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EXHIBIT 1.4
EXECUTION COPY
$1,325,000,000
ARROW ELECTRONICS, INC
ZERO COUPON CONVERTIBLE SENIOR DEBENTURES DUE 2021
UNDERWRITING AGREEMENT
February 15, 2001
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February 15, 2001
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
Banc of America Securities LLC
Chase Securities Inc.
Robertson Stephens, Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
Arrow Electronics, Inc., a New York corporation (the "Company"), proposes
to issue and sell to the several Underwriters named in Schedule I hereto (the
"Underwriters") $1,325,000,000 aggregate principal amount at maturity of its
Zero Coupon Convertible Senior Debentures due 2021 (the "Firm Securities") to be
issued pursuant to the provisions of an Indenture dated as of January 15, 1997,
as supplemented (the "Indenture") between the Company and Bank of New York (as
successor to Bank of Montreal Trust Company), as Trustee (the "Trustee"). The
Company also proposes to issue and sell to the Underwriters not more than an
additional $198,750,000 aggregate principal amount at maturity of its Zero
Coupon Convertible Senior Debentures due 2021 (the "Additional Securities") if
and to the extent that you, as Manager of the offering, shall have determined to
exercise, on behalf of the Underwriters, the right to purchase such Zero Coupon
Convertible Senior Debentures due 2021 granted to the Underwriters in Section 2
hereof. The Firm Securities and the Additional Securities are hereinafter
collectively referred to as the "Securities". The Securities will be convertible
into shares of Common Stock of the Company, par value $1.00 per share (the
"Common Stock" and such reserved convertible shares into which the Securities
are convertible, the "Underlying Securities").
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3, including a prospectus,
relating to among other things, certain debt securities and equity securities of
the Company to be issued from time to time by the Company (the "Shelf
Securities") and has filed with, or transmitted for filing to, or shall promptly
hereafter file with or transmit for filing to the Commission a prospectus
supplement (the "Prospectus Supplement") specifically relating to the Securities
pursuant to Rule
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424 under the Securities Act of 1933, as amended (the "Securities Act"). The
registration statement as amended at the time it becomes effective, is
hereinafter referred to as the "Registration Statement" and if the Company has
filed an abbreviated registration statement to register additional Zero Coupon
Senior Convertible Debentures due 2021 pursuant to Rule 462(b) under the
Securities Act (the "Rule 462 Registration Statement"), then any reference
herein to the term "Registration Statement" shall be deemed to include such Rule
462 Registration Statement. The related prospectus in the form first used to
confirm sales of Securities is hereinafter referred to as the "Basic
Prospectus." The term "Prospectus" means the Basic Prospectus together with the
Prospectus Supplement. The term "preliminary prospectus" means a preliminary
prospectus supplement specifically relating to the Securities, together with the
Basic Prospectus. As used herein, the terms "Basic Prospectus," "Prospectus" and
"preliminary prospectus" shall include in each case the documents, if any,
incorporated by reference therein. The terms "supplement", "amendment" and
"amend" as used herein shall include all documents deemed to be incorporated by
reference in the Prospectus that are filed subsequent to the date of the Basic
Prospectus by the Company with the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
1. Representations and Warranties. The Company represents and warrants to
and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by
the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus complied or
will comply when so filed in all material respects with the Exchange Act
and the applicable rules and regulations of the Commission thereunder,
(ii) each part of the Registration Statement, when such part became
effective, did not contain and, each such part as amended or supplemented,
if applicable, will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, (iii) the Registration
Statement and the Prospectus comply and, as amended or supplemented, if
applicable, will comply in all material respects with the Securities Act
and the applicable rules and regulations of the Commission thereunder and
(iv) the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain an untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
the
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light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph
do not apply to (A) statements or omissions in the Registration Statement
or the Prospectus made in reliance upon and in conformity with information
furnished to the Company by an Underwriter through you expressly for use
therein or (B) that part of the Registration Statement that constitutes
the Statement of Eligibility (Form T-1) under the Trust indenture Act of
1939, as amended (the "Trust Indenture Act"), of the Trustee.
(c) Since the respective dates as of which information is given in
the Prospectus, there has not been any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position, or results
of operations of the Company and its Material Subsidiaries (as defined
below), otherwise than as set forth or contemplated in the Prospectus.
