As filed with the Securities and Exchange Commission on December 29, 1999
Registration No. 333-_____
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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INGRAM MICRO INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 5045 62-1644402
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification Number)
organization) Code Number)
1600 E. St. Andrew Place
Santa Ana, CA 92705
(714) 566-1000
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
James E. Anderson, Jr., Esq. With copies to:
Senior Vice President, Secretary Francis J. Morison, Esq.
and General Counsel Davis Polk & Wardwell
Ingram Micro Inc. 450 Lexington Avenue
1600 E. St. Andrew Place New York, New York 10017
Santa Ana, CA 92705 (212) 450-4000
(714) 566-1000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or reinvestment plans, please 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, 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. [ ] ______________
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CALCULATION OF REGISTRATION FEE
=====================================================================================================================
Proposed
Maximum Proposed Maximum
Title of Each Class Amount to be Offering Price Per Aggregate Amount of
of Securities to be Registered Registered Unit (1) Offering Price (1) Registration Fee
- ---------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01 per 1,500,000 shares $ 12.4375 $ 18,656,250 $ 4,925.25
share............................
=====================================================================================================================
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457 (c) under the Securities Act of
1933, based upon the average of the high and low sale prices for the
common stock included on the New York Stock Exchange on December 28,
1999.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the SEC, acting pursuant to said Section 8(a), may
determine.
===============================================================================
PROSPECTUS
INGRAM MICRO INC.
1,500,000 SHARES OF CLASS A COMMON STOCK,
PAR VALUE $0.01 PER SHARE
This prospectus relates to the offering for resale of the shares of Class
A common stock, par value $0.01 per share, of Ingram Micro Inc., a Delaware
corporation. Ingram Micro issued a warrant to purchase 1,500,000 shares of its
Class A common stock to SOFTBANK Corp., a Japanese corporation, in a
transaction exempt from the registration requirements of the Securities Act of
1933, on December 3, 1999 and has agreed to register those shares pursuant to a
registration agreement dated December 3, 1999 between Ingram Micro and
SOFTBANK.
The selling shareholders may offer and sell the shares from time to time
pursuant to this prospectus. The term selling shareholders refers to SOFTBANK,
together with its transferees, pledgees, donees, successors or assigns, and any
other person who becomes a party to or agrees to be bound by the registration
agreement. The offered shares may be offered and sold by the selling
shareholders from time to time directly to purchasers or through underwriters,
broker/dealers or agents at fixed prices, at prevailing market prices at the
time of sale, at varying prices determined at the time of sale or at negotiated
prices. See "Plan of Distribution" and "Selling Shareholders." If required, the
names of any underwriters, broker/dealers or agents, any discounts, commissions
and other items constituting compensation from the selling shareholders and any
discounts, commissions or concessions allowed or reallowed or paid to
broker/dealers will be set forth in an accompanying supplement to this
prospectus. The selling shareholders will receive all of the net proceeds from
the sale of the offered shares and will pay all underwriting discounts and
selling commissions, if any, applicable to any sale. Ingram Micro is
responsible for payment of all other expenses incident to the offer and sale of
the offered shares. The selling shareholders and any underwriters,
broker/dealers or agents that participate in the distribution of offered shares
may be deemed to be "underwriters" within the meaning of the Securities Act,
and any profits on the sale of offered shares by any selling shareholder and
any discounts, commissions, concessions or other compensation received by any
underwriter, broker/dealer or agent may be deemed to be underwriting
commissions or discounts under the Securities Act. See "Plan of Distribution"
for a description of indemnification arrangements.
Prospective investors should carefully consider the matters discussed
under the caption "Risk Factors" commencing on page 6.
Ingram Micro's common stock is listed on the New York Stock Exchange under
the symbol "IM."
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these shares or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is December 29, 1999.
TABLE OF CONTENTS
Page
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Where You Can Find More Information..................................3
Incorporation of Certain Documents by
Reference.......................................................3
Forward-Looking Statements...........................................4
Prospectus Summary...................................................5
Risk Factors.........................................................6
Use of Proceeds......................................................7
Dividend Policy......................................................7
Description of Capital Stock.........................................8
Selling Shareholders................................................13
Plan of Distribution ...............................................14
Legal Matters.......................................................15
Experts.............................................................15
-----------------------
This prospectus includes or incorporates by reference various trademarks
and service marks owned or licensed by Ingram Micro Inc.
-----------------------
WHERE YOU CAN FIND MORE INFORMATION
Ingram Micro is subject to the informational requirements of the
Securities Exchange Act of 1934, and files annual, quarterly and current
reports and other information with the Securities and Exchange Commission. You
may read and copy any reports, statements or other information on file at the
SEC's public reference room located at 450 Fifth Street, N.W., Washington, D.C.
20549. You can request copies of those documents upon payment of a duplicating
fee, by writing to the SEC. In addition, you can inspect reports, proxy
statements and other information concerning Ingram Micro at the offices of the
New York Stock Exchange, 20 Broad Street, New York, New York 10005.
Ingram Micro has filed with the SEC a registration statement on Form S-3.
This prospectus, which forms a part of that registration statement, does not
contain all of the information included in the registration statement. Certain
information is omitted and you should refer to the registration statement and
its exhibits. With respect to references made in this prospectus to any of our
contracts or other documents, these references are not necessarily complete and
you should refer to the exhibits attached to the registration statement for
copies of the actual contract or document. You may review a copy of the
registration statement and the exhibits at the SEC's public reference room in
Washington, D.C. at the above location and at the SEC's regional offices in
Chicago, Illinois and New York, New York. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the public reference rooms. Ingram
Micro's SEC filings and the registration statement can also be reviewed by
accessing the SEC's Internet site at http://www.sec.gov. Copies of the
registration statement and exhibits are also on file at the NYSE and may be
obtained at the above location.
-----------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the SEC by Ingram Micro
pursuant to the Exchange Act (Exchange Act File Number: 001-12203) are
incorporated by reference in this prospectus:
(1) Ingram Micro's Annual Report on Form 10-K for the fiscal year
ended January 2, 1999, filed with the SEC on April 1, 1999.
(2) Ingram Micro's Quarterly Report on Form 10-Q for the fiscal
quarter ended April 3, 1999, filed with the SEC on May 18, 1999.
(3) Ingram Micro's Quarterly Report on Form 10-Q for the fiscal
quarter ended July 3, 1999, filed with the SEC on August 17, 1999.
(4) Ingram Micro's Quarterly Report on Form 10-Q for the fiscal
quarter ended October 2, 1999, filed with the SEC on November 16, 1999.
(5) Ingram Micro's Proxy Statement in connection with its 1999 Annual
Meeting of Shareowners held on May 19, 1999 filed with the SEC on April
19, 1999.
(6) The description of Ingram Micro's common stock contained in its
Exchange Act registration statement on Form 8-A dated September 19, 1996,
filed with the SEC pursuant to Section 12 of the Exchange Act, including
any amendment thereto or report filed for the purpose of updating this
description.
(7) All other reports filed by Ingram Micro pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act since December 29, 1999 and
prior to the termination of this offering of the shares offered by this
prospectus.
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Information incorporated by reference is considered to be part of this
prospectus. Any statement contained in a document incorporated by reference in
this prospectus will be modified or superseded to the extent that a statement
contained in this prospectus or in any other subsequently filed document which
also is incorporated by reference in this prospectus modifies or supersedes the
statement. Any statement so modified or superseded shall not be deemed, in its
unmodified form, to constitute a part of this prospectus.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address: Ingram Micro Inc., 1600 E. St. Andrew
Place, Santa Ana, CA 92705, Attention: Vice President, Investor and Corporate
Communications (telephone number: (714) 566-1000).
FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements" within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act.
Investors are cautioned that these statements included or incorporated by
reference in this prospectus are forward-looking statements that involve risks
and uncertainties. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates," and variations of these words and similar
expressions are intended to identify these forward-looking statements. These
statements are based on current expectations and projections about the
technology distribution industry and assumptions made by Ingram Micro's
management and are not guarantees of future performance.
Actual events and results may differ materially from those expressed or
forecasted in the forward-looking statements due to factors such as:
o continued pricing and margin pressures,
o intense competition,
o fluctuations in quarterly results,
o the potential decline as well as seasonal variations in demand for
Ingram Micro's products,
o the capital intensive nature of Ingram Micro's business,
o management of growth and acquisitions,
o dependence on information systems,
o exposure to foreign markets,
o dependence on key individuals,
o dependence on key suppliers and product supply shortages,
o risk of declines in inventory value,
o dependence on independent shipping companies,
o rapid technological change, and resulting obsolescence risks,
o failure to achieve substantial Year 2000 readiness,
o any reduction of floor planning financing for Ingram Micro's master
reseller business, and
o other risk factors identified in "Risk Factors" and elsewhere in this
prospectus.
Ingram Micro undertakes no obligation to update any forward-looking
statements in this prospectus.
Except as otherwise indicated, all references to the "Company," "we,"
"us," or "Ingram Micro" mean Ingram Micro Inc. and its consolidated
subsidiaries, unless the context otherwise requires.
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PROSPECTUS SUMMARY
The following information is qualified in its entirety by the more
detailed financial and other information appearing elsewhere in this prospectus
and in the documents incorporated by reference in this prospectus.
THE COMPANY
Ingram Micro is the leading wholesale distributor of computer-based
technology products and services worldwide. Ingram Micro markets microcomputer
hardware, networking equipment, and software products to more than 140,000
reseller customers in more than 130 countries. As a wholesale distributor, we
market our products to resellers as opposed to marketing directly to end-user
customers.
THE OFFERING
Securities Offered.............. 1,500,000 shares of common stock which may be issued
to SOFTBANK pursuant to a warrant dated December 3,
1999. See "Description of Capital Stock."
Use of Proceeds................. Ingram Micro will not receive any proceeds from the sale
by the selling shareholders of the offered shares.
Registration Agreement.......... Ingram Micro has agreed to use its reasonable best efforts
to keep effective a registration statement of which this
prospectus forms a part covering resales of the offered
shares for a period commencing on the date on which this
registration statement is effective and ending on
December 3, 2005, or an earlier date on which all of the
offered shares have been sold or cease to be registrable
securities, by the terms of the registration agreement. See
"Description of Capital Stock - Registration Agreement."
5
RISK FACTORS
In addition to the risk factors and other information included or
incorporated by reference in this prospectus, including the information
contained in Exhibit 99.01 to Ingram Micro's 1998 Form 10-K and any future
updates to that exhibit, prospective investors should carefully consider the
following risk factors in connection with an investment in the offered shares.
This prospectus, including the documents incorporated by reference in this
prospectus, contains forward-looking statements that involve risks and
uncertainties. The statements contained in this prospectus or incorporated by
reference in this prospectus that are not purely historical are forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act, including without limitation, statements regarding
Ingram Micro's expectations, beliefs, intentions or strategies regarding the
future. All forward-looking statements included in this document or
incorporated by reference in this prospectus are based on information available
to Ingram Micro on the date hereof, and we assume no obligation to update any
of these forward-looking statements. Ingram Micro's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those set forth in "Risk Factors" and
elsewhere in this prospectus.
The Ingram family stockholders own 86.2% of the aggregate voting power of
the Ingram Micro common equity, and are parties to a board representation
agreement that contains various anti-takeover provisions. As of November 30,
1999, Martha R. Ingram, her children, certain trusts created for their benefit,
and two charitable trusts and a foundation created by the Ingram family held
108,363 shares of common stock, including 15,673 shares issuable for stock
options exercisable within 60 days of November 30, 1999, in the aggregate and
69,385,976 shares of Class B common stock in the aggregate, amounting to 86.2%
of the aggregate voting power of the Ingram Micro common equity. We refer to
these stockholders in this prospectus as the Ingram family stockholders. Ingram
Industries Inc., Ingram Micro's former parent, which is controlled by the
Ingram family stockholders, held 231,000 shares of common stock as of November
30, 1999. In addition, Ingram Entertainment Inc., which is controlled by David
B. Ingram, held 2,901 shares of common stock as of November 30, 1999.
The Ingram family stockholders have entered into a board representation
agreement with Ingram Micro, which provides that certain types of corporate
transactions, including:
o transactions involving the potential sale or merger of Ingram Micro,
o the issuance of additional equity, warrants, or options,
o certain acquisitions, or
o the incurrence of significant indebtedness,
may not be entered into without the written approval of at least a majority of
the voting power held by certain of the Ingram family stockholders acting in
their sole discretion. In addition, the board representation agreement provides
for the election of certain directors designated by the Ingram family
stockholders. See "Description of Capital Stock - Board Representation
Agreement." Voting control by the Ingram family stockholders may discourage
certain types of transactions involving an actual or potential change of
control of Ingram Micro, including transactions in which the holders of the
common stock might receive a premium for their shares over the prevailing
market price of the common stock. In addition, certain provisions of the
Delaware General Corporation Law and Ingram Micro's certificate of
incorporation may make any attempt to obtain control of Ingram Micro more
difficult. See "Description of Capital Stock."
The market price of Ingram Micro's common stock has experienced
significant fluctuations and may continue to fluctuate significantly. The
market price of the shares may be significantly affected by quarterly
variations in Ingram Micro's results of operations, changes in earnings
estimates by market analysts, conditions in the personal computer and
technology industries, general market or economic conditions, among other
factors. Statements or changes in opinions, ratings, or earnings estimates made
by brokerage firms or industry analysts relating to the market in which Ingram
Micro does business or relating to us specifically could result in an immediate
and adverse
6
effect on the market price of the shares. In addition, in recent years the
stock market has experienced extreme price and volume fluctuations. These
fluctuations have had a substantial effect on the market prices for many
companies in technology-related industries, often unrelated to the operating
performance of the specific companies. There can be no assurances that the
market price of the shares will not decline below the levels prevailing at the
time of purchase of offered shares under this prospectus.
USE OF PROCEEDS
Ingram Micro will not receive any proceeds from the sale by the selling
shareholders of the offered shares.
