EXHIBIT 2
SHAREHOLDERS AGREEMENT
dated as of
January 23, 1996
between
FARNELL ELECTRONICS PLC
and
The Shareholders Listed on Schedule 1
hereto
SHAREHOLDERS AGREEMENT
AGREEMENT dated as of January 23, 1996 between Farnell Electronics
PLC, a public limited corporation formed under the laws of England (the
"Company"), and the Persons listed on Schedule 1 hereto ("Shareholders").
WHEREAS, the Company, FAC Delaware Corp., a Delaware corporation
("Merger Subsidiary") and Premier Industrial Corporation, an Ohio corporation
("Premier"), have entered into an Agreement and Plan of Merger (the "Merger
Agreement") dated as of the date hereof pursuant to which Premier will be merged
with and into Merger Subsidiary (the "Merger") and the Shareholders will
receive, in exchange for shares of common stock of Premier, consideration which
will include American Depositary Receipts representing Ordinary Shares and
American Depositary Receipts representing Preference Shares (each term as
defined below); and
WHEREAS, it is a condition to the consummation of the Merger that the
parties hereto enter into this Agreement; and
WHEREAS, the Shareholders will own or be entitled to have allotted and
issued to them on consummation of the Merger shares in the Company in accordance
with the terms of the Merger Agreement; and
WHEREAS, the Related Parties will own or be entitled to have allotted
and issued to them on consummation of the Merger shares in the Company in
accordance with the terms of the Merger Agreement.
NOW THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
1.1. Definitions.
(a) The following terms, as used herein, have the following meanings:
"Affiliate" of any person means any other person that, directly or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such person, provided that Premier, the Jewish
Community Federation, Cleveland, Ohio, and any pension, profit sharing, PAYSOP
or other similar arrangements involving Premier or any of its Subsidiaries shall
be deemed not to be an Affiliate of a Shareholder; and for the purposes of this
definition only, "control" (including the terms "controlling", "controlled by"
and "under common control with") means the possession, direct or indirect, of
the power to direct or cause
the direction of the management, policies or activities of a person whether
through the ownership of securities, by contract or agency or otherwise; and the
term "person" is deemed to include a partnership.
A Person shall be deemed the "beneficial owner" of, and shall be
deemed to "beneficially own", and shall be deemed to have "beneficial ownership"
of (i) any securities that such Person is deemed to "beneficially own" within
the meaning of Rule 13d-3 under the Exchange Act, as in effect on the date of
this Agreement, and (ii) without duplication, any securities that such Person
has the right to acquire (whether such right is exercisable immediately or only
upon the occurrence of certain events or the passage of time or both) pursuant
to any agreement, arrangement or understanding (written or oral) or otherwise;
provided that the Related Party Securities shall not be deemed beneficially
owned by any Shareholder.
"Board" shall mean the board of directors of the Company.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, USA or London, England are authorized by law
to close.
"Closing Ratio" and "Current Ratio" shall have the meanings given to
them in Section 2.2(a).
"Companies Act 1985" means the U.K. Companies ▇▇▇ ▇▇▇▇, amended by the
Companies ▇▇▇ ▇▇▇▇, and as in force from time to time.
"Concert Party" means Persons who are parties to an agreement or
arrangement relating to Voting Securities falling within Section 204 of the
Companies ▇▇▇, ▇▇▇▇, provided that the Jewish Community Federation, Cleveland,
Ohio and any pension, profit sharing, PAYSOP or other similar arrangements
involving Premier or any of its Subsidiaries shall be deemed not to be a Concert
Party.
"Control" means a holding or aggregate holding of shares carrying 30%
or more of the rights to vote at general meetings of a company, irrespective of
whether the holding or holdings gives defacto control.
"Dispose" means, directly or indirectly, sell, pledge, encumber, give
or otherwise transfer or agree to sell, pledge, encumber, give or otherwise
transfer.
"Effective Time" means the Effective Time as defined in the Merger
Agreement.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
2
"Fully diluted basis" means on the basis of the exercise in full of
all rights to subscribe, convert securities into or exchange securities for
Voting Securities, whether or not such rights are actually exercisable at the
relevant time.