(d) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of New York,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which the
conduct of its business or its ownership or leasing of property requires
such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole; and each subsidiary
of the Company which constitutes a "significant-subsidiary" within the
meaning of Rule 1-02 of Regulation S-X and each subsidiary of the Company
which constitutes a "restricted subsidiary" within the meaning of the
Indenture (together, the "Material Subsidiaries"), has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with power and
authority (corporate and other) to own its properties and to conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(e) This Agreement has been duly authorized, executed and delivered
by the Company; the Securities have been duly authorized and, when issued
and delivered pursuant to this Agreement, will have been
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duly executed, authenticated, issued and delivered and will constitute
valid and legally binding obligations of the Company entitled to the
benefits provided by the Indenture, under which they are to be issued,
which will be substantially in the form previously delivered to you; the
Indenture has been duly qualified under the Trust Indenture Act and has
been duly authorized, executed and delivered by the Company and
constitutes a valid and legally binding instrument, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles; and the Securities and the Indenture will conform to the
descriptions thereof in the Prospectus and will be in substantially the
form previously delivered to you.
(f) The Underlying Securities issuable upon conversion of the
Securities have been duly authorized and reserved and, when issued upon
conversion of the Securities in accordance with the terms of the
Securities, will be validly issued, fully paid and non-assessable, and the
issuance of the Underlying Securities will not be subject to any
preemptive or similar rights.
(g) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the Securities Act, complied when so
filed in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder.
(h) Prior to the date hereof, neither the Company nor any of its
affiliates has taken any action which is designed to or which has
constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of the Company
in connection with the offering of the Securities.
(i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement, the
Indenture, the Securities and the Underlying Securities will not
contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or any agreement or other
instrument binding upon the Company or any of its Material Subsidiaries or
to which any of its or their properties are subject that is material to
the Company and its subsidiaries, taken as a whole, or any material
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company or any Material Subsidiary or any of their
properties, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the
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Company of its obligations under this Agreement, the Indenture the
Securities or the Underlying Securities, except such as may be required by
the securities or Blue Sky laws of the various states in connection with
the offer and sale of the Securities.
(j) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the Company and its subsidiaries, taken
as a whole, and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(k) The Company is not, and after giving effect to the offering and
sale of the Securities, will not be an "investment company", as such term
is defined in the United States Investment Company Act of 1940, as amended
(the "Investment Company Act").
(1) The Company and its Material Subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure
to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(m) Ernst & Young LLP, who have certified certain financial
statements of the Company and its subsidiaries, and, to the Company's best
knowledge after due inquiry, PricewaterhouseCoopers LLP, who have
certified certain financial statements of Wyle Electronics, Inc., are each
independent public accountants as required by the Securities Act and the
rules and regulations of the Commission thereunder.
2. Agreements to Sell and Purchase. Subject to the terms and conditions
herein set forth, the Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
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purchase from the Company, at a purchase price of 44.1569% of the aggregate
principal amount thereof at maturity (the "Purchase Price") with respect to the
Securities plus accrued Original Issue Discount (as defined in the Indenture),
if any, to the Closing Date, the principal amount of Securities set forth
opposite the name of such Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Securities, and the Underwriters shall have a
one-time right to purchase, severally and not jointly, up to $ 198,750,000
aggregate principal amount at maturity of Additional Securities at the Purchase
Price plus accrued Original Issue Discount, if any, to the date of payment and
delivery. If you, on behalf of the Underwriters, elect to exercise such option,
you shall so notify the Company in writing not later than 30 days after the date
of this Agreement, which notice shall specify the aggregate principal amount at
maturity of Additional Securities to be purchased by the Underwriters and the
date on which such Additional Securities are to be purchased. Such date may be
the same as the Closing Date but not earlier than the Closing Date nor later
than ten business days after the date of such notice, Additional Securities may
be purchased as provided in Section 4 solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Securities. If
any Additional Securities are to be purchased, each Underwriter agrees,
severally and not jointly, to purchase the aggregate principal amount at
maturity of Additional Securities (subject to such adjustments to eliminate
fractional Securities as you may determine) that bears the same proportion to
the total aggregate principal amount at maturity of Additional Securities to be
purchased as the aggregate principal amount at maturity of Firm Securities set
forth in Schedule I opposite the name of such Underwriter bears to the total
aggregate principal amount at maturity of Firm Securities.