DIVIDEND POLICY
Ingram Micro has never declared or paid any dividends on its capital stock
other than a distribution of $20 million to Ingram Industries in connection
with its split-off from Ingram Industries in 1996. We currently intend to
retain our future earnings to finance the growth and development of our
business and therefore do not anticipate declaring or paying cash dividends on
our capital stock for the foreseeable future. Any future decision to declare or
pay dividends will be at the discretion of the board of directors and will be
dependent upon our financial condition, results of operations, capital
requirements, and such other factors as the board of directors deems relevant.
In addition, certain of Ingram Micro's debt facilities contain restrictions on
the declaration and payment of dividends.
7
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of Ingram Micro consists of 265,000,000
shares of Class A common stock, par value $0.01 per share, of which 70,820,934
shares were issued and outstanding as of November 30, 1999, and 135,000,000
shares of Class B common stock, par value $0.01 per share, of which 73,380,871
shares were issued and outstanding as of November 30, 1999. We refer to the
Class A common stock as common stock, and we refer to the Class A common stock
together with the Class B common stock as the common equity in this prospectus.
In addition, the certificate of incorporation authorizes the issuance by Ingram
Micro of up to 1,000,000 shares of preferred stock, par value $0.01 per share,
on terms determined by our board of directors. The following description is a
summary of the capital stock of Ingram Micro and is subject to and qualified in
its entirety by reference to the provisions of the certificate of incorporation
and the amended and restated bylaws of Ingram Micro, which have been filed or
incorporated by reference as exhibits to the registration statement.
Common Equity
The shares of common stock and Class B common stock are identical in all
respects, except for voting rights and certain conversion rights, as described
below.
Voting Rights. Each share of common stock entitles the holder to one vote
on each matter submitted to a vote of Ingram Micro's shareowners, including the
election of directors, and each share of Class B common stock entitles the
holder to ten votes on each of these matters. Except as required by applicable
law, holders of the common stock and Class B common stock vote together as a
single class on all matters submitted to a vote of the shareowners of Ingram
Micro. There is no cumulative voting. See "Risk Factors - The Ingram family
stockholders own 86.2% of the aggregate voting power of the Ingram Micro common
equity, and are parties to a board representation agreement that contains
various anti-takeover provisions."
Subject to New York Stock Exchange requirements, for so long as there are
any shares of Class B common stock outstanding, any action that may be taken at
a meeting of the shareowners may be taken by written consent in lieu of a
meeting if Ingram Micro receives consents signed by shareowners having the
minimum number of votes that would be necessary to approve the action at a
meeting at which all shares entitled to vote on the matter were present and
voted. This could permit certain holders of Class B common stock to take action
regarding certain matters without providing other shareowners the opportunity
to voice dissenting views or raise other matters. The right to take this action
by written consent of shareowners will expire when all outstanding shares of
Class B common stock cease to be outstanding.
Dividends, Distributions, and Stock Splits. Holders of common stock and
Class B common stock are entitled to receive dividends at the same rate if, as,
and when any dividends are declared by the board of directors out of assets
legally available therefor after payment of dividends required to be paid on
shares of preferred stock, if any.
In the case of dividends or distributions payable in common stock or Class
B common stock, only shares of common stock will be distributed with respect to
the common stock and only shares of Class B common stock will be distributed
with respect to the Class B common stock. In the case of dividends or other
distributions consisting of other voting shares of Ingram Micro, we will
declare and pay these dividends in two separate classes of such voting
securities, identical in all respects, except that the voting rights of each
security paid to the holders of the common stock shall be one-tenth of the
voting rights of each security paid to the holders of Class B common stock, and
each security paid to the holders of Class B common stock shall convert into
the security paid to the holders of the common stock upon the same terms and
conditions applicable to the Class B common stock. In the case of dividends or
other distributions consisting of securities convertible into, or exchangeable
for, voting securities of Ingram Micro, we will provide that these convertible
or exchangeable securities and the underlying securities be identical in all
respects, except that the voting rights of each security underlying the
convertible or exchangeable security paid to the holders of the common stock
shall be one-tenth of the voting rights of each security underlying the
convertible or exchangeable security paid to the holders of Class B common
stock, and the underlying securities paid to the holders of Class B common
stock shall convert into the security paid to the holders of the common stock
upon the same terms and conditions applicable to the Class B common stock.
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Neither the common stock nor the Class B common stock may be subdivided or
combined in any manner unless the other class is subdivided or combined in the
same proportion.
Conversion. The common stock has no conversion rights.
The Class B common stock is convertible into common stock, in whole or in
part, at any time and from time to time at the option of the holder, on the
basis of one share of common stock for each share of Class B common stock
converted. Each share of Class B common stock will also automatically convert
into one share of common stock upon the earliest to occur of:
(1) November 6, 2001;
(2) the sale or transfer of a share of Class B common stock (a) by a
holder that is a party to the board representation agreement, as
described below, to any person that is not an affiliate, spouse
or descendant of that holder, their estates or trusts for their
benefit or any other party to the exchange agreement which
effected the split-off from Ingram Industries in 1996 or (b) by
any other holder, to a holder that is not the spouse or
descendant of that holder or their estates or trusts for their
benefit; and
(3) the date on which the number of shares of Class B common stock
then outstanding is less than 25% of the aggregate number of
shares of common equity then outstanding.
Liquidation. In the event of any dissolution, liquidation, or winding up
of the affairs of Ingram Micro, whether voluntary or involuntary, after payment
of our debts and other liabilities and making provision for the holders of
preferred stock, if any, the remaining assets of Ingram Micro will be
distributed ratably among the holders of the common stock and the Class B
common stock, treated as a single class.
Mergers and Other Business Combinations. Upon a merger, combination, or
other similar transaction of Ingram Micro in which shares of common equity are
exchanged for or changed into other stock or securities, cash and/or any other
property, holders of each class of common equity will be entitled to receive an
equal per share amount of stock, securities, cash, and/or any other property,
as the case may be, into which or for which each share of any other class of
common equity is exchanged or changed; provided that in any transaction in
which shares of capital stock are distributed, the shares so exchanged for or
changed into may differ as to voting rights and certain conversion rights to
the extent and only to the extent that the voting rights and certain conversion
rights of common stock and Class B common stock differ at that time.
Other Provisions. The holders of the common stock and Class B common stock
are not entitled to preemptive rights. There are no redemption provisions or
sinking fund provisions applicable to the common stock or the Class B common
stock.
Preferred Stock
The board of directors is authorized, subject to any limitations
prescribed by the Delaware General Corporation Law, or the rules of any
quotation system or national securities exchange on which stock of Ingram Micro
may be quoted or listed, to provide for the issuance of shares of preferred
stock in one or more series; to establish from time to time the number of
shares to be included in each of these series; to fix the rights, powers,
preferences, and privileges of the shares of each series and any qualifications
and restrictions thereon; and, to the extent permitted by the DGCL, to increase
or decrease the number of shares of each of these series, without any further
vote or action by the shareowners. Depending upon the terms of the preferred
stock established by the board of directors, any or all series of preferred
stock could have preference over the common stock with respect to dividends and
other distributions and upon liquidation of Ingram Micro or could have voting
or conversion rights that could adversely affect the holders of the outstanding
common stock. We have no present plans to issue any shares of preferred stock.
9
Registration Agreement
Ingram Micro has filed the registration statement with the SEC. We will
use our reasonable best efforts to keep the registration statement effective
pursuant to the registration agreement for a period commencing on the date on
which this registration statement is effective and ending on December 3, 2005
or an earlier date on which all of the offered shares have been sold or cease
to be registrable securities. According to the terms of the registration
agreement, registrable securities means any shares of Ingram Micro common stock
issued or issuable to a selling shareholder upon exercise of the warrant;
provided that the offered shares shall cease to be registrable securities if
and when:
(1) a registration statement with respect to the disposition of the
offered shares shall have become effective under the Securities
Act and the shares shall have been disposed of pursuant to this
effective registration statement,
(2) the offered shares shall have been sold under circumstances in
which all of the applicable conditions of Rule 144 are met,
(3) all of the offered shares have been otherwise transferred to
selling shareholders who may trade these shares without
restriction under the Securities Act, and Ingram Micro has
delivered a new certificate or other evidence of ownership for
the offered shares not bearing a restrictive legend, or
(4) in the opinion of Ingram Micro's counsel, all of the offered
shares may be sold without any time, volume or manner
limitations pursuant to Rule 144(k) under the Securities Act.
In the event of any merger, reorganization, consolidation,
recapitalization or other change in corporate structure affecting the Ingram
Micro common stock, an adjustment shall be deemed to be made in the definition
of registrable securities in the registration agreement as is appropriate in
order to prevent any dilution or enlargement of the rights granted pursuant to
the registration agreement.
Ingram Micro will be permitted to suspend the use of this prospectus under
certain circumstances relating to pending corporate developments, public
filings with the SEC and similar events for a period not to exceed 60 days and
not to exceed an aggregate of 120 days in any 12-month period. A holder who
sells shares pursuant to the registration statement generally will be required
to be named as a selling shareholder in this prospectus, deliver this
prospectus to purchasers of the offered shares and be bound by certain
provisions of the registration agreement that are applicable to that holder,
including certain indemnification provisions.
Ingram Micro has agreed to pay all expenses of the registration statement,
excluding any underwriting fees or discounts or commissions attributable to the
sale of registrable securities. Ingram Micro has also agreed to provide to each
registered holder copies of this prospectus, notify each registered holder when
the registration statement has become effective and take certain other actions
as are required to permit, subject to the foregoing, unrestricted resales of
the shares. The plan of distribution of this prospectus permits resales of
offered shares by selling shareholders through brokers and dealers.
Limitation of Liability; Indemnification
As permitted by the DGCL, the certificate of incorporation provides that
directors of Ingram Micro shall not be personally liable to Ingram Micro or its
shareowners for monetary damages for breach of fiduciary duty as a director to
the fullest extent permitted by the DGCL, which currently provides that this
liability may be so limited, except for liability:
o for any breach of the director's duty of loyalty to Ingram Micro
or its shareowners,
10
o for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law,
o under Section 174 of the DGCL, relating to prohibited dividends
or distributions or the repurchase or redemption of stock, or
o for any transaction from which the director derives an improper
personal benefit.
Each person who is or was a party to any action by reason of the fact that
the person is or was a director or officer of Ingram Micro shall be indemnified
and held harmless by Ingram Micro to the fullest extent permitted by the DGCL.
This right to indemnification also includes the right to have paid by Ingram
Micro the expenses incurred in connection with any proceeding in advance of its
final disposition, to the fullest extent permitted by the DGCL. In addition, we
may, by action of the board of directors, provide indemnification to other
employees and agents of Ingram Micro to the extent the board of directors
determines to be appropriate under the DGCL.
As a result of this provision, Ingram Micro and its shareowners may be
unable to obtain monetary damages from a director for breach of his duty of
care. Although shareowners may continue to seek injunctive or other equitable
relief for an alleged breach of fiduciary duty by a director, shareowners may
not have any effective remedy against the challenged conduct if equitable
remedies are unavailable. We also reserve the right to purchase and maintain
directors' and officers' liability insurance.
Board Representation Agreement
Ingram Micro and the Ingram family stockholders have entered into a board
representation agreement. So long as the Ingram family stockholders and their
permitted transferees, as they are defined in the board representation
agreement, own in excess of 25,000,000 shares of the outstanding common equity,
the board representation agreement provides for the designation of certain
nominees:
o not more than three directors designated by the Ingram family
stockholders,
o one director designated by the chief executive officer of Ingram
Micro, and
o four or five additional independent directors who are not
members of the Ingram family or executive officers or employees
of Ingram Micro.
Directors designated by the Ingram family stockholders may, but are not
required to, include Martha R. Ingram, any of her legal descendants, or any of
their respective spouses. Messrs. Orrin H. Ingram and John R. Ingram and Mrs.
Ingram are the directors designated by the Ingram family stockholders; Mr.
Jerre L. Stead is the director designated by the chief executive officer of
Ingram Micro; and Messrs. Don H. Davis, Jr., Philip M. Pfeffer, J. Phillip
Samper, Joe B. Wyatt and Gerhard Schulmeyer are independent directors. Each of
the parties to the board representation agreement, other than Ingram Micro, has
agreed to vote its shares of common equity in favor of the designated nominees.
The Ingram family stockholders' holdings of common equity are sufficient to
guarantee the election of the designated nominees.
The board representation agreement provides for the formation of certain
committees of the board of directors. As provided in the bylaws and the board
representation agreement, Ingram Micro has four committees: an executive
committee, a nominating committee, an audit committee, and a human resources
committee.
In addition to provisions relating to the designation of directors, the
board representation agreement provides that certain types of corporate
transactions, including:
o transactions involving the potential sale or merger of Ingram
Micro;
o the issuance of additional equity, warrants, or options;
11
o acquisitions involving aggregate consideration in excess of 10%
of Ingram Micro's stockholders' equity;
o any guarantee of indebtedness of an entity other than a
subsidiary of Ingram Micro exceeding 5% of Ingram Micro's
stockholders' equity; and
o the incurrence of indebtedness in a transaction which could
reasonably be expected to reduce Ingram Micro's investment
rating (a) lower than one grade below the rating in effect
immediately following our initial public offering in November
1996 or (b) below investment grade, may not be entered into
without the written approval of at least a majority of the
voting power deemed to be held, for purposes of the board
representation agreement, by certain of the Ingram family
stockholders, acting in their sole discretion.
The board representation agreement will terminate on the date on which the
Ingram family stockholders and their permitted transferees collectively cease
to beneficially own at least 25,000,000 shares of the common equity of Ingram
Micro, as this number may be equitably adjusted to reflect stock splits, stock
dividends, recapitalizations, and other transactions in the capital stock of
Ingram Micro. All decisions for the Ingram family stockholders that are trusts
or foundations will be made by the trustees thereof, who in some cases are
members of the Ingram family.
Other Certificate of Incorporation and Bylaw Provisions
The bylaws provide that a majority of the total number of directors shall
constitute a quorum for the transaction of business. The board of directors may
act by unanimous written consent. The board representation agreement contains
additional provisions relating to corporate governance, as described above.
