-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HKTHHm4HRILLwP5B2YguG0qJUG5Y7hdZBXH61Z1SmpsTCVEtM4lFeDYcj+pKWjSC B43e8PJahgxHXKJZ2xc05A== 0000950123-01-001192.txt : 20010214 0000950123-01-001192.hdr.sgml : 20010214 ACCESSION NUMBER: 0000950123-01-001192 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 20010213 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARROW ELECTRONICS INC CENTRAL INDEX KEY: 0000007536 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 111806155 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-50572 FILM NUMBER: 1536543 BUSINESS ADDRESS: STREET 1: 25 HUB DR CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 5163911300 S-3/A 1 y42939a1s-3a.txt AMENDMENT NO. 1 TO FORM S-3 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 13, 2001 REGISTRATION NO. 333-50572 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ARROW ELECTRONICS, INC. NEW YORK 11-1806155 (EXACT NAME OF REGISTRANT (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER AS SPECIFIED IN CHARTER) OF INCORPORATION IDENTIFICATION NUMBER) OR ORGANIZATION) 5065 (PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER) 25 HUB DRIVE MELVILLE, NEW YORK 11747 (516) 391-1300 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ROBERT E. KLATELL EXECUTIVE VICE PRESIDENT ARROW ELECTRONICS, INC. 25 HUB DRIVE MELVILLE, NEW YORK 11747 (516) 391-1300 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) WITH A COPY TO: HOWARD S. KELBERG DONALD B. BRANT MILBANK, TWEED, HADLEY & MCCLOY LLP ONE CHASE MANHATTAN PLAZA NEW YORK, NEW YORK 10005 (212) 530-5000 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this Registration Statement until all the securities hereunder have been sold. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, check the following box. [ ] If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] ------------ If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] ------------ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] 2 EXPLANATORY NOTE The securities registered hereby may be offered from time to time by means of the basic prospectus included herein and, when a particular series of such securities is being offered or sold, such series of securities may be offered or sold by means of the basic prospectus included herein and an applicable prospectus supplement. If any series of securities registered hereby are offered or sold in reliance upon the procedures contemplated by Rule 430A under the Securities Act of 1933, as amended, such series of securities will be offered or sold by means of the basic prospectus included herein and a prospectus supplement in the form included herein. Series of securities registered hereby which are not offered or sold in reliance upon the procedures contemplated by Rule 430A may be offered or sold by means of the basic prospectus included herein and a prospectus supplement in a form other than the form of prospectus supplement included herein. 3 The information in this prospectus supplement is not complete and may be changed. This prospectus supplement and the accompanying prospectus are not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS SUPPLEMENT (Subject to Completion) Issued February 13, 2001 (To Prospectus dated February 13, 2001, Subject to Completion) $ [ARROW LOGO] Arrow Electronics, Inc. ZERO COUPON CONVERTIBLE SENIOR DEBENTURES DUE 2021 ------------------------ HOLDERS MAY CONVERT THE DEBENTURES INTO SHARES OF OUR COMMON STOCK AT ANY TIME PRIOR TO MATURITY AT A CONVERSION RATE OF SHARES PER $1,000 PRINCIPAL AMOUNT AT MATURITY. THE CONVERSION RATE WILL NOT BE ADJUSTED FOR ACCRUED ORIGINAL ISSUE DISCOUNT, BUT WILL BE SUBJECT TO ADJUSTMENT IN CERTAIN EVENTS. ------------------------ ON OR AFTER FEBRUARY , 2006, WE MAY REDEEM ANY OF THE DEBENTURES AT THE REDEMPTION PRICES SET FORTH IN THIS PROSPECTUS SUPPLEMENT. HOLDERS MAY REQUIRE US TO REPURCHASE THE DEBENTURES AT THE REPURCHASE PRICES SET FORTH IN THIS PROSPECTUS SUPPLEMENT ON FEBRUARY , 2006, FEBRUARY , 2011 AND FEBRUARY , 2016. ------------------------ FOR A MORE DETAILED DESCRIPTION OF THE DEBENTURES, SEE "DESCRIPTION OF DEBENTURES" BEGINNING ON PAGE S-22. ------------------------ OUR COMMON STOCK IS LISTED ON THE NEW YORK STOCK EXCHANGE UNDER THE SYMBOL "ARW." ON FEBRUARY 12, 2001, THE LAST REPORTED SALE PRICE OF OUR COMMON STOCK ON THE NEW YORK STOCK EXCHANGE WAS $28.91 PER SHARE. ------------------------ PRICE % AND ACCRUED ORIGINAL DISCOUNT, IF ANY ------------------------ We have granted the underwriters the right to purchase up to an additional $ aggregate principal amount at maturity of debentures to cover over-allotments. ------------------------ The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense. ------------------------ Morgan Stanley & Co. Incorporated expects to deliver the debentures to purchasers on February , 2001. ------------------------ MORGAN STANLEY DEAN WITTER CREDIT SUISSE FIRST BOSTON GOLDMAN, SACHS & CO. BANC OF AMERICA SECURITIES LLC JP MORGAN ROBERTSON STEPHENS , 2001 4 TABLE OF CONTENTS PROSPECTUS SUPPLEMENT - ------------------------------------- PAGE ------- Information Relating to Forward-Looking Statements......... S-2 Prospectus Supplement Summary........ S-3 Use of Proceeds...................... S-7 Common Stock Price Range............. S-7 Dividend Policy...................... S-7 Capitalization....................... S-8 Selected Historical Financial Data... S-9 Management's Discussion and Analysis of Financial Condition and Results of Operations...................... S-10 Business............................. S-14 Management........................... S-21 Description of Debentures............ S-22 Certain United States Federal Income Tax Considerations................. S-33 Underwriters......................... S-36 Legal Matters........................ S-37 Experts.............................. S-37 PROSPECTUS - ------------------------------------- PAGE ------- About This Prospectus................ 2 Where You Can Find More Information.. 2 Forward Looking Statements........... 3 Arrow Electronics, Inc............... 3 Use of Proceeds...................... 4 Consolidated Ratios of Earnings To Fixed Charges...................... 4 Description of Debt Securities....... 5 Description of Capital Stock......... 21 Description of Warrants.............. 23 Plan of Distribution................. 24 Validity of Securities............... 25 Experts.............................. 25
This document is in two parts. The first part is this prospectus supplement, which describes the terms of the offering of convertible senior debentures and also adds to and updates information contained in the accompanying prospectus and the documents incorporated by reference into the prospectus. The second part is the accompanying prospectus, which gives more general information, some of which may not apply to the convertible senior debentures. You should rely only on the information contained in or incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not authorized anyone to provide you with information that is different from that contained or incorporated by reference in this prospectus supplement or the accompanying prospectus. We are offering to sell the convertible senior debentures only where offers and sales are permitted. The information contained in or incorporated by reference in this prospectus supplement and the accompanying prospectus is accurate only as of the date of this prospectus supplement, regardless of the time of delivery of this prospectus supplement or of any sale of the convertible senior debentures. INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS This prospectus supplement includes forward-looking statements that are subject to certain risks and uncertainties which could cause actual results or facts to differ materially from such statements for a variety of reasons, including, but not limited to: industry conditions, changes in product supply, pricing, and customer demand, competition, other vagaries in the electronic components and commercial computer products markets, and changes in relationships with key suppliers. Forward-looking statements are those statements which are not statements of historical fact. You can identify these forward-looking statements by forward-looking words such as "expects," "anticipates," "intends," "plans," "may," "will," "believes," "seeks," "estimates," and similar expressions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any of the forward-looking statements. S-2 5 PROSPECTUS SUPPLEMENT SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements, including the notes thereto, included or incorporated by reference in this prospectus supplement. Unless otherwise specified, all information herein assumes no exercise of the underwriters' over-allotment option. References to "we," "us," "our," or "Arrow" refer to Arrow Electronics, Inc. and its subsidiaries, unless the context requires otherwise or the text indicates otherwise. ARROW ELECTRONICS, INC. We are the world's largest distributor of electronic components and computer products to industrial and commercial customers. We believe we are one of the global electronics distribution industry's leaders in state-of-the-art operating systems, employee productivity, value-added programs, and total quality assurance. Through a network of more than 225 sales facilities and 19 distribution centers in 38 countries, we deliver inventory solutions, materials management services, and design and technical support our customers need when, where and how they need them. We are diversified across suppliers, geographic regions, and customers. We are a leading distributor for over 600 suppliers. Our distribution network spans the world's three dominant electronics markets: the Americas, Europe, and the Asia/Pacific region. Through our business units in these vital industrialized regions, we serve over 175,000 original equipment manufacturers, or OEMs, and commercial customers worldwide. OEMs include manufacturers of computer and office products, industrial equipment (including machine tools, factory automation, and robotic equipment), telecommunications products, aircraft and aerospace equipment, and scientific and medical devices. Commercial customers are mainly value-added resellers of computer systems. Our strategy is to be the premier supply-chain partner for our customers and suppliers, assisting them throughout the supply chain--from concept through production. We believe we can achieve our strategy through: - Technology-based sales and marketing teams; - Broad array of value-added services; - State-of-the-art technology, systems and logistics networks; - Opportunistic acquisitions; and - Leadership in e-commerce. S-3 6 THE OFFERING Securities Offered......... $ aggregate principal amount at maturity of zero coupon convertible senior debentures due February , 2021, plus an additional $ aggregate principal amount at maturity if the underwriters' over-allotment option is exercised in full. We will not pay periodic interest on the debentures, except as described under "Description of Debentures -- Optional Conversion to Semiannual Coupon Debentures Upon a Tax Event." Yield to Maturity of Debentures............... % per year compounded semi-annually, calculated from February , 2001. Conversion................. You have the option to convert the debentures into our common stock at any time prior to maturity or their earlier redemption. You can convert the debentures into common stock at a fixed conversion rate of shares per $1,000 principal amount at maturity. The conversion rate will be subject to adjustment if certain events occur. See "Description of Debentures -- Conversion of Debentures by Holders." You may exercise the option to convert only before the debentures reach maturity and before we redeem or repurchase them. Ranking.................... The debentures will be unsecured and unsubordinated obligations of our company and are pari passu in right of payment with all of our existing and future unsubordinated and unsecured obligations. Original Issue Discount.... The debentures are being offered at original issue discount for United States federal income tax purposes equal to the excess of their principal amount at maturity over the amount of their issue price. We will not make periodic cash payments of interest on the debentures, except as described under "Description of Debentures -- Optional Conversion to Semiannual Coupon Debentures Upon a Tax Event." Nonetheless, you should be aware that accrued original issue discount will be included periodically in your gross income for United States federal income tax purposes. See "Certain United States Federal Income Tax Considerations." You should be aware that you will be responsible for the payment of taxes that may be due even though you may not receive any cash payment at the time original issue discount is included in your gross income. Redemption at Our Option... We cannot redeem the debentures before February , 2006. At any time on or after February , 2006, we can redeem all or part of the debentures for cash. You can convert the debentures after they are called for redemption at any time up to three business days prior to the redemption date. S-4 7 Redemption prices are equal to the issue price plus accrued original issue discount through the date of redemption. See "Description of Debentures -- Redemption of Debentures at Our Option." Fundamental Change......... You may require us to repurchase the debentures if we experience a Fundamental Change. The Fundamental Change purchase price is equal to the issue price plus accrued original issue discount through the date of repurchase. See "Description of Debentures -- Repurchase at the Option of the Holder Upon a Fundamental Change." Repurchase at the Option of the Holder..... You may require us to repurchase the debentures on February , 2006, February , 2011 and February , 2016 at a repurchase price equal to the issue price plus accrued original issue discount through the date of repurchase. We may elect to pay all or a portion of the repurchase price in common stock instead of cash, subject to certain conditions. See "Description of Debentures -- Repurchase of Debentures at the Option of the Holder." Conversion to Semiannual Coupon Debenture......... If a tax event prevents us from deducting original issue discount payable on the debentures, we can elect to pay you interest in cash and terminate the further accrual of original issue discount. See "Description of Debentures -- Optional Conversion to Semiannual Coupon Debentures Upon a Tax Event." Certain Covenants.......... The debentures are subject to a number of covenants, including restrictions on liens, sale and leaseback transactions, and mergers, consolidations, and the sale of substantially all of our assets, as more fully described in the prospectus. Use of Proceeds............ Arrow expects to use the net proceeds of this offering to repay short-term debt. NYSE Common Stock Symbol................... ARW S-5 8 SUMMARY HISTORICAL FINANCIAL DATA The following table contains our summary historical financial data as of the dates and for the periods indicated. We have derived the historical financial data as of and for each of the years in the five-year period ended December 31, 1999 from our audited consolidated financial statements. We have derived the historical financial data as of September 30, 2000 and for the nine-month periods ended September 30, 2000 and September 30, 1999 from our unaudited consolidated financial statements which, in the opinion of management, include all adjustments necessary for a fair presentation. Nine-month results, however, are not necessarily indicative of the results that may be expected for any other interim period or for a full year. You should read the following data together with our other historical financial information and statements (including related notes) of us incorporated by reference in this prospectus supplement. Please also read "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Capitalization" included in this prospectus supplement.
NINE MONTHS ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31, ----------------- ------------------------------------------------ 2000 1999(A) 1999(B) 1998 1997(C) 1996 1995 ------ ------- ------- ------ ------- ------ ------ (IN MILLIONS EXCEPT PER SHARE DATA) INCOME STATEMENT DATA Sales............................................ $9,268 $6,827 $9,313 $8,345 $7,764 $6,535 $5,919 Operating income................................. 537 230 339 353 375 401 423 EBITDA(d)........................................ 598 308 433 405 440 438 459 Interest expense................................. 107 78 106 81 67 38 46 Net income....................................... 249 80 124 146 164 203 203 Diluted earnings per share(e).................... $ 2.53 $ 0.83 $ 1.29 $ 1.50 $ 1.64 $ 1.98 $ 2.03
AT AT DECEMBER 31, SEPTEMBER 30, ---------------------------------------------- 2000 1999 1998 1997 1996 1995 ------------- ------ ------ ------ ------ ------ (IN MILLIONS) BALANCE SHEET DATA Accounts receivable and inventory................... $4,209 $3,084 $2,676 $2,475 $1,948 $1,979 Total assets........................................ 5,707 4,483 3,840 3,538 2,710 2,701 Total long-term debt and capital lease obligations....................................... 859 1,533 1,047 830 353 461 Shareholders' equity................................ 1,766 1,551 1,487 1,361 1,358 1,196
- ------------ (a) Operating and net income include a special charge of $25 million and $16 million after taxes, respectively, associated with the acquisition and integration of Richey Electronics, Inc. ("Richey") and the electronics distribution group of Bell Industries, Inc. ("EDG"). Excluding this charge, operating income, net income, and earnings per share on a diluted basis would have been $255 million, $97 million, and $1.01, respectively. (b) Operating and net income include a special charge of $25 million and $16 million after taxes, respectively, associated with the acquisition and integration of Richey and EDG. Excluding this charge, operating income, net income, and earnings per share on a diluted basis would have been $363 million, $141 million, and $1.46, respectively. (c) Operating and net income include special charges totaling $59 million and $40 million after taxes, respectively, associated with the realignment of our North American Components Operations and the acquisition and integration of the volume electronic component distribution businesses of Premier Farnell plc. Excluding these charges, operating income, net income, and earnings per share on a diluted basis were $434 million, $204 million, and $2.05, respectively. (d) EBITDA consists of the sum of net income, interest expense, income taxes, minority interest, and depreciation and amortization, exclusive of the special charges related to acquisitions. We present EBITDA because investors use EBITDA to determine our ability to meet our debt service obligations, fund capital expenditures, and expand our business. You should not consider this information to be an alternative to net income, operating income, cash flow from operations or any other operating or liquidity performance measure prescribed by generally accepted accounting principles (GAAP). Our presentation of EBITDA may not be comparable to EBITDA defined and presented by other companies. (e) Per share amounts in 1996 and 1995 have been restated to reflect a two-for-one stock split effective October 15, 1997. S-6 9 USE OF PROCEEDS Arrow expects to use the net proceeds of this offering to repay short-term debt. COMMON STOCK PRICE RANGE Arrow's common stock is listed on the New York Stock Exchange under the symbol "ARW." The following table lists the high and low per share sales prices for the common stock as reported by the New York Stock Exchange for the periods indicated:
HIGH LOW ------- ------- YEAR ENDED DECEMBER 31, 1999: First quarter............................................. $26 9/16 $13 3/16 Second quarter............................................ 19 7/8 14 5/8 Third quarter............................................. 23 1/8 16 15/16 Fourth quarter............................................ 26 1/2 14 3/4 YEAR ENDED DECEMBER 31, 2000: First quarter............................................. 37 1/2 20 1/2 Second quarter............................................ 46 28 1/4 Third quarter............................................. 39 7/8 31 3/8 Fourth quarter............................................ 37 3/16 22 1/16 YEAR ENDED DECEMBER 31, 2001: First quarter (through February 12, 2001)................. 33 7/16 26 3/16
On February 12, 2001, the reported last sale price of the common stock as reported by the New York Stock Exchange was $28.91 per share. DIVIDEND POLICY We have not paid cash dividends on our common stock during the past five years. While the board of directors considers the payment of dividends on the common stock from time to time, the declaration of future dividends will be dependent upon our earnings, financial condition, and other relevant factors. The terms of our credit facilities, senior notes, and senior debentures limit, among other things, the incurrence of additional borrowings and require that working capital, net worth, and certain other financial ratios be maintained at designated levels. S-7 10 CAPITALIZATION The following table sets forth our capitalization on an actual basis as of September 30, 2000 and as adjusted on a pro forma basis to give effect to the issuance of the floating rate notes due 2001, the 8.20% senior notes due 2003, the 8.70% senior notes due 2005 and the 9.15% senior notes due 2010, issued on October 6, 2000, the issuance of the debentures, and the application of the net proceeds thereof in accordance with "Use of Proceeds." In December 2000, we entered into a $400 million short-term credit facility scheduled to mature on March 19, 2001. If certain conditions are met, the facility maturity date may be extended to June 19, 2001. We used the proceeds of this facility to repay various short-term debt. We intend to repay the outstanding indebtedness of $400 million under this facility with a portion of the proceeds of this offering. In December 2000, Standard & Poor's announced that it had placed our long-term ratings on CreditWatch with negative implications. It also affirmed our A-2 commercial paper rating. Standard and Poor's stated that it would lower our long-term credit rating from its current BBB+ to BBB with a stable outlook on April 2, 2001, if we have not completed a significant equity offering by that date. In connection with this offering we have agreed not to engage in an offering of common stock or securities convertible into or exchangeable for common stock for a period of 90 days following the closing of this offering. See "Underwriters."
AT SEPTEMBER 30, 2000 --------------------- ACTUAL AS ADJUSTED ------ ----------- (IN MILLIONS) Short-term debt: Various borrowings, including current maturities of long-term debt......................................... $ 374 $ 374 Floating rate notes due 2001.............................. -- 200 Credit facilities......................................... 389 389 Commercial paper program.................................. 405 215 Bid facilities............................................ 297 -- ------ ------ $1,465 $1,178 ====== ====== Long-term debt: 6.45% senior notes due 2003............................... 250 250 7% senior notes due 2007.................................. 198 198 6 7/8% senior debentures due 2018......................... 196 196 7 1/2% senior debentures due 2027......................... 196 196 8.20% senior notes due 2003............................... -- 425 8.70% senior notes due 2005............................... -- 250 9.15% senior notes due 2010............................... -- 200 Zero coupon convertible senior debentures due 2021........ -- 487 Other obligations with various interest rates and due dates.................................................. 19 19 ------ ------ Total long-term debt.............................. 859 2,221 ------ ------ Total debt........................................ $2,324 $3,399 ====== ====== Shareholders' equity: Common stock, par value $1: Authorized--160,000,000 shares Issued--103,741,595 shares............................. 104 104 Capital in excess of par value............................ 528 528 Retained earnings......................................... 1,488 1,488 Foreign currency translation adjustment................... (196) (196) ------ ------ 1,924 1,924 Less: Treasury shares (5,552,692), at cost...................... 149 149 Unamortized employee stock awards......................... 9 9 ------ ------ Total shareholders' equity........................ 1,766 1,766 ------ ------ Total capitalization.............................. $4,090 $5,165 ====== ======
S-8 11 SELECTED HISTORICAL FINANCIAL DATA The following table contains our selected historical financial data as of the dates and for the periods indicated. We have derived the historical financial data as of and for each of the years in the five-year period ended December 31, 1999 from our audited consolidated financial statements. We have derived the historical financial data as of September 30, 2000 and for the nine-month periods ended September 30, 2000 and September 30, 1999 from our unaudited consolidated financial statements which, in the opinion of management, include all adjustments necessary for a fair presentation. Nine-month results, however, are not necessarily indicative of the results that may be expected for any other interim period or for a full year. You should read the following data together with our other historical financial information and statements (including related notes) of us incorporated by reference in this prospectus supplement. Please also read "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Capitalization" included in this prospectus supplement.
NINE MONTHS ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31, ----------------- ------------------------------------------------ 2000 1999(A) 1999(B) 1998 1997(C) 1996 1995 ------ ------- ------- ------ ------- ------ ------ (IN MILLIONS EXCEPT PER SHARE DATA) INCOME STATEMENT DATA Sales......................................... $9,268 $6,827 $9,313 $8,345 $7,764 $6,535 $5,919 Operating income.............................. 537 230 339 353 375 401 423 EBITDA(d)..................................... 598 308 433 405 440 438 459 Interest expense.............................. 107 78 106 81 67 38 46 Net income.................................... 249 80 124 146 164 203 203 Diluted earnings per share(e)................. $ 2.53 $ 0.83 $ 1.29 $ 1.50 $ 1.64 $ 1.98 $ 2.03
AT AT DECEMBER 31, SEPTEMBER 30, ---------------------------------------------- 2000 1999 1998 1997 1996 1995 ------------- ------ ------ ------ ------ ------ (IN MILLIONS) BALANCE SHEET DATA Accounts receivable and inventory.................... $4,209 $3,084 $2,676 $2,475 $1,948 $1,979 Total assets......................................... 5,707 4,483 3,840 3,538 2,710 2,701 Total long-term debt and capital lease obligations... 859 1,533 1,047 830 353 461 Shareholders' equity................................. 1,766 1,551 1,487 1,361 1,358 1,196
- ------------ (a) Operating and net income include a special charge of $25 million and $16 million after taxes, respectively, associated with the acquisition and integration of Richey Electronics, Inc. ("Richey") and the electronics distribution group of Bell Industries, Inc. ("EDG"). Excluding this charge, operating income, net income, and earnings per share on a diluted basis would have been $255 million, $97 million, and $1.01, respectively. (b) Operating and net income include a special charge of $25 million and $16 million after taxes, respectively, associated with the acquisition and integration of Richey and EDG. Excluding this charge, operating income, net income, and earnings per share on a diluted basis would have been $363 million, $141 million, and $1.46, respectively. (c) Operating and net income include special charges totaling $59 million and $40 million after taxes, respectively, associated with the realignment of our North American Components Operations and the acquisition and integration of the volume electronic component distribution businesses of Premier Farnell plc. Excluding these charges, operating income, net income, and earnings per share on a diluted basis were $434 million, $204 million, and $2.05, respectively. (d) EBITDA consists of the sum of net income, interest expense, income taxes, minority interest, and depreciation and amortization, exclusive of the special charges related to acquisitions. We present EBITDA because investors use EBITDA to determine our ability to meet our debt service obligations, fund capital expenditures, and expand our business. You should not consider this information to be an alternative to net income, operating income, cash flow from operations or any other operating or liquidity performance measure prescribed by generally accepted accounting principles (GAAP). Our presentation of EBITDA may not be comparable to EBITDA defined and presented by other companies. (e) Per share amounts in 1996 and 1995 have been restated to reflect a two-for-one stock split effective October 15, 1997. S-9 12 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For an understanding of the significant factors that influenced our performance during the periods described below, the following discussion should be read in conjunction with our consolidated financial statements and other information included in or incorporated by reference in this prospectus supplement. NINE MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999 SALES Consolidated sales for the first nine months of 2000 increased 36 percent compared with the comparable prior-year period. The sales growth was driven by a 59 percent increase in sales of core components (net of foreign exchange rate differences) for the first nine months of 2000, from the comparable prior-year period. Sales of computer products decreased by 7 percent for the first nine months of 2000, when compared to the year-earlier period principally as a result of market conditions for mid-range products and lower sales of low margin microprocessors (a product segment not considered a part of the company's core business). OPERATING INCOME We recorded operating income of $537.4 million in the first nine months of 2000, compared with $230.2 million in the comparable prior-year period. Excluding the integration charge relating to EDG and Richey, operating income was $254.8 million for the nine months ended September 30, 1999. The increase in operating income is due to increased sales and improving gross profit margins in the core components businesses around the world, as well as a change in mix resulting in greater weighting of the core components business. In addition, operating expenses as a percentage of sales decreased to 9.8 percent for the nine months ended September 30, 2000, from 10.1 percent in the comparable prior-year period. INTEREST EXPENSE Interest expense of $107.2 million in the first nine months of 2000 increased from $78.1 million in the comparable prior-year period. The increase is the result of additional debt incurred to fund acquisitions, internet-related joint ventures, and capital expenditures, and investments in working capital to support accelerated sales growth. INCOME TAXES We recorded a provision for taxes at an effective rate of 41 percent for the first nine months of 2000, compared with 44.4 percent in the comparable prior-year period. Excluding the impact of the integration charge referred to above, the effective rate was 42.8 percent for the nine months ended September 30, 1999. Our effective tax rate is principally impacted by, among other factors, the statutory tax rates in the countries in which we operate, the related level of earnings generated by these operations, and the nondeductibility of goodwill amortization. NET INCOME We recorded net income of $249 million in the first nine months of 2000, compared with $80.1 million in the comparable prior-year period. Excluding the integration charge of $24.6 million ($16.5 million after taxes), net income was $96.6 million for the first nine months of 1999. The increase in net income is due to increased sales and improving gross profit margins, offset, in part, by higher levels of interest. YEARS ENDED DECEMBER 31, 1999 AND 1998 SALES In 1999, consolidated sales increased to $9.3 billion. This 12 percent sales growth over 1998 was principally due to growth in the worldwide core components operations and acquisitions offset, in part, by S-10 13 fewer sales of low margin microprocessors, a product segment not considered a part of the company's core business, and foreign exchange rate differences. Excluding the impact of the Richey and EDG acquisitions, foreign exchange rate differences, and lower microprocessor sales, consolidated revenue increased by 8 percent over the prior year and sales of core components increased by 10 percent. Sales of commercial computer products increased marginally over 1998's level due principally to softening demand and lower average selling prices, offset by increasing unit shipments, as a result of market conditions. Consolidated sales of $8.3 billion in 1998 were 7 percent higher than 1997 sales of $7.8 billion. This sales growth was due to increased sales of commercial computer products from $1.3 billion in 1997 to more than $2 billion in 1998. Excluding the impact of acquisitions, 1998 sales of computer products increased by 24 percent when compared to 1997. The worldwide market for electronic components continued to be characterized by product availability well in excess of demand and resultant pressure on average selling prices and gross profit margins resulting in a decline in sales from $6.5 billion in 1997 to $6.3 billion in 1998. OPERATING INCOME In 1999, our consolidated operating income decreased to $338.7 million from $352.5 million in 1998, principally as result of the special charge of $24.6 million associated with the acquisition and integration of Richey and EDG. Excluding this integration charge, operating income was $363.2 million. Operating income, excluding the integration charge, increased as a result of higher sales, improving gross profit margins in the core components operations in the latter part of 1999, and improved operating efficiencies resulting from the integration of Richey and EDG into our North American Components Operations ("NACO") offset, in part, by lower gross profit margins in the computer products operations, increased non-cash amortization expense associated with goodwill, investments made in systems, including the Internet, and personnel to support anticipated increases in business activities in 2000 and beyond. Our consolidated operating income decreased to $352.5 million in 1998, compared with operating income of $374.7 million in 1997, including special charges of $59.5 million. Excluding the special charges, operating income in 1997 was $434.2 million. The reduction in operating income reflected a decline in the sales of our NACO, a further decline in gross margins due to proportionately higher sales of lower margin commercial computer products, and competitive pricing pressures throughout the world offset, in part, by the impact of increased sales and the benefits of continuing economies of scale. Operating expenses as a percent of sales remained consistent with 1997 at 9.7 percent, the lowest in our history. INTEREST EXPENSE In 1999, interest expense increased to $106.3 million from $81.1 million in 1998, reflecting both increases in borrowings to fund acquisitions and investments in working capital. Interest expense of $81.1 million in 1998 increased by $14 million from the 1997 level, reflecting increases in borrowings associated with acquisitions and investments in working capital. INCOME TAXES In 1999, we recorded a provision for taxes at an effective tax rate of 43 percent, excluding the integration charge, compared with 42.2 percent in 1998. The increased rate of 1999 is due to the non-deductibility of goodwill amortization. We recorded a provision for taxes at an effective tax rate of 42.2 percent in 1998 compared with 41 percent, excluding the special charges, in 1997. The higher effective rate in 1998 is due to the non-deductibility of goodwill amortization. NET INCOME In 1999, our net income decreased to $124.2 million from $145.8 million in 1998. Excluding the integration charge, net income was $140.6 million. The decrease in net income, excluding the integration S-11 14 charge, was primarily attributable to an increase in operating income and a decrease in minority interest offset by an increase in interest expense. Net income in 1998 was $145.8 million, a decrease from $204.1 million, before the special charges of $59.5 million ($40.4 million after taxes), in 1997. The decrease in net income is attributable to lower operating income and increases in interest expense. LIQUIDITY AND CAPITAL RESOURCES We maintain a high level of current assets, primarily accounts receivable and inventories. Consolidated current assets as a percentage of total assets were approximately 75 percent at September 30, 2000, compared with 70 percent at September 30, 1999. The net amount of cash used for our operating activities during the first nine months of 2000 was $373 million, principally reflecting investments in working capital, offset, in part, by earnings for the nine months. The net amount of cash used for investing activities was $177.6 million, including $51 million for various capital expenditures, $92.7 million primarily for the acquisitions of Rapac Electronics Ltd., Tekelec Europe, Jakob Hatteland AS, and Dicopel S.A. de C.V., and $33.9 million for internet-related joint ventures. The net amount of cash provided by financing was $554.6 million, primarily reflecting borrowings under the company's commercial paper program, credit facilities, and various short-term bank borrowings. The net amount of cash provided by our operating activities during the first nine months of 1999 was $66.6 million, principally reflecting earnings, offset, in part, by investments in working capital. The net amount of cash used for investing activities was $523.6 million, including $62.7 million for various capital expenditures and $460.9 million principally for the acquisitions of Richey, EDG, the remaining 10% of Spoerle Electronic, the remaining interest in Support Net, Inc., and the additional interest in Scientific and Business Minicomputers, Inc., as well as certain internet-related investments. The net amount of cash provided by financing activities was $356.8 million, reflecting borrowings under the company's credit facilities, offset, in part, by the repayment of Richey's 7.0% convertible subordinated notes and debentures and distributions to partners. In December 2000, we entered into a $400 million short-term credit facility scheduled to mature on March 19, 2001. If certain conditions are met, the facility maturity date may be extended to June 19, 2001, at our option. We used the proceeds of this facility to repay various short-term debt. We intend to repay the outstanding indebtedness of $400 million under this facility with a portion of the proceeds of this offering. See "Use of Proceeds." We are currently in negotiations with a number of financial institutions to refinance our $550 million 364-day credit facility scheduled to mature in March 2001 and our $650 million global multi-currency credit facility scheduled to mature in September 2001 with a new 364-day credit facility and a new multi-year credit facility. We anticipate that these transactions will close during the first quarter of 2001. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk from changes in foreign currency exchange rates and interest rates. As a large international organization, we are exposed to adverse movements in foreign currency exchange rates. These exposures may change over time as business practices evolve and could have a material impact on our financial results in the future. Our primary exposure relates to transactions in which the currency collected from customers is different from the currency utilized to purchase the product sold in Europe, the Asia/Pacific region, and Latin America. At the present time, we hedge only those currency exposures for which natural hedges do not exist. Anticipated foreign currency cash flows and earnings and investments in businesses in Europe, the Asia/Pacific region, and Latin America are not hedged as in many instances there are natural offsetting positions. The translation of the financial statements of the non-North American operations is impacted by fluctuations in foreign currency exchange rates. Had the various average foreign currency exchange rates remained the same during the first nine months of 2000 as compared with December 31, 1999, S-12 15 2000 sales and operating income would have been $284 million and $27 million higher, respectively, than the reported results. Our interest expense, in part, is sensitive to the general level of interest rates in the Americas, Europe, and the Asia/Pacific region. We manage our exposure to interest rate risk through the proportion of fixed rate and variable rate debt in its total debt portfolio. At September 30, 2000, we had approximately 37 percent of our debt as fixed rate borrowings and 63 percent of our debt subject to variable rates. Interest expense would fluctuate by approximately $7 million if average interest rates had changed by one percentage point during the first nine months of 2000. This amount was determined by considering the impact of a hypothetical interest rate on our borrowing cost. This analysis does not consider the effect of the level of overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, management could likely take actions to further mitigate any potential negative exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in our financial structure. S-13 16 BUSINESS BUSINESS OVERVIEW We are the world's largest distributor of electronic components and computer products to industrial and commercial customers. Spanning the world's three major electronics markets--the Americas, Europe, and the Asia/Pacific region--we offer an extensive global distribution network. We have one of the industry's broadest product offerings, or line cards, providing real-time access to a $1.9 billion inventory as of September 30, 2000 from more than 600 leading manufacturers. Through a network of more than 225 sales facilities and 19 distribution centers in 38 countries we deliver to more than 175,000 original equipment manufacturers and commercial customers the products, inventory solutions, materials management services, design, and technical support they need when, where and how they need them. We are the largest distributor for many of the world's leading semiconductor suppliers and one of the leading passive, electromechanical, and interconnect ("PEMCO") distribution resources in the industry. In 1999, revenues exceeded $9.3 billion with EBITDA and net income of $433 million and $141 million, respectively, excluding the special charge of $24.6 million ($16.5 million after taxes) associated with the integration of acquisitions. For the first nine months of 2000, revenues totaled approximately $9.3 billion with EBITDA and net income of $598 million and $249 million, respectively. In each of the first three quarters of 2000, sales, EBITDA, and net income were at record levels. Because we have a diverse mix of products and customers and a broad geographic reach, we do not rely upon any one supplier or type of product, and have limited exposure to technological change in the products we offer as well as limited risks related to our customers' business cycles and regional economic cycles. We have transitioned our business from its historical role of simple order fulfillment to an integral part of the supply chain. Suppliers rely on us to possess significant "demand creation" skills, on a global basis, and to serve as an integral resource to their own selling efforts. We also serve as a critical link in the management of our customers' own supply chain. Through our wide range of value-added services, we help our customers select the right technology and design and the most appropriate components, reduce time-to-market, lower costs, and enhance overall competitiveness. As manufacturing has moved to a just-in-time (JIT) basis, our expertise in supply-chain management enables us to deliver parts to our customers as needed. Contributing to this important role is our ability to profile our customers' product requirements--taking into consideration changing demand patterns and market fluctuations. Because of the breadth of our line card we can offer customers one-stop shopping, helping them to minimize their own costs. Over 64% of our North American revenues are derived from customers to whom we provide value-added services, reflecting our key role in the supply chain for suppliers and customers alike. The value-added services we offer include:
MANUFACTURING SERVICES MATERIALS MANAGEMENT PRODUCT ENHANCEMENT SERVICES - ---------------------- -------------------------------- -------------------------------- Box Building Bill of Materials (BOM) Grading Bar Coding Component Programming Bonded Inventory Management Packaging Connector and Cable Assembly CARES (Auto Replenishment) Serialization Flat Panel Assembly Hardware E-compass (Forecast and Order Special Handling Procedures Configuration Management) Special Marking Tape and Kitting In-plant Stores Reel Testing Systems Integration Inventory Management Software Integration JIT Inventory Primary and Proximity Warehousing Product Life Cycle Management Product Traceability Schedule Sharing
S-14 17
TECHNICAL SUPPORT ELECTRONIC COMMERCE FINANCIAL SERVICES - ----------------- ------------------- ------------------ Design-in Engineering Support EDI Consolidating Field Application Engineers Internet Ordering Invoicing Marketing Support PRO-Series Specialized Financing Product Education and In-plant Terminals Certification Technical Seminars Technical Support Technical Training
INDUSTRY OVERVIEW Our industry has undergone a significant transformation. Leading distributors must be more than stocking and marketing intermediaries. Their ability to fill a range of roles is paramount. Technical proficiency and demand creation, broad product offerings, innovative value-added programs, and a global presence contribute to the success of our suppliers and customers alike. Our industry has had strong long-term growth, yet is still subject to business cycles. Over the past 30 years our industry has grown at a 12% compound annual growth rate. Despite this growth, there are, periodically, industry-wide troughs driven principally by product supply and availability. Our financial performance through these cycles has changed significantly. During the down cycle of the mid 1980s, we suffered losses, while during the recessionary period of the early 1990s, we were marginally profitable. During the period from mid 1996 through 1999, the industry's longest and most severe recessionary cycle in the past three decades, our annual net income was never below $140 million, excluding non-recurring charges. We believe that if we are able to continue to successfully leverage our operating structure and cost efficiencies, we can position ourselves to not only reap the benefits of growth in our industry, but also better withstand the recessionary cycles. Our industry requires modest capital investments in "bricks and mortar." Instead, our cash requirements are most often tied to highly-liquid assets like receivables and inventory. Our industry's exposure to inventory risks is limited. It is the policy of most manufacturers to protect authorized distributors, like ourselves, against the potential write-down of semiconductor inventories due to technological change or manufacturers' price reductions. Under the terms of the related distributor agreements, and assuming the distributor complies with certain conditions, those suppliers are required to credit the distributor for inventory losses incurred through reductions in manufacturers' list prices. In addition, under the terms of many distributor agreements, the distributor has the right to return to the manufacturer for credit a defined portion of those inventory items purchased within a designated period of time. Approximately 65 percent of the dollar value of our inventory consists of semiconductors. A manufacturer who elects to terminate a distributor agreement is generally required to purchase from the distributor the total amount of its products carried in inventory. While these industry practices do not entirely protect us from inventory losses, we believe that they currently provide substantial protection from those losses. STRATEGY Our strategy is to be the premier supply-chain partner for our customers and suppliers, assisting them throughout the supply chain--from concept through production. We believe we can achieve our strategy through: TECHNOLOGY-BASED SALES AND MARKETING TEAMS We seek to ensure that our sales force and engineers stay abreast of the latest technological developments. Our field application engineers are trained to understand the needs of our customers and to translate that information back to our suppliers. By understanding the state-of-the-art products of our S-15 18 suppliers, and the full potential of their application, our team will be able to provide maximum benefit to both our customers and our suppliers. BROAD ARRAY OF VALUE-ADDED SERVICES We strive to provide our customers with the broadest array of the value-added services they want in order to service their needs throughout the supply chain. These value-added services, including both physical and materials management, position us as a true partner to our customers. From kitting, to programming of parts, to procurement and materials management programs, to credit extension, we seek to strengthen the reliance our customers place in us. STATE-OF-THE-ART TECHNOLOGY, SYSTEMS AND LOGISTICS NETWORKS We continuously invest in the technology, the systems, and the logistics network needed to make our distribution operations more efficient. Then, we rely on this efficient network to generate economies of scale from increased business activity, which results in decreased operating costs as a percentage of our revenues. OPPORTUNISTIC ACQUISITIONS Our opportunistic acquisitions over the past 20 years have helped enable us to become the largest electronic components distributor in the world and to become a truly global distributor. They have also helped us to improve our operating efficiencies by giving us the additional business activity from which economies of scale are derived. We will continue to expand our reach, striving for a presence that serves the needs of our customers and suppliers around the globe. LEADERSHIP IN E-COMMERCE Our investments in the Internet, both directly through our internal efforts and externally through the joint ventures in which we participate, will enable our customers, suppliers, and shareholders to participate in the benefits to be derived from this emerging technology. OVERVIEW BY REGION Our business has a significant presence in each of the world's three major markets. Our 1999 sales of $9.3 billion were generated as follows: 66% from the Americas, 26% from Europe, and 8% from the Asia/ Pacific region. NORTH AMERICA In North America, we are a leader in electronics distribution. Our operations are organized around two distinct operating groups, NACO and North American Computer Products ("NACP") groups: NACO offers a wide range of electronic components--principally semiconductors and PEMCO products (i.e., capacitors, resistors, potentiometers, power supplies, relays, switches, and connectors)--representing the industry's broadest line card. Sales totaled $3.6 billion and $3.9 billion in 1999 and for the first nine months of 2000, respectively, for this group. NACO consists of eight segmented marketing groups specifically positioned to provide business solutions tailored to match customer needs. These marketing groups are: - Arrow Contract Manufacturing Services Distribution Group focuses exclusively on providing industry expertise, extensive technical resources, and value-added services to contract manufacturers. - Arrow/Richey Electronics is one of the world's largest distributors of PEMCO products, and provides customers with comprehensive, innovative value-added services. - Arrow/Bell Components specializes in servicing the needs of small, medium, and emerging industrial OEMs in North America offering a complete line of semiconductor, PEMCO, and industrial computer S-16 19 products, as well as cable, mechanical, and assembly value-added services. Arrow/Bell's field application engineers provide dedicated semiconductor engineering support, design tools, and a broad technology base to assist customers throughout the product development and design cycle. - Arrow Semiconductor Group specializes in serving the semiconductor needs of the larger OEMs, interfacing with customers' engineers and product development teams to help select the right components that will minimize a product's time-to-market. - Arrow/Wyle Communications Group specializes in serving the semiconductor needs of communications and networking original equipment manufacturers, regardless of size. - Arrow/Zeus Electronics maintains support from design through production to the military, aerospace and other electronics industries offering high-reliability semiconductors and space products, commercial semiconductors, and industrial computer products, with military and aerospace inventories geared to meet crucial deadlines. - Arrow Alliance Group provides a full line card and a wide range of value-added services to large customers with complex needs. - Arrow Supplier Services Group manages all semiconductor supplier relationships, including the line card strategy, marketing programs and purchasing. NACP is a full-line technical distributor of computer systems, peripherals, and software to value-added resellers ("VARs") and industrial computer products, with an emphasis on being a leading distributor of mid-range work stations. Sales of this group totaled $2.6 billion and $1.8 billion in 1999 and for the first nine months of 2000, respectively. NACP consists of six segmented marketing groups as follows: - SBM is a leading distributor of Hewlett-Packard mid-range work stations operating on UNIX and NT platforms, offering sales, marketing, and technical support to its VARs. - SupportNet is a leading distributor of IBM mid-range work stations offering sales, marketing, and technical support to its VARs. - MOCA is a leading distributor of Sun Microsystems products, selling enterprise software, storage area networks, and Solaris operating systems which run on Sun Microsystems hardware and related professional services. - Arrow/Wyle Computer Products Group is a distributor offering technical solutions to OEM's, Compaq resellers and large complex customers who require computer products. Extensive product offerings include computer systems and servers, networking, peripherals, and an array of mass storage products, from disk drives to RAID systems. - Arrow Microtronica provides component and board level computer products to PC, server and storage subsystem builders and integrators representing the world's preeminent suppliers of CPUs, mass storage, memory, motherboards, and all other components and peripherals required to build a computer system. - Gates/Arrow is a full-line technical distributor of computer systems, peripherals, and software to VARs, offering a full range of computing platforms, from desktop systems to enterprise computing environments and technical assistance for most operating systems including UNIX, Netware, DOS, Windows, Windows NT, as well as Intel and RISC-based platforms. Arrow also serves the rapidly-developing markets in Argentina, Brazil, and Mexico through its recent majority investments in Elko, Panamericana, and Dicopel, respectively, leading electronic components distributors in each of these countries. S-17 20 EUROPE Our position in Europe has grown significantly since our initial entry into this market in 1985 with revenues totaling $2.4 billion in 1999, representing 26% of our worldwide total, and $2.6 billion for the first nine months of 2000. We are a recognized leader of pan-European components distribution. We have secured this position by recognizing that Europe is made up of unique sectors requiring different products and services, in effect cultivating a base of local knowledge supported by a global presence. Our product offering in Europe is more heavily weighted toward semiconductors, PEMCO products, and industrial computer products. We are organized into the following geographic regions to service the unique needs of our customers: - Northern Europe serves the U.K., Denmark, Finland, Ireland, Norway, and Sweden. Our joint venture in South Africa, Arrow-Altech, is also a part of this group. - Central Europe serves Germany, Austria, Belgium, the Netherlands, Switzerland, Poland, and the Czech Republic. - Southern Europe services Italy, France, Spain, Portugal, Israel, Greece, Hungary, Turkey, and Slovenia. ASIA/PACIFIC We are one of the largest distributors in this rapidly-growing region. Since our initial investment in this region in 1993, revenues have grown to more than $750 million in 1999 and we expect to exceed $1.3 billion in revenues in 2000. Our product offerings in the Asia/Pacific region largely consist of semiconductors, PEMCO, and industrial computer products. Headquartered in Hong Kong, we have offices in Australia, China, India, Malaysia, New Zealand, Singapore, South Korea, Taiwan, and Thailand. These areas are serviced by our regional distribution centers in Hong Kong, Malaysia, Taiwan, and Singapore. Our presence in the region has been strengthened by our joint venture with the Marubun Corporation, a leading independent components distributor in Japan. The joint venture sells electronic components to Japanese-owned customers in the Asia/Pacific region and the Americas. INTERNET Because of our critical position in the supply chain and the increasing demand for value-added services, we believe that the Internet provides us with a valuable tool to better serve our suppliers' and customers' needs. We have utilized a two-prong approach to the Internet. Internally, we have a formalized organization, the Internet Business Group, that focuses on our corporate e-commerce activities and brings us to the Internet with a set of tools and services that makes it as easy for customers to do business with us over the Internet as by traditional means. In 1999, we launched an extensive suite of on-line, supply-chain management tools, arrow.com PRO-Series. The result of extensive research and testing, PRO-Series gives customers Internet-based, 24-hour access to our inventory, plus the ability to place, modify, monitor, and manage every order on-line. We believe PRO-Series is the only on-line, supply-chain management tool that provides: - Real-time multi-line quotes; - Customer-specific pricing; - Spot and scheduled ordering on account; - Ability to change quantity, change data, cancel orders; - Return authorization; and - Real-time integration with our sales team. S-18 21 The second prong in our approach to the Internet has been to make strategic investments in select Internet start-up companies to access certain market segments that we do not currently reach. To date, we have made six such investments, including investments in companies targeted at Internet buyers and sellers of excess components, companies providing technical design resources for engineers for utilization in prototype development, and companies providing supply-chain management tools. ACQUISITIONS The electronics distribution market has undergone a period of consolidation. In 1970, we were ranked number eleven in our industry based upon annual revenues. Today, to a large extent resulting from our acquisition strategy, we are ranked number one. Since 1985, we have made more than 50 acquisitions and strategic investments. We believe we were the first distributor to develop and execute a strategy to build a pan-European distribution network and the first North American distributor to enter the Asia/Pacific region, building one of the largest regional distribution networks. Our approach is to acquire companies that are recognized leaders in their respective markets, share our operating philosophies and values, and possess strong, accomplished managers. Our acquisitions over the past 15 years have provided us with access to experienced sales and marketing teams, new supplier relationships, strong entrepreneurial managers, facilities and value-added centers, technical expertise, new customer markets, geographic reach, and the ability to gain greater operating leverage. Although one of the key challenges in any acquisition is the integration of the acquired organization, we believe that one of the key attributes of our organization is our ability to integrate all of our North American acquisitions, and many of our international acquisitions, into our operating systems with a minimal amount of disruption to either business. A successful integration creates significant synergies, which lower our fixed costs as a percentage of revenues. The synergies are principally from areas such as systems, facilities, logistics centers, and related personnel, as well as personnel in finance, human resources, and operations. For example, in January 1999, we acquired both Richey Electronics, Inc. and the electronics distribution business of Bell Industries, Inc. and by late 1999 we had identified and eliminated significant duplicative annual costs. The sales and marketing forces, however, are generally not rationalized. Instead, we utilize these larger teams to gain greater penetration in the market. THE WYLE ACQUISITION In early August 2000, a consortium consisting of ourselves, an affiliate of Schroder Ventures, and another distributor, agreed to purchase the VEBA Electronics Group from Germany-based E.ON AG (formerly VEBA AG) for approximately $2.35 billion in cash, including the assumption of debt. The VEBA Electronics Group reported 1999 sales of $5.5 billion. On October 16, 2000, we completed the acquisition of E.ON's U.S.-based operations: Wyle Components, Wyle Systems, and the U.S.-based portion of E.ON's logistics unit, ATLAS. Together, these entities reported combined 1999 sales in North America of about $2 billion. The Wyle businesses complement our existing distribution businesses in North America. Wyle brings a focused group of technical specialists to the market who will now be better positioned to deliver to its customers our broader and richer array of value-added services. We are fully committed to the integration of the best practices and people of the Wyle operations. Additionally, several new suppliers will be added to our line card. As has been the case with prior acquisitions, we expect the acquisition of the Wyle Companies to produce sizable synergies. Wyle Components is a franchised distributor for both broadline and proprietary semiconductor suppliers in North America. Wyle Components serves customers in various markets, including networking and communications, computing, contract manufacturing, instrumentation, transportation, and industrial controls. The merger of Wyle Components with our North American Components Operations effectively combines our superior supply-chain management tools and broad line card with Wyle's strong demand creation capabilities. Wyle Components had revenues of almost $1.3 billion in 1999 and $1.4 billion for the first nine months of 2000. S-19 22 Wyle Systems is a distributor of computer products with a strong market presence in the western United States. Our merger with Wyle Systems nearly doubles our OEM systems sales and systems configuration business, expands our line card, and strengthens our relationships with suppliers. Wyle Systems had revenues of $642 million in 1999 and $513 million for the first nine months of 2000. Wyle Systems has three business units: the OEM Systems Division, the Technical Solutions Division, and the Commercial Systems Division. The OEM Systems Division (OSD) provides three types of outsourcing services to OEMs: (1) manufacturing services, such as systems integration--integrating a combination of off-the-shelf products, such as boards, memory and microprocessors, and unique or custom products into end products for OEM customers, (2) engineering support, and (3) logistic and supply chain management, including drop-ship management, on- and off-site consignment management, export control and compliance management, and traffic management. The Technical Solutions Division (TSD) provides services similar to those of the OEM Systems Division. However, while the OSD serves OEMs, the TSD's customers are application VARs, systems integrators, and end users, with greater concentration on engineering support and less on manufacturing services. TSD also provides three types of outsourcing services to VARs and end users: integration services, systems engineering support, and just-in-time delivery. The Commercial Systems Division (CSD) services systems and PC integrators by acting as a volume distributor of commodity products, such as Quantum low-end storage products. The Commercial Systems Division targets the top 100 PC and systems integrators in the United States with an outside sales force and also concentrates on Intel product dealers with an internal group. THE MOCA ACQUISITION On October 31, 2000, we acquired MOCA for an initial purchase price of $115 million in cash plus the assumption or repayment of approximately $57 million of off-balance sheet financing. The acquisition agreement provides that the purchase price may be increased by up to an additional $37.5 million based upon future developments with respect to MOCA's business. MOCA is a distributor of Sun Microsystems products, selling enterprise software, storage area networks, and Solaris operating systems which run on Sun Microsystems hardware and related professional services. S-20 23 MANAGEMENT
NAME AGE POSITION - ---- --- -------- Stephen Kaufman........................... 59 Chairman Francis M. Scricco........................ 51 President and Chief Executive Officer Robert E. Klatell......................... 55 Executive Vice President, General Counsel and Secretary Sam R. Leno............................... 55 Senior Vice President and Chief Financial Officer Betty Jane Scheihing...................... 52 Senior Vice President Steven W. Menefee......................... 55 Senior Vice President and President, Arrow Asia Arthur H. Baer............................ 54 Vice President and President of Arrow Europe Michael J. Long........................... 42 Vice President and President of the North American Computer Products Group Jan M. Salsgiver.......................... 44 Vice President and President of the North American Components Organization
Stephen P. Kaufman joined Arrow as president of our Electronics Distribution Division in 1982. He was appointed President and Chief Operating Officer of Arrow in 1985. He served as Chief Executive Officer from 1986 through July 2000, and has served as Chairman since May 1994. Prior to this, he served in executive capacities with Midland-Ross Corporation and ten years prior to that, was associated with McKinsey and Company, management consultants, where he was a partner from 1976 to 1980. He serves on the Board of Directors for Harris Corporation and Polaroid Corporation. Francis M. Scricco has been President since June 1999 and was appointed Chief Executive Officer in July 2000. From March 1994 through August 1997 he was Group Vice President at Fischer Scientific International, Inc. Prior thereto, he was President of Whirlpool Canada. He has also held positions with the General Electric Company and The Boston Consulting Group. Robert E. Klatell has been Executive Vice President since July 1995 and has served as our Senior Vice President, General Counsel and Secretary for more than six years. He also served as Chief Financial Officer from January 1992 to April 1996 and Treasurer from 1990 to April 1996. Sam R. Leno was appointed Senior Vice President and Chief Financial Officer effective March 1999. From July 1995 through February 1999, he served as Executive Vice President and Chief Financial Officer of Corporate Express, Inc. Prior thereto he was Chief Financial Officer of a mid-sized healthcare company and for twenty-three years prior thereto he served in various financial positions at Baxter International. Betty Jane Scheihing has been Senior Vice President since May 1996 and served as a Vice President for more than five years prior thereto. Steven W. Menefee has been Senior Vice President of the company since July 1995 and served as a Vice President for more than five years prior thereto. In addition, he was appointed President of Arrow Asia in September 1998. Arthur H. Baer was named President of Arrow Europe and a Vice President in January 2000. Prior to joining Arrow, he was President of Hudson Valley Publishing, Inc. from February 1998 through December 1999 and President of Xyan, Inc. from 1996 through February 1998. Prior thereto, he served as Dean of the College of Business Administration at Drexel University from May 1993 through April 1996. Michael J. Long has been President and Chief Operating Officer of the North American Computer Products Group since July 1999. In addition, he has been a Vice President for more than five years and President of Gates/Arrow Distributing since November 1995. Prior thereto he was President of Capstone Electronics since 1994. Jan M. Salsgiver has been President of NACO since July 1999. Prior thereto, she served as President of the Arrow Supplier Services Group since its inception in January 1998. Prior thereto, she was President of the Arrow/Schweber Electronics Group since November 1995 and President of Zeus Electronics from July 1993 to November 1995. In addition, she has been a Vice President for more than five years. S-21 24 DESCRIPTION OF DEBENTURES The debentures will be issued under an indenture dated as of January 15, 1997 between us and The Bank of New York, as trustee. We have summarized the material terms and provisions of the debentures in this section, which supplement the terms of the senior debt securities contained in the prospectus. In addition to the material terms of the debentures contained in this prospectus supplement, you should read the description of the indenture contained in the prospectus for additional information regarding your rights as a holder of the debentures before you buy any of these debentures. References in this section to "us," "we" and "our" are solely to Arrow and not to our subsidiaries. References in this section to the "indenture" shall mean the indenture, as supplemented by the supplemental indenture relating to the debentures. In the event of any inconsistency between the terms of the debentures contained in this prospectus supplement and the provisions of the indenture contained in the prospectus, the terms contained in this prospectus supplement shall control with respect to the debentures. GENERAL; RANKING The debentures will be unsecured and unsubordinated obligations of our company and are pari passu in right of payment with all of our existing and future unsubordinated and unsecured obligations. The debentures are limited to $ aggregate principal amount at maturity, plus an additional $ aggregate principal amount at maturity if the underwriters' over-allotment option is exercised in full. The debentures are scheduled to mature on February , 2021. The debentures are being offered at a substantial discount from their principal amount at maturity and will therefore have original issue discount for U.S. federal income tax purposes. See "Certain United States Federal Income Tax Considerations." There will be no periodic cash payments of interest on the debentures, except as described under "--Optional Conversion to Semiannual Coupon Debentures Upon a Tax Event." In periods during which a debenture remains outstanding, the accrual of original issue discount (the difference between the issue price of a debenture and its principal amount at maturity) will be compounded semi-annually using a year composed of twelve 30-day months. The accrual of original issue discount will commence on the date the debentures are issued. Original issue discount or, if the debentures are converted to semiannual coupon debentures following the occurrence of a tax event, interest on the debentures, will cease to accrue upon conversion, repurchase or redemption of the debentures under the terms of the debentures. The principal amount at maturity of each debenture is payable at the office or agency of the paying agent, in the Borough of Manhattan, The City of New York, which shall initially be an office or agency of the trustee, or any other office of the paying agent maintained for this purpose. You may present debentures for conversion into common stock at the office of the conversion agent. Debentures in definitive form may be presented for exchange for other debentures or registration of transfer at the office of the registrar. The trustee will initially serve as paying agent, conversion agent and registrar. We will not impose a service charge for any registration, transfer or exchange of debentures. However, we may require the holder to pay for any tax, assessment or other governmental charge to be paid in connection with any registration, transfer or exchange of debentures. CONVERSION OF DEBENTURES BY HOLDERS You may convert your debentures into shares of our common stock at any time prior to maturity. However, if we elect to redeem a debenture, you may convert it only until the close of business on the last trading day prior to a redemption date, unless we fail to pay the redemption price. If you have delivered a repurchase notice exercising your option to require us to repurchase your debenture, you may not convert the debenture unless you withdraw the notice in accordance with the terms of the indenture. Similarly, if you exercise your option to require us to repurchase your debenture upon a Fundamental Change (as defined in the indenture), that debenture may be converted only if you withdraw your election to exercise your option in accordance with the terms of the indenture. You may convert your debentures in whole or in part provided S-22 25 that you convert them in multiples of $1,000 principal amount at maturity. We will deliver the shares issuable upon any conversion to the trustee no later than the close of business on the seventh business day following the conversion date. The initial conversion rate is shares of common stock per $1,000 principal amount at maturity of debentures, subject to adjustment upon the occurrence of the events described below. If, on conversion, you would be entitled to a fractional share of common stock, you will instead receive cash in an amount equal to the closing price of shares of our common stock on the trading day immediately prior to the conversion date multiplied by such fraction. You will not receive any cash payment on conversion of a debenture representing accrued original issue discount. Instead, accrued original issue discount will be deemed paid in full rather than canceled, extinguished or forfeited. Consequently, our delivery to you of the fixed number of shares of our common stock into which the debenture is convertible, together with the cash payment, if any, in lieu of a fractional share of our common stock, will be deemed to satisfy our obligation to pay the principal amount at maturity of the debenture, including accrued original issue discount attributable to the period from the issue date to the conversion date. We will not adjust the conversion ratio to account for accrued original issue discount. The conversion date is the date on which all of the requirements for delivery of the debenture for conversion have been satisfied. The conversion rate is subject to adjustment to prevent dilution upon the occurrence of any one of the following events: (1) the issuance of our common stock as a dividend or distribution on our common stock; (2) the issuance to our stockholders of rights or warrants to purchase our common stock at below market price; (3) certain subdivisions, combinations and reclassifications of our outstanding common stock; (4) distributions to all our common stockholders of our capital stock, debt securities, or other assets, excluding distributions of: - common stock in the manner described in item (1) above; - rights or warrants in the manner described in item (2) above; or - cash in the manner described in item (5) below; (5) cash distributions, excluding any quarterly cash dividend on our common stock if the quarterly distribution does not exceed the greater of: - the cash dividend per share from the previous quarter not requiring an adjustment under this provision, as adjusted to reflect subdivisions or combinations of our common stock; or - 3.75% of the average of the last reported sales price of the common stock during the 10 trading days immediately prior to the dividend declaration date; (6) payment in respect of a tender offer or exchange offer by us or any of our subsidiaries for our common stock if the price per share exceeds the current market price of our common stock on the next trading day after the last date on which tenders or exchanges may be made; and (7) payment in respect of certain tender offers or exchange offers by a third party in which, as of the closing or expiration date of such offer, our board of directors does not recommend rejection of the offer, in which case an adjustment will be made only if: - the tender offer or exchange offer increases the ownership of the person making the offer to more than 25% of our common stock; and - the cash and other consideration paid exceeds the market price of our common stock on the next trading day after the last date on which tenders or exchanges may be made. S-23 26 If an adjustment were required to be made under item (5) above as a result of a quarterly distribution, the adjustment would be based upon the amount by which the cash distributed exceeded the maximum quarterly dividend permitted under that item. If an adjustment were required to be made under item (5) as a result of a distribution other than a quarterly dividend, the adjustment would be based upon the full amount of cash distributed. The adjustment referred to in item (7) above will not be made if, as of the closing of the tender offer or exchange offer, the offering documents disclose a plan or an intention to cause us to engage in a consolidation, merger or sale of all or substantially all our assets. If our common stockholders become entitled to receive stock, other securities, property, cash or other assets upon any reclassification of our common stock, any consolidation or merger involving us, or any sale to another entity of substantially all of our assets, then you will generally be able to convert your debentures into the same type of consideration received by our common stockholders as if you had done so immediately prior to the triggering event. We may increase the conversion rate for a period of at least 20 days so long as: - the increase remains irrevocable during that period; and - our board of directors determines that the increase is in our best interest, which determination shall be conclusive. We must give at least seven days' advance notice of any increase in the conversion rate. In addition to increases in the conversion rate of the type described above, we may increase the conversion rate as we deem advisable to avoid or diminish any income tax to holders of our common stock resulting from any dividend or distribution of our stock, or rights to acquire stock, or from any event treated as a dividend, distribution or right to acquire our stock for income tax purposes. See "Certain United States Federal Income Tax Considerations." No adjustment in the conversion rate will be required unless the adjustment would require a change of at least 1% in the conversion rate then in effect; provided that any adjustment that would otherwise be required to be made will be carried forward and taken into account in any subsequent adjustment. Except as stated above, the conversion rate will not be adjusted for the issuance of our common stock, any securities convertible into or exchangeable for our common stock or any rights to purchase any of the foregoing. If, following a tax event, we exercise our option to have interest accrue on a debenture in lieu of original issue discount, you will be entitled to receive on conversion the same number of shares of common stock that you would have received had we not exercised our option. If we exercise our option, debentures surrendered for conversion during the period from the close of business on the record date next preceding the next interest payment date to the opening of business on the next interest payment date (except debentures to be redeemed on the next interest payment date) must also be accompanied by an amount equal to the accrued and unpaid interest on the debenture that you are to receive. Except where debentures surrendered for conversion must be accompanied by the payment described in this paragraph, no interest on converted debentures will be payable by us on any interest payment date subsequent to the date of conversion. See "--Optional Conversion to Semiannual Coupon Debentures Upon a Tax Event." In the event of a taxable distribution to our common stockholders or in certain other circumstances requiring an adjustment to the conversion rate, the debenture holders may, in certain circumstances, be deemed to have received a distribution subject to United States income tax as a dividend. In certain other circumstances, the absence of an adjustment may result in a taxable dividend to the holders of common stock. See "Certain United States Federal Income Tax Considerations." REDEMPTION OF DEBENTURES AT OUR OPTION We may not redeem the debentures before February , 2006. Beginning on February , 2006, we may redeem the debentures for cash in whole or in part at any time, by mailing a redemption notice to the debenture holders not less than 30 days nor more than 60 days prior to the redemption date. You can convert S-24 27 the debentures after they are called for redemption at any time up to three business days prior to the redemption date. The redemption price will be an amount in cash equal to 100% of the sum of: - $ , the original issue price per $1,000 principal amount; and - accrued original issue discount up to and including the date of redemption. The debentures will be redeemable in multiples of $1,000 principal amount at maturity. There is no sinking fund for the debentures. The table below shows redemption prices of debentures per $1,000 principal amount at maturity at February , 2006, and at each February thereafter until maturity on February , 2021. These redemption prices reflect accrued original issue discount up to and including each redemption date. The redemption price of a debenture redeemed between any two of the dates listed below would include an additional amount reflecting original issue discount accrued from the next preceding redemption date through the actual date of redemption.
