As filed with the Securities and Exchange Commission on June 11, 2001
Registration No. 333-58852
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1 ON
FORM S-3
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
A V N E T, I N C.
(Exact name of registrant as specified in its charter)
New York 11-1890605
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
David R. Birk, Esq.
2211 South 47th Street Senior Vice President and General Counsel
Phoenix, Arizona 85034 Avnet, Inc.
(480) 643-2000 2211 South 47th Street
(Address, including zip code, Phoenix, Arizona 85034
and telephone number, including (480) 643-2000
area code, of registrant's (Name, address, including zip code, and
principal executive offices) telephone number, including area
code, of agent for service)
Copy to:
Stephen V. Burger, Esq.
Carter, Ledyard & Milburn
2 Wall Street
New York, New York 10005-2072
Approximate date of commencement of proposed sale to the public: From time
to time after this amendment is declared effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest 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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
------------
This post-effective amendment shall become effective on such date as the
Commission, acting pursuant to Section 8(c) of the Securities Act of 1933, may
determine.
ii
PROSPECTUS
AVNET, INC.
1,957,720 SHARES OF COMMON STOCK
Avnet, Inc. is offering to sell shares of its common stock, as follows:
o up to 1,696,720 shares upon the exercise of options which were
granted to directors and employees of Kent Electronics
Corporation and which Avnet assumed when it acquired Kent; and
o up to 261,000 shares upon the exercise of a stock purchase
warrant which Kent issued to Applied Materials, Inc. and which
was converted into a warrant to purchase Avnet common stock when
Avnet acquired Kent.
Avnet acquired Kent by merger on June 8, 2001. As a result of the
merger, Kent has ceased to exist, and holders of Kent common stock are
receiving, in exchange for each Kent share they held, 0.87 of a share of Avnet
common stock and cash in lieu of a fractional share.
Avnet's common stock is listed on the New York Stock Exchange and the
Pacific Exchange (symbol: AVT). On June 8, 2001, the last reported sale price of
a share of Avnet common stock for New York Stock Exchange composite transactions
was $24.30. Avnet's principal executive offices are located at 2211 South 47th
Street, Phoenix, Arizona 85034.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is June __, 2001.
1
Table of Contents
USE OF PROCEEDS..............................................................3
MARKET PRICES OF AVNET COMMON STOCK AND DIVIDENDS............................3
THE MERGER...................................................................4
THE KENT PLAN OPTIONS........................................................4
General..............................................................4
Administration of the Plans..........................................5
Terms of the Options.................................................5
Exercise of the Options..............................................6
Tax Withholding......................................................7
Forfeiture for Dishonesty............................................7
Changes in Avnet's Capital Structure.................................8
Change in Control....................................................8
Amendment or Termination of the Plans...............................10
THE EXECUTIVE OPTIONS.......................................................11
General.............................................................11
Exercise of Executive Options.......................................12
Transferability of Executive Options................................14
Termination of Executive Options....................................14
Changes in Avnet's Capital Structure................................15
Change in Control...................................................15
Limited Stock Appreciation Rights...................................16
Amendment of Executive Options......................................17
THE WARRANT.................................................................18
FEDERAL INCOME TAX CONSIDERATIONS...........................................19
The Options.........................................................20
The Warrant.........................................................22
DESCRIPTION OF AVNET COMMON STOCK...........................................23
General.............................................................23
Board of Directors..................................................24
Power to Call Special Shareholders' Meetings........................25
Shareholder Action by Written Consent...............................25
Dividends and Repurchases of Shares.................................25
Approval of Certain Business Combinations and Reorganizations.......26
Business Combination Following a Change in Control..................26
Dissenters' Appraisal Rights........................................27
LEGAL MATTERS...............................................................27
EXPERTS.....................................................................27
WHERE YOU CAN FIND MORE INFORMATION.........................................28
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USE OF PROCEEDS
We intend to use the net proceeds from the sale of the shares covered by
this prospectus for Avnet's general corporate purposes, which may include
repayment of debt, capital expenditures, acquisitions, repurchases of Avnet's
common stock, and working capital. Pending these uses, the net proceeds may also
be temporarily invested in short-term securities.
MARKET PRICES OF AVNET COMMON STOCK AND DIVIDENDS
The principal market on which Avnet's common stock is traded is the New
York Stock Exchange under the symbol "AVT." The common stock also is listed on
the Pacific Exchange. The following table presents the high and low sales prices
of a share of Avnet's common stock during the calendar quarters indicated, as
reported for New York Stock Exchange composite transactions. Prices before
September 28, 2000, have been adjusted to reflect a two-for-one stock split
distributed on that date to Avnet shareholders of record on September 18, 2000.
High Low
---- ---
Calendar 1999
First quarter............................. $30.469 $17.813
Second quarter............................ 25.500 17.000
Third quarter............................. 26.219 20.531
Fourth quarter............................ 30.250 18.656
Calendar 2000
First quarter............................. 36.750 25.000
Second quarter............................ 40.563 28.000
Third quarter............................. 35.406 25.531
Fourth quarter............................ 30.281 17.187
Calendar 2001
First quarter............................. 28.453 19.350
Second quarter (through June 8)........... 28.094 18.953
See the cover page of this prospectus for a recent sale price of Avnet's
common stock.
Avnet paid a cash dividend on its common stock of 7.5 cents per share
during the first, second and third fiscal quarters of fiscal 2001 and each
fiscal quarter in fiscal 2000 and 1999, as adjusted to reflect the two-for-one
stock split on September 28, 2000, and will pay a cash dividend on its common
stock of 7.5 cents per share with respect to the fourth fiscal quarter of
fiscal 2001, on July 2, 2001. We cannot give you any assurances about the
frequency and amount of our future dividends.
3
THE MERGER
On June 8, 2001, Avnet acquired Kent Electronics Corporation through a
merger of Kent with and into Avnet. In the merger, Kent ceased to exist and each
outstanding share of Kent common stock was converted into the right to receive
0.87 of a share of Avnet common stock and cash in lieu of a fractional share.
Approximately 25,230,000 shares of Avnet common stock are being issued in the
merger. The merger was effected pursuant to an amended and restated agreement
and plan of merger dated as of March 21, 2001, between Avnet and Kent (the
"Merger Agreement").
THE KENT PLAN OPTIONS
General
At the effective time of the merger, Kent had director and employee
stock options outstanding under the following plans as amended to date (the
"Plans"):
Kent Electronics Corporation
1991 Non-Employee Director Stock Option Plan
Kent Electronics Corporation
1996 Employee Incentive Plan
Kent Electronics Corporation
1996 Non-Employee Director Stock Option Plan
Kent Electronics Corporation
1998 Stock Option Plan
Kent Electronics Corporation
1999 Stock Option Plan
The 1991 Non-Employee Director Stock Option Plan and the 1996
Non-Employee Director Stock Option Plan are collectively referred to below as
the "Director Plans."
As provided in Section 1.10(c)(i) of the Merger Agreement, the Plans are
continuing in existence after the merger, and each option outstanding under the
Plans at the effective time of the merger was assumed by Avnet and automatically
converted into an option to acquire Avnet common stock under the same terms and
conditions as applied when the option was an option to purchase Kent common
stock. For example, each Kent option has the same vesting schedule, payment
terms and expiration provisions as it had before the merger, when the option was
a Kent option. Also, the effect, if any, on an option of the death, disability,
retirement or employment termination of the optionee remains unchanged by the
merger. Note that options held by non-employee directors of Kent under the
Director Plans will expire on June 18, 2001, as a result of the merger.
