AMENDMENT NO. 3 TO LIMITED LIABILITY COMPANY AGREEMENT
OF ACCORD CONTRACT SERVICES LLC
This Amendment No. 3 (the "Amendment") to the Limited Liability
Company Agreement of Accord Contract Services LLC dated as of August 8, 1996
(the "Agreement") is hereby entered into as of February 28, 1997 by and
between Wyle Electronics, a California corporation ("Wyle") and Xxxxxxxx
Industries, a California corporation ("Xxxxxxxx"). Capitalized terms used
but not otherwise defined herein shall have the meanings ascribed thereto in
the Agreement.
R E C I T A L S
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X. Xxxx and Xxxxxxxx (together, the "Members") formed Accord
Contract Services LLC, a Delaware limited liability company (the "LLC"), to
provide certain materials management services for each of the Members,
including, without limitation. the acquisition of components and products and
the provision of kitting, turnkey and autoreplenishment services to customers
and related administrative and other related services in connection therewith.
B. The Agreement sets forth certain understandings and agreements
of the Members with respect to the LLC.
c. Pursuant to the Agreement, the Members have agreed upon the
"Termination Formula" (as defined in the Agreement).
D. The Members now desire to enter into this Amendment in order to
incorporate the Termination Formula into, and to make certain amendments to,
the Agreement, as mutually agreed upon by the Members and as set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein and for other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
A G R E E M E N T
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1. ADDITIONAL DEFINITIONS. The following definitions shall be, and hereby
are, added to the Agreement:
a. ACQUISITION MULTIPLE: Upon the occurrence of an Exercise Event, the
quotient of (i) the Acquisition Value of the Event Member, DIVIDED BY
(ii) the net sales from all sources for the Event Member for the
twelve full calendar months immediately preceding the month in which
the Exercise Event occurred.
b. ACQUISITION VALUE: Upon the occurrence of an Exercise Event, the
value of the Event Member in its entirety, as determined in the usual
and customary manner
with reference to the particular event resulting in the Exercise
Event. In the event that the Exercise Event does not entail the
acquisition of the common stock or substantially all of the assets of
the Event Member for cash or securities that are traded on a national
securities exchange, reported through the National Association of
Securities Dealers Automated Quotation System or traded
over-the-counter, then the Acquisition Value shall be determined by
agreement of the Members or, if the Members are unable to so agree,
then by a Neutral Party selected in accordance with Section 12.17(c)
of this Agreement.
c. AGGREGATE BASELINE SALES: Means the aggregate net sales by both
Members from the provision of Value Added Services for the twelve
full calendar months immediately preceding the effective date of the
Agreement.
d. EXERCISE EVENT: For purposes of the Agreement, the term "Exercise
Event" shall mean the occurrence of any of the following events with
respect to a Member:
(1) The approval by the shareholders of any Member of
the dissolution or liquidation of the Member;
(2) The consummation by any person (other than a Member)
of a tender offer or exchange offer to purchase any shares of a
Member's common stock such that, upon the consummation of such
offer, such person owns or controls 20% or more of the then
outstanding common stock of such Member;
(3) The execution by a Member or any subsidiary thereof
of an agreement with any person (other than the other Member) to
(i) merge, consolidate or otherwise reorganize with or into one or
more entities that are not subsidiaries of such Member, as a result
of which less than 50% of the outstanding voting securities of the
surviving or resulting entity immediately after the consummation of
such transaction are, or will be, owned by shareholders of such
Member immediately before such reorganization (assuming for purposes
of such determination that there is no change in the record ownership
of the Member's securities from the record date for such approval
until such transaction is consummated and that such record holders
hold no securities of the other party or parties to such a
transaction), (ii) sell, lease or otherwise dispose of assets of such
Member or its subsidiaries representing 50% or more of the
consolidated assets of the Member and its subsidiaries or (iii)
issue, sell or otherwise dispose of (including by way of merger,
consolidation, share exchange or any similar transaction) securities
representing 50% or more of the voting power of such Member;
(4) The acquisition by any person (other than a
Member) of beneficial ownership (as such term is defined in Rule 13d-
3 under the Securities
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Exchange Act of 1934, as amended (the "Exchange Act")) or the right
to acquire beneficial ownership of, or any "group" (as such term is
defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of,
20% or more of the then outstanding common stock of a Member; or
(5) The failure at any time, during any period of two
consecutive years, of individuals who at the beginning of such period
constituted the Board of Directors of a Member, for any reason, to
constitute at least a majority thereof, unless the election, or the
nomination for election by such Member's shareholders, of each new
Board member was approved by a vote of at least three-fourths of the
Board members then still in office who were Board members at the
beginning of such period (including for these purposes, new members
whose election or nomination was so approved).
