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
Xxxx Xxxxxxx 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
Table of Contents Page
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
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
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
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
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) Xxxx 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., Xxxx Xxxxxxx
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:
Electronic systems business:
(1) RKE Systems (Xxxx 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 Xxxx Xxxxxxx 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.) Crteil 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 Xxxxx Xxxxxxxx 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; 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 Xxxx Xxxxxxx
Grundstucke GmbH & Co. Elektronik Immobilien KG ("Xxxx 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 Xxxx Xxxxxxx 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
(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 Nette-
tal 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 Xxxxx Xxxx;
(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;
(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 Xxx Xxxxxxxxx), 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. Xxxx 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;
(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 Xxxx Xxxxxxx 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
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 Xxxx Karcher
Elektronik GmbH as well as the limited partnership interest in Xxxx Xxxxxxx
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 Xxxx 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;
(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 Xxx Xxxxxxxxx, 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) Xxxx Karcher Electronic Systems Plc hereby sells to Avnet, and
Avnet hereby purchases from Xxxx Xxxxxxx 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".
(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 Xxxxx. 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.
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.
"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 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 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.
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").
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 Xxxx Xxxxxxx 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"),
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. 0000000 USD with Deutsche Bank AG, Dusseldorf, bank
identification code (BLZ) 300 700 10, and such 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 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, 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.
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 (Institutder
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 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 Xxxxxxx Xxxxxxx Xxxxx 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:
(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.
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 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
(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 Xxxx-Xxxxx-Xxxxxx 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.
(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 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 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:
(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.
(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 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 (selbstndiges 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 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. 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 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.
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 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,
xxxxxxx, carrier or the like arising by operation of law or in the 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.
(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 excluding the
names VEBA and Xxxx 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.
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;
(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.
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 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 (Betriebsnderung) 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 Xxxx Xxxxxxx Elektronik GmbH, Xxxx 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 Xxxx Xxxxxxx Electronics Systems Plc, the
following shall apply:
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 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;
(D) there have been no "reportable events" (as defined in S
4043 of ERISA) "accumulated funding deficiency" (as defined in S 302 ERISA
and section 412 of the Code), whether or not waived or "prohibited
transactions" (as defined in S 406 of ERISA and S 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 S
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 S 3(37) of
ERISA), incurred any "withdrawal liability" (as defined in S 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 S 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 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"):
(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 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 (Dauerschuldverhltnisse) 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 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 Xxxxxxx Xxxxx 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,
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;
(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;
(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 X.X. Xxxxxxx 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;
(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
(Betriebsnderung) 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 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 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 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.
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 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;
(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
(Betriebsnderung) 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;
(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 X.X. Xxxxxxx 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;
(u) agree to any arrangements under which (i) Sig. X. Xxxxxxxx
Xxxxxxx 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. X.
Xxxxxxxx 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 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.
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 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 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 Xxxx Xxxxxxx).
(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.
(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 Xxxx 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,
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 Xxxxx) 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:
(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 X. Xxxxxxxxxxx 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 Xx.
Xxxx, Mr. Borsboom, Xx. Xxxxxx and Xx Xxxxxxxxxxx, 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 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 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. Xxxx Xxxxx 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.
7.13 Poing Warehouse
The Sellers and Avnet shall procure on the Closing Date that the
existing lease agreements between Viterra Aktiengesellschaft (previously Xxxx
Xxxxxxx XX) 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:
- 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 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 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' 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.
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 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) Xxxxx
Xxxxxxxxxxx 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).
(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 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.
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) (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 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 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.
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 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 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 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 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.
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;
(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 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;
(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:
(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
(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 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 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 Xxx 0000 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
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 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
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.
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 Racklagen) 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 Racklagenanteil - 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 (Auflsung) 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 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.
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
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.
(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 "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 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;
(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 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 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 (selbstndiges 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 XX
Xxxxx Xxxxxxxxxx
Xxxxxxxxxxxxxx 0
X-00000 Xxxxxxxxxx
Fax: x00-000-00 79 610
with a copy to:
Hengeler Xxxxxxx Xxxxxxx Xxxxx
Attn. Xxxxxxxxxx Xxxxxxxx / Xxxxxxxx Xxxxx-Xxxxxxxxxx
Xxxxxxxxxxxxxx 0
X-00000 Xxxxxxxxxx
Fax: x00-000-00 04 170
To Purchasers:
In relation to the Memec Purchaser:
Cherrybright Limited
c/o Clifford Chance Secretaries Limited
000 Xxxxxxxxxx Xxxxxx
XX-Xxxxxx XX0X 0XX
Fax: x00 000 0000000
with a copy to:
SVA Limited
Attn.: Xxx Xxxxxxx
00 Xxxxxxxxxxx Xxxxxx
XX-Xxxxxx XX0X 0XX
Fax: x00 000 000 0000
Xxxxxxxx Chance Limited Liability Partnership
Attn.: Xxxxxxx Xxxxxx / Xxxxx Xxxxx
000 Xxxxxxxxxx Xxxxxx
XX-Xxxxxx XX0X 4 JJ
Fax: x00 000 000 0000
In relation to Avnet Inc.:
Attn.: Xxxxx Xxxx, Xxx Xxxxxxxx
000 Xxxxx 00xx Xxxxxx
XXX-Xxxxxxx, Xxxxxxx 00000
Fax: x0 000 000 0000
with a copy to:
Xxxxx & Overy
Attn.: Xxx Xxxxxxx
Xxx Xxx Xxxxxx
XX-Xxxxxx, XX0X 0XX
Fax: x00 000 000 0000
In relation to Arrow Electronics, Inc.:
Attn.: Xxxxxx X. Xxxxxxx
00 Xxx Xxxxx
XXX-Xxxxxxxx, Xxx Xxxx 00000
Fax: x0 000 000 0000
with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx LLP
Attn.: Xxxxxx X. Xxxxxxx
0 Xxxxx Xxxxxxxxx Xxxxx
XXX-Xxx Xxxx, Xxx Xxxx 00000
Fax: x0 000 000 0000
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 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 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.
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 capitalized terms used in this Agreement are
defined in the following Sections and clauses:
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
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)
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)
Xxxx Xxxxxxx 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
Terms defined in the singular shall have a comparable meaning when used
in the plural, and vice versa.
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.