"Ordinary Shares" means the ordinary shares of 5p each in the Company
and any American Depositary Receipts representing such shares.
"Person" means an individual, a corporation, a partnership, an
association, a trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
"Permitted Transferee" of any natural person shall mean (i) in the
case of the death of such person, such person's executors, administrators,
testamentary trustees, heirs, legatees and devisees, (ii) such person's spouse,
parents, siblings or descendants or (iii) any entity that would qualify under
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code").
"Preference Shares" means the 6.75% Convertible Cumulative Redeemable
Preference Shares of $25 each in the Company and any American Depositary
Receipts representing such shares.
"Reference Group" means the Shareholders and Related Parties.
"Related Parties" means the Persons listed on Schedule 2.
"Related Party Securities" means Restricted Securities identified on
Schedule 2 as such securities; provided, however, that if after the date of this
Agreement such securities shall have been changed into a different number of
securities or a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
such number of securities shall be correspondingly adjusted to the extent
appropriate to reflect such change.
"Restricted Securities" means any Voting Securities and any other
securities or rights convertible into or exchangeable or exercisable (whether
immediately or otherwise) for such Voting Securities, including the Preference
Shares.
"Securities Act" means the U.S. Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Subsidiary" means a subsidiary within the meaning of Section 736 of
the Companies ▇▇▇ ▇▇▇▇.
"Takeover Code" means the City Code on Takeovers and Mergers as issued
by U.K. Panel on Takeovers and Mergers and as in force from time to time.
3
"Takeover Offer" means
(i) a takeover offer (within the meaning of section 428 of the
Companies Act 1985) in relation to the Company; or
(ii) an offer for any shares in the Company which is capable (if
accepted in full) of resulting in the offeror, together
with any person or persons acting in concert with him,
holding or beneficially owning Voting Securities
representing more than 50 percent of the Total Voting
Power; or
(iii) a mandatory offer for any Voting Securities of the Company
made pursuant to Rule 9 of the Takeover Code.
"Total Voting Power" means the aggregate number of votes attaching to
the outstanding Voting Securities.
"Voting Securities" means the Ordinary Shares and all other securities
of the Company entitled, in the ordinary course, to vote in the election of
directors of the Company, but for the avoidance of doubt not Preference Shares
or any other shares in the capital of the Company which carry votes only in
restricted circumstances.
ARTICLE 2
COVENANTS OF SHAREHOLDER
During the term of this Agreement, each Shareholder agrees that:
2.1. Voting of Voting Securities. (a) Subject to Section 2.7, at any
general or class meeting of holders of Voting Securities, the Shareholders will
be permitted to freely exercise, or abstain from exercising, the votes attaching
to that number of Voting Securities beneficially owned by them equal to the
excess (the "Excess Amount"), if any, of (i) 19.9% of the Total Voting Power on
the date of such meeting over (ii) the aggregate number of votes which may be
cast by the Related Parties in respect of Voting Securities at such date. To
the extent that the Shareholders beneficially own Voting Securities representing
more than the Excess Amount, the Shareholders shall vote such shares in
accordance with the recommendation of the Board of the Company.
(b) Section 2.1(a) shall not prevent the Shareholders exercising any
voting rights attaching to Preference Shares in accordance with the rights of
those shares.
