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EXHIBIT 2.2
EXECUTION COPY
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of March 21, 2001 (this "Agreement"),
between Avnet, Inc., a New York corporation ("Parent"), Alpha Acquisition Corp.,
a Texas corporation and wholly owned subsidiary of Parent ("Acquisition") and
Kent Electronics Corporation, a Texas corporation (the "Company").
WHEREAS, Parent, Acquisition, and Company propose to enter into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"; terms not defined herein shall have the meanings set forth in the
Merger Agreement), which provides, among other things, that Acquisition will
merge with and into Company pursuant to the terms of the merger provided for in
the Merger Agreement (the "Merger"); and
WHEREAS, as a condition to the willingness of Parent and Acquisition to
enter into the Merger Agreement, Parent and Acquisition have required that
Company agree, and in order to induce Parent and Acquisition to enter into the
Merger Agreement Company has agreed, to grant Parent an option to purchase
2,863,474 shares of common stock, without par value, of Company ("Company Common
Stock"), in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein and in the Merger Agreement, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
THE STOCK OPTION
SECTION 1.01 GRANT OF STOCK OPTION. Company hereby grants to Parent an
irrevocable option (the "Stock Option") to purchase up to 2,863,474 shares of
Company Common Stock (the "Option Shares") at a purchase price of $22.48 per
Option Share (the "Purchase Price").
SECTION 1.02 EXERCISE OF STOCK OPTION. (a) Subject to the conditions set
forth in Section 1.03, the Stock Option may be exercised by Parent, in whole or
in part, at any time or from time to time after the occurrence of an Exercise
Event (as defined below) and prior to the Termination Date (as defined below).
(b) An "EXERCISE EVENT" shall occur for purposes of this Agreement upon
the occurrence of any of the following events or circumstances:
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(i) from the date hereof through the date on which the Merger
Agreement is terminated for any reason by any party
thereto, any Person unaffiliated with Parent or Company
publicly announces an intention to acquire more than a
majority of the outstanding Company Common Stock;
(ii) termination of the Merger Agreement by Company pursuant to
Section 6.01(h) thereof or by Parent pursuant to Section
6.01(f) thereof; or
(iii) within one year following termination of the Merger
Agreement by Company pursuant to Section 6.01(c) or Section
6.01(d) thereof, or by Parent pursuant to Section 6.01(i)
thereof, any Person (other than Parent or any Affiliate of
Parent) shall successfully acquire more than 50% of the
Company Stock, or Company shall enter into a written
agreement with any Person (other than Parent) that has made
or in the future makes an Acquisition Proposal and
consummates a transaction or series of transactions with
such Person (or any Affiliate of such Person) whereby more
than a majority of the Company Stock or a majority of the
assets of Company are transferred to such Person (or
Affiliate thereof).
(c) The "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 termination of the Merger Agreement in accordance with
its terms, so long as, in the case of this clause (ii), an
Exercise Event has not occurred and could not occur in the
future; or
(iii) the date which is 180 days after the occurrence of an
Exercise Event; or
(iv) the date on which Parent's Total Recovery equals
$40,000,000.
(d) In the event Parent wishes to exercise the Stock Option, Parent shall
send a written notice (an "Exercise Notice") to Company specifying the total
number of Option Shares Parent wishes to purchase, the denominations of the
certificate or certificates evidencing such Option Shares which Parent wishes to
receive, a date for the closing of such purchase (a "Closing Date"), which shall
be at least five business days (as defined in the Merger Agreement) after
delivery of such notice, and a place for the Closing and, if Parent intends to
pay the Purchase Price for such Option Shares with a Note (as defined below)
pursuant to clause (b) of the second sentence of Section 1.04, the names of at
least three investment banks of recognized national standing, none of which
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have a material relationship with Parent, acceptable to Parent for the purpose
of determining the interest rate of such Note pursuant to Section 1.04 if Parent
and Company are unable to agree on such interest rate. In the event that the
interest rate is not determined on or prior to the date specified for the
Closing, the Closing shall occur on the first business day following
determination of the interest rate.
(e) Upon receipt of an Exercise Notice, Company shall be obligated to
deliver to Parent a certificate or certificates evidencing the number of Option
Shares specified therein, in accordance with the terms of this Agreement, on the
later of (i) the date specified in such Exercise Notice and (ii) the first
business day on which the conditions specified in Section 1.03 shall be
satisfied.