(2) ACCRUED (1) ORIGINAL ISSUE (3) DEBENTURE DISCOUNT REDEMPTION ISSUE PRICE AT % PRICE (1) + (2) ----------- -------------- --------------- February , 2006............................. February , 2007............................. February , 2008............................. February , 2009............................. February , 2010............................. February , 2011............................. February , 2012............................. February , 2013............................. February , 2014............................. February , 2015............................. February , 2016............................. February , 2017............................. February , 2018............................. February , 2019............................. February , 2020............................. At Stated Maturity (February , 2021)........
If we elect to convert the debentures to semiannual coupon debentures following a tax event, the debentures will be redeemable at the Restated Principal Amount (as described below) plus accrued and unpaid interest, if any, to the applicable redemption date. If less than all of the outstanding debentures held in certificated form are to be redeemed, the trustee will select the debentures held in certificated form to be redeemed in principal amounts at maturity of $1,000 or integral multiples thereof by lot, pro rata or by another method the trustee considers fair and appropriate. If a portion of your certificated debentures is selected for partial redemption and you convert a portion of your debentures, the converted portion will be deemed to be the portion selected for redemption. Debentures registered in the name of DTC or its nominee will be redeemed as described under "Book Entry System". REPURCHASE OF DEBENTURES AT THE OPTION OF THE HOLDER You have the right to require us to repurchase the debentures on February , 2006, February , 2011 and February , 2016. We will be required to repurchase any outstanding debenture for which you S-25 28 deliver a written repurchase notice to the paying agent. This notice must be delivered during the period beginning at any time from the opening of business on the date that is 20 business days prior to the repurchase date until the close of business on the repurchase date. If a repurchase notice is given and withdrawn during that period, we will not be obligated to repurchase the debentures listed in the notice. Our repurchase obligation will be subject to certain additional conditions. The repurchase price payable for a debenture will be equal to the issue price plus accrued original issue discount through the repurchase date. If, prior to the repurchase date, we have elected to convert the debentures to semiannual coupon debentures following a tax event, the repurchase price will be equal to the Restated Principal Amount plus accrued and unpaid interest to the repurchase date. See "--Optional Conversion to Semiannual Coupon Debentures Upon a Tax Event." The table below shows the repurchase prices of a debenture as of the specified repurchase dates.
REPURCHASE DATE REPURCHASE PRICE - --------------- ---------------- February , 2006........................................... February , 2011........................................... February , 2016...........................................
We may, at our option, elect to pay the repurchase price in cash, in shares of our common stock or in any combination of the two. For a discussion of the tax treatment of debenture holders receiving cash, shares of our common stock or both, see "Certain United States Federal Income Tax Considerations." If we elect to pay the repurchase price, in whole or in part, in shares of our common stock, the number of shares to be delivered in exchange for the portion of the repurchase price to be paid in our common stock will be equal to that portion of the repurchase price divided by the market price (as defined below) of our common stock. We will not, however, deliver fractional shares in repurchases using shares of our common stock as consideration. Debenture holders who would otherwise be entitled to receive fractional shares will instead receive cash in an amount equal to the market price of a share of our common stock multiplied by such fraction. Your right to require us to repurchase debentures is exercisable by delivering a written repurchase notice to the paying agent within 20 business days of the repurchase date. The paying agent initially will be the trustee. The repurchase notice must state: (1) if certificated debentures have been issued, the debenture certificate numbers (or, if your debentures are not certificated, your repurchase notice must comply with appropriate DTC procedures); (2) the portion of the principal amount at maturity of debentures to be repurchased, which must be in $1,000 multiples; (3) that the debentures are to be repurchased by us pursuant to the applicable provisions of the debentures and the indenture; and (4) your election, in the event that we decide to pay all or a portion of the repurchase price in shares of our common stock but prove unable to satisfy the conditions for common stock payment and ultimately have to pay cash, to: - withdraw your repurchase notice with respect to all or a portion of the debentures listed therein; or - receive cash for the entire repurchase price for all the debentures listed in your repurchase notice. If you fail to indicate your election under item (4) above, you will be deemed to have elected to receive cash for the entire repurchase price for all the debentures listed in your repurchase notice. S-26 29 You may withdraw any written repurchase notice by delivering a written notice of withdrawal to the paying agent prior to the close of business of the repurchase date. The withdrawal notice must state: - the principal amount at maturity of the withdrawn debentures; - if certificated debentures have been issued, the certificate numbers of the withdrawn debentures (or, if your debentures are not certificated, your withdrawal notice must comply with appropriate DTC procedures); and - the principal amount at maturity, if any, which remains subject to the repurchase notice. We must give notice of an upcoming repurchase date to all debenture holders not less than 20 business days prior to the repurchase date at their addresses shown in the register of the registrar. We will also give notice to beneficial owners as required by applicable law. This notice will state, among other things: - whether we will pay the repurchase price of the debentures in cash, shares of our common stock, or both (in which case the relative percentages will be specified); - if we elect to pay all or a portion of the repurchase price in shares of our common stock, the method by which we are required to calculate "market price" of the common stock; and - the procedures that holders must follow to require us to repurchase their debentures. The "market price" means the average sale price of our common stock for the five trading days ending on the third business day prior to the applicable repurchase date (assuming the third business day prior to the applicable repurchase date is a trading day, or if not, the five trading days ending on the last trading day prior to the third business day), appropriately adjusted to take into account the occurrence of certain events that would result in an adjustment of the conversion rate with respect to our common stock. The "sale price" of our common stock on any date means the closing sale price per share of our common stock on that date (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) as reported on the New York Stock Exchange. Because the market price of our common stock will be determined prior to the applicable repurchase date, debenture holders bear the market risk that our common stock will decline in value between the date the market price is calculated and the repurchase date. We may pay the repurchase price or any portion of the repurchase price in shares of our common stock only if our common stock is listed on a United States national securities exchange or quoted in an inter-dealer quotation system of any registered United States national securities association. Upon determination of the actual number of shares of our common stock to be issued in accordance with the foregoing provisions, if required, we will notify the securities exchanges or quotation systems on which our common stock is then listed or quoted and disseminate the number of shares to be issued on our website or through another public medium. Our right to repurchase your debentures, in whole or in part, with shares of our common stock is subject to various conditions, including: - registration of the shares of our common stock to be issued upon repurchase under the Securities Act and the Exchange Act, if required; and - qualification or registration of the shares of our common stock to be issued upon repurchase under applicable state securities laws, if necessary, or the availability of an exemption therefrom. If these conditions are not satisfied by a repurchase date, we will pay the repurchase price of the debentures to be repurchased entirely in cash. We may not change the form or components or percentages of components of consideration to be paid for the debentures once we have given the debenture holders the required notice, except as described in the preceding sentence. S-27 30 Payment of the repurchase price for a debenture for which a repurchase notice has been delivered and not withdrawn is conditioned upon book-entry transfer or delivery of the debenture, together with necessary endorsements, to the paying agent at its office in the Borough of Manhattan, The City of New York, or any other office of the paying agent, at any time after delivery of the repurchase notice. Payment of the repurchase price for the debenture will be made promptly following the later of the repurchase date and the time of book- entry transfer or delivery of the debenture. If the paying agent holds money or securities sufficient to pay the repurchase price of the debenture on the business day following the repurchase date, then, on and after the date: - the debenture will cease to be outstanding; - original issue discount (or, if the debentures have been converted to interest-bearing debentures following a tax event, interest) will cease to accrue; and - all other rights of the holder will terminate. This will be the case whether or not book-entry transfer of the debenture has been made or the debenture has been delivered to the paying agent, and all other rights of the debenture holder will terminate, other than the right to receive the repurchase price upon delivery of the debenture. Our ability to repurchase debentures with cash may be limited by the terms of our then-existing borrowing agreements. The indenture will prohibit us from repurchasing debentures for cash from debenture holders if any event of default under the indenture has occurred and is continuing, except a default in the payment of the repurchase price with respect to the debentures. Even though we become obligated to repurchase any outstanding debenture on a repurchase date, we may not have sufficient funds to pay the repurchase price on that repurchase date. If this were to occur, we could be required to issue shares of our common stock to pay the repurchase price at valuations based on then prevailing market prices for all debentures tendered by their holders. We will comply with the provisions of Rule 13e-4 and any other tender offer rules under the Exchange Act that may be applicable at the time of the tender offer. We will file a Schedule TO or any other schedule required in connection with any offer by us to repurchase the debentures. REPURCHASE AT THE OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE If we undergo a Fundamental Change (as defined below), you will have the option to require us to purchase for cash any or all of your debentures on a purchase date that is 30 days after the date we provide you with notice of such Fundamental Change. We will pay a purchase price equal to the issue price plus accrued original issue discount through the purchase date or, if applicable, the Restated Principal Amount plus accrued and unpaid interest through the date of purchase. You may require us to purchase all or any part of your debentures provided that the principal amount at maturity of the debentures being purchased is an integral multiple of $1,000. A "Fundamental Change" is the occurrence of any transaction or event in connection with which all or substantially all of our common stock will be exchanged for, converted into, acquired for or constitute solely the right to receive (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or any other method) any form of consideration which is not all or substantially all common stock listed (or, upon consummation of or immediately following such transaction or event, which will be listed) on a United States national securities exchange or approved for quotation on the Nasdaq's National Market or any similar United States system of automated dissemination of quotations of securities prices. In order to exercise your right to require us to repurchase your debentures upon a Fundamental Change, you must deliver a written notice to the paying agent prior to the close of business on the business day prior to the date on which the debentures are to be repurchased. You may withdraw the notice by delivering a written withdrawal notice to the paying agent before the repurchase date. On or before the 10th day following a S-28 31 Fundamental Change, we are required to mail to the trustee and all debenture holders of record a written notice: - stating that a Fundamental Change has occurred; and - explaining the repurchase rights that have arisen as a consequence of the Fundamental Change. To exercise your repurchase right, you must deliver to us (or our designated agent) within 30 days after the date of our Fundamental Change notice: - written notice of your election to exercise your repurchase right; and - the debentures to be repurchased duly endorsed for transfer. Payment for debentures surrendered for repurchase (and not withdrawn) prior to the expiration of the 30-day period will be made promptly following the repurchase date. If, following a tax event, we have previously exercised our option to pay interest on the debentures instead of accruing original issue discount, we will purchase the debentures at a cash price equal to the Restated Principal Amount plus accrued and unpaid interest from the date we exercised our option. See "--Optional Conversion to Semiannual Coupon Debentures Upon a Tax Event." In the event of a Fundamental Change, we will comply with the provisions of Rule 13e-4 and any other tender offer rules under the Exchange Act that may be applicable at the time we repurchase the debentures. We will also file a Schedule TO or any other schedule required in connection with any offer by us to repurchase the debentures. The repurchase rights of the debenture holders could discourage a potential acquirer from acquiring us, but the Fundamental Change repurchase feature does not result from management's knowledge of any potential acquirer's attempt to obtain control of us, nor is it part of an anti-takeover strategy on the part of management. The term "Fundamental Change" is limited to specific types of transactions and does not include other events that might adversely affect our financial condition. Moreover, the Fundamental Change repurchase feature may not protect you in the event of a highly leveraged transaction, reorganization, merger or similar transaction involving or affecting us. No debentures may be repurchased at the option of holders upon a Fundamental Change if there has occurred and is continuing an event of default described under "--Events of Default; Notice and Waiver" below. However, debentures may be repurchased if the event of default is in the payment of the Fundamental Change purchase price with respect to the debentures. OPTIONAL CONVERSION TO SEMIANNUAL COUPON DEBENTURES UPON A TAX EVENT We have the option to convert the debentures to interest-bearing debentures following a tax event. From and after the date a tax event occurs, we may elect to pay interest at % per year on the debentures instead of accruing original issue discount. The principal amount will be restated as the sum of (A) the issue price and (B) the amount of original issue discount accrued up to the date we exercise our conversion option. This "Restated Principal Amount" will then be the amount due at maturity. If we elect this option, interest will be based on a 360-day year comprised of twelve 30-day months. Interest will accrue from the date we exercise our conversion option and will be payable semiannually on February to holders of record on the immediately preceding February and on August to holders of record on the immediately preceding August . A tax event occurs when we receive an opinion from tax counsel stating that, for United States federal income tax purposes, there is more than an insubstantial risk that all or a portion of the interest, including S-29 32 original issue discount, payable on the debentures would not be deductible by us either (A) on a current accrual basis or (B) under any other method, as a result of either: - any amendment, change or announced prospective change in the laws or regulations of the United States or any of its political subdivisions or taxing authorities; or - any amendment, change, interpretation or application of the laws or regulations by any legislative body, court, government agency or regulatory authority. EVENTS OF DEFAULT; NOTICE AND WAIVER If an event of default has occurred and is continuing, the indenture provides that either the trustee or the holders of at least 25% in aggregate principal amount at maturity of the debentures then outstanding, in the case of an event of default described under paragraphs (1) and (2) below under the definition of events of default, or the holders of 25% in aggregate principal amount of the debt securities of all affected series then issued and outstanding under the indenture, in the case of an event of default specified under paragraphs (3) and (4) under the definition of events of default, may declare due and payable: - the issue price of the debentures (or, if the debentures are converted to interest-bearing debentures following a tax event, the Restated Principal Amount); plus - original issue discount accrued and unpaid on the debentures to the date of the declaration (or, if the debentures are converted to interest-bearing debentures following a tax event, interest accrued and unpaid on the debentures to the date of the declaration). In the case of certain events of bankruptcy or insolvency, the issue price plus original issue discount accrued and unpaid on the debentures to the date of the event (or, if the debentures are converted to interest-bearing debentures following a tax event, the Restated Principal Amount plus interest accrued and unpaid on the debentures to the date of the event) will automatically become immediately due and payable. Under circumstances specified in the indenture, the holders of a majority in aggregate principal amount at maturity of the outstanding debentures may rescind any acceleration of the debentures so that they will not become immediately due and payable. Cash interest will accrue at the rate of % per annum and be payable on demand upon a default in the payment of any redemption price or purchase price and, after acceleration, of the issue price plus accrued original issue discount (or, if the debentures are converted to interest-bearing debentures following a tax event, the Restated Principal Amount plus accrued and unpaid interest) to the extent such payment of the interest is legally enforceable. Original issue discount or, if the debentures are converted to semiannual coupon debentures following the occurrence of a tax event, interest on the debentures (except as provided in the first sentence of this paragraph), will cease to accrue after declaration of acceleration. The following constitute events of default under the indenture with respect to the debentures: (1) our failure to pay any of the following when each becomes due and payable: - the principal amount of the debentures (or, if the debentures have been converted to interest-bearing debentures following a tax event, the Restated Principal Amount) at stated maturity; - the issue price; - accrued and unpaid original issue discount (or, if the debentures have been converted to interest-bearing debentures following a tax event, accrued and unpaid interest); - redemption price; - repurchase price; or - Fundamental Change purchase price; S-30 33 (2) our failure for 30 days to pay any interest (assuming conversion of the debentures to interest-bearing debentures following a tax event) due on the debentures; (3) our failure to comply with any of our covenants or agreements set forth in the indenture or the debentures for 30 days after written notice by the trustee or by the holders of at least 25% in principal amount at maturity of the outstanding debentures; (4) certain events involving our bankruptcy, insolvency or reorganization or the bankruptcy, insolvency or reorganization of any of our Restricted Subsidiaries, as such term is defined in the prospectus under "Description of Debt Securities--Certain Definitions." The trustee will give notice to the debenture holders of any continuing default known to the trustee within 90 days after the trustee becomes aware of it. However, the trustee may withhold notice to the debenture holders of any default or event of default, except for defaults in any payment on the debentures, if the trustee considers it in the best interest of the debenture holders to do so. The holders of a majority in aggregate principal amount at maturity of the outstanding debentures may direct the time, place and method of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee. However, such direction may not conflict with any law or the indenture and will be subject to certain other limitations. Before exercising any right or power under the indenture at the direction of the debenture holders, the trustee will be entitled to receive security or indemnity satisfactory to the trustee against the costs, expenses and liabilities incurred by the trustee in complying with the direction of the debenture holders. No debenture holder will have any right to pursue any remedy with respect to the indenture or the debentures unless: (1) the debenture holder has previously given us and the trustee written notice of a continuing event of default; (2) the holders of at least 25% in aggregate principal amount at maturity of the outstanding debentures have made a written request to the trustee to pursue the remedy; (3) the debenture holder or holders have offered the trustee indemnity satisfactory to the trustee; (4) the holders of a majority in aggregate principal amount at maturity of the outstanding debentures have not given the trustee a direction inconsistent with the request within 60 days of the trustee's receipt of the request; and (5) the trustee has failed to comply with the request within a 60-day period. However, none of the following rights of any debenture holder may be impaired or adversely affected without the debenture holder's consent: (1) the right to receive payments of principal (including the issue price and accrued original issue discount) or interest in respect of any default in payment under a debenture on or after the due date; (2) the right to institute suit for the enforcement of any payments or conversion; or (3) the right to convert debentures. The holders of at least a majority in aggregate principal amount at maturity of the outstanding debentures may waive an existing default and its consequences, other than: - any default in any payment on the debentures; - any default with respect to the conversion rights of the debentures; or - any default in respect of certain covenants or provisions in the indenture which may not be modified without the consent of the holder of each debenture as described under the caption entitled "--Modification and Waiver" below. We will be required to furnish to the trustee annually a statement as to any default by us in the performance and observance of our obligations under the indenture. S-31 34 MODIFICATION AND WAIVER In addition to the provisions contained under "Description of Debt Securities--Modification of the Indenture" in the prospectus, we may not amend, modify or supplement the indenture without the consent of each holder affected if the effect of such amendment, modification or supplement would be to: (1) reduce the repurchase price or Fundamental Change purchase price; (2) alter the manner or rate of accrual of original issue discount or interest, if any; (3) make any debenture payable in money or securities of a type other than that stated in the debentures; (4) impair the right to institute suit for payment under, or conversion of, the debentures; (5) reduce the quorum or voting requirements under the indenture; (6) change any obligation of Arrow to maintain an office or agency in the places and for the purposes specified in the indenture; or (7) make any change that adversely affects the right to convert any debenture or the right to require us to repurchase a debenture or the right to require us to repurchase a debenture upon a Fundamental Change. PAYMENT AND PAYING AGENTS Payments on the debentures not made in shares of our common stock will be made in U.S. dollars at the office of the trustee. At our option, however, we may make payments by check mailed to the holder's registered address or, with respect to global debentures, by wire transfer. We will make interest payments to the person in whose name the debenture is registered at the close of business on the record date for the interest payment. The trustee initially will be designated as our paying agent for payments on debentures. We may at any time designate additional paying agents or rescind the designation of any paying agent or approve a change in the office through which any paying agent acts. Subject to the requirements of any applicable abandoned property laws, the trustee and paying agent shall pay to us upon written request any money held by them for payments on the debentures that remain unclaimed for two years after the date upon which that payment has become due. After payment to us, holders entitled to the money must look to us for payment. In that case, all liability of the trustee or paying agent with respect to that money will cease. INFORMATION CONCERNING THE TRUSTEE We have appointed The Bank of New York as trustee under the indenture, and as paying agent, conversion agent, registrar and custodian with regard to the debentures. S-32 35 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS This section summarizes some of the U.S. federal income tax considerations relating to the purchase, ownership, and disposition of the debentures and of common stock into which the debentures may be converted. This summary does not provide a complete analysis of all potential tax considerations. The information provided below is based on existing authorities. These authorities may change, or the Internal Revenue Service (the "IRS") might interpret the existing authorities differently. In either case, the tax consequences of purchasing, owning or disposing of debentures or common stock could differ from those described below. The summary generally applies only to holders that are U.S. holders that purchase debentures in the initial offering at their issue price and hold the debentures or common stock as "capital assets" (generally, for investment). The summary generally does not address tax considerations that may be relevant to particular investors because of their specific circumstances, or because they are subject to special rules. Finally, the summary does not describe the effect of the federal estate and gift tax laws or the effects of any applicable foreign, state, or local laws. INVESTORS CONSIDERING THE PURCHASE OF DEBENTURES SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE CONSEQUENCES OF FEDERAL ESTATE OR GIFT TAX LAWS, FOREIGN, STATE, OR LOCAL LAWS, AND TAX TREATIES. As used herein, the term "U.S. holder" means a holder of a debenture or common stock that is, for U.S. federal income tax purposes: - a citizen or resident of the United States; - a corporation or partnership created or organized in or under the laws of the United States or any state therein; - an estate the income of which is subject to U.S. federal income taxation regardless of its source; or - a trust if a U.S. court is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions. ORIGINAL ISSUE DISCOUNT Because the debentures do not provide for payments of fixed periodic interest, they will be sold at a discount from their principal amount at maturity. Investors will in effect receive interest at maturity, unless the debentures are converted or redeemed before then, by receiving a principal amount greater than the issue price of the debentures. Because this excess of principal over issue price is economically equivalent to interest, the U.S. tax rules require that this amount (referred to as "original issue discount") be recognized as interest income over the term of the debentures. The amount of accrued interest for each period is determined under a constant yield method, so that the accrued interest for any period equals a constant percentage of the holder's investment (including the original purchase price of the debenture plus any previously accrued interest). Because the holder's investment increases each period, the amount of interest income for each period will increase as the debentures get closer to maturity. We will be required to furnish annually to the IRS and to certain noncorporate holders information regarding the amount of original issue discount allocable to the year. For this purpose, we will use six-month accrual periods that begin or end on the maturity date of the debentures. SALE, EXCHANGE OR REDEMPTION OF THE DEBENTURES Except as described below, a holder will recognize capital gain or loss if the holder disposes of a debenture in a sale, redemption or exchange other than a conversion of the debenture into common stock. The holder's gain or loss will equal the difference between the proceeds received by the holder and the holder's adjusted tax basis in the debenture. The proceeds received by the holder will include the amount of any cash and the fair market value of any other property received for the debenture. The holder's tax basis in the S-33 36 debenture will generally equal the amount the holder paid for the debenture, increased by previously accrued original issue discount. The gain or loss recognized by a holder on a disposition of the debenture will be long-term capital gain or loss if the holder held the debenture for more than one year. Long-term capital gains of individual taxpayers are generally taxed at a maximum rate of 20 percent. The deductibility of capital losses is subject to limitation. If a holder elects to exercise his option to tender debentures to us on a February , 2006, February , 2011 or February , 2016 purchase date and we issue common stock in satisfaction of all or part of the purchase price, the exchange of the debentures for common stock should qualify as a reorganization for federal income tax purposes. If we pay the purchase price solely in common stock, the holder generally should not recognize any gain or loss. If we pay the purchase price with a combination of common stock and cash, the holder would be required to recognize any gain realized, but only to the extent of the cash received. The holder would not be allowed to recognize any loss. Because the price we will pay will equal the issue price plus accrued original issue discount, however, the amount received by an initial holder should equal the holder's tax basis and the holder should not realize any gain or loss. If we pay all or part of the purchase price with common stock and the holder receives cash in lieu of a fractional share of stock, the holder would be treated as if he received the fractional share and then had the fractional share redeemed for the cash. The holder would recognize capital gain or loss equal to the difference between the cash received and that portion of his basis in the stock attributable to the fractional share. A holder's initial tax basis in his common stock (including any fractional share) should equal the holder's adjusted basis in the debentures tendered, increased by the amount of gain recognized and decreased by the amount of cash received. The holder's holding period for his common stock should include the period during which the holder held his debentures. The holding period for common stock attributable to original issue discount, however, might begin on the day following the exchange date. CONVERSION OF THE DEBENTURES A holder generally will not recognize any income, gain or loss on converting a debenture into common stock. If the holder receives cash in lieu of a fractional share of stock, however, the holder would be treated as described in the preceding paragraph. The holder's holding period for the stock will include the period during which he or she held the debenture. The holding period for common stock attributable to original issue discount, however, might begin on the day following conversion. DIVIDENDS If, after a holder converts a debenture into common stock, we make a distribution in respect of that stock, the distribution will be treated as a dividend, taxable to the holder as ordinary income, to the extent it is paid from our current or accumulated earnings and profits. If the distribution exceeds our current and accumulated profits, the excess will be treated first as a tax-free return of the holder's investment, up to the holder's basis in its common stock. Any remaining excess will be treated as capital gain. If the holder is a U.S. corporation, it would generally be able to claim a deduction equal to a portion of any dividends received. The terms of the debentures allow for changes in the conversion rate of the debentures in certain circumstances. A change in conversion price that allows debentureholders to receive more shares of common stock on conversion may increase the debentureholders' proportionate interests in our earnings and profits or assets. In that case, the debentureholders would be treated as though they received a dividend in the form of our stock. Such a constructive stock dividend could be taxable to the debentureholders, although they would not actually receive any cash or other property. A taxable constructive stock dividend would result, for example, if the conversion rate is adjusted to compensate debentureholders for distributions of cash or property to our shareholders. Not all changes in conversion rate that allow debentureholders to receive more stock on conversion, however, increase the debenture-holders' proportionate interests in the company. For instance, a change in conversion rate could simply prevent the dilution of the debentureholders' interests upon a stock split or other change in capital structure. Changes of this type, if made by a bona fide, reasonable adjustment formula, are not treated as constructive stock dividends. Conversely, if an event occurs that dilutes the debentureholders' interests and the conversion rate is not adjusted, the resulting increase in the S-34 37 proportionate interests of our shareholders could be treated as a taxable stock dividend to them. Any taxable constructive stock dividends resulting from a change to, or failure to change, the conversion rate would be treated like dividends paid in cash or other property. They would result in ordinary income to the recipient, to the extent of our current or accumulated earnings and profits, with any excess treated as a tax-free return of capital or as capital gain. SALE OF COMMON STOCK A holder will generally recognize capital gain or loss on a sale or exchange of common stock. The holder's gain or loss will equal the difference between the proceeds received by the holder and the holder's adjusted tax basis in the stock. The proceeds received by the holder will include the amount of any cash and the fair market value of any other property received for the stock. The gain or loss recognized by a holder on a sale or exchange of stock will be long-term capital gain or loss if the holder held the stock for more than one year. In the case of individuals, long-term capital gains are generally taxed at a maximum rate of 20 percent, while the deductibility of capital losses is subject to limitation. BACKUP WITHHOLDING AND INFORMATION REPORTING The Internal Revenue Code and the Treasury regulations require those who make specified payments to report the payments to the IRS. Among the specified payments are interest (including original issue discount), dividends, and proceeds paid by brokers to their customers. The required information returns enable the IRS to determine whether the recipient properly included the payments in income. This reporting regime is reinforced by "backup withholding" rules. These rules require the payors to withhold tax at a 31 percent rate from payments subject to information reporting if the recipient fails to cooperate with the reporting regime by failing to provide his taxpayer identification number to the payor, furnishing an incorrect identification number, or repeatedly failing to report interest or dividends on his returns. The information reporting and backup withholding rules do not apply to payments to corporations, whether domestic or foreign. Payments of dividends to individual holders of common stock will generally be subject to information reporting, and will be subject to backup withholding unless the holder provides us or our paying agent with a correct taxpayer identification number. Payments made to holders by a broker upon a sale of debentures or common stock will generally be subject to information reporting and backup withholding. If, however, the sale is made through a foreign office of a U.S. broker, the sale will be subject to information reporting but not backup withholding. If the sale is made through a foreign office of a foreign broker, the sale will generally not be subject to either information reporting or backup withholding. This exception may not apply, however, if the foreign broker is owned or controlled by U.S. persons, or is engaged in a U.S. trade or business. Any amounts withheld from a payment to a holder of debentures or common stock under the backup withholding rules can be credited against any U.S. federal income tax liability of the holder. TAX EVENT The modification of the terms of the debentures by us upon a tax event as described in "Description of Debentures--Optional Conversion to Semiannual Coupon Debentures Upon a Tax Event," could alter the timing of income recognition by the holders regarding the semiannual payments of interest due after the option exercise date. THE PRECEDING DISCUSSION OF CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY. IT IS NOT TAX ADVICE, EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE, LOCAL, AND FOREIGN TAX CONSEQUENCES OF PURCHASING, HOLDING, AND DISPOSING OF OUR DEBENTURES OR COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS. S-35 38 UNDERWRITERS Under the terms and subject to the conditions contained in an underwriting agreement dated the date of this prospectus supplement, the underwriters named below have severally agreed to purchase, and we have agreed to sell to them, the following principal amounts of debentures:
NAME PRINCIPAL AMOUNT - ---- ---------------- 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. ................................... ----------- Total....................................................... $ ===========
The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the debentures offered by this prospectus supplement are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the debentures offered by this prospectus supplement if any such debentures are taken. However, the underwriters are not required to take or pay for the debentures covered by the underwriters over-allotment option described below. The underwriters initially propose to offer part of the debentures directly to the public at the public offering price listed on the cover page of this prospectus supplement and part to certain dealers at a price that represents a concession not in excess of $ per debenture. Any underwriter may allow, and such dealers may reallow, a concession not in excess of $ per debenture to other underwriters or to certain dealers. After the debentures are released to the public, the offering price and other selling terms may from time to time be varied by the underwriters named on the cover page of this prospectus supplement. We have granted to the underwriters an option, exercisable within 30 days of the date of this prospectus supplement, to purchase up to an additional $ aggregate principal amount at maturity of the debentures at the public offering price set forth on the cover page of this prospectus supplement, less underwriting discounts and commissions. The underwriters may exercise the option solely for the purpose of covering over-allotments if any, made in connection with the offering of debentures offered by this prospectus supplement. To the extent the option is exercised, each underwriter will become obligated to purchase approximately the same percentage of the additional debentures as the underwriter purchased in the original offering. If the underwriters' option is exercised in full, the total price to the public would be $ , the total underwriters' discounts and commissions would be $ and total proceeds to us would be $ . The debentures are a new issue of securities with no established trading market. The underwriters have advised us that they presently intend to make a market in the debentures as permitted by applicable laws and regulations. The underwriters are not obligated, however, to make a market in the debentures and any such market-making activity may be discontinued at any time at the sole discretion of the underwriters. Accordingly, we cannot assure you as to the liquidity of, or trading markets for, the debentures. We, our directors and our executive officers are agreeing that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the underwriters, each of us will not, during the period ending 90 days after the date of this prospectus supplement: - 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 S-36 39 - 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 transaction described above is to be settled by delivery of common stock or such other securities, in cash or otherwise. We may, without such consent, however: - issue and sell the debentures offered hereby; - issue the common stock issuable upon conversion of the debentures; and - grant options or issue and sell stock upon the exercise of outstanding stock options or otherwise pursuant to our stock option or employee stock purchase plans; and, with respect to Messrs. Kaufman and Klatell, they may, without such consent, contract to sell and sell up to 1,000,000 shares and 120,000 shares of common stock, respectively, after five trading days from the date of pricing of this offering. In order to facilitate the offering of the debentures and the common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the debentures or the common stock. Specifically, the underwriters may over-allot in connection with the offering, creating a short position in the debentures for their own account. In addition, to cover over-allotments or to stabilize the price of the debentures, the underwriters may bid for, and purchase, the debentures or shares of the common stock in the open market. Finally, the underwriting syndicate may reclaim selling concessions allowed to an underwriter or a dealer for distributing the debentures in the offering, if the syndicate repurchases previously distributed debentures in transactions to cover syndicate short positions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of the debentures or the common stock above independent market levels. The underwriters are not required to engage in these activities, and may end any of these activities at any time. From time to time, the underwriters or their affiliates may provide investment banking services to us, for which they have received customary compensation. We will apply $400 million of the net proceeds of this offering to repay our short-term indebtedness to an affiliate of Morgan Stanley Dean Witter. We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act. LEGAL MATTERS The validity of the debentures will be passed upon for us by Milbank, Tweed, Hadley & McCloy LLP. Certain legal matters will be passed on for the underwriters by Davis Polk & Wardwell. EXPERTS The consolidated financial statements of Arrow Electronics, Inc. at December 31, 1999 and 1998, and for each of the three years in the period ended December 31, 1999, appearing in our Annual Report on Form 10-K for the fiscal year ended December 31, 1999 and incorporated by reference in the prospectus, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report dated February 16, 2000 incorporated in the prospectus by reference and are included in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. The audited historical financial statements of the Wyle Electronics Group incorporated in this Supplement by reference to Arrow Electronics, Inc's Form 8-K dated September 1, 2000 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. S-37 40 THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION, DATED FEBRUARY 13, 2001. PROSPECTUS $2,000,000,000 ------------- ARROW ELECTRONICS, INC. DEBT SECURITIES PREFERRED STOCK COMMON STOCK WARRANTS We may offer and sell the securities from time to time in one or more offerings. This prospectus provides you with a general description of the securities we may offer. Each time we sell securities, we will provide a supplement to this prospectus that contains specific information about the offering and the terms of the securities. The supplement may also add, update or change information contained in this prospectus. You should carefully read this prospectus and any supplement before you invest in any of our securities. We may offer and sell the following securities: - - debt securities, in one or more series, consisting of notes, debentures or other evidences of indebtedness; - - preferred stock; - - common stock; and - - warrants. Our common stock is traded on the New York Stock Exchange under the symbol "ARW." Any common stock sold pursuant to this prospectus or any prospectus supplement will be listed on that exchange, subject to official notice of issuance. The prospectus supplement will state whether any other securities offered thereby will be listed on a securities exchange. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is , 2001. ------------- 41 TABLE OF CONTENTS About This Prospectus.................................................................................... 2 Where You Can Find More Information...................................................................... 2 Forward Looking Statements............................................................................... 3 Arrow Electronics, Inc................................................................................... 4 Use Of Proceeds.......................................................................................... 4 Consolidated Ratios Of Earnings To Fixed Charges......................................................... 4 Description Of Debt Securities........................................................................... 5 Description Of Capital Stock............................................................................. 24 Description Of Warrants.................................................................................. 26 Plan Of Distribution..................................................................................... 27 Validity Of Securities................................................................................... 28 Experts.................................................................................................. 28
42 ABOUT THIS PROSPECTUS This prospectus is part of a "shelf" registration statement that we filed with the United States Securities and Exchange Commission, or the "SEC." By using a shelf registration statement, we may sell up to $2,000,000,000 in aggregate offering price of any combination of the securities described in this prospectus (or in the other prospectus included in the shelf registration statement) from time to time and in one or more offerings. This prospectus only provides you with a general description of the securities that we may offer. Each time we sell securities, we will provide a supplement to this prospectus that contains specific information about the terms of the securities. The supplement may also add, update or change information contained in this prospectus. Before purchasing any securities, you should carefully read both this prospectus and any supplement, together with the additional information described under the heading "Where You Can Find More Information." Unless otherwise indicated or unless the context requires otherwise, all references in this prospectus to "Arrow", "we", "our", "us" or similar references mean Arrow Electronics, Inc. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The information contained in this prospectus and the supplement to this prospectus is accurate only as of the dates of their respective covers, regardless of the time of delivery of this prospectus or any supplement to this prospectus or of any sale of our securities. No action is being taken in any jurisdiction outside the United States to permit a public offering of the securities or possession or distribution of this prospectus or any supplement to this prospectus in that jurisdiction. Persons who come into possession of this prospectus or any supplement to this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus or any supplement to this prospectus applicable to that jurisdiction. WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and current reports, proxy statements and other documents with the Securities and Exchange Commission under the Securities Exchange Act of 1934. You may read and copy any document we file at the SEC's public reference room, 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our SEC filings are also available to the public on the SEC's Web site at http://www.sec.gov and through the New York Stock Exchange, 20 Broad Street, New York, New York 10005, on which our common stock is listed. You may obtain a copy of any of our filings with the SEC, or any of the agreements or other documents that constitute exhibits to those filings, without charge, by request directed to us at the following address and telephone number: Arrow Electronics, Inc. 25 Hub Drive Melville, New York 11747 (516) 391-1300 Attention: Secretary 2 43 The SEC allows us to "incorporate by reference" in this prospectus reports that we file with them, which means that we can disclose important information to you by referring you to those reports. Accordingly, we are incorporating by reference in this prospectus the documents listed below and any future filings we make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934: (1) Our Annual Report on Form 10-K for the year ended December 31, 1999; (2) Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000, June 30, 2000 and September 30, 2000; (3) Our Current Reports on Form 8-K dated September 1, 2000, September 19, 2000 and December 22, 2000; and (4) The description of our common stock set forth on our registration statement filed with the Securities and Exchange Commission pursuant to Section 12 of the Exchange Act, including any amendments or reports filed for the purpose of updating such description. The information incorporated by reference is deemed to be part of this prospectus, except for any information superseded by information contained directly in this prospectus. Any information that we file later with the SEC will automatically update and supersede this information. This prospectus constitutes a part of a registration statement on Form S-3 filed by us with the SEC under the Securities Act of 1933. This prospectus does not contain all the information that is contained in the registration statement, some of which we are allowed to omit in accordance with the rules and regulations of the SEC. We refer you to the registration statement and to the exhibits filed with the registration statement for further information with respect to Arrow. Copies of the registration statement and the exhibits to the registration statement are on file at the offices of the SEC and may be obtained upon payment of the prescribed fee or may be examined without charge at the public reference facilities of the SEC described above. Statements contained in this prospectus concerning the provisions of documents are summaries of the material provisions of those documents, and each of those statements is qualified in its entirety by reference to the copy of the applicable document filed with the SEC. Since this prospectus may not contain all of the information that you may find important, you should review the full text of these documents. FORWARD LOOKING STATEMENTS This prospectus includes forward-looking statements that are subject to certain risks and uncertainties which could cause actual results or facts to differ materially from the statements in this prospectus for a variety of reasons, including, but not limited to: industry conditions, changes in product supply, pricing, and customer demand, competition, other vagaries in the electronic components and commercial computer products markets, and changes in relationships with key suppliers. Forward-looking statements are those statements which are not statements of historical fact. You can identify these forward-looking statements by forward-looking words such as "expects," "anticipates," "intends," "plans," "may," "will," "believes," "seeks," "estimates," and similar expressions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any of the forward-looking statements. 3 44 ARROW ELECTRONICS, INC. We are the world's largest distributor of electronic components and computer products to industrial and commercial customers. We believe we are one of the global electronics distribution industry's leaders in state-of-the-art operating systems, employee productivity, value-added programs, and total quality assurance. We are a leading distributor for over 600 suppliers. Our distribution network spans the world's three dominant electronics markets: North America, Europe, and the Asia/Pacific region. Through our business units in these vital industrialized regions, we serve a diversified base of original equipment manufacturers and commercial customers worldwide. Original equipment manufacturers, or OEMs, include manufacturers of computer and office products, industrial equipment (including machine tools, factory automation, and robotic equipment), telecommunications products, aircraft and aerospace equipment, and scientific and medical devices. Commercial customers are mainly value-added resellers of computer systems. Through a network of more than 225 sales facilities and 19 distribution centers in 38 countries, we deliver to more than 175,000 OEMs and commercial customers the products, inventory solutions, materials management services, and design and technical support they need when, where and how they need them. USE OF PROCEEDS Except as otherwise described in the prospectus supplement relating to an offering of securities, the net proceeds from the sale of securities offered pursuant to this prospectus and any prospectus supplement will be used for general corporate purposes. CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES The following table sets forth our historical ratios of earnings to fixed charges and our consolidated subsidiaries for the periods indicated:
NINE MONTHS ENDED SEPTEMBER 30, 2000 YEAR ENDED DECEMBER 31, ------------------ ----------------------------------------------- 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges............... 4.6 2.9(a) 4.0 5.0(b) 8.6 7.7
- ------------------------ (a) Excluding the special pre-tax charge of $25 million associated with the acquisition and integration of Richey Electronics, Inc. and the electronics distribution group of Bell Industries, Inc., the ratio of earnings to fixed charges would have been 3.1. (b) Excluding special pre-tax charges totaling $59 million associated with the realignment of our North American components operations and the acquisition and integration of the volume electronic component distribution businesses of Premier Farnell plc, the ratio of earnings to fixed charges would have been 5.7. 4 45 DESCRIPTION OF DEBT SECURITIES We have described below the general terms and provisions of the debt securities to which a prospectus supplement may relate. We will describe the particular terms of the debt securities offered by any prospectus supplement in the prospectus supplement relating to the offered debt securities. We may from time to time offer and sell debt securities, consisting of debentures, notes and/or other unsecured evidences of indebtedness. The debt securities will be either our unsecured senior debt securities or our unsecured subordinated debt securities. We will issue senior debt securities under an indenture, called the "senior indenture", between us and The Bank of New York (as successor to Bank of Montreal Trust Company), as trustee, in such capacity, called the "senior trustee". We may also issue subordinated debt securities under a proposed indenture, called the "subordinated indenture", between us and a trustee to be named in any prospectus supplement relating to the subordinated debt securities, called the "subordinated trustee". In this prospectus, we refer to the senior indenture and the subordinated indenture together as the "indentures", to the senior debt securities and the subordinated debt securities together as the "debt securities" and to the senior trustee and the subordinated trustee together as the "trustees". Unless otherwise indicated, section references in this prospectus or in an accompanying prospectus supplement are to the relevant provisions of both the senior indenture and the subordinated indenture. The following summary of important provisions of the debt securities and the indentures does not purport to be complete. This summary is subject to the detailed provisions of the indentures, including the definition of certain terms used in this prospectus and those terms made a part of the indentures by reference to the Trust Indenture Act and the debt securities. Wherever particular sections or defined terms of the indentures are referred to, those sections or defined terms are incorporated by reference in this prospectus as part of the statement made, and the statement is qualified in its entirety by such reference. Numerical references in parentheses below are to sections in the indentures. Capitalized terms that are used and not otherwise defined in this prospectus will have the meanings assigned to them in the indentures. GENERAL The indentures provide for the issuance from time to time of debentures, notes or other evidences of indebtedness by us in an unlimited amount pursuant to a supplemental indenture, a board resolution, or an officer's certificate pursuant to a supplemental indenture or board resolution. (Section 2.3) Under each indenture, we may issue debt securities in one or more series with the same or various maturities, at par, at a premium or with an original issue discount. The applicable prospectus supplement relating to a particular series of debt securities will describe the specific terms of the debt securities we may offer, including: (a) the designation of the debt securities of a particular series, which will distinguish the debt securities of that series from the debt securities of all other series; (b) any limit upon the aggregate principal amount of the debt securities of that series that may be authenticated and delivered under the indentures and any limitation on our ability to increase the aggregate principal amount after the initial issuance of the debt securities of that series; 5 46 (c) the date or dates on which the principal of the debt securities of that series is payable (which date or dates may be fixed or extendible); (d) the rate or rates (which may be fixed or variable) per year at which the debt securities of that series will bear interest, if any; (e) the date or dates from which interest will accrue, on which interest will be payable and (in the case of registered securities (which is defined as any debt security registered on the security register)) on which a record will be taken for the determination of holders to whom interest is payable and/or the method by which such rate or rates or date or dates will be determined; (f) if other than as provided in the indentures, the place or places where (1) the principal of and any interest on debt securities will be payable, (2) any registered securities may be surrendered for exchange, (3) notices, demands to or upon us in respect of the debt securities of that series or the indentures may be served and (4) notice to holders may be published; (g) our right, if any, to redeem debt securities of that series, in whole or in part, at our option and the period or periods within which, the price or prices at which and any terms and conditions upon which debt securities of that series may be redeemed pursuant to any sinking fund or otherwise; (h) our obligation, if any, to redeem, purchase or repay debt securities of that series pursuant to any mandatory redemption, sinking fund or analogous provisions or at the option of a holder and the price or prices at which and the period or periods within which and any of the terms and conditions upon which debt securities of that series will be redeemed, purchased or repaid, in whole or in part, pursuant to our redemption obligation; (i) if other than denominations of $1,000 and any integral multiple of $1,000, the denominations in which debt securities of that series will be issuable; (j) if other than the principal amount of the debt securities, the portion of the principal amount of debt securities of that series which will be payable upon acceleration of the maturity of those securities; (k) if other than the coin or currency in which the debt securities of that series are denominated, the coin or currency in which payment of the principal of or interest on the debt securities of that series will be payable or if the amount of payments of principal of and/or interest on the debt securities of that series may be determined with reference to an index based on a coin or currency other than that in which the debt securities of that series are denominated, the manner in which those amounts will be determined; (l) if other than the currency of the United States of America, the currency or currencies, including composite currencies, in which payment of the principal of and interest on the debt securities of that series will be payable, and the manner in which any currencies will be valued against other currencies in which any other debt securities will be payable; 6 47 (m) whether the debt securities of that series or any portion thereof will be issuable, with or without coupons, as registered securities (and if so, whether those debt securities will be issuable as registered global securities) or unregistered securities (which is defined as any debt security other than a registered security), or any combination of the foregoing, any restrictions applicable to the offer, sale or delivery of unregistered securities or the payment of interest on those securities and, if other than as provided in the indenture, the terms upon which unregistered securities of any series may be exchanged for registered securities of that series and vice versa; (n) whether and under what circumstances we will pay additional amounts on debt securities held by a person who is not a U.S. person in respect of any tax, assessment or governmental charge withheld or deducted and, if so, whether we will have the option to redeem the securities rather than pay any additional amounts; (o) if the debt securities of that series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary debt security of that series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and terms of those certificates, documents or conditions; (p) any trustees, depositaries, authenticating or paying agents, transfer agents or the registrar or any other agents with respect to the debt securities of that series; (q) provisions, if any, for the defeasance of the debt securities of that series, including provisions permitting defeasance of less than all the debt securities of that series, which provisions may be in addition to, in substitution for, or in modification of (or any combination of the foregoing) the provisions of the indentures; (r) if the debt securities of that series are issuable in whole or in part as one or more registered global securities, the identity of the depositary (if other than The Depository Trust Company, or DTC) for that registered global security or securities (which depositary will, at the time of its designation as depositary and at all times while it serves as depositary, be a clearing agency registered under the Exchange Act and any other applicable statute or regulation); (s) any other events of default or covenants with respect to the debt securities of that series in addition to the events of default or covenants set forth in the indentures; (t) any other terms of the debt securities of that series, which terms will not be inconsistent with the provisions of the indentures. Neither indenture contains any restriction on the payment of dividends or any financial covenants. Neither indenture contains provisions which would afford you protection in the event of a transfer of assets to a subsidiary and incurrence of unsecured debt by such subsidiary, or in the event of a decline in our credit quality resulting from highly leveraged or other similar transactions involving us. 7 48 The debt securities will be unsubordinated obligations of ours and the senior debt securities will rank equal in right of payment with all of our existing and future unsecured and unsubordinated obligations. The indebtedness represented by the subordinated debt securities will be subordinated in right of payment to the prior payment in full of our senior debt, as described below under "Subordination". Claims of holders of the debt securities will be effectively subordinated to the claims of holders of the debt of our subsidiaries with respect to the assets of our subsidiaries. In addition, claims of holders of the debt securities will be effectively subordinated to the claims of holders of our secured debt and the secured debt of our subsidiaries with respect to the collateral securing those claims. Our claims as the holder of general unsecured intercompany debt will be similarly effectively subordinated to claims of holders of secured debt of our subsidiaries. SUBORDINATION If we issue subordinated debt securities, our obligations to make any payment of the principal of and premium, if any, and interest on, any subordinated debt securities to be issued will be subordinate and junior in right of payment to the prior payment in full of all of our senior indebtedness, whether outstanding on the date of the subordinated indenture or thereafter incurred. (article 10 of subordinated indenture) We may not pay the principal of or interest or premium on the subordinated debt securities if (i) we fail to make any of such payments on any senior indebtedness (other than trade accounts payable) which has matured by lapse of time, acceleration or otherwise, or (ii) a default occurs on the senior indebtedness (other than trade accounts payable) that allows the holders of the senior indebtedness to accelerate its maturity after lapse of time, the giving of notice or both and that default continues. If any payment or distribution of our assets occurs