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The exercise price per share of Avnet common stock issuable upon
exercise of each such Kent option is equal to the pre-merger per share exercise
price divided by the exchange ratio for the conversion of Kent common stock in
the merger (0.87) and rounded down to the nearest penny, and the number of
shares of Avnet common stock issuable upon exercise of each such Kent option is
equal to the number of shares of Kent common stock that could have been acquired
under the related Kent option before the merger multiplied by the exchange
ratio.
Many of the options state that they will expire upon the termination of
the optionee's employment with Kent for any reason other than the optionee's
death or retirement. If an optionee has transferred employment from Kent to
Avnet, his or her options will terminate on the date of the termination of his
or her employment with Avnet other than by reason of death or retirement.
Each optionee should review the expiration and other terms of his or her
option carefully. The description below of the Plans and the options thereunder
is a summary only.
The Plans will be limited to their current optionees. Avnet will not
issue additional options under the Plans.
Administration of the Plans
Since the merger, the Plans are being administered by the compensation
committee of the Avnet board of directors, which determines all questions of
interpretation and application of the Plans and options granted thereunder.
Subject to the express provisions of the Plan, the committee has full and final
authority and discretion to prescribe, amend and rescind rules and regulations
relating to administration of the Plans, and make all other determinations and
take all other actions deemed necessary, appropriate, or advisable for the
proper administration of the Plans.
Terms of the Options
The Plans are not subject to any provisions of the Employee Retirement
Income Security Act of 1974, and are not qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended.
The shares of Avnet common stock issuable upon exercise of options under
the Plans may be treasury shares or authorized but unissued shares.
In general, an option granted under the Plans is not transferable by the
optionee otherwise than by will or under the laws of descent and distribution or
pursuant to a qualified domestic
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relations order as defined in the Internal Revenue Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the
rules thereunder. The options are by their terms transferable, without
payment of consideration, to immediate family members of the optionees
or to trusts or partnerships for such family members. The committee may also
amend outstanding options to provide for such transferability.
Exercise of the Options
Subject to the tax withholding requirements set forth below, an option
may be exercised by delivering written notice to Avnet setting forth the number
of shares with respect to which the option is to be exercised and the address to
which certificates representing shares of Avnet common stock issuable upon the
exercise of such option shall be mailed, together with:
o cash, check, certified check, bank draft or postal or express money
order payable to the order of Avnet for an amount equal to the option
price of the shares being purchased,
o shares of Avnet common stock having a fair market value on the date of
exercise equal to the option price of the shares being purchased,
o in the case of the 1998 Stock Option Plan and the 1999 Stock Option
Plan, an irrevocable authorization directing a brokerage firm
acceptable to Avnet to sell the shares of Avnet common stock acquired
upon exercise of the option, or a portion of such shares, and remit to
Avnet a sufficient portion of the sale proceeds to pay the entire
purchase price and any tax withholding resulting from such exercise,
and/or
o any other form of payment which is acceptable to the committee.*
In order to enable an optionee to have sufficient funds to pay the option price,
the committee may, to the extent permitted by law, cause Avnet to loan funds to
the optionee, to guarantee a loan by a third party to the optionee or to take
such other action as the committee deems appropriate.
No fractional shares will be issued under the Plans.
Subject to the tax withholding requirements set forth below, as promptly
as practicable after receipt of written notification and payment, Avnet or a
stock transfer agent of Avnet will deliver to the optionee certificates for the
number of shares with respect to which the option has
______________
* Under the 1991 Non-Employee Director Stock Option Plan, the option price is
payable only in cash or by check, bank draft or money order payable to Avnet.
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been exercised, issued in the optionee's name. If shares of Avnet common stock
are used in payment, the fair market value of the shares of common stock
tendered must be less than the option price of the shares being purchased, and
the difference must be paid by check. Delivery will be deemed effected for
all purposes when Avnet or a stock transfer agent of Avnet has deposited the
certificates in the United States mail, addressed to the optionee, at the
address specified by the optionee.
Whenever an option is exercised by exchanging shares of Avnet common
stock owned by the optionee, the optionee shall deliver to Avnet certificates
registered in the name of the optionee representing a number of shares of Avnet
common stock legally and beneficially owned by the optionee, free of all liens,
claims, and encumbrances of every kind, accompanied by stock powers duly
endorsed in blank by the record holder of the shares represented by the
certificates (with signature guaranteed by Avnet or a commercial bank or trust
company or by a brokerage firm having a membership on a registered national
stock exchange). The delivery of certificates upon the exercise of options is
subject to the condition that the person exercising the option provide Avnet
with the information Avnet might reasonably request pertaining to exercise, sale
or other disposition.
Tax Withholding
Avnet or any subsidiary of Avnet may deduct from other compensation
payable to each employee optionee any sums required by federal, state, or local
tax law to be withheld with respect to the exercise of an option. In the
alternative, Avnet may require the optionee or other person exercising the
option to pay the sum directly to the employer corporation. If the optionee or
other person exercising the employee option is required to pay the sum directly,
he or she will deliver such payment in cash or by check on the date of exercise.
Avnet will have no obligation upon exercise of any employee option until it has
received payment, unless withholding as of or prior to the date of exercise is
sufficient to cover all sums due with respect to that exercise. Avnet and its
affiliates will not be obligated to advise optionee of the existence of the tax
or the amount which the employer corporation will be required to withhold.
Forfeiture for Dishonesty
The Plans other than the Director Plans provide that if the committee
finds, after full consideration of the facts presented on behalf of both Avnet
and an optionee, that the optionee has been engaged in fraud, embezzlement,
theft, commission of a felony or dishonesty in the course of his employment by
Kent or Avnet which damaged Kent or Avnet or an affiliate of Kent or Avnet, or
disclosed trade secrets of Kent or Avnet or an affiliate of Kent or Avnet, the
optionee will forfeit all unexercised options and all exercised options as to
which Avnet has not yet delivered the stock certificates. The decision of the
committee will be final. No decision of the committee, however, will affect the
finality of the discharge of such optionee by Avnet in any manner.
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Changes in Avnet's Capital Structure
The existence of the Plans and the options granted thereunder will not
affect or authorize any adjustment, recapitalization, reorganization or other
change in Avnet's capital structure or its business, any merger or consolidation
of Avnet, any issue of bonds, debentures, preferred or prior preference stocks
ahead of or affecting the Avnet common stock or the rights thereof, the
dissolution or liquidation of Avnet, or any sale or transfer of all or any part
of its assets or business, or any other corporate act or proceeding, whether of
similar character or otherwise.
If there is any change in the outstanding shares of Avnet common stock
by reason of any stock split, stock dividend, split-up, split-off, spin-off,
recapitalization, merger, consolidation, liquidation, rights offering, share
offering, reorganization, combination or exchange of shares, a sale by Avnet of
all or part of its assets, any distribution to shareholders other than a normal
cash dividend, or other extraordinary or unusual event, if the committee
determines that the change equitably requires an adjustment in the terms of any
option or the number of shares of Avnet common stock available for options, the
committee may make such adjustment.
