tax Asset would reasonably have been
expected to have been paid in cash or set-off against
payment of a Tax Liability;
(ii) which is a Tax Asset arising after the Effective Date
seven days after the auditors for the time being
shall have certified in writing that the Tax Asset
would have been used to offset a Tax Liability of the
relevant Purchaser, the relevant Companies or
relevant Subsidiaries but for the loss or set off of
the Tax Asset.
(b) If, after the relevant Closing Date, any Taxing Authority
informs Sellers, on the one hand, or any of the Purchasers,
the Companies, or Subsidiaries on the other, of any proposed
audit, claim, assessment or other dispute concerning Tax with
respect to which Sellers may incur a liability hereunder, then
the Sellers shall inform the relevant Purchaser or the
relevant Purchaser shall as soon as practicable (and in any
event within 30 days) inform the Sellers, as the case may be,
of such matter. Sellers shall not have any obligation to make
a payment to a relevant Purchaser under Section 9.5 if such
Purchaser shall have failed to timely notify Sellers
concerning an audit, claim, assessment or other dispute which
failure has a material adverse effect on the Sellers' ability
to exercise its rights under this Section 9.7 (b) and Section
8.4 except to the extent that the Purchasers
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can show that the liability would have arisen even if the Sellers had
been able to exercise such rights and in the event that the Parties
dispute whether or not the liability, or the extent to which the
liability, would have arisen but for the failure to notify, the dispute
resolution procedures in Section 3.4 shall apply to determine the
matters. Except to the extent contrary to or inconsistent with this
Section 9.7 (b) the provisions of Section 8.4 shall apply to this
section and subject thereto, the relevant Purchaser shall as soon as
practicable and, at the Sellers expense (i) give, and shall cause the
Companies or Subsidiaries to give the relevant Sellers the opportunity
to participate in any audits, disputes, administrative, judicial or
other proceedings related to Tax for which the Sellers may be liable
hereunder and (ii) allow the Sellers to challenge and litigate, or
cause the Companies or Subsidiaries to challenge and litigate, any such
audit, claim, assessment or other dispute at their discretion provided
that Sellers shall give reasonable consideration to comments and
suggestions made by the relevant Purchaser regarding the handling of
such contest and provided further that Sellers shall not settle any
such audit, claim, assessment or other dispute in a manner which is
unduly prejudicial to such relevant Purchaser.
(c) Any payments made hereunder to a Purchaser shall take effect
as a reduction in the Final Share Purchase Price provided for
in Section 2.3 and any payments made hereunder to the Sellers
shall take effect as an increase in the Purchase Price.
(d) For the purposes of this Section 9, in the case of any Tax
period which begins before and ends after the Effective Date,
the Effective Date shall be deemed to be the end of a Tax
period.
(e) For the purposes of this Article 9, in the case of any Tax
period which begins before and ends after the Closing Date,
the Closing Date shall be deemed to be the end of a Tax
period.
(f) The parties agree that for US federal income tax purposes, the
income of the Companies and the Subsidiaries which are
included in a US consolidated Tax Return shall be determined
based on a closing of the books method in accordance with
Treasury Regulation 1.1502-76.
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9.8 CERTAIN TAX MATTERS RELATING TO GERMANY
(a) In the event that any gain resulting from a write-up
(Zuschreibung) of assets (the "1999 ASSETS WRITE-UP") and the
adjusted valuation of liabilities and provisions (the "1999
ADJUSTMENT OF LIABILITIES AND PROVISIONS") due to the German
Steuerentlastungsgesetz 1999 / 2000 / 2002 has to be recorded
on the Tax balance sheet of any of the Companies or
Subsidiaries for the fiscal year 1999, the following shall
apply:
(i) Purchasers shall to the extent such a 1999 Assets
Write-Up has been made or must be made with respect
to the period and reserves existing prior to the
Effective Date ensure that in respect of such write
up, (A) Tax exempt reserves (steuerfreie Rucklagen)
pursuant to Section 52 (14) and (16) German Income
Tax Act (EStG) shall be included in the relevant Tax
balance sheet up to the maximum amount and maximum
period permitted by law and (B) to the extent
required for Tax purposes, a corresponding special
reserve with equity portion (Sonderposten mit
Rucklagenanteil - the "SPECIAL RESERVE") shall be
recorded in the annual individual statutory accounts
of the relevant Company or Subsidiary.