2.2. Acquisition of Restricted Securities.
(a) A Shareholder may acquire beneficial ownership of Restricted
Securities only if immediately after consummation of such acquisition, (i) the
ratio (the "Current Ratio") of the
4
number of Voting Securities then beneficially owned by the Reference Group to
the number of Voting Securities then outstanding, all on a fully diluted basis,
would not exceed (ii) the ratio (the "Closing Ratio") of the number of Voting
Securities beneficially owned by the Reference Group immediately following the
Effective Time to the number of Voting Securities outstanding immediately
following the Effective Time, all on a fully diluted basis. This paragraph
shall not prevent any Shareholder from taking up its pro rata entitlement under
any rights or other offering of Restricted Securities made to holders of
Restricted Securities substantially in proportion to the numbers of Restricted
Securities held or beneficially owned by such holders. If any of the Related
Parties acquires beneficial ownership of Restricted Securities, and as a result,
the Current Ratio exceeds the Closing Ratio, the Shareholders will within 60
days sell or otherwise transfer (other than by way of pledge or encumbrance) to
Persons who are not Permitted Transferees or Affiliates or in the Reference
Group beneficial ownership of a sufficient number of Voting Securities so that
the Current Ratio is not greater than the Closing Ratio, and shall effectuate
such sale or other transfer in accordance with clauses (i), (ii), or (iii) of
Section 2.3(b) (ignoring for these purposes the 10% limitation in the first
paragraph of Section 2.3(b)), or in another manner reasonably acceptable to the
Company.
(b) No Shareholder shall be obligated to dispose of any Restricted
Securities held by such Shareholders immediately after any purchase, redemption,
reacquisition, cancellation or other reduction in the Company's outstanding
Restricted Securities if the Current Ratio exceeds the Closing Ratio as a result
of such purchase redemption, reacquisition, cancellation or other reduction.
(c) Notwithstanding Section 2.2(a), the Reference Group may convert
Restricted Securities not already Voting Securities held by them to Voting
Securities, unless if as a result of so converting any Shareholder would incur
an obligation to make a mandatory offer pursuant to Rule 9 of the Takeover Code.
(d) The Shareholders agree to comply with the LSE Model Code for
Directors' Dealings ("Model Code") to the extent applicable to them and the
Company agrees that discretions and approvals under the Model Code will be
applied to Shareholders on a basis which is no less favorable than they are
applied to directors of the Company who are not Shareholders.
(e) Each Shareholder may purchase or otherwise acquire shares of
capital stock in other companies listed on the NYSE or LSE which to the
knowledge of such Shareholder, (after reasonable due inquiry) hold shares in the
Company; provided that immediately after the consummation of such purchase or
acquisition, the Shareholders do not beneficially own securities of any such
listed company representing more than 5% of the ordinary voting power of such
listed company.
2.3. Sale or Transfer of Restricted Securities. (a) Except as
otherwise provided, the Shareholders will not dispose of any Restricted
Securities beneficially owned by them except:
(i) to an Affiliate of such Shareholder, provided that such
Affiliate agrees in writing to be bound by the terms of this Agreement as a
Shareholder; or
5
(ii) in the case of a natural person, to any Permitted Transferee
of such person, provided that such transferee becomes a party to this
Agreement as a Shareholder.
(b) From and after the date one year after the Effective Time, the
Shareholders will not dispose of any Restricted Securities beneficially owned by
them unless (x) after giving effect to such disposal the Restricted Securities
disposed of by the Reference Group during the 12 month period ending immediately
after such disposal (including disposals pursuant to Section 2.2(a)) do not
represent more than 10% of the Total Voting Power, all on a fully diluted basis,
at that time, provided that such amount may exceed 10% if the Company consents
to such greater amount, which consent shall not be unreasonably withheld; and
(y) such disposal is effected in accordance with subparagraphs (i) through (vi)
below:
(i) in a privately negotiated transaction to any Person who
either is an institution which has been approved by the Company or, after
giving effect to such disposal, would beneficially own (together with any
Concert Party) Voting Securities which are entitled to exercise in the
aggregate 5% or less of Total Voting Power; provided that at least 5 days
prior to any such sale, the Shareholder notifies the Company of such
intention in writing and thereafter consults in good faith with the Company
and the broker or underwriters, as the case may be, as to the nature,
timing and material terms of such sale and makes a good faith effort to
accommodate the reasonable requests of the Company;
(ii) in a sale on the open market that is through a broker or
pursuant to a firm commitment, underwritten distribution to the public,
registered under the Securities Act or executed in compliance with
Regulation S thereunder or carried out in accordance with the rules of the
LSE, provided that at least 5 days prior to any such sale, the Shareholder
notifies the Company of such intention in writing and thereafter consults
in good faith with the Company and the broker or underwriters, as the case
may be, as to the nature, timing and material terms of such sale and makes
a good faith effort to accommodate the reasonable requests of the Company;
and provided further that the Shareholder uses its best efforts to effect
as wide a distribution of such Restricted Securities as is reasonably
practicable;
(iii) pursuant to Rule 144 of the General Rules and Regulations
of the Securities Act; provided that any such sale shall be subject to the
volume and manner of sale limitations set forth in such rule, whether or
not legally required;
(iv) pursuant to a tender or exchange or Takeover Offer made by
the Company or recommended by the Board to the Company's shareholders;
(v) as a bona fide pledge to a financial institution to secure
borrowings as permitted by applicable law, rules and regulations, provided,
however, that (x) such financial institution agrees to be bound by this
Agreement as a Shareholder and (y) the borrowings to be secured are full
recourse obligations of the pledgor and are entered into simultaneously
with the pledge; or
6
(vi) with the prior written consent of the Company.
