SECOND AMENDED AND RESTATED SHAREHOLDERS AGREEMENT

Exhibit 10.2

SECOND AMENDED AND RESTATED SHAREHOLDERS AGREEMENT

by and among

CO-INVESTMENT LLC VII (INTCOMEX)

THE SHALOM SHAREHOLDERS

THE CENTEL SHAREHOLDERS

THE ADDITIONAL SHAREHOLDERS

AND

INTCOMEX, INC.

June 23, 2005

TABLE OF CONTENTS

 

 

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TABLE OF CONTENTS

(continued)

 

 

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SECOND AMENDED AND RESTATED SHAREHOLDERS AGREEMENT

This SECOND AMENDED AND RESTATED SHAREHOLDERS AGREEMENT (this “ Agreement ”), dated as of June 23, 2005, is entered into by and among Co-Investment LLC VII (Intcomex), a Delaware limited liability company (“ CVC ”); Michael Shalom, a citizen of the United States; Anthony Shalom, a citizen of the United States (together with Michael Shalom, the “ Shalom Shareholders ” and each a “ Shalom Shareholder ”); Harry Luchtan, a citizen of Guatemala (“ Luchtan ”), Yehuda Azancot, a citizen of Israel (“ Azancot ,” and together with Luchtan, “ Centel Shareholders ”); the Additional Shareholders (as hereinafter defined); and Intcomex, Inc., a corporation organized and existing under the laws of the State of Delaware (the “ Company ” and, together with CVC, the Shalom Shareholders, the Centel Shareholders and the Additional Shareholders, the “ Parties ”).

WHEREAS, on August 27, 2004, the Company, CVC and certain other persons entered into a Stock Purchase Agreement (the “ Stock Purchase Agreement ”) pursuant to which, upon the Closing (as hereinafter defined) of the transactions contemplated thereby, CVC, the Shalom Shareholders and the Additional Shareholders owned in the aggregate one hundred percent (100%) of the Common Stock (as hereinafter defined) of the Company;

WHEREAS, as a part of the transactions contemplated by the Stock Purchase Agreement, the Company, CVC, the Shalom Shareholders, and the Additional Shareholders entered into that certain Shareholders Agreement dated August 31, 2004 (the “ Original Agreement ”);

WHEREAS, on April 28, 2005, the Company, the Centel Shareholders and certain other parties have executed and delivered a Share Purchase Agreement (the “ Centel Purchase Agreement ”) pursuant to which the Company and its wholly-owned subsidiary, Intcomex Holdings SPC-I, LLC, a Delaware limited liability company (“ Intcomex LLC ”), are acquiring all of the outstanding equity interests of Centel, S.A. de C.V., a sociedad anónima de capital variable organized under the laws of Mexico (“ Centel ”), and the Company is issuing shares of its capital stock to the Centel Shareholders as set forth in Section 1.2(b) of the Centel Purchase Agreement;

WHEREAS, as a part of the transactions contemplated by the Centel Purchase Agreement, the Parties entered into that certain Amended and Restated Shareholders Agreement dated April 28, 2005 (the “ First Amended Agreement ”);

WHEREAS, concurrently with the execution hereof, the Centel Shareholders and the Company will enter into a Put Right Agreement, the execution of which is acknowledged and agreed by the Shareholders, pursuant to which the Company would grant to each of the Centel Shareholders a right to put its Equity Securities to the Company on the terms and conditions contained therein;

WHEREAS, the Parties desire to amend and restate the Original Agreement in its entirety as set forth herein;

 

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NOW THEREFORE, in consideration of the foregoing and the mutual promises, covenants and agreements of the Parties hereto, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions . Capitalized terms used herein are used as defined in this Article I or as defined elsewhere in this Agreement.

“ Additional Shareholder ” shall mean each of Benjamin Mizrachi, Naftali Mizrachi, Mauro Butelmann, Javier Martinez, Boris Vasquez, Gonvas Enterprise, S.A., a s ociedad anónima organized and existing under the laws of Panama, Lunimar, S.A., a s ociedad anónima organized and existing under the laws of Panama, Hans Cristi Urzua, Jorge de Galvez, Mardel Holdings Limited, an international business company organized and existing under the laws of St. Lucia, and Emibasher Sociedad Anónima, a s ociedad anónima organized and existing under the laws of Costa Rica, who shall collectively be referred to as the “ Additional Shareholders .”

“ Additional Shareholders’ Representative ” has the meaning set forth in Section 7.14(a).