upon our dissolution, winding-up, liquidation or reorganization, we may not pay the principal of or interest or premium on the subordinated debt securities until we have made such payments in full to the holders of all senior indebtedness. If such dissolution, winding-up, liquidation or reorganization occurs and the holders of the subordinated debt securities receive a payment or distribution, then they must turn that payment or distribution over to the holders of the senior indebtedness or a trustee for the benefit of the senior indebtedness holders. Because of this subordination, if an insolvency occurs, holders of the subordinated debt securities may recover less, proportionately, than holders of senior debt and our general unsecured creditors. CONVERSION The terms, if any, on which debt securities are convertible into our common stock will be set forth in the prospectus supplement for that series of debt securities. These terms will include: - the conversion price, - the conversion period, - provision as to whether conversion will be at our option or at the option of the holder, 8 49 - the events requiring an adjustment of the conversion price, and - provisions affecting conversion in the event of the redemption of such series of debt securities. REGISTERED GLOBAL SECURITIES Unless otherwise specified in the applicable prospectus supplement, DTC will act as securities depositary for the debt securities. The debt securities will be issued only as registered global securities registered in the name of DTC's nominee, which we expect will be Cede & Co. We will issue one or more registered global securities for the debt securities representing the aggregate principal amount of that series of debt securities and will deposit the registered global securities with DTC. The description of book-entry procedures in this prospectus includes summaries of certain rules and operating procedures of DTC that affect transfers of interests in the registered global securities issued in connection with sales of debt securities made pursuant to this prospectus. The descriptions of the operations and procedures of DTC that follow are provided solely as a matter of convenience. These operations and procedures are solely within the control of the DTC settlement system and are subject to change from time to time. We understand that DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities that its participants (the "direct participants") deposit with DTC. DTC also facilitates the settlement among direct participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in direct participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Access to DTC's system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly (the "indirect participants," and together with the direct participants, the "participants"). Purchases of securities within DTC's system must be made by or through direct participants. The direct participants receive a credit for the securities on DTC's records. The ownership interest of the actual purchaser of each security (a "beneficial owner") is in turn recorded on the direct and indirect participants' records. Beneficial owners will not receive written confirmation from DTC of their purchase. However, beneficial owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the direct or indirect participant through which the beneficial owner entered into the transaction. Transfers of ownership interest in the securities are to be accomplished by entries made on the books of participants acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their ownership interest in debt securities except in the event that use of the book-entry system for the debt securities is discontinued. To facilitate subsequent transfers of the debt securities, all securities deposited by direct participants with DTC are registered in the name of a nominee of DTC. The deposit of debt securities with DTC and their registration in the name of the nominee do not change the 9 50 beneficial ownership of the securities. DTC has no knowledge of the actual beneficial owners of the debt securities. DTC's records reflect only the identity of the direct participants to whose accounts the debt securities are credited. The participants will remain responsible for keeping account of their holdings on behalf of their customers. As long as DTC or its nominee is the registered holder of the registered global security, DTC or its nominee will be considered the sole owner and holder of the debt securities represented by the registered global security for all purposes under the indenture and the debt securities. Except in limited circumstances, beneficial owners will not be entitled to have any portions of the registered global security registered in their names, will not receive or be entitled to receive physical delivery of debt securities in definitive form and will not be considered the owners or holders of the registered global security (or any debt securities represented thereby) under the indenture or the debt securities. The laws of some states require that certain persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a registered global security to those persons may be limited. Because DTC can act only on behalf of its participants, which in turn act on behalf of indirect participants and certain banks, the ability of a beneficial owner to pledge their interest to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of their interests, may be affected by the lack of a physical certificate evidencing their interests. DTC will send notices and other communications to its direct participants; direct participants will send these communications to indirect participants. The direct participants and indirect participants will send notices and other communications to beneficial owners pursuant to arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. We will send any redemption notices to the nominee of DTC. If less than all of the debt securities of a particular series are being redeemed, DTC will determine in accordance with its procedures the amount of the interest of each direct participant in the particular series to be redeemed. Neither DTC nor its nominee will consent or vote with respect to any debt securities. Under its usual procedures, DTC mails an omnibus proxy to its direct participants as soon as possible after the applicable record date. The omnibus proxy assigns the nominee's consenting or voting rights to those direct participants to whose accounts the applicable securities are credited on the record date (identified in a listing attached to the omnibus proxy). Principal, premium, if any, and interest payments on the debt securities will be made to DTC or its nominee. We expect that DTC will credit direct participants' accounts on the relevant payment date upon DTC's receipt of funds in accordance with the respective holdings shown on DTC's records. We expect that payments by participants to beneficial owners will be governed by standing instructions and customary practices, as is the case with securities for the accounts of customers in bearer form or registered in "street-name". These payments will be the responsibility of the participant and not of DTC, any underwriters, or us, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of distributions and other amounts to DTC is the responsibility of the trustee. DTC is responsible for disbursing those payments to the direct participants. The direct and indirect participants are responsible for disbursing payments to the beneficial owners. We will not have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership 10 51 interests in the registered global security or for maintaining, supervising or reviewing any records relating to those beneficial ownership interests. Interests in the registered global security will trade in DTC's Same-Day Funds Settlement System and secondary market trading activity in such interests will therefore settle in immediately available funds, subject in all cases to the rules and procedures of DTC and its participants. Transfers between participants in DTC will be effected in accordance with DTC's procedures, and will be settled in same-day funds. DTC may discontinue providing its services as securities depositary with respect to the debt securities at any time by giving reasonable notice to us and the trustee. In the event that a successor securities depositary is not obtained, definitive debt securities certificates representing the debt securities will be required to be printed and delivered. We will not have any responsibility or obligation to participants or the persons for whom they act as nominees with respect to the accuracy of the records of DTC, its nominee or any participant with respect to any ownership interest in the debt securities, or with respect to payments to or providing of notice for the participants or the beneficial owners. So long as DTC's nominee is the registered owner of the debt securities, references herein to a holder of the debt securities means DTC or its nominee and not the beneficial owners of the debt securities. The information in this section concerning DTC and DTC's book-entry system has been obtained from DTC. Neither we, the trustees nor the underwriters, dealers or agents, if any, take responsibility for the accuracy or completeness of this description. CERTAIN COVENANTS Except as specified below or in the applicable prospectus supplement, the following covenants apply to all series of senior debt securities. RESTRICTIONS ON LIENS. The senior indenture provides that we will not, and will not permit any Restricted Subsidiary to, create or incur any Lien on any shares of stock, indebtedness or other obligations of a Restricted Subsidiary or any Principal Property of ours or of a Restricted Subsidiary, whether those shares of stock, indebtedness or other obligations of a Restricted Subsidiary or Principal Property are owned at the date of such indenture or acquired afterwards, unless we secure or cause the applicable Restricted Subsidiary to secure the outstanding debt securities equally and ratably with (or, at our option, prior to) all indebtedness secured by the particular Lien, so long as the indebtedness is so secured. This covenant does not apply in the case of: (a) the creation of any Lien on any shares of stock, indebtedness or other obligations of a Subsidiary or any Principal Property acquired after the date of such indenture (including acquisitions by way of merger or consolidation) by us or a Restricted Subsidiary, contemporaneously with that acquisition, or within 180 days thereafter, to secure or provide for the payment or financing of any part of the purchase price, or the assumption of any Lien upon any shares of stock, indebtedness or other obligations of a Subsidiary or any Principal Property acquired after the date of such indenture existing at the time of the acquisition, or the acquisition of any shares of stock, indebtedness or other obligations of a Subsidiary or any Principal Property subject to any Lien without the assumption 11 52 of that Lien, provided that every Lien referred to in this clause will attach only to the shares of stock, indebtedness or other obligations of a Subsidiary or any Principal Property so acquired and fixed improvements on that Principal Property; (b) any Lien on any shares of stock, indebtedness or other obligations of a Subsidiary or any Principal Property existing on the date of such indenture; (c) any Lien on any shares of stock, indebtedness or other obligations of a Subsidiary or any Principal Property in favor of us or any Restricted Subsidiary; (d) any Lien on any Principal Property being constructed or improved securing loans to finance the construction or improvements of that property; (e) any Lien on shares of stock, indebtedness or other obligations of a Subsidiary or any Principal Property incurred in connection with the issuance of tax-exempt governmental obligations, including, without limitation, industrial revenue bonds and similar financings; (f) any mechanics', materialmen's, carriers' or other similar Liens arising in the ordinary course of business with respect to obligations that are not yet due or that are being contested in good faith; (g) any Lien on any shares of stock, indebtedness or other obligations of a Subsidiary or any Principal Property for taxes, assessments or governmental charges or levies not yet delinquent, or already delinquent but the validity of which is being contested in good faith; (h) any Lien on any shares of stock, indebtedness or other obligations of a Subsidiary or any Principal Property arising in connection with legal proceedings being contested in good faith, including any judgment Lien so long as execution on the Lien is stayed; (i) any landlord's Lien on fixtures located on premises leased by us or a Restricted Subsidiary in the ordinary course of business, and tenants' rights under leases, easements and similar Liens not materially impairing the use or value of the property involved; (j) any Lien arising by reason of deposits necessary to qualify us or any Restricted Subsidiary to conduct business, maintain self-insurance, or obtain the benefit of, or comply with, any law; (k) Liens on our current assets to secure loans to us that mature within twelve months from their creation and that are made in the ordinary course of business; and (l) any renewal of or substitution for any Lien permitted by any of the preceding clauses, provided, in the case of a Lien permitted under clauses (a), (b) or (d), the indebtedness secured is not increased nor the Lien extended to any additional assets. (Section 4.3(a) of senior indenture) 12 53 Notwithstanding the foregoing, we or any Restricted Subsidiary may create or assume Liens in addition to those permitted by the preceding sentence of this paragraph, and renew, extend or replace those Liens, provided that at the time of and after giving effect to the creation, assumption, renewal, extension or replacement, Exempted Debt does not exceed 15 percent of Consolidated Net Tangible Assets. (Section 4.3(b) of senior indenture) RESTRICTIONS ON SALE AND LEASE-BACK TRANSACTIONS. The senior indenture provides that we will not, and will not permit any Restricted Subsidiary to, sell or transfer, directly or indirectly, except to us or to a Restricted Subsidiary, any Principal Property as an entirety, or any substantial portion of that Principal Property, with the intention of taking back a lease of such property, except a lease for a period of three years or less at the end of which it is intended that the use of that property by the lessee will be discontinued. Notwithstanding the foregoing, we or any Restricted Subsidiary may sell any Principal Property and lease it back for a longer period: (a) if we or such applicable Restricted Subsidiary would be entitled, pursuant to the provisions of Section 4.3(a) of the senior indenture, to create a Lien on the property to be leased securing Funded Debt in an amount equal to the Attributable Debt with respect to the sale and lease-back transaction without equally and ratably securing the outstanding debt securities; or (b) if we promptly inform the trustee of the transaction, and we cause an amount equal to the fair value (as determined by resolution of our board of directors) of the property to be applied (1) to the purchase of other property that will constitute Principal Property having a fair value at least equal to the fair value of the property sold, or (2) to the retirement within 120 days after receipt of the proceeds of Funded Debt incurred or assumed by us or a Restricted Subsidiary, including the senior debt securities; provided, further that, in lieu of applying all of or any part of such net proceeds to such retirement, we may, within 75 days after the sale, deliver or cause to be delivered to the applicable trustee for cancellation either debentures or debt securities evidencing Funded Debt of ours (which may include the senior debt securities) or of a Restricted Subsidiary previously authenticated and delivered by the applicable trustee, and not yet tendered for sinking fund purposes or called for a sinking fund or otherwise applied as a credit against an obligation to redeem or retire such debt securities or debentures, and an officer's certificate (which will be delivered to the trustee) stating that we elect to deliver or cause to be delivered the debentures or debt securities in lieu of retiring Funded Debt as provided in such indenture. If we deliver debentures or debt securities to the trustee and we duly deliver the officer's certificate, the amount of cash that we will be required to apply to the retirement of Funded Debt under this provision of the senior indenture will be reduced by an amount equal to the aggregate of the then applicable optional redemption prices (not including any optional sinking fund redemption prices) of the applicable debentures or debt securities, or, if there are no such redemption prices, the principal amount of those debentures or debt securities. If the applicable debentures or debt securities provide for an amount less than the principal amount to be due and payable upon a declaration of the maturity, then the amount of cash will be reduced by the amount of principal of those debentures or debt securities that would be due and payable as of the date of the application upon a declaration of acceleration of the maturity pursuant to the terms of the indenture pursuant to which those debentures or debt securities were issued. (Section 4.4(a) of senior indenture) Notwithstanding the foregoing, we or any Restricted Subsidiary may enter into sale and lease-back transactions in addition to those permitted by this paragraph, without any obligation 13 54 to retire any outstanding debt securities or other Funded Debt, provided that at the time of entering into and giving effect to such sale and lease-back transactions, Exempted Debt does not exceed 15 percent of Consolidated Net Tangible Assets. (Section 4.4(b) of senior indenture) CERTAIN DEFINITIONS The term "Attributable Debt" as defined in the senior indenture means when used in connection with a sale and leaseback transaction referred to above under " - Certain Covenants - Restrictions on Sale and Lease-Back Transactions," on any date as of which the amount of Attributable Debt is to be determined, the product of (a) the net proceeds from the sale and lease-back transaction multiplied by (b) a fraction, the numerator of which is the number of full years of the term of the lease relating to the property involved in the sale and lease-back transaction (without regard to any options to renew or extend such term) remaining on the date of the making of the computation, and the denominator of which is the number of full years of the term of the lease measured from the first day of the term. The term "Consolidated Net Tangible Assets" as defined in the senior indenture means total assets after deducting all current liabilities and intangible assets as set forth in our most recent balance sheet and our consolidated Subsidiaries and computed in accordance with GAAP. The term "Exempted Debt" as defined in the senior indenture means the sum, without duplication, of the following items outstanding as of the date Exempted Debt is being determined: (a) indebtedness of ours and our Restricted Subsidiaries incurred after the date of such indenture and secured by liens created or assumed or permitted to exist pursuant to Section 4.3(b) of such indenture described above under " - Certain Covenants - Restrictions on Liens"; and (b) Attributable Debt of ours and our Restricted Subsidiaries in respect of all sale and lease-back transactions with regard to any Principal Property entered into pursuant to Section 4.4(b) of such indenture described above under " - Certain Covenants - Restrictions on Sales and Lease-Back Transactions". The term "Funded Debt" as defined in the senior indenture means all indebtedness for money borrowed, including purchase money indebtedness, having a maturity of more than one year from the date of its creation or having a maturity of less than one year but by its terms being renewable or extendible at the option of the obligor, beyond one year from the date of its creation. The terms "Holder" or "Securityholder" as defined in the applicable indenture mean the registered holder of any debt security with respect to registered securities and the bearer of any unregistered security or any coupon appertaining to it, as the case may be. The term "Lien" as defined in the senior indenture means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, or any other type of preferential arrangement that has the practical effect of creating a security interest in respect of such asset. For the purposes of such indenture, we or any Subsidiary will be deemed to own, subject to a Lien, any asset that we have acquired or hold subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. 14 55 The term "Original Issue Discount Security" as defined in the applicable indenture means any debt security that provides for an amount less than the principal amount of a particular security to be due and payable upon a declaration of acceleration of the maturity of that security pursuant to Section 6.2 of such indenture. The term "Principal Property" as defined in the senior indenture means any manufacturing or processing plant or warehouse owned at the date of such indenture or acquired after that date by us or any of our Restricted Subsidiaries which is located within the United States and the gross book value of which (including related land and improvements and all machinery and equipment without deduction of any depreciation reserves) on the date as of which the determination is being made exceeds 2 percent of Consolidated Net Tangible Assets, other than: (a) any manufacturing or processing plant or warehouse or any portion of the same (together with the land on which it is erected and fixtures that are a part of that land) which is financed by industrial development bonds which are tax exempt pursuant to Section 103 of the Internal Revenue Code (or which receive similar tax treatment under any subsequent amendments or any successor laws or under any other similar statute of the United States); (b) any property which in the opinion of our board of directors is not of material importance to the total business conducted by us as an entirety; or (c) any portion of a particular property which is similarly found not to be of material importance to the use or operation of such property. The term "Restricted Subsidiary" as defined in the applicable indenture means a Subsidiary of ours (a) of which substantially all the property is located, or substantially all the business is carried on, within the United States, and (b) which owns Principal Property; provided, however, that any Subsidiary may be declared a Restricted Subsidiary by board resolution, effective as of the date such board resolution is adopted; provided further, that any such declaration may be rescinded by further board resolution, effective as of the date that further board resolution is adopted. The term "Senior Indebtedness" as defined in the subordinated indenture shall mean (a) the principal of, premium, if any, and interest on all indebtedness, whether outstanding on the date of the subordinated indenture as originally executed or thereafter created or incurred, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such indebtedness is not superior in right of payment to the subordinated debt securities; and (b) any amendments, modifications, deferrals, renewals or extensions of any such Senior Indebtedness, or debentures, notes or other evidences of indebtedness issued in exchange for any such Senior Indebtedness; provided, however, that Senior Indebtedness shall not be deemed to include (i) indebtedness which constitutes subordinated indebtedness and (ii) any other debt securities issued pursuant to the subordinated indenture. The term "Subsidiary" as defined in the applicable indenture means, with respect to any person, any corporation, association or other business entity of which more than 50% of the outstanding Voting Stock is owned, directly or indirectly, by that person and one or more other Subsidiaries of that person. RESTRICTIONS ON MERGERS AND SALES OF ASSETS Under each indenture, we may not consolidate with, merge with or into, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of our property and assets (in one transaction or a series of related transactions) to, any person (other than a consolidation with or merger with or into a Subsidiary or a sale, conveyance, transfer, lease or other disposition to a 15 56 Subsidiary) or permit any person to merge with or into us unless (a) either (1) we will be the continuing person or (2) the person (if other than ourselves) formed by the consolidation or into which we are merged or that acquired or leased such property and assets of ours will be a corporation organized and validly existing under the laws of the United States of America or any of its jurisdictions and will expressly assume, by a supplemental indenture, executed and delivered to the trustee, all of our obligations on all of the debt securities under such indenture, and we will have delivered to the trustee an opinion of counsel stating that the consolidation, merger or transfer and the supplemental indenture complies with such indenture and that all conditions precedent provided for in such indenture relating to the transaction have been complied with and that the supplemental indenture constitutes a legal, valid and binding obligation of ours or the successor enforceable against such entity in accordance with its terms, subject to customary exceptions; and (b) an officer's certificate to the effect that immediately after giving effect to such transaction, no default will have occurred and be continuing and an opinion of counsel as to the matters set forth in clause (a) will have been delivered to the trustee. (Section 5.1) EVENTS OF DEFAULT Events of default defined in the indentures with respect to the debt securities of any series are: (a) we default in the payment of the principal of any debt securities of a series when the same becomes due and payable at maturity, upon acceleration, redemption or mandatory repurchase, including as a sinking fund installment, or otherwise; (b) we default in the payment of interest on any debt securities of a series when the same becomes due and payable, and that default continues for a period of 30 days; (c) we default in the performance of or breach any other covenant or agreement of ours in the applicable indenture with respect to the debt securities of a series and that default or breach continues for a period of 30 consecutive days (or, in the case of the subordinated indenture, 60 consecutive days) after written notice to us by the trustee or to us and the trustee by the Holders of 25 percent or more in aggregate principal amount of the debt securities of all series affected thereby; (d) an involuntary case or other proceeding is commenced against us or any Restricted Subsidiary with respect to our debts or our Restricted Subsidiary's debts under any bankruptcy, insolvency or other similar law now or in the future in effect seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official relating to us or a substantial part of our property, and the involuntary case or other proceeding remains undismissed and unstayed for a period of 60 days; or an order for relief is entered against us or any Restricted Subsidiary under the federal bankruptcy laws as now or in the future in effect; (e) we or any Restricted Subsidiary (1) commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or in the future in effect, or consents to the entry of an order for relief in an involuntary case under any such law, (2) consent to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of us or any Restricted Subsidiary or for all or substantially all of our property and 16 57 assets or any Restricted Subsidiary's property and assets or (3) effect any general assignment for the benefit of creditors; and (f) any other event of default established with respect to any series of debt securities issued pursuant to the applicable indenture occurs. (Section 6.1) The indentures provide that if an event of default described in clauses (a) or (b) above, with respect to the debt securities of any series then outstanding, occurs and is continuing, then, and in each and every such case, except for any series of debt securities the principal of which has already become due and payable, either the trustee or the Holders of not less than 25 percent in aggregate principal amount of the debt securities of any such affected series then outstanding under the applicable indenture (each series being treated as a separate class) by notice in writing to us (and to the trustee if given by Securityholders), may declare the entire principal (or, if the debt securities of any such series are Original Issue Discount Securities, the applicable portion of the principal amount as may be specified in the terms of the particular series established pursuant to that indenture) of all debt securities of the affected series, and the interest accrued on that series, if any, to be due and payable immediately, and upon any such declaration the same will become immediately due and payable. If an event of default described clauses (c) or (d) above, with respect to the debt securities of one or more but not all series then outstanding, or with respect to the debt securities of all series then outstanding, occurs and is continuing, then, and in each and every such case, except for any series of debt securities the principal of which has already become due and payable, either the trustee or the Holders of not less than 25 percent in aggregate principal amount (or, if the debt securities of any such series are Original Issue Discount Securities, the amount of which is accelerable as described in this paragraph) of the debt securities of all the affected series then outstanding under the applicable indenture (treated as a single class) by notice in writing to us (and to the trustee if given by Securityholders) may declare the entire principal (or, if the debt securities of any such series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of that series) of all debt securities of all the affected series, and the interest accrued on those series, if any, to be due and payable immediately, and upon any such declaration the same will become immediately due and payable. If an event of default described in clauses (e) or (f) above occurs and is continuing, then the principal amount (or, if any debt securities are Original Issue Discount Securities, the portion of the principal as may be specified in the terms of that series) of all the debt securities then outstanding and interest accrued on those debt securities, if any, will be and become immediately due and payable without any notice or other action by any Holder or the trustee to the full extent permitted by applicable law. Upon certain conditions such declarations may be rescinded and annulled and past defaults may be waived by the Holders of a majority in principal of the then outstanding debt securities of all series that have been accelerated, voting as a single class. (Section 6.2) TRUSTEE'S RIGHTS The indentures contain a provision under which, subject to the duty of the trustee during a default to act with the required standard of care: (a) the trustee may rely and will be protected in acting or refraining from acting upon any resolution, certificate, officer's certificate, opinion of counsel, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, 17 58 debenture, note, other evidence or indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper person or persons, and the trustee need not investigate any fact or matter stated in the document, but the trustee, in its discretion, may make any further inquiry or investigation into any facts or matters as it may see fit; (b) before the trustee acts or refrains from acting, it may require an officer's certificate and/or an opinion of counsel, which will conform to the requirements of the applicable indenture, and the trustee will not be liable for any action it takes or omits to take in good faith in reliance on that certificate or opinion; subject to the terms of such indenture, whenever in the administration of the trusts of such indenture the trustee deems it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action under the indenture, that matter (unless other evidence in respect thereof be specifically prescribed in such indenture) may, in the absence of negligence or bad faith on the part of the trustee, be deemed to be conclusively proved and established by an officer's certificate delivered to the trustee, and that certificate, in the absence of negligence or bad faith on the part of the trustee, will be full warrant to the trustee for any action taken, suffered or omitted by it under the provisions of such indenture upon the faith of the officer's certificate; (c) the trustee may act through its attorneys and agents not regularly in its employ and will not be responsible for the misconduct or negligence of any agent or attorney appointed with due care by it under the applicable indenture; (d) any request, direction, order or demand of us mentioned in the applicable indenture will be sufficiently evidenced by an officer's certificate (unless other evidence is specifically prescribed in such indenture); and any board resolution may be evidenced to the trustee by a copy of the resolution certified by our Secretary or an Assistant Secretary; (e) the trustee will be under no obligation to exercise any of the rights or powers vested in it by the applicable indenture at the request, order or direction of any of the Holders, unless the Holders have offered the trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with the request or direction; (f) the trustee will not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within its rights or powers or for any action it takes or omits to take in accordance with the direction of the Holders in accordance with the applicable indenture relating to the time, method and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred upon the trustee, under such indenture; (g) the trustee may consult with counsel, and the written advice of its counsel or any opinion of counsel will be full and complete authorization and protection in respect of any action taken, suffered or omitted by it under the applicable indenture in good faith and in reliance on that opinion of counsel; and (h) prior to the occurrence of an event of default under each indenture and after the curing or waiving of all events of default, the trustee will not be bound to make 18 59 any investigation into the facts or matters stated in any resolution, certificate, officer's certificate, opinion of counsel, board resolution, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document, but the trustee, in its discretion, may make any further inquiry or investigation into any facts or matters as it may see fit and, if the trustee decides to make such further inquiry or investigation, it will be entitled to examine, during normal business hours and upon prior written notice, our books, records and premises, personally or by agent or attorney. (Section 7.2) Subject to various provisions in the indentures, the Holders of at least a majority in principal amount (or, if the debt securities are Original Issue Discount Securities, such portion of the principal as is then accelerable under the applicable indenture) of the applicable outstanding debt securities of all series affected (voting as a single class) by notice to the trustee, may waive, on behalf of the Holders of all the debt securities of that series, an existing default or event of default with respect to such debt securities of that series and its consequences, except a default in the payment of principal of or interest on any debt security as specified in clauses of the "Events of Default" section above or in respect of a covenant or provision of such indenture which cannot be modified or amended without the consent of the Holder of each outstanding debt security affected by the default. Upon any waiver, the default will cease to exist, and any event of default with respect to the debt securities of that series will be deemed to have been cured, for every purpose of such indenture. However, no waiver will extend to any subsequent or other default or event of default or impair any right in relation to any subsequent or other default or event of default. (Section 6.4) Subject to provisions in the indentures for the indemnification of the trustee and certain other limitations, the Holders of at least a majority in aggregate principal amount (or, if any debt securities are Original Issue Discount Securities, the portion of the principal as is then accelerable under the applicable indenture) of the applicable outstanding debt securities of all series affected (voting as a single class), may direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee with respect to the debt securities of such series by such indenture, provided that the trustee may refuse to follow any direction that conflicts with law or such indenture that may involve the trustee in personal liability, or that the trustee determines in good faith may be unduly prejudicial to the rights of Holders not joining in the giving of such direction; and provided, further that the trustee may take any other action it deems proper that is not inconsistent with any directions received from such Holders of debt securities pursuant to such indenture. (Section 6.5) The indentures provide that no Holder of any applicable debt securities of any series may institute any proceeding, judicial or otherwise, with respect to the applicable indenture or the debt securities of that series, or for the appointment of a receiver or trustee, or for any other remedy under the indentures, unless: (a) such Holder has previously given to the trustee written notice of a continuing event of default with respect to the debt securities of that series; (b) such Holders of at least 25 percent in aggregate principal amount of applicable outstanding debt securities of the affected series have made written request to the trustee to institute proceedings in respect of the event of default in its own name as trustee under such indenture; 19 60 (c) the Holder or Holders have offered to the trustee indemnity reasonably satisfactory to the trustee against any costs, liabilities or expenses to be incurred in compliance with the request; (d) the trustee for 60 days after its receipt of the notice, request and offer of indemnity has failed to institute any such proceeding; and (e) during the 60-day period, the Holders of a majority in aggregate principal amount of the applicable outstanding debt securities of the affected series have not given the trustee a direction that is inconsistent with such written request. A Holder may not use such indenture to prejudice the rights of another Holder or to obtain a preference or priority over any other Holder. (Section 6.6) The indentures contain a covenant that we will file with the trustee, within 15 days after we are required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports that we may be required to file with the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act. (Section 4.6) DISCHARGE, LEGAL DEFEASANCE AND COVENANT DEFEASANCE Each indenture provides with respect to each series of applicable debt securities that, except as otherwise provided in this paragraph, we may terminate our obligations under such debt securities of a series and the applicable indenture with respect to debt securities of that series if: (a) all debt securities of that series previously authenticated and delivered, with certain exceptions, have been delivered to the trustee for cancellation, and we have paid all sums payable by us under such indenture with respect to that series; or (b) (1) the debt securities of that series mature within one year or all of them are to be called for redemption within one year under arrangements satisfactory to the trustee for giving the notice of redemption; (2) we irrevocably deposit in trust with the trustee, as trust funds solely for the benefit of the Holders of those debt securities, for that purpose, money or U.S. Government obligations or a combination of money or U.S. Government obligations sufficient (unless such funds consist solely of money, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification delivered to the trustee), without consideration of any reinvestment, to pay principal of and interest on the debt securities of that series to maturity or redemption, as the case may be, and to pay all other sums payable by us under such indenture; and (3) we deliver to the trustee an officer's certificate and an opinion of counsel, in each case stating that all conditions precedent provided for in such indenture relating to the satisfaction and discharge of such indenture with respect to the debt securities of that series have been complied with. With respect to the foregoing clause (a), only our obligations to compensate and indemnify the trustee will survive. With respect to the foregoing clause (b), only our obligations to execute and deliver debt securities of that series for authentication, to set the terms of the debt securities of that series, to maintain an office or agency in respect of the debt securities of that series, to have moneys held for payment in trust, to register the transfer or exchange of debt securities of that series, to deliver debt securities of that series for replacement or to be 20 61 canceled, to compensate and indemnify the trustee and to appoint a successor trustee, and our right to recover excess money held by the trustee will survive until those debt securities are no longer outstanding. Thereafter, only our obligations to compensate and indemnify the trustee and its right to recover excess money held by the trustee will survive. (Section 8.1) Each indenture provides that, except as otherwise provided in this paragraph, we: (a) will be deemed to have paid and will be discharged from any and all obligation, in respect of the debt securities of any series, and the provisions of such indenture will no longer be in effect with respect to the debt securities of that series (a "legal defeasance"); and (b) may omit to comply with any specific covenant relating to such series provided for in a board resolution or supplemental indenture or officer's certificate that may by its terms be defeased pursuant to the indenture (or any term, provision or condition of the senior indenture described under "-- Certain Covenants", in the case of the senior indenture) and our omission will be deemed not to be an event of default under clauses (c) and (d) under "Events of Default" above with respect to the outstanding debt securities of a series (a "covenant defeasance"); provided that the following conditions will have been satisfied: (a) we have irrevocably deposited in trust with the trustee as trust funds solely for the benefit of the Holders of the debt securities of that series, for payment of the principal of and interest on those debt securities, money or U.S. Government obligations or a combination of the foregoing sufficient (unless such funds consist solely of money, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the trustee) without consideration of any reinvestment and after payment of all federal, state and local taxes or other charges and assessments in respect of those payments payable by the trustee, to pay and discharge the principal of and accrued interest on the outstanding debt securities of such series to maturity or earlier redemption (irrevocably provided for under arrangements satisfactory to the trustee), as the case may be; (b) our deposit will not result in a breach or violation of, or constitute a default under, such indenture or any other material agreement or instrument to which we are a party or by which we are bound; (c) no default with respect to those debt securities will have occurred and be continuing on the date of the deposit; (d) we will have delivered to the trustee an opinion of counsel that the Holders of the debt securities of that series have a valid security interest in the trust funds subject to no prior liens under such Uniform Commercial Code; and (e) we will have delivered to the trustee an officer's certificate and an opinion of counsel, in each case stating that all conditions precedent provided for in such indenture relating to the defeasance contemplated have been complied with. In the case of a legal defeasance, we will have delivered to the trustee an opinion of counsel (based on a change in law) or a ruling directed to the trustee from the United States Internal Revenue Service that the Holders of the debt securities of that series will not recognize income, gain or loss for federal income tax purposes as a result of our exercise of our option 21 62 under this provision of the applicable indenture and will be subject to federal income tax on the same amount and in the same manner and at the same times as could have been the case if the deposit and defeasance had not occurred, or an instrument, in form reasonably satisfactory to the trustee, where we, notwithstanding a legal defeasance of our indebtedness in respect of debt securities of any series, or any portion of the principal amount thereof, will assume the obligation which will be absolute and unconditional) to irrevocably deposit with the trustee any additional sums of money or additional U.S. Government obligations or any combination of money or U.S. Government obligations, at such time or times as necessary, together with the money and/or U.S. Government obligations so deposited, to pay when due the principal of and premium, if any, and interest due and to become due on the applicable debt securities; provided, however, that the instrument may state that our obligation to make additional deposits as aforesaid will be subject to the delivery to us by the trustee of a notice asserting the deficiency accompanied by an opinion of an independent public accountant of nationally recognized standing selected by the trustee, showing the applicable calculation. Subsequent to a legal defeasance, our obligations to execute and deliver debt securities of that series for authentication, to set the terms of the debt securities of that series, to maintain an office or agency in respect of the debt securities of that series, to have moneys held for payment in trust, to register the transfer or exchange of debt securities of that series, to deliver debt securities of that series for replacement or to be canceled, to compensate and indemnify the trustee and to appoint a successor trustee, and our right to recover excess money held by the trustee will survive until those debt securities are no longer outstanding. After those debt securities are no longer outstanding, in the case of a legal defeasance, only our obligations to compensate and indemnify the trustee and our right to recover excess money held by the trustee will survive. (Sections 8.2 and 8.3) MODIFICATION OF THE INDENTURE Each indenture provides that we and the trustee may amend or supplement such indenture or the applicable debt securities of any series without notice to or the consent of any Holder: (a) to cure any ambiguity, defect or inconsistency in such indenture, provided that such amendments or supplements do not materially and adversely affect the interests of the Holders; (b) to comply with Article 5 (which relates to the covenant discussed under " - Restrictions on Mergers and Sales of Assets") of such indenture; (c) to comply with any requirements of the SEC in connection with the qualification of such indenture under the Trust Indenture Act; (d) to evidence and provide for the acceptance of appointment under such indenture with respect to the debt securities of any or all series by a successor trustee; (e) to establish the form or forms or terms of debt securities of any series or of the coupons appertaining to such debt securities as permitted under such indenture; (f) to provide for uncertificated or unregistered debt securities and to make all appropriate changes for such purpose; (g) to change or eliminate any provisions of such indenture with respect to all or any series of the debt securities not then outstanding (and, if the change is applicable 22 63 to fewer than all those series of the applicable debt securities, specifying the series to which the change is applicable), and to specify the rights and remedies of the trustee and the Holders of those debt securities; and (h) to make any change that does not materially and adversely affect the rights of any Holder. (Section 9.1) Each indenture also contains provisions that allow us and the trustee, subject to certain conditions, without prior notice to any Holders, to amend such indenture and the outstanding debt securities of any series with the written consent of the Holders of a majority in aggregate principal amount of the applicable debt securities then outstanding of all series affected by such supplemental indenture (all such series voting as one class). The Holders of a majority in aggregate principal amount of the applicable outstanding debt securities of all series affected (all such series voting as one class) by written notice to the trustee may waive future compliance by us with any provision of such indenture or the debt securities of that series. Notwithstanding the foregoing provisions, without the consent of each applicable Holder affected, an amendment or waiver, including a waiver pursuant to Section 6.4 of such indenture, may not: (a) extend the stated maturity of the principal of, or any sinking fund obligation or any installment of interest on, the Holder's debt security or reduce the principal amount or the rate of interest of that debt security (including any amount in respect of original issue discount), or any premium payable with respect to that debt security, or adversely affect the rights of that Holder under any mandatory redemption or repurchase provision or any right of redemption or repurchase at the option of that Holder, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon the acceleration of the maturity of that debt security or any amount provable in bankruptcy, or change any place of payment where, or the currency in which, any debt security or any premium or the interest on that debt security is payable, or impair the right to institute suit for the enforcement of any payment on or after the due date of that payment; (b) reduce the percentage in principal amount of outstanding debt securities of the relevant series the consent of whose Holders is required for any supplemental indenture or for any waiver of compliance with certain provisions of such indenture or certain defaults and their consequences provided for therein; (c) waive a default in the payment of principal of or interest on any applicable debt security of a Holder; or (d) modify any of the provisions of such indenture governing supplemental indentures with the consent of Securityholders, except to increase the percentage or to provide that certain other provisions of such indenture cannot be modified or waived without the consent of the Holder of each outstanding debt security affected by the modification. A supplemental indenture which changes or eliminates any covenant or other provision of the applicable indenture which has expressly been included solely for the benefit of one or more particular series of debt securities, or which modifies the rights of Holders of applicable debt securities of that series with respect to that covenant or provision, will be deemed not to affect the rights under such indenture of the Holders of debt securities of any other series or of the coupons 23 64 appertaining to those debt securities. It will not be necessary for the consent of any Holder under such indenture to approve the particular form of any proposed amendment, supplement or waiver, but it will be sufficient if the consent approves the substance of the amendment, supplement or waiver. After an amendment, supplement or waiver under such indenture becomes effective, we or, at our request, the trustee will give to the affected Holders a notice briefly describing the amendment, supplement or waiver. We or, at our request, the trustee will mail supplemental indentures to Holders upon request. Any failure of us to mail such notice, or any defect in the notice, will not, however, in any way impair or affect the validity of any supplemental indenture or waiver. (Section 9.2) INFORMATION CONCERNING THE TRUSTEE An affiliate of The Bank of New York participates as a lender under certain of our credit agreements. DESCRIPTION OF CAPITAL STOCK We have authority to issue 160,000,000 shares of common stock, par value $1.00 per share and 2,000,000 shares of preferred stock, par value $1.00 per share. As of September 30, 2000, we had outstanding 103,741,595 shares of common stock and no shares of preferred stock. Our board of directors has authority, without action by our shareholders, to issue authorized and unissued shares of preferred stock in one or more series and, within certain limitations, to determine the voting rights (including the right to vote as a series on particular matters), preference as to dividends and in liquidation, conversion, redemption and other rights of each series. The following is a brief summary of the voting, dividend, liquidation and certain other rights of the holders of the capital stock as set forth in our by-laws and Restated Certificate of Incorporation, copies of which are filed with the Commission. COMMON STOCK Voting Rights-Noncumulative Voting. The holders of common stock are entitled to one vote per share on all matters to be voted on by shareholders, including the election of directors. Shareholders are not entitled to cumulative voting rights, and, accordingly, the holders of a majority of the shares voting for the election of directors can elect the entire board of directors if they choose to do so and, in that event, the holders of the remaining shares will not be able to elect any person to the board of directors. Our Restated Certificate of Incorporation requires the affirmative vote of 90% of our outstanding shares of common stock to authorize certain mergers, sales of assets, corporate reorganizations and other transactions in the event that any person or entity acquires 30% or more of our outstanding common stock. Dividends; Restriction on Payment of Dividends. The holders of common stock are entitled to receive such dividends, if any, as may be declared from time to time by our board of directors, in its discretion, from funds legally available for the purpose and subject to prior dividend rights of holders of any shares of preferred stock which may be outstanding. Upon liquidation or dissolution of Arrow, subject to prior liquidation rights of the holders of preferred stock, the holders of common stock are entitled to receive on a pro rata basis the remaining assets of Arrow available for distribution. Holders of common stock have no preemptive or other subscription rights, and there are no conversion rights or redemption or sinking fund provisions 24 65 with respect to our common stock. In addition, the terms of our second amended and restated credit agreement, as amended, and our amended and restated 364-day credit agreement require that consolidated total debt, consolidated net worth, and the ratio of earnings to cash interest expense be maintained at certain designated levels. All outstanding shares of common stock are fully paid and not liable to further calls or assessment by us. PREFERRED STOCK Our board of directors is authorized, without further vote or action by the holders of our common stock, to issue by resolution an aggregate of 2,000,000 shares of preferred stock. These shares of preferred stock may be issued in one or more series as established from time to time by our board of directors. Our board also is authorized to fix the number of shares and the designation or title of each series of preferred stock prior to the issuance of any shares of that series. Regarding each class or series of preferred stock, our board will fix the voting powers which may be full or limited, or there may be no voting powers. Our board will also determine the preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions, of each series of preferred stock. Our board is further authorized to increase or decrease the number of shares of any series subsequent to the issuance of shares of that series, but not below the number of shares of the class or series then outstanding. No shares of preferred stock are presently outstanding and we have no plans to issue a new series of preferred stock. It is not possible to state the effect of the authorization and issuance of any series of preferred stock upon the rights of the holders of common stock until our board of directors determines the specific terms, rights and preferences of a series of preferred stock. However, possible effects might include restricting dividends on the common stock, diluting the voting power of the common stock or impairing the liquidation rights of the common stock without further action by holders of common stock. In addition, under some circumstances, the issuance of preferred stock may render more difficult or tend to discourage a merger, tender offer or proxy contest, the assumption of control by a holder of a large block of our securities or the removal of incumbent management, which could thereby depress the market price of our common stock. RIGHTS AGREEMENT In March 1988, we paid a dividend of one preferred share purchase right on each outstanding share of common stock pursuant to a rights agreement. Each right entitles the holder to purchase from us one one-hundredth of a share of participating stock, $1.00 par value, for a price of $50, subject to adjustment. Although the rights are not intended to prevent a takeover of Arrow at a full and fair price, they may have certain anti-takeover effects. They may deter an attempt to acquire Arrow in a manner which seeks to deprive our shareholders of the full and fair value of their investment and may deter attempts by significant shareholders to take advantage of Arrow and its shareholders through certain self-dealing transactions. The rights may cause substantial dilution to a person or group that acquires or attempts to acquire Arrow without the rights being redeemed by the board of directors. Accordingly, the rights should encourage any potential acquirer to negotiate with our board of directors. Unless approval is first obtained from our board of directors, the rights may deter transactions, including tender offers, which the majority of shareholders may believe are beneficial to them. 25 66 DESCRIPTION OF WARRANTS We have described below the general terms and provisions of the debt warrants and equity warrants to which a prospectus supplement may relate. We will describe the particular terms of any debt warrants and equity warrants offered by any prospectus supplement in the prospectus supplement relating to such debt warrants or equity warrants. GENERAL We may issue debt warrants and equity warrants, evidenced by warrant certificates under a warrant agreement, independently or together with any debt securities, preferred stock or common stock. The warrants may be transferable with or separate from such securities. If we offer debt warrants, the applicable prospectus supplement will describe the terms of the debt warrants, including the following: (i) the offering price, if any, including the currency, or currency unit in which such price will be payable; (ii) the designation, aggregate principal amount and terms of the offered debt securities with which the debt warrants are issued and the number of debt warrants issued with each such offered debt security; (iii) if applicable, the date on or after which the debt warrants and the related offered debt securities will be separately transferable; (iv) the designation, aggregate principal amount and terms of debt securities purchasable upon exercise of one debt warrant and the price or prices at which, and the currency, or currency unit in which such principal amount of debt securities may be purchased upon exercise; (v) the date on which the right to exercise the debt warrants commences and the date on which such right expires; (vi) any U.S. Federal income tax consequences; (vii) whether the debt warrants represented by the warrant certificates will be issued in registered or bearer form or both; and (viii) any other material terms of the debt warrants. If we offer equity warrants, the applicable prospectus supplement will describe the terms of the equity warrants, including the following: (i) the offering price, if any, including the currency or currency unit in which such price will be payable; (ii) the designation of any series of preferred stock purchasable upon exercise of the equity warrants; (iii) the number of shares of preferred stock or common stock purchasable upon exercise of one equity warrant, and the price or prices at which, and the currency, or currency unit in which such shares may be purchased upon exercise; (iv) the date on which the right to exercise the equity warrants and the date on which such right expires; (v) any U.S. Federal income tax consequences; (vi) whether the equity warrants represented by the warrant certificate will be issued in registered or bearer form or both; (vii) whether the equity warrants or the underlying preferred stock or common stock will be listed on any national securities exchange; and (viii) any other material terms of the equity warrants. In addition, if we sell any debt warrants or equity warrants for any foreign currency or currency units, the restrictions, elections, tax consequences, specific terms and other information with respect to such issue will be specified in the applicable prospectus supplement. Warrant certificates, if any, may be exchanged for new warrant certificates of different denominations and may (if in registered form) be presented for registration of transfer at the corporate trust office of the warrant agent, which will be listed in the applicable prospectus supplement, or at such other office as may be set forth therein. Warrantholders do not have any of the rights of holders of debt securities (except to the extent that the consent of warrantholders may be required for certain modifications of the terms of the indenture under which the series of offered debt securities issuable upon exercise of the warrants to be issued) or preferred or common stockholders and are not entitled to payments of principal and interest, if any, on debt securities or to dividends or other distributions made with respect to preferred stock or common stock. 26 67 Warrants may be exercised by surrendering the warrant certificate, if any, at the corporate trust office or other designated office of the warrant agent, with (i) the form of election to purchase on the reverse side of the warrant certificate, if any, properly completed and executed, and (ii) payment in full of the exercise price, as set forth in the applicable prospectus supplement. Upon exercise of warrants, the warrant agent will, as soon as practicable, deliver the debt securities, preferred stock or common stock issuable upon the exercise of the warrants in authorized denominations in accordance with the instructions of the exercise warrantholder and at the sole cost and risk of such holder. If less than all of the warrants evidenced by the warrant certificate are exercised, a new warrant certificate will be issued for the remaining amount of unexercised warrants, if sufficient time exists prior to the expiration date. PLAN OF DISTRIBUTION GENERAL Any of the securities offered hereby may be sold in any one or more of the following ways from time to time: - to or through underwriters; - through dealers; - directly to other purchasers; or - through agents. The distribution of the securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. In connection with the sale of securities, underwriters may receive compensation from us or purchasers of securities for whom they may act as agents, in the form of discounts, concessions or commissions. Underwriters, dealers and agents that participate in the distribution of securities may be deemed to be underwriters, and any discounts or commissions received by them from us and any profit on the resale of securities by them may be deemed to be underwriting discounts and commissions under the Securities Act. Any person who may be deemed to be an underwriter will be identified, and the compensation received from us will be described, in the prospectus supplement. During and after an offering through underwriters, the underwriters may purchase and sell the securities in the open market. These transactions may include overallotment and stabilizing transactions and purchases to cover syndicate short positions created in connection with the offering. The underwriters may also impose a penalty bid, whereby selling concessions allowed to syndicate members or other broker-dealers for the securities sold for their account may be reclaimed by the syndicate if those securities are repurchased by the syndicate in stabilizing or covering transactions. These activities may stabilize, maintain or otherwise affect the market price of the securities, which may be higher than the price that might otherwise prevail in the open market, and, if commenced, may be discontinued at any time. Except for our common stock, all securities, when first issued, will have no established trading market. Any underwriters or agents to or through whom securities are sold by us for public offering and sale may make a market in those securities, but the underwriters or agents 27 68 will not be obligated to do so and may discontinue any market making at any time without notice. We cannot assure you as to the liquidity of the trading market for any of our securities. Under agreements which we may enter into, underwriters, dealers and agents who participate in the distribution of securities may be entitled to indemnification by us against or contribution toward certain liabilities, including liabilities under the Securities Act. DELAYED DELIVERY ARRANGEMENT If so indicated in the prospectus supplement, we will authorize underwriters or other persons acting as our agents to solicit offers by certain institutions to purchase debt securities from us pursuant to contracts providing for payment and delivery on a future date. Institutions with which those types of contracts may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and others, but in all cases will be subject to our approval. The obligations of any purchaser under any of those types of contracts will be subject to the condition that the purchase of the securities will not at the time of delivery be prohibited under the laws of any jurisdiction to which the purchaser is subject. The underwriters and agents will not have any responsibility in respect of the validity or performance of those contracts. VALIDITY OF SECURITIES The validity of the securities offered by this prospectus will be passed upon for us by Milbank, Tweed, Hadley & McCloy LLP, New York, New York. EXPERTS The consolidated financial statements at December 31, 1999 and 1998, and for each of the three years in the period ended December 31, 1999, appearing in our Annual Report on Form 10-K for the fiscal year ended December 31, 1999 and incorporated by reference herein, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report dated February 16, 2000 incorporated in this prospectus by reference and are included in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. The audited historical financial statements of the Wyle Electronics Group incorporated in this Prospectus by reference to Arrow Electronics, Inc's Form 8-K dated September 1, 2000 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. 28 69 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth the estimated costs and expenses, other than the underwriting discounts and commissions, payable by Arrow Electronics, Inc. (the "Company") in connection with the sale of the securities.