(c) The Shareholders' ability to sell, transfer or otherwise dispose or
authorize the disposition of the Restricted Securities under Paragraph (a) and
(b) of this Section 2.3 is, in both cases, subject to the limitations imposed by
virtue of the representation letter attached as Exhibit 5.7(c) to the Merger
Agreement.
2.4. Additional Agreements. None of the Shareholders may (and each
Shareholder shall cause its Affiliates that are controlled by it not to) (a)
publicly request the Company or any of its agents, directly or indirectly, to
amend or waive any provision of this Agreement or (b) knowingly take any action
that would in either case reasonably be expected to require the Company to make
a public announcement regarding the possibility of any transaction with such
Shareholder.
2.5. Tax Treatment. Following the Effective Time, the Shareholders
shall not knowingly, or knowingly permit its Affiliates that are controlled by
it to, take any action or knowingly cause any action to be taken which would
cause the Merger to fail to qualify as a reorganization under Section 368(a) of
the Code.
2.6. Standstill. None of the Shareholders may (and each Shareholder
shall cause its Affiliates that are controlled by it, not to), without the prior
written consent of the Board, directly or indirectly:
(a) publicly propose that any Shareholder or any Affiliate of any
Shareholder enter into, directly or indirectly, any merger or other
business combination involving the Company or propose to purchase directly
or indirectly, a material portion of the equity or assets of the Company or
any of its Subsidiaries, or make any such proposal privately in a manner or
in terms such that it would reasonably be expected to require the Company
to make a public announcement regarding such proposal;
(b) attempt to, or participate in an attempt to, solicit the support
of other shareholders of the Company for any resolution to be considered at
any meeting of the shareholders of the Company which has not been proposed
by the Board;
(c) form, join or participate in or encourage the formation of a
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) with
respect to any Voting Securities of the Company, other than a group
consisting solely of Shareholders and the Affiliates controlled by them and
other persons with respect to whose Premier shares any Shareholder has
beneficial ownership on the date hereof.