(ii) The Sellers shall indemnify and hold the Purchasers
(including, for the purpose of this Section 9.8, any
Company nominated by the relevant Purchaser pursuant
to Section 1.1 (d)) harmless from any Tax liability
of the Purchasers, or of any of the Companies or the
Subsidiaries arising from the dissolution or partial
dissolution (Auflosung) of any reserves relating to
the 1999 Assets Write-Up made in accordance with (i)
above. The amount to be indemnified shall be equal to
the net present value of the aggregated future Tax
calculated with a discount rate of 5.5% per annum and
by applying a tax rate of 40%. Any loss carry forward
of the Purchasers or any of the Companies or the
Subsidiaries shall not be included in the calculation
of any tax calculated under this provision. In
addition, Sellers shall indemnify Purchasers for the
respective interest payments under Section 233 a
German General Tax Code (Abgabenordnung).
(iii) Any Tax arising after the Effective Date in the
fiscal years starting after December 31, 1999 from
the dissolution of any reserves relating to the
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1999 Adjustment of Liabilities and Provisions shall
be borne by Purchasers. For the avoidance of doubt
75% of any such Taxes arising for the year 2000 shall
be borne by Purchasers.
(iv) The aggregated amount pursuant to (ii) shall be paid
within 14 days of notice from the relevant Purchaser
that the respective Tax for 1999 becomes due. The
Sellers shall pay to the relevant Purchaser the
interest pursuant to (ii) above within 14 days of
notice from the relevant Purchaser that interest
becomes due.
(b) In connection with the tax consolidation for trade tax
purposes (gewerbesteuerliche Organschaft) in Germany, E.ON AG
and the Sellers have imposed on certain German companies a
group charge (Konzernumlage) in respect of trade tax,
regardless of whether any trade tax will become payable by
E.ON AG for certain Pre-Closing Tax Periods. The relevant
Purchaser agrees to cause (to the extent permitted by
mandatory law) the respective German Group Companies not to
raise against E.ON AG and the Sellers or any other German
company of the E.ON Group any claims (on any legal basis
whatsoever) for any reimbursement of such group charge and the
Purchasers shall indemnify and hold harmless E.ON AG, the
Sellers and any other German company of the E.ON Group from
any such claim raised by any German Group Company. Vice versa
E.ON AG and the Sellers agree not to impose any additional
group charge for trade tax to the Purchasers and the German
Group Companies, and E.ON AG and the Sellers shall indemnify
and hold harmless the Purchasers and the German Group
Companies from any such additional group charges imposed by
E.ON AG or the Sellers and from any additional corporate
income tax and solidarity surcharge or corporate income tax
resulting from any such additional group charges.
9.9 LIMITATION PERIOD
The provisions of this Article 9 as it applies to a liability to Tax of
any Company or Subsidiary shall be time-barred upon expiration of the
full limitation period for the relevant Tax (taking as an assumption
that there has been no fraud or wilful non-disclosure), other than in
respect of claims notified in accordance with this Article prior to the
end of such relevant period.
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9.10 CO-OPERATION ON TAX MATTERS
(a) Each of the Purchasers and the Sellers shall fully cooperate
with each other and their representatives in connection with
any Tax matter including the preparation and filing of any Tax
return, provision of any state or federal information relating
to mitigation of any Tax or the conduct of any audit,
investigation, dispute or appeal with respect to Tax.
Cooperation between each of the Purchasers and the Sellers
shall include (but shall not be limited to) providing and
making available all books, records and information, and the
assistance of all officers and employees necessary or useful
in connection with any Tax inquiry, audit, examination,
investigation, dispute, litigation or any other tax matter.
(b) Each of the Companies and Subsidiaries which are included in
any consolidated return to be filed by E.ON AG, VEBA
Corporation or any other company of the VEBA Group (the "VEBA
CONSOLIDATED RETURNS") shall prepare at their own cost pro
forma tax returns, on a "stand alone" basis consistent with
the terms of any tax sharing agreement including the Tax
Sharing Agreement as defined in Section 9.12(a) to which any
Company or Subsidiary is a party and shall provide such
returns together with all supporting schedules, information
and documentation necessary to prepare any consolidated Tax
Return including the Companies or the Subsidiaries to be filed
after the Closing Date, within 30 days of the due date of such
return.