SECTION 1.03 CONDITIONS TO DELIVERY OF OPTION SHARES. The obligation of
Company to deliver Option Shares upon any exercise of the 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, Sections 312.00 through 312.07 of the New York
Stock Exchange Listed Company Manual or any material applicable law, including,
without limitation, the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act"); and
(b) There shall be no preliminary or permanent injunction or other order
by any court of competent jurisdiction preventing or prohibiting such exercise
of the Stock Option or the delivery of the Option Shares in respect of such
exercise.
SECTION 1.04 CLOSINGS. At each Closing, Company will deliver to Parent a
certificate or certificates evidencing the number of Option Shares specified in
the applicable Exercise Notice (in the denominations specified therein), and
Parent will purchase each such Option Share from Company at the Purchase Price.
All payments made by Parent to Company pursuant to this Section 1.04 shall be
made, at the option of Parent, either (a) by wire transfer of immediately
available funds in the amount of the aggregate Purchase Price for the Option
Shares, or (b) by delivery to Company of (x) a certified or bank check or checks
payable to or on the order of Company in an amount not less than the aggregate
par value of the Option Shares to be purchased at the applicable Closing and (y)
a senior subordinated note of Parent, issued under substantially the same form
of indenture as the form filed as an exhibit to Parent's Current Report on Form
8-K bearing cover date of October 12, 2000, in a principal amount equal to the
aggregate Purchase Price less the amount paid by check or wire transfer pursuant
to clause (a) of this Section 1.04, with a maturity of seven years from the date
of issuance and covenants substantially the same as those of Parent's currently
outstanding publicly held 8.20% Notes due 2003 and bearing an interest rate
agreed to by Parent and Company as an interest rate intended to cause the Note
to trade, at the time of issuance, at a price equal to its principal amount (a
"Note": all such Notes being, collectively, the "Notes"). If Parent and Company
are unable to agree on such an interest rate within two business days after
delivery of the Exercise Notice, Company shall, not
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later than the close of business on the third business day after delivery of the
Exercise Notice, select one investment bank from the list of investment banks
included in such Exercise Notice, which investment bank shall, not later than
the opening of business on the fifth business day after delivery of such
Exercise Notice, determine the interest rate for the Note which such investment
bank believes, in its sole judgment, would cause the Note to trade, at the time
of issuance, at a price equal to its principal amount. The determination by such
investment bank shall be final, binding and conclusive on Parent and Company.
The fees and expenses of such investment bank shall be borne equally by Parent
and Company.
SECTION 1.05 ADJUSTMENTS UPON SHARE ISSUANCES, CHANGES IN CAPITALIZATION,
ETC. (a) In the event of any change in Company Common Stock or in the number of
outstanding shares of Company Common Stock by reason of a stock dividend,
split-up, recapitalization, combination, exchange of shares or similar
transaction or any other change in the corporate or capital structure of Company
(including, without limitation, the declaration or payment of an extraordinary
dividend of cash, securities or other property), the type and number of shares
or securities to be issued by Company upon exercise of the Stock Option shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction, so that Parent shall receive upon exercise of the
Stock Option the number and class of shares or other securities or property that
Parent would have received in respect of Company Common Stock if the Stock
Option had been exercised immediately prior to such event, or the record date
therefor, as applicable and elected to the fullest extent it would have been
permitted to elect, to receive such securities, cash or other property.
(b) In the event that Company shall enter into an agreement (i) to
consolidate with or merge into any person, other than Parent or one of its
subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Parent or one of
its subsidiaries, to merge into Company and Company shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Company Common Stock shall be changed into or exchanged for stock or
other securities of Company or any other person or cash or any other property or
the outstanding shares of Company Common Stock shall after such merger represent
less than 66% of the outstanding shares and share equivalents of the surviving
corporation or (iii) to sell or otherwise transfer all or substantially all of
its assets to any person, other than Parent or one of its subsidiaries, then,
and in each such case, proper provision shall be made in the agreements
governing such transaction so that Parent shall receive upon exercise of the
Stock Option the number and class of shares or other securities or property that
Parent would have received in respect of Company Common Stock if the Stock
Option had been exercised immediately prior to such transaction, or the record
date therefor, as applicable and elected to the fullest extent it would have
been permitted to elect, to receive such securities, cash or other property.
