SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
OCTOBER 21, 1999
KENT ELECTRONICS CORPORATION
(Exact name of registrant as
specified in its charter)
TEXAS 0-14643 74-1763541
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
1111 GILLINGHAM LANE
SUGAR LAND, TEXAS 77478
(Address of principal executive offices)
(281) 243-4000
(Registrant's telephone number,
including area code)
ITEM 5. OTHER EVENTS
On October 21, 1999, the Board of Directors of Kent Electronics Corporation
(the "Company") created one Right for each outstanding share of Common Stock,
without par value ("Common Stock"), of the Company and issued such Rights to
shareholders of record at the close of business on November 5, 1999 (the "Record
Date"). Each Right entitles the registered holder to purchase from the Company
one one-hundredth of a share of Series A Preferred Stock, par value $1.00 per
share (the "Preferred Stock"), at a price of $100 per one one-hundredth of a
share (the "Purchase Price"), subject to adjustment. The Purchase Price shall be
paid in cash or by certified check, cashiers or official bank check or bank
draft payable to the order of the Company or the Rights Agent. The description
and terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and ChaseMellon Shareholder Services L.L.C., as
Rights Agent (the "Rights Agent"). Capitalized terms that are not defined in
this summary have the meanings assigned to them in the Rights Agreement.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) a public announcement that
a person or group of affiliated or associated persons (an "Acquiring Person")
has acquired, or obtained the right to acquire, beneficial ownership of 15% or
more of the outstanding shares of Common Stock (the date of the announcement
being the "Stock Acquisition Date"), or (ii) ten Business Days (or such later
date as may be determined by the Company's Board of Directors before the
Distribution Date occurs) following the commencement of a tender offer or
exchange offer that would result in a person's becoming an Acquiring Person.
Certain inadvertent acquisitions will not result in a person's becoming an
Acquiring Person if the person promptly divests itself of sufficient Common
Stock. Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such Common
Stock certificates, (ii) new Common Stock certificates issued after November 5,
1999 will contain a notation incorporating the Rights Agreement by reference,
and (iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.
The Rights are not exercisable until after both the Original Rights
Agreement Expiration Date and the Distribution Date (regardless of whether the
Distribution Date occurs before or after the Original Rights Agreement
Expiration Date), and the Rights will expire at the Close of Business on the
tenth anniversary of the Record Date, unless earlier redeemed by the Company as
described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of Common Stock as of the Close of Business
on the Distribution Date and, thereafter, the separate Rights Certificates alone
will represent the Rights. All shares of Common Stock issued prior to the
Distribution Date will be issued with Rights. Shares of Common Stock issued
after the Distribution Date in connection with certain employee benefit plans or
upon conversion of certain securities will be issued with Rights, but the
Company will have no obligation to issue Rights with respect to any other shares
of Common Stock issued after the Distribution Date.
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In the event (a "Section 11(a)(ii) Event") that a person becomes an
Acquiring Person (except pursuant to a tender or exchange offer for all
outstanding shares of Common Stock at a price and on terms that the Board
determines to be fair to and otherwise in the best interests of the Company and
its shareholders (a "Permitted Offer")), each holder of a Right will thereafter
have the right to receive, upon exercise, Common Stock (or, in certain
circumstances, cash, property or other securities of the Company) having a
Current Market Price equal to two times the exercise price of the Right.
Notwithstanding any of the foregoing, following the occurrence of the Section
11(a)(ii) Event, all Rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by or transferred to any
Acquiring Person (or certain related parties) will be null and void in the
circumstances set forth in the Rights Agreement. However, Rights are not
exercisable following the occurrence of the Section 11(a)(ii) Event until such
time as the Rights are no longer redeemable by the Company as set forth below.
For example, at an exercise price of $100 per Right, each Right not owned
by an Acquiring Person (or by certain related parties) following the Section
11(a)(ii) Event would entitle its holder to purchase $200 worth of Common Stock
(or other consideration, as noted above) based upon its then Current Market
Price, for $100. Assuming that the Common Stock had a Current Market Price of
$20 per share at such time, the holder of each valid Right would be entitled to
purchase 10 shares of Common Stock for $100.