(d) deposit any Restricted Securities of the Company into a voting
trust or subject any such Restricted Securities to any arrangement or
agreement with respect to the voting thereof, other than (x) any such
trust, arrangement or agreement (i) the only parties to, or beneficiaries
of, which are Shareholders or any Affiliates controlled by them and (ii)
the
7
terms of which do not require or expressly permit any party thereto to act
in a manner inconsistent with this Agreement;
(e) except in accordance with Section 5.1, seek election to or seek
to place a representative on the Board or seek the removal or the non-
reappointment of any member of the Board;
(f) requisition or seek to have requisitioned or called any meeting
of the shareholders of the Company or requisition or seek to have
requisitioned the proposing of any resolution at any meeting of the
shareholders of the Company;
(g) (A) solicit, seek to effect, negotiate with or provide non-public
information to any other person with respect to, (B) make any statement or
proposal, whether written or oral, to the Board or any director or officer
of the Company with respect to, or (C) otherwise make any public
announcement or proposal whatsoever with respect to, any form of business
combination transaction (with any person) involving a change of Control of
the Company or the acquisition of a substantial portion of the equity
securities or assets of the Company or any of its Subsidiaries, including a
merger, consolidation, tender offer, Takeover Offer, exchange offer or
liquidation of the Company's assets, or any scheme of arrangement,
restructuring, recapitalization or similar transaction with respect to the
Company or any of its Subsidiaries; provided, however, that the foregoing
shall not (x) apply to any discussion between or among the Shareholders or
any of their respective agents or representatives or (y) in the case of
clause (B) above, be interpreted to limit the ability of any Shareholder,
or any designee of any Shareholder, on the Board to make any such statement
or proposal or to discuss any such proposal with any officer or director
of, or advisor to, the Company or advisor to the Board or to the Board
itself unless, in either case, it could reasonably be expected to require
the Company to make a public announcement regarding such discussion,
statement or proposal;
(h) (i) enter into (or remain a party to) any agreement or
understanding (whether formal or informal) which provides for two or more
of the parties thereto to co-operate with a view to obtaining or
consolidating control of the Company through the acquisition by any of them
of any beneficial ownership in Restricted Securities; (ii) enter into any
agreement, arrangement, understanding or transaction or do or omit to do
anything as a result of which it (either alone or with any other person)
will become obliged or required (whether under the Takeover Code or
otherwise) to make any Takeover Offer; (iii) encourage or co-operate or
assist or enter into any agreement or arrangement with any person relating
to or connected with the making of a Takeover Offer; (iv) make, accept or
reject any Takeover Offer, or vote on any resolution of the Company
concerning a Takeover Offer, other than in accordance with the
recommendation of the Board; (v) sell or transfer, or agree to sell or
transfer, any Restricted Securities to (A) the offeror of any Takeover
Offer, or any person acting in concert with him, or (B) any person whom the
Shareholder knows intends to, or whom the Shareholder has reason to believe
might, make a Takeover Offer or anyone whom the Shareholder knows to, or
has reason to believe might, be acting in concert with such a person;
8
(i) otherwise act, alone or in concert with others, to seek to control
or influence the management or policies of the Company (except for (A) to
the extent permitted hereby, voting as a holder of Restricted Securities
and (B) for actions taken as a director or officer of the Company);
(j) publicly disclose any intention, plan or arrangement inconsistent
with the foregoing, or make any such disclosure privately if it could
reasonably be expected to require the Company to make a public announcement
regarding such intention, plan or arrangement; or
(k) advise, assist (including by knowingly providing or arranging
financing for that purpose) or knowingly encourage any other person in
connection with any of the foregoing.
For the avoidance of doubt nothing herein shall prevent the Shareholders who are
directors of the Company from engaging in discussions with other directors,
which discussions relate to any matters which are not initiated by such
Shareholders.
2.7. Voting Arrangements. Notwithstanding any restriction in Section
2.1, each Shareholder shall vote or cause to be voted all Voting Securities and
(in the event that other Restricted Securities shall at any time and for any
reason be entitled to vote in the election of Directors of the Company) other
Restricted Securities owned by the Shareholders for nominees to the Board
designated pursuant to Section 5.1. Each Shareholder shall cause all Voting
Securities and such other Restricted Securities, respectively owned by the
Shareholders to be represented, in person or by proxy, at all general or class
meetings of holders of Voting Securities and such other Restricted Securities at
which such Shareholder is entitled to attend and vote, so that such Voting
Securities and such other Restricted Securities may be counted for the purpose
of determining the presence of a quorum at such meetings.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
Each Shareholder represents and warrants to the Company that:
3.1. Authorization. The execution, delivery and performance by the
Shareholders of this Agreement and the consummation by the Shareholders of the
transactions contemplated hereby are within each Shareholder's powers and, have
been duly authorized by all necessary actions, if any, including all necessary
actions by the trustees of a Shareholder if the Shareholder is a trust. This
Agreement constitutes a valid and binding agreement of the Shareholders.