(c) The provisions of this Agreement, including, without limitation,
Section 1.01, Section 1.02, Section 1.04, Section 3.02 and Section 3.03, shall
apply with
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appropriate adjustments to any securities for which the Stock Option becomes
exercisable pursuant to this Section 1.05.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents and warrants to Parent and Acquisition as follows:
SECTION 2.01 AUTHORITY RELATIVE TO THIS AGREEMENT. Company has all
necessary 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 Company and the
consummation by Company of the transactions contemplated hereby have been duly
and validly authorized by the Board of Directors of Company, and no other
corporate proceedings on the part of Company are necessary to authorize this
Agreement or to consummate such transactions. This Agreement has been duly and
validly executed and delivered by Company and, assuming the due authorization,
execution and delivery by Parent and Acquisition, constitutes a legal, valid and
binding obligation of Company, enforceable against Company in accordance with
its terms. The grant of the Stock Option hereunder is exempt from Section 16(b)
under the Securities Exchange Act of 1934 by virtue of Rule 16b-3(d) thereunder.
SECTION 2.02 AUTHORITY TO ISSUE SHARES. 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 Termination Date shall have reserved, all
the Option Shares issuable pursuant to this Agreement, and Company will take all
necessary corporate action to authorize and reserve and permit it to issue all
additional shares of Company Common Stock or other securities which may be
issued pursuant to Section 1.05, 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 Parent's voting rights, charges and other
encumbrances of any nature whatsoever (other than this Agreement) and shall not
be subject to any preemptive rights.
SECTION 2.03 CONSENTS; NO CONFLICT. The execution and delivery of this
Agreement by Company do not, and the performance of this Agreement by Company
will not, (i) require any consent, approval, authorization or permit of, or
filing with or notification to (other than pursuant to the HSR Act or foreign
competition, antitrust or investment law, if applicable) any governmental or
regulatory authority, domestic or foreign, (ii) conflict with or violate the
Articles of Incorporation or by-laws or equivalent organizational documents of
Company or any of its Subsidiaries, (iii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to Company or any of its
Subsidiaries or by which any property or asset of Company or any of its
Subsidiaries is bound or affected, or (iv) 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
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give to others any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or other encumbrance of any nature
whatsoever on any property or asset of Company or any of its Subsidiaries
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Company or
any of its Subsidiaries is a party or by which Company or any of its
Subsidiaries or any property or asset of Company or any of its Subsidiaries is
bound or affected, except, in the case of clauses (i), (iii) and (iv), for any
such conflicts, violations, breaches, defaults or other occurrences which would
not in any material respect prevent or delay the exercise by Parent of the Stock
Option or any other right of Parent under this Agreement.
ARTICLE III
COVENANTS OF COMPANY
SECTION 3.01 LISTING; OTHER ACTION. (a) Company shall, at its expense, use
reasonable best efforts to cause the Option Shares to be approved for listing on
the New York Stock Exchange, upon official notice of issuance, as promptly as
practicable following the date of this Agreement, and will provide prompt notice
to the New York Stock Exchange of the issuance of each Option Share, unless the
delivery of the Option Shares can be satisfied with shares of Company Common
Stock held in treasury by Company.
(b) Company shall use its reasonable 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 and regulations to
consummate and make effective the transactions contemplated hereunder,
including, without limitation, using its reasonable best efforts to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Entities. Without limiting the generality of the
foregoing, Company shall when required in order to effect the transactions
contemplated hereunder make all filings and submissions under the HSR as
promptly as practicable.
(c) Company shall not take any action in order to intentionally cause the
exercise of the Stock Option to violate Section 312.00 through 312.07 of the New
York Stock Exchange Listed Company Manual.