The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 90 days after the date of the offering of the
Securities, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of common stock or any securities convertible
into or exercisable or exchangeable for common stock or (ii) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the common stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of common stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the issue and sale of the Securities under this
Agreement, (B) the issuance of Common Stock upon conversion of the Securities
under this Agreement or (C) the
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granting of options or the issuance and sale by the Company of any shares of
common stock upon the exercise of outstanding stock options or otherwise
pursuant to the Company's stock option or employee stock purchase plans of which
the Underwriters have been advised in writing.
3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Securities as soon after the parties have executed this Agreement as in your
judgment is advisable. The Company is further advised by you that the Securities
are to be offered to the public initially at 45.289% of their principal amount
at maturity (the "Public Offering Price") plus accrued Original Issue Discount,
if any, to the Closing Date and to certain dealers selected by you at a price
that represents a concession not in excess of $6.793 per Security.
4. Payment and Delivery. (a) The Securities to be purchased by each
Underwriter hereunder, in definitive form, registered in the name of Cede & Co.
as nominee of The Depository Trust Company ("DTC"), or such other names as you
may request upon at least forty-eight hours prior notice to the Company, shall
be delivered by or on behalf of the Company to you, for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the purchase
price therefor by wire transfer to an account designated by the Company, payable
to the order of the Company in Federal (same-day) funds. The Company will cause
the certificates representing the Securities to be made available for checking
and packaging at least twenty-four hours prior to the Closing Date (as defined
below) at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be 9:30 a.m., New
York City time, on February 21, 2001 or such other time and date as you and the
Company may agree upon in writing. Such time and date are herein called the
"Closing Date".
(b) The documents to be delivered at the Closing Date by or on
behalf of the parties hereto pursuant to Section 6 hereof, including the
cross-receipt for the Securities and any additional documents requested by
the Underwriters pursuant to Section 6 hereof, will be delivered at such
time and date at the offices of Milbank, Tweed, Hadley & McCloy LLP, 1
Chase Manhattan Plaza, New York, NY 10005 (the "Closing Location") and the
Securities will be delivered at the Designated Office, all at the Closing
Date. A meeting will be held at the Closing Location at 9:30 a.m., New
York City time, on the New York Business Day next preceding the Closing
Date, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 4, "New York Business
Day" shall mean each Monday, Tuesday, Wednesday, Thursday
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and Friday which is not a day on which banking institutions in New York
are generally authorized or obligated by law or executive order to close.
(c) Payment for any Additional Securities shall be made by or on
behalf of the Underwriters by wire transfer to an account designated by
the Company, payable to the order of the Company in Federal (same day)
funds against delivery of such Additional Securities for the respective
accounts of the several Underwriters at 10:00 a.m., New York City time, on
the date specified in the notice described in Section 2 or at such other
time on the same or on such other date, in any event not later than March
20, 2001, as shall be designated in writing by you. The time and date of
such payment are hereinafter referred to as the "Option Closing Date."
5. Covenants of the Company. The Company covenants with each Underwriter
as follows:
(a) To prepare the Registration Statement and Prospectus in a form
approved by you and, before amending or supplementing the Registration
Statement and Prospectus, to furnish to the Underwriters a copy of each
such proposed amendment or supplement and not to use any such proposed
amendment or supplement to which the Underwriters reasonably object, and
to file with the Commission within the applicable period specified in Rule
424(b) under the Securities Act, any prospectus required to be filed
pursuant to such Rule.
(b) To endeavor to qualify the Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request and to maintain such qualification for as long as you
shall reasonably request.
(c) To furnish the Underwriters copies of the Registration Statement
and Prospectus and each amendment or supplement thereto signed by an
authorized officer of the Company (including exhibits thereto and
documents incorporated therein by reference), and additional copies
thereof, in each case in such quantities as you may from time to time
reasonably request, and if, during such period after the first date of the
public offering of the Securities as in the opinion of counsel of the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or a dealer, any event shall have
occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit
to State any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when
such Prospectus is delivered, not misleading, or if, in the opinion of
counsel for
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the Underwriters, it shall be necessary during such same period to amend
or supplement the Prospectus to comply with applicable law, to notify you
and upon your request to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as you may from
time to time reasonably request of an amended Prospectus or a supplement
to the Prospectus which will correct such statement or omission or effect
such compliance;
(d) Not to be or become, at any time prior to the earlier of (i) the
expiration of three years after the Closing Date or (ii) the time when
there are no longer any Securities outstanding, an open-end investment
company, unit investment trust, closed-end investment company or
face-amount certificate company that is or is required to be registered
under Section 8 of the investment Company Act.