Annual meetings of shareowners shall be held to elect the board of
directors and transact any other business as may be properly brought before the
meeting. Special meetings of shareowners may be called by the chairman and
shall be called by the secretary on the written request of shareowners having
10% of the voting power of Ingram Micro. The shareowners may act by written
consent in lieu of a meeting of shareowners until all shares of Class B common
stock cease to be outstanding.
The certificate of incorporation may be amended with the approval of the
board of directors by the vote required as described above. For so long as any
shares of Class B common stock remain outstanding, in addition to any vote
required by law, any amendment also requires the approval of the holders of a
majority of Ingram Micro's outstanding voting power and a majority of the
members of the board of directors. However, any amendment to the provisions of
the certificate of incorporation relating to the common equity also requires
the consent of a majority of the outstanding voting power held by the Ingram
family stockholders. The bylaws may be amended with the approval of
three-quarters of the entire board of directors or by the holders of 75% of
Ingram Micro's voting power present and entitled to vote at any annual or
special meeting of shareowners at which a quorum is present.
The number of directors which shall constitute the whole board of
directors shall be fixed by resolution of the board of directors. The number of
directors shall be eight or nine. The board currently has nine members. The
vote of a majority of the entire board is required for all actions of the
board. The directors shall be elected at the annual meeting of the shareowners,
except for filling vacancies. Directors may be removed with the approval of the
holders of a majority of Ingram Micro's voting power present and entitled to
vote at a meeting of shareowners. Vacancies and newly created directorships on
the board of directors resulting from any increase in the number of directors
may be filled by a majority of the directors then in office, although less than
a quorum, a sole remaining director, or the holders of a majority of the voting
power present and entitled to vote at a meeting of shareowners. So long as the
Ingram family stockholders and their permitted transferees own at least
25,000,000 shares of the common equity, the bylaws will provide for the
appointment of the designated nominees.
The presence, in person or by proxy, of the holders of a majority of the
votes entitled to be cast by the shareowners entitled to vote generally, shall
constitute a quorum for shareowner action at any meeting.
12
Section 203 of the DGCL
Ingram Micro is subject to Section 203 of the DGCL which, subject to
certain exceptions, prohibits a Delaware corporation from engaging in a
business combination, as defined in Section 203, with an "interested
stockholder," which is defined generally as any person who beneficially owns
15% or more of the outstanding voting stock of the company or any person
affiliated with such a person, for a period of three years following the date
that the shareowner became an interested stockholder, unless:
o prior to that date the board of directors of the corporation
approved either the business combination or the transaction that
resulted in the shareowner becoming an interested stockholder;
o upon consummation of the transaction that resulted in the
shareowner becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the number of shares
outstanding those shares owned (a) by directors who are also
officers of the corporation and (b) by employee stock plans in
which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer; or
o on or subsequent to that date the business combination is
approved by the board of directors of the corporation and
authorized at a meeting of shareowners by the affirmative vote
of at least 662/3% of the outstanding voting stock of the
corporation not owned by the interested stockholder.
Transfer Agent
The transfer agent and registrar for the common stock is First Chicago
Trust Company of New York, a division of EquiServe.
SELLING SHAREHOLDERS
The shares of common stock offered by this prospectus were originally
issued by Ingram Micro to the selling shareholders pursuant to the warrant
dated December 3, 1999, in a transaction exempt from the registration
requirements of the Securities Act. The term "selling shareholders" includes
SOFTBANK Corp., a Japanese corporation, and its transferees, pledgees, donees,
successors or assigns, and any other person who becomes a party to or agrees to
be bound by the registration agreement. In 1998, Ingram Micro entered into a
strategic alliance with SOFTBANK to provide global services to value-added
resellers, with Ingram Micro serving as SOFTBANK's supplier in markets outside
Japan and Korea, and SOFTBANK fulfilling Ingram Micro's sales to the Japanese
and Korean markets.
The selling shareholders may from time to time offer and sell pursuant
to this prospectus any or all of the offered shares. The cover page of this
prospectus sets forth the name and number of shares of common stock to be
offered.
SOFTBANK owns 1,168,682 outstanding shares of Ingram Micro common stock
and has the right to purchase an additional 1,500,000 shares pursuant to the
warrant. Assuming SOFTBANK had exercised its warrant to purchase 1,500,000
shares of Ingram Micro common stock on November 30, 1999, SOFTBANK would own
approximately 1.83% of the outstanding common equity as of such date.
13
PLAN OF DISTRIBUTION
Ingram Micro will not receive any of the proceeds of the sale of the
offered shares. The offered shares may be offered and sold by the selling
shareholders from time to time to purchasers directly. Alternatively, the
selling shareholders may from time to time offer and sell the offered shares to
or through underwriters, broker/dealers or agents, who may receive compensation
in the form of underwriting discounts, concessions or commissions from the
selling shareholders and/or the purchasers of the offered shares for whom they
may act as agents. The selling shareholders and any underwriters,
broker/dealers or agents that participate in the distribution of the offered
shares may be deemed to be "underwriters" within the meaning of the Securities
Act, and any profits on the sale of offered shares by any selling shareholders
and any discounts, commissions, concessions or other compensation received by
any of these underwriters, broker/dealers or agents may be deemed to be
underwriting discounts or commissions under the Securities Act. To the extent
the selling shareholders may be deemed to be underwriters, the selling
shareholders may be subject to certain statutory liabilities, including, but
not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5
under the Exchange Act.
The offered shares may be offered and sold from time to time in one or
more transactions at fixed prices, at prevailing market prices at the time of
sale, at varying prices determined at the time of sale or at negotiated prices.
The sale of the offered shares may be effected in transactions, which may
involve crosses or block transactions:
o on any national securities exchange or quotation service on
which the offered shares may be listed or quoted at the time of
sale,
o in the over-the-counter market,
o in transactions otherwise than on these exchanges or services or
in the over-the-counter market, or
o through the writing of options.
At the time a particular offering of the offered shares is made, a
prospectus supplement, if required, will be distributed which will set forth
the aggregate amount and type of offered shares being offered and the terms of
the offering, including the name or names of any underwriters, broker/dealers
or agents, any discounts, commissions and other items constituting compensation
from the selling shareholders and any discounts, commissions or concessions
allowed or reallowed or paid to broker/dealers. This prospectus supplement and,
if necessary, a post-effective amendment to the registration statement of which
this prospectus is a part, will be filed with the SEC to reflect the disclosure
of additional information with respect to the distribution of the offered
shares. In addition, the offered shares covered by this prospectus may be sold
in private transactions or under Rule 144 rather than pursuant to this
prospectus.
To the best knowledge of Ingram Micro, there are currently no plans,
arrangements or understandings between any selling shareholders and any
broker/dealer, agent or underwriter regarding the sale of the offered shares by
the selling shareholders. There is no assurance that any selling shareholder
will sell any or all of the offered shares or that any selling shareholder will
not transfer the offered shares by other means not described in this
prospectus.
To comply with the securities laws of certain jurisdictions, if
applicable, the offered shares will be offered or sold in jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the offered shares may not be offered or sold unless they have
been registered or qualified for sale in these jurisdictions or an exemption
from registration or qualification is available and is complied with.
The selling shareholders and any other person participating in this
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M of the Exchange Act which may limit the timing of purchases and sales of any
of the offered shares by the selling shareholders or any other person.
Furthermore, Regulation M may restrict the ability of any person engaged in the
14
distribution of the offered shares to engage in market-making activities with
respect to the particular offered shares being distributed for a period of up
to five business days prior to the commencement of that distribution. All of
the foregoing may affect the marketability of the offered shares and the
ability of any person or entity to engage in market-making activities with
respect to the offered shares.
Pursuant to the registration agreement entered into in connection with the
registration of the shares by Ingram Micro, each of Ingram Micro and the
selling shareholders will be indemnified by the other against certain
liabilities, including certain liabilities under the Securities Act, or will be
entitled to contribution in connection therewith.
The selling shareholders will not pay any expenses incidental to the
registration, offering and sale of the offered shares to the public other than
commissions, fees and discounts of underwriters, brokers, dealers and agents.
Pursuant to the registration agreement, the selling shareholders will not
pay any expenses of the registration of the offered shares, including, without
limitation, all registration and filing fees, including, without limitation:
(x) with respect to filings required to be made with the National
Association of Securities Dealers, Inc. and
(y) of compliance with federal and state securities or blue sky
laws.
Ingram Micro will register or qualify or cooperate with the selling
shareholders in connection with the registration or qualification or exemption
from the registration or qualification of the offered shares for offer and sale
under securities or blue sky laws of the jurisdictions within the United States
as any selling shareholder reasonably requests in writing.
LEGAL MATTERS
The validity of the shares offered by this prospectus will be passed upon
for Ingram Micro by Davis Polk & Wardwell.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to Ingram Micro's Annual Report on Form 10-K for the year ended
January 2, 1999, 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.
15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
An itemized statement of the estimated amount of the expenses, other than
underwriting discounts and commissions, incurred and to be incurred in
connection with the distribution of the shares registered pursuant to this
registration statement follows. Except for the Securities and Exchange
Commission registration fee, all amounts are estimates.
Securities and Exchange Commission registration fee............ $ 4,925
Printing and engraving expenses................................ 10,000
Accounting fees and expenses................................... 8,000
Legal fees and expenses........................................ 25,000
Transfer Agent fees and expenses............................... 5,000
Miscellaneous.................................................. 2,075
-----------
Total..................................................... $ 55,000
===========
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law provides, in effect,
that any person made a party to any action by reason of the fact that he is or
was a director, officer, employee or agent of Ingram Micro may and, in certain
cases, must be indemnified by Ingram Micro against, in the case of a
non-derivative action, judgments, fines, amounts paid in settlement and
reasonable expenses (including attorneys' fees) incurred by him as a result of
such action, and in the case of a derivative action, against expenses
(including attorneys' fees), if in either type of action he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of Ingram Micro. This indemnification does not apply, in a derivative
action, to matters as to which it is adjudged that the director, officer,
employee or agent is liable to Ingram Micro, unless upon court order it is
determined that, despite such adjudication of liability, but in view of all the
circumstances of the case, he is fairly and reasonably entitled to indemnity
for expenses, and, in a non-derivative action, to any criminal proceeding in
which such person had reasonable cause to believe his conduct was unlawful.
Section 102 of the DGCL allows Ingram Micro to eliminate or limit the
personal liability of a director to Ingram Micro or to any of its stockholders
for monetary damage for a breach of fiduciary duty as a director, except in the
case where the director:
o breaches such person's duty of loyalty to the Company or its
stockholders,
o fails to act in good faith, engages in intentional misconduct or
knowingly violates a law,
o authorizes the payment of a dividend or approves a stock
purchase or redemption in violation of Section 174 of the DGCL
or
o obtains an improper personal benefit.
Article Tenth of Ingram Micro's certificate of incorporation includes a
provision which eliminates directors' personal liability to the fullest extent
permitted under the DGCL.
Article Tenth of Ingram Micro's certificate of incorporation also provides
that Ingram Micro shall indemnify any person (and the heirs, executors or
administrators of such person) who was or is a party or is threatened to be
made a party to, or is involved in any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that such person is or was a director or officer of
Ingram Micro or is or was serving at the request of Ingram Micro as a director
or officer of another corporation,
II- 1
partnership, joint venture, trust or other enterprise, to the fullest extent
permitted by Delaware Law. Each such indemnified party shall have the right to
be paid by Ingram Micro for any expenses incurred in connection with any such
proceeding in advance of its final disposition to the fullest extent authorized
by Delaware Law. Article Tenth of Ingram Micro's certificate of incorporation
also provides that Ingram Micro may, by action of its board of directors,
provide indemnification to such of the employees and agents of Ingram Micro to
such extent and to such effect as the board of directors shall determine to be
appropriate and authorized by Delaware Law.
As permitted by Delaware Law and Ingram Micro's certificate of
incorporation, we maintain insurance covering our directors and officers
against certain liabilities incurred by them in their capacities as such,
including among other things, certain liabilities under the Securities Act of
1933, as amended.
Item 16. Exhibits
(a) List of Exhibits.
4.01 -- Registration Agreement dated as of December 3, 1999 between
Ingram Micro Inc. and SOFTBANK corp.
4.02 -- Warrant Agreement dated as of December 3, 1999 between
Ingram Micro Inc. and SOFTBANK Corp.
5.01 -- Opinion of Davis Polk & Wardwell
23.01 -- Consent of PricewaterhouseCoopers LLP
23.02 -- Consent of Davis Polk & Wardwell (included in Exhibit 5.01)
24.01 -- Powers of Attorney of certain officers and directors of
Ingram Micro Inc. (included on the signature pages hereof)
99.01 -- Cautionary Statements for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act of
1995 (incorporated by reference to Exhibit 99.01 to Ingram
Micro Inc.'s Annual Report on Form 10-K for the fiscal year
ended January 2, 1999, filed with the SEC on April 1, 1999)
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) 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 shares offered (if the total
dollar value of shares 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 SEC pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) 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;
II- 2
provided, however, that if the information required to be included in a
post-effective amendment by paragraphs (1) (i) and (ii) above is contained in
periodic reports filed with or furnished to the SEC by the registrant pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934, paragraphs (1)
(i) and (ii) shall not apply.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the shares offered therein,
and the offering of such shares 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 shares being registered which remain unsold at the
termination of the offering.
(4) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement relating to shares offered therein, and the
offering of such shares at that time shall be deemed to be the initial
bona fide offering thereof.
(5) The undersigned registrant hereby undertakes to supplement the
prospectus, after the expiration of the subscription period, to set forth
the results of the subscription offer, the transactions by any
underwriters during the subscription period, the amount of unsubscribed
securities to be purchased by any underwriters, and the terms of any
subsequent offering thereof. If any public offering by the underwriters is
to be made on terms differing from those set forth on the cover page of
the prospectus, a post-effective amendment will be filed to set forth the
terms of such offering.
(6) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of Ingram Micro pursuant to the foregoing provisions, or
otherwise, Ingram Micro has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Ingram Micro of expenses incurred
or paid by a director, officer or controlling person of Ingram Micro in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the shares
being registered, Ingram Micro 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 of whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
II- 3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Ingram Micro
Inc. certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Santa Ana, State of California, on this 29th day of
December, 1999.
INGRAM MICRO INC.