9.11 UK TAX MATTERS
(a) The relevant Purchaser hereby covenants with the Seller to pay
to the Seller, by way of adjustment to the Purchase Price, an
amount equivalent to:
(i) any Tax for which the Seller or any other person
falling within section 767 A (2) of the Income and
Corporation Taxes Act 1988 ("the Taxes Act") becomes
liable by virtue of the operation of section 767 A
and 767 B of the Taxes Act in circumstances where the
taxpayer company (as referred to in section 767 A
(1)) is any Company or any Subsidiary;
(ii) any Tax for which the Seller or any other person
falling within section 767 AA (4) of the Taxes Act
becomes liable by virtue of the operation of section
767 AA of the Taxes Act in circumstances where the
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transferred company (as referred to in section 767 AA
(1) (a)) is any Company or any Subsidiary; and
(iii) any other Tax for which the Seller or any other
member of the VEBA Group becomes liable as a result
of the failure by any Company or any Subsidiary,
after the Closing Date, being primarily liable, to
discharge it.
(b) The covenant contained in this Section 9.11 shall:
(i) extend to any reasonable costs incurred by the Seller
in connection with such Tax or a claim under this
Section 9.11 to the extent a recovery is made;
(ii) not apply to Tax to the extent that the relevant
Purchaser could claim payment in respect of it under
Section 9.5, except to the extent a payment has been
made pursuant to Section 9.5 and the tax to which it
relates was not paid by the Company or Subsidiary
concerned; and
(iii) not apply to tax which has been recovered under
section 767 B (2) of the Taxes Act or any other
relevant statutory provision (and the Seller shall
procure that no such recovery is sought to the extent
that payment is made hereunder).
9.12 CERTAIN TAX MATTERS RELATING TO THE U.S.
(a) The Tax sharing agreement dated 25 May 2000 (the "TAX SHARING
AGREEMENT") to which any Company or Subsidiary is a party
shall (i) remain in full force and effect until the Closing
Date, subject to the provisions of this Agreement from the
Effective Date to the Closing Date and (ii) be terminated as
to the Company or Subsidiary as of the Closing Date and no
Company or Subsidiary shall have any further obligations
thereunder.
(b) The relevant Sellers shall elect to end all Tax years for all
Companies and Subsidiaries formed under US state law as of the
Closing Date to the extent such an election is available to
those Sellers.
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(c) No Seller or affiliate of a Seller shall make any election
under U.S. Treasury Regulations section 1.1502 - 20 (g).
(d) Sellers represent and warrant to Purchasers as of the date
hereof and as of the Closing Date that,
(i) VEBA Corporation is (i) the sole owner of VEBA
Electronics LLC and (ii) a U.S. person within the
meaning of Section 7701 (a) (30) of the Internal
Revenue Code;
(ii) VEBA Electronics LLC, Memec LLC, Insight Electronics
LLC and Impact Semiconductor Technologies LLC are
classified as disregarded entities under Treasury
Regulations Section 301.7701-1 et seq, the purchases
of which will be treated as asset purchases for U.S.
federal income tax purposes; and
(iii) no consent under Section 341 (f) of the Internal
Revenue Code has been filed with respect to any
Company or Subsidiary.
(e) VEBA Corporation shall provide the relevant Purchasers with a
statement in substantially the form set forth in Treasury
Regulations Section 1.1445 - 2 (b) (2) (iii) that the Seller
for U.S. tax purposes is a U.S. person.
(f) For US state and federal tax purposes, the relevant Purchasers
are expressly assuming all liabilities identified in the
preparation of the relevant Tax Returns of the Companies and
Subsidiaries which are subject to the provisions of section
461(h) of the Internal Revenue Code and for the avoidance of
doubt, Sellers make no representation or warranty and shall
have no liability or obligation with regard to the foregoing.
9.13 SECTION 338(H)(10) ELECTION
(a) To the extent permissible under applicable Tax and
regulations, at the request of any Purchaser, the relevant
Sellers agree to cooperate with such Purchaser in making or
causing to be made (and in determining the cost of making or
causing to be made) a timely election under Section 338 (h)
(10) of the Internal Revenue Code, and any comparable
provision for state income tax purposes (the
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"SECTION 338 (H) (10) ELECTION") with respect to the purchase
by such Purchaser of the relevant Companies and Subsidiaries
and to file such Section 338 (h) (10) Election in the manner
required by applicable U.S. Treasury Regulations, provided
that Sellers' obligation to make a Section 338 (h) (10)
Election is subject to the following conditions:
(i) Prior to the election, the relevant Purchaser shall
have paid to Sellers a reasonable estimated amount of
the Incremental Tax Cost (as defined below); and
(ii) Sellers and the relevant Purchaser shall have
negotiated in good faith and agreed on a mutually
acceptable purchase price allocation based on the
fair market value of assets in accordance with
applicable Treasury Regulations.