(e) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be
paid the following: (i) the fees, disbursements and expenses of the
Company's counsel and accountants in connection with the registration and
delivery of the Securities under the Securities Act and all other expenses
in connection with the preparation, printing and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and any
amendments and supplements to any of the foregoing and the mailing and
delivering of copies thereof to the Underwriters and dealers; (ii) the
cost of printing or producing any Agreement among Underwriters, this
Agreement, the Blue Sky and legal investment memoranda, closing documents
(including any compilations thereof) and any other documents in connection
with the offering, purchase, sale and delivery of the Securities; (iii)
all expenses in connection with the qualification of the Securities for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with
the Blue Sky and legal investment surveys; (iv) any fees charged by
securities rating services for rating the Securities; (v) the cost of
preparing the Securities; (vi) the fees and expenses of the Trustee, any
agent of the Trustee, including the fees and expenses of the Trustee's
counsel, any transfer agent, registrar or depository; (vii) the costs and
expenses of the Company relating to investor presentations on any "road
show" undertaken in connection with the marketing of the offering of the
Securities, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with
the prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
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the cost of any aircraft charted in connection with the road show, and all
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this
Section. It is understood, however, that, except as provided in this
Section and Sections 7 and 9 hereof, the Underwriters will pay all of
their own costs and expenses, including the fees of their counsel,
transfer taxes on resale of any of the Securities by them, and any
advertising expenses connected with any offers they may make.
6. Conditions to the Underwriters' Obligations. The obligations of the
Underwriters hereunder shall be subject, in their discretion, to the condition
that all representations and warranties and other statements of the Company
herein are, at and as of the Closing Date, true and correct, the condition that
the Company shall have performed all of its obligations hereunder theretofore to
be performed, and the following additional conditions:
(a) The Underwriters shall have received on the Closing Date an
opinion of Davis Polk & Wardwell, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in Sections 6(b)(iii),
6(b)(iv), 6(b)(v), 6(b)(vi) and 6(b)(ix) and clauses 6(b)(xi)(B),
6(b)(xi)(C), and 6(b)(xi)(D) below, as well as such other related matters
as you may reasonably request, and such counsel shall have received such
papers and information as they may reasonably request to enable them to
pass upon such matters.
(b) The Underwriters shall have received on the Closing Date an
opinion of Milbank, Tweed, Hadley & McCloy, outside counsel for the
Company, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
State of New York, has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus;
(ii) each Material Subsidiary of the Company organized in the
United States and named in Schedule II hereto, is validly existing
as a corporation in good standing under the laws of the jurisdiction
of its incorporation and has the corporate power and authority to
own its property and to conduct its business as described in the
Prospectus;
(iii) this Agreement has been duly authorized, executed and
delivered by the Company;
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(iv) the Securities have been duly authorized by the Company
and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will be
entitled to the benefits of the Indenture; the Securities will
constitute valid and legally binding obligations of the Company,
enforceable against it in accordance with their terms, subject to
the qualification that enforceability of the obligations of the
Company thereunder may be limited by bankruptcy, fraudulent
conveyance or transfer, insolvency, reorganization, moratorium, and
other similar laws relating to or affecting creditors' rights
generally and except as the enforceability thereof is subject to the
application of general principles of equity (regardless of whether
considered in a proceeding at law or in equity) including, without
limitation (x) the possible unavailability of specific performance,
injunctive relief or any other equitable remedy and (y) concepts of
good faith, reasonableness, fair dealing and materiality; and the
Securities and the Indenture conform in all material respects to the
descriptions thereof in the Prospectus;
(v) the indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered
by the Company and constitutes a valid and legally binding agreement
of the Company, enforceable against it in accordance with its terms,
subject to the qualification that enforceability of the obligations
of the Company thereunder may be limited by bankruptcy, fraudulent
conveyance or transfer, insolvency, reorganization, moratorium, and
other similar laws relating to or affecting creditors' rights
generally and except as the enforceability thereof is subject to the
application of general principles of equity (regardless of whether
considered in a proceeding at law or in equity) including, without
limitation (x) the possible unavailability of specific performance,
injunctive relief or any other equitable remedy and (y) concepts of
good faith, reasonableness, fair dealing and materiality;
(vi) the Underlying Securities reserved for issuance upon
conversion of the Securities have been duly authorized and reserved
and, when issued upon conversion of the Securities in accordance
with the terms of the Securities, will be validly issued, fully paid
and non-assessable and the issuance of the Underlying Securities
will not be subject to any preemptive or similar rights;