“ Affiliate ” means: (i) with respect to any Person, any other Person directly or indirectly Controlling, Controlled by or under common Control with such Person; and (ii) with respect to any natural Person: (a) any parent, grandparent, sibling, child or spouse of such natural Person, or any Person married to any such Persons; (b) any trust established for the benefit of such natural Person or any Affiliate of such natural Person; or (c) any executor or administrator of the estate of such natural Person.

“ Agreement ” has the meaning set forth in the preamble.

“ Appointment Period ” has the meaning set forth in Section 7.6.

“ Appraiser ” has the meaning set forth in Section 5.5(b).

“ Azancot ” has the meaning set forth in the preamble.

“ Beneficial Ownership ” or “ Beneficially Owns ” shall mean, with respect to any Equity Securities, the ability to vote and direct the disposition of such Equity Securities; provided that if the Person asserting such Beneficial Ownership is not the registered owner of such Equity Securities, such Person shall have reasonably demonstrated (or be capable of reasonably demonstrating) his or its ability to vote and direct the disposition of such Equity Securities.

“ Board ” shall mean the Board of Directors of the Company.

“ Business Day ” shall mean any day other than a Saturday, a Sunday or a day on which banks in the City of New York are authorized or obligated by Law to close.

 

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“ Call Closing Date ” has the meaning set forth in Section 5.5(a).

“ Call Notice ” has the meaning set forth in Section 5.5(a).

“ Call Notice Date ” has the meaning set forth in Section 5.5(a).

“ Called Securities ” has the meaning set forth in Section 5.5(a).

“ Called Securities Purchase Price ” has the meaning set forth in Section 5.5(b).

“ Called Shareholders ” has the meaning set forth in Section 5.5(a).

“ Calling Shareholders ” has the meaning set forth in Section 5.5(c).

“ Cause ” shall mean, with respect to a termination or non-renewal by the Company or one of its Subsidiaries of a Person’s Designated Relationship: (i) the willful and continued failure by such Person to substantially perform his duties reasonably assigned to him within the scope of his Designated Relationship (other than any failure resulting from such Person’s death or incapacity due to physical or mental illness) after written demand for substantial performance is delivered by the Company or any of its Subsidiaries which specifically identifies the manner in which the Company or such Subsidiary believes such Person has not substantially performed his duties, provided such failure has not been cured within thirty (30) days of delivery of such written demand; (ii) the commission by a Person of theft, embezzlement, fraud or misappropriation of funds against the Company or any of its Subsidiaries or the willful engaging by such Person in other misconduct that is materially injurious to the Company or any of its Subsidiaries; (iii) the commission by such Person of a felony or crime involving fraud, dishonesty or moral turpitude; or (iv) the material breach by such Person or any other Person Controlled by such first Person of his or its obligations under the Stock Purchase Agreement, this Agreement, any Series A Seller Notes (as defined in the Stock Purchase Agreement) issued to or held by such Person or such other Person Controlled by such first Person, any Series B Seller Notes (as defined in the Stock Purchase Agreement) issued or held by to such Person or such other Person Controlled by such first Person, or the Stock Pledge Agreement with respect to the shares of Common Stock issued to such Person or such other Person Controlled by such first Person, provided such material breach has not been cured within thirty (30) days.

“ Centel ” has the meaning set forth in the recitals.

“ Centel Observer ” has the meaning set forth in Section 3.1(l).

“ Centel Purchase Agreement ” has the meaning set forth in the recitals.

“ Centel Shareholders ” has the meaning set forth in the preamble.

“ Centel Shareholders’ Representative ” has the meaning set forth in Section 7.15.

“ Change of Control ” shall mean any transaction pursuant to which the holders (together with their Permitted Transferees and Permitted Assignees) of a majority of the voting power of the Voting Shares prior to such transaction no longer hold a majority of the voting power of the Voting Shares following the consummation of such transaction.

 

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“ Charter Document ” shall mean any certificate of incorporation, by-laws, certificate of formation, limited liability company agreement, estatutos , charter, memorandum of association, articles of association, or other similar document.

“ Chosen Courts ” has the meaning set forth in Section 7.5.

“ Closing ” shall mean the closing of the transactions contemplated by the Stock Purchase Agreement.

“ Closing Date ” shall mean the date of the Closing.

“ Common Stock ” shall mean the common stock of the Company.

“ Company ” has the meaning set forth in the preamble.

“ Competitive Products ” has the meaning set forth in Section 4.2(a).

“ Consent ” shall mean any consent, permit, license, approval, authorization, or other order of, or action or exemption by, or filing with or notification of, any Governmental Entity or third party.