3.2. Non-Contravention. The execution, delivery and performance by
the Shareholder of this Agreement and the consummation of the transactions
contemplated hereby do
9
not and will not contravene or constitute a default under or give rise to a
right of termination, cancellation or acceleration of any right or obligation of
the Shareholder under any provision of applicable law or regulation or of any
agreement, judgment, injunction, order, decree, or other instrument binding on
the Shareholder.
3.3. Binding Effect. This Agreement is the valid and binding
Agreement of the Shareholder, enforceable against the Shareholder in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally. If
this Agreement is being executed in a representative or fiduciary capacity, the
person signing this Agreement has full power and authority to enter into and
perform this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to the Shareholders that:
4.1. Corporate Power and Authority. The Company has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder. The execution, delivery and performance by the Company
of this Agreement and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by the board of directors of the
Company and no other corporate action on the part of the Company is necessary to
authorize the execution, delivery or performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated
hereby.
4.2. Non-Contravention. The execution, delivery and performance by
the Company of this Agreement and the consummation of the transactions
contemplated hereby do not and will not contravene or constitute a default under
or give rise to a right of termination, cancellation or acceleration of any
right or obligation of the Company under any provision of applicable law or
regulation or of any agreement, judgment, injunction, order, decree, or other
instrument binding on the Company.
4.3. Binding Effect. This Agreement is the valid and binding
Agreement of the Company, enforceable against the Company in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally.
ARTICLE 5
COVENANTS OF THE COMPANY
5.1. Board Representation. (a) The Shareholders shall be entitled to
present two candidates to the Board of the Company for nomination to the Board
of the Company as directors,
10
which candidates the Board shall use their reasonable best efforts, subject to
their fiduciary duties as directors, to appoint or secure to be appointed to the
Board; provided that such candidates shall initially be ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇ ▇. ▇▇▇▇▇▇; provided further that for such time as the aggregate beneficial
ownership of Voting Securities of the Reference Group represents less than 12.5%
of the Total Voting Power, all on a fully diluted basis, such number of
candidates shall be reduced to one, such candidate to be reasonably acceptable
to the Board of the Company; and provided further that if at any time the
aggregate beneficial ownership of Voting Securities of the Reference Group
represents less than 5% of the Total Voting Power, all on a fully diluted basis,
the Shareholders shall no longer have any entitlements to present candidates for
nomination pursuant to this Section 5.1.
(b) For so long as ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇ are directors
of the Company it is agreed that they or the one of them remaining on the Board
of the Company, may appoint ▇▇▇▇▇▇ ▇. ▇▇▇▇ as their, or his, alternate.
(c) The Company agrees that ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇ are acceptable to it as directors of the Company and, in the case
of ▇▇▇▇▇▇ ▇. ▇▇▇▇, as an alternate director. Any candidate other than ▇▇▇▇▇▇ ▇.
▇▇▇▇ proposed as successor to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be
subject to the approval of the Board, such approval not to be unreasonably
withheld or delayed.
(d) While he is a director of the Company, ▇▇▇▇ ▇. ▇▇▇▇▇▇ will be a
member of the Audit and Remuneration Committees of the Board of the Company.
While they are directors or alternate directors of the Company, at least one of
▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇ will be given opportunity to sit on the
standing committees of the Board.
5.2. Registration Rights. The Company agrees that Shareholders shall
have the registration rights set forth in Exhibit A.
5.3. Acquisition for Investment. Each Shareholder acknowledges that
the Ordinary Shares and Preference Shares to be acquired by him under the Merger
Agreement have not been registered under the Securities Act or any State
securities laws and that acquisition of such shares is to be effected pursuant
to an exemption from the registration requirements imposed by such laws. In this
regard, such Shareholder is acquiring such shares to be acquired by him under
the Merger Agreement for his own account and not with a view to, or for sale in
connection with, any distribution thereof in violation of the Securities Act.
Such Shareholder is an "accredited investor" (as defined in Regulation D under
the Securities Act), 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 such shares and is capable of bearing the economic risks of such
investment.
