[Cazenove & Co Letterhead]
6th June, 2000
Dear Sirs,
Sale of ordinary shares of 5p each in Premier Farnell plc (the "Company")
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Introduction
This letter confirms the basis under which Cazenove & Co ("Cazenove") has agreed
to purchase, and the vendors specified in Appendix 1 (the "Vendors") have agreed
to sell, 17,850,000 ordinary shares of the Company (the "Shares") by way of a
"bought deal" (the "Transaction"). This letter also confirms that the Vendors
are the beneficial owners of, or are able to procure the sale of, the Shares and
that the Vendors have delegated authority to execute the sale on their behalf.
The Transaction
Subject as provided below, on the date falling five business days after the
execution of this agreement, (the "Settlement Day"), Xxxxxxxx will pay the
purchase price for the Shares at a price of US$ 6.6616 per Share, being US$
119,154,997.50 in the aggregate (the "Purchase Price"). The Vendors will deliver
the Shares as provided below under Settlement.
The Shares will be sold together with all rights now and hereafter attaching
thereto, including the right to receive and retain all dividends and other
distributions made or paid after 5th June, 2000, save that the Vendors shall be
entitled to retain the final dividend of 5 xxxxx per Share to be paid on 29th
June, 2000.
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Lock-up
The Vendors, by signing this letter, commit not to sell any further ordinary
shares of the Company during the period ending six months after consummation of
the Transaction or upon publication of the Company's interim results for the
period to 31st July, 2000, whichever is the later; provided that,
notwithstanding the foregoing, the Vendors shall be free to sell such shares in
any amount: (i) if the Company or any successor entity is the purchaser or
acquiror of such shares; or (ii) if such shares are sold pursuant to a tender
offer, exchange offer, or other bid by which a third party seeks to obtain
control of the Company.
Remuneration
Xxxxxxxx's remuneration for the sale of the Shares will be the difference
between the Purchase Price and the placing price of the Shares. This is expected
to be approximately 1 per cent. of the value of the Shares or approximately 4
xxxxx per Share.
Settlement
Xxxxxxxx acknowledges that the Vendors have given instructions to the Bank of
New York to have the Shares delivered to a nominee account in the name of
Cazenove Nominees Limited. These instructions shall be irrevocable. Pending
their release from such account, the Shares shall be held on trust by Cazenove
Nominees Limited as trustee for the Vendors. The Shares shall not be released
from the nominee account until payment by Xxxxxxxx of the sterling equivalent of
the Purchase Price to a client protected money account in CREST, whereupon the
Shares shall automatically be transferred through CREST from the nominee account
to a Cazenove clearing account.
The Shares delivered to the nominee account shall not contain any legend or
other notation restricting their transferability.
Subject to satisfactory delivery of the Shares to the Cazenove nominee account
by the Vendors, Xxxxxxxx will pay the Purchase Price in United States dollars
less an amount equal to U.S.$0.0275 for each of the American Depository Shares
surrendered to The Bank of New York in connection with the withdrawal of the
underlying ordinary shares of the Company represented thereby and sold to
Cazenove (which Xxxxxxxx shall pay to The Bank of New York in satisfaction of
the fees payable by the Vendors for such withdrawal) on the Settlement Day by
wire transfer of immediately available funds to the accounts specified in
Appendix 2, in amounts appropriate to reflect the number of shares sold by each
Vendor, as set forth in Appendix 1. The exchange rate to be used in calculating
the amount of U.S. dollars to be delivered on the Settlement Day in satisfaction
of the Purchase Price shall be the exchange rate at which Cazenove purchases
U.S. dollars on the date of this Agreement for delivery to the Vendors on the
Settlement Date.