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(vii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement,
the Indenture and the Securities will not contravene any provision
of applicable law or the restated certificate of incorporation or
by-laws of the Company each as amended, provided that such counsel
expresses no opinion insofar as performance by the Company of the
indemnification provisions contained therein may be considered under
applicable law to contravene public policy;
(viii) no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for
the performance by the Company of its obligations under this
Agreement, the Indenture and the Securities, except such as may be
required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Securities;
(ix) the statements (A) in the Prospectus under the captions
"Certain United States Federal Income Tax Consequences,"
"Description of Debentures" and "Underwriters" and (B) in the
Registration Statement in Item 15, in each case insofar as such
statements constitute summaries of the legal matters or documents
referred to therein, fairly present in all material respects the
information called for with respect to such legal matters and
documents and fairly summarize the matters referred to therein;
(x) the Company is not, and after giving effect to the
offering and sale of the Securities and the application of the
proceeds thereof as described in the Prospectus will not be,
required to register as an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended;
(xi) such counsel (A) is of the opinion that each document, if
any, filed pursuant to the Exchange Act and incorporated by
reference in the Prospectus (other than the financial statements and
schedules as to which such counsel need not express any opinion)
complied when so filed as to form in all material respects with the
Exchange Act and the rules and regulations of the Commission
thereunder, (B) is of the opinion that the Registration Statement
and Prospectus (except for financial statements and schedules and
other financial and statistical data included therein as to which
such counsel need not express any opinion) comply as to form in all
material respects with the
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Securities Act and the applicable rules and regulations of the
Commission thereunder, (C) has no reason to believe that (except for
financial statements and schedules and other financial and
statistical data as to which such counsel need not express any
belief and except for that part of the Registration Statement that
constitutes the Form 1-1 heretofore referred to) the Registration
Statement and the prospectus included therein at the time the
Registration Statement became effective contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and (D) has no reason to believe that (except
for financial statements and schedules and other financial and
statistical data as to which such counsel need not express any
belief) the Prospectus contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading.
With respect to Section 6(b)(xi) above, Milbank, Tweed, Hadley &
McCloy may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and documents
incorporated therein by reference and review and discussion of the
contents thereof, but is without independent check or verification except
as specified. With respect to clauses 6(b)(xi)(B), 6(b)(xi)(C) and
6(b)(xi)(D) above, Davis Polk & Wardwell may state that their opinion and
belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements
thereto (other than the documents incorporated by reference) and review
and discussion of the contents thereof (including documents incorporated
therein by reference), but are without independent check or verification
except as specified.
(c) The Underwriters shall have received on the Closing Date an
opinion of Robert E. Klatell, Executive Vice President and General Counsel
of the Company, dated the Closing Date, in form and substance satisfactory
to the Underwriters, to the effect that:
(i) to the best of such counsel's knowledge, (x) there are no
legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or to which any of the properties
of the Company or any of its subsidiaries is subject other than as
described in the Prospectus and other than such legal or
governmental proceedings which individually or in the aggregate
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are not material to the Company and its subsidiaries taken as a
whole and no such proceedings are threatened by others, and (y)
there are no statutes, regulations, contracts or other documents
that are required to be described in the Prospectus or to be filed
or incorporated by reference as exhibits to the Prospectus that are
not described, filed, or incorporated as required;
(ii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement,
the Indenture and the Securities will not contravene any agreement
or other instrument known to such counsel binding upon the Company
or any of its subsidiaries or to which any of its or their
properties are subject (including, without limitation, any credit
agreement, indenture or other financing agreement) that is material
to the Company and its subsidiaries, taken as a whole, or, to the
best of such counsel's knowledge, any judgment, order or decree that
is material to the Company and its subsidiaries taken as a whole, of
any governmental body, agency or court having jurisdiction over the
Company or any subsidiaries or any of their properties.
(d) On each of the date hereof prior to the execution of this
Agreement and the Closing Date, Ernst & Young LLP, independent public
accountants, shall have furnished to you a letter or letters, dated the
respective dates of delivery thereof, in form and substance satisfactory
to you containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to
the financial statements and certain financial information contained or
incorporated by reference into the Registration Statement and the
Prospectus; provided that the letter delivered on the Closing Date shall
use a "cut-off date" not earlier than the date hereof.
