STANDSTILL AGREEMENT
STANDSTILL AGREEMENT, dated as of August 8, 1996 (this "AGREEMENT"),
between Marshall Industries, a California corporation (the "MARSHALL") and Wyle
Electronics, a California corporation ("WYLE"). Marshall and Wyle are also each
referred to herein individually as a "VENTURE PARTNER" and collectively as the
"VENTURE PARTNERS."
WHEREAS, the Venture Partners have entered into that certain Limited
Liability Company Agreement of Accord Contract Services, LLC of even date
herewith (the "LLC AGREEMENT") establishing a joint venture between the Venture
Partners;
WHEREAS, Marshall has granted to Wyle certain warrants (the "MARSHALL
WARRANTS") to purchase shares of the common stock, $1.00 par value of Marshall
(the "MARSHALL COMMON STOCK");
WHEREAS, Wyle has granted to Marshall certain warrants (the "WYLE
WARRANTS" and together with the "MARSHALL WARRANTS," the "WARRANTS") to purchase
shares of the common stock, without par value, of Wyle (the "WYLE COMMON STOCK"
and, together with the "MARSHALL COMMON STOCK," the "COMMON STOCK");
WHEREAS, each of the Venture Partners believes that it is desirable to
establish certain limitations and procedures with respect to the ownership by
the other Venture Partner of their respective Warrants and Common Stock and
certain other matters affecting the corporate affairs of the Venture Partners;
NOW, THEREFORE, in consideration of the mutual covenants and premises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings:
"AFFILIATE" as applied to any specified person, shall mean any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person and, in the case of a person
who is an individual, shall include (i) members of such specified Person's
immediate family (as defined in Instruction 2 of Item 404(a) of Regulation S-K
under the Securities Act) and (ii) trusts, the trustee and all beneficiaries of
which are such specified person or members of such person's immediate family as
determined in accordance with the foregoing clause (i). For the purposes of
this definition, "CONTROL", when used with respect to any person, means the
power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
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"BENEFICIAL OWNERSHIP", "PERSON" and "GROUP" shall have the respective
meanings ascribed to such terms pursuant to Regulation 13D-G adopted by the SEC
under the Exchange Act, as in effect on the date hereof.
"COMBINED VOTING POWER" shall mean, at any measurement date, with
respect to either Venture Partner, the total number of votes which could have
been cast in an election of directors of such Venture Partners, assuming that a
meeting of the shareholders of such Venture Partner been duly held, based upon a
record date as of the measurement date, and further assuming that all of such
Venture Partner's Voting Securities then outstanding and entitled to vote at
such meeting were present and voted to the fullest extent possible at such
meeting.
"VOTING SECURITIES" shall mean, with respect to either Venture
Partner, the Common Stock of such Venture Partner, any preferred stock of such
Venture Partner that is entitled to vote generally for the election of
directors, any other class or series of such Venture Partner's securities that
is entitled to vote generally for the election of directors and any other
securities, warrants (including the applicable Warrants, whether or not then
exercisable), options or rights of any nature (whether or not issued by such
Venture Partner) that are convertible into, exchangeable for, or exercisable for
the purchase of, or otherwise give the holder thereof any rights in respect of,
the Common Stock of such Venture Partner or any other class or series of
securities of such Venture Partner that is entitled to vote generally for the
election of directors.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"13D/G GROUP" shall mean two or more persons acting together for the
purpose of acquiring, holding, voting or disposing of any Voting Securities of a
Venture Partner, which persons would be required under the Exchange Act to file
a statement on Schedule 13D or 13G with the SEC as a "person" within the meaning
of Section 13(d)(3) of the Exchange Act if such persons beneficially owned
sufficient securities to require such a filing under the Exchange Act.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
Each Venture Partner represents and warrants to the other Venture
Partner as follows:
(a) Such Venture Partner is a validly existing corporation under
the laws of the State of California and has the corporate power and authority to
enter into this Agreement and perform its obligations hereunder.
(b) This Agreement has been duly authorized, executed and
delivered by such Venture Partner and constitutes the legally valid and binding
agreement of such Venture Partner, enforceable against such Venture Partner in
accordance with the terms hereof.