“ Contract ” shall mean any written or oral contract, agreement, instrument, license, lease, sublease, mortgage, bond, note or binding understanding, arrangement, commitment, warranty, registration, or authorization.

“ Control ”, and its correlative meanings, “ Controlling ” and “ Controlled ”, shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, by virtue of being a Director or officer of such Person, or otherwise.

“ Court Square Capital ” shall mean Court Square Capital, Ltd., a corporation organized under the Laws of the State of Delaware.

“ Customer of the Business ” has the meaning set forth in Section 4.2(a).

“ CVC ” has the meaning set forth in the preamble.

“ Designated Relationship ” shall mean a relationship as Director, officer, employee or consultant of the Company or any of its Subsidiaries.

“ Director ” shall mean, with respect to a Person, any director, management committee member, managing director, principal, partner or persons holding comparable positions of such Person.

 

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“ Dragged Shareholders ” has the meaning set forth in Section 5.4.

“ EBITDA ” shall mean, with respect to a Person and any period, such Person’s consolidated net earnings (or loss), minus extraordinary gains (except to the extent such gains (i) offset losses that were deducted in a previous determination of net earnings (or loss) and (ii) are related to the same event giving rise to such previously deducted losses), interest income and non-cash gains resulting from foreign currency translation adjustments, in each case to the extent added in the determination of net earnings (or loss) for such period, plus interest expense, income taxes, depreciation and amortization, non-cash extraordinary losses and non-cash losses resulting from foreign currency translation adjustments, in each case to the extent deducted in the determination of net earnings (or loss) for such period, plus costs and expenses directly related to the consummation of the transactions contemplated by the Stock Purchase Agreement, the Loan Agreement and the transactions contemplated thereby to extent deducted in the determination of net earnings (or loss) for such period (not to exceed $4,675,000 in the aggregate), in each case, as determined in accordance with GAAP.

“ Encumbrance ” shall mean any lien (statutory or other), security interest, mortgage, covenant, pledge, assignment, adverse claim, title defect, assessment, lease, levy, charge or other encumbrance of any kind, or any conditional sale contract, sale-leaseback, financing lease, title retention contract or other contract to give any of the preceding.

“ Equity Security ” shall mean any: (i) Stock of the Company, whether voting or non-voting; (ii) security of the Company convertible into or exchangeable for Stock of the Company; or (iii) option, right or warrant issued by the Company to acquire Stock of the Company.

“ First Amended Agreement ” has the meaning set forth in the recitals.

“ Good Reason ” shall mean, with respect to a termination or non-renewal by a Person of his Designated Relationship, such Person’s termination of such Designated Relationship with the Company or any of its Subsidiaries within thirty (30) days after the Company or such Subsidiary, as the case may be: (i) materially reduces such Person’s duties and responsibilities with respect to his Designated Relationship without such Person’s consent (other than any reduction in duties and responsibilities resulting from such Person’s death or incapacity due to physical or mental illness); (ii) receives written notice from such Person that the Company or its Subsidiary, as the case may be, is in material breach of any of its obligations under any agreement with respect to such Person’s Designated Relationship, provided such breach has not been cured during such thirty- (30) day period; (iii) assigns such Persons duties materially inconsistent with his Designated Relationship; (iv) requires such Person to be principally located in any office or location more than twenty-five (25) miles from such Person’s current office; or (v) receives written notice from such Person that the Company or its Subsidiary, as the case may be, is in material breach of any obligations owed to such Person or any other Person Controlled by such first Person under (A) the Stock Purchase Agreement, (B) this Agreement, (C) any Series A Seller Notes held by such Person or such other Person Controlled by such first Person, (D) any Series B Seller Notes held by such Person or such other Person Controlled by such first Person, or (E) the Stock Pledge Agreement with respect to the shares of Common Stock issued to such

Person or such other Person Controlled by such first Person, provided such breach has not been cured during such thirty- (30) day period.

 

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“ Governmental Entity ” shall mean any governmental, judicial, legislative, executive, administrative or regulatory authority of the United States or any other federal, national, state, provincial or local government (whether domestic or foreign) or any subdivision, agency, commission, office or judicial, administrative or regulatory authority thereof.