(e) On each of the date hereof prior to the execution of this
Agreement, and the Closing Date, PricewaterhouseCoopers LLP, independent
auditors of Wyle Electronics, Inc., shall have furnished to you a letter
or letters dated the respective dates of delivery thereof, in form and
substance satisfactory to you, containing statements and information of
the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain
financial information contained or incorporated by reference into the
Registration Statement and the Prospectus.
(f) Since the date of this Agreement, or if earlier, the respective
dates as of which information is given in the Prospectus there shall not
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have been any change in the capital stock or long-term debt of the Company
or any of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of the
Company and its subsidiaries, otherwise than as set forth or contemplated
in the Prospectus, the effect of which, in any such case described in this
paragraph, is in the judgment of the Underwriters so material and adverse
as to make it impracticable or inadvisable to proceed with the offering or
the delivery of the Securities on the terms and in the manner contemplated
in this Agreement and in the Prospectus.
(g) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the Act,
and (ii) no such organization shall have publicly announced that it has
under surveillance or review, with possible negative implications, its
rating of any of the Company's debt securities.
(h) The Company shall have furnished or caused to be furnished to
you at the Closing Date a certificate of Robert E. Klatell, Executive Vice
President of the Company, satisfactory to you as to the accuracy of the
representations and warranties of the Company herein at and as of such
Closing Date, as to the performance by the Company of all of its
obligations hereunder to be performed at or prior to such Closing Date, as
to the matters set forth in subsection 6(f) and as to such other matters
as you may reasonably request.
(i) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto between you and the executive officers and directors of
the Company relating to sales and certain other dispositions of shares of
Common Stock or certain other securities, delivered to you on or before
the date hereof, shall be in force and effect on the Closing Date
7. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or
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caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to such Underwriter,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 7(a) or 7(b), such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated, in the case of
parties indemnified pursuant to Section 7(a), and by the Company, in the case of
parties indemnified pursuant to Section 7(b). The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff the indemnifying party agrees to indemnify the
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indemnified party from and against any loss or liability by reason of such
settlement or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
(d) To the extent the indemnification provided for in Section 7(a) or
7(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Securities or (ii) if the allocation
provided by clause 7(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 7(d)(i) above but also the relative fault of the Company on the one
hand and of the Underwriters on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other hand
in connection with the offering of the Securities shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the
Securities (before deducting expenses) received by the Company and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate public offering price of the Securities. The relative fault of the
Company on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the respective principal amounts of Securities they
have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 7(d). The amount paid or payable
by an
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indemnified party as a result of the losses, claims, damages and liabilities
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 7, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Securities underwritten by
it and distributed to the public were offered to the public exceeds the amount
of any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 7 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
(f) The indemnity and contribution provisions contained in this Section 7
and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Underwriter or any person controlling any Underwriter or
by or on behalf of the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Securities.
8. Termination. This Agreement shall be subject to termination by notice
given by you to the Company, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities; or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any event
specified in clauses 8(a)(i) through 8(a)(iv), such event, singly or together
with any other such event, makes it, in your judgment, impracticable to market
the Securities on the terms and in the manner contemplated in the Prospectus.
9. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
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If, on the Closing Date, or the Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Securities
that it has or they have agreed to purchase hereunder on such date, and the
aggregate principal amount at maturity of Securities which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not more
than one-tenth of the aggregate principal amount at maturity of the Securities
to be purchased on such date, the other Underwriters shall be obligated
severally in the proportions that the aggregate principal amount at maturity of
Firm Securities set forth opposite their respective names in Schedule I bears to
the aggregate principal amount at maturity of Firm Securities set forth opposite
the names of all such non-defaulting Underwriters, or in such other proportions
as you may specify, to purchase the Securities which such defaulting Underwriter
or Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the aggregate principal amount at maturity of Securities
that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 9 by an amount in excess of one-ninth of such
aggregate principal amount at maturity of Securities without the written consent
of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters
shall fail or refuse to purchase Firm Securities which it or they have agreed to
purchase hereunder on such date and the aggregate principal amount at maturity
of Securities with respect to which such default occurs is more than one-tenth
of the aggregate principal amount of Firm Securities to be purchased on such
date, and arrangements satisfactory to you and the Company for the purchase of
such Firm Securities are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter or the Company. In any such case either you or the Company shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. If, on the Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional Securities and the aggregate principal
amount at maturity of Additional Securities with respect to which such default
occurs is more than one-tenth of the aggregate principal amount at maturity of
Additional Securities to be purchased, the non-defaulting Underwriters shall
have the option to (a) terminate their obligation hereunder to purchase
Additional Securities or (b) purchase not less than the aggregate principal
amount at maturity of Additional Securities that such non-defaulting
Underwriters would have been obligated to purchase in the absence of such
default. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the
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Company shall be unable to perform its obligations under this Agreement, the
Company will reimburse the Underwriters or such Underwriters as have so
terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
10. Notices. In all dealings hereunder, you shall act on behalf of each of
the Underwriters, and the parties hereto shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any Underwriter made or
given by you on their behalf.