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Confirmation and Warranties of the Vendors
The Vendors severally, and not jointly, confirm and warrant, solely for the
benefit of Cazenove and not for the benefit of any subsequent purchasers of the
Shares, to the following effect:
(a) each of the Vendors has full legal title to its Shares and is free to sell
or procure the sale of its Shares with full title guarantee together with
all rights attaching thereto (including any dividends or other
distributions hereafter declared, made or paid in respect thereof);
(b) upon delivery, the Shares sold by each Vendor shall be free from any
contingent liabilities, claims, equities, liens, charges, encumbrances,
options and other third party rights created by the Vendor;
(c) to the best of the knowledge and belief of each Vendor, its Shares are not
the subject of any pending litigation that could prevent or materially
delay consummation of the Transaction;
(d) any approvals and authorisations required by each Vendor in connection with
the sale of the Shares have been obtained and are in full force and effect;
(e) the execution of this agreement on behalf of the Vendors has been duly
authorised by them and, upon execution, this agreement will constitute a
legal, valid and binding obligation of each of them, enforceable in
accordance with its terms;
(f) the Vendors have not granted to any person any pre-emptive or other similar
rights with respect to the Shares;
(g) to the best of the knowledge and belief of Xxxxxx X. Xxxxxx, who is a
director of the Company, all matters in respect of which the Company has a
duty to announce to the public under the listing rules made by the London
Stock Exchange have been so announced and the Vendors are not in possession
of any material price sensitive information in relation to the Company;
(h) none of the Vendors, their affiliates (as defined in Rule 405 under the
Securities Act of 1933, as amended (the "Securities Act")) or any person
acting on their behalf has engaged in any directed selling efforts (as that
term is defined in Regulation S under the Securities Act ("Regulation S")
in connection with the Transaction or any general solicitation or
advertising as such terms are used in Regulation D under the Securities
Act;
(i) in relation to all such confirmations and warranties, those confirmations
and warranties will be true and accurate as of the Settlement Day.
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Confirmation and Warranties of Cazenove
Xxxxxxxx confirms and warrants, solely for the benefit of each Vendor, to the
following effect:-
(a) Cazenove (1) is not acquiring the Shares with a view to any distribution
thereof that would violate the Securities Act or the securities laws of any
state of the United States or any other applicable jurisdiction; (2)
Cazenove has complied and will comply with all applicable laws, regulations
and rules of every country in which it has solicited offers for, offered or
sold, or will solicit offers for, offer or sell, the Shares (including,
without limitation, in the United Kingdom, the Financial Services Act of
1986, as amended (the "FSA"), and the Public Offers of Securities
Regulations 1995; (3) Xxxxxxxx has solicited offers for, offered or sold
and will solicit offers for, offer and sell the Shares only under
circumstances that have resulted or will result in compliance by it with
any applicable laws, and it has taken and will take at its own cost all
necessary steps to permit solicitations of offers, offers, sales or
purchases and resales by it of the Shares in a legally permissible manner;
and (4) any offers and sales of the Shares have been and will be made in
such a way that the Vendors are not obliged to file a prospectus or other
document with any authority or stock exchange of any jurisdiction;
(b) Cazenove understands that the Shares have not been and will not be
registered under the Securities Act and may not be offered or sold within
the United States of America or to, or for the account or benefit of, U.S.
persons (as that term is defined in Regulations) except pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act. Cazenove represents to and agrees with
the Vendors that (1) it and its affiliates (as defined in the Securities
Act) and all persons acting on its or their behalf have solicited offers
for, offered or sold, and will solicit offers for, offer or sell, the
Shares only in accordance with Rule 903 or 904 of Regulation S or in
accordance with Section 4(2) of the Securities Act to persons who are, in
the reasonable belief of Cazenove, Qualified Institutional Buyers; (2) in
connection with each sale of the Shares in the United States of America,
Cazenove will take all reasonable steps to cause the purchaser of such
Shares to sign a representation letter in the form of Exhibit 1 and deliver
a copy thereof to the Vendors; and (3) neither Cazenove or its affiliates
(as defined in the Securities Act) nor any person acting on its or their
behalf (x) has solicited offers for, offered or sold or will solicit offers
for, offer or sell, directly or indirectly, any Shares in the United States
of America by means of any form of "general solicitation" or "general
advertising" within the meaning of Regulation D under the Securities Act or
in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act or (y) has engaged or will engage in any
"directed selling efforts" within the meaning of Rule 902 of Regulation S
with respect to the Shares;
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(c) Cazenove has not offered or sold and will not offer or sell any Shares to
persons in the United Kingdom except in circumstances which will not result
in an offer to the public in the United Kingdom;
(d) Cazenove has not distributed or provided (and will not distribute or
provide) to purchasers or prospective purchasers of the Shares any offering
document, presentation or other information in relation to the Shares or
the Company and Cazenove has not made and will not make or purport to make
any representation, warranty, undertaking or agreement to or with any such
person on behalf of or in respect of the Vendors in relation to the Shares;
(e) Cazenove will not offer to sell any shares to persons other than
institutions which have been approved by the Company or would beneficially
own (together with any party with whom such person has any agreement
relating to the Shares falling within Section 204 of the Companies Act of
1985) less than 5% of the total voting power of the Company (after giving
effect to the Shares purchased pursuant to this agreement).