(b) "INCREMENTAL TAX COST" shall mean any reasonable, out of
pocket post-Closing fees, expenses and costs incurred by the
Sellers in connection with the Section 338 (h) (10) Election
(or reasonable out of pocket post-Closing fees, expenses and
costs incurred by Sellers in connection with a request by the
relevant Purchaser for cooperation pursuant to Section 9.13
(a) even if no Section 338 (h) (10) Election is made) and the
excess, if any, of:
(i) the aggregate amount of Tax attributable, directly or
indirectly, to the Section 338 (h) (10) Election,
including but not limited to any such Tax imposed
under U.S. Treasury Regulation Section 1.338 (b) - 3T
(h) and any such Tax attributable to the receipt of
any payment by the Sellers under Section 9.13 over
(ii) the aggregate amount of Tax attributable, directly or
indirectly, to the hypothetical U.S. federal, state
and local income tax liability of the Sellers
attributable to the deemed taxable sale of the
relevant Companies for which a Section 338 (h) (10)
Election is made without a Section 338 (h) (10)
Election.
(c) The Tax liability referred to in Section 9.13 (b) shall be
determined as if the gain and payment of the Incremental Tax
Cost by the relevant Purchaser were the only items of income
or loss on the relevant Tax returns of the Sellers and
assuming
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the relevant Seller's U.S. federal, state and local income tax
rates are the highest rates in effect in the tax year which
includes the Closing Date. The Incremental Tax Cost shall be
paid by Purchaser to Sellers, net of any estimate paid
pursuant to Section 9.13 (a), (or, in the event the estimate
paid pursuant to Section 9.13 (a) exceeds the actual
Incremental Tax Cost, the excess shall be paid by Sellers to
Purchaser), within 5 days of the payment by Sellers of the
relevant fee, cost or expense or, in the case of a Tax, within
5 days of the filing by Sellers of a Tax Return reflecting the
Section 338 (h) (10) Election. The relevant Purchaser shall
have the right to review and Sellers shall make available to
the relevant Purchaser all relevant information relied on by
Sellers to compute the Incremental Tax Cost or an estimate
thereof to be paid pursuant to Section 9.13 and Sellers shall
give reasonable consideration to comments made by the relevant
Purchaser with respect to such computation.
9.14 ALLOCATION OF PURCHASE PRICE
The Parties agree that the allocation of the Final Share Purchase Price
provided for in Article 2.3 (but subject to any adjustment required
under this Agreement or by a Taxing Authority) shall apply for all Tax
purposes and no other values shall be used and the Parties further
agree that the allocation of the Final Share Purchase Price and the
liabilities of a Company subject to a Section 338 (h) (10) Election and
its Subsidiaries, if any, (plus other relevant items) will be allocated
to the assets of the Company and its Subsidiaries for all purposes
(including Tax and financial accounting purposes) in a manner
consistent with the fair market values as finally agreed between the
parties within the applicable US rules and regulations. The relevant
Purchaser, the Company and Seller will file all Tax Returns (including
amended returns and claims for refund) and information reports in a
manner consistent with such values.
ARTICLE 10
TERMINATION
10.1 RIGHT TO TERMINATE
This Agreement may be terminated at any time prior to the Closing:
(a) by mutual written agreement of the Sellers and Purchasers;
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(b) by the Purchasers in case of a breach of Sellers'
representations and warranties, covenants or other obligations
as set forth in Section 4.2 (a) (iii);
(c) by the Purchasers, if the Sellers have not complied with their
obligation to effect the Closing on the Closing Date;
(d) by the Sellers, if (i) in a Closing involving two or more
Purchasers, less than two Purchasers comply with their
obligations to effect the Closing on the Closing Date, or (ii)
in a Closing involving one Purchaser, that Purchaser does not
comply with its obligations to effect the Closing on the
Closing Date;
(e) by either the Sellers or the Purchasers if the Closing shall
not have been consummated (because of any other reason than
set out in paragraph (c) or (d) above or in Section 4.2 (a)
(iii)) on or before February 28, 2001; or
(f) by either the Sellers or the Purchasers if the consummation of
the transactions contemplated hereby would violate any
non-appealable final order, decree or judgement of any court
or governmental body having competent jurisdiction in any
jurisdiction, provided that such order, decree or judgement
has a Material Adverse Effect (as defined in Article 5).