By: /s/ JAMES E. ANDERSON, JR
-------------------------------------
Name: James E. Anderson, Jr.
Title: Senior Vice President,
Secretary and General Counsel
POWER OF ATTORNEY
The registrant and each person whose signature appears below constitutes
and appoints Jerre L. Stead, Michael J. Grainger, and James E. Anderson, Jr.,
and any agent for service named in this Registration Statement and each of
them, his, her, or its true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him, her, or it and in his, her,
or its name, place and stead, in any and all capacities, to sign and file (i)
any and all amendments (including post-effective amendments) to this
Registration Statement, with all exhibits thereto, and other documents in
connection therewith, and (ii) a registration statement, and any and all
amendments thereto, relating to the offering covered hereby filed pursuant to
Rule 462(b) under the Securities Act of 1933, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he, she, or it might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
Signature Title Date
--------- ----- ----
/s/ Jerre L. Stead Chief Executive Officer (Principal Executive Officer); December 29, 1999
- -------------------------------- Chairman of the Board
Jerre L. Stead
/s/ Michael J. Grainger Executive Vice President and Worldwide Chief
- -------------------------------- Financial Officer (Principal Financial Officer and December 29, 1999
Michael J. Grainger Principal Accounting Officer)
/s/ Martha R. Ingram Director December 29, 1999
- --------------------------------
Martha R. Ingram
/s/ John R. Ingram Director December 29, 1999
- --------------------------------
John R. Ingram
/s/ David B. Ingram Director December 29, 1999
- --------------------------------
David B. Ingram
/s/ Philip M. Pfeffer Director December 29, 1999
- --------------------------------
Philip M. Pfeffer
/s/ Don H. Davis, Jr. Director December 29, 1999
- --------------------------------
Don H. Davis, Jr.
/s/ J. Phillip Samper Director December 29, 1999
- --------------------------------
J. Phillip Samper
II- 4
Signature Title Date
--------- ----- ----
/s/ Joe B. Wyatt Director December 29, 1999
- --------------------------------
Joe B. Wyatt
/s/ Gerhard Schulmeyer Director December 29, 1999
- --------------------------------
Gerhard Schulmeyer
II- 5
EXHIBIT INDEX
Exhibit Description
------- -----------
4.01 -- Registration Agreement dated as of December 3, 1999 between
Ingram Micro Inc. and SOFTBANK Corp.
4.02 -- Warrant Agreement dated as of December 3, 1999 between
Ingram Micro Inc. and SOFTBANK Corp.
5.01 -- Opinion of Davis Polk & Wardwell
23.01 -- Consent of PricewaterhouseCoopers LLP
23.02 -- Consent of Davis Polk & Wardwell (included in Exhibit 5.01)
24.01 -- Powers of Attorney of certain officers and directors of
Ingram Micro Inc. (included on the signature pages hereof)
99.01 -- Cautionary Statements for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995 (incorporated by reference to Exhibit 99.01 to
Ingram Micro Inc.'s Annual Report on Form 10-K for the
fiscal year ended January 2, 1999, filed with the SEC on
April 1, 1999)
II- 6
EXHIBIT 4.01
REGISTRATION AGREEMENT
AGREEMENT dated as of December 3, 1999 between Ingram Micro Inc., a
Delaware corporation ("Ingram"), and SOFTBANK CORP., a Japanese corporation
("SOFTBANK").
For good and valuable consideration (the receipt and sufficiency of which
is hereby acknowledged), Ingram and SOFTBANK agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have the
following meanings:
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with, such
Person. For the purposes of this definition, "control" when used with respect
to any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holders" means SOFTBANK and any other Person, who, pursuant to the terms
hereof, shall become a party to or agree to be bound by the terms of this
Agreement after the date hereof.
"Ingram Class A Common Stock" means the Class A Common Stock, par value
$0.01 per share, of Ingram.
"Person" means an individual, corporation, partnership, limited liability
company, trust, association or any other entity or organization.
"Registrable Securities" means any shares of Ingram Class A Common Stock
issued or issuable to a Holder upon exercise of the Warrant; provided that such
securities shall cease to be Registrable Securities if and when (i) a
registration statement with respect to the disposition of such securities shall
have become effective under the
Securities Act and such securities shall have been disposed of pursuant to such
effective registration statement, (ii) such securities shall have been sold
under circumstances in which all of the applicable conditions of Rule 144 (or
any similar provisions then in force) are met, (iii) all such securities have
been otherwise transferred to holders who may trade such securities without
restriction under the Securities Act, and Ingram has delivered a new
certificate or other evidence of ownership for such securities not bearing a
restrictive legend, or (iv) in the opinion of Ingram's counsel, all such
securities may be sold without any time, volume or manner limitations pursuant
to Rule 144(k) (or any similar provision then in effect) under the Securities
Act. In the event of any merger, reorganization, consolidation,
recapitalization or other change in corporate structure affecting the Ingram
Class A Common Stock, such adjustment shall be deemed to be made in the
definition of "Registrable Securities" as is appropriate in order to prevent
any dilution or enlargement of the rights granted pursuant to this Agreement.
"Registration Expenses" means all (i) registration and filing fees, (ii)
fees and expenses of compliance with securities or blue sky laws, (iii)
printing expenses, (iv) internal expenses of Ingram, (v) fees and disbursements
of counsel for Ingram, (vi) customary fees and expenses for independent
certified public accountants retained by Ingram, (vii) fees and expenses of any
special experts retained by Ingram in connection with such registration, (viii)
fees and expenses of listing the Registrable Securities on a securities
exchange and (ix) reasonable fees and disbursements of one separate firm of
attorneys for the Holders including Registrable Securities in such registration
(which counsel shall be selected by Holders owning a majority of the
Registrable Securities requested to be included in such registration by all
stockholders and shall be reasonably acceptable to Ingram); but shall not
include any underwriting fees or discounts or commissions attributable to the
sale of Registrable Securities.
"Rule 144" means Rule 144 under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Warrant" means the Warrant to purchase 1,500,000 shares of Ingram Class A
Common Stock dated the date hereof and issued to SOFTBANK.
ARTICLE 2
SHELF REGISTRATION
SECTION 2.01. Shelf Registration.
(a) No later than December 31, 1999, Ingram shall prepare and file with
the Commission a shelf registration statement (as amended and supplemented from
time to
2
time, the "Shelf Registration Statement") relating to the Registrable
Securities in accordance with Rule 415 under the Securities Act and will use
its reasonable best efforts to cause such Shelf Registration Statement to be
declared effective as soon as practicable thereafter and to keep such Shelf
Registration Statement continuously effective and in compliance with the
Securities Act and usable for resale of such Registrable Securities for a
period commencing on the date on which the Commission declares such Shelf
Registration Statement effective and ending on the sixth anniversary of the
date hereof or such earlier date on which all Registrable Securities covered by
such registration statement have been sold or cease to be Registrable
Securities. Ingram shall not be liable for the failure of any such registration
to become effective provided that Ingram complies with its obligations
hereunder.
(b) Ingram shall pay all Registration Expenses in connection with the
Shelf Registration Statement. Each Holder shall pay all underwriting discounts
and commissions and transfer taxes, if any, relating to the sale or disposition
of such Holder's Registrable Securities pursuant to the Shelf Registration
Statement.
(c) Prior to the filing with the Commission of any Shelf Registration
Statement or Subsequent Shelf Registration Statement (including any amendments
thereto) and the distribution or delivery of any prospectus (including any
supplements thereto), Ingram shall (i) provide draft copies thereof to the
Holders and reflect in such documents all such comments as the Holders (and
their counsel) reasonably may propose respecting the Selling Shareholders and
Plan of Distribution sections (or equivalents) and (ii) furnish to each Holder
such numbers of copies of a prospectus including a preliminary prospectus or
any amendment or supplement to any prospectus, as applicable, in conformity
with the requirements of the Securities Act, and such other documents, as such
Holder may reasonably request in order to facilitate the public sale or other
disposition of the securities owned by such Holder.
SECTION 2.02. Registration Procedures.
(a) The Holders will provide to Ingram at least 10 business days prior
written notice of their desire to make any offer or sale of any Registrable
Securities pursuant to the Shelf Registration Statement. If Ingram shall
determine, in its good faith judgment, that to permit offers or sales pursuant
to the Shelf Registration Statement would require Ingram to disclose material
nonpublic information (a "Disadvantageous Condition"), Ingram may, by delivery
of notice to the Holders within 5 days after Ingram's receipt of the written
notice from the Holders described above, suspend offers and sales pursuant to
the Shelf Registration Statement for a period (each such period, a "Blackout
Period") of not more than 60 consecutive days from the date of Ingram's
determination; provided that not more than two Blackout Periods may occur
during any period of twelve consecutive months.
3
If Ingram determines to initiate a Blackout Period, Ingram shall deliver a
notice to such effect to each Holder that has indicated (pursuant to the
written notice referred to above) a desire to sell Registrable Securities and
such Persons shall forthwith discontinue use of the prospectus and prospectus
supplement contained in such registration statement and, if so directed by
Ingram, shall deliver to Ingram all copies of the prospectus and prospectus
supplement then covering such Registrable Securities current at the time of
receipt of such notice.
Each Holder shall furnish to Ingram in writing such information as Ingram
may reasonably request in the context of such transactions, and shall otherwise
cooperate with Ingram in connection with the Shelf Registration Statement.
Ingram may exclude from the Shelf Registration Statement the Registrable
Securities of any Holder if such Holder fails to furnish such reasonably
requested information within three business days after receiving any request
therefor. Each selling Holder agrees to promptly furnish additional information
required to be disclosed in order to make the information previously provided
to Ingram by such Holder not materially misleading.
(b) Ingram agrees to supplement or amend the Shelf Registration Statement
to the extent required by the Securities Act and to furnish to each Holder and
each underwriter, if any, of the Registrable Securities copies of such
amendment or supplement within (i) if delivery is to Japan, five business days
of the effectiveness of such amendment or supplement or (ii) if delivery is
within the United States, three business days of the effectiveness of such
amendment or supplement. Each Holder agrees that, upon receipt of any notice
from Ingram of the happening of any event requiring the preparation of an
amendment or supplement, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated above, and, if so directed by
Ingram, such Holder will deliver to Ingram all copies in its possession of the
most recent prospectus and supplement covering such Registrable Securities at
the time of receipt of such notice; provided that if the Holder is so required
pursuant to any such notice to discontinue disposition of Registrable
Securities for more than 10 business days in the case of clause (i) above or 8
business days in the case of clause (ii) above, such discontinuation shall be
counted as one of Ingram's permitted Blackout Periods under Section 2.02(a).
(c) Ingram shall as promptly as practicable notify the Holders in writing
if the Shelf Registration Statement ceases to be effective for any reason at
any time during the period specified in Section 2.01(a) (other than because all
Registrable Securities registered thereunder shall have been resold pursuant
thereto or shall have ceased to be Registrable Securities), Ingram shall use
all reasonable efforts to obtain the prompt withdrawal of any order suspending
the effectiveness thereof, and in any event shall within thirty days of such
cessation of effectiveness amend the Shelf Registration Statement in a manner
reasonably expected to obtain the withdrawal of the order
4
suspending the effectiveness thereof, or file an additional shelf Registration
Statement covering all of the securities that as of the date of such filing are
Registrable Securities (a "Subsequent Shelf Registration Statement"). If a
Subsequent Shelf Registration Statement is filed, Ingram shall use all
reasonable efforts to cause the Subsequent Shelf Registration Statement to
become effective as promptly as is practicable after such filing and to keep
such Subsequent Shelf Registration Statement continuously effective until the
end of the period specified in Section 2.01(a).
(d) Ingram will use its reasonable best efforts to register or qualify the
Registrable Securities under such securities or blue sky laws of such
jurisdictions in the United States as any Holder of Registrable Securities
reasonably requests; provided that Ingram will not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph, (ii) subject itself to taxation in
any such jurisdiction or (iii) consent to general service of process in any
such jurisdiction. Ingram further agrees to use its reasonable best efforts to
cause all such Registrable Securities to be listed on each securities exchange
on which similar securities issued by Ingram are then listed.
SECTION 2.03. Indemnification by Ingram. Ingram agrees to indemnify and
hold harmless to the fullest extent permitted by law each Holder of Registrable
Securities covered by the Shelf Registration Statement, its officers, directors
and agents, and each Person, if any, who controls such Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
from and against any and all losses, claims, damages, liabilities and expenses
caused by any untrue statement or alleged untrue statement of a material fact
contained in the Shelf Registration Statement or any Subsequent Shelf
Registration Statement or any prospectus relating to the Registrable Securities
(as amended or supplemented if Ingram shall have furnished any amendments or
supplements thereto) or any preliminary, summary or final prospectus or 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 and Ingram will
reimburse such Holders for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending such loss, claim, damage,
liability or expense except insofar as such losses, claims, damages,
liabilities or expenses are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information furnished in
writing to Ingram by such Holder or on such Holder's behalf by an authorized
representative of such Holder in either such case expressly for use therein;
provided, that with respect to any untrue statement or omission or alleged
untrue statement or omission made in any preliminary prospectus, or in any
prospectus, as the case may be, the indemnity agreement contained in this
paragraph shall not apply to the extent that any such loss, claim, damage,
liability or expense results from the fact that a current copy of the
prospectus (or, in the case of a prospectus, the prospectus as amended or
supplemented) was not sent or given to the Person asserting any such loss,
claim,
5
damage, liability or expense at or prior to the written confirmation of the
sale of the Registrable Securities concerned to such Person if it is determined
that Ingram has timely provided such prospectus and it was the responsibility
of such Holder to provide such Person with a current copy of the prospectus (or
such amended or supplemented prospectus, as the case may be) and such current
copy of the prospectus (or such amended or supplemented prospectus, as the case
may be) would have cured the defect giving rise to such loss, claim, damage,
liability or expense. Ingram also agrees to indemnify any underwriters of the
Registrable Securities, their officers and directors and each Person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Holders provided in this Section 2.03.
SECTION 2.04. Indemnification by the Holders of Registrable Securities.