AMOUNT TO BE PAID ------- SEC registration fee................................................... $528,000 Printing expenses...................................................... 75,000 Legal fees and expenses................................................ 200,000 Accounting fees and expenses........................................... 20,000 Rating agency fees..................................................... 5,000 Blue Sky fees and expenses (including counsel)......................... 10,000 Miscellaneous expenses................................................. 62,000 -------- Total......................................................... $900,000 ========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS Article 9 of the Company's Certificate of Incorporation permits the indemnification of officers and directors under certain circumstances to the full extent that such indemnification may be permitted by law. Such rights of indemnification are in addition to, and not in limitation of, any rights to indemnification to which any officer or director of the Registrant is entitled under the Business Corporation Law of the State of New York (Sections 721 through 726), which provides for indemnification by a corporation of its officers and directors under certain circumstances as stated in the Business Corporation Law and subject to specified limitations set forth in the Business Corporation Law. The Company also maintains directors' and officers' liability insurance coverage which insures directors and officers of the Company against certain losses arising from claims made, and for which the Company has not provided reimbursement, by reason of their being directors and officers of the Company or its subsidiaries. ITEM 16. EXHIBITS The following documents are filed as exhibits to this Registration Statement, including those exhibits incorporated by reference to a prior filing of the Company under the Securities Act or the Exchange Act as indicated in parentheses:
EXHIBIT NUMBER EXHIBIT DESCRIPTION - ------ ------------------- 1.1 Underwriting Agreement (Common Stock).* 1.2 Underwriting Agreement (Preferred Stock).* 1.3 Underwriting Agreement (Debt Securities).* 1.4 Underwriting Agreement, dated as of February [ ], 2001, between Arrow Electronics, Inc. and Morgan Stanley & Co. Incorporated and the other underwriters named therein.*** 3.1 Restated Certificate of Incorporation of Arrow Electronics, Inc, as amended (filed as
II-1 70 Exhibits 3(a)(i) and 3(a)(ii) to the Annual Report of Arrow Electronics, Inc. on Form 10-K for the year ended December 31, 1999 (File No. 1-4482), and incorporated herein by this reference thereto). By-Laws of Arrow Electronics, Inc., as amended (filed as Exhibit 3(b) to the Annual Report of Arrow Electronics, Inc. on Form 10-K for the year ended December 31, 1999 (File No. 1-4482), and incorporated herein by this reference thereto). 3.2 Certificate of Designations for Preferred Stock.*** 3.3 Rights Agreement dated as of March 2, 1988, as amended (filed as Exhibits 4(a)(i) through 4(a)(vi) to the Annual Report of Arrow Electronics, Inc. on Form 10-K for the year ended December 31, 1999 (File No. 1-4482), and incorporated herein by this reference thereto). 4.1 Indenture between Arrow Electronics, Inc. and The Bank of New York (formerly, Bank of Montreal Trust Company), as trustee, dated as of January 15, 1997 (filed as Exhibit 4(b)(i) to the Annual Report of Arrow Electronics, Inc. on Form 10-K for the year ended December 31, 1999 (File No. 1-4482), and incorporated herein by this reference thereto). 4.2 Supplemental Indenture relating to the Zero Coupon Convertible Senior Debentures due 2021.*** 4.3 Form of Subordinated Indenture between Arrow Electronics, Inc. and [________________] as trustee, dated as of [_____________], 200[ ].* 4.4 Form of Warrant Agreement for Debt Securities (including form of Warrant Certificate).* 4.5 Form of Warrant Agreement for Preferred Stock (including form of Warrant Certificate).* 4.6 Form of Warrant Agreement for Common Stock (including form of Warrant Certificate).* 5.1 Opinion of Milbank, Tweed, Hadley & McCloy LLP with respect to the validity of securities being offered by Arrow Electronics, Inc.* 12.1 Statement regarding computation of consolidated ratios of earnings to fixed charges.** 23.1 Consent of Milbank, Tweed, Hadley & McCloy LLP (included in Exhibit 5.1).* 23.2 Consent of Ernst & Young LLP, independent auditors.* 23.3 Consent of PricewaterhouseCoopers LLP, independent auditors.* 24 Power of Attorney.** 25.1 Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as trustee, under indenture between Arrow Electronics, Inc. and the trustee dated as of January 15, 1997.** 25.2 Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of [_______________], as trustee, under the indenture between Arrow Electronics, Inc. and the trustee dated as of [_____________], 200[ ].***
________________________ * Filed herewith ** Previously filed *** To be filed by amendment or by Form 8-K II-2 71 ITEM 17. UNDERTAKINGS The registrants hereby undertake: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (a) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (b) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (c) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (1)(a) and (1)(b) do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of this offering. (4) That, for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (5) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (6) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the II-3 72 Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefits plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (7) To file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Act. II-4 73 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused Amendment No. 1 to this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Melville, New York, on February 13, 2001. ARROW ELECTRONICS, INC. By: /s/ Robert E. Klatell ______________________________ Robert E. Klatell Executive Vice President Pursuant to the requirements of the Securities Act of 1933, Amendment No. 1 to this registration statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE - --------- ----- ---- /s/ Stephen P. Kaufman* ___________________________ Chairman of the Board February 13, 2001 Stephen P. Kaufman /s/ Francis M. Scricco* ___________________________ President and Chief Executive Officer February 13, 2001 Francis M. Scricco (Principal Executive Officer) /s/ Robert E. Klatell ___________________________ Executive Vice President, Secretary, and February 13, 2001 Robert E. Klatell Director /s/ Sam R. Leno* ___________________________ Senior Vice President February 13, 2001 Sam R. Leno (Principal Financial Officer) /s/ Paul J. Reilly* ___________________________ Vice President - Finance February 13, 2001 Paul J. Reilly (Principal Accounting Officer) /s/ Daniel W. Duval* ___________________________ Director February 13, 2001 Daniel W. Duval
II-5 74 ___________________________ Director Carlo Giersch /s/ John N. Hanson * ___________________________ Director February 13, 2001 John N. Hanson ___________________________ Director Roger King /s/ Karen Gordon Mills * ___________________________ Director February 13, 2001 Karen Gordon Mills /s/ Barry W. Perry * ___________________________ Director February 13, 2001 Barry W. Perry /s/ Richard S. Rosenbloom * ___________________________ Director February 13, 2001 Richard S. Rosenbloom /s/ John C. Waddell * ___________________________ Director February 13, 2001 John C. Waddell * By Robert E. Klatell, as attorney-in-fact /s/ Robert E. Klatell - --------------------- Robert E. Klatell attorney-in-fact for the individuals as indicated
II-6 75 EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT DESCRIPTION - ------ ------------------- 1.1 Underwriting Agreement (Common Stock).* 1.2 Underwriting Agreement (Preferred Stock).* 1.3 Underwriting Agreement (Debt Securities).* 1.4 Underwriting Agreement, dated as of February [ ], 2001, between Arrow Electronics, Inc. and Morgan Stanley & Co. Incorporated and the other underwriters named therein.*** 3.1 Restated Certificate of Incorporation of Arrow Electronics, Inc, as amended (filed as Exhibits 3(a)(i) and 3(a)(ii) to the Annual Report of Arrow Electronics, Inc. on Form 10-K for the year ended December 31, 1999 (File No. 1-4482), and incorporated herein by this reference thereto). By-Laws of Arrow Electronics, Inc., as amended (filed as Exhibit 3(b) to the Annual Report of Arrow Electronics, Inc. on Form 10-K for the year ended December 31, 1999 (File No. 1-4482), and incorporated herein by this reference thereto). 3.2 Certificate of Designations for Preferred Stock.*** 3.3 Rights Agreement dated as of March 2, 1988, as amended (filed as Exhibits 4(a)(i) through 4(a)(vi) to the Annual Report of Arrow Electronics, Inc. on Form 10-K for the year ended December 31, 1999 (File No. 1-4482), and incorporated herein by this reference thereto). 4.1 Indenture between Arrow Electronics, Inc. and the Bank of New York (formerly, Bank of Montreal Trust Company), as trustee, dated as of January 15, 1997 (filed as Exhibit 4(b)(i) to the Annual Report of Arrow Electronics, Inc. on Form 10-K for the year ended December 31, 1999 (File No. 1-4482), and incorporated herein by this reference thereto). 4.2 Supplemental Indenture relating to the Zero Coupon Convertible Senior Debentures due 2021.*** 4.3 Form of Subordinated Indenture between Arrow Electronics, Inc. and [________________] as trustee, dated as of [_____________], 200[ ].* 4.4 Form of Warrant Agreement for Debt Securities (including form of Warrant Certificate).* 4.5 Form of Warrant Agreement for Preferred Stock (including form of Warrant Certificate).* 4.6 Form of Warrant Agreement for Common Stock (including form of Warrant Certificate).* 5.1 Opinion of Milbank, Tweed, Hadley & McCloy LLP with respect to the validity of securities being offered by Arrow Electronics, Inc.* 12.1 Statement regarding computation of consolidated ratios of earnings to fixed charges.** 23.1 Consent of Milbank, Tweed, Hadley & McCloy LLP (included in Exhibit 5.1).* 23.2 Consent of Ernst & Young LLP, independent auditors.* 23.3 Consent of PricewaterhouseCoopers LLP, independent auditors.* 24 Power of Attorney.** 25.1 Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of the Bank of New York, as trustee, under indenture between Arrow Electronics, Inc. and the trustee dated as of January 15, 1997.** 25.2 Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of [_______________], as trustee, under the indenture between Arrow Electronics, Inc. and the trustee dated as of [_____________], 200[ ].***
_____________________________ * Filed herewith ** Previously filed *** To be filed by amendment or by Form 8-K EX-1.1 2 y42939a1ex1-1.txt UNDERWRITING AGREEMENT 1 EXHIBIT 1.1 ARROW ELECTRONICS, INC. UNDERWRITING AGREEMENT STANDARD PROVISIONS (COMMON STOCK) ___________________, 200_ From time to time, Arrow Electronics, Inc., a New York corporation (the "Company"), may enter into one or more underwriting agreements that provide for the sale of a specified number of shares (the "Offered Securities") of the Company's common stock, par value $0.01 (the "Common Stock"), to the several underwriters named therein. The standard provisions set forth herein may be incorporated by reference in any such underwriting agreement (an "Underwriting Agreement"). The Underwriting Agreement, including the provisions incorporated therein by reference, is herein sometimes referred to as this Agreement. Terms defined in the Underwriting Agreement are used herein as therein defined. The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement, including a prospectus, relating to Common Stock 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 Offered Securities pursuant to Rule 424 under the Securities Act of 1933, as amended (the "Securities Act"). The term "Registration Statement" means the registration statement, including the exhibits thereto, as amended to the date of this Agreement. The term "Basic Prospectus" means the prospectus included in the Registration Statement. 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 Offered 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"). The term "Contract Securities" means the Offered Securities, if any, to be purchased pursuant to the delayed delivery contracts substantially in the form of Schedule I hereto, with such changes therein as the Company may approve (the "Delayed Delivery Contracts"). The term "Underwriters' Securities" means the Offered Securities other than Contract Securities. 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, to the Company's knowledge, threatened by the Commission. 2 (b) (i) Each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Registration Statement and 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 any 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 any untrue statement of a material fact or omit 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, except that the representations and warranties set forth in this Section 1(b) do not apply to statements or omissions in the Registration Statement or the Prospectus based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Manager expressly for use therein. (c) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each 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. (d) Each subsidiary of the Company which constitutes a "significant subsidiary" within the meaning of Rule 1-02 of Regulation S-X (the "Material Subsidiaries") has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each 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. (f) The Offered Securities, upon issuance and delivery and payment therefor in the manner described herein, will be duly authorized, validly issued, fully paid and nonassessable. The Offered Securities conform to the description thereof in the preliminary prospectus and the Prospectus. 2 3 (g) All of the outstanding shares of capital stock of the Company have been duly authorized and validly issued, are fully paid and nonassessable. (h) The Delayed Delivery Contracts have been duly authorized, executed and delivered by the Company and are valid and binding agreements of the Company, enforceable in accordance with their respective terms except as (i) enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and (ii) the availability of equitable remedies may be limited by equitable principles of general applicability. (i) The execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement, the Offered Securities and the Delayed Delivery Contracts 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 Company of its obligations under this Agreement, the Offered Securities or the Delayed Delivery Contracts, 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 Offered Securities. (j) There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement). (k) There are no legal or governmental proceedings pending or, to the knowledge of the Company, threatened to which the Company or any of its Material Subsidiaries is a party or to which any of the properties of the Company or any of its Material Subsidiaries is subject that are required to be described in the Registration Statement or the Prospectus and are not so described or any statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed or incorporated by reference as exhibits to the Registration Statement that are not described, filed or incorporated as required. (l) 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. (m) The Company is not an "investment company" or an entity "controlled" by an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended. 3 4 (n) 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. 2. Delayed Delivery Contracts. If the Prospectus provides for sales of Offered Securities pursuant to Delayed Delivery Contracts, the Company hereby authorizes the Underwriters to solicit offers to purchase Contract Securities on the terms and subject to the conditions set forth in the Prospectus pursuant to Delayed Delivery Contracts. Delayed Delivery Contracts may be entered into only with institutional investors approved by the Company of the types set forth in the Prospectus. On the Closing Date, the Company will pay to the Manager as compensation for the accounts of the Underwriters the commission set forth in the Underwriting Agreement in respect of the Contract Securities. The Underwriters will not have any responsibility in respect of the validity or the performance of any Delayed Delivery Contracts. If the Company executes and delivers Delayed Delivery Contracts with institutional investors, the aggregate amount of Offered Securities to be purchased by the several Underwriters shall be reduced by the aggregate amount of Contract Securities; such reduction shall be applied to the commitment of each Underwriter pro rata in proportion to the amount of Offered Securities set forth opposite such Underwriter's name in the Underwriting Agreement, except to the extent that the Manager determines that such reduction shall be applied in other proportions and so advises the Company; provided, however, that the total amount of Offered Securities to be purchased by all Underwriters shall be the aggregate amount set forth above, less the aggregate amount of Contract Securities. 3. Terms of Public Offering. The Company is advised by the Manager that the Underwriters propose to make a public offering of their respective portions of the Underwriters' Securities as soon after this Agreement has been entered into as in the Manager's judgment is advisable. The terms of the public offering of the Underwriters' Securities are set forth in the Prospectus. 4. Payment and Delivery. Payment for the Underwriters' Securities shall be made by wire transfer to an account designated by the Company in same day funds at the time and place set forth in the Underwriting Agreement, upon delivery to the Manager for the respective accounts of the several Underwriters of the Underwriters' Securities registered in such names and in such denominations as the Manager shall request in writing not less than two full business days prior to the date of delivery, with any transfer taxes payable in connection with the transfer of the Underwriters' Securities to the Underwriters duly paid. 4 5 5. Conditions to the Underwriters' Obligations. The several obligations of the Underwriters to purchase any Offered Securities are subject to the following conditions: (a) Subsequent to the execution and delivery of the Underwriting Agreement and prior to the Closing Date: (i) there shall not have occurred any downgrading in, nor shall any notice have been given of any intended or potential downgrading in or of any negative review of, the rating accorded any of the Company's securities by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; and (ii) there shall not have occurred any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement) that, in the judgment of the Manager, is material and adverse and that makes it, in the judgment of the Manager, impracticable to market the Offered Securities on the terms and in the manner contemplated in the Prospectus. (b) The Underwriters shall have received on the Closing Date a certificate, dated the Closing Date and signed by an executive officer of the Company, not in his individual capacity but solely in his capacity as an executive officer of the Company, to the effect set forth in clause (a) above and to the effect that the representations and warranties of the Company contained in this Agreement are true and correct as of the Closing Date and that the Company has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date. The officer signing and delivering such certificate may rely upon the best of his or her knowledge as to proceedings threatened. (c) The Underwriters shall have received on the Closing Date opinions of Milbank, Tweed, Hadley & McCloy LLP, counsel for the Company, and Robert E. Klatell, Executive Vice President and Secretary of the Company, dated the Closing Date, in form and substance satisfactory to the Underwriters. 5 6 (d) The Underwriters shall have received on the Closing Date an opinion of [ ], special counsel for the Underwriters, dated the Closing Date, in form and substance satisfactory to the Underwriters. 6. Covenants of the Company. In further consideration of the agreements of the Underwriters herein contained, the Company covenants with each Underwriter as follows: (a) To furnish the Manager, without charge, one signed copy of the Registration Statement (including exhibits thereto and documents incorporated therein by reference) and for delivery to each other Underwriter a conformed copy of the Registration Statement (without exhibits thereto and documents incorporated therein by reference) and, during the period mentioned in paragraph (c) below, as many copies of the Prospectus, any documents 8 7 incorporated by reference therein and any supplements and amendments thereto or to the Registration Statement as the Manager may reasonably request. (b) Before amending or supplementing the Registration Statement or the Prospectus with respect to the Offered Securities, to furnish to the Manager a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which the Manager reasonably objects. (c) If, during such period after the first date of the public offering of the Offered Securities as in the opinion of counsel for the Underwriters, after consultation with the Company, the Prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if, in the opinion of counsel for the Underwriters, after consultation with the Company, it is necessary to amend or supplement the Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to the dealers (whose names and addresses the Manager will furnish to the Company) to which Offered Securities may have been sold by the Manager on behalf of the Underwriters and to any other dealers upon request, either amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with applicable law. (d) To endeavor to qualify the Offered Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Manager shall reasonably request and to maintain such qualification for as long as the Manager shall reasonably request. (e) To make generally available to the Company's security holders and to the Manager as soon as practicable an earning statement covering a twelve month period, which earning statement shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder. (f) To pay all expenses incident to the performance of its obligations under this Agreement, including: (i) the preparation and filing of the Registration Statement and the Prospectus and all amendments and supplements thereto; (ii) the preparation, issuance and delivery of the Offered Securities; (iii) the fees and disbursements of the Company's counsel and accountants; (iv) the qualification of the Offered Securities under state securities or Blue Sky laws in accordance with the provisions of Section 6(d), including filing fees and the fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation of any Blue Sky or Legal Investment Memoranda; (v) the printing and delivery to the Underwriters in quantities as hereinabove stated of copies of the Registration Statement and all amendments thereto and of any preliminary prospectus and the Prospectus and any amendments or supplements thereto; (vi) the printing and delivery to the Underwriters of copies of any Blue Sky or Legal Investment Memoranda; (vii) 9 8 the filing fees and expenses, if any, incurred with respect to any filing with the National Association of Securities Dealers, Inc. made in connection with the Offered Securities; (viii) any expenses incurred by the Company in connection with a "road show" presentation to potential investors and (ix) all document production charges and expenses of counsel to the Underwriters (but not including their fees for professional services) incurred in connection with the preparation of this Agreement. 7. Indemnification 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 by any Underwriter or any such controlling person 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 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 the Manager 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 the Manager 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 either paragraph (a) or (b) of this Section 7, 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 10 9 \ 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 the Manager, in the case of parties indemnified pursuant to paragraph (a) above, and by the Company, in the case of parties indemnified pursuant to paragraph (b) above. 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 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 paragraph (a) or (b) of this Section 7 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 Offered Securities or (ii) if the allocation provided by clause (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 (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 Offered Securities shall be deemed to be in the same respective proportions as the net proceeds from the offering of such Offered 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 Supplement, bear to the aggregate public offering price of the Offered 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 number of Offered 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 paragraph (d) of this 11 10 Section 7. The amount paid or payable by an 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 Offered 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 the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Offered Securities. 8. Termination. This Agreement shall be subject to termination by notice given by the Manager to the Company, if (a) after the execution and delivery of the Underwriting 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 the judgment of the Manager, is material and adverse and (b) in the case of any of the events specified in clauses (a)(i) through (iv), such event, singly or together with any other such event, makes it, in the judgment of the Manager, impracticable to market the Offered Securities on the terms and in the manner contemplated in the Prospectus. 9. Defaulting Underwriters. If, on the Closing Date, any one or more of the Underwriters shall fail or refuse to purchase Underwriters' Securities that it has or they have agreed to purchase hereunder on such date, and the aggregate amount of Underwriters' Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate amount of the Underwriters' Securities to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the amount of Underwriters' Securities set forth opposite their respective names in the Underwriting Agreement bears to the aggregate amount of Underwriters Securities set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as the Manager may specify, to purchase the Underwriters' Securities which such defaulting Underwriter or 12 11 Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the amount of Underwriters' 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 amount of Underwriters' Securities without the written consent of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Underwriters' Securities and the aggregate amount of Underwriters' Securities with respect to which such default occurs is more than one-tenth of the aggregate amount of Underwriters' Securities to be purchased on such date, and arrangements satisfactory to the Manager and the Company for the purchase of such Underwriters' 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 the Manager 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. 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 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. Counterparts. This Agreement may be signed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 11. Applicable Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. 12. 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. 13 12 UNDERWRITING AGREEMENT _____________ , 200_ Arrow Electronics, Inc. 25 Hub Drive Melville, NY 11747 Dear Sirs and Mesdames: We (the "Manager") are acting on behalf of the underwriter or underwriters (including ourselves) named below (such underwriter or underwriters being herein called the "Underwriters"), and we understand that Arrow Electronics, Inc., a New York corporation (the "Company"), proposes to issue and sell [________] shares of the Company's Common Stock, par value $0.01, for an aggregate offering price of $[_________] (the "Securities") (The Securities are also referred to herein as the "Offered Securities.") Subject to the terms and conditions set forth or incorporated by reference herein, the Company hereby agrees to sell to the several Underwriters, and each Underwriter agrees, severally and not jointly, to purchase from the Company the number of Securities set forth below opposite their names at a purchase price of $[ ] per share of Securities.
Number of Name Securities ---- ------------------- [Name of Underwriter] [Insert syndicate list] Total. . . . . .
The number of Securities to be purchased by the several Underwriters shall be reduced by the aggregate number of Securities sold pursuant to delayed delivery contracts. The Underwriters will pay for the Offered Securities (less any Offered Securities sold pursuant to delayed delivery contracts) upon delivery thereof at [office] at ______ a.m. (New York time) on ___________, 200_, or at such other time, not later than 5:00 p.m. (New York time) on _________, 200_, as shall be designated by the Manager. The time and date of such payment and delivery are hereinafter referred to as the Closing Date. The Offered Securities shall have the terms set forth in the Prospectus dated ____________, 200_, and the Prospectus Supplement dated _____________, 200_. The Commission to be paid to the Underwriters in respect of the Offered Securities purchased pursuant to delayed delivery contracts arranged by the Underwriters shall be $[ ] per share of the Securities so purchased. 14 13 All provisions contained in the document entitled Arrow Electronics, Inc. Underwriting Agreement Standard Provisions (Common Stock ) dated _______ 200_, (the "Standard Provisions") a copy of which is attached hereto, are herein incorporated by reference in their entirety and shall be deemed to be a part of this Agreement to the same extent as if such provisions had been set forth in full herein, except that (i) if any term defined in such document is otherwise defined herein, the definition set forth herein shall control, (ii) all references in such document to a type of security that is not an Offered Security shall not be deemed to be a part of this Agreement and (iii) all references in such document to a type of agreement that has not been entered into in connection with the transactions contemplated hereby shall not be deemed to be a part of this Agreement. All references to the Manager in the Standard Provisions shall be taken to mean [name of Underwriter] and [names of other co-lead Managers] whose authority hereunder and thereunder may be exercised by them jointly or by [name of Underwriter] alone. 15 14 Please confirm your agreement by having an authorized officer sign a copy of this Agreement in the space set forth below. Very truly yours, [NAME OF LEAD MANAGER] [Name of Other Lead Managers] Acting severally on behalf of themselves [and the several Underwriters named herein] By: [NAME OF LEAD MANAGER] By: ----------------------------- Name: Title: Accepted: ARROW ELECTRONICS, INC. By: --------------------------- Name: Title: 16 15 Schedule I DELAYED DELIVERY CONTRACT _________, 200_ Ladies and Gentlemen: The undersigned hereby agrees to purchase from Arrow Electronics, Inc., a New York corporation (the "Company"), and the Company agrees to sell to the undersigned the Company's securities described in Schedule A annexed hereto (the "Securities"), offered by the Company's Prospectus dated ________________, 200_ and Prospectus Supplement dated _________________ 200_, receipt of copies of which are hereby acknowledged, at a purchase price stated in Schedule A and on the further terms and conditions set forth in this Agreement. The undersigned does not contemplate selling Securities prior to making payment therefor. The undersigned will purchase from the Company Securities at the price per share and in the numbers on the delivery dates set forth in Schedule A. Each such date on which Securities are to be purchased hereunder is hereinafter referred to as a "Delivery Date." Payment for the Securities which the undersigned has agreed to purchase on each Delivery Date shall be made to the Company by wire transfer in same day funds on the Delivery Date to the account specified by the Company, upon delivery to the undersigned of the Securities to be purchased by the undersigned on the Delivery Date, in such denominations and registered in such names as the undersigned may designate by written or telegraphic communication addressed to the Company not less than five full business days prior to the Delivery Date. The obligation of the undersigned to take delivery of and make payment for the Securities on the Delivery Date shall be subject to the conditions that (1) the purchase of Securities to be made by the undersigned shall not at the time of delivery be prohibited under the laws of the jurisdiction to which the undersigned is subject and (2) the Company shall have sold, and delivery shall have taken place to the underwriters (the "Underwriters") named in the Prospectus Supplement referred to above of, such part of the Securities as is to be sold to them. Promptly after completion of sale and delivery to the Underwriters, the Company will mail or deliver to the undersigned as its address set forth below notice to such effect, accompanied by a copy of the opinion of counsel for the Company delivered to the Underwriters in connection therewith. Failure to take delivery of and make payment for Securities by any purchaser under any other Delayed Delivery Contract shall not relieve the undersigned of its obligations under this agreement. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors, but will not be assignable by either party hereto without the written consent of the other. 17 16 If this Agreement is acceptable to the Company, it is requested that the Company sign the form of acceptance below and mail or deliver one of the counterparts hereof to the undersigned at its address set forth below. This will become a binding agreement, as of the date first above written, between the Company and the undersigned when such counterpart is so mailed or delivered. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. Yours very truly, ---------------------------- (Purchaser) By ------------------------- ---------------------------- (Title) ---------------------------- (Address) Accepted: ARROW ELECTRONICS, INC. By -------------------------- 18 17 PURCHASER -- PLEASE COMPLETE AT TIME OF SIGNING The name and telephone and department of the representative of the Purchaser with whom details of delivery on the Delivery Date may be discussed is as follows: (Please print.)
Telephone No. Name (Including Area Code) Department ---- --------------------- ---------- - ---------------------------------- ----------------- ------------------
19 18 SCHEDULE A Securities: Numbers to be Purchased: Price per Share: Delivery: 20 EX-1.2 3 y42939a1ex1-2.txt UNDERWRITING AGREEMENT 1 EXHIBIT 1.2 ARROW ELECTRONICS, INC. UNDERWRITING AGREEMENT STANDARD PROVISIONS (PREFERRED STOCK) ___________________, 200_ From time to time, Arrow Electronics, Inc., a New York corporation (the "Company"), may enter into one or more underwriting agreements that provide for the sale of a specified number of shares (the "Offered Securities") of the Company's preferred stock, par value $0.01 (the "Preferred Stock"), to the several underwriters named therein. The standard provisions set forth herein may be incorporated by reference in any such underwriting agreement (an "Underwriting Agreement"). The Underwriting Agreement, including the provisions incorporated therein by reference, is herein sometimes referred to as this Agreement. Terms defined in the Underwriting Agreement are used herein as therein defined. The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement, including a prospectus, relating to Preferred Stock 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 Offered Securities pursuant to Rule 424 under the Securities Act of 1933, as amended (the "Securities Act"). The term "Registration Statement" means the registration statement, including the exhibits thereto, as amended to the date of this Agreement. The term "Basic Prospectus" means the prospectus included in the Registration Statement. 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 Offered 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"). The term "Contract Securities" means the Offered Securities, if any, to be purchased pursuant to the delayed delivery contracts substantially in the form of Schedule I hereto, with such changes therein as the Company may approve (the "Delayed Delivery Contracts"). The term "Underwriters' Securities" means the Offered Securities other than Contract Securities. 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, to the Company's knowledge, threatened by the Commission. 2 (b) (i) Each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Registration Statement and 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 any 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 any untrue statement of a material fact or omit 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, except that the representations and warranties set forth in this Section 1(b) do not apply to statements or omissions in the Registration Statement or the Prospectus based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Manager expressly for use therein. (c) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each 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. (d) Each subsidiary of the Company which constitutes a "significant subsidiary" within the meaning of Rule 1-02 of Regulation S-X (the "Material Subsidiaries") has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each 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. (f) The Offered Securities, upon issuance and delivery and payment therefor in the manner described herein, will be duly authorized, validly issued, fully paid and nonassessable. The Offered Securities conform to the description thereof in the preliminary prospectus and the Prospectus; 2 3 (g) All of the outstanding shares of capital stock of the Company have been duly authorized and validly issued, are fully paid and nonassessable. (h) The Delayed Delivery Contracts have been duly authorized, executed and delivered by the Company and are valid and binding agreements of the Company, enforceable in accordance with their respective terms except as (i) enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and (ii) the availability of equitable remedies may be limited by equitable principles of general applicability. (i) The execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement, the Offered Securities and the Delayed Delivery Contracts 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 Company of its obligations under this Agreement, the Offered Securities or the Delayed Delivery Contracts, 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 Offered Securities. (j) There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement). (k) There are no legal or governmental proceedings pending or, to the knowledge of the Company, threatened to which the Company or any of its Material Subsidiaries is a party or to which any of the properties of the Company or any of its Material Subsidiaries is subject that are required to be described in the Registration Statement or the Prospectus and are not so described or any statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed or incorporated by reference as exhibits to the Registration Statement that are not described, filed or incorporated as required. (l) 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. (m) The Company is not an "investment company" or an entity "controlled" by an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended. 3 4 (n) 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. 2. Delayed Delivery Contracts. If the Prospectus provides for sales of Offered Securities pursuant to Delayed Delivery Contracts, the Company hereby authorizes the Underwriters to solicit offers to purchase Contract Securities on the terms and subject to the conditions set forth in the Prospectus pursuant to Delayed Delivery Contracts. Delayed Delivery Contracts may be entered into only with institutional investors approved by the Company of the types set forth in the Prospectus. On the Closing Date, the Company will pay to the Manager as compensation for the accounts of the Underwriters the commission set forth in the Underwriting Agreement in respect of the Contract Securities. The Underwriters will not have any responsibility in respect of the validity or the performance of any Delayed Delivery Contracts. If the Company executes and delivers Delayed Delivery Contracts with institutional investors, the aggregate amount of Offered Securities to be purchased by the several Underwriters shall be reduced by the aggregate amount of Contract Securities; such reduction shall be applied to the commitment of each Underwriter pro rata in proportion to the amount of Offered Securities set forth opposite such Underwriter's name in the Underwriting Agreement, except to the extent that the Manager determines that such reduction shall be applied in other proportions and so advises the Company; provided, however, that the total amount of Offered Securities to be purchased by all Underwriters shall be the aggregate amount set forth above, less the aggregate amount of Contract Securities. 3. Terms of Public Offering. The Company is advised by the Manager that the Underwriters propose to make a public offering of their respective portions of the Underwriters' Securities as soon after this Agreement has been entered into as in the Manager's judgment is advisable. The terms of the public offering of the Underwriters' Securities are set forth in the Prospectus. 4. Payment and Delivery. Payment for the Underwriters' Securities shall be made by wire transfer to an account designated by the Company in same day funds at the time and place set forth in the Underwriting Agreement, upon delivery to the Manager for the respective accounts of the several Underwriters of the Underwriters' Securities registered in such names and in such denominations as the Manager shall request in writing not less than two full business days prior to the date of delivery, with any transfer taxes payable in connection with the transfer of the Underwriters' Securities to the Underwriters duly paid. 4 5 5. Conditions to the Underwriters' Obligations. The several obligations of the Underwriters to purchase any Offered Securities are subject to the following conditions: (a) Subsequent to the execution and delivery of the Underwriting Agreement and prior to the Closing Date: (i) there shall not have occurred any downgrading in, nor shall any notice have been given of any intended or potential downgrading in or of any negative review of, the rating accorded any of the Company's securities by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; and (ii) there shall not have occurred any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement) that, in the judgment of the Manager, is material and adverse and that makes it, in the judgment of the Manager, impracticable to market the Offered Securities on the terms and in the manner contemplated in the Prospectus. (b) The Underwriters shall have received on the Closing Date a certificate, dated the Closing Date and signed by an executive officer of the Company, not in his individual capacity but solely in his capacity as an executive officer of the Company, to the effect set forth in clause (a) above and to the effect that the representations and warranties of the Company contained in this Agreement are true and correct as of the Closing Date and that the Company has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date. The officer signing and delivering such certificate may rely upon the best of his or her knowledge as to proceedings threatened. (c) The Underwriters shall have received on the Closing Date opinions of Milbank, Tweed, Hadley & McCloy LLP, counsel for the Company, and Robert E. Klatell, Executive Vice President and Secretary of the Company, dated the Closing Date, in form and substance satisfactory to the Underwriters. 5 6 (d) The Underwriters shall have received on the Closing Date an opinion of [ ], special counsel for the Underwriters, dated the Closing Date in form and substance satisfactory to the Underwriters. 6. Covenants of the Company. In further consideration of the agreements of the Underwriters herein contained, the Company covenants with each Underwriter as follows: (a) To furnish the Manager, without charge, one signed copy of the Registration Statement (including exhibits thereto and documents incorporated therein by reference) and for delivery to each other Underwriter a conformed copy of the Registration Statement (without exhibits thereto and documents incorporated therein by reference) and, during the period mentioned in paragraph (c) below, as many copies of the Prospectus, any documents 8 7 incorporated by reference therein and any supplements and amendments thereto or to the Registration Statement as the Manager may reasonably request. (b) Before amending or supplementing the Registration Statement or the Prospectus with respect to the Offered Securities, to furnish to the Manager a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which the Manager reasonably objects. (c) If, during such period after the first date of the public offering of the Offered Securities as in the opinion of counsel for the Underwriters, after consultation with the Company, the Prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if, in the opinion of counsel for the Underwriters, after consultation with the Company, it is necessary to amend or supplement the Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to the dealers (whose names and addresses the Manager will furnish to the Company) to which Offered Securities may have been sold by the Manager on behalf of the Underwriters and to any other dealers upon request, either amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with applicable law. (d) To endeavor to qualify the Offered Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Manager shall reasonably request and to maintain such qualification for as long as the Manager shall reasonably request. (e) To make generally available to the Company's security holders and to the Manager as soon as practicable an earning statement covering a twelve month period, which earning statement shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder. (f) To pay all expenses incident to the performance of its obligations under this Agreement, including: (i) the preparation and filing of the Registration Statement and the Prospectus and all amendments and supplements thereto; (ii) the preparation, issuance and delivery of the Offered Securities; (iii) the fees and disbursements of the Company's counsel and accountants; (iv) the qualification of the Offered Securities under state securities or Blue Sky laws in accordance with the provisions of Section 6(d), including filing fees and the fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation of any Blue Sky or Legal Investment Memoranda; (v) the printing and delivery to the Underwriters in quantities as hereinabove stated of copies of the Registration Statement and all amendments thereto and of any preliminary prospectus and the Prospectus and any amendments or supplements thereto; (vi) the printing and delivery to the Underwriters of copies of any Blue Sky or Legal Investment Memoranda; (vii) 9 8 the filing fees and expenses, if any, incurred with respect to any filing with the National Association of Securities Dealers, Inc. made in connection with the Offered Securities; (viii) any expenses incurred by the Company in connection with a "road show" presentation to potential investors and (ix) all document production charges and expenses of counsel to the Underwriters (but not including their fees for professional services) incurred in connection with the preparation of this Agreement. 7. Indemnification 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 by any Underwriter or any such controlling person 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 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 the Manager 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 the Manager 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 either paragraph (a) or (b) of this Section 7, 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 10 9 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 the Manager, in the case of parties indemnified pursuant to paragraph (a) above, and by the Company, in the case of parties indemnified pursuant to paragraph (b) above. 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 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 paragraph (a) or (b) of this Section 7 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 Offered Securities or (ii) if the allocation provided by clause (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 (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 Offered Securities shall be deemed to be in the same respective proportions as the net proceeds from the offering of such Offered 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 Supplement, bear to the aggregate public offering price of the Offered 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 number of Offered 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 paragraph (d) of this 11 10 Section 7. The amount paid or payable by an 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 Offered 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 the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Offered Securities. 8. Termination. This Agreement shall be subject to termination by notice given by the Manager to the Company, if (a) after the execution and delivery of the Underwriting 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 the judgment of the Manager, is material and adverse and (b) in the case of any of the events specified in clauses (a)(i) through (iv), such event, singly or together with any other such event, makes it, in the judgment of the Manager, impracticable to market the Offered Securities on the terms and in the manner contemplated in the Prospectus. 9. Defaulting Underwriters. If, on the Closing Date, any one or more of the Underwriters shall fail or refuse to purchase Underwriters' Securities that it has or they have agreed to purchase hereunder on such date, and the aggregate amount of Underwriters' Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate amount of the Underwriters' Securities to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the amount of Underwriters' Securities set forth opposite their respective names in the Underwriting Agreement bears to the aggregate amount of Underwriters Securities set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as the Manager may specify, to purchase the Underwriters' Securities which such defaulting Underwriter or 12 11 Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the amount of Underwriters' 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 amount of Underwriters' Securities without the written consent of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Underwriters' Securities and the aggregate amount of Underwriters' Securities with respect to which such default occurs is more than one-tenth of the aggregate amount of Underwriters' Securities to be purchased on such date, and arrangements satisfactory to the Manager and the Company for the purchase of such Underwriters' 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 the Manager 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. 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 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. Counterparts. This Agreement may be signed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 11. Applicable Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. 12. 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. 13 12 UNDERWRITING AGREEMENT _____________, 200_ Arrow Electronics, Inc. 25 Hub Drive Melville, NY 11747 Dear Sirs and Mesdames: We (the "Manager") are acting on behalf of the underwriter or underwriters (including ourselves) named below (such underwriter or underwriters being herein called the "Underwriters"), and we understand that Arrow Electronics, Inc., a New York corporation (the "Company"), proposes to issue and sell [________] shares of the Company's Preferred Stock, par value $0.01, for an aggregate offering price of $[_________] (the "Securities") (The Securities are also referred to herein as the "Offered Securities.") Subject to the terms and conditions set forth or incorporated by reference herein, the Company hereby agrees to sell to the several Underwriters, and each Underwriter agrees, severally and not jointly, to purchase from the Company the number of Securities set forth below opposite their names at a purchase price of $[____] per share of Securities.
Number of Name Securities ---- ------------------- [Name of Underwriter] [Insert syndicate list] Total. . . . . .
The number of Securities to be purchased by the several Underwriters shall be reduced by the number of Securities sold pursuant to delayed delivery contracts. The Underwriters will pay for the Offered Securities (less any Offered Securities sold pursuant to delayed delivery contracts) upon delivery thereof at [office] at ______ a.m. (New York time) on ___________, 200_, or at such other time, not later than 5:00 p.m. (New York time) on _________, 200_, as shall be designated by the Manager. The time and date of such payment and delivery are hereinafter referred to as the Closing Date. The Offered Securities shall have the terms set forth in the Prospectus dated ____________, 200_, and the Prospectus Supplement dated _____________, 200_. The Commission to be paid to the Underwriters in respect of the Offered Securities purchased pursuant to delayed delivery contracts arranged by the Underwriters shall be $[____] per share of the Securities so purchased. 14 13 All provisions contained in the document entitled Arrow Electronics, Inc. Underwriting Agreement Standard Provisions (Preferred Stock ) dated _______ 200_, (the "Standard Provisions") a copy of which is attached hereto, are herein incorporated by reference in their entirety and shall be deemed to be a part of this Agreement to the same extent as if such provisions had been set forth in full herein, except that (i) if any term defined in such document is otherwise defined herein, the definition set forth herein shall control, (ii) all references in such document to a type of security that is not an Offered Security shall not be deemed to be a part of this Agreement and (iii) all references in such document to a type of agreement that has not been entered into in connection with the transactions contemplated hereby shall not be deemed to be a part of this Agreement. All references to the Manager in the Standard Provisions shall be taken to mean [name of Underwriter] and [names of other co-lead Managers] whose authority hereunder and thereunder may be exercised by them jointly or by [name of Underwriter] alone. 15 14 Please confirm your agreement by having an authorized officer sign a copy of this Agreement in the space set forth below. Very truly yours, [NAME OF LEAD MANAGER] [Name of Other Lead Managers] Acting severally on behalf of themselves [and the several Underwriters named herein] By: [NAME OF LEAD MANAGER] By: ----------------------------- Name: Title: Accepted: ARROW ELECTRONICS, INC. By: --------------------------- Name: Title: 16 15 Schedule I DELAYED DELIVERY CONTRACT _________, 200_ Ladies and Gentlemen: The undersigned hereby agrees to purchase from Arrow Electronics, Inc., a New York corporation (the "Company"), and the Company agrees to sell to the undersigned the Company's securities described in Schedule A annexed hereto (the "Securities"), offered by the Company's Prospectus dated ________________, 200_ and Prospectus Supplement dated _________________ 200_, receipt of copies of which are hereby acknowledged, at a purchase price stated in Schedule A and on the further terms and conditions set forth in this Agreement. The undersigned does not contemplate selling Securities prior to making payment therefor. The undersigned will purchase from the Company Securities at the price per share and in the numbers on the delivery dates set forth in Schedule A. Each such date on which Securities are to be purchased hereunder is hereinafter referred to as a "Delivery Date." Payment for the Securities which the undersigned has agreed to purchase on each Delivery Date shall be made to the Company by wire transfer in same day funds on the Delivery Date to the account specified by the Company, upon delivery to the undersigned of the Securities to be purchased by the undersigned on the Delivery Date, in such denominations and registered in such names as the undersigned may designate by written or telegraphic communication addressed to the Company not less than five full business days prior to the Delivery Date. The obligation of the undersigned to take delivery of and make payment for the Securities on the Delivery Date shall be subject to the conditions that (1) the purchase of Securities to be made by the undersigned shall not at the time of delivery be prohibited under the laws of the jurisdiction to which the undersigned is subject and (2) the Company shall have sold, and delivery shall have taken place to the underwriters (the "Underwriters") named in the Prospectus Supplement referred to above of, such part of the Securities as is to be sold to them. Promptly after completion of sale and delivery to the Underwriters, the Company will mail or deliver to the undersigned as its address set forth below notice to such effect, accompanied by a copy of the opinion of counsel for the Company delivered to the Underwriters in connection therewith. Failure to take delivery of and make payment for Securities by any purchaser under any other Delayed Delivery Contract shall not relieve the undersigned of its obligations under this agreement. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors, but will not be assignable by either party hereto without the written consent of the other. 17 16 If this Agreement is acceptable to the Company, it is requested that the Company sign the form of acceptance below and mail or deliver one of the counterparts hereof to the undersigned at its address set forth below. This will become a binding agreement, as of the date first above written, between the Company and the undersigned when such counterpart is so mailed or delivered. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. Yours very truly, ---------------------------- (Purchaser) By ------------------------- ---------------------------- (Title) ---------------------------- (Address) Accepted: ARROW ELECTRONICS, INC. By -------------------------- 18 17 PURCHASER -- PLEASE COMPLETE AT TIME OF SIGNING The name and telephone and department of the representative of the Purchaser with whom details of delivery on the Delivery Date may be discussed is as follows: (Please print.)
Telephone No. Name (Including Area Code) Department ---- --------------------- ---------- - ---------------------------------- ----------------- ------------------
19 18 SCHEDULE A Securities: Numbers to be Purchased: Price per Share: Delivery: 20 EX-1.3 4 y42939a1ex1-3.txt UNDERWRITING AGREEMENT (DEBT SECURITIES) 1 EXHIBIT 1.3 ARROW ELECTRONICS, INC. UNDERWRITING AGREEMENT STANDARD PROVISIONS (DEBT SECURITIES) ____________________, 200_ From time to time, Arrow Electronics, Inc., a New York corporation (the "Company") may enter into one or more underwriting agreements that provide for the sale of designated debt securities to the several underwriters named therein. The standard provisions set forth herein may be incorporated by reference in any such underwriting agreement (an "Underwriting Agreement"). The Underwriting Agreement, including the provisions incorporated therein by reference, is herein sometimes referred to as this Agreement. Terms defined in the Underwriting Agreement are used herein as therein defined. The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement, including a prospectus, relating to the Debt 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 Offered Securities pursuant to Rule 424 under the Securities Act of 1933, as amended (the "Securities Act"). The term "Registration Statement" means the registration statement, including the exhibits thereto, as amended to the date of this Agreement. The term "Basic Prospectus" means the prospectus included in the Registration Statement. 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 Offered 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"). The term "Contract Securities" means the Offered Securities, if any, to be purchased pursuant to the delayed delivery contracts substantially in the form of Schedule I hereto, with such changes therein as the Company may approve (the "Delayed Delivery Contracts"). The term "Underwriters' Securities" means the Offered Securities other than Contract Securities. 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, to the Company's knowledge, threatened by the Commission. 2 (b) (i) Each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Registration Statement and 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 any 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 any untrue statement of a material fact or omit 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, except that the representations and warranties set forth in this Section 1(b) do not apply (A) to statements or omissions in the Registration Statement or the Prospectus based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Manager expressly for use therein or (B) to 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) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each 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. (d) 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, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each 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. (f) The Indenture has been duly qualified under the Trust Indenture Act and has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company, enforceable in accordance with its terms except as (i) the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and 2 3 (ii) rights of acceleration and the availability of equitable remedies may be limited by equitable principles of general applicability. (g) The Offered Securities have been duly authorized 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 the Underwriting Agreement, in the case of the Underwriters' Securities, or by institutional investors in accordance with the terms of the Delayed Delivery Contracts in the case of Contract Securities, will be entitled to the benefits of the Indenture and will be valid and binding obligations of the Company, in each case enforceable in accordance with their terms except as (i) the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and (ii) rights of acceleration, if any, and the availability of equitable remedies may be limited by equitable principles of general applicability. (h) The Delayed Delivery Contracts have been duly authorized, executed and delivered by the Company and are valid and binding agreements of the Company, enforceable in accordance with their respective terms except as (i) enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and (ii) the availability of equitable remedies may be limited by equitable principles of general applicability. (i) The execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement, the Indenture, the Offered Securities and the Delayed Delivery Contracts 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 Company of its obligations under this Agreement, the Indenture, the Offered Securities or the Delayed Delivery Contracts, 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 Offered Securities. (j) There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement). (k) There are no legal or governmental proceedings pending or, to the knowledge of the Company, threatened to which the Company or any of its Material Subsidiaries is a party or to which any of the properties of the Company or any of its Material Subsidiaries is subject that are required to be described in the Registration Statement or the Prospectus and are not so described or any statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed or incorporated by 3 4 reference as exhibits to the Registration Statement that are not described, filed or incorporated as required. (l) 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. (m) The Company is not an "investment company" or an entity "controlled" by an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended. (n) 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. 2. Delayed Delivery Contracts. if the Prospectus provides for sales of Offered Securities pursuant to Delayed Delivery Contracts, the Company hereby authorizes the Underwriters to solicit offers to purchase Contract Securities on the terms and subject to the conditions set forth in the Prospectus pursuant to Delayed Delivery Contracts. Delayed Delivery Contracts may be entered into only with institutional investors approved by the Company of the types set forth in the Prospectus. On the Closing Date, the Company will pay to the Manager as compensation for the accounts of the Underwriters the commission set forth in the Underwriting Agreement in respect of the Contract Securities. The Underwriters will not have any responsibility in respect of the validity or the performance of any Delayed Delivery Contracts. If the Company executes and delivers Delayed Delivery Contracts with institutional investors, the aggregate amount of Offered Securities to be purchased by the several Underwriters shall be reduced by the aggregate amount of Contract Securities; such reduction shall be applied to the commitment of each Underwriter pro rata in proportion to the amount of Offered Securities set forth opposite such Underwriter's name in the Underwriting Agreement, except to the extent that the Manager determines that such reduction shall be applied in other proportions and so advises the Company; provided, however, that the total amount of Offered Securities to be purchased by all Underwriters shall be the aggregate amount set forth above, less the aggregate amount of Contract Securities. 3. Terms of Public Offering. The Company is advised by the Manager that the Underwriters propose to make a public offering of their respective portions of the Underwriters Securities as soon after this Agreement has been entered into as in the Manager's judgment is 4 5 advisable, The terms of the public offering of the Underwriters' Securities are set forth in the Prospectus. 4. Payment and Delivery. Payment for the Underwriters' Securities shall be made by wire transfer to an account designated by the Company in same day funds at the time and place set forth in the Underwriting Agreement, upon delivery to the Manager for the respective accounts of the several Underwriters of the Underwriters' Securities registered in such names and in such denominations as the Manager shall request in writing not less than two full business days prior to the date of delivery, with any transfer taxes payable in connection with the transfer of the Underwriters' Securities to the Underwriters duly paid. 5. Conditions to the Underwriters' Obligations. The several obligations of the Underwriters to purchase any Offered Securities are subject to the following conditions: (a) Subsequent to the execution and delivery of the Underwriting Agreement and prior to the Closing Date: (i) there shall not have occurred any downgrading in, nor shall any notice have been given of any intended or potential downgrading in or of any negative review of, the rating accorded any of the Company's securities by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; and (ii) there shall not have occurred any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement) that, in the judgment of the Manager, is material and adverse and that makes it, in the judgment of the Manager, impracticable to market the Offered Securities on the terms and in the manner contemplated in the Prospectus. (b) The Underwriters shall have received on the Closing Date a certificate, dated the Closing Date and signed by an executive officer of the Company, not in his individual capacity but solely in his capacity as an executive officer of the Company, to the effect set forth in clause (a) above and to the effect that the representations and warranties of the Company contained in this Agreement are true and correct as of the Closing Date and that the Company has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date. The officer signing and delivering such certificate may rely upon the best of his or her knowledge as to proceedings threatened. (c) The Underwriters shall have received on the Closing Date opinions of Milbank, Tweed, Hadley & McCloy LLP, counsel for the Company, and Robert E. Klatell, Executive Vice President and Secretary of the Company, dated the Closing Date, in form and substance satisfactory to the Underwriters. 5 6 (d) The Underwriters shall have received on the Closing Date an opinion of [ ], special counsel for the Underwriters, dated the Closing Date, in form and substance satisfactory to the Underwriters. 6. Covenants of the Company. In further consideration of the agreements of the Underwriters herein contained, the Company covenants with each Underwriter as follows: (a) To furnish the Manager, without charge, one signed copy of the Registration Statement (including exhibits thereto and documents incorporated therein by reference) and for delivery to each other Underwriter a conformed copy of the Registration Statement (without exhibits thereto and documents incorporated therein by reference) and, during the period mentioned in paragraph (c) below, as many copies of the Prospectus, any documents incorporated by reference therein and any supplements and amendments thereto or to the Registration Statement as the Manager may reasonably request. (b) Before amending or supplementing the Registration Statement or the Prospectus with respect to the Offered Securities, to furnish to the Manager a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which the Manager reasonably objects. (c) If, during such period after the first date of the public offering of the Offered Securities as in the opinion of counsel for the Underwriters, after consultation with the Company, the Prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if, in the opinion of counsel for the Underwriters, after consultation with the Company, it is necessary to amend or supplement the Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to the dealers (whose names and addresses the Manager will furnish to the Company) to which Offered Securities may have been sold by the Manager on behalf of the Underwriters and to any other dealers upon request, either amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with applicable law. (d) To endeavor to qualify the Offered Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Manager shall reasonably request and to maintain such qualification for as long as the Manager shall reasonably request. (e) To make generally available to the Company's security holders and to the Manager as soon as practicable an earning statement covering a twelve month period, which earning statement shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder. (f) During the period beginning on the date of the Underwriting Agreement and continuing to and including the Closing Date, not to offer, sell, contract to sell or otherwise 6 7 dispose of any debt securities of the Company substantially similar to the Offered Securities (other than (i) the Offered Securities and (ii) commercial paper issued in the ordinary course of business), without the prior written consent of the Manager. (g) To pay all expenses incident to the performance of its obligations under this Agreement, including: (i) the preparation and filing of the Registration Statement and the Prospectus and all amendments and supplements thereto; (ii) the preparation, issuance and delivery of the Offered Securities; (iii) the fees and disbursements of the Company's counsel and accountants and of the Trustee and its counsel; (iv) the qualification of the Offered Securities under state securities or Blue Sky laws in accordance with the provisions of Section 6(d), including filing fees and the fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation of any Blue Sky or Legal Investment Memoranda; (v) the printing and delivery to the Underwriters in quantities as hereinabove stated of copies of the Registration Statement and all amendments thereto and of any preliminary prospectus and the Prospectus and any amendments or supplements thereto; (vi) the printing and delivery to the Underwriters of copies of any Blue Sky or Legal Investment Memoranda; (vii) any fees charged by rating agencies for the rating of the Offered Securities; (viii) the filing fees and expenses, if any, incurred with respect to any filing with the National Association of Securities Dealers, Inc. made in connection with the Offered Securities; (ix) any expenses incurred by the Company in connection with a "road show" presentation to potential investors and (x) all document production charges and expenses of counsel to the Underwriters (but not including their fees for professional services) incurred in connection with the preparation of this Agreement. 7. Indemnification 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 by any Underwriter or any such controlling person 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 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 the Manager 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 the Manager 7 8 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 either paragraph (a) or (b) of this Section 7, 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 the Manager, in the case of parties indemnified pursuant to paragraph (a) above, and by the Company, in the case of parties indemnified pursuant to paragraph (b) above. 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 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 paragraph (a) or (b) of this Section 7 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 Offered Securities or (ii) if the allocation provided by clause (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 (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 8 9 with the offering of the Offered Securities shall be deemed to be in the same respective proportions as the net proceeds from the offering of such Offered 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 Supplement, bear to the aggregate public offering price of the Offered 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 Offered 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 paragraph (d) of this Section 7. The amount paid or payable by an 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 Offered 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 1 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 the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Offered Securities. 8. Termination. This Agreement shall be subject to termination by notice given by the Manager to the Company, if (a) after the execution and delivery of the Underwriting Agreement and prior to the Closing Date (1) 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 beers suspended on any exchange or in 9 10 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 the judgment of the Manager, is material and adverse and (b)in the case of any of the events specified in clauses (a) (i) through (iv), such event, singly or together with any other such event, makes it, in the judgment of the Manager, impracticable to market the Offered Securities on the terms and in the manner contemplated in the Prospectus. 9. Defaulting Underwriters. If, on the Closing Date, any one or more of the Underwriters shall fail or refuse to purchase Underwriters' Securities that it has or they have agreed to purchase hereunder on such date, and the aggregate amount of Underwriters' Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate amount of the Underwriters' Securities to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the amount of Underwriters' Securities set forth opposite their respective names in the Underwriting Agreement bears to the aggregate amount of Underwriters Securities set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as the Manager may specify, to purchase the Underwriters' Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the amount of Underwriters' 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 amount of Underwriters' Securities without the written consent of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Underwriters' Securities and the aggregate amount of Underwriters' Securities with respect to which such default occurs is more than one-tenth of the aggregate amount of Underwriters' Securities to be purchased on such date, and arrangements satisfactory to the Manager and the Company for the purchase of such Underwriters' 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 the Manager 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. 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 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 11 10. Counterparts. This Agreement may be signed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 11. Applicable Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. 12. 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. 11 12 UNDERWRITING AGREEMENT ________________, 200_ Arrow Electronics, Inc. 25 Hub Drive Melville, NY 11747 Dear Sirs and Mesdames: We (the "Manager") are acting on behalf of the underwriter or underwriters (including ourselves) named below (such underwriter or underwriters being herein called the "Underwriters"), and we understand that Arrow Electronics, Inc., a New York corporation (the "Company"), proposes to issue and sell [Currency and Principal Amount] aggregate initial offering price of [Full title of Debt Securities] (the "Debt Securities"). (The Debt Securities are also referred to herein as the "Offered Securities.") The Debt Securities will be issued pursuant to the provisions of an Indenture dated as of _______________, 200_, as amended or supplemented from time to time (the "Indenture"), between the Company and [ ], as Trustee (the "Trustee"). Subject to the terms and conditions set forth or incorporated by reference herein, the Company hereby agrees to sell to the several Underwriters, and each Underwriter agrees, severally and not jointly, to purchase from the Company the respective principal amounts of Debt Securities set forth below opposite their names at a purchase price of ____ % of the principal amount of Debt Securities[, plus accrued interest, if any, from [Date of Offered Securities] to the date of payment and delivery]:
Principal Amount of Name Debt Securities ---- --------------- [Name of Underwriter] [insert syndicate list] Total.....
The principal amount of Debt Securities to be purchased by the several Underwriters shall be reduced by the aggregate principal amount of Debt Securities sold pursuant to delayed delivery contracts. The Underwriters will pay for the Offered Securities (less any Offered Securities sold pursuant to delayed delivery contracts) upon delivery thereof at [office] at _______ a.m. (New York time) on ______________, 200_, or at such other time, not later than 5:00 p.m. (New York time) on __________, 200_, as shall be designated by the Manager. The time and date of such payment and delivery are hereinafter referred to as the Closing Date. The Offered Securities shall have the terms set forth in the Prospectus dated ________, 200_, and the Prospectus Supplement dated _____________, 200_, including the following: 12 13 Terms of Debt Securities Maturity Date: Interest Rate: Redemption Provisions: Interest Payment Dates: _________________ and ________________ commencing ___________________, ____ [(Interest accrues from ___________________, ____)] Form and Denomination: [Other Terms:] The Commission to be paid to the Underwriters in respect of the Offered Securities purchased pursuant to delayed delivery contracts arranged by the Underwriters shall be ___% of the principal amount of the Debt Securities so purchased. All provisions contained in the document entitled Arrow Electronics, Inc. Underwriting Agreement Standard Provisions (Debt Securities) dated _________ 200_, (the "Standard Provisions") a copy of which is attached hereto, are herein incorporated by reference in their entirety and shall be deemed to be a part of this Agreement to the same extent as if such provisions had been set forth in full herein, except that (i) if any term defined in such document is otherwise defined herein, the definition set forth herein shall control, (ii) all references in such document to a type of security that is not an Offered Security shall not be deemed to be a part of this Agreement and (iii) all references in such document to a type of agreement that has not been entered into in connection with the transactions contemplated hereby shall not be deemed to be a part of this Agreement. All references to the Manager in the Standard Provisions shall be taken to mean [name of Underwriter] and [names of other co-lead Managers] whose authority hereunder and thereunder may be exercised by them jointly or by [name of Underwriter] alone. 13 14 Please confirm your agreement by having an authorized officer sign a copy of this Agreement in the space set forth below. Very truly yours, [NAME OF LEAD MANAGER] [Name of Other Lead Managers] Acting severally on behalf of themselves [and the several Underwriters named herein] By: [NAME OF LEAD MANAGER] By: ______________________________ Name: Title: Accepted: ARROW ELECTRONICS, INC. By: ______________________ Name: Title: 14 15 Schedule 1 DELAYED DELIVERY CONTRACT _______, 200_ Dear Ladies and Gentlemen: The undersigned hereby agrees to purchase from Arrow Electronics, Inc., a New York corporation (the "Company"), and the Company agrees to sell to the undersigned the Company's securities described in Schedule A annexed hereto (the "Securities"), offered by the Company's Prospectus dated __________________, 200_ and Prospectus Supplement dated _______________, 200_, receipt of copies of which are hereby acknowledged, at a purchase price stated in Schedule A and on the further terms and conditions set forth in this Agreement. The undersigned does not contemplate selling Securities prior to making payment therefor. The undersigned will purchase from the Company Securities in the principal amount and numbers on the delivery dates set forth in Schedule A. Each such date on which Securities are to be purchased hereunder is hereinafter referred to as a "Delivery Date." Payment for the Securities which the undersigned has agreed to purchase on each Delivery Date shall be made to the Company by wire transfer in same day funds on the Delivery Date to the account specified by the Company, upon delivery to the undersigned of the Securities to be purchased by the undersigned on the Delivery Date, in such denominations and registered in such names as the undersigned may designate by written or telegraphic communication addressed to the Company not less than five full business days prior to the Delivery Date. The obligation of the undersigned to take delivery of and make payment for the Securities on the Delivery Date shall be subject to the conditions that (1) the purchase of Securities to be made by the undersigned shall not at the time of delivery be prohibited under the laws of the jurisdiction to which the undersigned is subject and (2) the Company shall have sold, and delivery shall have taken place to the underwriters (the "Underwriters") named in the Prospectus Supplement referred to above of, such part of the Securities as is to be sold to them. Promptly after completion of sale and delivery to the Underwriters, the Company will mail or deliver to the undersigned as its address set forth below notice to such effect, accompanied by a copy of the opinion of counsel for the Company delivered to the Underwriters in connection therewith. Failure to take delivery of and make payment for Securities by any purchaser under any other Delayed Delivery Contract shall not relieve the undersigned of its obligations under this agreement. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors, but will not be assignable by either party hereto without the written consent of the other. If this Agreement is acceptable to the Company, it is requested that the Company sign the form of acceptance below and mail or deliver one of the counterparts hereof to the undersigned 15 16 at its address set forth below. This will become a binding agreement, as of the date first above written, between the Company and the undersigned when such counterpart is so mailed or delivered. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. Yours very truly, ______________________________ (Purchaser) By____________________________ ______________________________ (Title) ______________________________ (Address) Accepted: ARROW ELECTRONICS, INC. By________________________ 16 17 PURCHASER -- PLEASE COMPLETE AT TIME OF SIGNING The name and telephone and department of the representative of the Purchaser with whom details of delivery on the Delivery Date may be discussed is as follows: (Please print.)