Change in Control
The Plans other than the Director Plans provide that at least 30 days
prior to the effective date of a change in control as defined below, the
committee may modify any limitations as to the amount of options exercisable
each year so that all options from and after such date will, if the committee in
its discretion so determines, be exercisable in full. In addition, all the Plans
provide that either
o after the effective date of a change in control, each holder of an
outstanding option will be entitled upon exercise of such option to
receive in lieu of shares of Avnet common stock shares of such stock
or other securities of Avnet or the surviving or acquiring corporation
or such other property, at the same rate per share as the holders of
shares of Avnet common stock received pursuant to the change in
control, or
o all outstanding options may be cancelled by the Avnet board* as of the
effective date of the change in control, provided that notice of such
cancellation is given to each holder of an option and each holder will
have the right to exercise such option in full (without regard to any
limitations that might be set forth in the option agreement) during a
30-day period preceding the effective date of the change in control.
______________
* Or, in the case of the Director Plans, will be cancelled automatically.
8
"Change in control" under the Director Plans and the 1996 Employee
Incentive Plan means the happening of any of the following events:
o Avnet is merged into or consolidated with another corporation under
circumstances where Avnet is not the surviving corporation or the
Avnet common stock is converted into other securities, cash or other
property in connection with such merger or consolidation;
o Avnet is recapitalized in such a manner that shares of Avnet common
stock are converted into or exchanged for other securities of Avnet;
o Avnet sells or otherwise disposes of substantially all its assets to
another person, corporation or entity;
o over 30%* of the then outstanding shares of Avnet common stock are
acquired by another corporation or other entity in exchange for stock
(or stock and securities) of such entity; or
o over 30%* of the then outstanding shares of Avnet common stock are
acquired in a single transaction or a series of related transactions.
"Change in control" under the 1998 Stock Option Plan and the 1999 Stock
Option Plan means the happening of any of the following events:
o a merger or consolidation of Avnet with or into another corporation in
which (1) Avnet is not the surviving corporation or becomes a
wholly-owned subsidiary of another corporation, or (2) the Avnet
common stock is converted into other securities, cash or other
property;
o any sale of all or substantially all of the assets of Avnet; or
o the acquisition of "beneficial ownership" (as defined in Rule 13d-3
under the Securities Exchange Act of 1934) of securities of Avnet
representing more than 30% of the combined voting power of Avnet's
then outstanding securities (other than through a merger or
consolidation or an acquisition of securities directly from Avnet) by
any person other than Avnet, any trustee or other fiduciary holding
securities under an employee benefit plan of Avnet, or any entity
owned directly or indirectly by the shareholders of Avnet in
substantially the same proportion as their ownership of stock of
Avnet.
______________
* 50% in the 1991 Non-Employee Director Stock Option Plan.
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Amendment or Termination of the Plans
The board of directors of Avnet may modify, revise or terminate the 1991
Non-Employee Director Stock Option Plan at any time and from time to time.
However, it may not be amended more than once every six months, other than to
comport with changes in the Internal Revenue Code or the regulations thereunder,
or ERISA or the regulations hereunder. Also, without the approval of the holders
of at least a majority of the outstanding shares of Avnet's voting stock, the
Avnet board of directors may not
o materially increase the benefits accruing to participants in the 1991
Non-Employee Director Stock Option Plan;
o change the aggregate number of shares which may be issued under
options pursuant to the provisions of that Plan;
o reduce the option price at which options have been granted; or
o change the class of persons eligible to receive options.
No termination or amendment of the 1991 Non-Employee Director Stock Option Plan
may, without the consent of the holder of any option then outstanding, adversely
affect the rights of such holder under the option.
The board of directors of Avnet may amend, terminate or suspend the 1996
Non-Employee Director Stock Option Plan at any time and from time to time.
However, that Plan may not be amended more than once every six months, other
than to comport with changes in the Internal Revenue Code, ERISA or the
regulations thereunder. No termination or amendment of the 1996 Non-Employee
Director Stock Option Plan may, without the consent of the holder of any option
thereunder then outstanding, adversely affect the rights of such holder under
the option.
The board of directors of Avnet may amend, terminate or suspend the 1996
Employee Incentive Plan at any time in its sole and absolute discretion;
provided that to the extent required to maintain the status of any Incentive
Option under the Internal Revenue Code (see "Federal Income Tax
Considerations"), no amendment may be made without the approval of Avnet's
shareholders that would (a) change the aggregate number of shares of Avnet
common stock which may be issued under Incentive Options, (b) change the class
of employees eligible to receive Incentive Options, or (c) decrease the exercise
price for any Incentive Option below the fair market value of the Avnet common
stock at the time the option was granted. Otherwise, the Avnet board of
directors has the power to make any changes in the 1996 Employee Incentive Plan
and in the regulations and administrative provisions under that Plan or in any
outstanding
10
Incentive Option as in the opinion of counsel for Avnet may be
necessary or appropriate from time to time to enable any Incentive Option
granted under that Plan to continue to qualify as an Incentive Option or such
other stock option as may be defined under the Code so as to receive
preferential federal income tax treatment.
The board of directors of Avnet may amend, terminate or suspend the 1998
Stock Option Plan or the 1999 Stock Option Plan at any time, in its sole and
absolute discretion. However, no amendment, suspension or termination of these
Plans may alter or impair any outstanding option without the consent of the
optionee.
THE EXECUTIVE OPTIONS
General
At the effective time of the merger, there were in effect stock option
plans and agreements (the "Executive Options") between Kent and four of its
executive officers: Larry D. Olson, Mark A. Zerbe, Stephen J. Chapko and
David D. Johnson.
As provided in Section 1.10(c)(i) of the Merger Agreement, each
Executive Option is continuing in existence after the merger and was assumed by
Avnet and automatically converted into an option to acquire Avnet common stock
under the same terms and conditions as applied when such Executive Option was an
option to purchase Kent common stock, except that in connection with the merger,
as provided in each Executive Option, its vesting has been automatically
accelerated so that it is fully vested and exercisable. The effect, if any, on
an option of the death, disability, retirement or employment termination of the
optionee remains unchanged by the merger.
The exercise price per share of Avnet common stock issuable upon
exercise of each Executive Option is equal to the pre-merger per share exercise
price divided by the exchange ratio for the conversion of Kent common stock in
the merger (0.87) and rounded down to the nearest penny, and the number of
shares of Avnet common stock issuable upon exercise of each such Kent option is
equal to the number of shares of Kent common stock that could have been acquired
under the related Kent option before the merger multiplied by the exchange
ratio.
Each optionee under the Executive Options should review the terms of his
Executive Option carefully. The description of the Executive Options below is a
summary only.
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The following table sets forth information concerning the Executive
Options:
No. of Avnet shares Exercise price Expiration
Optionee that may be purchased per share Date
-------- --------------------- --------- ----
Larry D. Olson 45,675 $ 8.34 May 8, 2010
Mark A. Zerbe 45,675 8.34 May 8, 2010
Stephen J. Chapko 13,050 8.34 May 8, 2010
David D. Johnson 21,750 22.20 May 9, 2011
Exercise of Executive Options
An Executive Option may be exercised in whole or in part by delivering
written notice to Avnet setting forth the number of shares of Avnet common stock
with respect to which the option is to be exercised. In order to be effective,
such written notice must be accompanied by payment of the option price for such
shares of Avnet common stock, which payment shall be made
o in cash or by personal check, cashier's check, certified check or
postal or express money order payable to the order of Avnet in an
amount in United States dollars equal to the option price
multiplied by the number of shares of Avnet common stock with
respect to which the option is being exercised, or
o in shares of Avnet common stock.