The Holders of Registrable Securities included in the Shelf Registration
Statement agree, on a basis that is joint and several as among all Holders who
are Affiliates of one another (and several but not joint as among Holders who
are not Affiliates), to indemnify and hold harmless to the fullest extent
permitted by law (including without limitation reimbursement of Ingram for any
legal or any other expenses reasonably incurred by it in investigating or
defending such loss, claim, damage, liability or expense) Ingram, its officers,
directors and agents and each Person, if any, who controls Ingram 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 Ingram to such
Holders, but only (i) with respect to information furnished in writing by such
Holders or on such Holders' behalf by an authorized representative of such
Holder in either case expressly for use in the Shelf Registration Statement or
any Subsequent Shelf Registration Statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto, or any
preliminary, summary or final prospectus or any amendments or supplements
thereto or (ii) to the extent that any loss, claim, damage, liability or
expense described in Section 2.03 results from the fact that a current copy of
the prospectus (or, in the case of a prospectus, the prospectus as amended or
supplemented) was not sent or given to the Person asserting any such loss,
claim, damage, liability or expense at or prior to the written confirmation of
the sale of the Registrable Securities concerned to such Person if it is
determined that Ingram has timely provided such a prospectus and it was the
responsibility of a Holder to provide such Person with a current copy of the
prospectus (or such amended or supplemented prospectus, as the case may be) and
such current copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) would have cured the defect giving rise to such
loss, claim, damage, liability or expense. Each Holder also agrees to indemnify
and hold harmless underwriters of the Registrable Securities, their officers
and directors and each Person who controls such underwriters on substantially
the same basis as that of the indemnification of Ingram provided in this
Section 2.04.
SECTION 2.05. Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted
involving any Person in
6
respect of which indemnity may be sought pursuant to Section 2.03 or 2.04, such
Person (an "Indemnified Party") shall promptly notify the Person against whom
such indemnity may be sought (the "Indemnifying Party") in writing and the
Indemnifying Party shall assume the defense thereof, including the employment
of counsel reasonably satisfactory to such Indemnified Party, and shall assume
the payment of all fees and expenses. 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, (ii) the Indemnified Party has been advised in
writing by its counsel that representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them or (iii) the Indemnifying Party shall have failed to assume the defense of
such action within a reasonable period of time following receipt of the notice
seeking indemnity referred to above or employ counsel reasonably satisfactory
to the Indemnified Party. It is understood that the Indemnifying Party shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by the
Indemnified Party who had the largest number of Registrable Securities included
in such registration. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent which consent
shall not be unreasonably withheld, but if settled with such consent, or if
there be a final judgment for the plaintiff, the Indemnifying Party shall
indemnify and hold harmless such Indemnified Parties from and against any loss
or liability (to the extent stated above) 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 arising out of such proceeding.
SECTION 2.06. Contribution. If the indemnification provided for hereunder
is unavailable to the Indemnified Parties in respect of any losses, claims,
damages or liabilities referred to herein, then each such Indemnifying Party,
in lieu of indemnifying such Indemnified Party shall contribute to the amount
paid or payable by such Indemnified Party as a result of such losses, claims,
damages or liabilities (i) as between Ingram and the Holders on the one hand
and the underwriters on the other, in such proportion as is appropriate to
reflect the relative benefits received by Ingram and the Holders on the one
hand and the underwriters on the other from the offering of the securities, or
if such allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits but also the relative
fault of Ingram and the Holders on the one hand and of the underwriters on the
other in connection with
7
the statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations and (ii) as
between Ingram on the one hand and each Holder of Registrable Securities on the
other, in such proportion as is appropriate to reflect the relative fault of
Ingram and of each such Holder in connection with such statements or omissions,
as well as any other relevant equitable considerations. The relative benefits
received by Ingram and the Holders on the one hand and the underwriters on the
other shall be deemed to be in the same proportion as the total proceeds from
the offering (net of underwriting discounts and commissions but before
deducting expenses) received by Ingram and the Holders bear to the total
underwriting discounts and commissions received by the underwriters, in each
case as set forth in the table on the cover page of the prospectus. The
relative fault of Ingram and the Holders on the one hand and of the
underwriters on the other 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 Ingram and the Holders or by the underwriters. The
relative fault of Ingram on the one hand and of each such Holder on the other
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 such party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
Ingram and the Holders of Registrable Securities agree that it would not
be just and equitable if contribution pursuant to this Section 2.06 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages or 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 anything to the contrary contained herein, in
no event shall any (i) Holder be required to undertake liability to any Person
under Sections 2.04, 2.05 or 2.06 for any amounts in excess of the dollar
amount of the proceeds to be received by such Holder from the sale of such
Holder's Registrable Securities (after deducting any fees, discounts and
commissions applicable thereto) pursuant to any Shelf Registration Statement or
Subsequent Shelf Registration Statement under which such Registrable Securities
are to be registered under the Securities Act and (ii) underwriter be required
to undertake liability to any Person hereunder for any amounts in excess of the
aggregate discount, commission or other compensation payable to such
underwriter with respect to the Registrable Securities underwritten by it and
distributed pursuant to any Shelf Registration Statement or Subsequent Shelf
Registration Statement. 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 obligation of the Holders to contribute pursuant to
Sections 2.04,
8
2.05 or 2.06 shall be joint and several as among all Holders who are Affiliates
of one another (and several but not joint as among Holders who are not
Affiliates).
ARTICLE 3
MISCELLANEOUS
SECTION 3.01. Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. This Agreement supersedes all prior agreements and
understandings between the parties hereto with respect to the subject matter
hereof.
SECTION 3.02. Notices. Any notice, request, instruction or other document
to be given hereunder by any party hereto to another party hereto shall be in
writing (including telecopier or similar writing) and shall be given to such
party at its address set forth on the signature pages hereof, or to such other
address as the party to whom notice is to be given may provide in a written
notice to the party giving such notice, a copy of which written notice shall be
on file with the Secretary of Ingram. If notice is given pursuant to this
Section of a permitted successor or assign of a party to this Agreement, then
notice shall thereafter be given as set forth above to such successor or assign
of such party to this Agreement. Each such notice, request or other
communication shall be effective at the time set forth in the Stock Purchase
Agreement dated as of October 12, 1998 between the parties hereto.
SECTION 3.03. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard
to the conflicts of law rules of such state.
SECTION 3.04. Successors, Assigns, Transferees. Neither this Agreement nor
any right, remedy, obligation or liability arising hereunder or by reason
hereof shall be assignable by Ingram or any Holder, except that the Holder may
assign its rights hereunder to any of its Affiliates; provided that each such
transferee shall have executed and delivered to Ingram an instrument
substantially in the form of Exhibit A hereto pursuant to which the transferee
shall have agreed to be bound by the terms of this Agreement. This Agreement is
binding upon the parties to this Agreement and their successors and permitted
assigns and inures to the benefit of the parties to this Agreement and their
successors and permitted assigns, if any. Neither this Agreement nor any
provision hereof shall be construed so as to confer any right or benefit upon
any Person other than the parties to this Agreement.
SECTION 3.05. Amendments; Waivers. No failure or delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver
9
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law. Neither this Agreement nor
any term or provision hereof may be amended or waived except by an instrument
in writing signed by the parties hereto.
SECTION 3.06. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 3.07. Governing Law. THIS AGREEMENT AND ALL RIGHTS AND OBLIGATIONS
ARISING HEREUNDER SHALL BE CONSTRUED AND DETERMINED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF DELAWARE, AND THE PERFORMANCE THEREOF SHALL BE
GOVERNED AND ENFORCED IN ACCORDANCE WITH SUCH LAWS.
SECTION 3.08. Waiver of Jury Trial, Etc. The parties hereto agree that
they hereby irrevocably waive and agree to cause their respective Affiliates to
waive, the right to trial by jury in any action to enforce, or interpreting,
the provisions of this Agreement. Except as provided below, the parties agree
that the appropriate, exclusive and convenient forums for any disputes between
the parties hereto arising out of this Agreement shall be in any state or
federal court sitting in the State of Delaware. Except as provided below, the
parties hereto further agree that the parties will not bring suit with respect
to any disputes arising out of this Agreement in any court or jurisdiction
other than the above- specified courts; provided that the foregoing shall not
limit the rights of the parties to obtain execution of judgment in any other
jurisdiction. The parties hereto further agree, to the extent permitted by law,
that final and nonappealable judgment against a party in any action or
proceeding contemplated above shall be conclusive and may be enforced in any
other jurisdiction within or outside the United States by suit on the judgment,
a certified or exemplified copy of which shall be conclusive evidence of the
fact and amount of such judgment. Service of process in any action arising out
of or relating to this Agreement shall be effective if delivered or sent in
accordance with the provisions of Section 3.02.
10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
INGRAM MICRO INC.
By /s/ Michael J. Grainger
---------------------------------
Name: Michael J. Grainger
Title: EVP/CFO Worldwide
1600 Saint Andrew Place
Santa Ana, CA 92705
Telecopy: 714-566-7900
SOFTBANK CORP.
By /s/ Masayoshi Son
---------------------------------
Name: Masayoshi Son
Title: President and CEO
24-1, Nihonbashi - Hakozakicho
Chuo-ku, Tokyo 103-8501, Japan
Telecopy: 81-3-5641-3402
11
EXHIBIT A
FORM OF AGREEMENT TO BE BOUND
To the Parties to the Registration
Agreement dated as of
December ___, 1999
Dear Sirs:
Reference is made to the Registration Agreement (the "Agreement") dated as
of December 3, 1999 among Ingram Micro Inc. and SOFTBANK CORP.
In consideration of the transfer of Registrable Securities (as defined in
the Agreement) to the undersigned, the undersigned hereby confirms and agrees
to be bound by all of the provisions of the Agreement.
This letter shall be construed and enforced in accordance with the laws of
the State of Delaware without regard to the conflicts of law rules of such
state.
Very truly yours,
-----------------------------------
Permitted Transferee
EXHIBIT 4.02
INGRAM MICRO INC.
WARRANT FOR THE PURCHASE OF SHARES OF CLASS A
COMMON STOCK OF INGRAM MICRO INC.
WARRANT TO PURCHASE 1,500,000 SHARES
OF CLASS A
COMMON STOCK
THIS WARRANT AND THE SHARES OF CLASS A COMMON STOCK PURCHASABLE HEREUNDER
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE
THEREWITH. THIS WARRANT AND THE SHARES OF CLASS A COMMON STOCK PURCHASABLE
HEREUNDER ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, VOTING AND
OTHER MATTERS AS SET FORTH IN THE STANDSTILL AGREEMENT (AS HEREIN DEFINED),
COPIES OF WHICH MAY BE OBTAINED UPON REQUEST FROM THE COMPANY.
FOR VALUE RECEIVED, INGRAM MICRO INC., a Delaware corporation (the
"Company"), hereby certifies that SOFTBANK CORP. (including its successors and
permitted assigns, the "Holder") is entitled, subject to the provisions of this
Warrant, to purchase from the Company, at the times specified herein, 1,500,000
fully paid and non-assessable shares of Class A Common Stock of the Company,
par value $0.01 per share (the "Warrant Shares"), at a purchase price per share
equal to the Exercise Price (as hereinafter defined). The number of Warrant
Shares to be received upon the exercise of this Warrant and the price to be
paid for a Warrant Share are subject to adjustment from time to time as
hereinafter set forth.
(a) Definitions.
The following terms, as used herein, have the following meanings:
"Affiliate" shall have the meaning given to such term in Rule 12b-2
promulgated under the Securities and Exchange Act of 1934, as amended.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in California or Tokyo are authorized by law to close.
"Common Stock" means the Class A Common Stock, par value $0.01 per share,
of the Company or other capital stock of the Company that is not preferred as
to liquidation or dividends or any other security for which this Warrant may be
exercised pursuant to paragraph (i) hereof after the occurrence of any of the
transactions described in such paragraph.
"Exercise Price" means $13.25 per Warrant Share, such Exercise Price to be
adjusted from time to time as provided herein.
"Expiration Date" means December 3, 2004 at 5:00 p.m. California time.
"Fair Market Value" means, with respect to one share of Common Stock on
any date, the Current Market Price Per Common Share as defined in paragraph
(h)(4) hereof.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Registration Agreement" means the Registration Agreement dated as of the
date hereof between the Company and the Holder.
"Standstill Agreement" means the Standstill Agreement dated as of October
12, 1998 between the Company and the Holder.
(b) Exercise of Warrant.
(1) The Holder is entitled to exercise this Warrant in whole or in
part at any time, or from time to time, until the Expiration Date or, if
such day is not a Business Day, then on the next succeeding day that shall
be a Business Day. To exercise this Warrant, the Holder shall execute and
deliver to the Company a Warrant Exercise Notice substantially in the form
annexed hereto, this Warrant Certificate duly executed by the Holder and
payment of the applicable Exercise Price. Upon such delivery and payment,
the Holder shall be deemed to be the holder of record of the Warrant
Shares subject to such exercise, notwithstanding that the stock transfer
books of the Company shall then be closed or that certificates
representing such Warrant Shares shall not then be actually delivered to
the Holder. Notwithstanding anything herein to the contrary, in lieu of
payment in cash of the applicable
2
Exercise Price, the Holder may elect to deliver as payment, in whole or in
part of the aggregate Exercise Price, shares of Common Stock, including
shares to be issued upon the exercise of this Warrant, having the
aggregate Fair Market Value equal to the applicable portion of the
aggregate Exercise Price for the Warrant Shares; provided that if the
aggregate Fair Market Value of the Common Stock so delivered exceeds the
aggregate Exercise Price, in no event shall the Holder be entitled to
receive any amounts from the Company.
(2) The Exercise Price may be paid in cash or by certified or
official bank check or bank cashier's check payable to the order of the
Company or by any combination of such cash or check. The Company shall pay
any and all documentary, stamp or similar issue or transfer taxes payable
in respect of the issue or delivery of the Warrant Shares.
(3) If the Holder exercises this Warrant in part, this Warrant
Certificate shall be surrendered by the Holder to the Company and a new
Warrant Certificate of the same tenor and for the unexercised number of
Warrant Shares shall be executed by the Company. The Company shall
register the new Warrant Certificate in the name of the Holder and deliver
the new Warrant Certificate to the Person or Persons entitled to receive
the same.