The Party desiring to terminate this Agreement pursuant to clauses (b)
to (f) above shall give notice of such termination to the other
Parties. For the purpose of this Article 10, the Sellers are deemed to
be one Party and may therefore exercise their termination right only
jointly. To the extent that the matter or circumstance giving rise to a
right conferred on the Purchasers to terminate relates to one or two
Purchasers (rather than all of the Purchasers), such right shall be
exercisable by the Purchaser or Purchasers to which it relates rather
than by all the Purchasers.
10.2 CONSEQUENCES OF TERMINATION
(a) Without prejudice to any agreement between the Purchasers
alone, if (and to the extent that) this Agreement is
terminated as permitted by Section 10.1, such termination
shall be without liability of any Party (or any stockholder,
director, officer, employee, agent, consultant or
representative of such Party) to the other Parties to this
Agreement; provided that if such termination shall result from
the
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wilful (i) failure of any Party to fulfil a condition to the
performance of the obligations of any other Party (ii) failure
to perform a covenant of this Agreement or (iii) breach by any
Party hereto of any representation or warranty or agreement
contained herein, or termination results from any Party's
failure to close once the conditions to Closing set out in
Section 4.2 have been satisfied, such Party shall be fully
liable for any and all Losses incurred or suffered by Sellers
or the Purchasers (as the case may be) as a result of such
failure or breach. The provisions of this Section 10.2 and
Sections 11.6 (Public Disclosure), 11.7 (Taxes and Expenses)
and 11.10 (Governing Law; Competent Courts) shall survive any
termination hereof pursuant to Section 10.1.
(b) If this Agreement is terminated only in respect of certain
(but not all) Purchasers, the following shall apply:
(i) This Agreement shall remain in full force and effect
in respect of the obligations of the Sellers and of
those Purchasers in respect of which the transactions
contemplated hereby have been consummated or have not
been terminated.
(ii) The Final Share Purchase Price and the actual amount
of the Closing Date Inter-Group Debt to be paid by
the Purchasers referred to in (i) above shall be
determined in accordance with Articles 2 and 3, on
the basis of the provisions of Exhibit 2.3 (Part II).
(iii) The thresholds and maximum liability amounts relating
to the entire Group, as set forth in Sections 4.2 (a)
(iii) and 8.1 (b), (c), (d) and (e) shall remain
unchanged.
ARTICLE 11
MISCELLANEOUS
11.1 LIABILITY OF SELLERS AND PURCHASER
Each of the Sellers and Purchasers shall only be severally liable under
this Agreement and the liability of each shall be limited to matters
relating to the shares or companies directly or indirectly sold or
acquired by it hereunder. If any Purchaser designates any
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third party as transferee of any of the Sold Shares, that Purchaser
shall remain fully liable for all of its obligations hereunder with
respect to such shares.
11.2 ASSUMPTION OF LIABILITY BY E.ON AG
E.ON AG hereby assumes by way of co-assumption (Schuldbeitritt), and
shall be jointly and severally liable with the Sellers
(gesamtschuldnerische Mithaft) for, all obligations and liabilities
incurred or assumed by each of the Sellers under this Agreement,
including (without limitation) obligations and liabilities arising in
respect of the representations, covenants, warranties and indemnities
set out in this Agreement. Such joint and several liability of E.ON AG
shall not be affected by the winding up or dissolution of any of the
Sellers. E.ON AG represents and warrants to Avnet (and any company
nominated by it pursuant to Section 1.1(d)) by way of an independent
guarantee (selbstandiges Garantieversprechen) and covenants to Avnet
(and any company nominated by it pursuant to Section 1.1(d)) that the
winding up of EBV Verwaltungs GmbH is and will continue to be on a
solvent basis and the assets of that company exceed its liabilities.