Such notice may be delivered in person or by messenger or courier service to the
Secretary of Avnet, or shall be sent by registered mail, return receipt
requested, to the Secretary of Avnet, and in all such cases delivery will be
deemed made on the date when the Secretary receives such notice.
At the time when an optionee (or a permissible transferee of an
Executive Option) makes payment to Avnet for the shares of Avnet common stock
issuable upon the exercise of an Executive Option, Avnet may require the
optionee to pay to Avnet an additional amount equal to any federal, state or
local taxes which Avnet deems necessary or appropriate to be withheld in
connection with the exercise of such option. If an optionee does not pay Avnet
any such additional amount, to the extent applicable, the employer of the
optionee (for payroll tax purposes) will have the right to withhold such
required amount from any sum payable, or to become payable, to optionee, upon
such terms and conditions as Avnet in its discretion may prescribe.
12
Payment of the option price may be made in whole or in part in shares of
Avnet common stock previously held by the optionee (or a permissible transferee
of an Executive Option). If payment is made in whole or in part in shares of
Avnet common stock, then the optionee (or permissible transferee) must deliver
to Avnet, in payment of the option price of the shares of Avnet common stock
with respect to which such option is exercised, (i) certificates registered in
the name of such optionee (or permissible transferee) representing a number of
shares of Avnet common stock legally and beneficially owned by such optionee (or
permissible transferee), free of all liens, claims and encumbrances of every
kind, such certificates to be accompanied by stock powers duly endorsed in blank
by the record holder of the shares represented by such certificates, and (ii) if
the option price of the shares of Avnet common stock with respect to which such
option is to be exercised exceeds the fair market value of such shares, cash or
a personal check, cashier's check, certified check or postal or express money
order payable to the order of Avnet in an amount in United States dollars equal
to the amount of such excess. If the fair market value of such shares of Avnet
common stock delivered to Avnet by an optionee exceeds the option price of the
shares of Avnet common stock with respect to which such Executive Option is to
be exercised, Avnet will promptly cause to be delivered to optionee a
replacement share certificate representing the number of shares of Avnet common
stock in excess of those surrendered in payment of the option price.
As promptly as practicable after the receipt by Avnet of
o such written notice from an optionee (or a permissible
transferee) setting forth the number of shares of Avnet common
stock with respect to which an Executive Option is to be
exercised,
o payment of the option price of such shares, and
o an amount equal to any federal, state or local taxes which Avnet
deems necessary or appropriate to be paid or withheld incident to
the exercise of such Executive Option,
Avnet will cause to be delivered to such optionee (or permissible transferee)
certificates representing the number of shares of Avnet common stock with
respect to which such Executive Option has been so exercised.
For purposes of determining the value of shares of Avnet common stock
delivered in payment of all or any portion of the option price, the "fair market
value" of such shares shall equal the average of the daily averages of the high
and low sales price per share of the Avnet common stock as reported by the New
York Stock Exchange (or such other principal exchange or market on which the
Avnet common stock is traded as of the applicable dates) on each day on which
such trades are reported of the five trading days prior to optionee's exercise
of the option.
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Transferability of Executive Options
The Executive Options may not be transferred by the optionees otherwise
than by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined in the Internal Revenue Code or
ERISA, or the rules thereunder; however, an Executive Option may be transferred,
without payment of consideration, to immediate family members of the optionee or
to trusts or partnerships for such family members.
Termination of Executive Options
If an optionee dies while in the employ of Avnet (or while affiliated
with Avnet in the discretion of the Avnet board of directors), his Executive
Option will terminate on the earlier of (a) the date of expiration of the
option, and (b) twelve months following the date of the optionee's death. After
the death of the optionee, his executors, administrators or any person(s) to
whom the option was transferred by will or by the laws of descent and
distribution, will have the right to exercise the Executive Option at any time
before it terminates.
If, before the date of expiration of an Executive Option, the optionee
shall retire in good standing from the employ of Avnet (or from another
affiliation with Avnet in the discretion of the Avnet board of directors),
including retirement by reason of disability, such Executive Option will
terminate on the earlier of (1) the date of expiration of the option, and (2)
three years following the date of such retirement. "Disability" means a total
and permanent disability resulting from a mental or physical incapacity which
prevents optionee from performing the full scope of his duties for Avnet (as
such duties exist on the date immediately prior to the occurrence of such
incapacity) and lasting or expected to last for a period of at least 180 days.
Disability shall be determined in good faith by the Avnet board of directors
based on the opinion of a licensed physician. In the event of such retirement,
the optionee (or, in the event of his incapacity, his legal representative)
shall have the right to exercise the Executive Option at any time before it
terminates to the same extent that he was entitled to exercise it immediately
prior to such retirement.
If, before the date of expiration of an Executive Option, the optionee's
employment by Avnet is terminated by Avnet at its election, or shall be
terminated by the optionee for "good reason," the optionee shall have the right
to exercise the Executive Option at any time prior to the earlier of (i) the
date of expiration of such Executive Option, and (ii) twelve months following
the date of such termination of employment.
A termination of an optionee's employment for "good reason" will occur
if the optionee tenders his resignation to the Avnet board of directors after
there has been a significant and material diminishment in the nature and scope
of the authority, power, function and duty attached to optionee's management
position with Avnet, and such diminishment lasts for at least 30 consecutive
days and is not cured or corrected by Avnet within ten days after optionee
provides notice of same to Avnet pursuant to the notice provisions hereof. The
termination of an
14
optionee's employment with Avnet for good reason may take place at any time
after the events set forth in the preceding sentence have occurred, and
such termination need not be effected within any specified time period after
the occurrence of such events.
If, before the date of expiration of an Executive Option, the optionee's
employment or other affiliation with Avnet terminates at the election of
optionee for any reason other than good reason (other than in connection with
the optionee's retirement as discussed above), the Executive Option will
terminate on the earlier of (i) the date of expiration of such Executive Option,
and (ii) ninety days after the date of termination of the optionee's employment
or other affiliation with Avnet.
Changes in Avnet's Capital Structure
The existence of the Executive Options will not affect in any way the
right or power of Avnet or its shareholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in Avnet's
capital structure or its business, or any merger or consolidation of Avnet, or
any issue of bonds, debentures, preferred or prior preference stock ahead of, or
affecting, the Avnet common stock or the rights thereof, or the dissolution or
liquidation of Avnet, or any sale or transfer of all or any part of its assets
or business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
The number of shares covered by an Executive Option and the price per
share thereof will be proportionately adjusted for any increase or decrease in
the number of issued shares of Avnet common stock resulting from the subdivision
or consolidation of shares or any other capital adjustment, the payment of a
stock dividend or any other increase in such shares effected without receipt of
consideration by Avnet or any other decrease therein effected without a
distribution of cash, property, or other securities in connection therewith.
