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STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 3, 1997 (this
"Agreement"), among XXXX XXXXXXX XX, a company organized under the laws of
Germany ("Parent"), EBV ELECTRONICS INC., a Delaware corporation and an indirect
wholly owned subsidiary of Parent ("Purchaser"), and WYLE ELECTRONICS, a
California corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Parent, Purchaser and the Company propose to enter
into, simultaneously herewith, an Agreement and Plan of Merger (the "Merger
Agreement"; capitalized terms used but not defined in this Agreement shall have
the meanings ascribed to them in the Merger Agreement), which provides, upon the
terms and subject to the conditions thereof, for (i) the commencement by
Purchaser of a tender offer (the "Offer") to purchase all of the issued and
outstanding shares of the common stock, no par value, of the Company ("Common
Stock"), at a purchase price of $50.00 per share, net to the seller in cash, and
(ii) the subsequent merger of Purchaser with and into the Company (the
"Merger"), whereby each share of Common Stock, other than shares owned directly
or indirectly by Parent or by the Company and other than Dissenting Shares, will
be converted into the right to receive $50.00 (or such greater amount to be paid
per share in the Offer); and
WHEREAS, as a condition to the willingness of Parent and
Purchaser to enter into the Merger Agreement, Parent and Purchaser have required
that the Company agree, and in order to induce Parent and Purchaser to enter
into the Merger Agreement, the Company has agreed, to grant Purchaser an option
to purchase shares of Common Stock, upon the terms and subject to the conditions
of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth in
this Agreement and in the Merger Agreement, the parties hereto agree as follows:
ARTICLE I
THE STOCK OPTION
SECTION 1.01. Grant of Top-Up Stock Option. The Company hereby
grants to Purchaser an irrevocable option (the "Top-Up Stock Option") to
purchase that number of shares of Common Stock (the "Top-Up Option Shares")
equal to the number of shares of Common Stock that, when added to the number of
shares of Common Stock owned by
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Purchaser and its affiliates immediately following consummation of the Offer,
shall constitute 90% of the shares of Common Stock then outstanding on a fully
diluted basis (assuming the issuance of the Top-Up Option Shares), at a cash
purchase price per Top-Up Option Share equal to $50.00 (the "Purchase Price"),
subject to the terms and conditions set forth herein; provided, however, that
the Top-Up Stock Option shall not be exercisable if the number of shares of
Common Stock subject thereto exceeds the number of authorized shares of Common
Stock available for issuance.
SECTION 1.02. Exercise of Top-Up Stock Option. (a) Subject to
the conditions set forth in Section 1.05 and to any additional requirements of
Law, the Top-Up Stock Option may be exercised by Purchaser, in whole but not in
part, at any time or from time to time after the occurrence of a Top-Up Exercise
Event (as defined below) and prior to the Top-Up Termination Date (as defined
below).
(b) A "Top-Up Exercise Event" shall occur for purposes of this
Agreement upon Purchaser's acceptance for payment pursuant to the Offer of
shares of Common Stock constituting more than 50% but less than 90% of the
shares of Common Stock then outstanding on a fully diluted basis.
(c) The "Top-Up Termination Date" shall occur for purposes of
this Agreement upon the first to occur of any of the following:
(i) the Effective Time;
(ii) the date which is 10 business days after the occurrence
of a Top-Up Exercise Event (unless prior thereto the Top-Up Stock
Option shall have been exercised); or
(iii) the termination of the Merger Agreement.
(d) In the event Purchaser wishes to exercise the Top-Up Stock
Option, Purchaser shall send a written notice (a "Top-Up Exercise Notice") to
the Company specifying the denominations of the certificate or certificates
evidencing the Top-Up Option Shares which Purchaser wishes to receive, a date
(subject to the earlier satisfaction or waiver of the conditions set forth in
Section 1.03) (the "Closing Date"), which shall be a business day which is not
later than 10 business days and not earlier than the fifth business day after
delivery of such notice, and place for the closing of such purchase (the
"Closing"). The Company shall, within two business days after receipt of a
Top-Up Exercise Notice, deliver written notice to Purchaser specifying the
number of Top-Up Option Shares and the aggregate Purchase Price therefor.
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SECTION 1.03. Conditions to Closing. The obligation of the
Company to deliver Top-Up Option Shares upon any exercise of the Top-Up Stock
Option is subject to the following conditions:
(a) Such delivery would not in any material respect violate,
or otherwise cause the material violation of, Section 312.03(c) of the
NYSE Listed Company Manual ("Section 312") or any material Law,
including, without limitation, the HSR Act, applicable thereto;
(b) There shall be no preliminary or permanent injunction or
other final, non-appealable judgment by a court of competent
jurisdiction preventing or prohibiting such exercise of the Top-Up
Stock Option or the delivery of the Top-Up Option Shares in respect of
such exercise; and
(c) The Company shall have available from its authorized
shares of Common Stock such number of shares as is sufficient to issue
the Top-Up Option Shares; provided, however, that the Company shall
have fully complied with its obligations under Section 3.01(b).