11.3 NOTICES
All notices or other communications hereunder shall be deemed to have
been duly made if they are made in writing and are personally delivered
by registered mail or courier service or sent by telecopier (provided
that the telecopy is promptly confirmed in writing) to the person at
the address set forth below, or such other address as may be designated
by the respective Party to the other Parties in the same manner:
To Sellers and/or E.ON AG:
E.ON AG
Legal Department
Bennigsenplatz 1
D-40474 Dusseldorf
Fax: +49-211-45 79 610
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118
with a copy to:
Hengeler Mueller Weitzel Wirtz
Attn. Maximilian Schiessl / Wolfgang Meyer-Sparenberg
Trinkausstra(beta)e 7
D-40213 Dusseldorf
Fax: +49-211-83 04 170
To Purchasers:
In relation to the Memec Purchaser:
Cherrybright Limited
c/o Clifford Chance Secretaries Limited
200 Aldersgate Street
GB-London EC1A 4JJ
Fax: +44 207 6005555
with a copy to:
SVA Limited
Attn.: Ian Sellars
20 Southampton Street
GB-London WC2E 7OQ
Fax: +44 207 497 2174
Clifford Chance Limited Liability Partnership
Attn.: Matthew Layton / Sarah Jones
200 Aldersgate Street
GB-London EC1A 4 JJ
Fax: +44 207 600 5555
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119
In relation to Avnet Inc.:
Attn.: David Birk, Ray Sadowski
221 South 47th Street
USA-Phoenix, Arizona 85034
Fax: +1 480 643 7929
with a copy to:
Allen & Overy
Attn.: Ian Stanley
One New Change
GB-London, EC4M 9QQ
Fax: +44 207 330 9999
In relation to Arrow Electronics, Inc.:
Attn.: Robert E. Klatell
25 Hub Drive
USA-Melville, New York 11747
Fax: +1 516 391 1683
with a copy to:
Milbank, Tweed, Hadley & McCloy LLP
Attn.: Howard S. Kelberg
1 Chase Manhattan Plaza
USA-New York, New York 10005
Fax: +1 212 530 5219
11.4 SUCCESSORS AND ASSIGNS
The provisions of this Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective successors and
assigns; provided that no Party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without
the consent of each other Party hereto, except for (i) any assignment
by any Purchaser to any subsidiary or holding company or any subsidiary
of any such holding company, provided that the relevant Purchaser shall
remain jointly and severally liable hereunder (ii) any assignment of
rights by Memec Purchaser to its financing banks as security for any
financing incurred to finance the transaction contemplated by this
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Agreement, (iii) any assignment or merger which takes place by
operation of law, or (iv) for the avoidance of doubt, any transfer of
the Sold Shares by any Purchaser after the Closing.
11.5 THIRD PARTY BENEFICIARIES
Neither this Agreement nor any provision set forth in this Agreement is
intended to confer any rights or remedies upon any person other than
the Parties, any company nominated by a Purchaser under Section 1.1(d)
or any Group Company. However, neither this Agreement nor any provision
set forth in this Agreement is intended to confer any rights to enforce
any rights or remedies upon any person or entity other than the Parties
and, in respect of the right to demand transfer of any Sold Shares, any
company nominated by a Purchaser under Section 1.1(d). For the
avoidance of doubt, this provision shall not limit the rights of any
Purchaser to enforce any rights to recover or any remedies hereunder
(including rights in respect of any losses, liabilities, damages, costs
and expenses suffered by any Group Company as set forth in this
Agreement) on behalf of (or in the name of) any company nominated by
the relevant Purchaser in accordance with Section 1.1(d).
11.6 PUBLIC DISCLOSURE
No Party shall make any press release or similar public announcement
with respect to this Agreement without the prior written consent of the
other Parties, except as may be required to comply with the
requirements of any applicable laws or the rules and regulations of any
stock exchange upon which the securities of one of the Parties or their
respective parent companies are listed. Notwithstanding the foregoing
or any provision of the Confidentiality Agreement dated February 3,
2000, any of the Purchasers may make such disclosures as are necessary
in connection with the syndication of any financing incurred to finance
the transactions contemplated by this Agreement or the public offering
or private placement of any shares or debt in connection therewith.
11.7 TAXES AND EXPENSES
All transfer taxes (including, without limitation, all real estate
transfer taxes and US state tax if any), notarial fees, stamp or
registration duties and fees payable to any cartel or competition
authority payable in connection with the execution and implementation
of this Agreement shall be borne by Purchasers. Each of the Sellers and
Purchasers shall
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121
bear its own expenses, including the fees of its advisers, incurred in
connection with this Agreement. No such expenses shall be charged to
any Company or Subsidiary. The Purchasers and the Sellers agree to
cooperate and provide certificates or other information necessary to
alienate, reduce or otherwise exempt the Purchasers from such taxes so
payable in connection with the execution and implementation of this
Agreement, wherever reasonably practicable and at the expense of the
benefiting Purchasers.