Change in Control
If
o Avnet is merged into or consolidated with another corporation
under circumstances where Avnet is not the surviving corporation
or where the Avnet common stock is converted into other
securities, cash or other property in connection with such merger
or consolidation,
o Avnet is recapitalized in such a manner that shares of Avnet
common stock are converted into or exchanged for other securities
of Avnet,
o Avnet sells or otherwise disposes of substantially all its assets
to another person, corporation or entity, or
15
o a tender offer is announced that, if successfully completed,
would result in a "change in control,"
then after the effective date of such merger, consolidation, recapitalization,
exchange, sale or acquisition, as the case may be, the optionee of an Executive
Order will be entitled upon exercise of such Executive Option to receive in lieu
of shares of Avnet common stock shares of such stock or other securities of
Avnet or the surviving or acquiring corporation or such other property at the
rate per share as the holders of shares of Avnet common stock received pursuant
to the terms of the merger, consolidation, exchange, recapitalization, sale or
acquisition.
A "change in control" will occur on the earlier of the following dates:
o The date any entity or person (including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934) shall
have become the beneficial owner of, or shall have obtained
voting control over, 30% or more of the outstanding shares of
Avnet common stock; and
o The date the shareholders of Avnet approve a definitive agreement
(A) to merge or consolidate Avnet with or into another
corporation, in which Avnet is not the continuing or surviving
corporation or pursuant to which any shares of Avnet common stock
would be converted into cash, securities or other property of
another corporation, other than a merger of Avnet in which
holders of Avnet common stock immediately prior to the merger
have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger as immediately
before, or (B) to sell or otherwise dispose of substantially all
the assets of Avnet.
Limited Stock Appreciation Rights
When a change in control occurs, and thereafter so long as an Executive
Option is in effect, the optionee will have the right to require Avnet (or if
Avnet is not the survivor of a merger, consolidation or reorganization, such
survivor) to purchase from him any or all unexercised options granted under the
Executive Option at a price per option payable in cash equal to the "change in
control price" per share less the option price per share multiplied by the
number of shares subject to the Executive Option specified by the optionee for
purchase in a written notice to Avnet or such survivor, addressed to the
attention of the corporate secretary.
The term "change in control price" means
(a) in the case of a change in control that does not result from a
"termination merger," defined as a merger, consolidation or
reorganization in which Avnet is not the survivor or shares of Avnet
common stock are converted into cash or other securities or other
assets, the higher of (I) the highest sales price of a share of
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Avnet common stock on the New York Stock Exchange on the trading days
during the 30 days immediately preceding the date the optionee so
notified Avnet of his election pursuant to the preceding paragraphs,
and (II) the highest sales price per share of the Avnet common stock
on the New York Stock Exchange on the trading days during the 30 days
immediately preceding the date of the change in control; or
(b) in the case of a change in control that results from a termination
merger, the higher of (I) the fair market value of the consideration
receivable per share by holders of Avnet common stock in such
termination merger (which fair market value as to any securities
included in such consideration shall be the highest sales price per
unit of such security on the principal exchange or market where such
security is actively traded on the trading days during the 30 days
immediately preceding the date of the termination merger, and as to
any such security not actively traded in any market, and as to all
other property included in such consideration, shall be the fair
market value determined by the compensation committee of the Avnet
board of directors in good faith exercised in a reasonable manner),
and (II) the amount determined pursuant to clause (a)(II) above.
The amount payable to an optionee by Avnet or the survivor entity in a
termination merger will be paid in cash or by certified check, and will be
reduced by the amount of any taxes required to be withheld.
Amendment of Executive Options
An Executive Option may be modified or amended only by a written
instrument executed by Avnet and the optionee, and any such modification or
amendment may be authorized on behalf of Avnet by the compensation committee of
the Avnet board of directors.
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THE WARRANT
On February 2, 2000, Kent issued to Applied Materials, Inc. a stock
purchase warrant to purchase up to 300,000 shares of Kent common stock at a
price of $22-13/16 per share. At the effective time of the merger, the warrant
was converted into a right to purchase up to 261,000 shares of Avnet common
stock at an exercise price of $26.221264 per share, subject to further
adjustment in certain events. The exercise price may be paid in cash, by wire
transfer, or by certified or official bank check, payable to the order of Avnet.
In lieu of exercising this warrant, the holder may elect to receive
shares of Avnet common stock equal to the value of the warrant (or any part
thereof if exercised in part) by surrendering the warrant to Avnet with notice
of such election, in which event Avnet will issue to the holder a number of
shares of Avnet common stock computed as follows:
Y (A - B)
---------
X = A
Where
X = The number of shares of Avnet common stock to be
issued to the holder.
Y = The number of shares of Avnet common stock exercised
at such time under the warrant.
A = The fair market value of one share of Avnet common
stock.
B = The exercise price of the warrant (as adjusted to the
date of such calculations).
For purposes of the above formula, fair market value will be the last
closing price of the Avnet common stock for New York Stock Exchange composite
transactions immediately preceding the exercise of the warrant.
The warrant will expire on February 2, 2005.
18
FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of Carter, Ledyard & Milburn, counsel to Avnet, the
following is a summary of the material United States federal income tax
considerations relating to the options and warrants covered by this prospectus.
This summary is not a complete description of such considerations. In
particular, this summary does not address the tax treatment of special classes
of holders, such as banks, tax-exempt entities, insurance companies, persons
holding options or warrants as part of a hedging or conversion transaction or as
part of a "straddle," U.S. expatriates, persons subject to the alternative
minimum tax, dealers or traders in securities or currencies, persons that, after
the merger, will own, directly or indirectly, stock possessing at least ten
percent (10%) of the total combined voting power of all Avnet shares, and
holders whose functional currency is not the U.S. dollar. Further, this
discussion is limited to optionees and warrant holders that are U.S. Holders (as
defined below) and assumes that all options were received in connection with the
performance of services for Kent or one of its subsidiaries.
This summary is based on the Internal Revenue Code of 1986, as amended,
the Treasury regulations (including proposed and temporary regulations)
promulgated thereunder (the "Treasury Regulations"), official pronouncements and
judicial decisions, all as in effect on the date hereof and all of which are
subject to change, possibly with retroactive effect.
For purposes of this summary, the term "U.S. Holder" means an optionee or
warrant holder that is for U.S. federal income tax purposes:
o an individual citizen or resident of the U.S.;
o a corporation organized under the laws of the U.S. or any state
thereof, including the District of Columbia;
o an estate the income of which is subject to U.S. federal income tax
without regard to its source; or
o a trust if a court within the U.S. is able to exercise primary
supervision over the administration of the trust and one or more U.S.
persons have the authority to control all substantial decisions of the
trust.
If a partnership holds options or warrants, the U.S. federal income tax
treatment of a partner will generally depend upon the status of the partner and
the activities of the partnership.
U.S. holders of options and warrants should consult their own tax
advisors with respect to the federal income tax consequences of exercising
options or warrants or disposing of Avnet shares acquired pursuant to the
exercise of options or warrants in their
19
particular circumstances and with respect to the state, local or other income
tax consequences of such exercise or disposition.
The Options
The conversion of options to purchase shares of Kent common stock into
options to purchase shares of Avnet common stock was not a taxable event for
United States federal income tax purposes.
Each option is either an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (an "Incentive
Option"), or an option which does not qualify as an Incentive Option (a
"Nonqualified Option"). Different tax consequences attach to these two types of
options.