“ Indebtedness ” of any Person shall mean, at any date, without duplication: (i) all obligations of such Person for borrowed money; (ii) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments; (iii) all obligations of such Person to pay the deferred purchase price of property or services; (iv) all obligations of such Person as lessee that are capitalized in accordance with applicable generally accepted accounting principles; (v) all Indebtedness of others secured by an Encumbrance on any asset of such Person, whether or not such Indebtedness is assumed by such Person; and (vi) all obligations of such Person in the nature of guarantees of the obligations described in clauses (i) through (v) above of any other Person.

“ Intcomex Holdings ” shall mean Intcomex Holdings, L.L.C., a Delaware limited liability company.

“ Intcomex LLC ” has the meaning set forth in the recitals.

“ IPO ” shall mean the initial Registered Offering.

“ Issued Equity Securities ” has the meaning set forth in Section 3.1(c).

“ Issued Subsidiary Equity Securities ” has the meaning set forth in Section 3.1(d).

“ Judgment ” shall mean any judgment, order, writ, directive, ruling, decision, injunction, decree, settlement agreement or award of any Governmental Entity or arbitrator.

“ Latin America ” shall mean Mexico, Central America and South America.

“ Law ” shall mean any: (i) law, statute, ordinance, regulation, whether federal, national, state, provincial or local; (ii) regulation, rule, code, standard, requirement and criterion enacted, promulgated or issued under any law, statute, ordinance or regulation, whether federal, national, state, provincial or local; or (iii) Judgment, in each case for clauses (i) through (iii) whether domestic or foreign.

“ Letter of Interest ” shall mean the Letter of Interest, dated as of March 25, 2004, between CVC and Intcomex Holdings, as amended.

“ Loan Agreement ” has the meaning set forth in Section 6.3.

“ Lock-Up Agreement ” shall mean, with respect to an IPO, an agreement with the underwriter in which each Shareholder transferring shares of Equity Securities in such IPO agrees not to transfer any other Equity Securities held by them for a certain time period following the closing date of the IPO.

 

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“ Luchtan ” has the meaning set forth in the preamble.

“ Major Shareholder ” shall mean any Shareholder that holds Equity Securities representing more than 1% of the aggregate number of all outstanding Equity Securities.

“ Material Adverse Effect ” shall mean any material and adverse effect on either (i) any of the condition (financial or otherwise), business, properties, assets, liabilities, results of operations or prospects of the Company and its Subsidiaries taken as a whole or (ii) the ability of the Company to consummate the transactions that the Company is required to consummate hereby.

“ Most Favorable Purchase Notice ” has the meaning set forth in Section 5.2(d).

“ Necessary Action ” shall mean, with respect to a result required to be caused, all actions (to the extent such actions are permitted by applicable Law and subject to the provisions of Section 6.3 hereof) reasonably necessary to cause such result, which actions may include, without limitation: (i) voting or providing a written consent or proxy with respect to Equity Securities or other Voting Stock; (ii) causing the adoption of shareholders resolutions and amendments to the Charter Documents of the Company or any of its Subsidiaries; (iii) causing members of the Board (to the extent such members were nominated or designated by the Person obligated to undertake the Necessary Action and subject to any fiduciary duties that they may have as Directors of the Company) to act in a certain manner or causing them to be removed in the event they do not act in such a manner (without regard to whether such failure to act is due to the fiduciary duty referred to above); (iv) executing agreements and instruments; and (v) making, or causing to be made, with Governmental Entities or other Persons, all filings, approvals, registrations or similar actions that are required to achieve such result.

“ Non-CVC Shareholder ” shall mean any Shareholder other than CVC and its Permitted Transferees.

“ Notice Date ” has the meaning set forth in Section 5.2(a).

“ Offer Notice ” has the meaning set forth in Section 5.2(a).

“ Offering Person ” has the meaning set forth in Section 5.2(a).

“ Other Shareholder ” has the meaning set forth in Section 5.3(a).

“ Original Agreement ” has the meaning set forth in the recitals.

“ Parties ” has the meaning set forth in the preamble.

“ Permitted Assignee ” shall mean a Person: (i) all of whose voting stock is directly or indirectly owned free and clear of any Encumbrances by Citigroup Inc. and that is Controlled by Citigroup Inc.; and (ii) not less than 70% of whose equity interests are directly or indirectly owned free and clear of any Encumbrances by Citigroup Inc.