11.8 ENTIRE AGREEMENT; CONFIDENTIALITY UNDERTAKING
This Agreement (including all Exhibits hereto and any documents to be
delivered at Closing) contains the entire agreement between the Parties
with respect to the subject matter hereof and supersedes all prior
agreements and understandings with respect thereto, except for the
Confidentiality Agreement dated February 3, 2000, which will remain in
full force and effect until the Closing Date or, if this Agreement is
(in its entirety or with respect to certain Divisions) terminated
pursuant to Article 10 hereof, beyond the date of such termination.
Upon request of any Purchaser, Sellers will assign, or cause E.ON AG to
assign, or, if such assignment is not possible, enforce, or cause E.ON
AG to enforce, for Purchasers' account and at their expense, any rights
of the Sellers or E.ON AG against any third party for a breach of any
confidentiality undertaking assumed by such third party in connection
with the sale of the Group.
11.9 AMENDMENTS AND WAIVERS
(a) Except as expressly otherwise provided herein, any provision
of this Agreement may be amended or waived if, but only if,
such amendment or waiver is by written instrument executed by
all Parties or their duly authorised representatives and
explicitly referring to this Agreement and notarised if
required by law.
(b) Sellers hereby waive any rights and remedies which they may
have against any Company or Subsidiary or any of their
directors, officers or employees or any HQ Employee who
becomes an employee of any Purchaser (or any affiliate of such
Purchaser) as contemplated by Section 7.23, in respect of any
misrepresentation, inaccuracy or omission in or from
information provided for the purpose of assisting the Sellers
to make the representations, warranties and indemnities
contained in this Agreement or preparation of the Exhibits and
Disclosure Letter pertaining thereto.
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11.10 GOVERNING LAW; COMPETENT COURTS
This Agreement shall be governed by, and construed in accordance with,
the laws of Germany. Any dispute arising out of or relating to this
Agreement, or the breach, termination or invalidity thereof, shall be
settled in the courts of Frankfurt am Main, Germany, which shall have
exclusive jurisdiction. The governing language of this Agreement shall
be English, unless otherwise required by mandatory law.
11.11 INTERPRETATION; EXHIBITS
(a) The headings of the Articles and Sections of this Agreement
are for convenience purposes only and do not affect the
interpretation of any of the provisions hereof.
(b) Any reference to $ shall mean United States Dollars. For the
purpose of any disclosure thresholds in the representations
and warranties (Article 5), such reference shall include the
equivalent in any foreign currency at the exchange rate
officially determined in Frankfurt am Main on the date hereof.
(c) For the purpose of this Agreement, a business day shall be any
day other than a Saturday, a Sunday or any other day on which
banks in Dusseldorf or London or New York are generally
closed.
(d) Words such as "hereof", "herein" or "hereunder" refer (unless
otherwise required by the context) to this Agreement as whole
and not to a specific provision of this Agreement. The term
"including" shall mean including, without limitation.
(e) The Exhibits of this Agreement are an integral part of this
Agreement and any reference to this Agreement includes this
Agreement and the Exhibits as a whole.
(f) References to a law or process or officer or person under one
jurisdiction shall include equivalents in other jurisdictions.
11.12 DEFINITIONS
In addition to the definitions of Arrow, Avnet, Memec Purchaser,
Viterra, Sellers, Purchaser, E.ON AG and the Parties in the
introductory clause of this Agreement, the
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123
capitalized terms used in this Agreement are defined in the following
Sections and clauses:
<TABLE>
<S> <C>
1998 and 1999 U.S. GAAP Group Financial Statements Section 5.4 (b)
1999 Adjustment of Liabilities and Provisions Section 9.8 (a)
1999 Assets Write-Up Section 9.8 (a)
1999 German GAAP Group Balance Sheet Section 5.4 (a)
Additional Amount Section 2.2
Applicable Laws Section 5.7 (b)
Arrangements Section 5.11 (a)
Atlas Europe Division Recitals, item 1