(4) Upon surrender of this Warrant Certificate in conformity with the
foregoing provisions, the Company shall transfer to the Holder of this
Warrant Certificate appropriate evidence of ownership of the shares of
Common Stock or other securities or property (including any money) to
which the Holder is entitled, registered or otherwise placed in, or
payable to the order of, the name or names of the Holder and shall deliver
such evidence of ownership and any other securities or property (including
any money) to the Person or Persons entitled to receive the same, together
with an amount in cash in lieu of any fraction of a share as provided in
paragraph (e) below.
(c) Restrictive Legend. Certificates representing shares of Common Stock
issued pursuant to this Warrant shall bear a legend substantially in the form
of the legend set forth on the first page of this Warrant Certificate unless
(i) at the time of exercise such shares are registered under the Securities Act
or (ii) the Holder has delivered to the Company an opinion of outside counsel
for the Holder reasonably acceptable to the Company to the effect that the
securities represented by this Warrant Certificate are no longer subject to
restrictions on resale under the Securities Act.
3
(d) Reservation of Shares. The Company hereby agrees that at all times it
shall reserve for issuance and delivery upon exercise of this Warrant such
number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of this Warrant. All such shares
shall be duly authorized and, when issued upon such exercise, shall be validly
issued, fully paid and non-assessable, free and clear of all liens, security
interests, charges and other encumbrances or restrictions on sale and free and
clear of all preemptive rights, except to the extent set forth in the
Standstill Agreement.
(e) Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant and in lieu
of delivery of any such fractional share upon any exercise hereof, the Company
shall pay to the Holder an amount in cash equal to such fraction multiplied by
the Current Market Price Per Common Share (as defined in paragraph (h)(4)) at
the date of such exercise.
(f) Exchange, Transfer or Assignment of Warrant.
(1) This Warrant and the Warrant Shares are subject to the provisions
of the Registration Agreement and the Standstill Agreement, including the
restrictions on transfer. Each holder of this Warrant Certificate by
holding the same, consents and agrees that the registered holder hereof
may be treated by the Company and all other Persons dealing with this
Warrant Certificate as the absolute owner hereof for any purpose and as
the Person entitled to exercise the rights represented hereby. The Holder,
by its acceptance of this Warrant, will be subject to the provisions of,
and will have the benefits of, the Registration Agreement and the
Standstill Agreement to the extent set forth therein, including the
transfer restrictions therein.
(2) Subject to compliance with the transfer restrictions set forth in
the Standstill Agreement, upon surrender of this Warrant to the Company,
together with the attached Warrant Assignment Form duly executed, the
Company shall, without charge, execute and deliver a new Warrant in the
name of any Affiliate of the Holder named in such instrument of assignment
and, if the Holder's entire interest is not being assigned, in the name of
the Holder and this Warrant shall promptly be canceled; provided that any
such transferee shall have executed and delivered to Ingram an instrument
in form and substance satisfactory to Ingram pursuant to which such
transferee shall agree to be bound by the provisions of the Standstill
Agreement.
4
(g) Loss or Destruction of Warrant. Upon receipt by the Company of
evidence satisfactory to it (in the exercise of its reasonable discretion) of
the loss, theft, destruction or mutilation of this Warrant Certificate, and (in
the case of loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this Warrant
Certificate, if mutilated, the Company shall execute and deliver a new Warrant
Certificate of like tenor and date.
(h) Anti-dilution Provisions. The Exercise Price of this Warrant and the
number of shares of Common Stock for which this Warrant may be exercised shall
be subject to adjustment from time to time upon the occurrence of certain
events as provided in this paragraph (h); provided that notwithstanding
anything to the contrary contained herein, the Exercise Price shall not be less
than the par value of the Common Stock.
(1) In case the Company shall at any time after the date hereof (i)
declare a dividend or make a distribution on Common Stock payable in
Common Stock, (ii) subdivide or split the outstanding Common Stock, (iii)
combine or reclassify the outstanding Common Stock into a smaller number
of shares, or (iv) issue any shares of its capital stock in a
reclassification of Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the
surviving corporation), the Exercise Price in effect at the time of the
record date for such dividend or distribution or of the effective date of
such subdivision, split, combination or reclassification shall be
proportionately adjusted so that, after giving effect to paragraph (h)(7),
the exercise of this Warrant after such time shall entitle the holder to
receive the aggregate number of shares of Common Stock or other securities
of the Company (or shares of any security into which such shares of Common
Stock have been reclassified pursuant to clause (iii) or (iv) above)
which, if this Warrant had been exercised immediately prior to such time,
such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, distribution, subdivision, split,
combination or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur.
(2) In case the Company shall fix a record date for the issuance of
rights, options or warrants to the holders of its Common Stock entitling
such holders to subscribe for or purchase for a period expiring within 60
days of such record date shares of Common Stock (or securities convertible
into shares of Common Stock) at a price per share of Common Stock (or
having a conversion price per share of Common Stock, if a security
convertible into shares of Common Stock) less than
5
the Current Market Price Per Common Share on such record date, the maximum
number of shares of Common Stock issuable upon exercise of such rights,
options or warrants (or conversion of such convertible securities) shall
be deemed to have been issued and outstanding as of such record date and
the Exercise Price shall be adjusted by multiplying the Exercise Price in
effect immediately prior to such record date by a fraction, the numerator
of which shall be the sum of (i) the number of shares of Common Stock
outstanding immediately prior to such record date multiplied by the
Current Market Price Per Common Share immediately prior to such record
date and (ii) the aggregate consideration, if any, payable by the holders
of such rights, warrants, options or convertible securities prior to
receipt of such shares of Common Stock, and the denominator of which shall
be the product of the aggregate number of shares of Common Stock
outstanding as of such record date (assuming the maximum number of shares
of Common Stock issuable upon exercise of such rights, warrants, options
or convertible securities have been issued) and the Current Market Price
Per Common Share immediately prior to such record date but in no event
will such fraction exceed 1. In case any portion of the consideration to
be received by the Company shall be in a form other than cash, the fair
market value of such noncash consideration shall be utilized in the
foregoing computation. Such fair market value shall be determined by the
Board of Directors of the Company. The Holder shall be notified promptly
of any consideration other than cash to be received by the Company and
furnished with a description of the consideration and the fair market
value thereof, as determined by the Board of Directors. Such adjustment
shall be made successively whenever such record date is fixed; and in the
event (i) that such rights, options or warrants are not so issued or
expire without having been exercised in full or (ii) of a change in the
number of shares of Common Stock to which the holders of such rights,
options or warrants are entitled (other than pursuant to adjustment
provisions therein which are no more favorable in their entirety than
those contained in this paragraph (h)), the Exercise Price shall again be
adjusted to be the Exercise Price which would then be in effect in the
case of clause (i), if such record date had not been fixed with respect to
the unexercised portion of such rights, options or warrants, or in the
case of clause (ii), if such holders had initially been entitled to such
changed number of shares of Common Stock.
(3) In case the Company shall fix a record date for the making of a
distribution to holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in
6
which the Company is the surviving corporation) of evidences of
indebtedness, cash (other than regular cash dividends), assets or other
property (other than dividends payable in Common Stock or rights, options
or warrants referred to in, and for which an adjustment is made pursuant
to, paragraph (h)(2) hereof), the Exercise Price to be in effect after
such record date shall be determined by multiplying the Exercise Price in
effect immediately prior to such record date by a fraction, the numerator
of which shall be the Current Market Price Per Common Share on such record
date, less the fair market value (determined as set forth in paragraph
(h)(2) hereof) of the portion of the assets, cash, other property or
evidence of indebtedness so to be distributed which is applicable to one
share of Common Stock, and the denominator of which shall be such Current
Market Price Per Common Share. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such
distribution is not so made, the Exercise Price shall again be adjusted to
be the Exercise Price which would then be in effect if such record date
had not been fixed.
(4) For the purpose of any computation under paragraph (e) or
paragraph (h)(2) or (3) hereof, on any determination date, the "Current
Market Price Per Common Share" shall mean the average (weighted by daily
trading volume) of the Daily Prices (as defined below) per share of the
Common Stock for the 20 consecutive trading days ending five days prior to
such date. "Daily Price" means (i) if the shares of Common Stock then are
listed and traded on the New York Stock Exchange, Inc. ("NYSE"), the
closing price on such day as reported on the NYSE Composite Transactions
Tape; (ii) if the shares of Common Stock then are not listed and traded on
the NYSE, the closing price on such day as reported by the principal
national securities exchange on which the shares are listed and traded;
(iii) if the shares of Common Stock then are not listed and traded on any
such securities exchange, the last reported sale price on such day on the
National Market of the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ"); (iv) if the shares of Common Stock
then are not listed and traded on any such securities exchange and not
traded on the NASDAQ National Market, the average of the highest reported
bid and lowest reported asked price on such day as reported by NASDAQ; or
(v) if such shares are not listed and traded on any such securities
exchange, not traded on the NASDAQ National Market and bid and asked
prices are not reported by NASDAQ, then the average of the closing bid and
asked prices, as reported by The Wall Street Journal for the
over-the-counter market. If on any determination date the shares of Common
Stock are not quoted by any such organization, the Current
7
Market Price Per Common Share shall be the fair market value of such
shares on such determination date as determined by the Board of Directors,
without regard to considerations of the lack of liquidity or applicable
regulatory restrictions or transfer restrictions. For purposes of any
computation under this paragraph (h), the number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or
for the account of the Company or its subsidiaries.
(5) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least one percent
in such price; provided that any adjustments which by reason of this
paragraph (h)(5) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this paragraph (h) shall be made to the nearest one tenth of a cent or to
the nearest hundredth of a share, as the case may be.
(6) In the event that, at any time as a result of the provisions of
this paragraph (h), the holder of this Warrant upon subsequent exercise
shall become entitled to receive any shares of capital stock or other
securities of the Company other than Common Stock, the number of such
other shares so receivable upon exercise of this Warrant shall thereafter
be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions contained herein.
(7) Upon each adjustment of the Exercise Price as a result of the
calculations made in paragraphs (h)(1), (2) or (3) hereof, the number of
shares for which this Warrant is exercisable immediately prior to the
making of such adjustment shall thereafter evidence the right to purchase,
at the adjusted Exercise Price, that number of shares of Common Stock
obtained by (i) multiplying the number of shares covered by this Warrant
immediately prior to this adjustment of the number of shares by the
Exercise Price in effect immediately prior to such adjustment of the
Exercise Price and (ii) dividing the product so obtained by the Exercise
Price in effect immediately after such adjustment of the Exercise Price.
(8) Not less than two nor more than 30 days prior to the record date
or effective date, as the case may be, of any action which requires an
adjustment or readjustment pursuant to this paragraph (h), the Company
shall forthwith file in the custody of the secretary or any assistant
secretary at its principal executive office and with its stock
8
transfer agent or its warrant agent, if any, an officers' certificate
showing the adjusted Exercise Price determined as herein provided, setting
forth in reasonable detail the facts requiring such adjustment and the
manner of computing such adjustment. Each such officers' certificate shall
be made available at all reasonable times for inspection by the Holder and
the Company shall, forthwith after each such adjustment, mail a copy, by
first-class mail, of such certificate to the Holder.
(9) The Holder shall, at its option, be entitled to receive, in lieu
of the adjustment pursuant to paragraph (h)(3) otherwise required thereof,
on the date of exercise of this Warrant, the evidences of indebtedness,
other securities, cash, property or other assets which such Holder would
have been entitled to receive if it had exercised its Warrant for shares
of Common Stock immediately prior to the record date with respect to such
distribution. The Holder may exercise its option under this paragraph
(h)(9) by delivering to the Company a written notice of such exercise
within twenty-one days after the effectiveness (determined pursuant to
paragraph (j)) of the delivery by the Company of the certificate of
adjustment required pursuant to paragraph (h)(8) to be delivered in
connection with such distribution.
(i) Consolidation, Merger, or Sale of Assets. In case of any consolidation
of the Company with, or merger of the Company into, any other Person, any
merger of another Person into the Company (other than a merger which does not
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock) or any sale or transfer of all or
substantially all of the assets of the Company or of the Person formed by such
consolidation or resulting from such merger or which acquires such assets, as
the case may be, the Holder shall have the right thereafter to exercise this
Warrant for the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock for which this Warrant may have been exercised
immediately prior to such consolidation, merger, sale or transfer, assuming (i)
such holder of Common Stock is not a Person with which the Company consolidated
or into which the Company merged or which merged into the Company or to which
such sale or transfer was made, as the case may be ("Constituent Person"), or
an Affiliate of a Constituent Person and (ii) in the case of a consolidation,
merger, sale or transfer which includes an election as to the consideration to
be received by the holders, such holder of Common Stock failed to exercise its
rights of election as to the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer (provided
that if the kind or amount of securities, cash and other property receivable
upon such consolidation,
9
merger, sale or transfer is not the same for each share of Common Stock held
immediately prior to such consolidation, merger, sale or transfer by other than
a Constituent Person or an Affiliate thereof and in respect of which such
rights of election shall not have been exercised ("Non-Electing Shares"), then
for the purpose of this paragraph (i) the kind and amount of securities, cash
and other property receivable upon such consolidation, merger, sale or transfer
by each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the Non-Electing Shares). Adjustments
for events subsequent to the effective date of such a consolidation, merger and
sale of assets shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. In any such event, effective
provisions shall be made in the certificate or articles of incorporation of the
resulting or surviving corporation, in any contract of sale, conveyance, lease
or transfer, or otherwise so that the provisions set forth herein for the
protection of the rights of the Holder shall thereafter continue to be
applicable; and any such resulting or surviving corporation shall expressly
assume the obligation to deliver, upon exercise, such shares of stock, other
securities, cash and property. The provisions of this paragraph (i) shall
similarly apply to successive consolidations, mergers, sales, leases or
transfers.
(j) Notices. Any notice, demand or delivery authorized by this Warrant
Certificate shall be in writing and shall be given to the Holder or the Company
as the case may be, at its address (or telecopier number) set forth below, or
such other address (or telecopier number) as shall have been furnished to the
party giving or making such notice, demand or delivery:
If to the Company:
Ingram Micro Inc.