In the event (a "Section 13 Event") that, at any time from and after the
time an Acquiring Person becomes such, (i) the Company is acquired in a merger
or other business combination transaction (other than certain mergers that
follow a Permitted Offer), or (ii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right (except Rights that
previously have been voided as set forth above) shall thereafter have the right
to receive, upon exercise, a number of shares of common stock of the acquiring
company having a Current Market Price equal to two times the exercise price of
the Right.
For example, at an exercise price of $100 per Right, each Right following a
Section 13 Event would entitle its holder to purchase $200 worth of common stock
of the acquiring company for $100. Assuming that the common stock of the
acquiring company had a per share value of $50 at such time, the holder of each
issued Right would be entitled to purchase four shares of the common stock of
the acquiring company for $100.
The Purchase Price payable, and the number of one one-hundredths of a share
of Preferred Stock or other securities or property issuable, upon exercise of
the Rights are subject to adjustment from time to time to prevent dilution (i)
in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) if holders of the Preferred Stock
are granted certain rights or warrants to subscribe for Preferred Stock or
convertible securities at less than the Current Market Price of the Preferred
Stock, or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular quarterly cash dividends)
or of subscription rights or warrants (other than those referred to above).
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With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Preferred Stock will be issued upon the exercise
of any Rights (other than fractions which are integral multiples of one one-
hundredth of a share of Preferred Stock) and, in lieu thereof, an adjustment in
cash will be made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
The Company may redeem the Rights in whole, but not in part, at a price of
$.001 per Right, payable, at the option of the Company, in cash, shares of
Common Stock or such other consideration as the Board of Directors may determine
at any time prior to the earlier of (i) the Close of Business on the tenth
Business Day following the Stock Acquisition Date and (ii) the Expiration Date.
Immediately upon the action of the Board of Directors ordering redemption of the
Rights, the Rights will terminate and the only right of the holders of Rights
will be to receive the $.001 redemption price.
At any time after the occurrence of a Section 11(a)(ii) Event and prior to
a person's becoming the beneficial owner of 50% or more of the shares of Common
Stock then outstanding, the Company may exchange the Rights (other than Rights
owned by an Acquiring Person or an affiliate or an associate of an Acquiring
Person, which will have become null and void), in whole or in part, at an
exchange ratio of one share of Common Stock, and/or other equity securities
deemed to have the same value as one share of Common Stock, per Right, subject
to adjustment.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights should not
be taxable to the shareholders or to the Company, shareholders may, depending
upon the circumstances, recognize taxable income in the event that the Rights
become exercisable for Common Stock (or other consideration) of the Company or
for common stock of the acquiring company as set forth above or are exchanged as
provided in the preceding paragraph.
Other than certain provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity, defect or inconsistency, to make changes
which do not materially adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person); provided, however, that no
amendment to adjust the time period governing redemption shall be made at such
time as the Rights are not redeemable.
The Rights Agreement and the press release announcing the declaration
of the Rights are attached hereto as exhibits or incorporated herein by
reference. The foregoing description of the Rights is qualified in its entirety
by reference to such exhibits.
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ITEM 7. EXHIBITS
Exhibit 4* Rights Agreement between Kent Electronics Corporation
and ChaseMellon Shareholder Services L.L.C., as Rights
Agent, dated as of October 21, 1999, which includes as
Exhibit A the Amended and Restated Certificate of
Designation, Preferences and Rights of Series A
Preferred Stock, as Exhibit B the form of Rights
Certificate and as Exhibit C the Summary of Rights to
Purchase Preferred Stock. Incorporated by reference to
Exhibit 1 to the Company's Form 8-A filed with the
Securities and Exchange Commission on November 5, 1999.
Exhibit 99 Press Release dated October 21, 1999.
_________________________________
*Incorporated herein by reference.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KENT ELECTRONICS CORPORATION
Dated: November 5, 1999 By: /s/ Stephen J. Chapko
--------------------------------------
Stephen J. Chapko
President and
Chief Financial Officer
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