Telephone No. Name (Including Area Code) Department ---- --------------------- ---------- ______________________ _____________________ _________________
17 18 SCHEDULE A Securities: Principal Amounts or Numbers to be Purchased: Purchase Price: Delivery: 18 EX-4.3 5 y42939a1ex4-3.txt FORM OF SUBORDINATED INDENTURE 1 EXHIBIT 4.3 ================================================================================ ARROW ELECTRONICS, INC. and [ ], Trustee ---------- Indenture Dated as of [ ], 20[ ] Subordinated Debt Securities ---------- ================================================================================ 2 TABLE OF CONTENTS Page ---- ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.........................1 Section 1.1. Definitions .............................................1 Section 1.02. Other Definitions ......................................6 Section 1.03. Incorporation By Reference Of Trust Indenture Act ......6 Section 1.04. Rules of Construction ..................................7 ARTICLE 2 THE SECURITIES ....................................................7 Section 2.1. Form ....................................................7 Section 2.2. Execution and Authentication ............................7 Section 2.3. Amount Unlimited; Issuable in Series ....................9 Section 2.4. Denomination And Date Of Securities; Payments Of Interest .............................................11 Section 2.5. Registrar And Paying Agent; Agents Generally ...........12 Section 2.6. Paying Agent To Hold Money In Trust ....................12 Section 2.7. Transfer And Exchange ..................................13 Section 2.8. Replacement Securities .................................15 Section 2.9. Outstanding Securities .................................16 Section 2.10. Temporary Securities ..................................17 Section 2.11. Cancellation ..........................................17 Section 2.12. CUSIP Numbers .........................................17 Section 2.13. Defaulted Interest ....................................17 Section 2.14. Series May Include Tranches ...........................17 ARTICLE 3 REDEMPTION .......................................................18 Section 3.1. Applicability Of Article ...............................18 Section 3.2. Notice Of Redemption; Partial Redemptions ..............18 Section 3.3. Payment of Securities Called For Redemption ............20 Section 3.4. Exclusion Of Certain Securities From Eligibility For Selection For Redemption .............................20 Section 3.5. Mandatory And Optional Sinking Funds ...................21 ARTICLE 4 COVENANTS ........................................................23 Section 4.1. Payment Of Securities ..................................23 Section 4.2. Maintenance Of Office Or Agency ........................23 Section 4.3. Certificate To Trustee .................................24 Section 4.4. Reports By The Company .................................24 i 3 ARTICLE 5 SUCCESSOR CORPORATION ............................................25 Section 5.1. When Companies May Merge, Etc ..........................25 Section 5.2. Successor Substituted ..................................25 ARTICLE 6 DEFAULT AND REMEDIES .............................................26 Section 6 1. Events Of Default ......................................26 Section 6.2. Acceleration ...........................................26 Section 6.3. Other Remedies .........................................28 Section 6.4. Waiver Of Past Defaults ................................28 Section 6.5. Control By Majority ....................................28 Section 6.6. Limitation On Suits ....................................29 Section 6.7. Rights Of Holders To Receive Payment ...................29 Section 6 8. Collection Suit By Trustee .............................29 Section 6.9. Trustee May File Proofs Of Claim .......................30 Section 6.10. Application Of Proceeds ...............................30 Section 6.11. Restoration Of Rights And Remedies ....................31 Section 6.12. Undertaking For Costs .................................31 Section 6.13. Rights And Remedies Cumulative ........................31 Section 6.14. Delay Or Omission Not Waiver ..........................31 ARTICLE 7 TRUSTEE ..........................................................32 Section 7.1. General ................................................32 Section 7.2. Certain Rights Of Trustee ..............................32 Section 7.3. Individual Rights Of Trustee ...........................33 Section 7 4. Trustee's Disclaimer ...................................34 Section 7.5. Notice Of Default ......................................34 Section 7.6. Reports By Trustee To Holders ..........................34 Section 7.7. Compensation And Indemnity .............................34 Section 7.8. Replacement Of Trustee .................................35 Section 7.9. Successor Trustee By Merger, Etc .......................36 Section 7.10. Eligibility ...........................................36 Section 7.11. Money Held In Trust ...................................37 ARTICLE 8 DISCHARGE OF INDENTURE ...........................................37 Section 8.1. Defeasance Within One Year Of Payment ..................37 Section 8.2. Defeasance .............................................38 Section 8.3. Covenant Defeasance ....................................39 Section 8.4. Application Of Trust Money .............................40 Section 8.5. Repayment To Company ...................................40 ARTICLE 9 AMENDMENTS, SUPPLEMENTS AND WAIVERS ..............................40 Section 9.1. Without Consent Of Holders .............................40 Section 9.2. With Consent Of Holders ................................41 Section 9.3. Revocation And Effect Of Consent .......................42 Section 9.4. Notation On Or Exchange Of Securities ..................43 ii 4 Section 9.5. Trustee To Sign Amendments, Etc .........................43 Section 9.6. Conformity With Trust Indenture Act .....................43 ARTICLE 10 SUBORDINATION ...................................................44 Section 10.1. Agreement To Subordinate ...............................44 Section 10.2. Distribution On Dissolution Or Reorganization; Subrogation Of Securities ............................44 Section 10.3. No Payment On Securities If Senior Indebtedness Is In Default ...........................................46 Section 10.4. Payments On Securities Permitted .......................47 Section 10.5. Authorization Of Securityholders To Trustee To Effect Subordination ........................................47 Section 10.6. Knowledge Of Trustee ...................................48 Section 10.7. Trustee May Hold Senior Indebtedness ...................48 Section 10.8. Rights Of Holders Of Senior Indebtedness Not Impaired ..48 Section 10.9. Modification Of Terms Of Senior Indebtedness ...........48 ARTICLE 11 MISCELLANEOUS ...................................................49 Section 11.1. Trust Indenture Act Of 1939 ............................49 Section 11.2. Notices ................................................49 Section 11.3. Certificate And Opinion As To Conditions Precedent .....50 Section 11.4. Statements Required In Certificate Or Opinion ..........50 Section 11.5. Evidence Of Ownership ..................................51 Section 11.6. Rules By Trustee, Paying Agent Or Registrar ............52 Section 11.7. Payment Date Other Than A Business Day .................52 Section 11.8. Governing Law ..........................................52 Section 11.9. No Adverse Interpretation Of Other Agreements ..........52 Section 11.10. Successors ............................................52 Section 11.11. Duplicate Originals ...................................52 Section 11.12. Separability ..........................................52 Section 11.13. Table Of Contents, Headings, Etc ......................53 Section 11.14. Incorporators, Shareholders, Officers and Directors Of Company Exempt From Individual Liability .........53 Section 11.15. Judgment Currency .....................................53 iii 5 [Tie Sheet] iv 6 INDENTURE, dated as of [ ], 20[ ], between Arrow Electronics, Inc, a New York corporation (the "Company"), and [ ] (the "Trustee"). RECITALS OF THE COMPANY WHEREAS, the Company has duly authorized the issue from time to time of its subordinated debentures, notes or other evidences of indebtedness, which may or may not be convertible into or exchangeable for any securities of any Person (including the Company), to be issued in one or more series (the "Securities") up to such principal amount or amounts as may from time to time be authorized in accordance with the terms of this Indenture and to provide, among other things, for the authentication, delivery and administration thereof, the Company has duly authorized the execution and delivery of this Indenture; and WHEREAS, all things necessary to make this Indenture a valid indenture and agreement according to its terms have been done; NOW, THEREFORE: In consideration of the premises and the purchases of the Securities by the holders thereof, the Company and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective holders from time to time of the Securities or of any and all series thereof and of the coupons, if any, appertaining thereto as follows: ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.1 Definitions. "Agent" means any Registrar, Paying Agent, transfer agent or Authenticating Agent. "Authorized Newspaper" means a newspaper (which, in the case of The City of New York, will, if practicable, be The Wall Street Journal (Eastern Edition) and in the case of London, will, if practicable, be the Financial Times (London Edition) and published in an official language of the country of publication customarily published at least once a day for at least five days in each calendar week and of general circulation in The City of New York or London, as applicable. If it shall be impractical in the opinion of the Trustee to make any publication of any notice required hereby in an Authorized Newspaper, any publication or other notice in lieu thereof which is made or given with the approval of the Trustee shall constitute a sufficient publication of such notice. 7 "Board Resolution" means one or more resolutions of the board of directors of the Company or any authorized committee thereof, certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted and to be in full force and effect on the date of certification, and delivered to the Trustee. "Business Day" means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in The City of New York or in the city in which the Corporate Trust Office is located, with respect to any Security the interest on which is based on the offered quotations in the interbank Eurodollar market for dollar deposits in London, or with respect to Securities denominated in a specified currency other than United States dollars, in the principal financial center of the country of the specified currency. "Capital Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person's capital stock or equity, including, without limitation, all Common Stock and Preferred Stock. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person's common stock, whether now outstanding or issued after the date of this Indenture, including, without limitation, all series and classes of such common stock. "Company" means the party named as such in the first paragraph of this Indenture until a successor replaces it pursuant to Article 5 of this Indenture and thereafter means the successor. "Consolidated Net Tangible Assets" means total assets after deducting therefrom all current liabilities and intangible assets as set forth in the most recent balance sheet of the Company and its consolidated Subsidiaries and computed in accordance with GAAP. "Corporate Trust Office" means the office of the Trustee at which the corporate trust business of the Trustee shall, at any particular time, be principally administered, which office is, at the date of this Indenture, located at [__________], Attention: [__________]. "Default" means any Event of Default as defined in Section 6.1 and any event that is, or after notice or passage of time or both would be, an Event of Default. "Depositary" means, with respect to the Securities of any series issuable or issued in the form of one or more Registered Global Securities, the Person designated as Depositary by the Company pursuant to Section 2.3 until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Depositary" shall mean or include each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, "Depositary" as used with respect to the Securities of any such series shall mean the Depositary with respect to the Registered Global Securities of that series. The initial Depositary shall be The Depository Trust Company, New York, New York. 2 8 "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Holder" or "Securityholder" means the registered holder of any Security with respect to Registered Securities and the bearer of any Unregistered Security or any coupon appertaining thereto, as the case may be. "Indebtedness" of the Company means any liability or obligation of the Company (whether incurred directly by the Company, by assumption or otherwise) (i) for money borrowed, or (ii) for indebtedness (whether or not secured by lien, pledge or deposit), including trade accounts payable, created in favor of a vendor or seller for, or to finance all or part of, the purchase price of property, equipment or other assets, or (iii) arising under a lease of property, equipment or other assets which, pursuant to generally accepted accounting principles then in effect, is classified upon the balance sheet of the Company as a liability of the Company, or (iv) arising under an express written guaranty by the Company of the liability or obligation of another (including any subsidiary of the Company) which is outstanding on the date of this Indenture as originally executed, or any such guaranty thereafter executed by the Company where the liability or obligation of the Company arising thereunder is, under the express provisions of such guaranty, superior in right of payment to the Securities. "Indenture" means this Indenture as originally executed or as it may be amended or supplemented from time to time by one or more indentures supplemental to this Indenture entered into pursuant to the applicable provisions of this Indenture and shall include the forms and terms of the Securities of each series established as contemplated pursuant to Sections 2.1 and 2.3. "Officer" means, with respect to the Company, the Chairman of the Board of Directors, the President or Chief Executive Officer, any Vice President, the Chief Financial Officer, the Treasurer or any Assistant Treasurer, or the Secretary or any Assistant Secretary. "Officers' Certificate" means a certificate signed in the name of the Company (i) by the Chairman of the Board of Directors, the President or Chief Executive Officer or a Vice President and (ii) by the Chief Financial Officer, the Treasurer or any Assistant Treasurer, or the Secretary or any Assistant Secretary, complying with Section 11.4 and delivered to the Trustee. Each such certificate shall comply with Section 314 of the Trust Indenture Act and include (except as otherwise expressly provided in this Indenture) the statements provided in Section 11.4, if and to the extent required thereby. "Opinion of Counsel" means a written opinion signed by legal counsel, who may be an employee of or counsel to the Company, satisfactory to the Trustee and complying with Section 11.4. Each such opinion shall comply with Section 314 of the Trust Indenture Act and include the statements provided in Section 11.4, if and to the extent required thereby. "Original Issue Date" of any Security (or portion thereof) means the earlier of (a) the date of authentication of such Security or (b) the date of any Security (or portion thereof) for which such Security was issued (directly or indirectly) on registration of transfer, exchange or substitution. 3 9 "Original Issue Discount Security" means any Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 6.2. "Periodic Offering" means an offering of Securities of a series from time to time, the specific terms of which Securities, including, without limitation, the rate or rates of interest, if any, thereon, the stated maturity or maturities thereof and the redemption provisions, if any, with respect thereto, are to be determined by the Company or its agents upon the issuance of such Securities. "Person" means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Preferred Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person's preferred or preference stock, whether now outstanding or issued after the date of this Indenture, including, without limitation, all series and classes of such preferred or preference stock. "Principal" of a Security means the principal amount of, and, unless the context indicates otherwise, includes any premium payable on, the Security. "Principal Property" means any manufacturing or processing plant or warehouse owned at the date hereof or hereafter acquired by the Company or any Restricted Subsidiary of the Company which is located within the United States and the gross book value of which (including related land and improvements thereon and all machinery and equipment included therein without deduction of any depreciation reserves) on the date as of which the determination is being made exceeds 2% of Consolidated Net Tangible Assets, other than (i) any such manufacturing or processing plant or warehouse or any portion thereof (together with the land on which it is erected and fixtures comprising a part thereof) which is financed by industrial development bonds which are tax exempt pursuant to Section 103 of the Internal Revenue Code (or which receive similar tax treatment under any subsequent amendments thereto or any successor laws thereof or under any other similar statute of the United States), (ii) any property which in the opinion of the Company's Board of Directors is not of material importance to the total business conducted by the Company as an entirety , or (iii) any protion of a particular property which is similarly found not to be of material importance to the use or operation of such property. "Registered Global Security" means a Security evidencing all or a part of a series of Registered Securities, issued to the Depositary for such series in accordance with Section 2.2, and bearing the legend prescribed in Section 2.2. "Registered Security" means any Security registered on the Security Register (as defined in Section 2.5). "Responsible Officer" means, when used with respect to the Trustee, any senior trust officer, any vice president, any trust officer, any assistant trust officer, or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Subsidiary" means a Subsidiary of the Company (i) substantially all the property of which is located, or substantially all the business of which is carried on, within the United States, and (ii) which owns Principal Property; provided, however, that any Subsidiary may be declared a Restricted Subsidiary by Board Resolution, effective as of the date such Board Resolution is adopted; provided further, that any such declaration may be rescinded by further Board Resolution, effective as of the date such further Board Resolution is adopted. "Securities" means any of the securities, as defined in the first paragraph of the recitals hereof, that are authenticated and delivered under this Indenture and, unless the context indicates otherwise, shall include any coupon appertaining thereto. "Securities Act" means the Securities Act of 1933, as amended. "Senior Indebtedness" of the Company means (a) the principal of, premium, if any, and interest on all Indebtedness, whether outstanding on the date of this Indenture as originally executed or thereafter created or incurred, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such Indebtedness is not superior in right of payment to the Securities; and (b) any amendments, modifications, deferrals, renewals or extensions of any such Senior Indebtedness, or debentures, 4 10 notes or other evidences of indebtedness issued in exchange for any such Senior Indebtedness; provided, however, that Senior Indebtedness shall not be deemed to include (i) Indebtedness which constitutes Subordinated Indebtedness and (ii) any other debt securities issued pursuant to this Indenture. "Subordinated Indebtedness" of the Company means the principal of, premium, if any, and interest, on Indebtedness, whether outstanding on the date of execution of this Indenture or thereafter created, assumed or incurred, which Indebtedness is by its terms expressly stated to be junior and subordinate in right of payment to other Indebtedness of the Company (other than the Securities). "Subsidiary" means, with respect to any Person, any corporation, association or other business entity of which more than 50% of the outstanding Voting Stock is owned, directly or indirectly, by such Person and one or more other Subsidiaries of such Person. "Trustee" means the party named as such in the first paragraph of this Indenture until a successor replaces it in accordance with the provisions of Article 7 and thereafter means such successor. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, as it may be amended from time to time. "UCC" means the Uniform Commercial Code, as in effect in each applicable jurisdiction. "United States Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended and as codified in Title 11 of the United States Code, as amended from time to time hereafter, or any successor federal bankruptcy law. "Unregistered Security" means any Security other than a Registered Security. "U.S. Government Obligations" means securities that are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depository receipt. "Voting Stock" means with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the election of directors, managers or other voting members of the governing body of such Person. 5 11 "Yield to Maturity" means, as the context may require, the yield to maturity (i) on a series of Securities or (ii) if the Securities of a series are issuable from time to time, on a Security of such series, calculated at the time of issuance of such series in the case of clause (i), or at the time of issuance of such Security of such series in the case of clause (ii), or, if applicable, at the most recent redetermination of interest on such series or on such Security, and calculated in accordance with the constant interest method or such other accepted financial practice as is specified in the terms of such Security. Section 1.02. Other Definitions. Each of the following terms is defined in the section set forth opposite such term:
Term Section ---- ------- Authenticating Agent 2.2 Cash Transaction 7.3 Dollars 4.2 Event of Default 6.1 Judgment Currency 11.15 mandatory sinking fund payment 3.5 optional sinking fund payment 3 5 Paying Agent 2.5 Record Date 2.4 Registrar 2.5 Required Currency 11.15 Security Register 2.5 Self-Liquidating Paper 7.3 sinking fund payment date 3.5 tranche 2.14
Section 1.03. Incorporation By Reference Of Trust Indenture Act. Whenever this Indenture refers to a provision of the Trust Indenture Act, the provision is incorporated by reference in and made a part of this Indenture. The following terms used in this Indenture that are defined by the Trust Indenture Act have the following meanings: "indenture securities" means the Securities; "indenture security holder" means a Holder or a Securityholder; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the indenture securities means the Company or any other obligor on the Securities. 6 12 All other terms used in this Indenture that are defined by the Trust Indenture Act, defined by reference in the Trust Indenture Act to another statute or defined by a rule of the Commission and not otherwise defined herein have the meanings assigned to them therein. Section 1.04. Rules of Construction. Unless the context otherwise requires: (i) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (ii) words in the singular include the plural, and words in the plural include the singular; (iii) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (iv) all references to Sections or Articles refer to Sections or Articles of this Indenture unless otherwise indicated; and (v) use of masculine, feminine or neuter pronouns should not be deemed a limitation, and the use of any such pronouns should be construed to include, where appropriate, the other pronouns. ARTICLE 2 THE SECURITIES Section 2.1. Form. The Securities of each series shall be substantially in such form or forms (not inconsistent with this Indenture) as shall be established by or pursuant to one or more Board Resolutions or in one or more indentures supplemental hereto, or in one or more Officer's Certificates pursuant to such Board Resolutions or supplemental indentures, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have imprinted or otherwise reproduced thereon such legend or legends or endorsements, not inconsistent with the provisions of this Indenture, as may be required to comply with any law, or with any rules of any securities exchange or usage, all as may be determined by the officers executing such Securities as evidenced by their execution of the Securities. Unless otherwise so established, Unregistered Securities shall have coupons attached. Section 2.2. Execution and Authentication. Two officers shall execute the Securities (other than coupons) for the Company by facsimile or manual signature in the name and on behalf of the Company. The seal of the Company, if any, shall be reproduced on the Securities. If an Officer whose signature is on a Security no longer holds that office at the time the Security is authenticated, the Security shall nevertheless be valid. The Trustee, at the expense of the Company, may appoint an authenticating agent (the "Authenticating Agent") to authenticate Securities other than coupons. The Authenticating 7 13 Agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such Authenticating Agent. A Security (other than coupons) shall not be valid until the Trustee or Authenticating Agent manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series having attached thereto appropriate coupons, if any. executed by the Company to the Trustee for authentication together with the applicable documents referred to below in this Section, and the Trustee shall thereupon authenticate and deliver such Securities to or upon the written order of the Company. In authenticating any Securities of a series, the Trustee shall be entitled to receive prior to the first authentication of any Securities of such series, and (subject to Article 7) shall be fully protected in relying upon, unless and until such documents have been superseded or revoked: (1) any Board Resolution and/or executed supplemental indenture referred to in Sections 2.1 and 2.3 by or pursuant to which the forms and terms of the Securities of that series were established; (2) any Officers' Certificate referred to in Sections 2.1 and 2.3 setting forth the form or forms and terms of the Securities, stating that the form or forms and terms of the Securities of such series have been, or will be when established in accordance with such procedures as shall be referred to therein, established in compliance with this Indenture; and (3) at the option of the Company, either an Opinion of Counsel, or a letter addressed to the Trustee permitting it to rely on an Opinion of Counsel, substantially to the effect that the Securities have been duly authorized and, if executed and authenticated in accordance with the provisions of the Indenture and delivered to and duly paid for by the purchasers thereof on the date of such opinion, would be entitled to the benefits of the Indenture and would be valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, receivership, moratorium and other similar laws affecting creditors' rights generally, general principles of equity, and such other matters as shall be specified therein. If the Company shall establish pursuant to Section 2.3 that the Securities of a series or a portion thereof are to be issued in the form of one or more Registered Global Securities, then the Company shall execute and the Trustee shall authenticate and deliver one or more Registered Global Securities that (i) shall represent and shall be denominated in an amount equal to the aggregate principal amount of all of the Securities of such series issued in such form and not yet canceled, (ii) shall be registered in the name of the Depositary for such Registered Global Security or Securities or the nominee of such Depositary, (iii) shall be delivered by the Trustee to such Depositary or its custodian or pursuant to such Depositary's instructions and (iv) shall bear a legend substantially to the following effect: "Unless and until it is exchanged in whole or in 8 14 part for Securities in definitive registered form, this Security may not be transferred except as a whole by the Depositary to the nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary." Section 2 3. Amount Unlimited; Issuable in Series. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series and each such series shall rank equally and pari passu with all other unsecured and unsubordinated debt of the Company. There shall be established in or pursuant to Board Resolution or one or more indentures supplemental hereto, or in an Officer's Certificate pursuant to such Board Resolution or such supplemental indenture, prior to the initial issuance of Securities of any series, subject to the last sentence of this Section 2.3, (1) the designation of the Securities of the series, which shall distinguish the Securities of the Series from the Securities of all other series; (2) any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture and any limitation on the ability of the Company to increase such aggregate principal amount after the initial issuance of the Securities of that series (except for securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, or upon redemption of, other Securities of the series pursuant hereto); (3) the date or dates on which the principal of the Securities of the series is payable (which date or dates may be fixed or extendible); (4) the rate or rates (which may be fixed or variable) per annum at which the Securities of the series shall bear interest, if any, the date or dates from which such interest shall accrue, on which such interest shall be payable and (in the case of Registered Securities) on which a record shall be taken for the determination of Holders to whom interest is payable and/or the method by which such rate or rates or date or dates shall be determined; (5) if other than as provided in Section 4.2, the place or places where the principal of and any interest on Securities of the series shall be payable, any Registered Securities of the series may be surrendered for conversion, exchange, notices, demands to or upon the Company in respect of the Securities of the series and this Indenture may be served and notice to Holders may be published; (6) the right, if any, of the Company to redeem Securities of the series, in whole or in part, at its option and the period or periods within which, the price or prices at which and any terms and conditions upon which Securities of the series may be so redeemed, pursuant to any sinking fund or otherwise; (7) the obligation, if any, of the Company to redeem, purchase or repay Securities of the series pursuant to any mandatory redemption, sinking fluid or analogous 9 15 provisions or at the option of a Holder thereof and the price or prices at which and the period or periods within which and any of the terms and conditions upon which Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation; (8) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of the series shall be issuable; (9) if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon acceleration of the maturity thereof; (10) if other than the coin or currency in which the Securities of the series are denominated, the coin or currency in which payment of the principal of or interest on the Securities of the series shall be payable or if the amount of payments of principal of and/or interest on the Securities of the series may be determined with reference to an index based on a coin or currency other than that in which the Securities of the series are denominated, the manner in which such amounts shall be determined; (11) if other than the currency of the United States of America, the currency or currencies, including composite currencies, in which payment of the Principal of and interest on the Securities of the series shall be payable, and the manner in which any such currencies shall be valued against other currencies in which any other Securities shall be payable; (12) whether the Securities of the series or any portion thereof will be issuable as Registered Securities (and if so, whether such Securities will be issuable as Registered Global Securities) or Unregistered Securities (with or without coupons), or any combination of the foregoing, any restrictions applicable to the offer, sale or delivery of Unregistered Securities or the payment of interest thereon and, if other than as provided herein, the terms upon which Unregistered Securities of any series may be exchanged for Registered Securities of such series and vice versa; (13) whether and under what circumstances the Company will pay additional amounts on the Securities of the series held by a person who is not a U.S. person in respect of any tax, assessment or governmental charge withheld or deducted and, if so, whether the Company will have the option to redeem such Securities rather than pay such additional amounts; (14) if the Securities of the series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and terms of such certificates, documents or conditions; (15) unless otherwise provided herein, any trustees, depositaries, authenticating or paying agents, transfer agents or the registrar or any other agents with respect to the Securities of the series; 10 16 (16) provisions, if any, for the defeasance of the Securities of the series (including provisions permitting defeasance of less than all Securities of the series), which provisions may be in addition to, in substitution for, or in modification of (or any combination of the foregoing) the provisions of Article 8; (17) if the Securities of the series are issuable in whole or in part as one or more Registered Global Securities, the identity of the Depositary for such Registered Global Security or Securities (which Depositary shall, at the time of its designation as Depositary and at all times while it serves as Depositary, be a clearing agency registered under the Exchange Act and any other applicable statute or regulation) if other than The Depository Trust Company, New York, New York; (18) if the Securities of the series are to be convertible into or exchangeable for any securities of any Person (including the Company), the terms and conditions upon which such Securities will be so convertible or exchangeable; (19) any other events of default or covenants with respect to the Securities of the series in addition to the Events of Default or covenants set forth herein; and (20) any other terms of the Securities of the series (which terms shall not be inconsistent with the provisions of this Indenture). All Securities of any one series and coupons, if any, appertaining thereto shall be substantially identical, except in the case of Registered Securities as to date and denomination, except in the case of any Periodic Offering and except as may otherwise be provided by or pursuant to the Board Resolution referred to above or as set forth in any such indenture supplemental hereto, or Officer's Certificate pursuant to such Board Resolution or such supplemental indenture. All Securities of any one series need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if so provided by or pursuant to such Board Resolution or in any such indenture supplemental hereto, or Officer's Certificate pursuant to such Board Resolution or such supplemental indenture, and any forms and terms of Securities to be issued from time to time may be completed and established from time to time prior to the issuance thereof by procedures described in such Board Resolution or supplemental indenture, or Officer's Certificate pursuant to such Board Resolution or such supplemental indenture. Section 2.4. Denomination And Date Of Securities; Payments Of Interest. The Securities of each series shall be issuable as Registered Securities or Unregistered Securities in denominations established as contemplated by Section 2.3 or, if not so established with respect to Securities of any series, in denominations of $1,000 and any integral multiple thereof. The Securities of each series shall be numbered, lettered or otherwise distinguished in such manner or in accordance with such plan as the Officers of the Company executing the same may determine, as evidenced by their execution thereof. Each Security shall be dated the date of its authentication. The Securities of each series shall bear interest, if any, from the date, and such interest and shall be payable on the dates, established as contemplated by Section 2.3. 11 17 The person in whose name any Registered Security of any series is registered at the close of business on any record date applicable to a particular series with respect to any interest payment date for such series shall be entitled to receive the interest, if any, payable on such interest payment date notwithstanding any transfer or exchange of such Registered Security subsequent to the record date and prior to such interest payment date, except if and to the extent the Company shall default in the payment of the interest due on such interest payment date for such series, in which case the provisions of Section 2.13 shall apply. The term "Record Date" as used with respect to an interest payment date (except a date for payment of defaulted interest) for the Securities of any series shall mean the date specified as such in the terms of the Registered Securities of such series established as contemplated by Section 2.3, or, if no such date is so established, the fifteenth day next preceding such interest payment date, whether or not such record date is a Business Day. Section 2.5. Registrar And Paying Agent; Agents Generally. The Company shall maintain an office or agency where Securities may be presented for registration, registration of transfer or for exchange (the "Registrar") and an office or agency where Securities may be presented for payment (the "Paying Agent"), which shall be in the Borough of Manhattan, The City of New York. The Company shall cause the Registrar to keep a register of the Registered Securities and of their registration, transfer and exchange (the "Security Register"). The Company may have one or more additional Paying Agents or transfer agents with respect to any series. The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture and the Trust Indenture Act that relate to such Agent. The Company shall give prompt written notice to the Trustee of the name and address of any Agent and any change in the name or address of an Agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such. The Company may remove any Agent upon written notice to such Agent and the Trustee; provided that no such removal shall become effective until (i) the acceptance of an appointment by a successor Agent to such Agent as evidenced by an appropriate agency agreement entered into by the Company and such successor Agent and delivered to the Trustee or (ii) notification to the Trustee that the Trustee shall serve as such Agent until the appointment of a successor Agent in accordance with clause (i) of this proviso. The Company or any affiliate of the Company may act as Paying Agent or Registrar; provided that neither the Company nor an affiliate of the Company shall act as Paying Agent in connection with the defeasance of the Securities or the discharge of this Indenture under Article 8. The Company initially appoints the Trustee as Registrar and Paying Agent. If, at any time, the Trustee is not the Registrar, the Registrar shall make available to the Trustee ten days prior to each interest payment date and at such other times as the Trustee may reasonably request the names and addresses of the Holders as they appear in the Security Register. Section 2.6 Paying Agent To Hold Money In Trust. Not later than 10:00 a.m. New York City time on each due date of any Principal or interest on any Securities, the Company shall deposit with the Paying Agent money in immediately available funds sufficient 12 18 to pay such Principal or interest. The Company shall require each Paying Agent other than the Trustee to agree in writing that such Paying Agent shall hold in trust for the benefit of the Holders of such Securities or the Trustee all money held by the Paying Agent for the payment of Principal of and interest on such Securities and shall promptly notify the Trustee of any default by the Company in making any such payment. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and account for any funds disbursed, and the Trustee may at any time during the continuance of any payment default, upon written request to a Paying Agent, require such Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed. Upon doing so, the Paying Agent shall have no further liability for the money so paid over to the Trustee. If the Company or any affiliate of the Company acts as Paying Agent, it will, on or before each due date of any Principal of or interest on any Securities, segregate and hold in a separate trust fund for the benefit of the Holders thereof a sum of money sufficient to pay such Principal or interest so becoming due until such sum of money shall be paid to such Holders or otherwise disposed of as provided in this Indenture, and will promptly notify the Trustee in writing of its action or failure to act as required by this Section. Section 2.7. Transfer And Exchange. Unregistered Securities (except for any temporary global Unregistered Securities) and coupons (except for coupons attached to an temporary global Unregistered Securities) shall be transferable by delivery. At the option of the Holder thereof, Registered Securities of any series (other than a Registered Global Security, except as set forth below) may be exchanged for a Registered Security or Registered Securities of such series and tenor having authorized denominations and an equal aggregate principal amount, upon surrender of such Registered Securities to be exchanged at the agency of the Company that shall be maintained for such purpose in accordance with Section 2.5 and upon payment, if the Company shall so require, of the charges hereinafter provided. If the Securities of any series are issued in both registered and unregistered form, except as otherwise established pursuant to Section 2.3, at the option of the Holder thereof, Unregistered Securities of any series may be exchanged for Registered Securities of such series and tenor having authorized denominations and an equal aggregate principal amount, upon surrender of such Unregistered Securities to be exchanged at the agency of the Company that shall be maintained for such purpose in accordance with Section 4.2, with, in the case of Unregistered Securities that have coupons attached, all unmatured coupons and all matured coupons in default thereto appertaining, and upon payment, if the Company shall so require, of the charges hereinafter provided. At the option of the Holder thereof, if Unregistered Securities of any series, maturity date, interest rate and original issue date are issued in more than one authorized denomination, except as otherwise established pursuant to Section 2.3, such Unregistered Securities may be exchanged for Unregistered Securities of such series and tenor having authorized denominations and an equal aggregate principal amount, upon surrender of such Unregistered Securities to be exchanged at the agency of the Company that shall be maintained for such purpose in accordance with Section 4.2, with, in the case of Unregistered Securities that have coupons attached, all unmatured coupons and all matured coupons in default thereto appertaining, and upon payment, if the Company shall so require, of the charges hereinafter provided. Registered Securities of any series may not be exchanged for Unregistered Securities of such series. Whenever any securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. 13 19 All Registered Securities presented for registration of transfer, exchange, redemption or payment shall be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder or his attorney duly authorized in writing. The Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of Securities. No service charge shall be made for any such transaction. Notwithstanding any other provision of this Section 2.7, unless and until it is exchanged in whole or in part for Securities in definitive registered form, a Registered Global Security representing all or a portion of the Securities of a series may not be transferred except as a whole by the Depositary for such series to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary for such series or a nominee of such successor Depositary. If at any time the Depositary for any Registered Global Securities of any series notifies the Company that it is unwilling or unable to continue as Depositary for such Registered Global Securities or if at any time the Depositary for such Registered Global Securities shall no longer be eligible under applicable law, the Company shall appoint a successor Depositary eligible under applicable law with respect to such Registered Global Securities. If a successor Depositary eligible under applicable law for such Registered Global Securities is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company will execute, and the Trustee, upon receipt of the Company's order for the authentication and delivery of definitive Registered Securities of such series and tenor, will authenticate and deliver Registered Securities of such series and tenor, in any authorized denominations, in an aggregate principal amount equal to the principal amount of such Registered Global Securities, in exchange for such Registered Global Securities. The Company may at any time and in its sole discretion determine that any Registered Global Securities of any series shall no longer be maintained in global form. In such event the Company will execute, and the Trustee, upon receipt of the Company's order for the authentication and delivery of definitive Registered Securities of such series and tenor, will authenticate and deliver, Registered Securities of such series and tenor in any authorized denominations, in an aggregate principal amount equal to the principal amount of such Registered Global Securities, in exchange for such Registered Global Securities. Any time the Registered Securities of any series are not in the form of Registered Global Securities pursuant to the preceding two paragraphs, the Company agrees to supply the Trustee with a reasonable supply of certificated Registered Securities without the legend required by Section 2.2 and the Trustee agrees to hold such Registered Securities in safekeeping until authenticated and delivered pursuant to the terms of this Indenture. If established by the Company pursuant to Section 2.3 with respect to any Registered Global Security, the Depositary for such Registered Global Security may surrender such Registered Global Security in exchange in whole or in part for Registered Securities of the 14 20 same series and tenor in definitive registered form on such terms as are acceptable to the Company and such Depositary. Thereupon, the Company shall execute, and the Trustee shall authenticate and deliver, without service charge, (i) to the Person specified by such Depositary new Registered Securities of the same series and tenor, of any authorized denominations as requested by such Person, in an aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Registered Global Security; and (ii) to such Depositary a new Registered Global Security in a denomination equal to the difference, if any, between the principal amount of the surrendered Registered Global Security and the aggregate principal amount of Registered Securities authenticated and delivered pursuant to clause (i) above. Registered Securities issued in exchange for a Registered Global Security pursuant to this Section 2.7 shall be registered in such names and in such authorized denominations as the Depositary for such Registered Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee or an agent of the Company or the Trustee. The Trustee or such agent shall deliver such Securities to or as directed by the Persons in whose names such Securities are so registered. All Securities issued upon any transfer or exchange of Securities shall be valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange. Notwithstanding anything herein or in the forms or terms of any Securities to the contrary, none of the Company, the Trustee or any agent of the Company or the Trustee shall be required to exchange any Unregistered Security for a Registered Security if such exchange would result in adverse Federal income tax consequences to the Company (such as, for example, the inability of the Company to deduct from its income, as computed for Federal income tax purposes, the interest payable on the Unregistered Securities) under then applicable United States Federal income tax laws. The Trustee and any such agent shall be entitled to rely on an Officers Certificate or an Opinion of Counsel in determining such result. Neither the Registrar nor the Company shall be required (i) to issue, authenticate, register the transfer of or exchange Securities of any series for a period of 15 days before a selection of such Securities to be redeemed or (ii) to register the transfer of or exchange any Security selected for redemption in whole or in part. Section 2.8. Replacement Securities. If a defaced or mutilated Security of any series is surrendered to the Trustee or if a Holder claims that its Security of any series has been lost, destroyed or wrongfully taken, the Company shall, subject to the further provisions of this Section 2.8, issue and the Trustee shall authenticate a replacement Security of such series and tenor and principal amount bearing a number not contemporaneously outstanding. The Company may charge such Holder for any tax or other governmental charge that may be imposed as a result of or in connection with replacing a Security and for its expenses and the expenses of the Trustee (including without limitation attorneys' fees and expenses) in replacing a Security. In 15 21 case any such mutilated, defaced, lost, destroyed or wrongfully taken Security has become or is about to become due and payable, the Company in its discretion may pay such Security instead of issuing a new Security in replacement thereof. If required by the Trustee or the Company, (i) an indemnity bond must be furnished that is sufficient in the judgment of both the Trustee and the Company to protect the Company, the Trustee and any Agent from any loss that any of them may suffer if a Security is replaced or paid as provided in this Section 2.8 and (ii) in the case of a lost, destroyed or wrongfully taken Security, evidence must be furnished to the satisfaction of both the Trustee and the Company of the loss, destruction or wrongful taking of such Security. Notwithstanding the foregoing, the Company and the Trustee shall have no obligation to replace or pay a Security pursuant to this Section 2.8 if either the Company or the Trustee has notice that such Security has been acquired by a bona fide purchaser. Every replacement Security is an additional obligation of the Company and shall be entitled to the benefits of this Indenture. To the extent permitted by law, the foregoing provisions of this Section are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or wrongfully taken Securities. Section 2.9. Outstanding Securities. Securities outstanding at any time are all Securities that have been authenticated and delivered by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section as not outstanding. If a Security is replaced pursuant to Section 2.8, it ceases to be outstanding unless and until the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a holder in due course. If the Paying Agent (other than the Company or an affiliate of the Company) holds on the maturity date or any redemption date or date for repurchase of the Securities money sufficient to pay Securities payable or to be redeemed or repurchased on that date, then on and after that date such Securities cease to be outstanding and interest on them shall cease to accrue. A Security does not cease to be outstanding because the Company or one of its affiliates holds such Security, provided, however, that, in determining whether the Holders of the requisite principal amount of the outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any affiliate of the Company shall be disregarded and deemed not to be outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities as to which a Responsible Officer of the Trustee has received written notice to be so owned shall be so disregarded. Any Securities so owned that are pledged by the Company, or by any affiliate of the Company, as security for loans or other obligations, otherwise than to another such affiliate of the Company, shall be deemed to be outstanding, if the pledgee is entitled pursuant to the terms of its pledge agreement and is free to exercise in its or his discretion the right to vote such securities, uncontrolled by the Company or by any such affiliate. 16 22 Section 2.10. Temporary Securities. Until definitive Securities of any series are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities of such series. Temporary Securities of any series shall be substantially in the form of definitive Securities of such series but may have insertions, substitutions, omissions and other variations determined to be appropriate by the Officers executing the temporary Securities, as evidenced by their execution of such temporary Securities. If temporary Securities of any series are issued, the Company will cause definitive Securities of such series to be prepared without unreasonable delay. After the preparation of definitive Securities of any series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series and tenor upon surrender of such temporary Securities at the office or agency of the Company designated for such purpose pursuant to Section 4.2, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of such series and tenor and authorized denominations. Until so exchanged, the temporary Securities of any series shall be entitled to the same benefits under this Indenture as definitive Securities of such series. Section 2.11 Cancellation. The Company at any time may deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold. The Registrar, any transfer agent and the Paying Agent shall forward to the Trustee any Securities surrendered to them for transfer, exchange or payment. The Trustee shall cancel and destroy all Securities surrendered for transfer, exchange, payment or cancellation and shall deliver a certificate of destruction to the Company. The Company may not issue new Securities to replace Securities it has paid in full or delivered to the Trustee for cancellation. Section 2.12. CUSIP Numbers. The Company in issuing the Securities may use "CUSIP" and "CINS" numbers (if then generally in use), and the Trustee shall use CUSIP numbers or CINS numbers, as the case may be, in notices of redemption or exchange as a convenience to Holders and no representation shall be made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or exchange. Section 2.13. Defaulted Interest. If the Company defaults in a payment of interest on the Securities, it shall pay, or shall deposit with the Paying Agent money in immediately available funds sufficient to pay, the defaulted interest plus (to the extent lawful) any interest payable on the defaulted interest (as may be specified in the terms thereof, established pursuant to Section 2.3) to the Persons who are Holders on a subsequent special record date, which shall mean the 15th day next preceding the date fixed by the Company for the payment of defaulted interest, whether or not such day is a Business Day. At least 15 days before such special record date, the Company shall mail to each Holder and to the Trustee a notice that states the special record date, the payment date and the amount of defaulted interest to be paid. Section 2.14. Series May Include Tranches. A series of Securities may include one or more tranches (each, a "tranche") of Securities, including Securities issued in a Periodic Offering. The Securities of different tranches may have one or more different terms, including 17 23 authentication dates and public offering prices, but all the Securities within each such tranche shall have identical terms, including authentication date and public offering price. Notwithstanding any other provision of this Indenture, with respect to Sections 2.2 (other than the fourth paragraph thereof) through 2.4, 2.7, 2.8, 2.10, 3.1 through 3.5, 4.2, 6.1 through 6.14, 8.1 through 8.5 and 9.2, if any series of Securities includes more than one tranche, all provisions of such sections applicable to any series of Securities shall be deemed equally applicable to each tranche of any series of Securities in the same manner as though originally designated a series unless otherwise provided with respect to such series or tranche pursuant to Section 2.3. In particular, and without limiting the scope of the next preceding sentence, any of the provisions of such sections which provide for or permit action to be taken with respect to a series of Securities shall also be deemed to provide for and permit such action to be taken instead only with respect to Securities of one or more tranches within that series (and such provisions shall be deemed satisfied thereby), even if no comparable action is taken with respect to Securities in the remaining tranches of that series. ARTICLE 3 REDEMPTION Section 3.1. Applicability Of Article. The provisions of this Article shall be applicable to the Securities of any series which are redeemable before their maturity or to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 2.3 for Securities of such series. Section 3.2. Notice Of Redemption; Partial Redemptions. Notice of redemption to the Holders of Registered Securities of any series to be redeemed as a whole or in part at the option of the Company shall be given by mailing notice of such redemption by first class mail postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption to such Holders of Registered Securities of such series at their last addresses as they shall appear upon the Securities Register. Notice of redemption to the Holders of Unregistered Securities of any series to be redeemed as a whole or in part who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act, shall be given by mailing notice of such redemption, by first class mail, postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption, to such Holders at such addresses as were so furnished to the Trustee (and, in the case of any such notice given by the Company, the Trustee shall make such information available to the Company for such purpose). Notice of redemption to all other Holders of Unregistered Securities of any series to be redeemed as a whole or in part shall be published in an Authorized Newspaper in The City of New York or with respect to any Security the interest on which is based on the offered quotations in the interbank Eurodollar market for dollar deposits in an Authorized Newspaper in London, in each case, once in each of three successive calendar weeks, the first publication to be not less than 30 days nor more than 60 days prior to the date fixed for redemption. Any notice which is mailed or published in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. Failure to give notice by mail, or any defect in the notice to the Holder of any Security of a series designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security of such series. 18 24 The notice of redemption to each such Holder shall specify (i) the principal amount of each Security of such series held by such Holder to be redeemed, (ii) the CUSIP numbers of the Securities to be redeemed, (iii) the date fixed for redemption, (iv) the redemption price, (v) the place or places of payment, (vi) that payment will be made upon presentation and surrender of such Securities and, in the case of Securities with coupons attached thereto, of all coupons appertaining thereto maturing after the date fixed for redemption, (vii) that such redemption is pursuant to the mandatory or optional sinking fund, or both, if such be the case, (viii) that interest accrued to the date fixed for redemption will be paid as specified in such notice and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue. In case any Security of a series is to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Security, a new Security or Securities of such series and tenor in principal amount equal to the unredeemed portion thereof will be issued. The notice of redemption of Securities of any series to be redeemed at the option of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. Not later than 10:00 a.m. New York City time on the redemption date specified in the notice of redemption given as provided in this Section, the Company will deposit with the Trustee or with one or more Paying Agents (or, if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust as provided in Section 2.6) an amount of money in immediately available funds sufficient to redeem on the redemption date all the Securities of such series so called for redemption at the appropriate redemption price, together with accrued interest to the date fixed for redemption. If less than all the outstanding Securities of a series are to be redeemed, the Company will deliver to the Trustee at least 15 days prior to the last date on which notice of redemption may be given to Holders pursuant to the first paragraph of this Section 3.2 (or such shorter period as shall be acceptable to the Trustee) an Officers' Certificate (which need not contain the statements required by Section 11.4) stating the aggregate principal amount of such Securities to be redeemed. In case of a redemption at the election of the Company prior to the expiration of any restriction on such redemption, the Company shall deliver to the Trustee, prior to the giving of any notice of redemption to Holders pursuant to this Section, an Officers' Certificate stating that such redemption is not prohibited by such restriction. If less than all the Securities of a series are to be redeemed, the Trustee shall select, pro rata, by lot or in such manner as it shall deem appropriate and fair, Securities of such series to be redeemed in whole or in part. Securities may be redeemed in part in multiples equal to the minimum authorized denomination for Securities of such series or any multiple thereof. The Trustee shall promptly notify the Company in writing of the Securities of such series selected for redemption and, in the case of any Securities of such series selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. 19 25 Section 3.3. Payment of Securities Called For Redemption. If notice of redemption has been given as above provided, the Securities or portions of Securities specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption, and on and after such date (unless the Company shall default in the payment of such Securities at the redemption price, together with interest accrued to such date) interest on the Securities or portions of Securities so called for redemption shall cease to accrue, and the unmatured coupons, if any, appertaining thereto shall be void and, except as provided in Sections 7.11 and 8.4, such Securities shall cease from and after the date fixed for redemption to be entitled to any benefit under this Indenture, and the Holders thereof shall have no right in respect of such Securities except the right to receive the redemption price thereof and unpaid interest to the date fixed for redemption. On presentation and surrender of such Securities at a place of payment specified in said notice, together with all coupons, if any, appertaining thereto maturing after the date fixed for redemption, said Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption; provided that payment of interest becoming due on or prior to the date fixed for redemption shall be payable in the case of Securities with coupons attached thereto, to the Holders of the coupons for such interest upon surrender thereof, and in the case of Registered Securities, to the Holders of such Registered Securities registered as such on the relevant record date subject to the terms and provisions of Sections 2.4 and 2.13 hereof. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate of interest or Yield to Maturity (in the case of an Original Issue Discount Security) borne by such Security. If any Security with coupons attached thereto is surrendered for redemption and is not accompanied by all appurtenant coupons maturing after the date fixed for redemption, the surrender of such missing coupon or coupons may be waived by the Company and the Trustee, if there be furnished to each of them such security or indemnity as they may require to save each of them harmless. Upon presentation of any Security of any series redeemed in part only, the Company shall execute and the Trustee shall authenticate and deliver to or on the order of the Holder thereof, at the expense of the Company, a new Security or Securities of such series and tenor (with any unmatured coupons attached), of authorized denominations, in principal amount equal to the unredeemed portion of the Security so presented. Section 3.4. Exclusion Of Certain Securities From Eligibility For Selection For Redemption. Securities shall be excluded from eligibility for selection for redemption if they are identified by registration and certificate number in a written statement signed by an authorized officer of the Company and delivered to the Trustee at least 40 days prior to the last date on which notice of redemption may be given as being owned of record and beneficially by, not pledged or hypothecated by either (a) the Company or (b) an entity specifically identified in such written statement as directly or indirectly controlling or controlled by or under direct or indirect common control with the Company. 20 26 Section 3.5 Mandatory And Optional Sinking Funds. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment," and any payment in excess of such minimum amount provided for by the terms of the Securities of any series is herein referred to as an "optional sinking fund payment." The date on which a sinking fund payment is to be made is herein referred to as the "sinking fund payment date." In lieu of making all or any part of any mandatory sinking fund payment with respect to any series of Securities in cash, the Company may at its option (a) deliver to the Trustee Securities of such series theretofore purchased or otherwise acquired (except through a mandatory sinking fund payment) by the Company or receive credit for Securities of such series (not previously so credited) theretofore purchased or otherwise acquired (except as aforesaid) by the Company and delivered to the Trustee for cancellation pursuant to Section 2.11, (b) receive credit for optional sinking fund payments (not previously so credited) made pursuant to this Section, or (c) receive credit for Securities of such series (not previously so credited) redeemed by the Company through any optional sinking fund payment. Securities so delivered or credited shall be received or credited by the Trustee at the sinking fund redemption price specified in such Securities. On or before the sixtieth day next preceding each sinking fund payment date for any series, or such shorter period as shall be acceptable to the Trustee, the Company will deliver to the Trustee an Officers' Certificate (a) specifying the portion of the mandatory sinking fund payment to be satisfied by payment of cash and the portion to be satisfied by credit of specified Securities of such series and the basis for such credit, (b) stating that none of the specified Securities of such series has theretofore been so credited, (c) stating that no defaults in the payment of interest or Events of Default with respect to such series have occurred (which have not been waived or cured) and are continuing and (d) stating whether or not the Company intends to exercise its right to make an optional sinking fund payment with respect to such series and, if so, specifying the amount of such optional sinking fund payment that the Company intends to pay on or before the next succeeding sinking fund payment date. Any Securities of such series to be credited and required to be delivered to the Trustee in order for the Company to be entitled to credit therefor as aforesaid which have not theretofore been delivered to the Trustee shall be delivered for cancellation pursuant to Section 2.11 to the Trustee with such Officers' Certificate (or reasonably promptly thereafter if acceptable to the Trustee). Such Officers' Certificate shall be irrevocable and upon its receipt by the Trustee the Company shall become unconditionally obligated to make all the cash payments or delivery of securities therein referred to, if any, on or before the next succeeding sinking fund payment date. Failure of the Company, on or before any such sixtieth day, to deliver such Officer's Certificate and Securities specified in this paragraph, if any, shall not constitute a Default but shall constitute, on and as of such date, the irrevocable election of the Company (i) that the mandatory sinking fund payment for such series due on the next succeeding sinking fund payment date shall be paid entirely in cash without the option to deliver or credit Securities of such series in respect thereof and (ii) that the Company will make no optional sinking fund payment with respect to such series as provided in this Section. If the sinking fund payment or payments (mandatory or optional or both) to be made in cash on the next succeeding sinking fund payment date plus any unused balance of any preceding sinking fund payments made in cash shall exceed $50,000 (or a lesser sum if the 21 27 Company shall so request with respect to the Securities of any series), such cash shall be applied on the next succeeding sinking fund payment date to the redemption of Securities of such series at the sinking fund redemption price thereof together with accrued interest thereon to the date fixed for redemption. If such amount shall be $50,000 (or such lesser sum) or less and the Company makes no such request then it shall be carried over until a sum in excess of $50,000 (or such lesser sum) is available. The Trustee shall select, in the manner provided in Section 3.2, for redemption on such sinking fund payment date a sufficient principal amount of Securities of such series to absorb said cash, as nearly as may be, and shall inform the Company of the serial numbers of the Securities of such series (or portions thereof) so selected. Securities shall be excluded from eligibility for redemption under this Section if they are identified by registration and certificate number in an Officers' Certificate delivered to the Trustee at least 60 days prior to the sinking fund payment date as being owned of record and beneficially by, and not pledged or hypothecated by either (a) the Company or (b) an entity specifically identified in such Officers' Certificate as directly or indirectly controlling or controlled by or under direct or indirect common control with the Company. The Trustee, in the name and at the expense of the Company (or the Company, if it shall so request the Trustee in writing) shall cause notice of redemption of the Securities of such series to be given in substantially the manner provided in Section 3.2 (and with the effect provided in Section 3.3) for the redemption of Securities of such series in part at the option of the Company. The amount of any sinking fund payments not so applied or allocated to the redemption of Securities of such series shall be added to the next cash sinking fund payment for such series and, together with such payment, shall be applied in accordance with the provisions of this Section. Any and all sinking fund moneys held on the stated maturity date of the Securities of any particular series (or earlier, if such maturity is accelerated), which are not held for the payment or redemption of particular Securities of such series shall be applied, together with other moneys, if necessary, sufficient for the purpose, to the payment of the Principal of, and interest on, the Securities of such series at maturity. Not later than 10:00 a.m. New York City time on each sinking fund payment date, the Company shall pay to the Trustee in cash or shall otherwise provide for the payment of all interest accrued to the date fixed for redemption on Securities to be redeemed on the next following sinking fund payment date. The Trustee shall not redeem or cause to be redeemed any Securities of a series with sinking fund moneys or mail any notice of redemption of Securities of such series by operation of the sinking fund during the continuance of a Default in payment of interest on such Securities or of any Event of Default except that, where the mailing of notice of redemption of any Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities, provided that it shall have received from the Company a sum sufficient for such redemption. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such Default or Event of Default shall occur, and any moneys thereafter paid into the sinking fund, shall, during the continuance of such Default or Event of Default, be deemed to have been collected under Article 6 and held for the payment of all such Securities. In case such Event of Default shall have been waived as provided in Section 6.4 or the Default cured on or before the sixtieth day preceding the sinking fund payment date in any year, such moneys shall thereafter be applied on the next succeeding sinking fund payment date in accordance with this Section to the redemption of such Securities. 