Nonqualified Options
Upon exercise of a Nonqualified Option for cash, the optionee recognizes
ordinary income in an amount equal to the excess, if any, of the fair market
value, on the date of exercise, of the shares purchased over their exercise
price. If an optionee pays the option exercise price by delivering shares of
Avnet common stock already owned by such optionee, such delivery would
constitute a non-taxable exchange by the optionee to the extent an equal number
of new shares of Avnet common stock are received, and the optionee would
recognize ordinary income in an amount equal to the fair market value of the
additional shares received (i.e., above the number of shares delivered).
Optionees are especially urged to consult their own tax advisers before paying
the exercise price of an option by delivering shares of Avnet common stock
already owned.
Any ordinary income recognized upon exercise of a Nonqualified Option by
a holder who was an employee of Kent or a subsidiary at the time the option was
granted will be classified as taxable wages subject to federal and state income
tax withholding and employment tax withholding, which withholding taxes will be
due and payable at the time the option is exercised. At Avnet's request, upon
exercise of a Nonqualified Option, the optionee will be required to pay to Avnet
an amount equal to 28% of such ordinary income for federal income tax
withholding purposes and, where applicable, an appropriate percentage for
employment tax and state and local income tax withholding purposes, to cover the
amount of employment and income tax withholding which Avnet is required to pay.
Avnet will be entitled to an income tax deduction in the same amount
that, and for Avnet's taxable year in which, the optionee recognizes ordinary
income from the exercise of a Nonqualified Option.
Upon a sale of shares purchased on the exercise of a Nonqualified
Option, the optionee will recognize short-term or long-term capital gain or
loss, depending on whether the shares are
20
held for more than one year after the date of exercise. Such gain or loss will
be measured by the difference between the selling price of the shares and
the fair market value of the shares on the date of exercise.
Incentive Options
In general, the holder of an Incentive Option does not recognize any
income at the time the option is exercised (although the exercise of an
Incentive Option can have "alternative minimum tax" consequences to the optionee
as described below under the caption " -- Alternative Minimum Tax"). If an
optionee holds shares purchased upon exercise of an Incentive Option for at
least (a) two years after the date the related Kent option was granted to the
optionee and (b) one year after the date such shares are transferred to the
optionee, then any gain or loss in respect of a subsequent disposition of such
shares will generally be treated as a long-term capital gain or loss. In the
event that the optionee disposes of shares purchased upon exercise of an
Incentive Option (for this purpose a disposition includes a sale, exchange, gift
or certain other transfers of legal title but not a mere pledge) before the end
of such two- and one-year periods (any such disposition being herein referred to
as a "disqualifying disposition"), then the excess, if any, of the aggregate
fair market value of such shares on the date on which the option was exercised
over the aggregate exercise price of such shares will be treated as ordinary
income to the optionee in the year of the disqualifying disposition, unless such
disqualifying disposition is a sale or exchange for less than the fair market
value of such shares on the date of exercise of the option, in which case the
amount that will be so treated as ordinary income will be limited to the excess,
if any, of the aggregate amount realized upon such sale or exchange over the
aggregate exercise price of the shares so sold or exchanged.
In the event that a disqualifying disposition of shares is a sale or
exchange for more than the fair market value of such shares on the date of
exercise of the Incentive Option, the excess of the aggregate amount realized
upon such sale or exchange over the aggregate fair market value of such shares
on the date of exercise will be treated as a capital gain. Such gain will be
treated as long-term capital gain if the shares have been held for more than one
year at the time of the disqualifying disposition and otherwise will be treated
as short-term capital gain. In the event that a disqualifying disposition is a
sale or exchange for less than the aggregate exercise price of such shares, no
ordinary income will be realized by the optionee, and the difference between the
aggregate amount realized upon such sale or exchange and such aggregate exercise
price will be treated as a long-term or short-term capital loss, depending upon
whether such shares have or have not been held for more than one year at the
time of such sale or exchange.
The rules described above relating to disqualifying dispositions may not
apply to certain transfers -- for example, transfers by bequest or incident to
divorce.
Avnet will not be entitled to any federal income tax deduction with
respect to the exercise of an Incentive Option, but may be entitled, in the year
of a disqualifying disposition, to a deduc-
21
tion equal to the amount, if any, that the optionee must treat as ordinary
income. At Avnet's request, upon exercise of an Incentive Option or upon
a disqualifying disposition, the optionee will be required to pay to Avnet an
appropriate percentage for any required employment tax or federal, state or
local income tax withholding.
If an optionee pays the option exercise price by delivering shares of
Avnet common stock already owned by such optionee, such delivery would
constitute a non-taxable exchange by the optionee and would not affect the
Incentive Option status of the shares purchased upon exercise of the option.
However, if the shares delivered in payment had previously been acquired upon
exercise of an Incentive Option and were not subsequently held for the requisite
one- and two-year periods, the delivery of such shares in payment of the
exercise price of an option would constitute a disqualifying disposition of the
shares so delivered. Optionees are especially urged to consult their own tax
advisers before paying the exercise price of an Incentive Option by delivering
shares of common stock already owned.
In the event an optionee exercises an Incentive Option more than three
months (one year if the optionee is disabled) after employment with Avnet
terminates, the tax treatment with respect to the option is the same as for a
Nonqualified Option (discussed above).
Alternative Minimum Tax
The Internal Revenue Code imposes an alternative minimum tax determined
by applying a special tax rate to the excess, if any, of an individual's
"alternative minimum taxable income" over a specified exemption amount.
Alternative minimum taxable income includes the amount by which the fair market
value of shares acquired through exercise of an Incentive Option exceeds the
exercise price. In addition, the basis of any shares so acquired for determining
gain or loss for purposes of the alternative minimum tax will be the shares"
fair market value at exercise. In the event of a disqualifying disposition of
the shares in the year the Incentive Option is exercised, the amount includible
as alternative minimum taxable income is limited to the excess of the sales
price over the exercise price.
The Warrant
The following summary relating to the warrant covered by this prospectus
assumes that the Merger qualified as a tax-free "reorganization" and that the
Kent warrant was, the Avnet warrant is, and the Avnet shares would be held as a
capital asset by the warrant holder.
The conversion of the Kent warrant into an Avnet warrant was not a
taxable event for United States federal income tax purposes. The warrant
holder's aggregate tax basis and holding period carried over to the Avnet
warrant. The tax considerations associated with the Avnet warrant will generally
be as described below.
22
The warrant holder will recognize a capital loss upon the lapse of the
warrant equal to the holder's basis in the warrant, and will recognize capital
gain or loss upon the sale of the warrant to Avnet or a third party equal to the
sales proceeds less the holder's basis in the warrant. Such capital gain or loss
will be long-term capital gain or loss if the warrant was held for more than one
year.
If the warrant is exercised by payment of cash for Avnet shares, there
is no taxable event for the warrant holder. The tax basis for the warrant will
be added to the exercise price paid for the stock in determining the holder's
basis in the shares received, and the holding period for the shares will begin
on the day after exercise. If, alternatively, the holder elects to receive Avnet
shares having a value equal to the value of the warrant, the holder should
recognize capital gain or loss equal to the difference between the value of the
shares received and the warrant holder's tax basis in the warrant. Upon a
subsequent sale of the shares, the holder will recognize capital gain or loss
equal to the excess of the sales price of the shares over the holder's basis in
the shares, which is the value of the shares at the time the warrant is
exchanged for such shares. Such capital gain or loss will be long-term capital
gain or loss if the shares were held for more than one year.