(f) in relation to all such confirmations and warranties, those confirmations
and warranties will be true and accurate as of the Settlement Day.
Waiver of Claim and Indemnity
(A) No claim shall be made against Cazenove, any subsidiary of Cazenove, any of
their partners, employees or advisers, or any body corporate, person or
partnership relating to or in connection with the business carried on by
Cazenove which is owned or controlled by, in control of or under common
control with any such partner or employee (each a "Cazenove Indemnified
Person") to recover any loss, damage, liability, cost, charge or expense
which the Vendors may suffer or incur by reason of, or arising out of the
carrying out by a Cazenove Indemnified Person of the Transaction, except to
the extent such loss, damage, liability, cost, charge or expense arises
from the negligence, bad faith or wilful default of any Cazenove
Indemnified Person, or from the breach by any Cazenove Indemnified Person
of this agreement or of its duties or obligations under the FSA or the
regulatory system (as defined in the Rules of the Securities and Futures
Authority Limited).
(B) Save as provided in paragraph (D) below, the Vendors hereby undertake (pro
rata in proportion to the number of Shares sold by such Vendor) to Cazenove
(for themselves and on behalf of each and every other Cazenove Indemnified
Person) to indemnify each Cazenove Indemnified Person against all or any
claims (whether or not successful, or with the Vendors' prior agreement,
compromised or settled), actions, liabilities, demands, proceedings or
judgements (each a "Claim") made, brought or established against any such
Cazenove Indemnified Person in any jurisdiction by any purchaser of Shares
pursuant to the Transaction or by any governmental agency, stock exchange
or regulatory body or any other person whatsoever and against all losses,
costs, charges or expenses (including reasonable legal fees) and taxes
(including, to
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the extent payable by the Vendors under this agreement, stamp duty, stamp
duty reserve tax and value added tax) (each an "Expense") which such
Cazenove Indemnified Person may suffer or incur (including, but not limited
to, all such Expenses suffered or incurred in disputing any Claim or in
establishing its right to be indemnified pursuant to this paragraph (B) or
in seeking advice as to any Claim, or in any way related to or in
connection with this indemnity) and which in any such case arises, directly
or indirectly, out of, or is attributable to or is in connection with, the
carrying out by Cazenove of their obligations to such Vendors under or in
connection with this agreement or the Transaction; provided, however, that
no Cazenove Indemnified Person shall be entitled to any indemnity under
this paragraph (B) to the extent that the Claim or Expense concerned
results from the negligence, bad faith or wilful default of any Cazenove
Indemnified Person or breach by any Cazenove Indemnified Person of any
confirmation and warranty, agreement or obligation under this agreement, or
of its duties or obligations under the FSA or the regulatory system.
(C) Save as provided in paragraph (D) below, Xxxxxxxx hereby undertakes to the
Vendors, their partners, fiduciaries, agents, advisors and employees, and
any body corporate, person or partnership which is owned or controlled by,
in control of or under common control with any of the foregoing (each a
"Vendor Indemnified Person") to indemnify each Vendor Indemnified Person
against all or any Claims (whether or not successful, or with Xxxxxxxx's
prior agreement, compromised or settled), made, brought or established
against any such Vendor Indemnified Person in any jurisdiction by any
purchaser of Shares pursuant to the Transaction or by any governmental
agency, stock exchange or regulatory body or any other person whatsoever
and against all Expenses which such Vendor Indemnified Person may suffer or
incur (including, but not limited to, all such Expenses suffered or
incurred in disputing any Claim, in establishing its right to be
indemnified pursuant to this paragraph (C) or in seeking advice as to any
Claim, or in any way related to or in connection with this indemnity) and
which in any such case arises, directly or indirectly, out of, or is
attributable to or is in connection with, the negligence, bad faith or
wilful default of Cazenove or the breach by Cazenove of any confirmation
and warranty, agreement or obligation under this agreement, or of its
duties or obligations under the FSA or the regulatory system; provided,
however, that no Vendor Indemnified Person shall be entitled to any
indemnity under this paragraph (C) to the extent that the Claim or Expense
concerned results from the negligence, bad faith or wilful default of any
Vendor Indemnified Person or breach by any Vendor Indemnified Person of any
confirmation and warranty, agreement or obligation under this agreement.