22 28 ARTICLE 4 COVENANTS Section 4.1. Payment Of Securities. The Company shall pay the Principal of and interest on the Securities on the dates and in the manner provided in the Securities and this Indenture. The interest on Securities with coupons attached (together with any additional amounts payable pursuant to the terms of such Securities) shall be payable only upon presentation and surrender of the several coupons for such interest installments as are evidenced thereby as they severally mature. The interest on any temporary Unregistered Securities (together with any additional amounts payable pursuant to the terms of such Securities) shall be paid, as to the installments of interest evidenced by coupons attached thereto, if any, only upon presentation and surrender thereof, and, as to the other installments of interest, if any, only upon presentation of such Unregistered Securities for notation thereon of the payment of such interest. The interest on Registered Securities (together with any additional amounts payable pursuant to the terms of such Securities) shall be payable only to the Holders thereof and at the option of the Company may be paid by mailing checks for such interest payable to or upon the written order of such Holders at their last addresses as they appear on the Security Register of the Company. Notwithstanding any provisions of this Indenture and the Securities of any series to the contrary, if the Company and a Holder of any Registered Security so agree, payments of interest on, and any portion of the Principal of, such Holder's Registered Security (other than interest payable at maturity or on any redemption or repayment date or the final payment of Principal on such Security) shall be made by the Paying Agent, upon receipt from the Company of immediately available funds by 11:00 A.M., New York City time (or such other time as may be agreed to between the Company and the Paying Agent), directly to the Holder of such Security (by Federal funds wire transfer or otherwise) if the Holder has delivered written instructions to the Trustee 15 days prior to such payment date requesting that such payment will be so made and designating the bank account to which such payments shall be so made and in the case of payments of Principal surrenders the same to the Trustee in exchange for a Security or Securities aggregating the same principal amount as the unredeemed principal amount of the Securities surrendered. The Trustee shall be entitled to rely on the last instruction delivered by the Holder pursuant to this Section 4.1 unless a new instruction is delivered 15 days prior to a payment date. The Company will indemnify and hold each of the Trustee and any Paying Agent harmless against any loss, liability or expense (including attorneys' fees) resulting from any act or omission to act on the part of the Company or any such Holder in connection with any such agreement or from making any payment in accordance with any such agreement. The Company shall pay interest on overdue Principal, and interest on overdue installments of interest, to the extent lawful, at the rate per annum specified in the Securities. Section 4.2. Maintenance Of Office Or Agency. The Company will maintain in the Borough of Manhattan, The City of New York, an office or agency where Securities may be surrendered for registration of transfer or exchange or for presentation for payment and where notices and demands to or upon the Company in respect of the Securities and this Indenture may 23 29 be served. The Company hereby initially designates the Corporate Trust Office of the Trustee, located in the Borough of Manhattan, The City of New York, as such office or agency of the Company. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 11.2. The Company will maintain one or more agencies in a city or cities located outside the United States (including any city in which such an agency is required to be maintained under the rules of any stock exchange on which the Securities of any series are listed) where the Unregistered Securities, if any, of each series and coupons, if any, appertaining thereto may be presented for payment. No payment on any Unregistered Security or coupon will be made upon presentation of such Unregistered Security or coupon at an agency of the Company within the United States nor will any payment be made by transfer to an account in, or by mail to an address in, the United States unless, pursuant to applicable United States laws and regulations then in effect, such payment can be made without adverse tax consequences to the Company. Notwithstanding the foregoing. if full payment in United States Dollars ("Dollars") at each agency maintained by the Company outside the United States for payment on such Unregistered Securities or coupons appertaining thereto is illegal or effectively precluded by exchange controls or other similar restrictions, payments in Dollars of Unregistered Securities of any series and coupons appertaining thereto which are payable in Dollars may be made at an agency of the Company maintained in the Borough of Manhattan, The City of New York. The Company may also from time to time designate one or more other offices or agencies where the Securities of any series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. Section 4.3. Certificate To Trustee. The Company will furnish to the Trustee annually, on or before a date not more than four months after the end of its fiscal year (which, on the date hereof, is a calendar year), a brief certificate (which need not contain the statements required by Section 11.4) from its principal executive, financial or accounting officer as to his or her knowledge of the compliance of the Company with all conditions and covenants under this Indenture (such compliance to be determined without regard to any period of grace or requirement of notice provided under this Indenture) which certificate shall comply with the requirements of the Trust Indenture Act. Section 4.4. Reports By The Company. The Company covenants to file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents, and other reports which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act. 24 30 ARTICLE 5 SUCCESSOR CORPORATION Section 5.1. When Companies May Merge, Etc. The Company shall not consolidate with, merge with or into, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its property and assets (in one transaction or a series of related transactions) to, any Person (other than a consolidation with or merger with or into a Subsidiary or a sale, conveyance, transfer, lease or other disposition to a Subsidiary) or permit any Person to merge with or into the Company unless: (a) either (i) the Company shall be the continuing Person or (ii) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or that acquired or leased such property and assets of the Company shall be a corporation organized and validly existing under the laws of the United States of America or any jurisdiction thereof and shall expressly assume, by a supplemental indenture, executed and delivered to the Trustee, all of the obligations of the Company on all of the Securities and under this Indenture and the Company shall have delivered to the Trustee an Opinion of Counsel stating that such consolidation, merger or transfer and such supplemental indenture complies with this provision and that all conditions precedent provided for herein relating to such transaction have been complied with and that such supplemental indenture constitutes the legal, valid and binding obligation of the Company or such successor enforceable against such entity in accordance with its terms, subject to customary exceptions; and (b) an Officers' Certificate to the effect that immediately after giving effect to such transaction, no Default shall have occurred and be continuing and an Opinion of Counsel as to the matters set forth in Section 5.1(a) shall have been delivered to the Trustee Section 5.2. Successor Substituted. Upon any consolidation or merger, or any sale, conveyance, transfer, lease or other disposition of all or substantially all of the property and assets of the Company in accordance with Section 5.1, the successor Person formed by such consolidation or into which the Company is merged or to which such sale, conveyance, transfer, lease or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein. In the event of any such sale, conveyance, transfer or other disposition (other than by way of lease) the Company or any successor Person that shall heretofore have become such in the manner described in this Article shall be discharged from all obligations and covenants under this Indenture and the Securities and may be liquidated and dissolved. 25 31 ARTICLE 6 DEFAULT AND REMEDIES Section 6.1. Events Of Default. An "Event of Default" shall occur with respect to the Securities of any series if: (a) the Company defaults in the payment of the Principal of any Security of such series when the same becomes due and payable at maturity, upon acceleration, redemption or mandatory repurchase, including as a sinking fund installment, or otherwise, whether or not payment thereof shall be prevented by Article 10; (b) the Company defaults in the payment of interest on any Security of such series when the same becomes due and payable, and such default continues for a period of 30 days, whether or not payment thereof shall be prevented by Article 10; (c) the Company defaults in the performance of or breaches any other covenant or agreement of the Company in this Indenture with respect to any Security of such series or in the Securities of such series and such default or breach continues for a period of 60 consecutive days after written notice to the Company by the Trustee or to the Company and the Trustee by the Holders of 25% or more in aggregate principal amount of the Securities of all series affected thereby; (d) an involuntary case or other proceeding shall be commenced against the Company or any Restricted Subsidiary with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Company or any Restricted Subsidiary under the federal bankruptcy laws as now or hereafter in effect; (e) the Company or any Restricted Subsidiary (A) commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, (B) consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or any Restricted Subsidiary or for all or substantially all of the property and assets of the Company or any Restricted Subsidiary or (C) effects any general assignment for the benefit of creditors; or (f) any other Event of Default established pursuant to Section 2.3 with respect to the Securities of such series occurs. Section 6.2. Acceleration. If an Event of Default described in clauses (a) or (b) of Section 6.1 with respect to the Securities of any series then outstanding occurs and is continuing, 26 32 then, and in each and every such case, except for any series of Securities the principal of which shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Securities of any such affected series then outstanding hereunder (each such series treated as a separate class) by notice in writing to the Company (and to the Trustee if given by Securityholders), may declare the entire principal (or, if the Securities of any such series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series established pursuant to Section 2.3) of all Securities of such affected series, and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable. (b) If an Event of Default described in clauses (c) or (f) of Section 6.1 with respect to the Securities of one or more but not all series then outstanding, or with respect to the Securities of all series then outstanding, occurs and is continuing, then, and in each and every such case, except for any series of Securities the principal of which shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount (or, if the Securities of any such series are Original Issue Discount Securities, the amount thereof accelerable under this Section) of the Securities of all such affected series then outstanding hereunder (treated as a single class) by notice in writing to the Company (and to the Trustee if given by Securityholders), may declare the entire principal (or, if the Securities of any such series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series established pursuant to Section 2.3) of all Securities of all such affected series, and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable. (c) If an Event of Default described in clause (d) or (e) of Section 6.1 occurs and is continuing, then the principal amount (or, if any Securities are Original issue Discount Securities, such portion of the principal as may be specified in the terms thereof established pursuant to Section 2.3) of all the Securities then outstanding and interest accrued thereon, if any, shall be and become immediately due and payable, without any notice or other action by any Holder or the Trustee, to the full extent permitted by applicable law. The foregoing provisions, however, are subject to the condition that if, at any time after the principal (or, if the Securities are Original Issue Discount Securities, such portion of the principal as may be specified in the terms thereof established pursuant to Section 2.3) of the Securities of any series (or of all the Securities, as the case may be) shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Securities of each such series (or of all the Securities, as the case may be) and the principal of any and all Securities of each such series (or of all the Securities, as the case may be) which shall have become due otherwise than by acceleration (with interest upon such principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest, at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of each such series to the date of such payment or deposit) and such amount as shall be sufficient to cover all amounts owing the Trustee under Section 7.7, and if any and all Events of Default under the Indenture, other than 27 33 the non-payment of the principal of Securities that shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein, then, and in each and every such case, the Holders of a majority in aggregate principal amount of all the then outstanding Securities of all such series that have been accelerated (voting as a single class), by written notice to the Company and to the Trustee, may waive all defaults with respect to all such series (or with respect to all the Securities, as the case may be) and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon. For all purposes under this Indenture, if a portion of the principal of any Original Issue Discount Securities shall have been accelerated and declared due and payable pursuant to the provisions hereof, then, from and after such declaration, unless such declaration has been rescinded and annulled, the principal amount of such Original Issue Discount Securities shall be deemed, for all purposes hereunder, to be such portion of the principal thereof as shall be due and payable as a result of such acceleration, and payment of such portion of the principal thereof as shall be due and payable as a result of such acceleration, together with interest, if any, thereon and all other amounts owing thereunder, shall constitute payment in full of such Original Issue Discount Securities. Section 6.3. Other Remedies. If a payment default or an Event of Default with respect to the Securities of any series occurs and is continuing, the Trustee may pursue, in its own name or as trustee of an express trust, any available remedy by proceeding at law or in equity to collect the payment of principal of and interest on the Securities of such series or to enforce the performance of any provision of the Securities of such series or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. Section 6.4. Waiver Of Past Defaults. Subject to Sections 6.2, 6.7 and 9.2, the Holders of at least a majority in principal amount (or, if the Securities are Original Issue Discount Securities, such portion of the principal as is then accelerable under Section 6.2) of the outstanding Securities of all series affected (voting as a single class), by notice to the Trustee, may waive, on behalf of the Holders of all the Securities of such series, an existing Default or Event of Default with respect to the Securities of such series and its consequences, except a Default in the payment of Principal of or interest on any Security as specified in clause (a) or (b) of Section 6.1 or in respect of a covenant or provision of this Indenture which cannot be modified or amended without the consent of the Holder of each outstanding Security affected. Upon any such waiver, such Default shall cease to exist, and any Event of Default with respect to the Securities of such series arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto. Section 6.5. Control By Majority. Subject to Sections 7.1 and 7.2(v), the Holders of at least a majority in aggregate principal amount (or, if any Securities are Original Issue Discount Securities, such portion of the principal as is then accelerable under Section 6.2) of the outstanding Securities of all series affected (voting as a single class) may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising 28 34 any trust or power conferred on the Trustee with respect to the Securities of such series by this Indenture; provided that the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that may involve the Trustee in personal liability or that the Trustee determines in good faith may be unduly prejudicial to the rights of Holders not joining in the giving of such direction; and provided further that the Trustee may take any other action it deems proper that is not inconsistent with any directions received from Holders of Securities pursuant to this Section 6.5. Section 6.6. Limitation On Suits. No Holder of any Security of any series may institute any proceeding, judicial or otherwise, with respect to this Indenture or the Securities of such series, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (a) such Holder has previously given to the Trustee written notice of a continuing Event of Default with respect to the Securities of such series; (b) the Holders of at least 25% in aggregate principal amount of outstanding Securities of all such series affected shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (c) such Holder or Holders have offered to the Trustee indemnity reasonably satisfactory to the Trustee against any costs, liabilities or expenses to be incurred in compliance with such request; (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (e) during such 60 day period, the Holders of a majority in aggregate principal amount of the outstanding Securities of all such affected series have nor given the Trustee a direction that is inconsistent with such written request. A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over such other Holder. Section 6.7. Rights Of Holders To Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Security to receive payment of Principal of or interest, if any, on such Holder's Security on or after the respective due dates expressed on such Security, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. Section 6.8. Collection Suit By Trustee. If an Event of Default with respect to the Securities of any series in payment of Principal or interest specified in clause (a) or (b) of Section 6.1 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount (or such portion thereof as specified in the terms established pursuant to Section 2.3 of Original Issue Discount Securities) of Principal of, and accrued interest remaining unpaid on, together with interest on overdue Principal of, and, to the extent that payment of such interest is lawful, interest on overdue 29 35 installments of interest on, the Securities of such series, in each case at the rate or Yield to Maturity (in the case of Original Issue Discount Securities) specified in such Securities, and such further amount as shall be sufficient to cover all amounts owing the Trustee under Section 7.7. Section 6.9 Trustee May File Proofs Of Claim. In the case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for amounts due the Trustee under Section 7.7) and the Holders allowed in any judicial proceedings relative to the Company (or any other obligor on the Securities), its creditors or its property and shall be entitled and empowered to collect and receive any moneys, securities or other property payable or deliverable upon conversion or exchange of the Securities or upon any such claims and to distribute the same, and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it under Section 7.7. Nothing herein contained shall be deemed to empower the Trustee to authorize or consent to, or accept or adopt on behalf of any Holder, any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 6.10. Application Of Proceeds. Any moneys collected by the Trustee pursuant to this Article in respect of the Securities of any series shall be applied in the following order at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of Principal or interest, upon presentation of the several Securities and coupons appertaining to such Securities in respect of which moneys have been collected and noting thereon the payment, or issuing Securities of such series and tenor in reduced principal amounts in exchange for the presented Securities of such series and tenor if only partially paid, or upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 7.7 applicable to the Securities of such series in respect of which moneys have been collected; SECOND: In case the principal of the Securities of such series in respect of which moneys have been collected shall not have become and be then due and payable, to the payment of interest on the Securities of such series in default in the order of the maturity of the installments of such interest, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in such Securities, such payments to be made ratably to the persons entitled thereto, without discrimination or preference; THIRD: In case the principal of the Securities of such series in respect of which moneys have been collected shall have become and shall be then due and payable, to the 30 36 payment of the whole amount then owing and unpaid upon all the Securities of such series for Principal and interest, with interest upon the overdue Principal, and (to the extent that such interest has been collected by the Trustee) upon overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original issue Discount Securities) specified in the Securities of such series; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Securities of such series, then to the payment of such Principal and interest or Yield to Maturity, without preference or priority of Principal over interest or Yield to Maturity, or of interest or Yield to Maturity over Principal, or of any installment of interest over any other installment of interest, or of any Security of such series over any other Security of such series, ratably to the aggregate of such Principal and accrued and unpaid interest or Yield to Maturity; and FOURTH: To the payment of the remainder, if any, to the Company or any other person lawfully entitled thereto. Section 6.11. Restoration Of Rights And Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then, and in each and every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored to their former positions hereunder and thereafter all rights and remedies of the Company, Trustee and the Holders shall continue as though no such proceeding had been instituted. Section 6.12. Undertaking For Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, in either case in respect to the Securities of any series, a court may require any party litigant in such suit (other than the Trustee) to file an undertaking to pay the costs of the suit, and the court may assess reasonable costs, including reasonable attorneys' fees, against any party litigant (other than the Trustee) in the suit having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.12 does not apply to a suit by a Holder pursuant to Section 6.7 or a suit by Holders of more than 10% in aggregate principal amount of the outstanding Securities of such series. Section 6.13. Rights And Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or wrongfully taken Securities in Section 2.8, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 6.14. Delay Or Omission Not Waiver. No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article 6 or by law to the Trustee or 31 37 to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. ARTICLE 7 TRUSTEE Section 7.1. General. The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act and as set forth herein. Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, unless it receives indemnity satisfactory to it against any loss, liability or expense. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Article 7. Section 7.2. Certain Rights Of Trustee. Subject to Trust Indenture Act Sections 315(a) through (d): (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, Officers' Certificate, Opinion of Counsel (or both), statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper person or persons. The Trustee need not investigate any fact or matter stated in the document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit; (b) before the Trustee acts or refrains from acting, it may require an Officers, Certificate and/or an Opinion of Counsel, which shall conform to Section 10.4. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion. Subject to Sections 7.1 and 7.2, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee, and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof; (c) the Trustee may act through its attorneys and agents not regularly in its employ and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care by it hereunder; 32 38 (d) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officers' Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any Board Resolution may be evidenced to the Trustee by a copy thereof certified by the Secretary or an Assistant Secretary of the Company; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within its rights or powers or for any action it takes or omits to take in accordance with the direction of the Holders in accordance with Section 6.5 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture; (g) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; and (h) prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all Events of Default, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, Officers' Certificate, Opinion of Counsel, Board Resolution, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine, during normal business hours and upon prior written notice, books, records and premises of the Company, personally or by agent or attorney. Section 7.3. Individual Rights Of Trustee. The Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company or its affiliates with the same rights it would have if it were not the Trustee. Any Agent may do the same with like rights. However, the Trustee is subject to Trust Indenture Act Sections 310(b) and 311. For purposes of Trust Indenture Act Section 311(b)(4) and (6), the following terms shall mean: (a) "Cash Transaction" means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; and 33 39 (b) "Self-Liquidating Paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and that is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation. Section 7.4. Trustee's Disclaimer. The recitals contained herein and in the Securities (except the Trustee's certificate of authentication) shall be taken as statements of the Company and not of the Trustee and the Trustee assumes no responsibility for the correctness of the same. Neither the Trustee nor any of its agents (i) makes any representation as to the validity or adequacy of this Indenture or the Securities and (ii) shall be accountable for the Company's use or application of the proceeds from the Securities. Section 7.5. Notice Of Default. If any Default with respect to the Securities of any series occurs and is continuing and if such Default is known to the actual knowledge of a Responsible Officer with the Corporate Trust Department of the Trustee, the Trustee shall give to each Holder of Securities of such series notice of such Default within 90 days after it occurs (i) if any Unregistered Securities of such series are then outstanding, to the Holders thereof, by publication at least once in an Authorized Newspaper in the Borough of Manhattan, The City of New York and at least once in an Authorized Newspaper in London and (ii) to all Holders of Securities of such series in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, unless such Default shall have been cured or waived before the mailing or publication of such notice; provided, however, that, except in the case of a Default in the payment of the Principal of or interest on any Security, the Trustee shall be protected in withholding such notice if the Trustee in good faith determines that the withholding of such notice is in the interests of the Holders. Section 7.6. Reports By Trustee To Holders. Within 60 days after each May 15, beginning with May 15, 20[ ], the Trustee shall mail to each Holder as and to the extent provided in Trust Indenture Act Section 313(c) a brief report dated as of such May 15, if required by Trust Indenture Act Section 313(a). Section 7.7. Compensation And Indemnity. The Company shall pay to the Trustee such compensation as shall be agreed upon in writing from time to time for its services. The compensation of the Trustee shall not be limited by any law on compensation of a Trustee of an express trust. The Company agrees to pay or reimburse the Trustee and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture and the Securities or the issuance of the Securities or any series thereof (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ) except to the extent any such expense, disbursement or advance may arise from its negligence or bad faith. The Company shall indemnify the Trustee and each predecessor Trustee for, and to hold it harmless against, any loss, liability or expense arising out of or in connection 34 40 with the acceptance or administration of this Indenture and the Securities or the issuance of the Securities or any series thereof or the trusts hereunder and the performance of its duties hereunder, including the costs and expenses of defending itself against or investigating any claim of liability in the premises, except to the extent such loss, liability or expense is due to the negligence or bad faith of the Trustee or such predecessor Trustee. The Trustee shall notify the Company promptly of any claim asserted against the Trustee for which it may seek indemnity. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel; provided that the Company will not be required to pay such fees and expenses if it assumes the Trustee's defense and there is no conflict of interest between the Company and the Trustee in connection with such defense. The Company need not pay for any settlement made without its written consent. The Company need not reimburse any expense or indemnify against any loss or liability to the extent incurred by the Trustee through its negligence, bad faith or willful misconduct. To secure the Company's payment obligations in this Section 7.7, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, in its capacity as Trustee, except money or property held in trust to pay Principal of, and interest on particular Securities. The obligations of the Company under this Section to compensate and indemnify the Trustee and each predecessor Trustee and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture or the rejection or termination of this Indenture under bankruptcy law. Such additional indebtedness shall be a senior claim to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Securities or coupons, and the Securities are hereby subordinated to such senior claim. If the Trustee renders services and incurs expenses following an Event of Default under Section 6.1(d) or Section 6.1(e), the parties hereto and the Holders by their acceptance of the Securities hereby agree that such expenses are intended to constitute expenses of administration under any bankruptcy law. Section 7.8. Replacement Of Trustee. A resignation or removal of the Trustee as Trustee with respect to the Securities of any series and appointment of a successor Trustee as Trustee with respect to the Securities of any series shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 7.8. The Trustee may resign as Trustee with respect to the Securities of any series at any time by so notifying the Company in writing. The Holders of a majority in aggregate principal amount of the outstanding Securities of any series may remove the Trustee as Trustee with respect to the Securities of such series by so notifying the Trustee and the Company in writing and may appoint a successor Trustee with respect thereto with the consent of the Company. The Company may remove the Trustee as Trustee with respect to the Securities of any series if: (a) the Trustee is no longer eligible under Section 7.10 of this Indenture; (b) the Trustee is adjudged a bankrupt or insolvent; (c) a receiver or other public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. 35 41 If the Trustee resigns or is removed as Trustee with respect to the Securities of any series, or if a vacancy exists in the office of Trustee with respect to the Securities of any series for any reason, the Company shall promptly appoint a successor Trustee with respect thereto. Within one year after the successor Trustee takes office, the Holders of a majority in aggregate principal amount of the outstanding Securities of such series may appoint a successor Trustee in respect of such Securities to replace the successor Trustee appointed by the Company. If the successor Trustee with respect to the Securities of any series does not deliver its written acceptance required by the next succeeding paragraph of this Section 7.8 within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of a majority in aggregate principal amount of the outstanding Securities of such series may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect thereto. A successor Trustee with respect to the Securities of any series shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after the delivery of such written acceptance, subject to the lien provided for in Section 7.7, (a) the retiring Trustee shall transfer all property held by it as Trustee in respect of the Securities of such series to the successor Trustee, (b) the resignation or removal of the retiring Trustee in respect of the Securities of such series shall become effective and (c) the successor Trustee shall have all the rights, powers and duties of the Trustee in respect of the Securities of such series under this Indenture. A successor Trustee shall mail notice of its succession to each Holder of Securities of such series. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in the preceding paragraph. The Company shall give notice of any resignation and any removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee in respect of the Securities of such series to all Holders of Securities of such series. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. Notwithstanding replacement of the Trustee with respect to the Securities of any series pursuant to this Section 7.8, the Company's obligations under Section 7.7 shall continue for the benefit of the retiring Trustee. Section 7.9. Successor Trustee By Merger, Etc. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation or national banking association, the resulting, surviving or transferee corporation or national banking association without any further act shall be the successor Trustee with the same effect as if the successor Trustee had been named as the Trustee herein. Section 7.10. Eligibility. This Indenture shall always have a Trustee who satisfies the requirements of Trust Indenture Act Section 310(a). The Trustee shall have a combined capital and surplus of at least $10,000,000 as set forth in its most recent published annual report of condition, if any. The Trustee shall comply with Trust Indenture Act Section 310(b). If at any time the Trustee with respect to the Securities of any series shall cease to be eligible in 36 42 accordance with the provisions of this Section, it shall resign immediately within the manner and with the effect hereinafter specified in this Article. Section 7.11. Money Held In Trust. The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law and except for money held in trust under Article 8 of this Indenture. ARTICLE 8 DISCHARGE OF INDENTURE Section 8.1. Defeasance Within One Year Of Payment. Except as otherwise provided in this Section 8.1, the Company may terminate its obligations under the Securities of any series and this Indenture with respect to Securities of such series if: (a) all Securities of such series previously authenticated and delivered (other than destroyed, lost or wrongfully taken Securities of such series that have been replaced or Securities of such series that are paid pursuant to Section 4.1 or Securities of such series for whose payment money or securities have theretofore been held in trust and thereafter repaid to the Company, as provided in Section 8.5) have been delivered to the Trustee for cancellation and the Company has paid all sums payable by it hereunder; or (b) (i) the Securities of such series mature within one year or all of them are to be called for redemption within one year under arrangements satisfactory to the Trustee for giving the notice of redemption, (ii) the Company irrevocably deposits in trust with the Trustee, as trust funds solely for the benefit of the Holders of such Securities for that purpose, money or U.S. Government Obligations or a combination thereof sufficient (unless such funds consist solely of money, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee), without consideration of any reinvestment, to pay Principal of and interest on the Securities of such series to maturity or redemption, as the case may be, and to pay all other sums payable by it hereunder, and (iii) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, in each case stating that all conditions precedent provided for herein relating to the satisfaction and discharge of this Indenture with respect to the Securities of such series have been complied with. With respect to the foregoing clause (a), only the Company's obligations under Sections 7.7 and 8.5 in respect of the Securities of such series shall survive. With respect to the foregoing clause (b), only the Company's obligations in Sections 2.2 through 2.12, 4.2, 7.7, 7.8 and 8.5 in respect of the Securities of such series shall survive until such Securities of such series are no longer outstanding. Thereafter, only the Company's obligations in Sections 7.7 and 8.5 in respect of the Securities of such series shall survive. After any such irrevocable deposit, the Trustee shall acknowledge in writing the discharge of the Company's obligations under the 37 43 Securities of such series and this Indenture with respect to the Securities of such series except for those surviving obligations specified above. Section 8.2. Defeasance. Except as provided below, the Company will be deemed to have paid and will be discharged from any and all obligations in respect of the Securities of any series and the provisions of this Indenture will no longer be in effect with respect to the Securities of such series (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same); provided that the following conditions shall have been satisfied: (a) the Company has irrevocably deposited in trust with the Trustee as trust funds solely for the benefit of the Holders of the Securities of such series, for payment of the Principal of and interest on the Securities of such series, money or U.S. Government Obligations or a combination thereof sufficient (unless such funds consist solely of money, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee) without consideration of any reinvestment and after payment of all federal, state and local taxes or other charges and assessments in respect thereof payable by the Trustee, to pay and discharge the Principal of and accrued interest on the outstanding Securities of such series to maturity or earlier redemption (irrevocable provided for under arrangements satisfactory to the Trustee), as the case may be; (b) such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound; (c) no Default with respect to the Securities of such series shall have occurred and be continuing on the date of such deposit; (d) the Company shall have delivered to the Trustee (1) either (x) a ruling directed to the Trustee received from the United States Internal Revenue Service to the effect that the Holders of the Securities of such series will not recognize income, gain or loss for federal income tax purposes as a result of the Company's exercise of its option under this Section 8.2 and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred, (y) an Opinion of Counsel to the same effect as the ruling described in clause (x) above and based upon a change in law, or (z) an instrument, in form reasonably satisfactory to the Trustee, wherein the Company, notwithstanding the payment and discharge, pursuant to this Section 8.2, of its indebtedness in respect of Securities of any series, or any portion of the principal amount thereof, shall assume the obligation (which shall be absolute and unconditional) to irrevocably deposit with the Trustee such additional sums of money, if any, or additional U.S. Government Obligations (meeting the requirements of this Article 8), if any, or any combination thereof, at such time or times, as shall be necessary, together with the money and/or U.S. Government Obligations theretofore so deposited, to pay when due the Principal of and premium, if any, and interest due and to become due on such Securities or portions thereof; provided, however, that such instrument may state that the obligation of the 38 44 Company to make additional deposits as aforesaid shall be subject to the delivery to the Company by the Trustee of a notice asserting the deficiency accompanied by an opinion of an independent public accountant of nationally recognized standing, selected by the Trustee, showing the calculation thereof, and (2) an Opinion of Counsel to the effect that the Holders of the Securities of such series have a valid security interest in the trust finds subject to no prior liens under the UCC; and (e) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, in each case stating that all conditions precedent provided for herein relating to the defeasance contemplated by this Section 8.2 of the Securities of such series have been complied with. The Company's obligations in Sections 2.2 through 2.12, 4.2, 7.7, 7.8 and 8.5 with respect to the Securities of such series shall survive until such Securities are no longer outstanding. Thereafter, only the Company's obligations in Sections 7.7 and 8.5 shall survive. Section 8.3. Covenant Defeasance. The Company may omit to comply with any specific covenant relating to such series provided for in a Board Resolution or supplemental indenture, or Officer's Certificate pursuant to such Board Resolution or such supplemental indenture, pursuant to Section 2.3 that may by its terms be defeased pursuant to this Section 8.3), and such omission shall be deemed not to be an Event of Default under clauses (c) or (f) of Section 6.1, with respect to the outstanding Securities of a series if: (a) the Company has irrevocably deposited in trust with the Trustee as trust funds solely for the benefit of the Holders of the Securities of such series, for payment of the Principal of and interest, if any, on the Securities of such series, money or U.S. Government Obligations or a combination thereof in an amount sufficient (unless such funds consist solely of money, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee) without consideration of any reinvestment and after payment of all federal, state and local taxes or other charges and assessments in respect thereof payable by the Trustee, to pay and discharge the Principal of and accrued interest on the outstanding Securities of such series to maturity or earlier redemption (irrevocably provided for under arrangements satisfactory to the Trustee), as the case may be; (b) such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound; (c) no Default with respect to the Securities of such series shall have occurred and be continuing on the date of such deposit; (d) the Company has delivered to the Trustee an Opinion of Counsel to the effect that the Holders of the Securities of such series have a valid security interest in the trust funds subject to no prior liens under the UCC; and 39 45 (e) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, in each case stating that all conditions precedent provided for herein relating to the covenant defeasance contemplated by this Section 8.3 of the Securities of such series have been complied with. Section 8.4. Application Of Trust Money. Subject to Section 8.5, the Trustee or Paying Agent shall hold in trust money or U.S. Government Obligations deposited with it pursuant to Section 8.1, 8.2 or 8.3, as the case may be, in respect of the Securities of any series end shall apply the deposited money and the proceeds from deposited U.S. Government Obligations in accordance with the Securities of such series and this Indenture to the payment of Principal of and interest on the Securities of such series; but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 8.1, 8.2 or 8.3, as the case may be, or the Principal and interest received in respect thereof, other than any such tax, fee or other charge that by law is for the account of the Holders. Section 8.5. Repayment To Company. Subject to Sections 7.7, 8.1, 8.2 and 8.3, the Trustee and the Paying Agent shall promptly pay to the Company upon request set forth in an Officers' Certificate any money held by them at any time and not required to make payments hereunder and thereupon shall be relieved from all liability with respect to such money. The Trustee and the Paying Agent shall pay to the Company upon written request any money held by them and required to make payments hereunder under this Indenture that remains unclaimed for two years; provided that the Trustee or such Paying Agent before being required to make any payment may cause to be published at the expense of the Company once in an Authorized Newspaper in The City of New York or with respect to any Security the interest on which is based on the offered quotations in the interbank Eurodollar market for dollar deposits in an Authorized Newspaper in London or mail to each Holder entitled to such money at such Holder's address (as set forth in the Security Register) notice that such money remains unclaimed and that after a date specified therein (which shall be at least 30 days from the date of such publication or mailing) any unclaimed balance of such money then remaining will be repaid to the Company. After payment to the Company, Holders entitled to such money must look to the Company for payment as general creditors unless an applicable law designates another Person, and all liability of the Trustee and such Paying Agent with respect to such money shall cease. ARTICLE 9 AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 9.1. Without Consent Of Holders. Without Consent Of Holders. The Company and the Trustee may amend or supplement this Indenture or the Securities of any series without notice to or the consent of any Holder: 40 46 (a) to cure any ambiguity, defect or inconsistency in this Indenture; provided that such amendments or supplements shall not materially and adversely affect the interests of the Holders; (b) to comply with Article 5; (c) to comply with any requirements of the Commission in connection with the qualification of this Indenture under the Trust Indenture Act; (d) to evidence and provide for the acceptance of appointment hereunder with respect to the Securities of any or all series by a successor Trustee; (e) to establish the form or forms or terms of Securities of any series or of the coupons appertaining to such Securities as permitted by Section 2.3, including the provisions and procedures relating to Securities convertible into or exchangeable for any securities of any Person (including the Company); (f) to provide for uncertificated or Unregistered Securities and to make all appropriate changes for such purpose; (g) to change or eliminate any provisions of this Indenture with respect to all or any series of the Securities not then outstanding (and, if such change is applicable to fewer than all such series of the Securities, specifying the series to which such change is applicable), and to specify the rights and remedies of the Trustee and the holders of such Securities in connection therewith; and (h) to make any change that does not materially and adversely affect the rights of any Holder. Section 9.2. With Consent Of Holders. Subject to Sections 6.4 and 6.7, without prior notice to any Holders, the Company and the Trustee may amend this Indenture and the Securities of any series with the written consent of the Holders of a majority in aggregate principal amount of the outstanding Securities of all series affected by such supplemental indenture (all such series voting as one class), and the Holders of a majority in aggregate principal amount of the outstanding Securities of all series affected thereby (all such series voting as one class) by written notice to the Trustee may waive future compliance by the Company with any provision of this Indenture or the Securities of such series. Notwithstanding the provisions of this Section 9.2, without the consent of each Holder affected thereby, an amendment or waiver, including a waiver pursuant to Section 6.4, may not; (a) extend the stated maturity of the Principal of, or any sinking fund obligation or any installment of interest on, such Holder's Security, or reduce the Principal amount thereof or the rate of interest thereon (including any amount in respect of original issue discount), or any premium payable with respect thereto, or adversely affect the rights of such Holder under any mandatory redemption or repurchase provision or any right of redemption or repurchase at the option of such Holder, or adversely affect 41 47 any right to convert or exchange any Security as may be provided pursuant to Section 2.3 herein, or reduce the amount of the Principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity thereof pursuant to Section 6.2 or the amount thereof provable in bankruptcy, or change any place of payment where, or the currency in which, any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the due date therefor; (b) reduce the percentage in principal amount of outstanding Securities of the relevant series the consent of whose Holders is required for any such supplemental indenture, for any waiver of compliance with certain provisions of this Indenture or certain Defaults and their consequences provided for in this Indenture; (c) waive a Default in the payment of Principal of or interest on any Security of such Holder; or (d) modify any of the provisions of this Section 9.2, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each outstanding Security affected thereby. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of Holders of Securities of such series with respect to such covenant or provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series or of the coupons appertaining to such Securities. It shall not be necessary for the consent of any Holder under this Section 9.2 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section 9.2 becomes effective, the Company or, at the Company's request, the Trustee shall give to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. The Company or, at the Company's request, the Trustee will mail supplemental indentures to Holders upon request. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture or waiver. Section 9.3. Revocation And Effect Of Consent. Until an amendment or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the Security of the consenting Holder, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to its Security or portion of its Security. Such revocation shall be effective only if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective. 42 48 The Company may, but shall not be obligated to, fix a record date (which may be not less than 10 nor more than 60 days prior to the solicitation of consents) for the purpose of determining the Holders of the Securities of any series affected entitled to consent to any amendment, supplement or waiver. If a record date is fixed, then, notwithstanding the immediately preceding paragraph, those Persons who were such Holders at such record date (or their duly designated proxies) and only those Persons shall be entitled to consent to such amendment, supplement or waiver or to revoke any consent previously given, whether or not such Persons continue to be such Holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date. After an amendment, supplement or waiver becomes effective with respect to the Securities of any series affected thereby, it shall bind every Holder of such Securities theretofore or thereafter authenticated and delivered hereunder unless it is of the type described in any of clauses (a) through (d) of Section 9.2. In case of an amendment or waiver of the type described in clauses (a) through (d) of Section 9.2, the amendment or waiver shall bind each such Holder who has consented to it and every subsequent Holder of a Security that evidences the same indebtedness as the Security of the consenting Holder. Section 9.4. Notation On Or Exchange Of Securities. If an amendment, supplement or waiver changes the terms of any Security, the Trustee may require the Holder thereof to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security about the changed terms and return it to the Holder and the Trustee may place an appropriate notation on any Security of such series thereafter authenticated. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security of the same series and tenor that reflects the changed terms. Section 9.5. Trustee To Sign Amendments, Etc. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of an amendment, supplement or waiver authorized pursuant to this Article 9 is authorized or permitted by this Indenture, stating that all requisite consents have been obtained or that no consents are required and stating that such supplemental indenture constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to customary exceptions. Subject to the preceding sentence, the Trustee shall sign such amendment, supplement or waiver if the same does not adversely affect the rights of the Trustee. The Trustee may, but shall not be obligated to, execute any such amendment, supplement or waiver that affects the Trustee`s own rights, duties or immunities under this Indenture or otherwise. Section 9.6. Conformity With Trust Indenture Act. Every supplemental indenture executed pursuant to this Article 9 shall conform to the requirements of the Trust Indenture Act as then in effect. 43 49 ARTICLE 10 SUBORDINATION Section 10.1. Agreement To Subordinate. The Company, for itself its successors and assigns, covenants and agrees, and each holder of a Security, by his acceptance thereof, likewise covenants and agrees, that the payment of the principal of premium, if any, and interest on each and all of the Securities is hereby expressly subordinated, to the extent and in the manner hereinafter set forth, in right of payment to the prior payment in full of all Senior Indebtedness. Section 10.2. Distribution On Dissolution Or Reorganization; Subrogation Of Securities. Upon any distribution of assets of the Company upon dissolution, winding up, liquidation or reorganization of the Company in any bankruptcy, insolvency, or receivership proceeding or upon an assignment for the benefit of creditors or any other marshalling of the assets and liabilities of the Company, (a) the holders of all Senior Indebtedness shall first be entitled to receive payment in full of the principal thereof, premium, if any, and interest thereon before the holders of the Securities are entitled to receive any payment upon the principal of or premium, if any, or interest on the Securities; (b) any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (other than shares of the Company as reorganized or readjusted or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinate, at least to the extent provided in this Article 10 with respect to the Securities, to the payment of all Senior Indebtedness which may at the time be outstanding, provided that the rights of the holders of Senior Indebtedness are not altered by such reorganization or readjustment), to which the holders of the Securities or the Trustee would be entitled except for the provisions of this Article 10 shall be paid or delivered by the person making such payment distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or other person, directly to the holders of Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, ratably according to the aggregate amounts remaining unpaid on account of the Senior Indebtedness held or represented by each, to the extent necessary to make payment in full of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness; and (c) in the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (other than shares of the Company as reorganized or readjusted or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinate, at least to the extent provided in this Article 10 with respect to the Securities, to the payment of Senior Indebtedness, provided that the rights of the holders of Senior Indebtedness are not altered by such reorganization or readjustment), shall be received by the trustee or the holders of the Securities before all 44 50 Senior Indebtedness is paid in full, such payment or distribution shall be paid over to the holders of such Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, ratably as aforesaid, for application to the payment of all Senior Indebtedness remaining unpaid until all such Senior Indebtedness shall have been paid in full, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness. The consolidation of the Company with, or the merger of the Company into, another corporation or the liquidation or dissolution of the Company following the sale or conveyance of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided in Section 5.1 shall not be deemed a dissolution, winding up, liquidation or reorganization for the purposes of this Article 10 if such other corporation shall, as a part of such consolidation, merger, sale or conveyance, comply with the conditions stated in Section 5.1. Subject to the payment in full of all Senior Indebtedness, the holders of the Securities shall be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company applicable to the Senior indebtedness until all amounts owing on the Securities shall be paid in full, and, as between the Company, its creditors other than holders of Senior Indebtedness, and the holders of the Securities, no payment or distribution of cash, property or securities made to the holders of Senior Indebtedness by virtue of this Article 10 which otherwise would have been made to the holders of the Securities shall be deemed to be a payment by the Company on account of the Senior Indebtedness, and no payment or distribution of cash, property or securities made to holders of Securities by virtue of the subrogation provided for in this Article 10 which otherwise would have been made to the holders of Senior Indebtedness shall be deemed to be a payment on account of the Securities; it being understood that the provisions of this Article 10 are and are intended solely for the purpose of defining the relative rights of the holders of the Securities, on the one hand, and the holders of the Senior Indebtedness, on the other hand. Nothing contained in this Article 10 or elsewhere in this Indenture or in the Securities is intended to or shall impair, as between the Company, its creditors other than the holders of Senior Indebtedness, and the holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the holders of the Securities the principal of and premium, if any, and interest on the Securities as and when the same shall become due and payable in accordance with their terms, or to affect the relative rights of the holders of the Securities and creditors of the Company other than the holders of Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article 10 of the holders of Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy. The Company shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of the Company within the meaning of this Article 10, and the Trustee shall be entitled to assume that no such event has occurred unless the Company has given such notice. Upon any distribution of assets of the Company referred to in this Article 10, the Trustee, subject to the provisions of Section 7.2, and the holders of the Securities shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization 45 51 proceedings are pending or upon a certificate of the liquidating trustee or agent or other person making any distribution to the Trustee or to the holders of the Securities for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10. The Trustee, however, shall not be deemed to owe any fiduciary duty to the holders of Senior indebtedness and shall not be liable to any such holder if it shall in good faith pay over or distribute to the holders of the Securities or the Company or any other person, money or assets to which the holders of Senior Indebtedness shall be entitled by virtue of this Article 10 or otherwise. With respect to the holders of Senior Indebtedness, the Company and the Trustee undertake to perform or observe only such of their covenants and obligations as are specifically set forth in this Article 10, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Indenture against the Company or the Trustee. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article 10, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such person, as to the extent to which such person is entitled to participate in such payment or distribution, and as to other facts pertinent to the rights of such persons under this Article 10, and if such evidence is not furnished, the Trustee may defer any payment to such person pending judicial determination as to the right of such person to receive such payment. If, in the event of any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of the Company, a proper claim or proof of debt in the form required in such proceeding is not filed by all of the Securityholders prior to 30 days before the expiration of the time to file such claim or claims, and is not filed by the Trustee pursuant to the authority granted to the Trustee pursuant to this Indenture prior to 15 days before such expiration, then the holder or holders of Senior Indebtedness of the Company are hereby authorized to, and have the right to, file an appropriate claim for and on behalf of the Holders of the Securities. Section 10.3. No Payment On Securities If Senior Indebtedness Is In Default. (a) Upon the maturity of any Senior Indebtedness (other than trade accounts payable) by lapse of time, acceleration or otherwise, all principal thereof and premium, if any, and interest due thereon shall first be paid in full, or such payment duly provided for in cash, in cash equivalents or in accordance with the terms of such Senior Indebtedness and the agreements, if any, under which such Senior Indebtedness was issued or created, before any payment is made on account of the principal of or premium, if any, or interest on the Securities or to acquire any of the Securities. (b) Upon the occurrence of any default with respect to any Senior Indebtedness (other than trade accounts payable), as defined therein or in the instrument under which it is outstanding, which, after notice or lapse of time, or both, would constitute an event of default which would permit the holders to accelerate the maturity thereof, other than default in payment of the principal of or premium, if any, or interest on such Senior Indebtedness, and after 46 52 written notice thereof has been given to the Company and the Trustee by the holder or holders of such Senior indebtedness or their representative or representatives, then, unless and until such default shall have been cured or waived or shall have ceased to exist, or provision shall have been made for the payment of all principal, premium, if any, and interest which would be due upon such Senior Indebtedness in the event of the acceleration of the maturity thereof in cash, in cash equivalents or in accordance with the terms of such Senior Indebtedness and the agreements, if any, under which such Senior Indebtedness was issued or created, no payment shall be made by the Company with respect to the principal of or premium, if any, or interest on the Securities or to acquire any of the Securities. (c) Nothing in this Section 10.3 shall prevent the application by the Trustee or any paying agent (other than the Company) of any moneys deposited with it under this Indenture to the payment of or on account of the principal of or premium, if any, or interest on any Security if the Trustee or such paying agent shall not have received, at least five days prior to the date on which such moneys become due and payable, notice by or on behalf of any holder of Senior Indebtedness of the happening and continuance of any default on Senior Indebtedness; provided, however, that nothing in this Section 10.3 or the next preceding sentence shall prevent any payment in connection with a redemption of Securities if the first mailing of notice of such redemption has been made pursuant to Article 3 prior to the receipt by the Trustee of notice of such default as provided in clause (b) of this Section 10.3. (d) Any deposit of moneys by the Company with the Trustee or any paying agent (whether or not stated to be in trust) for the payment of interest on any Securities or for the payment of the principal of or premium, if any, on any Securities at maturity or upon call for redemption shall be subject to the provisions of this Article 10, and the Trustee will not receive or accept any deposit from the Company for any such payment upon the happening of any of the events specified in clause (a) of this Section 10.3 or during the continuance of any default specified in clause (b) of this Section 10.3, and in the event that the Trustee shall receive any such deposit which the Company is not entitled to make, the Trustee will hold such amount subject to the provisions of this Article 10. Section 10.4. Payments On Securities Permitted. Nothing contained in this Article 10 or elsewhere in this Indenture, or in any of the Securities, shall (a) prevent the application by the Trustee or any paying agent (other than the Company) of any moneys deposited with it hereunder to the payment of or on account of the principal of or premium, if any, or interest on the Securities, or (b) affect the obligation of the Company to make, or prevent the Company from making, payment of the principal of or premium, if any, or interest on the Securities, except in either case, as otherwise provided in Section 10.3 or during the pendency of any dissolution, winding up, liquidation or reorganization of the Company. Section 10.5. Authorization Of Securityholders To Trustee To Effect Subordination. Each holder of Securities by his acceptance thereof authorizes and directs the Trustee in his behalf to take such action as may be necessary or appropriate to effectuate the subordination thereof as provided in this Article 10 and irrevocably appoints the Trustee his attorney-in-fact for any and all such purposes. 47 53 Section 10.6. Knowledge Of Trustee. Notwithstanding the provisions of this Article 10 or any other provisions of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to or by the Trustee, or the taking of any other action by the Trustee, unless and until the Trustee shall have received written notice thereof from the Company, any Securityholder, any paying agent or the holder or representative of any class of Senior Indebtedness who shall have been certified by the Company or otherwise established to the reasonable satisfaction of the Trustee to be such a Securityholder, paying agent or holder or representative; and, prior to the receipt of any such written notice, the Trustee shall be entitled to assume that no such facts exist; provided, however, that if at least two Business Days prior to the date upon which by the terms hereof any such moneys may become payable for any purpose (including, without limitation, the payment of either the principal (or premium, if any) or interest, if any, on any Security) the Trustee shall not have received with respect to such moneys the notice provided for in this Section 10.6, then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such moneys and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary, which may be received by it within two Business Days prior to such date; provided, however, no such application shall affect the obligations under this Article 10 of the Persons receiving such moneys from the Trustee. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a trustee on behalf of such holder) to establish that such a notice has been given by a holder of Senior Indebtedness or a trustee on behalf of any such holder. Section 10.7. Trustee May Hold Senior Indebtedness. The Trustee shall be entitled to all the rights set forth in this Article 10 with respect to any Senior Indebtedness at the time held by it, to the same extent as any other holder of Senior Indebtedness. Section 10.8. Rights Of Holders Of Senior Indebtedness Not Impaired. No right of any present or future holder of any Senior Indebtedness to enforce the subordination herein shall at any time or in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with. Section 10.9. Modification Of Terms Of Senior Indebtedness. Any renewal or extension of the time of payment of any Senior Indebtedness or the exercise by the holders of Senior Indebtedness of any of their rights under any instrument creating or evidencing Senior Indebtedness, including, without limitation, the waiver of default thereunder, may be made or done all without notice to or assent from the Holders of the Securities or the Trustee. No compromise, alteration, amendment, modification, extension, renewal or other change of, or waiver, consent or other action in respect of, any liability or obligation under or in respect of or of, any of the terms, covenants or conditions of any indenture or other instrument under which any Senior Indebtedness is outstanding or of such Senior Indebtedness, whether or not such release is in accordance with the provisions of any applicable document, shall in any way alter or affect any of the provisions of this Article 10 or of the Securities relating to the subordination thereof. 48 54 ARTICLE 11 MISCELLANEOUS Section 11.1. Trust Indenture Act Of 1939. This Indenture shall incorporate and be governed by the provisions of the Trust Indenture Act that are required to be part of and to govern indentures qualified under the Trust Indenture Act. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by operation of Section 318(c) of the Trust Indenture Act, the imposed duties shall control. Section 11.2. Notices. Any notice or communication shall be sufficiently given if written and (a) if delivered in person when received or (b) if mailed by first class mail 5 days after mailing, or (c) as between the Company and the Trustee if sent by facsimile transmission, when transmission is confirmed, in each case addressed as follows: If to the Company: Arrow Electronics, Inc. 25 Hub Drive Melville, New York 11747 Telecopy: (516) 391-1683 Attention: Robert E. Klatell If to the Trustee [ ] [ ] [ ] Telecopy: [ ] Attention: [ ] The Company or the Trustee by written notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication shall be sufficiently given to Holders of any Unregistered Securities, by publication at least once in an Authorized Newspaper in The City of New York, or with respect to any Security the interest on which is based on the offered quotations in the interbank Eurodollar market for dollar deposits at least once in an Authorized Newspaper in London, and by mailing to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act at such addresses as were so furnished to the Trustee (and in the case of an notice given by the Company, the Trustee shall make such information available to the Company for such purpose) and to Holders of Registered Securities by mailing to such Holders at their addresses as they shall appear on the Security Register. Notice mailed shall be sufficiently given if so mailed within the time prescribed. Copies of any such communication or notice to a Holder shall also be mailed to the Trustee and each Agent at the same time. 49 55 Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. Except as otherwise provided in this Indenture, if a notice or communication is mailed in the manner provided in this Section 11.2, it is duly given, whether or not the addressee receives it. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case it shall be impracticable to give notice as herein contemplated, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. Section 11.3. Certificate And Opinion As To Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (a) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (b) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent, if any, have been complied with. Section 11.4. Statements Required In Certificate Or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this indenture shall include: (a) a statement that each person signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statement or opinion contained in such certificate or opinion is based; (c) a statement that, in the opinion of each such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether or not, in the opinion of each such person, such condition or covenant has been complied with; provided, however, that, with respect to matters of fact, an Opinion of Counsel may rely on an Officers' Certificate or certificates of public officials. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or 50 56 covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate, statement or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise o reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters or information that is in the possession of the Company, upon the certificate, statement or opinion of or representations by an officer or officers of the Company, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be base as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of an officer of the Company or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate or opinion of any independent firm of public accountants filed with the Trustee shall contain a statement that such firm is independent. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Section 11.5. Evidence Of Ownership. The Company, the Trustee and any agent of the Company or the Trustee may deem and treat the Holder of any Unregistered Security and the Holder of any coupon as the absolute owner of such Unregistered Security or coupon (whether or not such Unregistered Security or coupon shall be overdue) for the purpose of receiving payment thereof or on account thereof and for all other purposes, and neither the Company, the Trustee, nor any agent of the Company or the Trustee shall be affected by any notice to the contrary. The fact of the holding by any Holder of an Unregistered Security, and the identifying number of such Security and the date of his holding the same, may be proved by the production of such Security or by a certificate executed by any trust company, bank, banker or recognized securities dealer wherever situated satisfactory to the Trustee, if such certificate shall be deemed by the Trustee to be satisfactory. Each such certificate shall be dated and shall state that on the date thereof a Security bearing a specified identifying number was deposited with or exhibited to such trust company, bank, banker or recognized securities dealer by the person named in such certificate. Any such certificate may be issued in respect of one or more Unregistered Securities specified therein. The holding by the person named in any such certificate of any Unregistered Securities specified therein shall be presumed to continue for a period of one year from the date of such certificate unless at the time of any determination of 51 57 such holding (1) another certificate bearing a later date issued in respect of the same Securities shall be produced or (2) the Security specified in such certificate shall be produced by some other Person, or (3) the Security specified in such certificate shall have ceased to be outstanding. Subject to Article 7, the fact and date of the execution of any such instrument and the amount and numbers of Securities held by the Person so executing such instrument may also be proven in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in any other manner which the Trustee may deem sufficient. The Company, the Trustee and any agent of the Company or the Trustee may deem and treat the person in whose name any Registered Security shall be registered upon the Security Register for such series as the absolute owner of such Registered Security (whether or not such Registered Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the Principal of and, subject to the provisions of this Indenture, interest on such Registered Security and for all other purposes; and neither the Company nor the Trustee nor any agent of the Company or the Trustee shall be affected by any notice to the contrary. Section 11.6. Rules By Trustee, Paying Agent Or Registrar. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Paying Agent or Registrar may make reasonable rules for its functions. Section 11.7. Payment Date Other Than A Business Day. If any date for payment of Principal or interest on any Security shall not be a Business Day at any place of payment, then payment of Principal of or interest on such Security, as the case may be, need not be made on such date, but may be made on the next succeeding Business Day at any place of payment with the same force and effect as if made on such date and no interest shall accrue in respect of such payment for the period from and after such date. Section 11.8. Governing Law. The rights and duties of the parties under this Indenture shall, pursuant to New York General Obligations Law Section 5-1401, be governed by the law of the State of New York. Section 11.9. No Adverse Interpretation Of Other Agreements. This Indenture may not be used to interpret another indenture or loan or debt agreement of the Company or any Subsidiary of the Company. Any such indenture or agreement may not be used to interpret this Indenture. Section 11.10. Successors. All agreements of the Company in this Indenture and the Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. Section 11.11. Duplicate Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Section 11.12. Separability. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 52 58 Section 11.13. Table Of Contents, Headings, Etc. The Table of Contents and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms and provisions hereof. Section 11.14. Incorporators. Shareholders, Officers and Directors Of Company Exempt From Individual Liability. No recourse under or upon any obligation, covenant or agreement contained in this Indenture or any indenture supplemental hereto, or in any Security or any coupons appertaining thereto, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such, or against any past, present or future shareholder, officer, director or employee, as such, of the Company or of any successor, either directly or through the Company or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Securities and the coupons appertaining thereto by the Holders thereof and as part of the consideration for the issue of the Securities and the coupons appertaining thereto. Section 11.15. Judgment Currency The Company agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the Principal of or interest on the Securities of any series (the "Required Currency") into a currency in which a judgment will be rendered (the "Judgment Currency"), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the day on which final unappealable judgment is entered, unless such day is not a Business Day, then, to the extent permitted by applicable law, the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the Business Day preceding the day on which final unappealable judgment is entered and (b) its obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any Judgment (whether or not entered in accordance with subsection (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture. 53 59 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the date first written above. (SEAL) ARROW ELECTRONICS, INC., ATTEST: as the Company _____________________ By: ____________________________________ Name: Name: Title: Title: (SEAL) [ ], ATTEST: as the Trustee _____________________ By: ____________________________________ Name: Name: Title: Title: 54 EX-4.4 6 y42939a1ex4-4.txt FORM OF WARRANT AGREEMENT 1 EXHIBIT 4.4 ARROW ELECTRONICS, INC. and [NAME OF WARRANT AGENT], Warrant Agent ------------ WARRANT AGREEMENT [DEBT SECURITIES] Dated as of [___________], 20[__] 2 WARRANT AGREEMENT dated as of [_________], 20[__], between ARROW ELECTRONICS, INC., a New York corporation (the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), and [_____________], as warrant agent (the "Warrant Agent", which term includes any successor warrant agent hereunder). WHEREAS the Company has entered into an Indenture dated as of [_______________], [____] (the "Indenture"), with [________________], a [________] corporation, as Trustee (the "Trustee", which term includes any successor trustee under the Indenture), providing for the issuance [from time to time] of the Company's [[title of debt Securities]] [debt securities, to be issued in one or more series as provided in the Indenture] (the "Debt Securities"); [WHEREAS the Company proposes to sell [title of Securities being offered] (the "Offered Securities") with] [WHEREAS the Company proposes to issue] Warrant certificates evidencing one or more warrants (the "Warrants"; individually a "Warrant") representing the right to purchase up to an aggregate principal amount of $[_____________] of Debt Securities, which are to be issued under the Indenture (the "Warrant Securities"), such warrant certificates and other warrant certificates issued pursuant to this Agreement being called the "Warrant Certificates"; and WHEREAS the Company desires that the Warrant Agent act on behalf of the Company in connection with the issuance, exchange, exercise and replacement of the Warrant Certificates, and in this Agreement wishes to set forth, among other things, the form and provisions of the Warrant Certificates and the terms and conditions on which they may be issued, exchanged, exercised and replaced. NOW THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the parties hereto agree as follows: ARTICLE I. ISSUANCE OF WARRANTS AND EXECUTION AND DELIVERY OF WARRANT CERTIFICATES SECTION 1.01. ISSUANCE OF WARRANTS. [Warrants shall be initially issued in connection with the issuance of the Offered Securities] [but shall be separately transferable on and after [___________], 20[__] (the "Detachable Date")] [and shall not be separately transferable] [and each] [Each] Warrant Certificate shall evidence one or more Warrants. Each Warrant evidenced by a Warrant Certificate shall represent the right, subject to the provisions contained herein and therein, to purchase up to $[____________] aggregate principal amount of Warrant Securities. SECTION 1.02. EXECUTION AND DELIVERY OF WARRANT CERTIFICATES. Warrant Certificates, whenever issued, shall be in [bearer] [or] [registered] form [or both] 2 3 substantially in the form set forth in Annex A hereto, shall be dated and may have such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as the officers of the Company executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange on which the Warrants may be listed, or to conform to common usage. The Warrant Certificates shall be signed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President, its Chief Operating Officer, its Chief Financial Officer, one of its Vice Presidents (whether or not designated by a number or word or words added before or after the title Vice President), its Treasurer or an Assistant Treasurer under its corporate seal and attested by its Secretary or one of its Assistant Secretaries. Such signatures may be manual or facsimile signatures of such authorized officers and may be imprinted or otherwise reproduced on the Warrant Certificates. The seal of the Company may be in the form of a facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Warrant Certificates. No Warrant Certificate shall be valid for any purpose, and no Warrant evidenced thereby shall be exercisable, until such Warrant evidenced thereby has been countersigned by the manual signature of the Warrant Agent. Such signature by the Warrant Agent upon any Warrant Certificate executed by the Company shall be conclusive evidence that the Warrant Certificate so countersigned has been duly issued hereunder. In case any officer of the Company who shall have signed any of the Warrant Certificates shall cease to be such officer before the Warrant Certificates so signed shall have been countersigned and delivered by the Warrant Agent, such Warrant Certificates may be countersigned and delivered notwithstanding that the person who signed such Warrant Certificates ceased to be such officer of the Company; and any Warrant Certificate may be signed on behalf of the Company by such persons as, at the actual date of the execution of such Warrant Certificate, shall be the proper officers of the Company, although at the date of the execution of this Agreement any such person was not such officer. [IF BEARER WARRANTS--The term "holder" or "holder of a Warrant Certificate" as used herein shall mean [IF OFFERED SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--prior to the Detachable Date, the registered owner of the Offered Security to which such Warrant Certificate was initially attached (or the bearer if the Offered Securities are in bearer form) and after such Detachable Date] the bearer of such Warrant Certificate.] [IF REGISTERED WARRANTS--The term "holder" or "holder of a Warrant Certificate" as used herein shall mean any person in whose name at the time any Warrant Certificate shall be registered upon the books to be maintained by the Warrant Agent for that purpose [IF OFFERED SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--or, prior to the Detachable Date, upon the register of the Offered Securities]. The Company will, or will cause the registrar of the Offered Securities to, 3 4 make available at all times to the Warrant Agent such information as to holders of the Offered Securities with Warrants as may be necessary to keep the Warrant Agent's records up-to-date.] SECTION 1.03. ISSUANCE OF WARRANT CERTIFICATES. Warrant Certificates evidencing the right to purchase up to $[____________] principal amount of Warrant Securities (except as provided in Section 2.03(c), 3.02 and 4.01) may be executed by the Company and delivered to the Warrant Agent upon the execution of this Agreement or from time to time thereafter. The Warrant Agent shall, upon receipt of Warrant Certificates duly executed on behalf of the Company and upon order of the Company, countersign Warrant Certificates evidencing Warrants representing the right to purchase up to $[_______] aggregate principal amount of Warrant Securities and shall deliver such Warrant Certificates to or upon the order of the Company. Subsequent to such original issuance of the Warrant Certificates, the Warrant Agent shall countersign a Warrant Certificate only if the Warrant Certificate is issued in exchange or substitution for one or more previously countersigned Warrant Certificates [IF REGISTERED WARRANTS--or in connection with their transfer] as hereinafter provided, or as provided in Section 2.03(c). ARTICLE II. WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS SECTION 2.01. WARRANT PRICE. During the period from and including [___________], 20[__], to and including [___________], 20[__], the exercise price of each Warrant will be [[___]% of the principal amount of the Warrant Securities] [$[_____] plus [accrued amortization of the original issue discount] [accrued interest] from the most recently preceding [________]]. [During the period from [___________], 20[__], to and including [___________], 20[__], the exercise price of each Warrant will be [[___]% of the principal amount of the Warrant Securities] [$[_____] plus [accrued amortization of the original issue discount] [accrued interest] from the most recently preceding [___________]].] [In each case, the original issue discount will be amortized at a [___]% annual rate, computed on an annual basis using a 360-day year consisting of twelve 30-day months.] Such purchase price of Warrant Securities is referred to in this Agreement as the "Warrant Price". [The original issue discount for each $[____] principal amount of Warrant Securities is $[---------].] SECTION 2.02. DURATION OF WARRANTS. Each Warrant may be exercised in whole at any time, as specified herein, on or after [the date thereof] [[___________], 20[__]] and at or before 5:00 p.m. New York City time on [___________], 20[__] or such later date as may be selected by the Company, in a written statement to the Warrant Agent and with notice to the holders of Warrants (such date of expiration being called the "Expiration Date"). Each Warrant not exercised at or before 5:00 p.m. New York City time on the Expiration Date shall become void and all rights of the holder of the Warrant Certificate evidencing such Warrant under this Agreement shall cease. SECTION 2.03. EXERCISE OF WARRANTS. (a) During the period specified in Section 2.02, any whole number of Warrants may be exercised [, subject to Section 2.03(c),] by delivery to the Warrant Agent of the Warrant Certificate evidencing such Warrant, with the form 4 5 of election to purchase Warrant Securities set forth on the reverse side of the Warrant Certificate properly completed and duly executed, and by paying in full [in lawful money of the United States of America] [in the foreign currency or currency unit in which the Warrant Securities are denominated] by bank wire transfer in immediately available funds the Warrant Price for each Warrant exercised to the principal corporate trust office of the Warrant Agent [or at [________]]. The date on which the duly completed and executed Warrant Certificate and payment in full of the Warrant Price is received by the Warrant Agent shall be deemed to be the date on which the Warrant is exercised. The Warrant Agent shall deposit all funds received by it in payment of the Warrant Price in an account of the Company maintained with it and shall advise the Company by telephone at the end of each day on which a wire transfer for the exercise of Warrants is received of the amount so deposited to its account. The Warrant Agent shall promptly confirm such telephone advice to the Company in writing. (b) The Warrant Agent shall, from time to time, as promptly as practicable, advise the Company and the Trustee of (i) the number of Warrants exercised, (ii) the instructions of each holder of the Warrant Certificates evidencing such Warrants with respect to delivery of the Warrant Securities to which such holder is entitled upon such exercise, (iii) delivery of Warrant Certificates evidencing the balance, if any, of the Warrants remaining after such exercise and (iv) such other information as the Company or the Trustee shall reasonably require. (c) As soon as practicable after the exercise of any Warrant, the Company shall issue, pursuant to the Indenture, in authorized denomination to or upon the order of the holder of the Warrant Certificate evidencing such Warrant, the Warrant Securities to which such holder is entitled, [in fully registered form, registered in such name or names] [in bearer form,] as may be directed by such holder [; provided, however, that the Company shall deliver Warrant Securities in bearer form only outside the United States of America (including the states and District of Columbia) and its possessions (including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island, and Northern Mariana Islands) and only upon delivery from the person entitled to physical delivery of such Warrant Securities of an executed certification substantially in the form of Annex B hereto]. If fewer than all of the Warrants evidenced by such Warrant Certificate are exercised, the Company shall execute (attested and under seal as aforesaid), and an authorized officer of the Warrant Agent shall manually countersign and deliver, a new Warrant Certificate evidencing the number of such Warrants remaining unexercised, unless sufficient time does not exist before the Expiration Date to exercise such Warrants in accordance with the provisions of this Agreement. (d) The Company shall not be required to pay any stamp or other tax or other governmental charge required to be paid in connection with any transfer involved in the issuance of the Warrant Securities and the Company shall not be required to issue or deliver any Warrant Security until such tax or other charge shall have been paid or it shall have been established to the satisfaction of the Company that no such tax or other charge is due. 5 6 ARTICLE III. OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANT CERTIFICATES SECTION 3.01. NO RIGHTS AS A HOLDER OF WARRANT SECURITIES CONFERRED BY WARRANTS OR WARRANT CERTIFICATES. No Warrant Certificate or Warrant evidenced thereby shall entitle the holder thereof to any of the rights of a holder of Warrant Securities, including without limitation the right to receive the payment of principal of or premium, if any, or interest, if any, on Warrant Securities or to enforce any of the covenants in the Indenture except to the extent that in connection with any modification of the Indenture pursuant to the provisions of Section [___] thereof a holder of any unexpired Warrant shall be deemed to be the holder of the principal amount of Warrant Securities issuable upon exercise of such Warrant. SECTION 3.02. LOST, STOLEN, MUTILATED OR DESTROYED CERTIFICATES. Upon receipt by the Warrant Agent of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Warrant Certificate and of indemnity reasonably satisfactory to it and the Company and, in the case of mutilation, upon surrender thereof to the Warrant Agent for cancellation, then, in the absence of notice to the Company or the Warrant Agent that such Warrant Certificate has been acquired by a bona fide purchaser or holder in due course, the Company may (or, in the case of mutilation, shall) execute, and in such event an authorized officer of the Warrant Agent shall manually countersign and deliver, in exchange for or in lieu of the lost, stolen, destroyed or mutilated Warrant Certificate, a new Warrant Certificate of the same tenor and evidencing a like number of Warrants. Upon the issuance of any new Warrant Certificate under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Warrant Agent) in connection therewith. Every substitute Warrant Certificate executed and delivered pursuant to this Section in lieu of any lost, stolen or destroyed Warrant Certificate shall represent an additional contractual obligation of the Company, whether or not the lost, stolen or destroyed Warrant Certificate shall be at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) any and all other rights or remedies notwithstanding any law or statute existing or hereinafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. SECTION 3.03. HOLDER OF WARRANT CERTIFICATE MAY ENFORCE RIGHTS. Notwithstanding any of the provisions of this Agreement, any holder of a Warrant Certificate, without the consent of the Warrant Agent, the Trustee, the holder of any Warrant Securities or the holder of any other Warrant Certificate, may, in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company suitable to enforce or otherwise in respect of, his right to exercise the Warrants evidenced by his Warrant Certificate in the manner provided in his Warrant Certificate and in this Agreement. 6 7 [IF WARRANT SECURITIES ARE EXCHANGEABLE OR CONVERTIBLE-- SECTION 3.04. CONVERSION OR EXCHANGE. The Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized [title of security], the full number of shares of such [title of security] then issuable upon exchange or conversion of all Warrant Securities.] ARTICLE IV. EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES SECTION 4.01. EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES. [IF OFFERED SECURITIES WITH WARRANTS WHICH ARE IMMEDIATELY DETACHABLE OR WARRANTS ISSUED INDEPENDENT OF ANY OFFERED SECURITIES--Upon] [IF OFFERED SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--Prior to the Detachable Date a Warrant Certificate may be exchanged or transferred only together with the Offered Securities to which the Warrant Certificate was initially attached, and only for the purpose of effecting, or in conjunction with, an exchange or transfer of such Offered Security. Prior to the Detachable Date, each transfer of the Offered Security [on the register maintained with respect to the Offered Securities] shall operate also to transfer the related Warrant Certificates. After the Detachable Date, upon] surrender at the principal corporate trust office of the Warrant Agent [or [__________]], Warrant Certificates evidencing Warrants may be exchanged for Warrant Certificates in other denominations evidencing such Warrants [IF REGISTERED WARRANTS--or the transfer may be registered in whole or in part]; provided that such other Warrant Certificates evidence a like number of Warrants as the Warrant Certificates so surrendered. [IF REGISTERED AND BEARER WARRANTS (SUBJECT TO ANY LIMITATIONS IMPOSED WITH RESPECT TO SUCH EXCHANGES)--After the Detachable Date, upon] [Upon] surrender at the principal corporate trust office of the Warrant Agent [or [__________]], Warrant Certificates in bearer form may be exchanged for Warrant Certificates in registered form evidencing a like number of Warrants.] [IF REGISTERED WARRANTS--The Warrant Agent shall keep, at its corporate trust office, books in which, subject to such reasonable regulations as it may prescribe, it shall register Warrant Certificates and exchanges and transfers of outstanding Warrant Certificates upon surrender of the Warrant Certificates to the Warrant Agent at its principal corporate trust office [or [___________]] for exchange [or registration of transfer], properly endorsed or accompanied by appropriate instruments of registration of transfer and written instructions for transfer, all in form satisfactory to the Company and the Warrant Agent.] The Company may require payment of a service charge for any exchange [or registration of transfer] of Warrant Certificates, and may require payment of a sum sufficient to cover any stamp or other tax or other governmental charge that may be imposed in connection with any such exchange [or registration of transfer]. Whenever any Warrant Certificates are so surrendered for exchange [or registration of transfer] an authorized officer of the Warrant Agent shall manually countersign and deliver to the person or persons entitled thereto a Warrant Certificate or Warrant Certificates duly authorized and executed by the Company, as so requested. The Warrant Agent shall not be required to effect any exchange [or registration of transfer] which will result in the issuance of a Warrant Certificate 7 8 evidencing a fraction of a Warrant or a number of full Warrants and a fraction of a Warrant. All Warrant Certificates issued upon any exchange [or registration of transfer] of Warrant Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits under this Agreement, as the Warrant Certificates surrendered for such exchange [or registration of transfer]. SECTION 4.02. TREATMENT OF HOLDERS OF WARRANT CERTIFICATES. [IF OFFERED SECURITIES WITH BEARER WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--Subject to Section 4.01, each] [IF OFFERED SECURITIES WITH BEARER WARRANTS WHICH ARE IMMEDIATELY DETACHABLE OR WARRANTS ISSUED INDEPENDENT OF ANY OFFERED SECURITIES--Each] Warrant Certificate shall be transferable by delivery and shall be deemed negotiable and the bearer of each Warrant Certificate may be treated by the Company, the Warrant Agent and all other persons dealing with such bearer as the absolute owner thereof for any purpose and as the person entitled to exercise the rights represented by the Warrants evidenced thereby, any notice to the contrary notwithstanding. [IF REGISTERED WARRANTS--Every holder of a Warrant Certificate, by accepting the same, consents and agrees with the Company, the Warrant Agent and with every subsequent holder of such Warrant Certificate that until the transfer of the Warrant Certificate is registered on the books of the Warrant Agent [or the register of the Offered Securities prior to the Detachable Date], the Company and the Warrant Agent [or the registrar of the Offered Securities prior to the Detachable Date] may treat such registered holder as the absolute owner thereof for any purpose and as the person entitled to exercise the rights represented by the Warrants evidenced thereby, any notice to contrary notwithstanding.] SECTION 4.03. CANCELLATION OF WARRANT CERTIFICATES. Any Warrant Certificate surrendered for exchange [, registration of transfer] or exercise of the Warrants evidenced thereby, if surrendered to the Company, shall be delivered to the Warrant Agent and all Warrant Certificates surrendered or so delivered to the Warrant Agent shall be promptly cancelled by the Warrant Agent and shall not be reissued and, except as expressly permitted by this Agreement, no Warrant Certificate shall be issued hereunder in exchange or in lieu thereof. The Warrant Agent shall deliver to the Company from time to time or otherwise dispose of cancelled Warrant Certificates in a manner satisfactory to the Company. ARTICLE V. CONCERNING THE WARRANT AGENT SECTION 5.01. WARRANT AGENT. The Company hereby appoints the Warrant Agent as warrant agent of the Company in respect of the Warrants and the Warrant Certificates upon the terms and subject to the conditions herein set forth and the Warrant Agent hereby accepts such appointment. The Warrant Agent shall have the powers and authority granted to and conferred upon it in the Warrant Certificates and hereby and such further powers and authority to act on behalf of the Company as the Company may hereafter grant to or confer upon it in writing. All of the terms and provisions with respect to such powers and authority contained in the Warrant Certificates are subject to and governed by the terms and provisions hereof. 8 9 SECTION 5.02. CONDITIONS OF WARRANT AGENT'S OBLIGATIONS. The Warrant Agent accepts its obligations herein set forth upon the terms and conditions hereof, including the following, to all of which the Company agrees and to all of which the rights hereunder of the holders from time to time of the Warrant Certificates shall be subject: (a) COMPENSATION AND INDEMNIFICATION. The Company agrees promptly to pay the Warrant Agent the compensation to be agreed upon with the Company for all services rendered by the Warrant Agent and to reimburse the Warrant Agent for reasonable out-of-pocket expenses (including counsel fees) incurred by the Warrant Agent in connection with the services rendered hereunder by the Warrant Agent. The Company also agrees to indemnify the Warrant Agent for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Warrant Agent, arising out of or in connection with its acting as Warrant Agent hereunder, as well as the costs and expenses of defending against any claim of such liability. (b) AGENT FOR THE COMPANY. In acting under this Agreement and in connection with the Warrant Certificates, the Warrant Agent is acting solely as agent of the Company and does not assume any fiduciary obligation or relationship of agency or trust for or with any of the holders of Warrant Certificates or beneficial owners of Warrants. (c) DOCUMENTS. The Warrant Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in reliance upon any Warrant Certificate, notice, direction, consent, certificate, affidavit, statement or other paper or document reasonably believed by it to be genuine and to have been presented or signed by the proper parties. (d) CERTAIN TRANSACTIONS. The Warrant Agent, and its officers, directors and employees, may become the owner of, or acquire any interest in, Warrants and/or Warrant Securities and/or Offered Securities, with the same rights that it or they would have if it were not the Warrant Agent hereunder, and, to the extent permitted by applicable law, it or they may engage or be interested in any financial or other transaction with the Company and may act on, or as depositary, trustee or agent for, any committee or body of holders of Warrant Securities, Offered Securities or other obligations of the Company as freely as if it were not the Warrant Agent hereunder. Nothing in this Agreement shall be deemed to prevent the Warrant Agent from acting as Trustee under the Indenture or as trustee under any other indenture with the Company. (e) NO LIABILITY FOR INVALIDITY. The Warrant Agent shall have no liability with respect to any invalidity of this Agreement or any of the Warrant Certificates. (f) NO LIABILITY FOR INTEREST. The Warrant Agent shall transfer to the Company interest on any monies at any time received by it pursuant to any of the provisions of this Agreement or of the Warrant Certificates. (g) NO RESPONSIBILITY FOR REPRESENTATIONS. The Warrant Agent shall not be responsible for any of the recitals or representations herein or in the Warrant 9 10 Certificates (except as to the Warrant Agent's countersignature thereon), all of which are made solely by the Company. (h) NO IMPLIED OBLIGATIONS. The Warrant Agent shall be obligated to perform only such duties as are herein and in the Warrant Certificates specifically set forth and no implied duties or obligations shall be read into this Agreement or the Warrant Certificates against the Warrant Agent. The Warrant Agent shall not be under any obligation to take any action hereunder which might involve it in any expense or liability, the payment of which within a reasonable time is not, in its reasonable opinion, assured to it. The Warrant Agent shall not be accountable or under any duty or responsibility for the use by the Company of any of the Warrant Certificates countersigned and delivered by it to the Company pursuant to this Agreement or for the application by the Company of the proceeds of the Warrant Certificates. The Warrant Agent shall have no duty or responsibility in case of any default by the Company in the performance of its covenants or agreements contained herein or in the Warrant Certificates or in the case of the receipt of any written demand from a holder of a Warrant Certificate with respect to such default, including, without limiting the generality of the foregoing, any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise, or, except as provided in Section 6.02 hereof, to make any demand upon the Company. SECTION 5.03. RESIGNATION AND APPOINTMENT OF SUCCESSOR. (a) The Company agrees, for the benefit of the holders from time to time of the Warrant Certificates, that there shall at all times be a Warrant Agent hereunder until all the Warrant Certificates are no longer exercisable. (b) The Warrant Agent may at any time resign as such agent by giving written notice to the Company of such intention on its part, specifying the date on which it desires its resignation to become effective; provided that such date shall not be less than three months after the date on which such notice is given unless the Company otherwise agrees. The Warrant Agent hereunder may be removed at any time by the filing with it of an instrument in writing signed by or on behalf of the Company and specifying such removal and the date upon which such removal shall become effective. Such resignation or removal shall take effect upon the appointment by the Company, as hereinafter provided, of a successor Warrant Agent (which shall be a bank or trust company authorized under the laws of the jurisdiction of its organization to exercise corporate trust powers) and the acceptance of such appointment by such successor Warrant Agent. The obligations of the Company under Section 5.02(a) shall continue to the extent set forth therein notwithstanding the resignation or removal of the Warrant Agent. (c) In case at any time the Warrant Agent shall resign, or shall be removed, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or shall file a petition seeking relief under the Federal Bankruptcy Code, as now constituted or hereafter amended, or under any other applicable Federal or state bankruptcy law or similar law or make an assignment for the benefit of its creditors or consent to the appointment of a receiver or custodian of all or any substantial part of its property, or shall admit in writing its inability to pay or meet its debts as they mature, or if a receiver or custodian of it or of all or any substantial part of its property shall be appointed, or if an order of any court shall be entered for relief against it under the provisions of the Federal Bankruptcy Code, as now constituted or hereafter amended, 10 11 or under any other applicable Federal or state bankruptcy or similar law, or if any public officer shall have taken charge or control of the Warrant Agent or of its property or affairs, for the purpose of rehabilitation, conservation or liquidation, a successor Warrant Agent, qualified as aforesaid, shall be appointed by the Company by an instrument in writing, filed with the successor Warrant Agent. Upon the appointment as aforesaid of a successor Warrant Agent and acceptance by the successor Warrant Agent of such appointment, the Warrant Agent shall cease to be Warrant Agent hereunder. (d) Any successor Warrant Agent appointed hereunder shall execute, acknowledge and deliver to its predecessor and the Company an instrument accepting such appointment hereunder, and thereupon such successor Warrant Agent, without any further act, deed or conveyance, shall become vested with all the authority, rights, powers, trusts, immunities, duties and obligations of such predecessor with like effect as if originally named as Warrant Agent hereunder, and such predecessor, upon payment of its charges and to transfer, deliver and pay over, and such successor Warrant Agent shall be entitled to receive, all monies, securities and other property on deposit with or held by such predecessor, as Warrant Agent hereunder. (e) Any corporation into which the Warrant Agent hereunder may be merged or converted or any corporation with which the Warrant Agent may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Warrant Agent shall be a party, or any corporation to which the Warrant Agent shall sell or otherwise transfer all or substantially all the assets and business of the Warrant Agent, provided that it shall be qualified as aforesaid, shall be the successor Warrant Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto. ARTICLE VI. MISCELLANEOUS SECTION 6.01. AMENDMENT. This Agreement may be amended by the parties hereto, without the consent of the holder of any Warrant Certificate, for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein, or making any other provisions with respect to matters or questions arising under this Agreement as the Company and the Warrant Agent may deem necessary or desirable; provided that such action shall not adversely affect the interests of the holders of the Warrant Certificates. SECTION 6.02. NOTICES AND DEMANDS TO THE COMPANY AND WARRANT AGENT. If the Warrant Agent shall receive any notice or demand addressed to the Company by the holder of a Warrant Certificate pursuant to the provisions of the Warrant Certificates, the Warrant Agent shall promptly forward such notice or demand to the Company. SECTION 6.03. ADDRESSES. Any communications from the Company to the Warrant Agent with respect to this Agreement shall be addressed to the Warrant Agent at its principal corporate trust office at [______________________], [_________________________], Attention: [_______________________], and any communication from the Warrant Agent to the 11 12 Company with respect to this Agreement shall be addressed to Arrow Electronics, Inc., 25 Hub Drive, Melville, New York 11747 Attention: [____________] or such other address as shall be specified in writing by the Warrant Agent or the Company. SECTION 6.04. NOTICES TO HOLDERS OF WARRANTS. Any notice to holders of Warrants which by any provisions of this Agreement is required or permitted to be given shall be given [IF REGISTERED WARRANTS--by first class mail, postage prepaid, at such holder's address as appears on the books of the Warrant Agent [or on the register of the Offered Securities prior to the Detachable Date]] [IF BEARER WARRANTS--by publication at least once in a daily morning newspaper in New York City [, in London] [and in [________]]. SECTION 6.05. APPLICABLE LAW. The validity, interpretation and performance of this Agreement and each Warrant Certificate issued hereunder and of the respective terms and provisions thereof shall be governed by, and construed in accordance with, the substantive laws of the State of New York without regard to any conflict of laws provisions. SECTION 6.06. DELIVERY OF PROSPECTUS. The Company will furnish to the Warrant Agent sufficient copies of a prospectus with an accompanying prospectus supplement relating to the Warrant Securities, and the Warrant Agent agrees that upon the exercise of any Warrant, the Warrant Agent will deliver to the holder of the Warrant Certificate evidencing such Warrant prior to or concurrently with the delivery of the Warrant Securities issued upon such exercise, a copy of such prospectus and prospectus supplement. SECTION 6.07. OBTAINING OF GOVERNMENTAL APPROVALS. The Company will from time to time take all action which may be necessary to obtain and keep effective any and all permits, consents and approvals of governmental agencies and authorities and securities acts filings under United States Federal and state laws and any applicable laws of other jurisdictions (including without limitation a registration statement in respect of the Warrants and Warrant Securities under the Securities Act of 1933) which may be or become required in connection with the issuance, sale, transfer and delivery of the Warrant Certificates, the exercise of the Warrants, the issuance, sale, transfer and delivery of the Warrant Securities issued upon exercise of the Warrants or upon the expiration of the period during which the Warrants are exercisable. SECTION 6.08. PERSONS HAVING RIGHTS UNDER WARRANT AGREEMENT. Nothing in this Agreement shall give to any person other than the Company, the Warrant Agent and the holders of the Warrant Certificates any right, remedy or claim under or by reason of this Agreement. SECTION 6.09. HEADINGS. The descriptive headings of the several Articles or Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. SECTION 6.10. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which as so executed shall be deemed to be an original, but such counterparts shall together constitute but one and the same instrument. 12 13 SECTION 6.11. INSPECTION OF AGREEMENT. A copy of this Agreement shall be available at all reasonable times at the principal corporate trust office of the Warrant Agent and the Company for inspection by the holder of any Warrant Certificate. The Warrant Agent or the Company may require such holder to submit his Warrant Certificate for inspection by it. SECTION 6.12. PAYMENT OF STAMP AND OTHER DUTIES. The Company will pay all stamp and other duties, if any, to which, under the laws of the United States of America, the original issuance of the Warrant Certificates may be subject. 13 14 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by one of their respective authorized officers as of the day and year first above written. ARROW ELECTRONICS, INC. By -------------------------------- Name: Title: [NAME OF WARRANT AGENT] By -------------------------------- Name: Title: 14 15 ANNEX A TO WARRANT AGREEMENT [FORM OF WARRANT CERTIFICATE] [FACE OF WARRANT CERTIFICATE] [FORM OF LEGEND IF SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE: PRIOR TO [___________], 20[___] THIS WARRANT CERTIFICATE CANNOT BE TRANSFERRED OR EXCHANGED UNLESS ATTACHED TO A [TITLE OF OFFERED SECURITIES].] EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT AGENT AS PROVIDED HEREIN WARRANTS TO PURCHASE [DEBT SECURITIES] Issued by ARROW ELECTRONICS, INC. VOID AFTER 5:00 P.M. NEW YORK CITY TIME ON [___________], 20[___] [No.]___________________________________________________________ Warrants This certifies that [the bearer is the] [[__________] or registered assigns is the registered] owner of the above indicated number of Warrants, each Warrant entitling such [bearer] [registered owner] to purchase, at any time [after 5:00 p.m. New York City time on [___________], 20[__] and] at or before 5:00 p.m. New York City time on [___________], 20[__] (or such later date as may be selected by Arrow Electronics, Inc., a New York corporation (the "Company") with notice to the holder hereof as provided in the Warrant Agreement (as hereinafter defined)), $[____] principal amount of [Title of Warrant Securities] (the "Warrant Securities") of the Company, to be issued under the Indenture (as hereinafter defined), on the following basis: during the period from and including [___________], 20[___], the exercise price of each Warrant will be [[___]% of the principal amount of the Warrant Securities] [$[______] plus [accrued amortization of the original issue discount] [accrued interest] from the most recently preceding [__________]] [; and during the period from [___________], 20[__], to and including [___________], 20[__], the exercise price of each Warrant will be [[___]% of the principal amount of the Warrant Securities] [$[_____] plus [accrued amortization of the original issue discount] [accrued interest] from the most recently preceding [__________]] [; provided 15 16 that in each case, the original issue discount will be amortized at a [___]% annual rate, computed on an annual basis, using a 360-day year consisting of twelve 30-day months)] (the "Warrant Price"). [The original issue discount for each $[1,000] principal amount of Warrant Securities is $[__________].] The holder may exercise the Warrants evidenced hereby by delivery to the Warrant Agent (as hereinafter defined) of this Warrant Certificate, with the form of election to purchase on the reverse hereof properly completed and duly executed and by paying in full [in lawful money of the United States of America] [in the foreign currency or currency unit in which the Warrant Securities are denominated] by bank wire transfer in immediately available funds the Warrant Price for each Warrant exercised to the warrant agent, such delivery and payment to be made at the principal corporate trust office of [name of Warrant Agent] or its successor as warrant agent (the "Warrant Agent") [,or [________]], currently at the address specified on the reverse hereof, and upon compliance with and subject to the conditions set forth herein and the Warrant Agreement. Any whole number of Warrants evidenced by this Warrant Certificate may be exercised to purchase Warrant Securities [in registered form in denominations of $[_____] and any integral multiples thereof] [in bearer form in the denomination of $[_____]] [or both]. Upon any exercise of fewer than all of the Warrants evidenced by this Warrant Certificate, there shall be issued to the holder hereof a new Warrant Certificate evidencing the number of Warrants remaining unexercised, unless sufficient time does not exist to exercise such Warrants in accordance with the provisions of the Warrant Agreement before the Warrants become void. This Warrant Certificate is issued under and in accordance with the Warrant Agreement dated as of [___________], 20[__] (the "Warrant Agreement") between the Company and the Warrant Agent and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the holder of this Warrant Certificate consents by acceptance hereof. Copies of the Warrant Agreement are on file at the principal corporate trust office of the Warrant Agent specified on the reverse hereof [and at [____________]]. The Warrant Securities to be issued and delivered upon the exercise of the Warrants evidenced by this Warrant Certificate will be issued under and in accordance with an Indenture dated as of [___________], [____] (the "Indenture"), between the Company and [___________], as Trustee (such Trustee and any successor to such Trustee being hereinafter referred to as the "Trustee"), and will be subject to the terms and provisions contained in the Indenture. Copies of the Indenture and the form of the Warrant Securities are on file at the principal corporate trust office of the Trustee in New York City [and at - ------------------]. [IF OFFERED SECURITIES WITH BEARER WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--Prior to [___________], 20[__], this Warrant Certificate may be exchanged or transferred only together with the [Title of Offered Securities] (the "Offered Securities") to which this Warrant Certificate was initially attached, and only for the purpose of effecting, or in conjunction with, an exchange or transfer of such Offered Securities. After such date, this] [IF OFFERED SECURITIES WITH BEARER WARRANTS WHICH ARE IMMEDIATELY DETACHABLE OR WARRANTS ISSUED INDEPENDENT OF ANY OFFERED SECURITIES--This] Warrant Certificate may be registered when this Warrant Certificate is surrendered at the principal corporate trust office of the Warrant Agent [or 16 17 [__________]] by the registered owner or his assigns, in person or by his attorney duly authorized in writing, in the manner and subject to the limitations provided in the Warrant Agreement. [IF OFFERED SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--Except as provided in the immediately preceding paragraph, after] [IF OFFERED SECURITIES WITH WARRANTS WHICH ARE IMMEDIATELY DETACHABLE OR WARRANTS ISSUED INDEPENDENT OF ANY OFFERED SECURITIES--After] countersignature by the Warrant Agent and prior to the expiration of this Warrant Certificate, this Warrant Certificate may be exchanged at the principal corporate trust office of the Warrant Agent [or [_________]] for Warrant Certificates, representing the same aggregate number of Warrants, [in registered form] [in bearer form] [in either registered or bearer form]. This Warrant Certificate shall not entitle the holder hereof to any of the rights of a holder of the Warrant Securities, including without limitation the right to receive payments of principal, of premium, if any, or interest, if any, on the Warrant Securities or to enforce any of the covenants of the Indenture, except to the extent that in connection with any modification of the Indenture pursuant to the provisions of Section [__] thereof a holder of any unexpired Warrant shall be deemed to be the holder of the principal amount of Warrant Securities issuable upon exercise of such Warrant. This Warrant Certificate shall be governed by, and construed in accordance with the laws of the State of New York without regard to any conflict of laws provisions. The Warrant Certificate shall not be valid or obligatory for any purpose until countersigned by the Warrant Agent. Dated as of [___________], 20[__]. ARROW ELECTRONICS, INC. By -------------------------------- Name: Title: [SEAL] Attest: ----------------------------------- [Assistant] Secretary 17 18 [NAME OF WARRANT AGENT], As Warrant Agent By ------------------------------- Name: Title: 18 19 (REVERSE OF WARRANT CERTIFICATE) INSTRUCTIONS FOR EXERCISE OF WARRANT To exercise the Warrants evidenced hereby, the holder must pay by bank wire transfer in immediately available funds the Warrant Price in full for Warrants exercised to [insert name of Warrant Agent], at its principal corporate trust office at [insert address of Warrant Agent], Attention: [______________], [or [______________________________]] which wire transfer must specify the name of the holder and the number of Warrants exercised by such holder. In addition, the holder must complete the information required below and present this Warrant Certificate in person or by mail (registered mail is recommended) to the Warrant Agent at the addresses set forth below. This Warrant Certificate, completed and duly executed, must be received by the Warrant Agent together with such wire transfer. [If the undersigned is requesting delivery of Warrant Securities in bearer form, the person entitled to physical delivery of such Warrant Securities will be required to deliver a certificate (copies of which may be obtained from the Warrant Agent [or [_____________]]) certifying that such Warrant Securities are not being acquired by or on behalf of a U.S. person or for resale to a U.S. person unless such U.S. person is qualified under United States tax laws and regulations.] TO BE EXECUTED UPON EXERCISE OF WARRANT The undersigned hereby irrevocably elects to exercise ________ Warrants, evidenced by this Warrant Certificate, to purchase $______ principal amount of the [Title of Warrant Securities] (the "Warrant Securities") of Arrow Electronics, Inc. and represents that he has tendered payment for such Warrant Securities by bank wire transfer in immediately available funds to the order of Arrow Electronics, Inc., in care of [insert name and address of Warrant Agent], in the amount of $______ in accordance with the terms hereof. The undersigned requests that said principal amount of Warrant Securities be in [bearer form in the authorized denominations] [fully registered form in the authorized denominations, registered in such names and delivered], all as specified in accordance with the instructions set forth below. If the number of Warrants exercised is less than all of the Warrants evidenced hereby, the undersigned requests that a new Warrant Certificate representing the remaining Warrants evidenced hereby be issued and delivered to the undersigned unless otherwise specified in the instructions below or unless sufficient time does not exist before the remaining Warrants become void. 19 20 Dated: Name - ----------------------------------- ------------------------------ (Please Print) Address - ----------------------------------- ---------------------------- (Insert Social Security or Other Identifying Number of Holder) ----------------------------------- Signature -------------------------- 20 21 The Warrants evidenced hereby may be exercised at the following addresses: By hand at ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- By mail at ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- 21 22 [IF REGISTERED WARRANT] ASSIGNMENT (FORM OF ASSIGNMENT TO BE EXECUTED IF HOLDER DESIRES TO TRANSFER WARRANTS EVIDENCED HEREBY) FOR VALUE RECEIVED __________ hereby sells assigns and transfers unto Please insert social security or other identifying number. --------------------------------- - ---------------------------------- --------------------------------- Please print name and address including zip code) - ------------------------------------------------------------------------- The Warrants represented by the within Warrant Certificate and does hereby irrevocably constitute and appoint _________________________, Attorney, to transfer said Warrant Certificate on the books of the Warrant Agent with full power of substitution in the premises. Dated: -------------------------------------- Signature (Signature must conform in all respects to the name of the holder as specified on the face of this Warrant Certificate and must bear a signature guarantee by a bank, trust company or member broker of the New York, Chicago or Pacific Stock Exchange.) Signature Guaranteed: - ---------------------------------- 22 23 ANNEX B TO WARRANT AGREEMENT FORM OF CERTIFICATE FOR DELIVERY OF BEARER WARRANT SECURITIES [DEBT SECURITIES] Issued by ARROW ELECTRONICS, INC. To: Arrow Electronics, Inc. This certificate is submitted in connection with the request of the undersigned that you deliver $_____ principal amount of [Title of Warrant Securities] (the "Warrant Securities") in bearer form upon exercise of Warrants. The undersigned hereby certifies that as of the date hereof (the date of delivery to the undersigned of the Warrant Securities), the Warrant Securities which are to be delivered to the undersigned in bearer form are not being acquired by or for the account or benefit of a United States person, or for offer to resell or for resale to a United States person or any person who is within the United States or, if any beneficial interest in the Warrant Securities is being acquired by a United States person, such United States person (i) is a foreign branch of a United States financial institution (as defined in U.S. Treas. Reg. section 1.165-12(c)(1)(v)) which has provided to the person from which it purchased the obligation a certificate stating that it agrees to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986 and the regulations thereunder (a "qualifying foreign branch"), (ii) acquired such securities through a qualifying foreign branch and is holding the obligation through such financial institution or (iii) is a financial institution holding for purposes of resale during the restricted period (as defined in U.S. Treas. Reg. section 1.163-5(c)(2)(i)(D)(7)), which financial institution has not acquired the obligation for the purposes of resale directly or indirectly to a United States person or to a person within the United States. In addition, the undersigned hereby certifies that the above- referenced Warrant Securities are not being acquired by or for the account or benefit of a "U.S. person", as the term is defined in Regulation S under the United States Securities Act of 1933, as amended. If the undersigned is a clearing organization, the undersigned represents that this certificate is based on statements provided to it by its member organizations. If the undersigned is a dealer, the undersigned agrees to obtain a similar certificate from each person entitled to delivery of any of the Warrant Securities in bearer form purchased from it. Notwithstanding the foregoing, if the undersigned has actual knowledge that the information contained in such certificate is false, the undersigned will not deliver a Warrant 23 24 Security in bearer form to the person who signed such certificate notwithstanding the delivery of such certificate to the undersigned. The undersigned will be deemed to have actual knowledge that the beneficial owner is a United States person for this purpose if the undersigned has a United States address for the beneficial owner of the Security. As used herein, "United States" means the United States of America (including the states and the District of Columbia) and its possessions, including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Islands, and Northern Mariana Islands; "United States person" means an individual who is a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof, or an estate or trust the income of which is subject to United States Federal income taxation regardless of its source; and a "clearing organization" means an entity which is in the business of holding obligations for member organizations and transferring obligations among such members by credit or debit to the account of a member without the necessity of physical delivery of the obligation. The undersigned understands that this certificate may be required in connection with United States tax laws and regulations. The undersigned irrevocably authorizes you to produce this certificate or a copy hereof to any interested party in any administrative or legal proceedings with respect to the matters covered by this certificate. --------------------------------------- (Signature) Dated: --------------------------------------- (Please print name) Address: 24 EX-4.5 7 y42939a1ex4-5.txt FORM OF WARRANT AGREEMENT 1 EXHIBIT 4.5 ARROW ELECTRONICS, INC. and [NAME OF WARRANT AGENT], Warrant Agent ------------ WARRANT AGREEMENT [PREFERRED STOCK] Dated as of [___________], 20[__] 2 WARRANT AGREEMENT dated as of [___________], 20[__] , between ARROW ELECTRONICS, INC., a New York corporation (the "Company"), and [_____________], as warrant agent (the "Warrant Agent", which term includes any successor warrant agent hereunder). [WHEREAS the Company proposes to sell [title of Securities being offered] (the "Offered Securities") with] [WHEREAS the Company proposes to issue] Warrant certificates evidencing one or more warrants (the "Warrants"; individually a "Warrant") representing the right to purchase up to [____] shares of the [title] Preferred Stock of the Company (the "Warrant Securities"), having the terms which shall be set forth in the Certificate of Designation relating thereto, such warrant certificates and other warrant certificates issued pursuant to this Agreement being called the "Warrant Certificates"; and WHEREAS the Company desires that the Warrant Agent act on behalf of the Company in connection with the issuance, exchange, exercise and replacement of the Warrant Certificates, and in this Agreement wishes to set forth, among other things, the form and provisions of the Warrant Certificates and the terms and conditions on which they may be issued, exchanged, exercised and replaced. NOW THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the parties hereto agree as follows: ARTICLE I. ISSUANCE OF WARRANTS AND EXECUTION AND DELIVERY OF WARRANT CERTIFICATES SECTION 1.01. ISSUANCE OF WARRANTS. [Warrants shall be initially issued in connection with the issuance of the Offered Securities] [but shall be separately transferable on and after [___________], 20[__] (the "Detachable Date")] [and shall not be separately transferable] [and each] [Each] Warrant Certificate shall evidence one or more Warrants. Each Warrant evidenced by a Warrant Certificate shall represent the right, subject to the provisions contained herein and therein, to purchase up to [_________] shares of the Warrant Securities. SECTION 1.02. EXECUTION AND DELIVERY OF WARRANT CERTIFICATES. Warrant Certificates, whenever issued, shall be in [bearer] [or] [registered] form [or both] substantially in the form set forth in Annex A hereto, shall be dated and may have such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as the officers of the Company executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange on which the Warrants may be listed, or to conform to common usage. The Warrant Certificates shall be signed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President, its Chief Operating Officer, its Chief Financial Officer, 2 3 one of its Vice Presidents (whether or not designated by a number or word or words added before or after the title Vice President), its Treasurer or an Assistant Treasurer under its corporate seal and attested by its Secretary or one of its Assistant Secretaries. Such signatures may be manual or facsimile signatures of such authorized officers and may be imprinted or otherwise reproduced on the Warrant Certificates. The seal of the Company may be in the form of a facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Warrant Certificates. No Warrant Certificate shall be valid for any purpose, and no Warrant evidenced thereby shall be exercisable, until such Warrant evidenced thereby has been countersigned by the manual signature of the Warrant Agent. Such signature by the Warrant Agent upon any Warrant Certificate executed by the Company shall be conclusive evidence that the Warrant Certificate so countersigned has been duly issued hereunder. In case any officer of the Company who shall have signed any of the Warrant Certificates shall cease to be such officer before the Warrant Certificates so signed shall have been countersigned and delivered by the Warrant Agent, such Warrant Certificates may be countersigned and delivered notwithstanding that the person who signed such Warrant Certificates ceased to be such officer of the Company; and any Warrant Certificate may be signed on behalf of the Company by such persons as, at the actual date of the execution of such Warrant Certificate, shall be the proper officers of the Company, although at the date of the execution of this Agreement any such person was not such officer. [IF BEARER WARRANTS--The term "holder" or "holder of a Warrant Certificate" as used herein shall mean [IF OFFERED SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--prior to the Detachable Date, the registered owner of the Offered Security to which such Warrant Certificate was initially attached (or the bearer if the Offered Securities are in bearer form) and after such Detachable Date] the bearer of such Warrant Certificate.] [IF REGISTERED WARRANTS--The term "holder" or "holder of a Warrant Certificate" as used herein shall mean any person in whose name at the time any Warrant Certificate shall be registered upon the books to be maintained by the Warrant Agent for that purpose [IF OFFERED SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--or, prior to the Detachable Date, upon the register of the Offered Securities]. The Company will, or will cause the registrar of the Offered Securities to, make available at all times to the Warrant Agent such information as to holders of the Offered Securities with Warrants as may be necessary to keep the Warrant Agent's records up-to-date. SECTION 1.03. ISSUANCE OF WARRANT CERTIFICATES. Warrant Certificates evidencing the right to purchase up to [__________] shares of Warrant Securities (except as provided in Section 2.03(c), 3.02 and 4.01) may be executed by the Company and delivered to the Warrant Agent upon the execution of this Agreement or from time to time thereafter. The Warrant Agent shall, upon receipt of Warrant Certificates duly executed on behalf of the Company and upon order of the Company, countersign Warrant Certificates evidencing Warrants representing the right to purchase up to [__________] shares of Warrant Securities and shall 3 4 deliver such Warrant Certificates to or upon the order of the Company. Subsequent to such original issuance of the Warrant Certificates, the Warrant Agent shall countersign a Warrant Certificate only if the Warrant Certificate is issued in exchange or substitution for one or more previously countersigned Warrant Certificates [IF REGISTERED WARRANTS--or in connection with their transfer] as hereinafter provided, or as provided in Section 2.03(c). ARTICLE II. WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS SECTION 2.01. WARRANT PRICE. During the period from and including [___________], 20[__], to and including [___________], 20[__], the exercise price of each Warrant will be $[_____] per share of the Warrant Securities. [During the period from [___________], 20[__], to and including [___________], 20[__], the exercise price of each Warrant will be $[______] per share.] Such purchase price of Warrant Securities is subject to Section 2.4 and is referred to in this Agreement as the "Warrant Price". SECTION 2.02. DURATION OF WARRANTS. Each Warrant may be exercised in whole at any time, as specified herein, on or after [the date thereof] [[___________], 20[__]] and at or before 5:00 p.m. New York City time on [___________], 20[__] or such later date as may be selected by the Company, in a written statement to the Warrant Agent and with notice to the holders of Warrants (such date of expiration being called the "Expiration Date"). Each Warrant not exercised at or before 5:00 p.m. New York City time on the Expiration Date [(an "Expired Unexercised Warrant")] shall become void and all rights of the holder of the Warrant Certificate evidencing such Warrant under this Agreement shall cease. SECTION 2.03. EXERCISE OF WARRANTS. (a) During the period specified in Section 2.02, any whole number of Warrants may be exercised by delivery to the Warrant Agent of the Warrant Certificate evidencing such Warrant, with the form of election to purchase Warrant Securities set forth on the reverse side of the Warrant Certificate properly completed and duly executed, and by paying in full [in lawful money of the United States of America] [in the foreign currency or currency unit in which the Warrant Securities are denominated] by bank wire transfer in immediately available funds the Warrant Price for each Warrant exercised to the principal corporate trust office of the Warrant Agent [or at [________]]. The date on which the duly completed and executed Warrant Certificate and payment in full of the Warrant Price is received by the Warrant Agent shall be deemed to be the date on which the Warrant is exercised. The Warrant Agent shall deposit all funds received by it in payment of the Warrant Price in an account of the Company maintained with it and shall advise the Company by telephone at the end of each day on which a wire transfer for the exercise of Warrants is received of the amount so deposited to its account. The Warrant Agent shall promptly confirm such telephone advice to the Company in writing. (b) The Warrant Agent shall, from time to time, as promptly as practicable, advise the Company of (i) the number of Warrants exercised, (ii) the instructions of each holder 4 5 of the Warrant Certificates evidencing such Warrants with respect to delivery of the Warrant Securities to which such holder is entitled upon such exercise, (iii) delivery of Warrant Certificates evidencing the balance, if any, of the Warrants remaining after such exercise and (iv) such other information as the Company shall reasonably require. (c) As soon as practicable after the exercise of any Warrant, the Company shall issue to or upon the order of the holder of the Warrant Certificate evidencing such Warrant, the Warrant Securities to which such holder is entitled, in fully registered form, registered in such name or names as may be directed by such holder. If fewer than all of the Warrants evidenced by such Warrant Certificate are exercised, the Company shall execute (attested and under seal as aforesaid), and an authorized officer of the Warrant Agent shall manually countersign and deliver, a new Warrant Certificate evidencing the number of such Warrants remaining unexercised, unless sufficient time does not exist before the Expiration Date to exercise such Warrants in accordance with the provisions of this Agreement. (d) The Company shall not be required to pay any stamp or other tax or other governmental charge required to be paid in connection with any transfer involved in the issuance of the Warrant Securities and the Company shall not be required to issue or deliver any Warrant Security until such tax or other charge shall have been paid or it shall have been established to the satisfaction of the Company that no such tax or other charge is due. SECTION 2.4. WARRANT PRICE ADJUSTMENT. [Here insert warrant price adjustment provisions to protect against dilution.] ARTICLE III. OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANT CERTIFICATES SECTION 3.01. NO RIGHTS AS A HOLDER OF WARRANT SECURITIES CONFERRED BY WARRANTS OR WARRANT CERTIFICATES. No Warrant Certificate or Warrant evidenced thereby shall entitle the holder thereof to any of the rights of a holder of Warrant Securities, including, without limitation, the right to receive any dividend or payment on Warrant Securities. SECTION 3.02. LOST, STOLEN, MUTILATED OR DESTROYED CERTIFICATES. Upon receipt by the Warrant Agent of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Warrant Certificate and of indemnity reasonably satisfactory to it and the Company and, in the case of mutilation, upon surrender thereof to the Warrant Agent for cancellation, then, in the absence of notice to the Company or the Warrant Agent that such Warrant Certificate has been acquired by a bona fide purchaser or holder in due course, the Company may (or, in the case of mutilation, shall) execute, and in such event an authorized officer of the Warrant Agent shall manually countersign and deliver, in exchange for or in lieu of the lost, stolen, destroyed or mutilated Warrant Certificate, a new Warrant Certificate of the same tenor and evidencing a like number of Warrants. Upon the issuance of any new Warrant Certificate under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Warrant Agent) in connection therewith. Every substitute Warrant Certificate executed and delivered 5 6 pursuant to this Section in lieu of any lost, stolen or destroyed Warrant Certificate shall represent an additional contractual obligation of the Company, whether or not the lost, stolen or destroyed Warrant Certificate shall be at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) any and all other rights or remedies notwithstanding any law or statute existing or hereinafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. SECTION 3.03. HOLDER OF WARRANT CERTIFICATE MAY ENFORCE RIGHTS. Notwithstanding any of the provisions of this Agreement, any holder of a Warrant Certificate, without the consent of the Warrant Agent, the holder of any Warrant Securities or the holder of any other Warrant Certificate, may, in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company suitable to enforce or otherwise in respect of, his right to exercise the Warrants evidenced by his Warrant Certificate in the manner provided in his Warrant Certificate and in this Agreement. SECTION 3.04. RESERVATION OF SHARES. The Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized [title] Preferred Stock, for the purpose of effecting the exercise of the Warrants, the full number of shares of [title] Preferred Stock then issuable upon the exercise of all outstanding Warrants, and the Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized [title of security], for the purpose of effecting any exchange or conversion of the Warrant Securities, the full number of shares of such [title of security] issuable upon exchange or conversion of all Warrant Securities. ARTICLE IV. EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES SECTION 4.01. EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES. [IF OFFERED SECURITIES WITH WARRANTS WHICH ARE IMMEDIATELY DETACHABLE OR WARRANTS ISSUED INDEPENDENT OF ANY OFFERED SECURITIES--Upon] [IF OFFERED SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--Prior to the Detachable Date a Warrant Certificate may be exchanged or transferred only together with the Offered Securities to which the Warrant Certificate was initially attached, and only for the purpose of effecting, or in conjunction with, an exchange or transfer of such Offered Security. Prior to the Detachable Date, each transfer of the Offered Security [on the register maintained with respect to the Offered Securities] shall operate also to transfer the related Warrant Certificates. After the Detachable Date, upon] surrender at the principal corporate trust office of the Warrant Agent [or [__________]], Warrant Certificates evidencing Warrants may be exchanged for Warrant Certificates in other denominations evidencing such Warrants [IF REGISTERED WARRANTS--or the transfer may be registered in whole or in part]; provided that such other Warrant Certificates evidence a like number of Warrants as the Warrant Certificates so surrendered. [IF REGISTERED AND BEARER WARRANTS (SUBJECT TO ANY LIMITATIONS IMPOSED WITH RESPECT TO SUCH 6 7 EXCHANGES)--After the Detachable Date, upon] [Upon] surrender at the principal corporate trust office of the Warrant Agent [or [__________]], Warrant Certificates in bearer form may be exchanged for Warrant Certificates in registered form evidencing a like number of Warrants.] [IF REGISTERED WARRANTS--The Warrant Agent shall keep, at its corporate trust office, books in which, subject to such reasonable regulations as it may prescribe, it shall register Warrant Certificates and exchanges and transfers of outstanding Warrant Certificates upon surrender of the Warrant Certificates to the Warrant Agent at its principal corporate trust office [or [________]] for exchange [or registration of transfer], properly endorsed or accompanied by appropriate instruments of registration of transfer and written instructions for transfer, all in form satisfactory to the Company and the Warrant Agent.] The Company may require payment of a service charge for any exchange [or registration