DESCRIPTION OF AVNET COMMON STOCK
General
Avnet is authorized to issue 300,000,000 shares of common stock, par
value $1.00 per share. At the close of business on June 6, 2001, 92,472,376
shares of Avnet common stock were outstanding, not including 8,892 treasury
shares. Avnet will issue approximately an additional 25,230,000 shares of its
common stock to former holders of Kent's common stock in connection with Avnet's
acquisition of Kent. All outstanding shares of Avnet common stock are fully paid
and nonassessable.
The holders of shares of Avnet's common stock have equal rights to
dividends from funds legally available for the payment of dividends when, as and
if declared by Avnet's board of directors, and are entitled, upon liquidation,
to share ratably in any distribution in which holders of common stock
participate. The common stock is not redeemable, has no preemptive or conversion
rights and is not liable for assessments or further calls. The holders of shares
of Avnet's common stock are entitled to one vote for each share at all meetings
of shareholders.
The transfer agent and registrar for Avnet's common stock is Wells Fargo
Minnesota, N.A. Avnet's common stock is listed on the New York Stock Exchange
and the Pacific Exchange.
Under its certificate of incorporation, Avnet is authorized to issue up
to 3,000,000 shares of preferred stock, in series. For each series of preferred
stock, Avnet's board of directors may
23
fix the relative rights, preferences and limitations as between the shares of
such series, the shares of other series of Avnet preferred stock, and the shares
of Avnet common stock. No shares of Avnet preferred stock are outstanding.
Board of Directors
Although New York law permits the certificate of incorporation of a New
York corporation to provide for cumulative voting in the election of directors,
Avnet's certificate of incorporation does not so provide.
New York law permits the certificate of incorporation or by-laws of a
New York corporation to divide its directors into as many as four classes with
staggered terms of office. However, Avnet's certificate and by-laws do not so
provide for a classified board of directors. Therefore, all of its directors are
elected annually for one-year terms.
New York law provides that any or all directors of a New York
corporation may be removed for cause by vote of the shareholders and, if the
corporation's certificate of incorporation or the specific provisions of a
by-law adopted by the shareholders so provides, by action of the board. New York
law also allows directors to be removed without cause if so provided in the
corporation's certificate of incorporation or by-laws. The Avnet certificate of
incorporation provides that directors may be removed with or without cause at
any time by the vote of the shareholders holding a majority of the shares of
Avnet common stock.
New York law provides that newly created directorships resulting from an
increase in the number of directors and vacancies arising for any reason may be
filled by vote of the board of directors, whether or not constituting a quorum,
except that:
o vacancies resulting from the removal of directors without cause may be
filled only by a vote of the shareholders, unless the certificate of
incorporation or a specific provision of a by-law adopted by the
shareholders provides that such a vacancy may be filled by a vote of
the board of directors;
o the certificate of incorporation or by-laws of the corporation may
provide that all newly created directorships and vacancies may be
filled only by a vote of the shareholders; and
o the certificate of incorporation may specify that the proportion of
votes of directors necessary to fill a newly created directorship or a
vacancy on the board must be greater than the normal majority vote of
the directors present at the time of the vote (Avnet's certificate of
incorporation does not so specify a greater proportion of votes).
24
The Avnet by-laws provide that any vacancy created by the removal of a
director by the shareholders with or without cause may be filled only by a vote
of the shareholders, and that any vacancy created for any other reason may be
filled by a vote of the board of directors or the shareholders.
Power to Call Special Shareholders' Meetings
New York law provides that special meetings of shareholders may be
called by the board of directors and by such persons as may be authorized in the
corporation's certificate of incorporation or by-laws. The Avnet by-laws provide
that special meetings of the shareholders may be called by the board of
directors or the chairman of the board, and shall be called by the chairman of
the board, the president or the secretary at the written request of shareholders
owning 75% of the shares entitled to vote at the meeting. In addition, New York
provides that if an annual shareholders' meeting has not been held for a certain
period of time and a sufficient number of directors were not elected to conduct
the business of the corporation, the board must call a special meeting for the
election of directors. If the board fails to do so, or sufficient directors are
not elected within a certain period of time, holders of 10% of the votes of the
shares entitled to vote in an election of directors may demand the call of a
special meeting for such an election.
Shareholder Action by Written Consent
New York law provides that shareholder action may be taken without a
meeting upon the written consent of the holders of all outstanding shares
entitled to vote, or if the certificate of incorporation so provides, upon the
written consent of holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize such action at a
meeting of shareholders at which all shares entitled to vote thereon were
present and voted. The Avnet certificate of incorporation does not authorize
shareholders to act by less than unanimous written consent.
Dividends and Repurchases of Shares
A New York corporation may declare and pay dividends, or make other
distributions in cash or its bonds or its property, on its outstanding shares
except when the corporation is insolvent or would thereby be made insolvent, or
when the declaration, payment or distribution would be contrary to any
restrictions contained in its certificate of incorporation. Avnet's certificate
of incorporation contains no such restrictions. In general, dividends may be
declared or paid and other distributions may be made out of surplus only, so
that the net assets of the corporation remaining after such declaration, payment
or distribution must at least equal the amount of the corporation's stated
capital.
25
Approval of Certain Business Combinations and Reorganizations
Under New York law and Avnet's certificate of incorporation, a majority
of the votes of all outstanding shares entitled to vote thereon are required to
approve a merger or consolidation in which Avnet is a constituent corporation, a
share exchange or a sale, lease or other disposition of all or substantially all
the assets of Avnet if not made in the usual or regular course of business.
Business Combination Following a Change in Control
New York law prohibits a New York corporation from engaging in any
business combination (defined to include a variety of transactions, including
mergers, consolidations, sales or dispositions of assets, issuances of stock,
liquidations, reclassifications and the receipt of certain benefits from the
corporation, including loans or guarantees) with, involving or proposed by any
interested shareholder of such corporation (defined generally as any person that
beneficially owns, directly or indirectly, 20% or more of the outstanding voting
stock of a New York corporation or any person that is an affiliate or associate
of a New York corporation and at any time within the past five years was a
beneficial owner of 20% or more of the outstanding voting stock) for a period of
five years after the date on which the interested shareholder first became an
interested shareholder, unless the transaction is approved by the board of
directors prior to the date on which the interested shareholder became an
interested shareholder. After this five-year period, an interested shareholder
may engage in a business combination with the corporation if either
o the business combination is approved by the affirmative vote of the
holders of a majority of the shares of the corporation's voting stock
other than those shares beneficially owned by the interested
shareholder and his affiliates and associates, or
o the value of the aggregate consideration to be paid by the interested
shareholder in connection with the business combination satisfies
certain "fair price" formulas specified in the New York statute, and
the interested shareholder, after becoming such, has not acquired any
additional shares of the corporation's voting stock, except as
provided in the statute.
Under New York law, corporations may elect not to be governed by the
statute described above, but Avnet's certificate of incorporation does not
contain such an election.
26
Dissenters' Appraisal Rights
Shareholders of a New York corporation have the right to dissent and
receive payment of the judicially determined "fair value" of their shares in the
case of
o certain amendments or changes to the corporation's certificate of
incorporation adversely affecting their rights,
o a merger or consolidation in which the corporation is a constituent
corporation if the shareholders are entitled to vote thereon,
o a merger or consolidation where the shareholders are not entitled to
vote and their shares will be canceled or exchanged in the merger or
consolidation for cash or other consideration other than shares of the
surviving or consolidated corporation or another corporation,
o any sale, lease, exchange or other disposition of all or substantially
all of the corporation's assets which requires shareholder approval,
other than a transaction wholly for cash which is conditioned upon the
dissolution of the corporation within one year of the asset
transaction, and
o certain share exchanges.