(c) Neither the execution and delivery of this Agreement by such
Venture Partner, nor the performance of its obligations hereunder, will conflict
with or result in a breach
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of or constitute a default under, any law, rule, regulation, judgment, order or
decree of any court, arbitrator or governmental agency or instrumentality, or of
any agreement or instrument to which such Venture Partner is party, or of any of
the charter documents of such Venture Partner.
(d) As of the date hereof, such Venture Partner does not own
more than 100 shares of Common Stock of the other Venture Partner or any other
Voting Securities of such other Venture Partner.
(e) Other than this Agreement, neither such Venture Partner nor
any of its affiliates, has any agreement, arrangement or other understanding
with any person with respect to acquiring, holding, voting or disposing the
other Venture Partner's Voting Securities.
SECTION 3. COVENANTS WITH RESPECT TO THE VENTURE PARTNER VOTING
SECURITIES AND OTHER MATTERS.
3.1. ACQUISITION OF VENTURE PARTNER VOTING SECURITIES. Subject to
Section 3.2, neither Venture Partner shall directly or indirectly acquire, offer
to acquire, agree to acquire, become the beneficial owner of or obtain any
rights in respect of any Voting Securities of the other Venture Partner, by
purchase or otherwise, or take any action in furtherance thereof, if the effect
of such acquisition, agreement or other action would be (either immediately or
upon consummation of any such acquisition, agreement or other action, or upon
the expiration of any period of time provided in any such acquisition, agreement
or other action) to increase the aggregate beneficial ownership of such other
Venture Partner's Voting Securities by the first Venture Partner and its
affiliates to a number of Voting Securities that represents or possesses 15% or
more of the Combined Voting Power of such other Venture Partner's Voting
Securities, without the approval of such other Venture Partner's Board of
Directors. Notwithstanding the foregoing maximum percentage limitation, no
Venture Partner shall be obligated to dispose of any Voting Securities of the
other Venture Partner beneficially owned in violation of such maximum percentage
limitation if, and solely to the extent that, its beneficial ownership is or
will be increased solely as a result of a repurchase, redemption or other
acquisition of any Voting Securities by the other Venture Partner or any of its
subsidiaries.
3.2. TAKEOVER PROPOSALS. Neither Venture Partner shall submit a
proposal to acquire a majority of the Combined Voting Power of the other Venture
Partner's Voting Securities (a "CHANGE OF CONTROL PROPOSAL") to any person
unless such Change of Control Proposal (or the submission thereof to any such
person) has been approved by the Board of Directors of such other Venture
Partner and the following conditions are satisfied:
(a) Any such Change of Control Proposal shall contemplate either
(i) a tender offer for all of the outstanding Common Stock of such other Venture
Partner not owned by the Venture Partner making such proposal and must be
conditioned upon a majority of such Common Stock not owned by such Venture
Partner being tendered, or (ii) a merger transaction conditioned upon the
holders of a majority of Combined Voting Power of the specified Venture Partner
not owned by the Venture Partner making such proposal, present, in person or by
proxy, voting in favor of such transaction. In the case of either (i) or (ii),
the same consideration must be offered to all of the specified Venture Partner's
shareholders.
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(b) Any such Change of Control Proposal must be approved by the
Board of Directors of such other Venture Partner, which shall not give its
approval unless it has received an opinion from a nationally recognized
investment banking firm to the effect that the Change of Control Proposal is
fair to the shareholders of the specified Venture Partner from a financial point
of view (other than the other Venture Partner making such proposal).
Unless the foregoing conditions have been previously satisfied, a Change of
Control Proposal shall not be presented to the shareholders of either Venture
Partner (including by way of a tender offer, merger proposal or other Change of
Control Proposal that is conditioned on satisfaction of this Section 3.2).
3.3. DISPOSITION OF VENTURE PARTNER VOTING SECURITIES AND OTHER
RELATED MATTERS.
(a) Without the prior approval of the Board of Directors of the
other Venture Partner, neither Venture Partner shall, directly or indirectly,
sell, transfer any beneficial interest in, pledge, hypothecate or otherwise
dispose of any Voting Security of the other Venture Partner:
(i) in a transaction or series of related transactions that
would result in a transfer to any person or group of more than 3.0% of
the Combined Voting Power of such other Venture Partner, except in
response to certain tender or exchange offers as permitted by Section
3.3(b); and
(ii) in a transaction or series of related transactions that
would result in a transfer to any person or group that, to the
knowledge of the transferring Venture Partner at the time of such
transaction, upon consummation of such sale, transfer or disposition,
would, directly or indirectly, have beneficial ownership of, or the
right to acquire beneficial ownership of, such number of Voting
Securities of the other Venture Partner that would represent greater
than 5.0% (or in the case of any mutual fund or similar institutional
investor with the stated intention to remain a passive investor,
greater than 10%), of the Combined Voting Power of such other Venture
Partner, except in response to certain tender or exchange offers as
permitted by Section 3.3(b).