SECTION 3.02 REGISTRATION. (a) Upon the request of Parent at any time and
from time to time within two years of the last Closing, Company agrees (i) to
effect, as promptly as practicable, but in each instance no more than 60 days
after its receipt of such a request, up to two registrations under the
Securities Act covering any part or all (as may be requested by Parent) of the
Option Shares or other securities that have been acquired by or are issuable to
Parent upon exercise of the Stock Option (provided that the anticipated
aggregate sales price of such securities is at least $5,000,000), and to use its
best efforts to qualify such Option Shares or other securities under any
applicable state securities laws and (ii) to include, at Parent's request, any
part or all of the Option Shares or such other securities in any registration
statement filed by Company under the Securities Act in which such inclusion is
permitted under applicable rules and
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regulations, and to use its best efforts to keep each such registration
described in clauses (i) and (ii) effective for a period of not less than twelve
months. If the managing underwriter of a proposed underwritten offering of
securities by Company described in clause (ii) shall advise Company in writing
that, in the reasonable opinion of the managing underwriter, the distribution of
the Option Shares requested by Parent to be included in a registration statement
concurrently with securities being registered for sale by Company would
adversely affect the distribution of such securities by Company, then Company
shall either (i) include such Option Shares in the registration statement, but
Parent shall agree to delay the offering and sale for such period of time as the
managing underwriter may reasonably request (provided that Parent may at any
time withdraw its request to include Option Shares in such offering) or (ii)
include such portion of the Option Shares in the registration statement as the
managing underwriter advises may be so included for sale simultaneously with
sales by Company, provided, that at Company's discretion, Company may reduce the
number of Option Shares to be included in such offering only to the extent that
such Option Shares will not constitute more than 25% of the Shares of Company
Common Stock to be included in such offering. The registrations effected under
this Section 3.02 shall be effected at Company's expense except for any
underwriting discounts and commissions allocable to the Option Shares and the
fees and disbursements of Parent's counsel. Company shall indemnify and hold
harmless Parent, its affiliates and controlling persons and their respective
officers, directors, agents and representatives from and against any and all
losses, claims, damages, liabilities and expenses (including, without
limitation, all out-of-pocket expenses, investigation expenses, expenses
incurred with respect to any judgment and fees and disbursements of counsel and
accountants) arising out of or based upon any statements contained in, or
omissions or alleged omissions from, each registration statement (and related
prospectus) filed pursuant to this Section 3.02 provided, however, that Company
shall not be liable in any such case to Parent or any affiliate or controlling
person of Parent or any of their respective officers, directors, agents or
representatives to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or omission or alleged omission made in such
registration statement or prospectus in reliance upon, and in conformity with,
written information furnished to Company specifically for use in the preparation
thereof by Parent, such affiliate, controlling person, officer, director, agent
or representative, as the case may be.
(b) For a period not exceeding an aggregate of 60 trading days in any 12
month period, Company may suspend the ability of Parent to make dispositions
under a registration statement or prospectus by providing Parent with written
notification (a "Blocking Notice") if Company's Board of Directors determines in
its good faith judgment that Company's obligation to ensure that such
registration statement and prospectus contain current and complete information
would require Company to make a public disclosure regarding a material
non-public transaction, provided, that Company shall not be entitled to deliver
a Blocking Notice within 10 trading days of the expiration of any Blocking
Notice previously delivered. Each Blocking Notice shall contain a general
statement of the reasons for such postponement and an approximation of the
anticipated delay. Parent agrees that, upon receipt of a Blocking Notice from
Company,
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Parent shall not dispose of, sell or offer for sale the Option Shares pursuant
to the registration statement until Parent receives (i) copies of the
supplemented or amended prospectus, or until counsel for Company shall have
determined that such disclosure is not required due to subsequent events, (ii)
notice in writing from Company that the use of the prospectus may be resumed and
(iii) copies of any additional or supplemental filings that are incorporated by
reference in the prospectus.
(c) Whenever Parent shall have requested that any Option Shares be
registered pursuant to this Section 3.02, the Company will use its commercially
reasonable efforts to effect the registration and the sale of such Option Shares
in accordance with this Section 3.02 and, to that end, will as expeditiously as
reasonably practicable (i) prepare and file with the Securities and Exchange
Commission a registration statement with respect to the Option Shares (and
required amendments and supplements to such registration statement), (ii) enter
into customary agreements in connection therewith (including underwriting
agreements in customary form), (iii) obtain a cold comfort letter from the
Company's independent public accountants in customary form and covering
customary matters, (iv) provide a customary legal opinion of the Company's
outside counsel, and (v) take all such other actions reasonably necessary to
perform its obligations under this Section 3.02.