of transfer] of Warrant Certificates, and may require payment of a sum sufficient to cover any stamp or other tax or other governmental charge that may be imposed in connection with any such exchange [or registration of transfer]. Whenever any Warrant Certificates are so surrendered for exchange [or registration of transfer] an authorized officer of the Warrant Agent shall manually countersign and deliver to the person or persons entitled thereto a Warrant Certificate or Warrant Certificates duly authorized and executed by the Company, as so requested. The Warrant Agent shall not be required to effect any exchange [or registration of transfer] which will result in the issuance of a Warrant Certificate evidencing a fraction of a Warrant or a number of full Warrants and a fraction of a Warrant. All Warrant Certificates issued upon any exchange [or registration of transfer] of Warrant Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits under this Agreement, as the Warrant Certificates surrendered for such exchange [or registration of transfer]. SECTION 4.02. TREATMENT OF HOLDERS OF WARRANT CERTIFICATES. [IF OFFERED SECURITIES WITH BEARER WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--Subject to Section 4.01, each] [IF OFFERED SECURITIES WITH BEARER WARRANTS WHICH ARE IMMEDIATELY DETACHABLE OR WARRANTS ISSUED INDEPENDENT OF ANY OFFERED SECURITIES--Each] Warrant Certificate shall be transferable by delivery and shall be deemed negotiable and the bearer of each Warrant Certificate may be treated by the Company, the Warrant Agent and all other persons dealing with such bearer as the absolute owner thereof for any purpose and as the person entitled to exercise the rights represented by the Warrants evidenced thereby, any notice to the contrary notwithstanding. [IF REGISTERED WARRANTS--Every holder of a Warrant Certificate, by accepting the same, consents and agrees with the Company, the Warrant Agent and with every subsequent holder of such Warrant Certificate that until the transfer of the Warrant Certificate is registered on the books of the Warrant Agent [or the register of the Offered Securities prior to the Detachable Date], the Company and the Warrant Agent [or the registrar of the Offered Securities prior to the Detachable Date] may treat such registered holder as the absolute owner thereof for any purpose and as the person entitled to exercise the rights represented by the Warrants evidenced thereby, any notice to contrary notwithstanding.] SECTION 4.03. CANCELLATION OF WARRANT CERTIFICATES. Any Warrant Certificate surrendered for exchange [, registration of transfer] or exercise of the Warrants evidenced thereby, if surrendered to the Company, shall be delivered to the Warrant Agent and all Warrant Certificates surrendered or so delivered to the Warrant Agent shall be promptly 7 8 cancelled by the Warrant Agent and shall not be reissued and, except as expressly permitted by this Agreement, no Warrant Certificate shall be issued hereunder in exchange or in lieu thereof. The Warrant Agent shall deliver to the Company from time to time or otherwise dispose of cancelled Warrant Certificates in a manner satisfactory to the Company. ARTICLE V. CONCERNING THE WARRANT AGENT SECTION 5.01. WARRANT AGENT. The Company hereby appoints the Warrant Agent as warrant agent of the Company in respect of the Warrants and the Warrant Certificates upon the terms and subject to the conditions herein set forth and the Warrant Agent hereby accepts such appointment. The Warrant Agent shall have the powers and authority granted to and conferred upon it in the Warrant Certificates and hereby and such further powers and authority to act on behalf of the Company as the Company may hereafter grant to or confer upon it in writing. All of the terms and provisions with respect to such powers and authority contained in the Warrant Certificates are subject to and governed by the terms and provisions hereof. SECTION 5.02. CONDITIONS OF WARRANT AGENT'S OBLIGATIONS. The Warrant Agent accepts its obligations herein set forth upon the terms and conditions hereof, including the following, to all of which the Company agrees and to all of which the rights hereunder of the holders from time to time of the Warrant Certificates shall be subject: (a) COMPENSATION AND INDEMNIFICATION. The Company agrees promptly to pay the Warrant Agent the compensation to be agreed upon with the Company for all services rendered by the Warrant Agent and to reimburse the Warrant Agent for reasonable out-of-pocket expenses (including counsel fees) incurred by the Warrant Agent in connection with the services rendered hereunder by the Warrant Agent. The Company also agrees to indemnify the Warrant Agent for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Warrant Agent, arising out of or in connection with its acting as Warrant Agent hereunder, as well as the costs and expenses of defending against any claim of such liability. (b) AGENT FOR THE COMPANY. In acting under this Agreement and in connection with the Warrant Certificates, the Warrant Agent is acting solely as agent of the Company and does not assume any fiduciary obligation or relationship of agency or trust for or with any of the holders of Warrant Certificates or beneficial owners of Warrants. (c) DOCUMENTS. The Warrant Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in reliance upon any Warrant Certificate, notice, direction, consent, certificate, affidavit, statement or other paper or document reasonably believed by it to be genuine and to have been presented or signed by the proper parties. (d) CERTAIN TRANSACTIONS. The Warrant Agent, and its officers, directors and employees, may become the owner of, or acquire any interest in, Warrants and/or Warrant Securities and/or Offered Securities, with the same rights that it or they would have if it 8 9 were not the Warrant Agent hereunder, and, to the extent permitted by applicable law, it or they may engage or be interested in any financial or other transaction with the Company and may act on, or as depositary, trustee or agent for, any committee or body of holders of Warrant Securities, Offered Securities or other obligations of the Company as freely as if it were not the Warrant Agent hereunder. (e) NO LIABILITY FOR INVALIDITY. The Warrant Agent shall have no liability with respect to any invalidity of this Agreement or any of the Warrant Certificates. (f) NO LIABILITY FOR INTEREST. The Warrant Agent shall transfer to the Company interest on any monies at any time received by it pursuant to any of the provisions of this Agreement or of the Warrant Certificates. (g) NO RESPONSIBILITY FOR REPRESENTATIONS. The Warrant Agent shall not be responsible for any of the recitals or representations herein or in the Warrant Certificates (except as to the Warrant Agent's countersignature thereon), all of which are made solely by the Company. (h) NO IMPLIED OBLIGATIONS. The Warrant Agent shall be obligated to perform only such duties as are herein and in the Warrant Certificates specifically set forth and no implied duties or obligations shall be read into this Agreement or the Warrant Certificates against the Warrant Agent. The Warrant Agent shall not be under any obligation to take any action hereunder which might involve it in any expense or liability, the payment of which within a reasonable time is not, in its reasonable opinion, assured to it. The Warrant Agent shall not be accountable or under any duty or responsibility for the use by the Company of any of the Warrant Certificates countersigned and delivered by it to the Company pursuant to this Agreement or for the application by the Company of the proceeds of the Warrant Certificates. The Warrant Agent shall have no duty or responsibility in case of any default by the Company in the performance of its covenants or agreements contained herein or in the Warrant Certificates or in the case of the receipt of any written demand from a holder of a Warrant Certificate with respect to such default, including, without limiting the generality of the foregoing, any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise, or, except as provided in Section 6.02 hereof, to make any demand upon the Company. SECTION 5.03. RESIGNATION AND APPOINTMENT OF SUCCESSOR. (a) The Company agrees, for the benefit of the holders from time to time of the Warrant Certificates, that there shall at all times be a Warrant Agent hereunder until all the Warrant Certificates are no longer exercisable. (b) The Warrant Agent may at any time resign as such agent by giving written notice to the Company of such intention on its part, specifying the date on which it desires its resignation to become effective; provided that such date shall not be less than three months after the date on which such notice is given unless the Company otherwise agrees. The Warrant Agent hereunder may be removed at any time by the filing with it of an instrument in writing signed by or on behalf of the Company and specifying such removal and the date upon which such removal shall become effective. Such resignation or removal shall take effect upon 9 10 the appointment by the Company, as hereinafter provided, of a successor Warrant Agent (which shall be a bank or trust company authorized under the laws of the jurisdiction of its organization to exercise corporate trust powers) and the acceptance of such appointment by such successor Warrant Agent. The obligations of the Company under Section 5.02(a) shall continue to the extent set forth therein notwithstanding the resignation or removal of the Warrant Agent. (c) In case at any time the Warrant Agent shall resign, or shall be removed, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or shall file a petition seeking relief under the Federal Bankruptcy Code, as now constituted or hereafter amended, or under any other applicable Federal or state bankruptcy law or similar law or make an assignment for the benefit of its creditors or consent to the appointment of a receiver or custodian of all or any substantial part of its property, or shall admit in writing its inability to pay or meet its debts as they mature, or if a receiver or custodian of it or of all or any substantial part of its property shall be appointed, or if an order of any court shall be entered for relief against it under the provisions of the Federal Bankruptcy Code, as now constituted or hereafter amended, or under any other applicable Federal or state bankruptcy or similar law, or if any public officer shall have taken charge or control of the Warrant Agent or of its property or affairs, for the purpose of rehabilitation, conservation or liquidation, a successor Warrant Agent, qualified as aforesaid, shall be appointed by the Company by an instrument in writing, filed with the successor Warrant Agent. Upon the appointment as aforesaid of a successor Warrant Agent and acceptance by the successor Warrant Agent of such appointment, the Warrant Agent shall cease to be Warrant Agent hereunder. (d) Any successor Warrant Agent appointed hereunder shall execute, acknowledge and deliver to its predecessor and the Company an instrument accepting such appointment hereunder, and thereupon such successor Warrant Agent, without any further act, deed or conveyance, shall become vested with all the authority, rights, powers, trusts, immunities, duties and obligations of such predecessor with like effect as if originally named as Warrant Agent hereunder, and such predecessor, upon payment of its charges and to transfer, deliver and pay over, and such successor Warrant Agent shall be entitled to receive, all monies, securities and other property on deposit with or held by such predecessor, as Warrant Agent hereunder. (e) Any corporation into which the Warrant Agent hereunder may be merged or converted or any corporation with which the Warrant Agent may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Warrant Agent shall be a party, or any corporation to which the Warrant Agent shall sell or otherwise transfer all or substantially all the assets and business of the Warrant Agent, provided that it shall be qualified as aforesaid, shall be the successor Warrant Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto. 10 11 ARTICLE VI. MISCELLANEOUS SECTION 6.01. AMENDMENT. This Agreement may be amended by the parties hereto, without the consent of the holder of any Warrant Certificate, for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein, or making any other provisions with respect to matters or questions arising under this Agreement as the Company and the Warrant Agent may deem necessary or desirable; provided that such action shall not adversely affect the interests of the holders of the Warrant Certificates. SECTION 6.02. NOTICES AND DEMANDS TO THE COMPANY AND WARRANT AGENT. If the Warrant Agent shall receive any notice or demand addressed to the Company by the holder of a Warrant Certificate pursuant to the provisions of the Warrant Certificates, the Warrant Agent shall promptly forward such notice or demand to the Company. SECTION 6.03. ADDRESSES. Any communications from the Company to the Warrant Agent with respect to this Agreement shall be addressed to the Warrant Agent at its principal corporate trust office at [______________________], [_________________________], Attention: [_________________________], and any communication from the Warrant Agent to the Company with respect to this Agreement shall be addressed to Arrow Electronics, Inc., 25 Hub Drive, Melville, New York 11747 Attention: [____________] or such other address as shall be specified in writing by the Warrant Agent or the Company. SECTION 6.04. NOTICES TO HOLDERS OF WARRANTS. Any notice to holders of Warrants which by any provisions of this Agreement is required or permitted to be given shall be given [IF REGISTERED WARRANTS--by first class mail, postage prepaid, at such holder's address as appears on the books of the Warrant Agent [or on the register of the Offered Securities prior to the Detachable Date]] [IF BEARER WARRANTS--by publication at least once in a daily morning newspaper in New York City [, in London] [and in [________]]. SECTION 6.05. APPLICABLE LAW. The validity, interpretation and performance of this Agreement and each Warrant Certificate issued hereunder and of the respective terms and provisions thereof shall be governed by, and construed in accordance with, the substantive laws of the State of New York without regard to any conflict of laws provisions. SECTION 6.06. DELIVERY OF PROSPECTUS. The Company will furnish to the Warrant Agent sufficient copies of a prospectus with an accompanying prospectus supplement relating to the Warrant Securities, and the Warrant Agent agrees that upon the exercise of any Warrant, the Warrant Agent will deliver to the holder of the Warrant Certificate evidencing such Warrant prior to or concurrently with the delivery of the Warrant Securities issued upon such exercise, a copy of such prospectus and prospectus supplement. SECTION 6.07. OBTAINING OF GOVERNMENTAL APPROVALS. The Company will from time to time take all action which may be necessary to obtain and keep effective any and all permits, consents and approvals of governmental agencies and authorities and securities 11 12 acts filings under United States Federal and state laws and any applicable laws of other jurisdictions (including without limitation a registration statement in respect of the Warrants and Warrant Securities under the Securities Act of 1933) which may be or become required in connection with the issuance, sale, transfer and delivery of the Warrant Certificates, the exercise of the Warrants, the issuance, sale, transfer and delivery of the Warrant Securities issued upon exercise of the Warrants or upon the expiration of the period during which the Warrants are exercisable. SECTION 6.08. PERSONS HAVING RIGHTS UNDER WARRANT AGREEMENT. Nothing in this Agreement shall give to any person other than the Company, the Warrant Agent and the holders of the Warrant Certificates any right, remedy or claim under or by reason of this Agreement. SECTION 6.09. HEADINGS. The descriptive headings of the several Articles or Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. SECTION 6.10. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which as so executed shall be deemed to be an original, but such counterparts shall together constitute but one and the same instrument. SECTION 6.11. INSPECTION OF AGREEMENT. A copy of this Agreement shall be available at all reasonable times at the principal corporate trust office of the Warrant Agent and the Company for inspection by the holder of any Warrant Certificate. The Warrant Agent or the Company may require such holder to submit his Warrant Certificate for inspection by it. SECTION 6.12. PAYMENT OF STAMP AND OTHER DUTIES. The Company will pay all stamp and other duties, if any, to which, under the laws of the United States of America, the original issuance of the Warrant Certificates may be subject. 12 13 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by one of their respective authorized officers as of the day and year first above written. ARROW ELECTRONICS, INC. By ---------------------------------- Name: Title: [NAME OF WARRANT AGENT] By ---------------------------------- Name: Title: 13 14 ANNEX A to Warrant Agreement [FORM OF WARRANT CERTIFICATE] [FACE OF WARRANT CERTIFICATE] [FORM OF LEGEND IF SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE: PRIOR TO [___________], 20[___] THIS WARRANT CERTIFICATE CANNOT BE TRANSFERRED OR EXCHANGED UNLESS ATTACHED TO A [TITLE OF OFFERED SECURITIES].] EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT AGENT AS PROVIDED HEREIN WARRANTS TO PURCHASE [TITLE] PREFERRED STOCK Issued by ARROW ELECTRONICS, INC. VOID AFTER 5:00 P.M. NEW YORK CITY TIME ON [___________], 20[___] [No.] ___________________________________________________ Warrants This certifies that [the bearer is the] [[__________] or registered assigns is the registered] owner of the above indicated number of Warrants, each Warrant entitling such [bearer] [registered owner] to purchase, at any time [after 5:00 p.m. New York City time on [___________], 20[__] and] at or before 5:00 p.m. New York City time on [___________], 20[__] (or such later date as may be selected by Arrow Electronics, Inc., a New York corporation (the "Company") with notice to the holder hereof as provided in the Warrant Agreement (as hereinafter defined)), [_______] shares of the [title] Preferred Stock (the "Warrant Securities") of the Company, on the following basis: during the period from and including [___________], 20[___], the exercise price of each Warrant will be $[______] per share of [title] Preferred Stock[; during the period from [___________], 20[__], to and including [___________], 20[__], the exercise price of each Warrant will be $[______] per share] (the "Warrant Price"). The holder may exercise the Warrants evidenced hereby by delivery to the Warrant Agent (as hereinafter defined) of this Warrant Certificate, with the form of election to purchase on the reverse hereof properly completed and duly executed and by paying in full [in lawful money of the United States of America] [in the foreign currency or currency unit in which the Warrant Securities are denominated] by bank wire transfer in immediately available funds the Warrant 14 15 Price for each Warrant exercised to the warrant agent, such delivery and payment to be made at the principal corporate trust office of [name of Warrant Agent] or its successor as warrant agent (the "Warrant Agent") [,or [___________]], currently at the address specified on the reverse hereof, and upon compliance with and subject to the conditions set forth herein and the Warrant Agreement. Any whole number of Warrants evidenced by this Warrant Certificate may be exercised to purchase Warrant Securities. Upon any exercise of fewer than all of the Warrants evidenced by this Warrant Certificate, there shall be issued to the holder hereof a new Warrant Certificate evidencing the number of Warrants remaining unexercised, unless sufficient time does not exist to exercise such Warrants in accordance with the provisions of the Warrant Agreement before the Warrants become void. This Warrant Certificate is issued under and in accordance with the Warrant Agreement dated as of [___________], 20[__] (the "Warrant Agreement") between the Company and the Warrant Agent and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the holder of this Warrant Certificate consents by acceptance hereof. Copies of the Warrant Agreement are on file at the principal corporate trust office of the Warrant Agent specified on the reverse hereof [and at [__________]]. [IF OFFERED SECURITIES WITH BEARER WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--Prior to [___________], 20[__], this Warrant Certificate may be exchanged or transferred only together with the [Title of Offered Securities] (the "Offered Securities") to which this Warrant Certificate was initially attached, and only for the purpose of effecting, or in conjunction with, an exchange or transfer of such Offered Securities. After such date, this] [IF OFFERED SECURITIES WITH BEARER WARRANTS WHICH ARE IMMEDIATELY DETACHABLE OR WARRANTS ISSUED INDEPENDENT OF ANY OFFERED SECURITIES--This] Warrant Certificate may be registered when this Warrant Certificate is surrendered at the principal corporate trust office of the Warrant Agent [or [__________]] by the registered owner or his assigns, in person or by his attorney duly authorized in writing, in the manner and subject to the limitations provided in the Warrant Agreement. [IF OFFERED SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--Except as provided in the immediately preceding paragraph, after] [IF OFFERED SECURITIES WITH WARRANTS WHICH ARE IMMEDIATELY DETACHABLE OR WARRANTS ISSUED INDEPENDENT OF ANY OFFERED SECURITIES--After] countersignature by the Warrant Agent and prior to the expiration of this Warrant Certificate, this Warrant Certificate may be exchanged at the principal corporate trust office of the Warrant Agent [or [_________]] for Warrant Certificates, representing the same aggregate number of Warrants, [in registered form] [in bearer form] [in either registered or bearer form]. [IF NYSE LISTED, INSERT--Warrants not exercised by 5 p.m. on the date specified above ("Expired Unexercised Warrants") shall have a residual value of one share of Preferred Stock of the Company per 100 Expired Unexercised Warrants.] 15 16 This Warrant Certificate shall not entitle the holder hereof to any of the rights of a holder of the Warrant Securities, including without limitation the right to receive any dividend payments on the Warrant Securities. This Warrant Certificate shall be governed by, and construed in accordance with the laws of the State of New York without regard to any conflict of laws provisions. The Warrant Certificate shall not be valid or obligatory for any purpose until countersigned by the Warrant Agent. Dated as of [___________], 20[__]. ARROW ELECTRONICS, INC. By ---------------------------------- Name: Title: [SEAL] Attest: ------------------------------------- [Assistant] Secretary [NAME OF WARRANT AGENT], As Warrant Agent By ---------------------------------- Name: Title: 16 17 (REVERSE OF WARRANT CERTIFICATE) INSTRUCTIONS FOR EXERCISE OF WARRANT To exercise the Warrants evidenced hereby, the holder must pay by bank wire transfer in immediately available funds the Warrant Price in full for Warrants exercised to [insert name of Warrant Agent], at its principal corporate trust office at [insert address of Warrant Agent], Attention: [______________], [or [______________________________]] which wire transfer must specify the name of the holder and the number of Warrants exercised by such holder. In addition, the holder must complete the information required below and present this Warrant Certificate in person or by mail (registered mail is recommended) to the Warrant Agent at the addresses set forth below. This Warrant Certificate, completed and duly executed, must be received by the Warrant Agent together with such wire transfer. TO BE EXECUTED UPON EXERCISE OF WARRANT The undersigned hereby irrevocably elects to exercise ________ Warrants, evidenced by this Warrant Certificate, to purchase _________ shares of the [title] Preferred Stock (the "Warrant Securities") of Arrow Electronics, Inc. and represents that he has tendered payment for such Warrant Securities by bank wire transfer in immediately available funds to the order of Arrow Electronics, Inc., in care of [insert name and address of Warrant Agent], in the amount of $______ in accordance with the terms hereof. The undersigned requests that said number of shares of Warrant Securities be registered in such names and delivered, all as specified in accordance with the instructions set forth below. If the number of Warrants exercised is less than all of the Warrants evidenced hereby, the undersigned requests that a new Warrant Certificate representing the remaining Warrants evidenced hereby be issued and delivered to the undersigned unless otherwise specified in the instructions below or unless sufficient time does not exist before the remaining Warrants become void. 17 18 Dated: Name - ----------------------------------- ------------------------------- (Please Print) Address - ----------------------------------- ---------------------------- (Insert Social Security or Other Identifying Number of Holder) ----------------------------------- Signature -------------------------- 18 19 The Warrants evidenced hereby may be exercised at the following addresses: By hand at ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- By mail at ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- 19 20 [IF REGISTERED WARRANT] ASSIGNMENT (FORM OF ASSIGNMENT TO BE EXECUTED IF HOLDER DESIRES TO TRANSFER WARRANTS EVIDENCED HEREBY) FOR VALUE RECEIVED __________ hereby sells assigns and transfers unto Please insert social security or other identifying number. --------------------------------- - --------------------------------- --------------------------------- (Please print name and address including zip code) - -------------------------------------------------------------------------- The Warrants represented by the within Warrant Certificate and does hereby irrevocably constitute and appoint _________________________, Attorney, to transfer said Warrant Certificate on the books of the Warrant Agent with full power of substitution in the premises. Dated: -------------------------------------- Signature (Signature must conform in all respects to the name of the holder as specified on the face of this Warrant Certificate and must bear a signature guarantee by a bank, trust company or member broker of the New York, Chicago or Pacific Stock Exchange.) Signature Guaranteed: - --------------------------------- 20 EX-4.6 8 y42939a1ex4-6.txt FORM OF WARRANT AGREEMENT 1 EXHIBIT 4.6 ARROW ELECTRONICS, INC. and [NAME OF WARRANT AGENT], Warrant Agent ------------ WARRANT AGREEMENT [COMMON STOCK] Dated as of [___________], 20[__] 2 WARRANT AGREEMENT dated as of [___________], 20[__] , between ARROW ELECTRONICS, INC., a New York corporation (the "Company"), and [_____________], as warrant agent (the "Warrant Agent", which term includes any successor warrant agent hereunder). [WHEREAS the Company proposes to sell [title of Securities being offered] (the "Offered Securities") with] [WHEREAS the Company proposes to issue] Warrant certificates evidencing one or more warrants (the "Warrants"; individually a "Warrant") representing the right to purchase up to [____] shares of the Common Stock of the Company (the "Warrant Securities"), such warrant certificates and other warrant certificates issued pursuant to this Agreement being called the "Warrant Certificates"; and WHEREAS the Company desires that the Warrant Agent act on behalf of the Company in connection with the issuance, exchange, exercise and replacement of the Warrant Certificates, and in this Agreement wishes to set forth, among other things, the form and provisions of the Warrant Certificates and the terms and conditions on which they may be issued, exchanged, exercised and replaced. NOW THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the parties hereto agree as follows: ARTICLE I. ISSUANCE OF WARRANTS AND EXECUTION AND DELIVERY OF WARRANT CERTIFICATES SECTION 1.01. ISSUANCE OF WARRANTS. [Warrants shall be initially issued in connection with the issuance of the Offered Securities] [but shall be separately transferable on and after [___________], 20[__] (the "Detachable Date")] [and shall not be separately transferable] [and each] [Each] Warrant Certificate shall evidence one or more Warrants. Each Warrant evidenced by a Warrant Certificate shall represent the right, subject to the provisions contained herein and therein, to purchase up to [_________] shares of the Warrant Securities. SECTION 1.02. EXECUTION AND DELIVERY OF WARRANT CERTIFICATES. Warrant Certificates, whenever issued, shall be in [bearer] [or] [registered] form [or both] substantially in the form set forth in Annex A hereto, shall be dated and may have such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as the officers of the Company executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange on which the Warrants may be listed, or to conform to common usage. The Warrant Certificates shall be signed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President, its Chief Operating Officer, its Chief Financial Officer, one of its Vice Presidents (whether or not designated by a number or word or words added 2 3 before or after the title Vice President), its Treasurer or an Assistant Treasurer under its corporate seal and attested by its Secretary or one of its Assistant Secretaries. Such signatures may be manual or facsimile signatures of such authorized officers and may be imprinted or otherwise reproduced on the Warrant Certificates. The seal of the Company may be in the form of a facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Warrant Certificates. No Warrant Certificate shall be valid for any purpose, and no Warrant evidenced thereby shall be exercisable, until such Warrant evidenced thereby has been countersigned by the manual signature of the Warrant Agent. Such signature by the Warrant Agent upon any Warrant Certificate executed by the Company shall be conclusive evidence that the Warrant Certificate so countersigned has been duly issued hereunder. In case any officer of the Company who shall have signed any of the Warrant Certificates shall cease to be such officer before the Warrant Certificates so signed shall have been countersigned and delivered by the Warrant Agent, such Warrant Certificates may be countersigned and delivered notwithstanding that the person who signed such Warrant Certificates ceased to be such officer of the Company; and any Warrant Certificate may be signed on behalf of the Company by such persons as, at the actual date of the execution of such Warrant Certificate, shall be the proper officers of the Company, although at the date of the execution of this Agreement any such person was not such officer. [IF BEARER WARRANTS--The term "holder" or "holder of a Warrant Certificate" as used herein shall mean [IF OFFERED SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--prior to the Detachable Date, the registered owner of the Offered Security to which such Warrant Certificate was initially attached (or the bearer if the Offered Securities are in bearer form) and after such Detachable Date] the bearer of such Warrant Certificate.] [IF REGISTERED WARRANTS--The term "holder" or "holder of a Warrant Certificate" as used herein shall mean any person in whose name at the time any Warrant Certificate shall be registered upon the books to be maintained by the Warrant Agent for that purpose [IF OFFERED SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--or, prior to the Detachable Date, upon the register of the Offered Securities]. The Company will, or will cause the registrar of the Offered Securities to, make available at all times to the Warrant Agent such information as to holders of the Offered Securities with Warrants as may be necessary to keep the Warrant Agent's records up-to-date.] SECTION 1.03. ISSUANCE OF WARRANT CERTIFICATES. Warrant Certificates evidencing the right to purchase up to [_______] shares of Warrant Securities (except as provided in Section 2.03(c), 3.02 and 4.01) may be executed by the Company and delivered to the Warrant Agent upon the execution of this Agreement or from time to time thereafter. The Warrant Agent shall, upon receipt of Warrant Certificates duly executed on behalf of the Company and upon order of the Company, countersign Warrant Certificates evidencing Warrants representing the right to purchase up to [_______] shares of Warrant Securities and shall deliver such Warrant Certificates to or upon the order of the Company. Subsequent to such original 3 4 issuance of the Warrant Certificates, the Warrant Agent shall countersign a Warrant Certificate only if the Warrant Certificate is issued in exchange or substitution for one or more previously countersigned Warrant Certificates [IF REGISTERED WARRANTS--or in connection with their transfer] as hereinafter provided, or as provided in Section 2.03(c). ARTICLE II. WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS SECTION 2.01. WARRANT PRICE. During the period from and including [___________], 20[__], to and including [___________], 20[__], the exercise price of each Warrant will be $[_____] per share of the Warrant Securities. [During the period from [___________], 20[__], to and including [___________], 20[__], the exercise price of each Warrant will be $[______] per share.] Such purchase price of Warrant Securities is subject to Section 2.04 and is referred to in this Agreement as the "Warrant Price". SECTION 2.02. DURATION OF WARRANTS. Each Warrant may be exercised in whole at any time, as specified herein, on or after [the date thereof] [[___________], 20[__]] and at or before 5:00 p.m. New York City time on [___________], 20[__] or such later date as may be selected by the Company, in a written statement to the Warrant Agent and with notice to the holders of Warrants (such date of expiration being called the "Expiration Date"). Each Warrant not exercised at or before 5:00 p.m. New York City time on the Expiration Date [(an "Expired Unexercised Warrant")] shall become void and all rights of the holder of the Warrant Certificate evidencing such Warrant under this Agreement shall cease. SECTION 2.03. EXERCISE OF WARRANTS. (a) During the period specified in Section 2.02, any whole number of Warrants may be exercised by delivery to the Warrant Agent of the Warrant Certificate evidencing such Warrant, with the form of election to purchase Warrant Securities set forth on the reverse side of the Warrant Certificate properly completed and duly executed, and by paying in full [in lawful money of the United States of America] [in the foreign currency or currency unit in which the Warrant Securities are denominated] by bank wire transfer in immediately available funds the Warrant Price for each Warrant exercised to the principal corporate trust office of the Warrant Agent [or at [________]]. The date on which the duly completed and executed Warrant Certificate and payment in full of the Warrant Price is received by the Warrant Agent shall be deemed to be the date on which the Warrant is exercised. The Warrant Agent shall deposit all funds received by it in payment of the Warrant Price in an account of the Company maintained with it and shall advise the Company by telephone at the end of each day on which a wire transfer for the exercise of Warrants is received of the amount so deposited to its account. The Warrant Agent shall promptly confirm such telephone advice to the Company in writing. (b) The Warrant Agent shall, from time to time, as promptly as practicable, advise the Company of (i) the number of Warrants exercised, (ii) the instructions of each holder of the Warrant Certificates evidencing such Warrants with respect to delivery of the Warrant Securities to which such holder is entitled upon such exercise, (iii) delivery of Warrant 4 5 Certificates evidencing the balance, if any, of the Warrants remaining after such exercise and (iv) such other information as the Company shall reasonably require. (c) As soon as practicable after the exercise of any Warrant, the Company shall issue to or upon the order of the holder of the Warrant Certificate evidencing such Warrant, the Warrant Securities to which such holder is entitled, in fully registered form, registered in such name or names as may be directed by such holder. If fewer than all of the Warrants evidenced by such Warrant Certificate are exercised, the Company shall execute (attested and under seal as aforesaid), and an authorized officer of the Warrant Agent shall manually countersign and deliver, a new Warrant Certificate evidencing the number of such Warrants remaining unexercised, unless sufficient time does not exist before the Expiration Date to exercise such Warrants in accordance with the provisions of this Agreement. (d) The Company shall not be required to pay any stamp or other tax or other governmental charge required to be paid in connection with any transfer involved in the issuance of the Warrant Securities and the Company shall not be required to issue or deliver any Warrant Security until such tax or other charge shall have been paid or it shall have been established to the satisfaction of the Company that no such tax or other charge is due. SECTION 2.04. WARRANT PRICE ADJUSTMENT. [Here insert warrant price adjustment provisions to protect against dilution.] ARTICLE III. OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANT CERTIFICATES SECTION 3.01. NO RIGHTS AS A HOLDER OF WARRANT SECURITIES CONFERRED BY WARRANTS OR WARRANT CERTIFICATES. No Warrant Certificate or Warrant evidenced thereby shall entitle the holder thereof to any of the rights of a holder of Warrant Securities, including, without limitation, the right to receive any dividend or payment on Warrant Securities. SECTION 3.02. LOST, STOLEN, MUTILATED OR DESTROYED CERTIFICATES. Upon receipt by the Warrant Agent of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Warrant Certificate and of indemnity reasonably satisfactory to it and the Company and, in the case of mutilation, upon surrender thereof to the Warrant Agent for cancellation, then, in the absence of notice to the Company or the Warrant Agent that such Warrant Certificate has been acquired by a bona fide purchaser or holder in due course, the Company may (or, in the case of mutilation, shall) execute, and in such event an authorized officer of the Warrant Agent shall manually countersign and deliver, in exchange for or in lieu of the lost, stolen, destroyed or mutilated Warrant Certificate, a new Warrant Certificate of the same tenor and evidencing a like number of Warrants. Upon the issuance of any new Warrant Certificate under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Warrant Agent) in connection therewith. Every substitute Warrant Certificate executed and delivered pursuant to this Section in lieu of any lost, stolen or destroyed Warrant Certificate shall represent an additional contractual obligation of the Company, whether or not the lost, stolen or destroyed Warrant Certificate shall be at any time enforceable by anyone, and shall be entitled to the 5 6 benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) any and all other rights or remedies notwithstanding any law or statute existing or hereinafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. SECTION 3.03. HOLDER OF WARRANT CERTIFICATE MAY ENFORCE RIGHTS. Notwithstanding any of the provisions of this Agreement, any holder of a Warrant Certificate, without the consent of the Warrant Agent, the holder of any Warrant Securities or the holder of any other Warrant Certificate, may, in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company suitable to enforce or otherwise in respect of, his right to exercise the Warrants evidenced by his Warrant Certificate in the manner provided in his Warrant Certificate and in this Agreement. SECTION 3.04. RESERVATION OF SHARES. The Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized Common Stock, for the purpose of effecting the exercise of the Warrants, the full number of shares of Common Stock then issuable upon the exercise of all outstanding Warrants. ARTICLE IV. EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES SECTION 4.01. EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES. [IF OFFERED SECURITIES WITH WARRANTS WHICH ARE IMMEDIATELY DETACHABLE OR WARRANTS ISSUED INDEPENDENT OF ANY OFFERED SECURITIES--Upon] [IF OFFERED SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--Prior to the Detachable Date a Warrant Certificate may be exchanged or transferred only together with the Offered Securities to which the Warrant Certificate was initially attached, and only for the purpose of effecting, or in conjunction with, an exchange or transfer of such Offered Security. Prior to the Detachable Date, each transfer of the Offered Security [on the register maintained with respect to the Offered Securities] shall operate also to transfer the related Warrant Certificates. After the Detachable Date, upon] surrender at the principal corporate trust office of the Warrant Agent [or [__________]], Warrant Certificates evidencing Warrants may be exchanged for Warrant Certificates in other denominations evidencing such Warrants [IF REGISTERED WARRANTS--or the transfer may be registered in whole or in part]; provided that such other Warrant Certificates evidence a like number of Warrants as the Warrant Certificates so surrendered. [IF REGISTERED AND BEARER WARRANTS (SUBJECT TO ANY LIMITATIONS IMPOSED WITH RESPECT TO SUCH EXCHANGES)--After the Detachable Date, upon] [Upon] surrender at the principal corporate trust office of the Warrant Agent [or [__________]], Warrant Certificates in bearer form may be exchanged for Warrant Certificates in registered form evidencing a like number of Warrants.] [IF REGISTERED WARRANTS--The Warrant Agent shall keep, at its corporate trust office, books in which, subject to such reasonable regulations as it may prescribe, it shall register Warrant Certificates and exchanges and transfers of outstanding Warrant Certificates upon surrender of the Warrant Certificates to the Warrant Agent at its principal corporate trust office [or [________]] for exchange [or registration of transfer], properly endorsed or accompanied by 6 7 appropriate instruments of registration of transfer and written instructions for transfer, all in form satisfactory to the Company and the Warrant Agent.] The Company may require payment of a service charge for any exchange [or registration of transfer] of Warrant Certificates, and may require payment of a sum sufficient to cover any stamp or other tax or other governmental charge that may be imposed in connection with any such exchange [or registration of transfer]. Whenever any Warrant Certificates are so surrendered for exchange [or registration of transfer] an authorized officer of the Warrant Agent shall manually countersign and deliver to the person or persons entitled thereto a Warrant Certificate or Warrant Certificates duly authorized and executed by the Company, as so requested. The Warrant Agent shall not be required to effect any exchange [or registration of transfer] which will result in the issuance of a Warrant Certificate evidencing a fraction of a Warrant or a number of full Warrants and a fraction of a Warrant. All Warrant Certificates issued upon any exchange [or registration of transfer] of Warrant Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits under this Agreement, as the Warrant Certificates surrendered for such exchange [or registration of transfer]. SECTION 4.02. TREATMENT OF HOLDERS OF WARRANT CERTIFICATES. [IF OFFERED SECURITIES WITH BEARER WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--Subject to Section 4.01, each] [IF OFFERED SECURITIES WITH BEARER WARRANTS WHICH ARE IMMEDIATELY DETACHABLE OR WARRANTS ISSUED INDEPENDENT OF ANY OFFERED SECURITIES--Each] Warrant Certificate shall be transferable by delivery and shall be deemed negotiable and the bearer of each Warrant Certificate may be treated by the Company, the Warrant Agent and all other persons dealing with such bearer as the absolute owner thereof for any purpose and as the person entitled to exercise the rights represented by the Warrants evidenced thereby, any notice to the contrary notwithstanding. [IF REGISTERED WARRANTS--Every holder of a Warrant Certificate, by accepting the same, consents and agrees with the Company, the Warrant Agent and with every subsequent holder of such Warrant Certificate that until the transfer of the Warrant Certificate is registered on the books of the Warrant Agent [or the register of the Offered Securities prior to the Detachable Date], the Company and the Warrant Agent [or the registrar of the Offered Securities prior to the Detachable Date] may treat such registered holder as the absolute owner thereof for any purpose and as the person entitled to exercise the rights represented by the Warrants evidenced thereby, any notice to contrary notwithstanding.] SECTION 4.03. CANCELLATION OF WARRANT CERTIFICATES. Any Warrant Certificate surrendered for exchange [, registration of transfer] or exercise of the Warrants evidenced thereby, if surrendered to the Company, shall be delivered to the Warrant Agent and all Warrant Certificates surrendered or so delivered to the Warrant Agent shall be promptly cancelled by the Warrant Agent and shall not be reissued and, except as expressly permitted by this Agreement, no Warrant Certificate shall be issued hereunder in exchange or in lieu thereof. The Warrant Agent shall deliver to the Company from time to time or otherwise dispose of cancelled Warrant Certificates in a manner satisfactory to the Company. 7 8 ARTICLE V. CONCERNING THE WARRANT AGENT SECTION 5.01. WARRANT AGENT. The Company hereby appoints the Warrant Agent as warrant agent of the Company in respect of the Warrants and the Warrant Certificates upon the terms and subject to the conditions herein set forth and the Warrant Agent hereby accepts such appointment. The Warrant Agent shall have the powers and authority granted to and conferred upon it in the Warrant Certificates and hereby and such further powers and authority to act on behalf of the Company as the Company may hereafter grant to or confer upon it in writing. All of the terms and provisions with respect to such powers and authority contained in the Warrant Certificates are subject to and governed by the terms and provisions hereof. SECTION 5.02. CONDITIONS OF WARRANT AGENT'S OBLIGATIONS. The Warrant Agent accepts its obligations herein set forth upon the terms and conditions hereof, including the following, to all of which the Company agrees and to all of which the rights hereunder of the holders from time to time of the Warrant Certificates shall be subject: (a) COMPENSATION AND INDEMNIFICATION. The Company agrees promptly to pay the Warrant Agent the compensation to be agreed upon with the Company for all services rendered by the Warrant Agent and to reimburse the Warrant Agent for reasonable out-of-pocket expenses (including counsel fees) incurred by the Warrant Agent in connection with the services rendered hereunder by the Warrant Agent. The Company also agrees to indemnify the Warrant Agent for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Warrant Agent, arising out of or in connection with its acting as Warrant Agent hereunder, as well as the costs and expenses of defending against any claim of such liability. (b) AGENT FOR THE COMPANY. In acting under this Agreement and in connection with the Warrant Certificates, the Warrant Agent is acting solely as agent of the Company and does not assume any fiduciary obligation or relationship of agency or trust for or with any of the holders of Warrant Certificates or beneficial owners of Warrants. (c) DOCUMENTS. The Warrant Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in reliance upon any Warrant Certificate, notice, direction, consent, certificate, affidavit, statement or other paper or document reasonably believed by it to be genuine and to have been presented or signed by the proper parties. (d) CERTAIN TRANSACTIONS. The Warrant Agent, and its officers, directors and employees, may become the owner of, or acquire any interest in, Warrants and/or Warrant Securities and/or Offered Securities, with the same rights that it or they would have if it were not the Warrant Agent hereunder, and, to the extent permitted by applicable law, it or they may engage or be interested in any financial or other transaction with the Company and may act on, or as depositary, trustee or agent for, any committee or body of holders of Warrant Securities, Offered Securities or other obligations of the Company as freely as if it were not the Warrant Agent hereunder. 8 9 (e) NO LIABILITY FOR INVALIDITY. The Warrant Agent shall have no liability with respect to any invalidity of this Agreement or any of the Warrant Certificates. (f) NO LIABILITY FOR INTEREST. The Warrant Agent shall transfer to the Company interest on any monies at any time received by it pursuant to any of the provisions of this Agreement or of the Warrant Certificates. (g) NO RESPONSIBILITY FOR REPRESENTATIONS. The Warrant Agent shall not be responsible for any of the recitals or representations herein or in the Warrant Certificates (except as to the Warrant Agent's countersignature thereon), all of which are made solely by the Company. (h) NO IMPLIED OBLIGATIONS. The Warrant Agent shall be obligated to perform only such duties as are herein and in the Warrant Certificates specifically set forth and no implied duties or obligations shall be read into this Agreement or the Warrant Certificates against the Warrant Agent. The Warrant Agent shall not be under any obligation to take any action hereunder which might involve it in any expense or liability, the payment of which within a reasonable time is not, in its reasonable opinion, assured to it. The Warrant Agent shall not be accountable or under any duty or responsibility for the use by the Company of any of the Warrant Certificates countersigned and delivered by it to the Company pursuant to this Agreement or for the application by the Company of the proceeds of the Warrant Certificates. The Warrant Agent shall have no duty or responsibility in case of any default by the Company in the performance of its covenants or agreements contained herein or in the Warrant Certificates or in the case of the receipt of any written demand from a holder of a Warrant Certificate with respect to such default, including, without limiting the generality of the foregoing, any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise, or, except as provided in Section 6.02 hereof, to make any demand upon the Company. SECTION 5.03. RESIGNATION AND APPOINTMENT OF SUCCESSOR. (a) The Company agrees, for the benefit of the holders from time to time of the Warrant Certificates, that there shall at all times be a Warrant Agent hereunder until all the Warrant Certificates are no longer exercisable. (b) The Warrant Agent may at any time resign as such agent by giving written notice to the Company of such intention on its part, specifying the date on which it desires its resignation to become effective; provided that such date shall not be less than three months after the date on which such notice is given unless the Company otherwise agrees. The Warrant Agent hereunder may be removed at any time by the filing with it of an instrument in writing signed by or on behalf of the Company and specifying such removal and the date upon which such removal shall become effective. Such resignation or removal shall take effect upon the appointment by the Company, as hereinafter provided, of a successor Warrant Agent (which shall be a bank or trust company authorized under the laws of the jurisdiction of its organization to exercise corporate trust powers) and the acceptance of such appointment by such successor Warrant Agent. The obligations of the Company under Section 5.02(a) shall continue to the extent set forth therein notwithstanding the resignation or removal of the Warrant Agent. 9 10 (c) In case at any time the Warrant Agent shall resign, or shall be removed, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or shall file a petition seeking relief under the Federal Bankruptcy Code, as now constituted or hereafter amended, or under any other applicable Federal or state bankruptcy law or similar law or make an assignment for the benefit of its creditors or consent to the appointment of a receiver or custodian of all or any substantial part of its property, or shall admit in writing its inability to pay or meet its debts as they mature, or if a receiver or custodian of it or of all or any substantial part of its property shall be appointed, or if an order of any court shall be entered for relief against it under the provisions of the Federal Bankruptcy Code, as now constituted or hereafter amended, or under any other applicable Federal or state bankruptcy or similar law, or if any public officer shall have taken charge or control of the Warrant Agent or of its property or affairs, for the purpose of rehabilitation, conservation or liquidation, a successor Warrant Agent, qualified as aforesaid, shall be appointed by the Company by an instrument in writing, filed with the successor Warrant Agent. Upon the appointment as aforesaid of a successor Warrant Agent and acceptance by the successor Warrant Agent of such appointment, the Warrant Agent shall cease to be Warrant Agent hereunder. (d) Any successor Warrant Agent appointed hereunder shall execute, acknowledge and deliver to its predecessor and the Company an instrument accepting such appointment hereunder, and thereupon such successor Warrant Agent, without any further act, deed or conveyance, shall become vested with all the authority, rights, powers, trusts, immunities, duties and obligations of such predecessor with like effect as if originally named as Warrant Agent hereunder, and such predecessor, upon payment of its charges and to transfer, deliver and pay over, and such successor Warrant Agent shall be entitled to receive, all monies, securities and other property on deposit with or held by such predecessor, as Warrant Agent hereunder. (e) Any corporation into which the Warrant Agent hereunder may be merged or converted or any corporation with which the Warrant Agent may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Warrant Agent shall be a party, or any corporation to which the Warrant Agent shall sell or otherwise transfer all or substantially all the assets and business of the Warrant Agent, provided that it shall be qualified as aforesaid, shall be the successor Warrant Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto. ARTICLE VI. MISCELLANEOUS SECTION 6.01. AMENDMENT. This Agreement may be amended by the parties hereto, without the consent of the holder of any Warrant Certificate, for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein, or making any other provisions with respect to matters or questions arising under this Agreement as the Company and the Warrant Agent may deem necessary or desirable; provided that such action shall not adversely affect the interests of the holders of the Warrant Certificates. 10 11 SECTION 6.02. NOTICES AND DEMANDS TO THE COMPANY AND WARRANT AGENT. If the Warrant Agent shall receive any notice or demand addressed to the Company by the holder of a Warrant Certificate pursuant to the provisions of the Warrant Certificates, the Warrant Agent shall promptly forward such notice or demand to the Company. SECTION 6.03. ADDRESSES. Any communications from the Company to the Warrant Agent with respect to this Agreement shall be addressed to the Warrant Agent at its principal corporate trust office at [______________________], [_________________________], Attention: [_________________________], and any communication from the Warrant Agent to the Company with respect to this Agreement shall be addressed to Arrow Electronics, Inc., 25 Hub Drive, Melville, New York 11747 Attention: [____________] or such other address as shall be specified in writing by the Warrant Agent or the Company. SECTION 6.04. NOTICES TO HOLDERS OF WARRANTS. Any notice to holders of Warrants which by any provisions of this Agreement is required or permitted to be given shall be given [IF REGISTERED WARRANTS--by first class mail, postage prepaid, at such holder's address as appears on the books of the Warrant Agent [or on the register of the Offered Securities prior to the Detachable Date]] [IF BEARER WARRANTS--by publication at least once in a daily morning newspaper in New York City [, in London] [and in [________]]. SECTION 6.05. APPLICABLE LAW. The validity, interpretation and performance of this Agreement and each Warrant Certificate issued hereunder and of the respective terms and provisions thereof shall be governed by, and construed in accordance with, the substantive laws of the State of New York without regard to any conflict of laws provisions. SECTION 6.06. DELIVERY OF PROSPECTUS. The Company will furnish to the Warrant Agent sufficient copies of a prospectus with an accompanying prospectus supplement relating to the Warrant Securities, and the Warrant Agent agrees that upon the exercise of any Warrant, the Warrant Agent will deliver to the holder of the Warrant Certificate evidencing such Warrant prior to or concurrently with the delivery of the Warrant Securities issued upon such exercise, a copy of such prospectus and prospectus supplement. SECTION 6.07. OBTAINING OF GOVERNMENTAL APPROVALS. The Company will from time to time take all action which may be necessary to obtain and keep effective any and all permits, consents and approvals of governmental agencies and authorities and securities acts filings under United States Federal and state laws and any applicable laws of other jurisdictions (including without limitation a registration statement in respect of the Warrants and Warrant Securities under the Securities Act of 1933) which may be or become required in connection with the issuance, sale, transfer and delivery of the Warrant Certificates, the exercise of the Warrants, the issuance, sale, transfer and delivery of the Warrant Securities issued upon exercise of the Warrants or upon the expiration of the period during which the Warrants are exercisable. SECTION 6.08. PERSONS HAVING RIGHTS UNDER WARRANT AGREEMENT. Nothing in this Agreement shall give to any person other than the Company, the Warrant Agent and the holders of the Warrant Certificates any right, remedy or claim under or by reason of this 11 12 Agreement. SECTION 6.09. HEADINGS. The descriptive headings of the several Articles or Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. SECTION 6.10. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which as so executed shall be deemed to be an original, but such counterparts shall together constitute but one and the same instrument. SECTION 6.11. INSPECTION OF AGREEMENT. A copy of this Agreement shall be available at all reasonable times at the principal corporate trust office of the Warrant Agent and the Company for inspection by the holder of any Warrant Certificate. The Warrant Agent or the Company may require such holder to submit his Warrant Certificate for inspection by it. SECTION 6.12. PAYMENT OF STAMP AND OTHER DUTIES. The Company will pay all stamp and other duties, if any, to which, under the laws of the United States of America, the original issuance of the Warrant Certificates may be subject. 12 13 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by one of their respective authorized officers as of the day and year first above written. ARROW ELECTRONICS, INC. By ------------------------------ Name: Title: [NAME OF WARRANT AGENT] By ------------------------------ Name: Title: 13 14 ANNEX A TO WARRANT AGREEMENT [FORM OF WARRANT CERTIFICATE] [FACE OF WARRANT CERTIFICATE] [FORM OF LEGEND IF SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE: PRIOR TO [___________], 20[___] THIS WARRANT CERTIFICATE CANNOT BE TRANSFERRED OR EXCHANGED UNLESS ATTACHED TO A [TITLE OF OFFERED SECURITIES].] EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT AGENT AS PROVIDED HEREIN WARRANTS TO PURCHASE COMMON STOCK Issued by ARROW ELECTRONICS, INC. VOID AFTER 5:00 P.M. NEW YORK CITY TIME ON [___________], 20[___] [No.] ___________________________________________________ Warrants This certifies that [the bearer is the] [[__________] or registered assigns is the registered] owner of the above indicated number of Warrants, each Warrant entitling such [bearer] [registered owner] to purchase, at any time [after 5:00 p.m. New York City time on [___________], 20[__] and] at or before 5:00 p.m. New York City time on [___________], 20[__] (or such later date as may be selected by Arrow Electronics, Inc., a New York corporation (the "Company") with notice to the holder hereof as provided in the Warrant Agreement (as hereinafter defined)), [_______] shares of the Common Stock (the "Warrant Securities") of the Company, on the following basis: during the period from and including [___________], 20[___], the exercise price of each Warrant will be $[______] per share of Common Stock[; during the period from [___________], 20[__], to and including [___________], 20[__], the exercise price of each Warrant will be $[______] per share] (the "Warrant Price"). The holder may exercise the Warrants evidenced hereby by delivery to the Warrant Agent (as hereinafter defined) of this Warrant Certificate, with the form of election to purchase on the reverse hereof properly completed and duly executed and by paying in full, [in lawful money of the United States of America] [in the foreign currency or currency unit in which the Warrant Securities are denominated] by bank wire transfer in immediately available funds the Warrant Price for each 14 15 Warrant exercised to the warrant agent, such delivery and payment to be made at the principal corporate trust office of [name of Warrant Agent] or its successor as warrant agent (the "Warrant Agent") [,or [___________]], currently at the address specified on the reverse hereof, and upon compliance with and subject to the conditions set forth herein and the Warrant Agreement. Any whole number of Warrants evidenced by this Warrant Certificate may be exercised to purchase Warrant Securities. Upon any exercise of fewer than all of the Warrants evidenced by this Warrant Certificate, there shall be issued to the holder hereof a new Warrant Certificate evidencing the number of Warrants remaining unexercised, unless sufficient time does not exist to exercise such Warrants in accordance with the provisions of the Warrant Agreement before the Warrants become void. This Warrant Certificate is issued under and in accordance with the Warrant Agreement dated as of [___________], 20[__] (the "Warrant Agreement") between the Company and the Warrant Agent and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the holder of this Warrant Certificate consents by acceptance hereof. Copies of the Warrant Agreement are on file at the principal corporate trust office of the Warrant Agent specified on the reverse hereof [and at [__________]]. [IF OFFERED SECURITIES WITH BEARER WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--Prior to [___________], 20[__], this Warrant Certificate may be exchanged or transferred only together with the [Title of Offered Securities] (the "Offered Securities") to which this Warrant Certificate was initially attached, and only for the purpose of effecting, or in conjunction with, an exchange or transfer of such Offered Securities. After such date, this] [IF OFFERED SECURITIES WITH BEARER WARRANTS WHICH ARE IMMEDIATELY DETACHABLE OR WARRANTS ISSUED INDEPENDENT OF ANY OFFERED SECURITIES--This] Warrant Certificate may be registered when this Warrant Certificate is surrendered at the principal corporate trust office of the Warrant Agent [or [__________]] by the registered owner or his assigns, in person or by his attorney duly authorized in writing, in the manner and subject to the limitations provided in the Warrant Agreement. [IF OFFERED SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--Except as provided in the immediately preceding paragraph, after] [IF OFFERED SECURITIES WITH WARRANTS WHICH ARE IMMEDIATELY DETACHABLE OR WARRANTS ISSUED INDEPENDENT OF ANY OFFERED SECURITIES--After] countersignature by the Warrant Agent and prior to the expiration of this Warrant Certificate, this Warrant Certificate may be exchanged at the principal corporate trust office of the Warrant Agent [or [_________]] for Warrant Certificates, representing the same aggregate number of Warrants, [in registered form] [in bearer form] [in either registered or bearer form]. [IF NYSE LISTED, INSERT--Warrants not exercised by 5 p.m. on the date specified above ("Expired Unexercised Warrants") shall have a residual value of one share of Common Stock of the Company per 100 Expired Unexercised Warrants.] 15 16 This Warrant Certificate shall not entitle the holder hereof to any of the rights of a holder of the Warrant Securities, including without limitation the right to receive any dividend payments on the Warrant Securities. This Warrant Certificate shall be governed by, and construed in accordance with the laws of the State of New York without regard to any conflict of laws provisions. The Warrant Certificate shall not be valid or obligatory for any purpose until countersigned by the Warrant Agent. Dated as of [___________], 20[__]. ARROW ELECTRONICS, INC. By -------------------------------- Name: Title: [SEAL] Attest: ----------------------------------- [Assistant] Secretary [NAME OF WARRANT AGENT], As Warrant Agent By -------------------------------- Name: Title: 16 17 (REVERSE OF WARRANT CERTIFICATE) INSTRUCTIONS FOR EXERCISE OF WARRANT To exercise the Warrants evidenced hereby, the holder must pay by bank wire transfer in immediately available funds the Warrant Price in full for Warrants exercised to [insert name of Warrant Agent], at its principal corporate trust office at [insert address of Warrant Agent], Attention: [______________], [or [______________________________]] which wire transfer must specify the name of the holder and the number of Warrants exercised by such holder. In addition, the holder must complete the information required below and present this Warrant Certificate in person or by mail (registered mail is recommended) to the Warrant Agent at the addresses set forth below. This Warrant Certificate, completed and duly executed, must be received by the Warrant Agent together with such wire transfer. TO BE EXECUTED UPON EXERCISE OF WARRANT The undersigned hereby irrevocably elects to exercise ________ Warrants, evidenced by this Warrant Certificate, to purchase _________ shares of the Common Stock (the "Warrant Securities") of Arrow Electronics, Inc. and represents that he has tendered payment for such Warrant Securities by bank wire transfer in immediately available funds to the order of Arrow Electronics, Inc., in care of [insert name and address of Warrant Agent], in the amount of $______ in accordance with the terms hereof. The undersigned requests that said number of shares of Warrant Securities be registered in such names and delivered, all as specified in accordance with the instructions set forth below. If the number of Warrants exercised is less than all of the Warrants evidenced hereby, the undersigned requests that a new Warrant Certificate representing the remaining Warrants evidenced hereby be issued and delivered to the undersigned unless otherwise specified in the instructions below or unless sufficient time does not exist before the remaining Warrants become void. 17 18 Dated: Name - ----------------------------------- ------------------------------- (Please Print) Address - ----------------------------------- ---------------------------- (Insert Social Security or Other Identifying Number of Holder) ----------------------------------- Signature -------------------------- 18 19 The Warrants evidenced hereby may be exercised at the following addresses: By hand at ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- By mail at ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- 19 20 [IF REGISTERED WARRANT] ASSIGNMENT (FORM OF ASSIGNMENT TO BE EXECUTED IF HOLDER DESIRES TO TRANSFER WARRANTS EVIDENCED HEREBY) FOR VALUE RECEIVED __________ hereby sells assigns and transfers unto Please insert social security or other identifying number. --------------------------------- - --------------------------------- --------------------------------- (Please print name and address including zip code) - -------------------------------------------------------------------------- The Warrants represented by the within Warrant Certificate and does hereby irrevocably constitute and appoint _________________________, Attorney, to transfer said Warrant Certificate on the books of the Warrant Agent with full power of substitution in the premises. Dated: -------------------------------------- Signature (Signature must conform in all respects to the name of the holder as specified on the face of this Warrant Certificate and must bear a signature guarantee by a bank, trust company or member broker of the New York, Chicago or Pacific Stock Exchange.) Signature Guaranteed: - --------------------------------- 20 EX-5.1 9 y42939a1ex5-1.txt OPINION OF MILBANK, TWEED, HADLEY & MCCLOY LLP 1 EXHIBIT 5.1 February 13, 2001 Arrow Electronics, Inc. 25 Hub Drive Melville, NY 11747 Ladies and Gentlemen: We have acted as counsel to Arrow Electronics, Inc., a New York corporation (the "Company), in connection with its filing of a Registration Statement on Form S-3 (the "Registration Statement") with the Securities and Exchange Commission under the Securities Act of 1933, as amended, for the purpose of registering the following securities to be offered from time to time by the Company on the terms to be determined at the time of the offering: (i) common Stock, par value $1.00, of the Company (the "Common Stock"); (ii) preferred stock of the Company (the "Preferred Stock"); (iii) senior and subordinated debt securities of the Company (collectively; the "Debt Securities"); and (iv) warrants to purchase Common Stock, Preferred Stock and Debt Securities (collectively, the "Warrants"). We have examined such records, documents and matters of law and satisfied ourselves as to such matters of fact as we have considered relevant for the purposes of this opinion. On the basis of such examination, we are of the opinion that, when the Registration Statement, as it may be amended, has become effective under the Securities Act and any applicable state securities or Blue Sky laws have been complied with: 1. The Common Stock, when duly authorized, will be validly issued, fully paid, and nonassessable at such time as: (i) the terms of the issuance and sale of the Common Stock have been duly authorized by appropriate action of the Company and (ii) the Common Stock has been duly issued and sold as contemplated by the Registration Statement and any prospectus supplement relating thereto. 2 2. The Preferred Stock, when duly authorized, will be validly issued, fully paid, and nonassessable at such time as: (i) the terms of the issuance and sale of the Preferred Stock have been duly authorized by appropriate action of the Company and (ii) the Preferred Stock has been duly issued and sold as contemplated by the Registration Statement and any prospectus supplement relating thereto. 3. The Debt Securities will be valid and legally binding obligations of the Company, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles at such time as: (i) the terms of the Debt Securities and of their issuance and sale have been approved by appropriate action of the Company; (ii) the Debt Securities have been duly executed, authenticated and delivered in accordance with the applicable indenture or supplemental indenture; and (iii) the Debt Securities have been duly issued and sold as contemplated by the Registration Statement and any prospectus supplement relating thereto and the applicable indenture or supplemental indenture. 4. The Warrants, when duly authorized, will be valid and legally binding obligations of the Company, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles at such time as: (i) the terms of the Warrants and of their issuance and sale have been approved by appropriate action of the Company and the applicable warrant agent; and (ii) the Warrants have been duly executed, authenticated and delivered in accordance with the applicable warrant agreement. We hereby consent to the reference to us under the heading "Validity of Securities" in the prospectus constituting a part of the Registration Statement and to the filing of this opinion as Exhibit 5.1 to the Registration Statement. By giving this consent, we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended and the rules and regulations promulgated thereunder. Very truly yours, /s/ Milbank, Tweed, Hadley & McCloy LLP ---------------------------------------- DBB/HSK 2 EX-23.2 10 y42939a1ex23-2.txt CONSENT OF ERNST & YOUNG LLP 1 EXHIBIT 23.2 [LETTERHEAD OF ERNST & YOUNG] CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Amendment No. 1 to Form S-3 No. 333-50572) and related Prospectus of Arrow Electronics, Inc. for the sale of up to $2,000,000,000 in aggregate offering price of any combination of securities described in the Prospectus and to the incorporation by reference therein of our report dated February 16, 2000 with respect to the consolidated financial statements and schedule of Arrow Electronics, Inc. included in the Annual Report (Form 10-K) for the year ended December 31, 1999, as filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP New York, NY February 13, 2001 EX-23.3 11 y42939a1ex23-3.txt CONSENT OF PRICEWATERHOUSECOOPERS LLP 1 EXHIBIT 23.3 Consent of Independent Accountants We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 of Arrow Electronics, Inc. of our report dated March 21, 2000, except for second paragraph of Note 1 which the date is August 7, 2000 and except for fourth paragraph of Note 8 which the date is August 4, 2000 relating to the financial statements of Wyle Electronics Group, which appears in the Current Report on Form 8-K of Arrow Electronics, Inc. dated September 1, 2000. /s/ PricewaterhouseCoopers LLP February 13, 2001 San Jose, California -----END PRIVACY-ENHANCED MESSAGE-----