Atlas U.S. Division Recitals, item 1
Anti-Trust Laws Section 4.3 (a)
Arrow Plan Section 7.25 (a)
Avnet Group Section 4.2 (a) (i) (B)
Avnet Indemnified Party Section 7.11
Base Amount Section 2.2
Closing Section 4.1
Closing I Section 4.5
Closing II Section 4.5 (b)
Closing Certificates Section 3.1 (b)
Closing Date Section 4.1
Closing Date Inter-Group Debt Section 2.1
Code Section 5.11 (b)
Committed Facilities Section 4.2 (a) (iv)
Companies Recitals, item 9
Completing Purchasers Section 4.5 (a)
CPA Firm Section 3.4
Clean-Up Costs Section 7.14 (c)
Divisions Recitals, item 1
EBV Division Recitals, item 1
Effective Date Section 1.3
Effective Date Cash Section 2.1
Effective Date Certificates Section 3.1 (a)
Effective Date External Debt Section 2.1
Effective Date Financial Statements Section 3.1 (a)
Effective Date Inter-Group Debt Section 2.1
</TABLE>
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124
<TABLE>
<S> <C>
Effective Date Working Capital Section 2.1
Effective Date Working Capital Target Amount Section 2.1
Effective Date Taxation Liability Section 2.1
Environmental Laws Section 5.8 (a)
Environmental Pollution Section 7.14 (b)
E.ON AG Section 2.1
E.ON Group Recitals, item 9
ERISA Section 5.11(b)
Estimated Closing Date Inter-Group Debt Section 2.1
Expert Section 4.5
Final Share Purchase Price Section 2.2
Forex and Hedging Contracts Section 7.24 (a)
German GAAP Section 3.2
Group Recitals, item 9
Group Companies Recitals, item 9
HQ Employees Section 7.23 (c)
HSR Act Section 4.3 (a)
Income Tax Section 9.1
Incremental Tax Cost Section 9.13 (b)
Indemnifiable Tax Section 9.1
Indemnified Party Section 8.4 (a)
Indemnifying Party Section 8.4 (a)
Intellectual Property Rights Section 5.6 (a)
Inter-Group Debt Section 2.1
Inter-Group Debt Closing Condition Section 4.2 (a) (v)
Internal Revenue Code Section 5.11 (b) (i)
Losses Section 8.1 (a)
March 2000 Divisional Accounts Section 5.4 (d)
March 2000 Group Accounts Section 5.4 (c)
Material Adverse Effect Section 5 (Introduction)
Material Agreements Section 5.12 (a)
Memec Division Recitals, item 1
Memec Employees Section 7.25 (b)
Memec Plan Section 7.25 (b)
Memec Plc Recitals, item 1
Non-Completing Purchasers Section 4.5 (a)
Non-Compliance Section 7.14 (d)
</TABLE>
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125
<TABLE>
<S> <C>
Non-Compliance Costs Section 7.14 (d)
Overprovision Section 9.5 (e) (i)
Permits Section 5.7 (a)
Post Effective Date Inter-Group Interest Portion Section 2.1
Post Effective Date External Interest Portion Section 2.1
Pre-Closing Distributions Section 2.1
Pre-Closing Non-Recurring Charges Section 2.1
Pre-Closing Tax Period Section 9.1
Preliminary Share Purchase Price Section 2.4
Properties Section 5.5 (f)
Raab Karcher Immobilien Recitals, item 2
RKE Division Recitals, item 1
Section 338 (h) (10) Election Section 9.13 (a)
Sold Shares Section 1.1 (a)
Subsidiaries Recitals, item 9
Tax Section 9.1
Taxation Section 9.1
Tax Asset Section 9.1
Taxing Authority Section 9.1
Tax Loss Section 9.5 (a) (viii)
Tax Return Section 9.1
Transitional and Separation Arrangements Section 4.5
Unfunded Pension Liability Section 2.1
US Companies Section 5.11 (b)
US Company Plans Section 5.11 (b)
VEBA Comfort Letters Section 7.8
VEBA Consolidated Returns Section 9.10 (b)
VEBA Employees Section 7.25 (a)
VEBA Group Recitals, item 9
VEBA Plan Section 7.25 (a)
Wyle/Avnet Litigation Section 7.12
Wyle Components Division Recitals, item 1
Wyle Electronics Pension Plan Section 5.11 (b)
Wyle Systems Division Recitals, item 1
</TABLE>
Terms defined in the singular shall have a comparable meaning when used
in the plural, and vice versa.
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11.13 SEVERABILITY
Should any provision of this Agreement, or any provision incorporated
in the future, be or become invalid or unenforceable, the validity or
enforceability of the other provisions of this Agreement shall not be
affected thereby. The invalid or unenforceable provision shall be
deemed to be substituted by a suitable and equitable provision which,
to the extent legally permissible, comes as close as possible to the
intent and purpose of the invalid or unenforceable provision. The same
shall apply if any provision of this Agreement is invalid because of
the stipulated scope of a time period or if this Agreement contains any
omissions.