SECTION 3.03 REPURCHASE OF OPTION. (a) For a period of 30 days after the
earlier of the consummation of, or the execution of an agreement providing for,
a Superior Proposal involving Company (a "Put Event"), but in no event later
than 180 days following an Exercise Event, Parent shall have the right, upon
five business days' prior written notice to Company (or any successor in
interest to Company by merger, sale of all or substantially all of the assets,
or otherwise) (the "Put Notice"), to cause Company (or any such successor in
interest) to have a closing and to pay at such closing (and Company and such
successor, jointly and severally, shall be obligated to pay) to Parent in
consideration for the cancellation of the Stock Option, an aggregate
cancellation price (the "Cancellation Price") equal to the product of (x) the
number of Option Shares as to which the Stock Option remains exercisable
multiplied by (y) the excess of (i) the average per share closing price of a
share of Company Common Stock as quoted on the New York Stock Exchange (or if
not then quoted thereon, on such other exchange or quotation system on which
Company Common Stock is quoted) for the period of five trading days ending on
the trading day immediately prior to the occurrence of the Put Event over (ii)
the Purchase Price.
(b) At any closing contemplated by the Put Notice, Company shall pay to
Parent the Cancellation Price for the number of Option Shares as to which the
Stock Option is to be canceled either by (i) delivering to Parent a certified or
bank check payable to or on the order of Parent in an amount equal to the
Cancellation Price (ii) wire transfer of immediately available funds, or (iii)
(A) canceling an aggregate amount, up to the amount of the Purchase Price
(including, without limitation, accrued and unpaid interest), then owing to
Company under the Note or Notes delivered by Parent to Company in connection
with the exercise by Parent of the Stock Option and (B) delivering to Parent a
certified or bank check payable to or on the order of Parent in an
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amount equal to the excess, if any, of the Cancellation Price over the amount of
indebtedness canceled under clause (A) (including, without limitation, accrued
and unpaid interest) evidenced by such Note or Notes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Company as follows:
SECTION 4.01 AUTHORITY RELATIVE TO THIS AGREEMENT. Parent has all necessary
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 the consummation by
Parent of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Parent, and no other corporate
proceedings on the part of Parent are necessary to authorize this Agreement or
to consummate such transactions. This Agreement has been duly and validly
executed and delivered by Parent and, assuming the due authorization, execution
and delivery by Company, constitutes a legal, valid and binding obligation of
Parent, enforceable against Parent in accordance with its terms.
SECTION 4.02 CONSENTS; NO CONFLICT. The execution and delivery of this
Agreement by Parent does not, the performance of this Agreement by Parent will
not, and the issuance of the Note by Parent will not at the time of issuance,
(i) require any consent, approval, authorization or permit of, or filing with or
notification to (other than pursuant to the HSR Act or foreign competition,
antitrust or investment law, if applicable) any governmental or regulatory
authority, domestic or foreign, (ii) conflict with or violate the certificate of
incorporation or by-laws of Parent, (iii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to Parent or by which any
property or asset of Parent is bound or affected, or (iv) 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
or other encumbrance of any nature whatsoever on any property or asset of Parent
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent is
a party or by which Parent or any property or asset of Parent is bound or
affected, except, in the case of clauses (i), (iii) and (iv), for any such
conflicts, violations, breaches, defaults or other occurrences which would not
in any material respect prevent or delay the exercise by Company of any right of
Company under this Agreement and would not have a Parent Material Adverse
Effect.
ARTICLE V
COVENANTS OF PARENT
Parent hereby covenants and agrees as follows:
SECTION 5.01 DISTRIBUTION. Parent shall acquire the Option Shares for
investment purposes only and not with a view to any distribution thereof in
violation of
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the Securities Act, and shall not sell any Option Shares purchased pursuant to
this Agreement except in compliance with the Securities Act.
SECTION 5.02 NOTES AND REGISTRATION. (a) Any Note delivered pursuant to
Section 1.04 shall be duly and validly authorized, executed and delivered by
Parent shall constitute a legal, valid and binding obligation of Parent,
enforceable against Parent in accordance with its terms.