(D) The indemnities in paragraphs (B) and (C) above shall not extend to
Expenses suffered or incurred by a Cazenove Indemnified Person or a Vendor
Indemnified Person (in the disjunctive, an "Indemnified Person") in
connection with the Transaction, unless such Expenses are occasioned by,
result from, are attributable to or would not have arisen but for (in each
case whether directly or indirectly) any material breach by the party from
whom it seeks indemnification (the "Indemnifying
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Party") of any of its obligations under this agreement including any
material breach of any of the representations, warranties and undertakings
contained in the sections headed Confirmation and Warranties.
(E) All sums payable to any Indemnified Person pursuant to the indemnities
specified in paragraph (B) and (C) above shall be paid free and clear of
all deductions or withholdings unless the deduction or withholdings are
required by law, in which case the payer shall pay such amount as shall be
required to ensure the net amount received by the relevant Indemnified
Person equals the full amount which would have been received by it had such
deduction or withholding not been made.
(F) If the United Kingdom Inland Revenue or any other taxing authority in any
jurisdiction brings into charge to taxation any sum payable under the
indemnities specified in paragraph (B) and (C), then (after talking account
of any tax deduction or benefit associated with the Expense in respect of
which the sum is payable) the sum so payable shall be grossed up by such
amount as will ensure that after deduction of the taxation so chargeable
there shall remain a sum equal to the amount that would otherwise be
payable under such indemnity.
(G) If any Expense arises from claims of a third party that are subject to the
indemnification provided for in paragraph (B) or (C) above (a "Third Party
Claim"), the Indemnified Party shall give the Indemnifying Party notice of
such Third Party Claim within 30 days of the receipt by the Indemnified
Party of notice of such Third Party Claim; provided, however, that the
failure to provide such notice shall not release the Indemnifying Party
from any of its obligations hereunder or otherwise except to the extent the
Indemnifying Party is materially prejudiced by such failure. The
Indemnifying Party shall be entitled to assume and control the defense of
such Third Party Claim at its expense and through counsel of its choice if
it gives notice of its intention to do so to the Indemnified Party within
five days of the receipt of such notice from the Indemnified Party.
Notwithstanding the foregoing, the Indemnified Party shall be entitled to
retain, at its own expense, its own counsel. In the event the Indemnifying
Party exercises the right to undertake any such defense against any such
Third Party Claim as provided above, the Indemnified Party shall cooperate
with the Indemnifying Party in such defense and make available to the
Indemnifying Party, at the Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in the Indemnified Party's
possession or under the Indemnified Party's control relating thereto as is
reasonably required by the Indemnifying Party. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense
against any such Third Party Claim, the Indemnifying Party shall cooperate
with the Indemnified party in such defense and make available to the
Indemnified Party, at the Indemnifying Party's expense, all such witnesses,
records, materials and information in the Indemnifying Party's possession
or under
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the Indemnifying Party's control relating thereto as is reasonably required
by the Indemnified Party. No such Third Party Claim may be settled by the
Indemnifying Party without the written consent of the Indemnified Party,
which shall not be unreasonably withheld or delayed.
Third party rights
Each Indemnified Person may enforce the terms of any indemnity hereunder
directly against the Indemnifying Party. Except as provided by the foregoing, a
person who is not a party to this agreement has no right under the Contracts
(Rights of Third Parties) Act 1999 to enforce any term of this agreement;
provided, however, that nothing herein shall affect any right or remedy of any
third party which exists apart from such Act.
Governing law and jurisdiction
This agreement and the documents to be entered into pursuant to it shall be
governed by and construed in accordance with the laws of England. All the
parties hereto irrevocably agree that the courts of England are to have
non-exclusive jurisdiction to settle any disputes which may arise out of or in
connection with this agreement.
Please indicate your agreement to the terms of this letter by signing and
returning the enclosed duplicate copy.
Yours faithfully,
/s/ Cazenove & Co
Cazenove & Co
/s/ Xxxxxx X. Xxxxxx
....................................
Accepted and agreed
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