1600 East St. Andrew Place
Santa Ana, CA 92705
U.S.A.
Attention: Secretary
Telecopy: 1-714-566-9370
If to the Holder:
SOFTBANK CORP.
24-1, Nihonbashi - Hakozakicho
Chuo-ku, Tokyo 103-8501, Japan
Telecopy: 81-3-5641-3402
10
with a copy to:
Hitoshi Hasegawa
Morrison & Foerster LLP
AIG Building, 11th Floor
1-1-3 Marunouchi, Chiyoda-ku
Tokyo 100-005, Japan
Telecopy: 81-3-3214-6512
Each such notice, demand or delivery shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified
herein and a fax confirm is received or (ii) if given by any other means, when
received at the address specified herein.
(k) Rights of the Holder. Prior to the exercise of any Warrant, the Holder
shall not, by virtue hereof, be entitled to any rights of a shareholder of the
Company, including, without limitation, the right to vote, to receive dividends
or other distributions or to receive any notice of meetings of shareholders or
any notice of any proceedings of the Company except as may be specifically
provided for herein.
(l) The Holder understands that neither this Warrant nor, except as
otherwise provided in the Registration Agreement, any of the Warrant Shares has
been or will be registered under the Securities Act. The Holder represents that
it is acquiring this Warrant and the Warrant Shares for its own account for
investment only and not with the current intention of making a public
distribution thereof. The Holder has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company so that it is capable of evaluating the merits and risks of its
investment in the Company. The Holder is an "accredited investor" as that term
is defined in Rule 501(a) of Regulation D under the Securities Act. The Holder
has been furnished with and carefully read a copy of this Warrant Certificate
and has been given a sufficient opportunity to ask questions of, and receive
answers from, the Company concerning the terms and conditions of this Warrant.
The Holder acknowledges that, except as otherwise provided in the Registration
Agreement, this Warrant and the Warrant Shares must be held indefinitely and
that the Holder must bear the economic risk of this investment indefinitely
unless this Warrant or the Warrant Shares are subsequently registered under the
Securities Act or an exemption from such registration is available.
11
(m) Governing Law. THIS WARRANT CERTIFICATE AND ALL RIGHTS ARISING
HEREUNDER SHALL BE CONSTRUED AND DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF CALIFORNIA, AND THE PERFORMANCE THEREOF SHALL BE GOVERNED
AND ENFORCED IN ACCORDANCE WITH SUCH LAWS.
(n) Waiver of Jury Trial, etc. The parties hereto agree that they hereby
irrevocably waive and agree to cause their respective Affiliates to waive, the
right to trial by jury in any action to enforce, or interpreting, the
provisions of this Warrant. Except as provided below, the parties agree that
the appropriate, exclusive and convenient forums for any disputes between the
parties hereto arising out of this Warrant shall be in any state or federal
court sitting in the State of California. Except as provided below, the parties
hereto further agree that the parties will not bring suit with respect to any
disputes arising out of this Warrant in any court or jurisdiction other than
the above-specified courts; provided that the foregoing shall not limit the
rights of the parties to obtain execution of judgment in any other
jurisdiction. The parties hereto further agree, to the extent permitted by law,
that final and nonappealable judgment against a party in any action or
proceeding contemplated above shall be conclusive and may be enforced in any
other jurisdiction within or outside the United States by suit on the judgment,
a certified or exemplified copy of which shall be conclusive evidence of the
fact and amount of such judgment. Service of process in any action arising out
of or relating to this Warrant shall be effective if delivered or sent in
accordance with the provisions of paragraph (j) hereof.
(o) HSR Act and Rules. In the event the Company (or any successor of the
Company) or any Holder reasonably believes that exercise of this Warrant and
issuance of the Warrant Shares (or, to the extent provided herein, where
appropriate, the other securities or property (including cash) acquirable upon
exercise of this Warrant following the happening of certain events as provided
herein) requires prior compliance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations thereunder (the "HSR Act
and Rules"), any such exercise shall be contingent upon such prior compliance,
and, subject to effecting such compliance, be effective as of the date
specified in the notice of exercise delivered pursuant to paragraph (b). If the
Notification and Report Form required to be filed under the HSR Act and Rules
is filed no later than five Business Days following delivery of the notice of
exercise delivered pursuant to paragraph (b) but if the waiting period under
the HSR Act and rules expired or is terminated after the Expiration Date, such
expiration of this Warrant shall not affect the Holder's right to exercise in
accordance with a notice of exercise delivered to the Company in accordance
with paragraph (b) above prior to such Expiration Date.
12
(p) Amendments; Waivers. Any provision of this Warrant Certificate may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Holder and the Company, or in the
case of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by
law.
13
IN WITNESS WHEREOF, the Company has duly caused this Warrant Certificate
to be signed by its duly authorized officer and to be dated as of December 3,
1999.
INGRAM MICRO INC.
By: /s/ Michael J. Grainger
------------------------------------
Name: Michael J. Grainger
Title: EVP/CEO Worldwide
Acknowledged and Agreed:
SOFTBANK CORP.
By: /s/ Masayoshi Son
----------------------
Name: Masayoshi Son
Title: President and CEO
14
WARRANT EXERCISE NOTICE
To: Ingram Micro Inc.
The undersigned irrevocably exercises the Warrant for the purchase of
___________ shares of Class A Common Stock (the "Shares"), par value $0.01 per
share, of Ingram Micro Inc. (the "Company") at the Exercise Price currently in
effect pursuant to the Warrant and herewith makes payment of $___________ (such
payment being made in cash or by certified or official bank or bank cashier's
check payable to the order of the Company or by any permitted combination of
such cash or check), all on the terms and conditions specified in the within
Warrant Certificate, surrenders this Warrant Certificate and all right, title
and interest therein to the Company and directs that the Shares deliverable
upon the exercise of this Warrant be registered or placed in the name and at
the address specified below and delivered thereto.
-OR-
The undersigned irrevocably exercises the Warrant for the purchase of
___________ shares of Class A Common Stock (the "Shares"), par value $0.01 per
share, of Ingram Micro Inc. (the "Company") at the Exercise Price currently in
effect pursuant to the Warrant (provided that in lieu of payment of such
Exercise Price, the undersigned will deliver as payment of the Exercise Price a
number of shares of Common Stock, including shares to be issued upon the
exercise of the Warrant, having an aggregate Fair Market Value (as defined in
the Warrant) equal to the aggregate Exercise Price for the Shares), all on the
terms and conditions specified in the within Warrant Certificate, surrenders
this Warrant Certificate and all right, title and interest therein to the
Company and directs that the Shares deliverable upon the exercise of this
Warrant be registered or placed in the name and at the address specified below
and delivered thereto.
Date: __________ __, ____.
--------------------------------
(Signature of Owner)
--------------------------------
(Address)
--------------------------------
15
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Address:
[Any unexercised portion of the Warrant evidenced by the within
Warrant Certificate to be issued to:
Please insert social security or identifying number:
Name:
Address:]
16
WARRANT ASSIGNMENT FORM
Dated__________
FOR VALUE RECEIVED, ___________________________________________________________
hereby sells, assigns and transfers unto,
___________________________________________________________ (the "Assignee")1,
(please type or print in block letters)
_______________________________________________________________________________
(insert address)
its right to purchase up to ____ shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint
_______________________ Attorney, to transfer the same on the books of the
Company, with full power of substitution in the premises.
Signature ______________________
- --------
1 Must be an affiliate of holder.
17
EXHIBIT 5.01
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NY 10017
December 29, 1999
Ingram Micro Inc.
1600 E. St. Andrew Place
Santa Ana, CA 92705
Ladies and Gentlemen:
Re Ingram Micro Inc. Registration Statement on Form S-3 -- 1,500,000
shares of Common Stock
We have acted as counsel to Ingram Micro Inc. (the "Company") in
connection with the Company's Registration Statement on Form S-3 (the
"Registration Statement") filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended, for the registration of
1,500,000 shares of Class A Common Stock, par value $0.01 per share (the
"Shares"), issuable pursuant to the Warrant to purchase 1,500,000 shares of
Class A Common Stock dated December 3, 1999, as executed by Ingram Micro Inc.
and issued to SOFTBANK Corp. (the "Warrant").
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments as we have deemed
necessary for the purposes of rendering this opinion.
On the basis of the foregoing and assuming the due execution and
delivery of certificates representing the Shares upon valid exercise of the
Warrant in accordance with its terms, we are of opinion that the Shares have
been duly authorized and will be validly issued, fully paid and
non-assessable.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal laws of the
Ingram Micro Inc. 2 December 29, 1999
United States of America and the General Corporation Law of the State of
Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the reference to our name under the
caption "Legal Matters" in the prospectus contained in the Registration
Statement.
Very truly yours,
/s/ Davis Polk & Wardwell
---------------------------
Davis Polk & Wardwell
EXHIBIT 23.01
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 10, 1999, except as to Note
14, which is as of February 19, 1999, relating to the financial statements
which appears in the 1998 Annual Report to Shareowners, which is incorporated
by reference in Ingram Micro Inc.'s Annual Report on Form 10-K for the year
ended January 2, 1999. We also consent to the incorporation by reference of our
report dated February 10, 1999, except as to Note 14, which is as of February
19, 1999, relating to the financial statement schedule, which appears in such
Annual Report on Form 10-K. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
- -------------------------------
PricewaterhouseCoopers LLP
Costa Mesa, California
December 24, 1999
EXHIBIT 99.01
CAUTIONARY STATEMENTS FOR PURPOSES OF THE
"SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
The Private Securities Litigation Reform Act of 1995 (the "Act") provides a
"safe harbor" for "forward- looking statements" to encourage companies to
provide prospective information, so long as such information is identified as
forward-looking and is accompanied by meaningful cautionary statements
identifying important factors that could cause actual results to differ
materially from those discussed in the forward-looking statement(s). Ingram
Micro Inc. (the "Company") desires to take advantage of the safe harbor
provisions of the Act.
Except for historical information, the Company's Annual Report on Form 10-K
for the year ended January 2, 1999 to which this exhibit is appended, the
Company's quarterly reports on Form 10-Q, the Company's current reports on Form
8-K, periodic press releases, as well as other public documents and statements,
may contain "forward- looking statements" within the meaning of the Act.
In addition, representatives of the Company from time to time participate
in speeches and calls with market analysts, conferences with investors and
potential investors in the Company's securities, and other meetings and
conferences. Some of the information presented in such speeches, calls, meetings
and conferences may be "forward- looking statements" within the meaning of the
Act.
It is not reasonably possible to itemize all of the many factors and
specific events that could affect the Company and/or the computer-based
technology products and services distribution industry as a whole. In some
cases, information regarding certain important factors that could cause actual
results to differ materially from those projected, forecasted, estimated,
budgeted or otherwise expressed in forward-looking statements made by or on
behalf of the Company may appear or be otherwise conveyed together with such
statements. The following additional factors (in addition to other possible
factors not listed) could affect the Company's actual results and cause such
results to differ materially from those projected, forecasted, estimated,
budgeted or otherwise expressed in forward-looking statements made by or on
behalf of the Company:
Intense Competition. The Company operates in a highly competitive
environment, both in the United States and internationally. The computer-based
technology products and services distribution industry is characterized by
intense competition, based primarily on price, product availability, speed and
accuracy of delivery, effectiveness of sales and marketing programs, credit
availability, ability to tailor specific solutions to customer needs, quality
and breadth of product lines and services, and availability of technical and
product information. The Company's competitors include regional, national, and
international wholesale distributors, as well as hardware manufacturers,
networking equipment manufacturers, and software publishers that sell directly
to resellers and end-users and large resellers who resell to other resellers.
There can be no assurance that the Company will not lose market share in the
United States or in international markets, or that it will not be forced in the
future to reduce its prices in response to the actions of its competitors and
thereby experience a further reduction in its gross margins. See Margins."
The Company entered into the channel assembly business during 1997 and has
since expanded to include the manufacture of private label and unbranded systems
and systems for original equipment manufacturers ("OEMs"). Certain of the
Company's competitors in channel assembly, private label and unbranded systems
manufacturing and OEM systems manufacturing may be more experienced and may have
more established contacts with suppliers and other types of partners, providing
those competitors with a competitive advantage over the Company. Success in the
channel assembly, private label and unbranded systems manufacturing and OEM
systems manufacturing business requires significant infrastructure investment,
and there can be no assurance that product can be assembled and delivered in a
cost effective manner sufficient to adequately cover the Company's investment.
In addition, if OEM and reseller partners choose not to participate or choose
not to increase their support for the Company's channel assembly, private label
and unbranded systems manufacturing and OEM systems manufacturing initiatives,
and if the Company is not successful in finding other ways to cover the
Company's infrastructure investment, there is no assurance that the Company's
business, financial condition, or results of operations will not be materially
impacted.
As the Company initiates other business models, such as electronic software
distribution, it faces competition from companies with more experience in this
arena. There also exists a risk that, after investing in the new distribution
method, this form of software delivery may not generate the volume adequate to
cover the Company's investment. In addition, as the Company enters new business
areas, it may also encounter increased competition from current competitors
and/or from new competitors, some of which may be current customers of the
Company. There can be no assurance that increased competition and adverse
reaction from customers resulting from the Company's expansion into new business
models will not have a material adverse effect on the Company's business,
financial condition, or results of operations.
Narrow Margins. As a result of intense price competition in the
computer-based technology products and services wholesale distribution industry,
the Company's margins have historically been narrow and are expected in the
future to continue to be narrow. The Company's gross margins have been further
reduced by the Company's entry into the master reseller business, which has
lower gross margins than the Company's traditional wholesale distribution
business. These narrow margins magnify the impact on operating results of
variations in operating costs. The Company receives purchase discounts from
suppliers based on a number of factors, including sales or purchase volume and
breadth of customers. These purchase discounts directly affect gross margins.