ARTICLE 6
TERMINATION
11
6.1. Termination of Agreement. This Agreement shall terminate upon
the occurrence of any of the following:
(a) the written agreement of the Company and Shareholders to
terminate this Agreement;
(b) upon a Person or Persons, together with any other person or
persons acting in concert with him or them, acquiring Voting Securities
representing more than 50% of the Total Voting Power; or
(c) the dissolution, liquidation or winding up of the Company.
6.2. Termination of Article 2. The provisions of Article 2 shall
terminate:
(a) after the later of the fourth anniversary of the date hereof and
such time as the Reference Group beneficially own Restricted Securities
representing less than 20% of the Total Voting Power, all on a fully
diluted basis;
(b) if the candidates properly presented for nomination to the Board
of the Company in accordance with Section 5.1(a) and being able (with the
approval of the Company in the general meeting, if required) and willing to
serve as Directors of the Company, are not appointed and maintained as
directors of the Company other than through any member of the Reference
Group voting against the appointment of such candidates to the Board;
(c) on any dividend payable on the Preference Shares being in arrears
for more than 30 days;
(d) if a breach of covenant takes place under any material borrowing
agreement of the Company and on the ground of that breach the lender or
lenders under that agreement shall state in writing to the Company the
intention promptly to cause the acceleration of the repayment of the loan;
(e) if the Company purchases its own shares or reduces its capital and
as a result any of the Shareholders would be required to make an offer for
any Voting Securities pursuant to Rule 9 of the Takeover Code in the
absence of the termination of one or more provisions of Article 2 (in which
case only those provisions the termination of which is necessary to avoid
such requirement shall be terminated); or
(f) if the Shareholders and the Board are acting in concert for the
purposes of the Takeover Code and any member of the Board, other than the
Shareholders or designees appointed pursuant to Section 5.1, acquires
Voting Securities with the result that the concert parties in the aggregate
would beneficially own Voting Securities carrying more than 29.9% of the
Total Voting Power in the absence of the termination of one or more
12
provisions of Article 2 (in which case only those provisions the
termination of which is necessary to avoid such requirement shall be
terminated).
ARTICLE 7
MISCELLANEOUS
7.1. Legend.
(a) All certificates representing Restricted Securities subject to
this Agreement shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND NEITHER THE SHARES NOR ANY INTEREST
THEREIN MAY BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION UNDER SUCH ACT IS NOT REQUIRED. THE SHARES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO A SHAREHOLDERS AGREEMENT DATED JANUARY 23,
1996 (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY) WHICH
PROVIDES, AMONG OTHER THINGS, FOR CERTAIN RESTRICTIONS ON TRANSFER THEREOF.
ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT SHALL BE
VOID."
(b) The Shareholders agree to the entry of stop transfer orders with
the transfer agent and registrar of the stock subject to this Agreement against
transfer of legended stock held by the Shareholders except in compliance with
the requirements of this Agreement.
7.2. Specific Performance. The Shareholders agree that any breach by
any of them of any provision of this Agreement would irreparably injure the
Company and that money damages would be an inadequate remedy therefor.
Accordingly, the Shareholders agree that the Company shall be entitled to one or
more injunctions enjoining any such breach and requiring specific performance of
this Agreement and consent to the entry thereof, in addition to any other remedy
to which the Company is entitled at law or in equity.
7.3. Notices. All notices, requests and other communications to
either party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to the Company, to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Farnell Electronics PLC
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
13
England
Telecopier: 011-44-1937-580-070
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to Shareholders, to:
c/o Parkwood Corporation
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇, Day, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or telecopier number as such party may hereafter specify
for the purpose by notice to the other party hereto. Each such notice, request
or other communication shall be effective when delivered at the address
specified in this Section 7.3.
7.4. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Shareholders and the Company, or in the case of a waiver, by
the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
14
7.5. Expenses. Except as otherwise provided herein and in Exhibit A
hereto, all costs and expenses incurred in connection with this Agreement shall
be paid by the party incurring such cost or expense.