 

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“ Permitted Transferee ” shall mean (a) any Affiliate of a Shareholder that, upon becoming a transferee of Equity Securities of such Shareholder: (i) agrees to become a party to this Agreement and to assume the rights and obligations of the transferring Shareholder under this Agreement with respect to the transferred Equity Securities (it being specified that the transferring Shareholders shall upon such assumption no longer enjoy and be released from such rights and obligations with respect to such transferred Equity Securities); (ii) other than in the case of a transfer by Co-Investment LLC VII (Intcomex) of all of its Equity Securities to a Permitted Assignee (as defined in the Stock Purchase Agreement), agrees that such transferee will not cease to be an Affiliate of the Transferor unless prior to the time such transferee ceases to be an Affiliate of the Transferor, such transferee transfers to the Transferor all Equity Securities owned by such transferee, together with its rights and obligations under this Agreement with respect to such Equity Securities; and (iii) executes such further documents as may be necessary, in the opinion of the Company, to make the transferee a party hereto and to assume such rights and obligations; or (b) Hector Yubeili in connection with a one-time transfer by (A) Luchtan of up to 1% of the Equity Securities held by the Centel Shareholders in aggregate to Hector Yubeili and (B) Azancot of up to 24% of the Equity Securities held by the Centel Shareholders in aggregate to Hector Yubeili, whereupon Hector Yubeili shall become a “Centel Shareholder”; provided that upon becoming a transferee of Equity Securities, Hector Yubeili (i) agrees to become a party to this Agreement and to the Pledge Agreement and to assume the rights and obligations of the transferring Shareholder hereunder and thereunder with respect to the transferred Equity Securities (it being specified that the transferring Centel Shareholders shall upon such assumption no longer enjoy and be released from such rights and obligations with respect to such transferred Equity Securities); and (ii) executes such further documents as may be necessary, in the opinion of the Company, to make the transferee a party to this Agreement and the Pledge Agreement and to assume such rights and obligations.

“ Person ” shall mean any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, unincorporated organization, governmental or regulatory body or other entity.

“ Pledge Agreement ” shall mean a Share Pledge Agreement, dated as of the date hereof, by and among the Company and the Centel Shareholders.

“ Pro Rata Portion ” shall mean: (a) for purposes of Section 5.3, the number of Equity Securities that each Other Shareholder shall be entitled to transfer, which shall be determined by multiplying (i) the total number of Equity Securities proposed to be transferred to a purchaser by a Selling Shareholder pursuant to a Transfer Notice by (ii) a fraction, the numerator of which is the total number of Equity Securities held by such Other Shareholder and the denominator of which is the total number of Equity Securities held by all Shareholders (including the Selling Shareholder) by (iii) the Tag-Along Factor; and (b) for purposes of Section 5.5, the number of Called Securities that each Calling Shareholder shall be entitled to purchase, which shall be determined by multiplying (i) the total number of Equity Securities to be sold by the Called Shareholders pursuant to a Call Notice by (ii) a fraction, the numerator of which is the total

 

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number of Equity Securities held by such Calling Shareholder and the denominator of which is the total number of Equity Securities held by all Shareholders (including the Called Shareholders).

“ Process Agent ” has the meaning set forth in Section 7.6.

“ Purchase Notice ” has the meaning set forth in Section 5.2(b).

“ Registered Offering ” shall mean a registered offering of Equity Securities to the general public, including a listing on a United States national securities exchange, the Nasdaq National Market, the Nasdaq Small Cap Market or other recognized securities exchange designated by the Board, and underwritten on a firm or best efforts basis by an investment banking institution recognized in the market or markets in which the offering is registered.

“ Restrictive Covenants ” has the meaning set forth in Section 4.2(e).

“ Securities Act ” shall mean the United States Securities Act of 1933, as amended, together with the rules and regulations thereunder.

“ Selling Shareholder ” has the meaning set forth in Section 5.3(a).

“ Shalom Director ” has the meaning set forth in Section 3.1(a)(i).

“ Shalom Shareholder ” and “ Shalom Shareholders ” have the meaning set forth in the preamble, and shall include any executor or administrator of the estate of such Person.

“ Shareholder ” shall mean any Person party to this Agreement other than the Company.

“ Stock ” shall mean any “equity security” (as such term is defined in Rule 405 under the Securities Act).

“ Stock Pledge Agreement ” shall mean a stock pledge agreement creating a security interest in the shares of Common Stock Beneficially Owned by Co-Investment LLC VII (Intcomex), which stock pledge agreement provides that such stock pledge agreement shall terminate, and the security interest created thereby automatically released, upon the transfer of the shares of Common Stock subject to such stock pledge agreement in a manner permitted by the Original Agreement to a transferee other than a Permitted Transferee.

“ Stock Purchase Agreement ” has the meaning set forth in the recitals.