(b) Upon the request of Company at any time and from time to time within
three years of the first Closing, Parent agrees (i) to effect, as promptly as
practicable, up to two registrations under the Securities Act covering any part
or all (as may be requested by Company) of the Notes, and to use its best
efforts to qualify such Notes under any applicable state securities laws and
(ii) to cause to be included any part or all of the Notes in any registration
statement for debt securities filed by Parent under the Securities Act in which
such inclusion is permitted under applicable rules and regulations, and to use
its best efforts to cause to keep each such registration described in clauses
(i) and (ii) effective for a period of not less than six months. Parent shall
give Company at least 15 days' advance written notice of Parent's anticipated
filing of a registration statement described in clause (ii) of the preceding
sentence. If the managing underwriter of a proposed offering of securities by
Parent shall advise Parent in writing that, in the reasonable opinion of the
managing underwriter, the distribution of the Notes requested by Company to be
included in a registration statement concurrently with securities being
registered for sale by Parent would adversely affect the distribution of such
securities by Parent, then Parent shall either (i) include such Notes in the
registration statement, but Company shall agree to delay the offering and sale
for such period of time as the managing underwriter may reasonably request
(provided that Company may at any time withdraw its request to include Notes in
such offering) or (ii) include such portion of the Notes in the registration
statement as the managing underwriter advises may be so included for sale
simultaneously with sales by Parent. The registrations effected under this
paragraph (c) shall be effected at Parent's expense except for underwriting
commissions allocable to the Notes and the fees and disbursements of Company's
counsel. Parent shall indemnify and hold harmless Company, its affiliates and
controlling persons and their respective officers, directors, agents and
representatives from and against any and all losses, claims, damages,
liabilities and expenses (including, without limitation, all out-of-pocket
expenses, investigation expenses, expenses incurred with respect to any judgment
and fees and disbursements of counsel and accountants) arising out of or based
upon any statements contained in, or omissions or alleged omissions from, each
registration statement (and related prospectus) filed pursuant to this paragraph
(c); provided, however, that Parent shall not be liable in any such case to
Company or any affiliate or controlling person of Company or any of their
respective officers, directors, agents or representatives to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon an untrue statement or omission or
alleged omission made in such registration statement or prospectus in reliance
upon, and in conformity with, written information furnished to Parent with
respect to it specifically for use in the preparation thereof by Company, such
affiliate, controlling person, officer, director, agent or representative, as
the case may be.
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(c) Whenever Company shall have requested that any Notes be registered
pursuant to this Section 5.02 Parent will use its commercially reasonable
efforts to effect the registration and the sale of such Notes in accordance with
this Section 5.02 and, to that end, will as expeditiously as reasonably
practicable (i) prepare and file with the Securities and Exchange Commission a
registration statement with respect to the Notes (and required amendments and
supplements to such registration statement), (ii) enter into customary
agreements in connection therewith (including underwriting agreements in
customary form), (iii) obtain a cold comfort letter from Parent's independent
public accountants in customary form and covering customary matters, (iv)
provide a customary legal opinion of the Parent's outside counsel, and (v) take
all such other actions reasonably necessary to perform its obligations under
this Section 5.02.
ARTICLE VI
PARENT RECOVERY
SECTION 6.01 Limitation of Parent Recovery. (a) Notwithstanding any other
provision herein or in the Merger Agreement, in no event shall Parent's Total
Recovery (as defined below) exceed $40 million (the "Maximum Recovery"), and, if
it otherwise would exceed such amount, Parent, at its sole discretion, shall
either (i) reduce the number of shares subject to the Stock Option, (ii) deliver
to Company for cancellation shares of Company Common Stock (or other securities
into which such Option Shares are converted or exchanged), (iii) pay cash to
Company, (iv) reduce the amount of the Cancellation Price or (v) any combination
of the foregoing, so that Parent's actually realized Total Recovery shall not
exceed the Maximum Recovery after taking into account the foregoing actions.
Notwithstanding any other provision of this Agreement, the Stock Option may not
be exercised for a number of shares as would, as of the date of exercise, result
in a Notional Total Recovery (as defined below) of more than the Maximum
Recovery and, if exercise of the Stock Option would otherwise result in the
Notional Total Recovery exceeding such amount, Parent, in its discretion, may
take any of the actions specified in this Section 6.01(a) so that the Notional
Total Recovery shall not exceed the Maximum Recovery; provided, that nothing in
this sentence shall restrict any subsequent exercise of the Stock Option which
at such time complies with this sentence.
