ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On December 27, 2023, Arrow Electronics China Limited, as an original seller and sellers’ agent (“Arrow Electronics”), and Arrow/Components Agent Limited, as an original seller (“Arrow Components” and Arrow Electronics, each an “Original Seller” and collectively, the “Original Sellers”) entered into a Limited Recourse Receivables Discounting Framework Agreement (the “Receivables Purchase Agreement”) with The Hongkong and Shanghai Banking Corporation Limited (the “Bank”) to sell up to USD 300 million (or such higher amount as may be agreed from time to time) of trade receivables originated by the Original Sellers (the “Transaction”). The initial term of the Transaction is one year, subject to any extension as the Bank may agree. Closing of the Transaction occurred on December 28, 2023.
Each Original Seller has made certain representations, warranties, and undertakings. These representations, warranties and undertakings: (i) have been made only for the purpose of allocating risk pursuant to the Receivables Purchase Agreement; (ii) are, in certain cases, subject to materiality qualifications contained in the Receivables Purchase Agreement which may differ from what may be viewed as material by investors; and (iii) were made as of the date of the Receivables Purchase Agreement and will be made on such other date(s) as specified therein.
The purchase of the receivables by the Bank under the Receivables Purchase Agreement during the availability period is subject to agreed eligibility criteria and limits being met. The Receivables Purchase Agreement provides for the payment by an Original Seller to the Bank of a sum equal to loss suffered by the Bank as a result of certain events, including but not limited to, any representation made by the relevant Original Seller in connection with the relevant purchased receivable being incorrect in any material respect when made.
The Receivables Purchase Agreement contains a number of termination events that may be exercised by the Bank, including: (i) an Original Seller breaching in any material respect any undertaking or other material obligation set forth in the Receivables Purchase Agreement (subject to certain exceptions); (ii) failure by an Original Seller to make the required payments pursuant to the Receivables Purchase Agreement; (iii) the occurrence or likely occurrence of an insolvency event in relation to any Original Seller; (iv) any person who has waived or released its rights to any Original Seller’s purchased receivables asserts any interest in any Original Seller’s purchased receivables; and (v) if it becomes unlawful for an Original Seller or the Bank to perform any of its obligations under the transaction documents or any of the transaction documents ceases to be legal, valid, binding, and enforceable. The Bank may also terminate the Receivables Purchase Agreement by giving not less than 21 days’ notice.
The foregoing description of the Receivables Purchase Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Receivables Purchase Agreement, which is attached hereto as Exhibit 10.1, and is incorporated by reference into this Current Report on Form 8-K.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