“ Subsidiary ” shall mean, as to any Person, any other Person: (i) of which such first Person, directly or indirectly, owns securities or other equity interests representing fifty percent (50%) or more of the aggregate voting power of all securities and equity interests issued by such second Person; or (ii) of which such first Person possesses the right to elect fifty percent (50%) or more of the Directors; provided that Intcomex Holdings, Intcomex LLC and their Subsidiaries shall be deemed to be Subsidiaries of the Company.

 

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“ Subsidiary Equity Security ” shall mean, with respect to a Subsidiary of the Company, any: (i) Stock of such Subsidiary, whether voting or non-voting; (ii) security of such Subsidiary convertible into or exchangeable for Stock of such Subsidiary; or (iii) option, right or warrant issued by such Subsidiary to acquire Stock of such Subsidiary.

“ Tag-Along Factor ” shall mean, with respect to the calculation of a Pro-Rata Portion following the delivery of a Transfer Notice pursuant to Section 5.3(a): (i) one-half, if such Transfer Notice is delivered prior to the fourth anniversary of the Closing Date; and (ii) one, if such Transfer Notice is delivered on or after the fourth anniversary of the Closing Date.

“ Termination Event ” shall mean: (i) with respect to any Non-CVC Shareholder that is a natural Person, the termination (including as a result of a failure to offer to renew an employment or consulting contract at the end of its term or the non-renewal of an appointment as a Director) of each Designated Relationship of such Non-CVC Shareholder, provided that each such termination: (A) was effected by the Company or one of its Subsidiaries for Cause; (B) was effected by the Non-CVC Shareholder without Good Reason; or (C) was due to the non-renewal of the term of a Director appointed by the Shalom Shareholder pursuant to Section 3.1(a); or (ii) with respect to any Non-CVC Shareholder that is not a natural Person, the termination (including as a result of a failure to offer to renew an employment or consulting contract at the end of its term or the non-renewal of an appointment as a Director) of each Designated Relationship of any natural Person that Controls such Non-CVC Shareholder, provided that such termination: (A) was effected by the Company or one of its Subsidiaries for Cause; (B) was effected by such natural Person without Good Reason; or (C) was due to the non-renewal of the term of a Director appointed by the Shalom Shareholder pursuant to Section 3.1(a); provided , further that for purposes of this definition Boris Vasquez, Matthew DeLeon, Ester Mizrachi Kastell and Gustavo Daniel Blufstein shall be deemed to Control Gonvas Enterprise, S.A., Mardel Holdings Limited, Emibasher Sociedad Anónima and Lunimar S.A., respectively.

“ Territory ” shall mean the territory of the United States, Chile, Argentina, Costa Rica, Ecuador, El Salvador, Guatemala, Jamaica, Panama, Peru, Uruguay, Cayman Islands and Colombia.

“ transfer ” has the meaning set forth in Section 5.1(a), and “ transferring ” and “ transferred ” shall have correlative meanings.

“ Transfer Notice ” has the meaning set forth in Section 5.3(a).

“ Transfer Shares ” has the meaning set forth in Section 5.2(a).

“ Transferor ” has the meaning set forth in Section 5.1(b).

“ Transferring Shareholder ” has the meaning set forth in Section 5.2(a).

“ U.S. GAAP ” shall mean United States generally accepted accounting principles.

“ Voting Shares ” shall mean the outstanding Equity Securities having the right to vote generally for the election of Directors of the Board.

 

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“ Voting Stock ” shall mean, with respect to an issuer of Stock, the outstanding Stock of such issuer having the right to vote generally in any election of Directors of such issuer.

Section 1.2 General Interpretive Principles .

(a) Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun, pronoun, or adjective shall be deemed to include the plural as well as the singular and to cover all genders. Unless otherwise specified, words such as “herein,” “hereof,” “hereby,” “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular Section or subsection of this Agreement, and references herein to “Articles” or “Sections” refer to Articles or Sections of this Agreement. The headings in this Agreement are intended solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement.

(b) Whenever used in this Agreement, except as otherwise expressly provided, (i) “Shalom Shareholders” shall include each Shalom Shareholder and (ii) “Additional Shareholders” shall include each Additional Shareholder.

(c) The terms “dollars” and “$” shall mean United States Dollars.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

Section 2.1 Representations and Warranties of All Parties . Each of the Parties hereto hereby represents and warrants to the others on the date hereof as follows:

(a) Organization and Qualification; Power . Such Party (if a Person other than a natural Person) is a corporation or other entity duly organized and validly existing under the Laws of its jurisdiction of organization. Such Party (if a Person other than a natural Person) has all requisite power and authority to own, lease and operate its assets, and to carry on its business as it is now being conducted.