The selling Venture Partner shall request all purchasers of Voting Securities of
the other Venture Partner from them in negotiated transactions, and all
underwriters, placement agents or brokers ("AGENTS") for any public offerings or
open market transactions involving such Voting Securities, to represent and
warrant that the requirements of this Section 3.3(a) have been satisfied with
respect to such transactions, such representations by Agents to be qualified to
the best of such Agents' knowledge.
(b) Notwithstanding Section 3.3(a), on and after the eleventh
business day following the commencement of a tender or exchange offer for
outstanding Voting Securities of the other Venture Partner, the specified
Venture Partner may tender or exchange any Voting Securities of the other
Venture Partner beneficially owned by it pursuant to such offer if such offer
shall have been previously approved by the Board of Directors of the subject
Venture Partner.
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(c) Proposed transfers of Voting Securities by either Venture
Partner that are not in compliance with this Section shall be of no force or
effect and shall be null and void.
3.4. PROXY SOLICITATIONS, ETC. Neither Venture Partner shall solicit
proxies, assist any other person in any way, directly or indirectly, in the
solicitation of proxies, become a "participant" in a "solicitation," or assist
any "participant" in a "solicitation" (as such terms are defined in Rule 14a-1
of Regulation 14A under the Exchange Act) in opposition to the recommendation of
the Board of Directors of the other Venture Partner, or submit any proposal for
the vote of shareholders of the other Venture Partner, or recommend or request
or induce or attempt to induce any other person to take any such actions, or
seek to advise, encourage or influence any other person with respect to the
voting of Voting Securities of the other Venture Partner, in each case without
the prior approval of the Board of Directors of such other Venture Partner.
3.5. NO VOTING TRUSTS, POOLING AGREEMENTS, OR FORMATION OF "GROUPS".
Without the prior approval of the Board of Directors of the other Venture
Partner, neither Venture Partner shall form, join in or in any other way
participate in any partnership, pooling agreement, syndicate, voting trust or
other "group", including a 13D/G Group, with respect to the Voting Securities of
the other Venture Partner, or enter into any agreement (other than this
Agreement or the Registration Rights Agreement) or arrangement or otherwise act
in concert with any other person or group, for the purpose of acquiring,
holding, voting or disposing of the Voting Securities of the other Venture
Partner.
3.6. NO SOLICITATION OF BIDDERS. Neither Venture Partner shall
directly or indirectly assist, solicit, encourage or induce any person to bid
for or acquire outstanding Voting Securities of the other Venture Partners in
excess of 5.0% of the Combined Voting Power of the Voting Securities of the
other Venture Partner.
3.7. NON-CIRCUMVENTION. Neither Venture Partner or any affiliate of
any such Venture Partner shall take any action, alone or in concert with any
other person or group, to seek control of the other Venture Partner or otherwise
seek to circumvent the limitations of the provisions of this Section 3 of this
Agreement without the approval of the Board of Directors of the other Venture
Partner. Without limiting the generality of the foregoing, neither Venture
Partner shall, without the approval of the Board of Directors of the other
Venture Partner, (i) present to such other Venture Partner or to any third party
any proposal that could reasonably be expected to result in a change of control
of such other Venture Partner or in any increase beyond the percentage specified
in Section 3.1 in the Combined Voting Power of the Voting Securities of such
other Venture Partner beneficially owned in the aggregate by the first Venture
Partner, (ii) publicly suggest or announce its willingness or desire to engage
in a transaction or group of transactions, or have another person engage in a
transaction or group of transactions, that would result in a change of control
of the first Venture Partner or in any increase beyond the percentage specified
in Section 3.1 in the Combined Voting Power of the Voting Securities of such
other Venture Partner beneficially owned in the aggregate by the first Venture
Partner, (iii) initiate, request, induce or attempt to induce or give
encouragement to any other person to initiate any proposal that could reasonably
be expected to result in a change of control of such other Venture Partner or in
any increase beyond the percentage specified in Section 3.1 in the Combined
Voting Power of the Voting Securities of such other Venture Partner beneficially
owned in the aggregate
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by the first Venture Partner, or (iv) publicly request, suggest or announce its
desire to amend or obtain a waiver of any provision of this Agreement.