e. GROWTH MULTIPLE: Means, upon the occurrence of an Exercise Event,
the growth, stated as a percentage, of the aggregate sales generated
by the United States electronic components distribution industry from
August 8, 1996 through the date of such Exercise Event, as determined
by agreement of the Members or, if the Members are unable to so
agree, then by a Neutral Party selected in accordance with Section
12.17(c).
f. INCREMENTAL SALES: Means, upon the occurrence of an Exercise Event,
the difference between (i) the aggregate net sales by both Members
from the provision of Value Added Services for the twelve full
calendar months immediately preceding the month in which the Exercise
Event occurred, MINUS (ii) the product of the Aggregate Baseline
Sales, multiplied by the Growth Multiple.
g. VALUE ADDED SERVICES: Means those types of materials management
services that are intended to be provided to the Members by the LLC,
including, without limitation, kitting, turnkey, autoreplenishment
and related services.
2. AMENDED DEFINITIONS. The following definitions shall be, and hereby are,
amended as follows:
a. CHANGE IN CONTROL TERMINATION FEE: Equals the greater of (i) $25
million, or (ii) the amount calculated pursuant to the Termination
Formula, but in no event shall such Change in Control Termination Fee
exceed $40 million. Notwithstanding the foregoing, unless otherwise
agreed to in writing by the Members prior thereto, the Change in
Control Termination Fee shall equal $0 in connection with any Exercise
Event that occurs after August 7, 2001.
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b. TERMINATION FORMULA: The Termination Formula shall mean, upon an
Exercise Event, fifty percent (50%) of the product of Incremental
Sales, MULTIPLIED by one hundred thirty percent (130%) of the
Acquisition Multiple.
3. DELETED DEFINITIONS. The following definitions, and any and all
references to the defined terms in the Agreement, shall be, and hereby is,
deleted:
TO WARRANT AGREEMENT
WARRANT AGREEMENT
WARRANT VALUE
4. TERMINATION NOTICE UPON EXERCISE EVENT. It is the intention of the
Members that either Member be permitted to terminate the LLC upon the
occurrence of an Exercise Event with respect to a Member by providing a
Termination Notice to the other Member, in accordance with, and subject to the
terms and conditions contained in, the Agreement (including, without
limitation, the payment of the Change in Control Termination Fee by the Event
Member pursuant to Section 11.1(c) of the Agreement). In furtherance of the
foregoing, the Agreement shall be, and hereby is, amended as follows:
a. The first sentence of Section 11.1(a)(xi) shall be, and hereby is,
amended by the insertion of the phrase "or by the Event Member"
immediately following the phrase "by the Member other than the Event
Member (also a "TO Member")".
b. Section 11.1(c)(i) shall be, and hereby is, amended and restated in
its entirety as follows:
"(i) Upon the occurrence of an Exercise Event with respect
to an Event Member and the subsequent delivery of a Termination
Notice by the TO Member or the Event Member pursuant to
Section 11.1(a)(xi) at any time during the term of the LLC,
or if later: (i) prior to the first anniversary of a Deadlock,
upon dissolution of the LLC pursuant to Section 11.1(a)(vi)
(other than an Improper Deadlock), or (ii) prior to the first
anniversary of the effective date of this Agreement, upon
dissolution of the LLC pursuant to Section 11.1(a)(ix), such
Event Member shall pay to the TO Member in cash an amount equal
to the Change in Control Termination Fee, which amount shall be
payable within thirty (30) days following the occurrence of the
Exercise Event."
5. EXTENSION OF TIME. Wyle and Xxxxxxxx hereby agree that the "Associated
Agreement Negotiation Period" (as defined in Section 2.5 of the Agreement) has
been extended through (and including) March 31, 1997 with respect to the
agreements previously referred to in the Agreement as: (i) the Systems License;
and (ii) the [Sub] Lease Agreement.
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6. ENTIRE AGREEMENT. The Agreement, as amended by this Amendment,
constitutes the entire agreement between the parties pertaining to the subject
matter hereof and fully supersedes any and all prior or contemporaneous
agreements or understandings between the parties hereto pertaining to the
subject matter hereof.
7. FULL FORCE AND EFFECT. Except as expressly amended in Amendment Xx. 0,
Xxxxxxxxx Xx. 0 and this Amendment, the Agreement shall remain in full force
and effect.
8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment or have
caused this Amendment to be duly executed on their behalf as of the day and
year first set forth above.
WYLE ELECTRONICS,
a California corporation
By:
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Name:
Title:
XXXXXXXX INDUSTRIES,
a California corporation
By:
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Name:
Title:
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