Because many purchase discounts from suppliers are based on percentage increases
in sales of products, it may become more difficult for the Company to achieve
the percentage growth in sales required for larger discounts due to the current
size of the Company's revenue base. In the last year, major PC manufacturers
have substantially raised the threshold on sales volume before distributors may
qualify for discounts and/or rebates, which has adversely affected the Company's
narrow margins. There has also been increased price competition among
distributors in the last year as distributors have fought to maintain market
share. The intense price competition, particularly in the United States, has
adversely affected the Company's narrow margins. Further decreases in purchase
discounts and rebates by suppliers and continued or increased price competition
among distributors may have a material adverse impact on the Company's results
of operations. In addition, as hardware manufacturers look to increase direct
sales volumes while tightening terms and conditions, some customers are buying
more products directly from the manufacturer rather than through distribution,
which may adversely affect the Company's sales volumes and profit margins. As a
result of the Company's narrow margins, if the Company's receivables experience
a substantial deterioration in their collectibility or the Company cannot obtain
credit insurance at reasonable rates, the Company's financial condition and
results of operations may also be adversely impacted.
Fluctuations in Quarterly Results. The Company's quarterly net sales and
operating results have varied significantly in the past and will likely continue
to do so in the future as a result of seasonal variations in the demand for the
products and services offered by the Company, the introduction of new hardware
and software technologies and products offering improved features and
functionality, the introduction of new products and services by the Company and
its competitors, the loss or consolidation of a significant supplier or
customer, changes in the level of operating expenses, inventory adjustments,
product supply constraints, competitive conditions including pricing, interest
rate fluctuations, the impact of acquisitions, currency fluctuations, and
general economic conditions. The Company's narrow margins may magnify the impact
of these factors on the Company's operating results. The Company believes that
period-to-period comparisons of its operating results should not be relied upon
as an indication of future performance. In addition, the results of any
quarterly period are not indicative of results to be expected for a full fiscal
year. In certain future quarters, the Company's operating results may be below
the expectations of public market analysts or investors. In such event, the
market price of the Common Stock would be materially adversely affected.
Capital Intensive Nature of Business. The Company's business requires
significant levels of capital to finance accounts receivable and product
inventory that is not financed by trade creditors. In order to continue its
expansion, including acquisitions, the Company will need additional financing,
including debt financing, which may or may not be available on terms acceptable
to the Company, or at all. In addition to the Company's
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prospects, financial condition and results of operations, macroeconomic factors
such as fluctuations in interest rates or a general economic downturn may
restrict the Company's ability to raise the necessary capital. No assurance can
be given that the Company will continue to be able to raise capital in adequate
amounts for these or other purposes on terms acceptable to the Company, and the
failure to do so could have a material adverse effect on the Company's business,
financial condition, and results of operations. See "-- Fluctuations in
Quarterly Results," "-- Acquisitions" and "--Risk of Termination of Subsidized
Floor Plan Financing for the Company's Master Reseller Business."
Management of Growth. The rapid growth of the Company's business has
required the Company to make significant recent additions in personnel and has
significantly increased the Company's working capital requirements. Although the
Company has experienced significant sales growth in recent years, such growth
should not be considered indicative of future sales growth. Such growth has
resulted in new and increased responsibilities for management personnel and has
placed and continues to place a significant strain upon the Company's
management, operating and financial systems, and other resources. There can be
no assurance that the strain placed upon the Company's management, operating and
financial systems, and other resources will not have a material adverse effect
on the Company's business, financial condition, and results of operations, nor
can there be any assurance that the Company will be able to attract or retain
sufficient personnel to continue the expansion of its operations. Also crucial
to the Company's success in managing its growth will be its ability to achieve
additional economies of scale. There can be no assurance that the Company will
be able to achieve such economies of scale, and the failure to do so could have
a material adverse effect on the Company's business, financial condition, and
results of operations.
Dependence on Information Systems. The Company depends on a variety of
information systems for its operations, particularly its centralized IMpulse
information processing system which supports more than 40 operational functions
including receiving, customer management, order processing, shipping, inventory
management, and accounting. At the core of the IMpulse system is on-line,
real-time distribution software to which considerable enhancements and
modifications have been made to support the Company's growth and its low cost
business model. Although the Company has not in the past experienced significant
failures or downtime of IMpulse or any of its other information systems, any
such failure or significant downtime could prevent the Company from taking
customer orders, printing product pick-lists, and/or shipping product and could
prevent customers from accessing price and product availability information from
the Company.
In order to react to changing market conditions, the Company must
continuously expand and improve IMpulse and its other information systems. The
Company has begun to migrate its IMpulse information processing system from a
mainframe-based system using Cobol language to a client-server based system
using Oracle database management systems. The Company believes that this new
information system architecture will address the Company's need for a
distributed computing environment and will increase system scalability and fault
tolerance. However, to the extent the Company fails to implement improvements to
its IMpulse information systems at a rate that meets the demands of customers,
the Company's competitive advantage with respect to such systems may be
adversely affected, which may have a material adverse effect on the Company
business, financial condition and results of operations.
From time to time the Company may acquire other businesses having
information systems and records, which must be converted and integrated into
IMpulse or other Company information systems. These conversion and integration
projects could result in a significant diversion of resources from other
operations. The transition to and implementation of new or upgraded hardware or
software systems could result in system delays or failures. Any interruption,
corruption, degradation or failure of the Company's information systems could
adversely impact its ability to receive and process customer orders on a timely
basis.
The Company believes that customer information systems are becoming
increasingly important in the wholesale distribution of technology products. As
a result, the Company has enriched its customer information systems by adding
features that allow increased flexibility in how reseller customers purchase
products from the Company. However, there can be no assurance that competitors
will not develop customer information systems
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that are superior to those offered by the Company. The inability of the Company
to develop competitive customer information systems could adversely affect the
Company's business, financial condition, and results of operations.
As is the case with many computer software systems, some of the Company's
systems use two digit data fields which recognize dates using the assumption
that the first two digits are "19" (i.e., the number 99 is recognized as the
year 1999). Therefore, the Company's date critical functions relating to the
year 2000 and beyond, such as sales, distribution, purchasing, inventory
control, merchandise planning and replenishment, facilities, and financial
systems, may be severely affected unless changes are made to these systems. With
the assistance of an outside consultant, the Company commenced a review of its
internal systems to identify applications that are not Year 2000 ready and to
assess the impact of the Year 2000 problem. The Company has developed an overall
plan to modify its internal systems to be Year 2000 ready. The Company
anticipates that the required Year 2000 modifications will be made on a timely
basis and does not believe that the cost of such modifications will have a
material effect on the Company's operating results. There can be no assurance,
however, that the Company will be able to modify successfully and in a timely
manner all of its internal services and systems to comply with Year 2000
requirements, which could have a material adverse effect on the Company's
operating results. In addition, the Company faces risks to the extent that
suppliers of products (including components for its channel assembly, private
label and unbranded systems, and configuration initiative), services (including
services provided by independent shipping companies), and business on a
worldwide basis may not have business systems or products that comply with Year
2000 requirements. In the event any such third parties cannot provide the
Company with products, services or systems that meet Year 2000 requirements in a
timely manner, the Company's operating results could be materially adversely
affected. The Company's operating results also could be materially adversely
affected if it were to be held responsible for the failure of any products sold
by the Company to be Year 2000 compliant despite its disclaimer of product
warranties and the limitation of liability contained in its sales terms and
conditions.
Exposure to Foreign Markets; Currency Risk. The Company, through its
subsidiaries, operates in a number of countries outside of the United States,
and the Company expects its international net sales to increase as a percentage
of total net sales in the future. The Company's net sales from operations
outside the United States are primarily denominated in currencies other than the
U.S. dollar. Accordingly, the Company's international operations impose risks
upon its business as a result of exchange rate fluctuations. There can be no
assurance that exchange rate fluctuations will not have a material adverse
effect on the Company's business, financial condition, or results of operations
in the future. In certain countries outside the United States, operations are
accounted for primarily on a U.S. dollar denominated basis. In the event of an
unexpected devaluation of the local currency in those countries (as occurred in
Mexico in December 1994 and more recently in 1997 in Asia and Latin America),
the Company may experience significant foreign exchange losses. In addition, the
Company's operations may be significantly adversely affected as a result of the
general economic impact of the devaluation of the local currency.
The Company's operations outside the United States are subject to other
risks such as the imposition of governmental controls, export license
requirements, restrictions on the export of certain technology, political
instability, trade restrictions, tariff changes, difficulties in staffing and
managing international operations, difficulties in collecting accounts
receivable and longer collection periods, aud the impact of local economic
conditions and practices. These risks are more prevalent in regions where the
economic and political environments are less stable compared to more stable
areas such as Canada and Western Europe. As the Company continues to expand its
international business, its success will be dependent, in part, on its ability
to anticipate and effectively manage these and other risks. There can be no
assurance that these and other factors will not have a material adverse effect
on the Company's operations or its business, financial condition, and results of
operations as a whole.
Dependence on Key Individuals. The Company is dependent in large part on
its ability to retain the services of its key management, sales, and operational
personnel. The Company's continued success is also dependent upon its ability to
retain and attract other qualified employees, including highly skilled
technical, managerial, and marketing personnel, to meet the Company's needs.
Competition for qualified personnel is intense, particularly in the area of
technical support. The Company may not be successful in attracting and retaining
the personnel it
4
requires, which could have a material adverse effect on the financial condition
and results of operations of the Company.
Product Supply, Dependence on Key Suppliers. The ability of the Company to
obtain particular products or product lines in the required quantities and to
fulfill customer orders on a timely basis is critical to the Company's success.
In most cases, the Company has no guaranteed price or delivery agreements with
its suppliers. As a result, the Company has experienced, and may in the future
continue to experience, short-term inventory shortages. In addition,
manufacturers who currently distribute their products through the Company may
decide to distribute, or to substantially increase their existing distribution,
through other distributors, their own dealer networks, or directly to resellers.
Further, the computer-based technology products industry experiences significant
product supply shortages and customer order backlogs from time to time due to
the inability of certain manufacturers to supply certain products on a timely
basis. There can be no assurance that suppliers will be able to maintain an
adequate supply of products to fulfill the Company's customer orders on a timely
basis or that the Company will be able to obtain particular products or that a
product line currently offered by suppliers will continue to be available.
Acquisitions. As part of its growth strategy, the Company pursues the
acquisition of companies that either complement or expand its existing business.
Acquisitions involve a number of risks and difficulties, including expansion
into new geographic markets and business areas, the possibility that the Company
could incur or acquire substantial debt in connection with the acquisitions, the
requirement to understand local business practices, the diversion of
management's attention to the assimilation of the operations and personnel of
the acquired companies, the integration of the acquired companies' management
information systems with those of the Company, potential adverse short-term
effects on the Company's operating results, the amortization of acquired
intangible assets, and the need to present a unified corporate image.
Risk of Declines in Inventory Value. The Company's business, like that of
other wholesale distributors, is subject to the risk that the value of its
inventory will be adversely affected by price reductions by suppliers or by
technological chan 'ges affecting the usefulness or desirability of the products
comprising the inventory. It is the policy of most suppliers of computer-based
technology products and services to protect distributors such as the Company,
who purchase directly from such suppliers, from the loss in value of inventory
due to technological change or the supplier's price reductions. These policies
are sometimes not embodied in written agreements and do not protect the Company
in all cases from declines in inventory value. Major PC suppliers in the last
year have decreased the availability of price protection for distributors. The
shorter time periods during which distributors may receive rebates or credit for
decreases in manufacturer prices on unsold inventory have made it more difficult
for the Company to match its inventory levels with the price protection periods.
Consequently, the Company's risk of loss due to declines in value of inventory
held by the Company after such price protection periods have passed has
increased. No assurance can be given that unforeseen new product developments
will not materially adversely affect the Company, or that the Company will be
able to successfully manage its existing and future inventories. The Company's
risk of declines in inventory value could also be greater outside the United
States where agreements with suppliers are more restrictive with regard to price
protection and the Company's ability to return unsold inventory. For those
suppliers participating in the Company's channel assembly program, the extent to
which the amount of inventory in the channel is reduced may directly impact the
amount of price protection which will be provided by those suppliers. If major
computer-based technology vendors substantially decrease or eliminate the
availability of price protection to wholesale distributors, such change in
policy could have a material adverse effect on the Company's financial condition
and results of operations.
Dependence on Independent Shipping Companies. The Company relies almost
entirely on arrangements with independent shipping companies for the delivery of
its products. The termination of the Company's arrangements with one or more of
these independent shipping companies, or the failure or inability of one or more
of these independent shipping companies to deliver products from suppliers to
the Company or products from the Company to its reseller customers or their
end-user customers could have a material adverse effect on the Company's
business, financial condition, or results of operations.
5
Rapid Technological Change; Alternate Means of Software Distribution. The
computer-based technology products industry is subject to rapid technological
change, new and enhanced product specification requirements, and evolving
industry standards. These changes may cause inventory in stock to decline
substantially in value or to become obsolete. In addition, suppliers may give
the Company limited or no access to new products being introduced.
Net sales of software products have decreased as a percentage of total net
sales in recent years due to a number of factors, including bundling of software
with microcomputers; sales growth in Ingram Alliance, which is a hardware-only
business; declines in software prices; and the emergence of alternative means of
software distribution, such as site licenses and electronic distribution. The
Company expects this trend to continue.
Risk of Termination of Subsidized Floor Plan Financing for the Company's
Master Reseller Business. The master reseller business is characterized by gross
margins and operating margins that are even narrower than those of the rest of
its U.S. business and by competition based almost exclusively on price,
programs, and execution. A substantial majority of the Company's master reseller
sales are funded by floor plan financing companies. The Company has typically
received payment from these financing institutions within three business days
from the date of the sale, allowing the Company's master reseller business to
operate at much lower relative working capital levels than the Company's
wholesale distribution business. Its suppliers typically subsidize such floor
plan financing for the Company's reseller customers. Starting in the second half
of 1998, certain of the industry's leading hardware manufacturers reduced their
flooring fee subsidies. As a result, payments from institutions that finance
master reseller sales with these reduced subsidies are now received within 15
days. This delay in payment has increased the Company's average borrowing levels
and interest costs. If the arrangements for these floor plan financing subsidies
are terminated or continue to be substantially reduced, such change in policy
could have a material adverse effect on the Company's financial condition and
results of operations.
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