7.6. 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 none of the parties may assign,
delegate or otherwise transfer any of their rights or obligations under this
Agreement without the written consent of the other party hereto. Neither this
Agreement nor any provision hereof is intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder.
7.7. Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other party hereto.
7.8. Entire Agreement. This Agreement and the Registration Rights
Agreement (and all exhibits thereto) constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior
agreements, understandings and negotiations, both written and oral, between the
parties with respect thereto. No representation, inducement, promise,
understanding, condition or warranty not set forth herein or therein has been
made or relied upon by any of the parties hereto.
7.9. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of New York without regard to the
conflict of laws rules of such states.
7.10. Jurisdiction. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement may be
brought against any of the parties in the courts of the State of New York, or,
if a party has or can acquire jurisdiction, in the United States District Court
for the Southern District of New York, and each of the parties hereby consents
to the jurisdiction of such courts (and of the appropriate appellate courts) in
any such action or proceeding and waives any obligation to venue laid therein.
Process in any such action or proceeding may be served on any party anywhere in
the world, whether within or without the State of New York.
7.11. Effective Time. This Agreement shall become effective at the
Effective Time.
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
Farnell Electronics PLC
By: /s/ ▇. ▇▇▇▇▇▇▇
---------------------
Name: ▇. ▇▇▇▇▇▇▇
Title: CEO
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Trust
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Trust
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Trust
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Revocable Trust
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Trust
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee
Schedule 1
----------
Shareholders Agreement
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Trust created by the ▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Trust
Agreement, originally dated August 27, 1976, as amended
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Trust created by the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Trust
Agreement, originally dated September 27, 1976, as amended
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Trust created by the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Trust
Agreement, originally dated September 14, 1977, as amended
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Revocable Trust created by the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Revocable Trust
Agreement, originally dated August 17, 1978, as amended
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Trust created by the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable
Trust Agreement, originally dated December 16, 1977, as amended
Schedule 2
----------
Shareholders Agreement
Name of Related Party No. of Related
--------------------- Party Securities
----------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ Annuity Trust created by the ▇▇▇▇ ▇. ▇▇▇▇▇▇ 165,847
Annuity Trust Agreement dated December 8, 1976 (f/b/o
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ irrevocable Trust created by the Agreement 1,554,839
dated September 16, 1963 (f/b/o ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇)
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ revocable Trust created by the ▇▇▇▇▇ ▇. 32,107
▇▇▇▇▇▇▇▇ revocable Trust Agreement originally dated March
16, 1983
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ revocable Trust created by the ▇▇▇▇▇▇▇ ▇. 42,739
▇▇▇▇▇ revocable Trust Agreement originally dated May 20,
1983, as amended
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ revocable Trust created by the Agreement 9,832
originally dated May 20, 1983
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ revocable Trust created by the Agreement 1,263
originally dated ▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ irrevocable Trust created by the Agreement 2,176,578
dated December 16, 1963 (f/b/o ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ irrevocable Trust created by the Agreement 185,964
for the benefit of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ dated December 4,
1978
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ irrevocable Trusts created by the Trust 3,591
Agreements dated December 8, 1990 and August 28, 1993
(f/b/o ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇)
▇▇▇▇▇▇ Associated Foundations -- ▇▇▇▇ ▇. and ▇▇▇▇▇▇ ▇▇▇▇▇▇ 1,485,584
Fund
▇▇▇▇▇▇ Associated Foundations -- ▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇▇ 1,208,907
▇▇▇▇▇▇ Fund
▇▇▇▇▇▇ Associated Foundations -- ▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇ 1,148,849
▇▇▇▇▇▇ Fund
The ▇▇▇▇ ▇. and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Foundation, including The 4,880,479
▇▇▇▇▇▇ ▇▇▇▇▇▇ Fund of the ▇▇▇▇ ▇. and ▇▇▇▇▇▇ ▇▇▇▇▇▇
Foundation
The ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Foundation 1,856,420
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Family Foundation 2,422,541