3.8. CONFIDENTIAL INFORMATION. The provisions of Section 12.18 of
the LLC Agreement, as in effect on the date hereof, are hereby incorporated by
reference and made a part of this document as though fully set forth herein.
Such obligations shall continue to be binding on the parties to this Agreement
during its term, notwithstanding any earlier termination of the LLC Agreement.
In addition, each Venture Partner hereby acknowledges that the United
States securities laws prohibit any person who has received from an issuer
material, non-public information, including certain information that may be part
of the Confidential Material (as defined in the LLC Agreement), while such
information is non-public, from purchasing or selling securities of such issuer
or from communicating such information to any other person under circumstances
in which it is reasonably foreseeable that such person is likely to purchase or
sell such securities.
3.9. VOTING. Each of the Venture Partners shall, at any annual or
special meeting of the shareholders at which directors of the other Venture
Partner are to be elected, or in connection with a solicitation of consents
through which directors of the other Venture Partner are to be selected, vote
(or give a written consent with respect to) all of its Voting Securities in the
other Venture Partner (i) in favor of the election to the Board of Directors of
such other Venture Partner of the persons nominated by the Board of Directors of
such other Venture Partner, and all other proposals recommended by the Board of
Directors of such other Venture Partner, and (ii) in opposition to any nominee
or proposal opposed by such Board of Directors.
3.10. NO SOLICITATION OF EMPLOYEES. Each Venture Partner hereby
agrees that during the term of this Agreement, it will not, and will direct its
Representatives (as defined in the LLC Agreement) not to, (i) solicit for
employment or advise or recommend to any other person that it solicit for
employment any executive officer of the other Venture Partner or any other
employee of the other Venture Partner directly involved in the activities of the
Joint Venture, (ii) advise or encourage any such executive officer or other
employee of the other Venture Partner to terminate his employment with such
other Venture Partner, or (iii) interfere or attempt to interfere with the
employment or any contractual relationship between the other Venture Partner and
any such executive officer or other employee.
3.11. WAIVER OF REQUIREMENTS. Notwithstanding anything in this
Section 3 to the contrary, any of the terms of Sections 3.10 through 3.9 may be
waived, in whole or in part, and as to particular transactions or matters, if
the Board of Directors of the affected Venture Partner shall have approved such
waiver.
SECTION 4. TERM OF AGREEMENT.
This Agreement shall terminate on August 8, 2006; PROVIDED, HOWEVER,
that in the event that the LLC Agreement is terminated for any reason, then this
Agreement shall terminate upon the later to occur of (i) the 18th month
anniversary of such termination, or (ii) such time as such Venture Partner owns
Voting Securities of the other Venture Partner representing less than
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2% of the Combined Voting Power of such other Venture Partner's Voting
Securities and, PROVIDED, FURTHER, HOWEVER, that in no event shall this
Agreement expire prior to August 8, 1999.
SECTION 5. LEGEND AND STOP TRANSFER ORDER.
To assist in effectuating the provisions of this Agreement, each
Venture Partner hereby consents (i) to the placement within 10 business days
after any Voting Securities of the other Venture Partner become subject to the
provisions of this Agreement, of the following legend on all certificates
representing ownership of Voting Securities owned of record or beneficially by
the specified Venture Partner, until such shares are sold, transferred or
disposed in a manner permitted hereby:
The securities represented by this certificate are subject
to restrictions on voting and transfer as set forth in a
Standstill Agreement and a Warrant Agreement by and between
the Company and the holder of such securities, and may not
be sold, transferred, pledged, hypothecated or otherwise
disposed of except in accordance therewith. Copies of said
Standstill Agreement and Warrant Agreement are on file at
the office of the Corporate Secretary of the Company.
and (ii) to the entry of stop transfer orders with the transfer agent or agents
of Company Voting Securities against the transfer by such Venture Partner of
Voting Securities of the other Venture Partner except in compliance with the
requirements of this Agreement. Each Venture Partner agrees to remove promptly
all legends and stop transfer orders with respect to the transfer of Voting
Securities made in compliance with the provisions of this Agreement.