(b) For purposes of this Agreement, "Total Recovery" shall mean: (i) the
aggregate amount (before taxes) of (A) the excess of (x) the net cash amounts or
fair market value of any property received by Parent pursuant to a sale of
Option Shares (or securities into which such shares are converted or exchanged),
other than to a wholly- owned subsidiary of Parent, after payment of applicable
brokerage or sales commissions and discounts, over (y) Parent's aggregate
Purchase Price for such Option Shares (or other securities), plus (B) all
amounts received by Parent upon the repurchase of the Stock Option by Company
pursuant to Section 3.03 hereof, plus (C) all amounts theretofore received by
Parent pursuant to Section 6.02 of the Merger Agreement, minus (ii) (A) all
amounts of cash previously paid to Company pursuant to Section 6.01(a), plus (B)
the value of the Option Shares (or other securities) previously delivered to
Company for cancellation pursuant to Section 6.01(a), which value shall be
deemed to be the
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aggregate Purchase Price paid for such Option Shares (or other securities). For
purposes of this Agreement, "Notional Total Recovery" with respect to any number
of shares as to which Parent may propose to exercise the Stock Option shall be
the Total Recovery, determined as of the date of such proposed exercise assuming
that the Stock Option were exercised on such date for such number of shares, and
assuming that such shares, together with all other Option Shares held by Parent
and its affiliates as of such date, were sold for cash at the closing market
price for the Company Common Stock as of the close of business on the preceding
trading day (less customary brokerage discounts and commissions). For purposes
of this Section 6.01, transactions by a subsidiary transferee of Parent in
respect of the Stock Option or Option Shares transferred to it shall be treated
as if made by Parent.
(c) Notwithstanding any other provision of this Agreement, nothing in
this Agreement shall affect the ability of Parent to receive, nor relieve
Company's obligation to pay, any payment provided for in Section 6.02 of the
Merger Agreement; provided, that if and to the extent the Total Recovery
received by Parent would exceed the Maximum Recovery following receipt of such
payment, Parent shall be obligated to comply with the terms of Section 6.01(a)
on the date on which Parent has realized cash and/or property representing Total
Recovery in excess of Maximum Recovery.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 EXPENSES. Except as otherwise provided herein or in the Merger
Agreement, all costs and expenses incurred in connection with the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses.
SECTION 7.02 FURTHER ASSURANCES. Company and Acquisition will execute and
deliver all such further documents and instruments and take all such further
action as may be necessary in order to consummate the transactions contemplated
hereby.
SECTION 7.03 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 7.04 ENTIRE AGREEMENT. This Agreement, the Merger Agreement
(together with the Exhibits, the Company Disclosure Schedule, the Parent
Disclosure Schedule and the other executed documents delivered pursuant thereto)
and the Confidentiality Agreement constitute the entire agreement between the
parties with respect to the matters provided for herein, and supersedes all
prior agreements and understandings, both written and oral, between the parties,
or any of them, with respect to the subject matter hereof.
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SECTION 7.05 ASSIGNMENT. This Agreement shall not be assigned by operation
of law or otherwise, except that Parent may assign all or any of its rights and
obligations hereunder to any wholly-owned subsidiary of Parent, provided that no
such assignment shall relieve Parent of its obligations hereunder if such
assignee does not perform such obligations.
SECTION 7.06 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
or shall confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
SECTION 7.07 AMENDMENT; WAIVER. This Agreement may not be amended except by
an instrument in writing signed by the parties hereto. Either Company or Parent
may (i) extend the time for the performance of any obligation or other act of
the other, (ii) waive any inaccuracy in the representations and warranties of
the other contained herein or in any document delivered by the other pursuant
hereto and (iii) waive compliance with any agreement or condition contained
herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
SECTION 7.08 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 to, the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
SECTION 7.09 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed on transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at their
addresses as specified in the Merger Agreement or sent by electronic
transmission to the respective parties at their telecopier numbers as specified
in the Merger Agreement.
SECTION 7.10 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas regardless of the
laws that might otherwise govern under applicable principles of conflicts of
law.
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SECTION 7.11 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in anyway the meaning or
interpretation of this Agreement.
SECTION 7.12 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different, parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, Parent, Acquisition and Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
AVNET, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer and
Senior Vice President
ALPHA ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
KENT ELECTRONICS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive Officer