All statements, requests, notices and agreements hereunder shall be in
writing and, if to the Underwriters, shall be delivered or sent by mail, telex
or facsimile transmission to you as the representatives in care of Morgan
Stanley & Co. Incorporated, 1585 Broadway, New York, New York 10036; and, if to
the Company, shall be delivered or sent by mail, telex or facsimile transmission
to the address of the Company set forth in the Prospectus, Attention: Secretary;
provided, however, that any notice to a Underwriter pursuant to Section 7(c)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
11. Binding Effect. This Agreement shall be binding upon, and inure solely
to the benefit of, the Underwriters, the Company and, to the extent provided in
Sections 7 hereof, the officers and directors of the Company and each person who
controls the Company or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
12. Timing. Time shall be of the essence of this Agreement.
13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
14. Counterparts. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such respective counterparts shall together constitute
one and the same instrument.
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If the foregoing is in accordance with your understanding, please sign and
return to us 5 counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Underwriters and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
15. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
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Very truly yours,
ARROW ELECTRONICS, INC.
By: /s/ Robert E. Klatell
-------------------------------
Name: Robert E. Klatell
Title: Executive Vice President
24
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
Banc of America Securities LLC
J.P. Morgan Securities Inc.
Robertson Stephens, Inc.
Acting severally on behalf of themselves
and the several Underwriters named in
Schedule I hereto.
By: Morgan Stanley & Co. Incorporated
By: /s/ William Bergin
-------------------------------
Name: William Bergin
Title: Vice President
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SCHEDULE I
Aggregate Principal
Amount at Maturity of
Firm Securities To Be
Underwriter Purchased
- --------------------------------------------------------- ---------------------
Morgan Stanley & Co. Incorporated ....................... 927,500,000.00
Credit Suisse First Boston Corporation .................. 198,750,000.00
Goldman, Sachs & Co ..................................... 66,250,000.00
Banc of America Securities LLC .......................... 44,166,666.67
J.P. Morgan Securities Inc. ............................. 44,166,666.67
Robertson Stephens, Inc. ................................ 44,166,666.67
-----------------
Total: ............................................ $1,325,900,000.00
=================
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SCHEDULE II
List of Material Subsidiaries pursuant to Section 6(b)(ii)
Gates/Arrow Distributing, Inc.
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EXHIBIT A
[FORM OF LOCK-UP LETTER
TO BE SIGNED BY COMPANY OFFICERS AND DIRECTORS]
February ___, 2001
Morgan Stanley & Co. incorporated
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
Banc of America Securities LLC
J.P. Morgan Securities Inc.
Robertson Stephens, Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated
("Morgan Stanley"), Credit Suisse First Boston Corporation, Goldman, Sachs &
Co., Banc of America Securities LLC, Chase Securities Inc. and Robertson
Stephens, Inc. propose to enter into an Underwriting Agreement (the
"Underwriting Agreement") with Arrow Electronics, Inc., a New York corporation
(the "Company"), providing for the public offering (the "Public Offering") by
the several Underwriters, including us (the "Underwriters"), of $1,325,000,000
aggregate principal amount at maturity of its Zero Coupon Convertible Senior
Debentures due 2021 (the "Securities"). The Securities will be convertible into
shares of common stock of the Company, par value $1.00 per share (the "Common
Stock").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, it will not, during the period commencing on the
date on which the Company initially files the registration statement amendment
with the Securities and Exchange Commission with respect to the Public Offering
and
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ending 90 days after the date of the final prospectus supplement relating to the
Public Offering (the "Prospectus"), (1) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock,
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) the sale of any
Securities to the Underwriters pursuant to the Underwriting Agreement or (b)
transactions relating to shares of Common Stock or other securities acquired in
open market transactions after the completion of the Public Offering.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
------------------------------
Name:
------------------------------
Address:
4