SECTION 6. REMEDIES.
Each of the Venture Partners acknowledge and agree that (i) the
provisions of this Agreement are reasonable and necessary to protect the proper
and legitimate interests of the parties hereto, and (ii) the parties would be
irreparably damaged in the event any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to
preliminary and permanent injunctive relief to prevent breaches of the
provisions of this Agreement by the other parties without the necessity of
proving actual damages or of posting any bond, and to enforce specifically the
terms and provisions hereof and thereof in any court of the United States or any
state thereof having jurisdiction, which rights shall be cumulative and in
addition to any other remedy to which the parties may be entitled hereunder or
at law or equity.
SECTION 7. GENERAL PROVISIONS.
7.1. CHOICE OF LAW. This Agreement shall be construed, interpreted
and the rights of the parties determined in accordance with the laws of the
State of California without reference to the choice of laws provisions thereof.
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7.2. NOTICES. All notices, consents, requests, instructions,
approvals and other communications provided for herein and all legal process in
regard hereto shall be in writing and shall be decreed to be validly given, made
or served when delivered personally, transmitted by telex or telecopier, or
deposited in the U.S. mail, postage prepaid, for delivery by express, registered
or certified mail, or delivered to a recognized overnight courier service,
addressed as follows:
If to Marshall:
Marshall Industries
9320 Telstar Avenue
El Monte, California 91731
Attention: Chief Financial Officer
If to Wyle:
Wyle Electronics
15370 Barranca Parkway
Irvine, California 92718
Attention: Chief Financial Officer
or to such other address as may be specified in a notice given pursuant to this
Section. All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back if telexed; when receipt acknowledged, if telecopied; and the next
business day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery. The parties may change the address to
which notices are to be given by giving five days' prior notice of such change
in accordance herewith.
7.3. SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. The parties hereto agree that they will use
their best efforts at all times to support and defend this Agreement.
7.4. CERTAIN TRANSFERS. Each affiliate of a Venture Partner that
shall have the right to become the beneficial owner, within the meaning and
scope of Section 3 hereof, of Voting Securities of the other Venture Partner
shall, promptly upon becoming such owner or holder, execute and deliver to such
other Venture Partner, a joinder agreement, agreeing to be legally bound by this
Agreement. Neither Venture Partner shall transfer Voting Securities of the
other Venture Partner to any affiliate of such first Venture Partner unless the
transferee shall agree to be bound by this Agreement in the manner specified
above.
7.5. AMENDMENTS; WAIVERS. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed by each party hereto. No failure or delay by any party hereto 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
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privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
7.6. DESCRIPTIVE HEADINGS. Descriptive headings are for convenience
only and shall not control or affect the meaning or construction of any
provision of this Agreement. Reference in this Agreement to Sections are to
Sections of this Agreement. All pronouns and any variations thereof refer to
the masculine, feminine or neuter, singular or plural, as the identity of the
applicable person or persons may require.
7.7. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other
instruments and agreements referred to herein embody the entire agreement of the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements with respect thereto.
7.8. COUNTERPARTS. This Agreement shall become binding when one or
more counterparts hereof, individually or taken together, bears the signatures
of each of the parties hereto. This Agreement may be executed in any number of
counterparts, each of which shall be an original as against the party whose
signature appears thereon, or on whose behalf such counterpart is executed, but
all of which taken together shall be one and the same agreement.
7.9. NO PARTNERSHIP. No partnership, joint venture or joint
undertaking is intended to be, or is, formed between the parties hereto or any
of them by reason of this Agreement or the transactions contemplated herein.
7.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the successors and assigns of
the parties hereto. All of the terms, covenants and agreements contained in
this Agreement are solely for the benefit of the parties hereto, and their
respective successors and assigns, and no other parties (including, without
limitation, any other shareholder or creditor of either Venture Partner, or any
director, officer or employee of such Venture Partner) are intended to be
benefitted by, or entitled to enforce, this Agreement.
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IN WITNESS WHEREOF, the parties hereto intending to be legally bound
have duly executed this Agreement, all as of the day and year first above
written.
MARSHALL INDUSTRIES
By:
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Name:
Title:
WYLE ELECTRONICS
By:
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Name:
Title:
S-1