SECTION 1.04. Closing. (a) At the Closing, (i) the Company
shall deliver to Purchaser a certificate or certificates evidencing the
applicable number of Top-Up Option Shares (in the denominations specified
therein), and (ii) Purchaser shall purchase each Top-Up Option Share from the
Company at the Purchase Price. Payment by Purchaser of the Purchase Price for
the Top-Up Option Shares shall be made in cash.
(b) All cash payments made pursuant to this Agreement shall be
made by wire transfer of immediately available funds. Certificates evidencing
Top-Up Option Shares delivered hereunder may, at the Company's election, contain
the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE
WITH THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933 OR AN EXEMPTION THEREFROM.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Purchaser as follows:
SECTION 2.01. Organization; Authority Relative to this
Agreement. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California. The Company has all
requisite corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the part
of the Company. This Agreement has been duly executed and delivered by the
Company.
SECTION 2.02. Authority to Issue Shares. The Company has taken
all necessary corporate action to authorize and reserve and permit it to issue,
and at all times from the date hereof through the Top-Up Termination Date shall
have reserved, all the Top-Up Option Shares issuable pursuant to this Agreement,
and the Company shall take all necessary corporate action to authorize and
reserve and permit it to issue all additional shares of the Company Common Stock
or other securities which may be issued pursuant to Section 1.03, all of which,
upon their issuance and delivery in accordance with the terms of this Agreement,
shall be duly authorized, validly issued, fully paid and nonassessable, shall be
delivered free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on Purchaser's voting
rights, charges, adverse rights and other encumbrances of any nature whatsoever
(other than this Agreement) and shall not be subject to any preemptive rights.
SECTION 2.03. No Conflict; Required Filings and Consents. (a)
Except as set forth in Section 4.05 of the Disclosure Schedule, the execution
and delivery of this Agreement by the Company do not, and the performance by the
Company of its obligations hereunder and the consummation of the transactions
contemplated hereby will not, (i) conflict with or violate the Articles of
Incorporation or Bylaws or equivalent organizational documents of the Company or
any of its subsidiaries, (ii) assuming that all consents, approvals, orders and
authorizations described in Section 2.03(b) have been obtained and all
registrations, declarations, filings and notifications described in Section
2.03(b) have been made, conflict with or violate any Law applicable to the
Company or any subsidiary or by which any property or asset of the Company or
any subsidiary is bound or affected or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
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amendment, acceleration or cancellation of, or result in the creation of a Lien
on any property or asset of the Company or any subsidiary pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation, other than, in the case of clauses
(ii) and (iii), any such conflicts, violations, breaches, defaults or other
occurrences that individually or in the aggregate would not prevent or
materially delay the consummation of the transactions contemplated hereby or the
performance by the Company of any of its obligations hereunder.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any Governmental Entity
is required by the Company or any of its subsidiaries in connection with the
execution and delivery of this Agreement except for (i) the filing of a
pre-merger notification and report form by the Company under the HSR Act and the
expiration or termination of the waiting period thereunder and (ii) such other
consents, approvals, orders, authorizations, registrations, declarations,
filings and notices the failure of which to be obtained or made would not,
individually or in the aggregate, prevent or materially delay the consummation
of the transactions contemplated hereby or the performance by the Company of any
of its obligations hereunder.
ARTICLE III
COVENANTS OF THE COMPANY
SECTION 3.01. Further Action. (a) The Company shall use its
best efforts to take, or cause to be taken, all appropriate action, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
Laws to consummate and make effective the transactions contemplated hereunder,
including, without limitation, using all reasonable efforts to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Entities.
(b) The Company shall not take any action in order to cause
intentionally the exercise of the Top-Up Stock Option to violate Section 312.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby jointly and severally represent
and warrant to the Company as follows:
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SECTION 4.01. Organization; Authority Relative to this
Agreement. Each of Parent and Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Each of Parent and Purchaser has all requisite corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Parent and Purchaser and the consummation by
Parent and Purchaser of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of Parent and
Purchaser. This Agreement has been duly executed and delivered by Parent and
Purchaser and, assuming the due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of Parent and
Purchaser, enforceable against each of Parent and Purchaser in accordance with
its terms.