(b) Authority; Validity . Such Party has all requisite legal capacity (if a natural Person) or power and authority (if a Person other than a natural Person) to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery by such Party of this Agreement and the other documents and instruments to be executed by such Person pursuant hereto and the performance of his, her or its obligations hereunder and thereunder have been duly authorized by all necessary action. This Agreement has been duly executed and delivered by such Party and, assuming due authorization, execution and delivery of this Agreement by the other Parties hereto, constitutes his, her or its legal, valid and binding obligation, enforceable against him, her or it in accordance with its terms. No further act or proceeding on his, her or its part is necessary to authorize this Agreement or the performance of his, her or its obligations hereunder.

(c) Compliance; Binding Effect . The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not: (i) violate

 

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any provision of the Charter Documents of any Party that is not a natural Person; (ii) constitute a breach or violation of, or default under, or accelerate any obligation, or create an Encumbrance on any assets, properties or rights of such Party (with or without notice, lapse of time or both) pursuant to, any Contracts binding upon the Party; or (iii) violate or conflict with any Law to which such Party is subject or by which such Party is bound.

(d) Consents . No Consent is required to be made or obtained by such Party in connection with: (i) the execution, delivery or performance of this Agreement by such Party; or (ii) the consummation by such Party of any of the transactions contemplated herein.

(e) Ownership . Each of the Shareholders (other than the Centel Shareholders) Beneficially Owns and is the record holder of Equity Securities.

Section 2.2 Representations and Warranties of CVC . CVC hereby represents and warrants on the date hereof as follows:

(a) Ownership of CVC . All Voting Stock of CVC is indirectly owned by Citigroup Inc., free and clear of any Encumbrances. Not less than 70% of the equity interests in CVC is indirectly owned by Citigroup Inc., free and clear of any Encumbrances.

(b) No Registration . None of CVC, any of its Affiliates other than the Company and its Subsidiaries, nor any person acting on its or their behalf has made, directly or indirectly, offers or sales of any security, or has solicited, directly or indirectly, offers to buy any security, under circumstances that would require the registration of the offer and sale of the Stock in CVC under the Securities Act.

ARTICLE III

GOVERNANCE

Section 3.1 Voting Rights; Board; Management; Information . Each Shareholder shall take all Necessary Action to cause:

(a) (i) the Board to consist, for so long as the Shalom Shareholders continue to Beneficially Own Voting Shares representing at least 25% of the voting power of all outstanding Voting Shares, of five (5) Directors, three (3) of whom shall be nominated by CVC and two (2) of whom shall be nominated by the Shalom Shareholders (the “ Shalom Directors ”), and to cause each committee of the Board to include at least one Shalom Director; it being specified that each of CVC and the Shalom Shareholders shall be entitled to cause the removal and replacement of any Director nominated by it or them at any time, with or without cause, and to nominate an alternate Director to replace and/or substitute, if necessary, each Director nominated by it or them, as the case may be;

(ii) the board of Directors of each Subsidiary of the Company that is required, in accordance with applicable Law, to have a board of Directors to consist, for so long as the Shalom Shareholders continue to Beneficially Own Voting Shares representing at least 25% of the voting power of all outstanding Voting Shares, of either

 

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(x) five (5) Directors, three (3) of whom shall be nominated by CVC and two (2) of whom shall be nominated by the Shalom Shareholders or (y) three (3) Directors, two (2) of whom shall be nominated by CVC and one (1) of whom shall be nominated by the Shalom Shareholders, and to cause each committee of such boards of Directors of the Subsidiaries to include at least one Director nominated by the Shalom Shareholders; it being specified that each of CVC and the Shalom Shareholders shall be entitled to cause the removal and replacement of any such Director nominated by it or them at any time, with or without cause, and to nominate an alternate Director to replace and/or substitute, if necessary, each Director nominated by it or them, as the case may be;

(b) the Company and its Subsidiaries to refrain, for so long as the Shalom Shareholders continue to Beneficially Own Voting Shares representing at least 25% of the voting power of all outstanding Voting Shares, from approving any of the following actions or matters (whether or not the shareholders of the Company or any of its Subsidiaries have approved of such actions or matters) without first having received the affirmative vote or written consent of the Shalom Directors:

(i) any amendment or modification of the Charter Documents of the Company or any of its Subsidiaries adversely affecting the rights, benefits or privileges of the holders of Common Stock held by the Shalom Shareholders and the Additional Shareholders, taken as a class;