SECTION 4.02. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by Parent and Purchaser do not, and
the performance by Parent and Purchaser of their obligations hereunder and the
consummation of the transactions contemplated hereby will not, (i) conflict with
or violate the Certificate of Incorporation or Bylaws or equivalent
organizational documents of Parent or Purchaser, (ii) assuming that all
consents, approvals, orders and authorizations described in Section 4.02(b) have
been obtained and all registrations, declarations, filings and notifications
described in Section 4.02(b) have been made, conflict with or violate any Law
applicable to Parent or Purchaser or by which any property or asset of Parent or
Purchaser is bound or affected or (iii) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any
property or asset of Parent or Purchaser pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation, other than, in the case of clauses (ii) and (iii), any
such conflicts, violations, breaches, defaults or other occurrences that
individually or in the aggregate would not prevent or materially delay the
consummation of the transactions contemplated hereby or the performance by
Parent or Purchaser of any of their respective obligations hereunder.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any Governmental Entity
is required by Parent or Purchaser in connection with the execution and delivery
of this Agreement, the performance by Parent or Purchaser of any of its
obligations hereunder or the consummation by Parent or Purchaser of the
transactions contemplated hereby, except for (i) the filing of a pre-merger
notification and report form under the HSR Act and the expiration or termination
of the waiting period thereunder and (ii) such other consents, approvals,
orders, authorizations, registrations, declarations, filings and notices the
failure of which to be obtained or made would not, individually or in the
aggregate, prevent or materially delay the consummation of
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the transactions contemplated hereby or the performance by Parent or Purchaser
of any of their respective obligations hereunder.
ARTICLE V
COVENANTS OF PARENT AND PURCHASER
SECTION 5.01. Distribution. Purchaser shall acquire the Top-Up
Option Shares for investment purposes only and only for the purpose of effecting
a short-form merger with the Company and not with a view to any distribution
thereof in violation of the Securities Act, and shall not sell any Top-Up Option
Shares purchased pursuant to this Agreement except in compliance with the
Securities Act and applicable state securities and "blue sky" laws.
SECTION 5.02. Parent Guaranty. Parent hereby agrees to cause
Purchaser to perform all of Purchaser's obligations under this Agreement.
ARTICLE VI
TERMINATION OF AGREEMENT
SECTION 6.01. Termination. This Agreement, other than the
rights and obligations of the Company and Purchaser under Sections 3.01, 5.01
and 5.02 and Article VII, shall terminate on the Top-Up Termination Date.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendment. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 7.02. Waiver. Any party hereto may (a) extend the time
for or waive compliance with the performance of any obligation or other act of
any other party hereto or (b) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
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SECTION 7.03. Fees and Expenses. Except as otherwise provided
herein or in Section 7.08 of the Merger Agreement, all Expenses incurred in
connection with this Agreement shall be paid by the party incurring such
Expenses.
SECTION 7.04. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be deemed given
if delivered personally or sent by telecopy or by overnight courier (providing
proof of delivery) to the respective parties at their addresses as specified in
Section 10.02 of the Merger Agreement.
SECTION 7.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner to the fullest extent permitted by applicable Law in order
that the transactions contemplated hereby may be consummated as originally
contemplated to the fullest extent possible.
SECTION 7.06. Assignment; Binding Effect; Benefit. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned, in whole or in part, by operation of law or otherwise, by any of
the parties hereto without the prior written consent of the other parties,
except that Purchaser may assign, in its discretion, any or all of its rights,
interests and obligations hereunder to Parent or any direct or indirect wholly
owned subsidiary of Parent, but no such assignment shall relieve Purchaser of
any of its obligations hereunder. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties hereto and their respective successors and permitted assigns.
Notwithstanding anything contained in this Agreement to the contrary, nothing in
this Agreement, express or implied, is intended to confer on any person other
than the parties hereto or their respective successors and permitted assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
SECTION 7.07. Governing Law. Except to the extent the law of
the State of California is mandatorily applicable hereto, this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Delaware.
SECTION 7.08. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any
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court of the United States located in the State of New York, Delaware or
California or in New York, Delaware or California state court (a "Specified
Court"), this being in addition to any other remedy to which they are entitled
at law or in equity. In addition, each of the parties hereto (i) consents to
submit itself to the personal jurisdiction of any Specified Court in the event
any dispute arises out of this Agreement or any of the transactions contemplated
by this Agreement, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(iii) agrees that it will not bring any action relating to this Agreement or any
of the transactions contemplated by this Agreement in any court other than a
Specified Court and (iv) agrees to waive any defense based upon venue or forum
non conveniens grounds.
SECTION 7.09. Headings. The descriptive headings contained in
this Agreement are included for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 7.10. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, all
of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
SECTION 7.11. Entire Agreement. This Agreement constitutes the
entire agreement, and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
all as of the date first written above.
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By /s/ Xxxxxxx Xxxxx /s/ Xxxx Xxx Xxxxxxx
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Name: Xxxxxxx Xxxxx Xxxx Xxx Xxxxxxx
Title: Member of the Board General Counsel
EBV ELECTRONICS INC.
By Xxxxxxx Xxxxxxxx
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Name: Xxxxxxx Xxxxxxxx
Title: President and CEO
WYLE ELECTRONICS
By Xxxxx X. Xxxxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxxxx
Title: President and Chief
Executive Officer