(ii) any incurrence by the Company or any of its Subsidiaries of Indebtedness of a principal amount greater than $500,000 (other than (x) extensions, renewals or refinancings of outstanding Indebtedness that do not increase the principal amount of such Indebtedness, (y) Indebtedness incurred in the ordinary course of business or (z) Indebtedness incurred or permitted pursuant to the Loan Agreement) such that, upon the incurrence of such Indebtedness, the sum of (x) the principal amount of the Indebtedness thereby incurred and (y) the Company’s consolidated long-term debt and short-term debt, net of cash and cash equivalents, as shown at the end of the period covered by the most recent unaudited consolidated quarterly financial statements or audited annual consolidated financial statements of the Company, is greater than four times the aggregate consolidated EBITDA of the Company in the four most recent quarters for which unaudited consolidated quarterly financial statements or audited annual consolidated financial statements have been prepared by the Company;

(iii) the entering into, or commitment to enter into, any line of business other than the distribution of electronic, computer, electric and communication equipment and components and related software, furniture and accessories;

(iv) the making of any contributions to a political party or a candidate for political office, in each case whether domestic or foreign; or

(v) the entry into of any transaction with CVC or any of its Affiliates (other than the Company and its Subsidiaries) involving an aggregate amount in excess of $5,000,000; provided that no such affirmative vote or consent shall be required if the

 

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transaction: (A) is entered into on an arms’-length basis and on terms consistent with those available from an unrelated third-party; (B) involves the issuance of Equity Securities in compliance with the provisions of Section 3.1(c) or the issuance of Subsidiary Equity Securities in compliance with the provisions of Section 3.1(d); (C) involves the issuance by the Company or any of its Subsidiaries of debt securities or instruments to CVC or any of its Affiliates; or (D) is otherwise permitted by Article V of this Agreement.

(c) the Company to refrain from issuing any Equity Securities (the “ Issued Equity Securities ”) without affording each Shareholder the right to acquire such Issued Equity Securities in proportion to such Shareholder’s then existing holding of Equity Securities as that of the Issued Equity Securities, or, if such Issued Equity Securities are of a class of which no securities are issued or outstanding immediately prior to the issuance of such Issued Equity Securities, in proportion to the number of Equity Securities held by such Shareholder at the time of such issuance as compared to the aggregate number of all outstanding Equity Securities, in each case on the same terms and conditions and for the same consideration as the Company proposes to issue such Issued Equity Securities (provided that each Shareholder that Beneficially Owns non-voting Equity Securities shall acquire non-voting Equity Securities in connection with such issuance). Notwithstanding the foregoing, the provisions of the first sentence of this Section 3.1(c) shall not apply to: (i) issuances of Equity Securities pursuant to a Registered Offering; (ii) any issuance or transfer of Equity Securities to Directors, officers and employees of the Company or any of its Subsidiaries pursuant to a compensation plan approved by the Board; (iii) issuances of Equity Securities pursuant to the exercise, conversion or exchange of outstanding Equity Securities, provided that the relevant right to exercise, convert or exchange is afforded to or enjoyed by all holders of Equity Securities being exercised, converted or exchanged; (iv) issuances of Equity Securities by the Company in connection with the merger of the Company with another Person, or the purchase by the Company of assets or shares of the capital stock or other ownership interest of another Person; or (v) issuances of Equity Securities by the Company in connection with any financing or leasing arrangement.

(d) the Subsidiaries of the Company to refrain from issuing any Subsidiary Equity Securities (the “ Issued Subsidiary Equity Securities ”) to any Shareholder without affording each other Shareholder the right to acquire such Issued Subsidiary Equity Securities in proportion to such other Shareholder’s then existing holding of Subsidiary Equity Securities as that of the Issued Subsidiary Equity Securities, or, if such Issued Subsidiary Equity Securities are of a class of which no securities are issued or outstanding immediately prior to the issuance of such Issued Subsidiary Equity Securities, in proportion to the number of Subsidiary Equity Securities held by such Shareholder at the time of such issuance as compared to the aggregate number of all outstanding Subsidiary Equity Securities, on the same terms and conditions and for the same consideration as such Subsidiary proposes to issue such Issued Subsidiary Equity Securities (provided that each Shareholder that Beneficially Owns non-voting Equity Securities shall acquire non-voting Equity Securities in connection with such issuance (and if a Shareholder holds both non-voting and voting Equity Securities, such Shareholder shall acquire both non-voting and votin