However, no appraisal rights will be available in a merger to a shareholder of
the surviving corporation whose rights are not adversely affected or whose
shares were, at the record date to vote on the plan of merger, either listed on
a national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association of
Securities Dealers, Inc.
LEGAL MATTERS
The validity of the shares offered hereby was passed upon for Avnet by
David R. Birk, its Senior Vice President and General Counsel. Mr. Birk
beneficially owns 122,325 shares of Avnet's common stock, which includes 114,200
shares issuable upon exercise of employee stock options.
EXPERTS
The restated supplemental consolidated financial statements and schedule of
Avnet, Inc. as of June 30, 2000, and July 2, 1999, and for the three years
in the period ended June 30, 2000, incorporated by reference in this prospectus
from Avnet's Current Report on Form 8-K bearing cover date of
27
June 8, 2001, and the consolidated financial statements and schedule of Avnet,
Inc., as of June 30, 2000 and July 2, 1999, and for the three years in the
period ended June 30, 2000, incorporated by reference in this prospectus from
Avnet's Annual Report on Form 10-K for the fiscal year ended June 30, 2000, as
amended and restated in Amendment No. 1 thereto, dated September 27, 2000, have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are incorporated herein by
reference in reliance upon the authority of that firm as experts in giving
said report.
The consolidated financial statements of Marshall Industries
incorporated by reference in this prospectus from Avnet's Current Report on Form
8-K bearing cover date of October 20, 1999, for the fiscal years ended May 31,
1999, 1998 and 1997 have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated herein by reference in reliance upon the authority of that firm as
experts in giving such report.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a post-effective amendment on Form S-3 to a
registration statement on Form S-4 (Registration No. 333-58852) filed by Avnet
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended. We refer you to the registration statement as so amended, and the
exhibits thereto for further information with respect to Avnet and the shares
offered hereby.
Avnet files annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission (Commission File
Number 1-4224). These filings contain important information which does not
appear in this prospectus. For further information about Avnet, you may obtain
these filings over the internet at the SEC's web site at http://www.sec.gov. You
may also read and copy these filings at the SEC's public reference room at 450
Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the
operation of the public reference room by calling the SEC at 1-800-SEC-0330, and
may obtain copies of Avnet's filings from the public reference room by calling
(202) 942-8090.
The SEC allows Avnet to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to other documents which Avnet has filed or will file with the
SEC. We are incorporating by reference in this prospectus
o Avnet's Annual Report on Form 10-K for the fiscal year ended June 30,
2000, as amended and restated in Amendment No. 1 thereto, dated
September 27, 2000,
28
o Avnet's Quarterly Reports on Form 10-Q for the quarterly periods ended
September 29, 2000, December 29, 2000, and March 30, 2001,
o Avnet's Current Reports on Form 8-K bearing cover dates of October 20,
1999, July 11, 2000, August 7, 2000, September 25, 2000, September 27,
2000, October 12, 2000, October 20, 2000, October 20, 2000, October
26, 2000, October 26, 2000, October 31, 2000, January 17, 2001,
February 12, 2001, April 19, 2001, April 26, 2001, May 14, 2001, June
7, 2001 and June 8, 2001, and
o The description of Avnet's common stock which appears in Avnet's
registration statement for the registration of the Avnet common stock
under Section 12(b) of the Securities Exchange Act of 1934, including
any amendment or report filed to update this description.
All documents which Avnet has filed or will file with the SEC pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act after the
reports listed above and before the termination of this offering of Avnet's
securities will be deemed to be incorporated by reference in this prospectus and
to be a part of it from the filing dates of such documents. Certain statements
in and portions of this prospectus update and replace information in the above
listed documents incorporated by reference. Likewise, statements in or portions
of a future document incorporated by reference in this prospectus may update and
replace statements in and portions of this prospectus or the above listed
documents.
We shall provide you without charge, upon your written or oral request,
a copy of any of the Plans, the Executive Options and the stock purchase warrant
dated February 2, 2000, or any other agreement relating to the shares of Avnet
common stock offered in this prospectus, and any of the documents incorporated
by reference in this prospectus, other than exhibits to such documents which are
not specifically incorporated by reference into such documents. Please direct
your written or telephone requests to Raymond Sadowski, Avnet, Inc., 2211 South
47th Street, Phoenix, Arizona 85034 (telephone 480-643-2000).
29
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses of the issuance and distribution of the securities which are
the subject of the prospectus in this post-effective amendment are estimated as
follows:
Registration fee....................................... $10,138
Legal fees and expenses................................ 30,000
Accountants' fees and expenses......................... 45,000
Miscellaneous.......................................... 4,862
------
Total.................................................. $90,000
======
- ----------
* Consists only of that portion of the registration fee attributable to the
1,957,720 shares of the Registrant's common stock covered by the prospectus
in this post-effective amendment.
Item 15. Indemnification of Directors and Officers.
Section 54 of the registrant's by-laws provides as follows:
"Indemnification"
"A. The Corporation shall indemnify, and advance the
expenses of, any director, officer or employee to the full extent
permitted by the New York Business Corporation Law as the same
now exists or may hereafter be amended.
"B. The indemnification and advancement of expenses granted
pursuant to this Section 54 shall not be exclusive or limiting of
any other rights to which any person seeking indemnification or
advancement of expenses may be entitled when authorized by (i) a
resolution or shareholders, (ii) a resolution of directors or
(iii) an agreement providing for such indemnification; provided
that no indemnification may be made to or on behalf of any such
person if a judgment or other final adjudication adverse to such
person establishes that his acts were committed in bad faith or
were the result of active and deliberate dishonesty
II-1
and were material to the cause of action so adjudicated, or that
he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
"C. No amendment, modification or rescission of these
By-laws shall be effective to limit any person's right to
indemnification with respect to any alleged cause of action that
accrues or other incident or matter that occurs prior to the date
on which such modification, amendment or rescission is adopted."
Section 721 of the New York Business Corporation Law (the "B.C.L.")
provides that no indemnification may be made to or on behalf of any director or
officer of the Registrant if "a judgment or other final adjudication adverse to
the director or officer establishes that his acts were committed in bad faith or
were the result of active and deliberate dishonesty and were material to the
cause of action so adjudicated, or that he personally gained in fact a financial
profit or other advantage to which he was not legally entitled." Section 54B of
the Registrant's By-laws includes the foregoing statutory language.
The rights granted under Section 54 of the By-laws are in addition to, and
are not exclusive of, any other rights to indemnification and expenses to which
any director or officer may otherwise be entitled. Under the B.C.L., a New York
corporation may indemnify any director or officer who is made or threatened to
be made a party to an action by or in the right of such corporation against
"amounts paid in settlement and reasonable expenses, including attorneys" fees,"
actually and necessarily incurred by him in connection with the defense or
settlement of such action, or in connection with an appeal therein, if such
director or officer acted, in good faith, for a purpose which he reasonably
believed to be in the best interests of the corporation, except that no
indemnification shall be made in respect of (1) a threatened action, or a
pending action which is settled or otherwise disposed of, or (2) any claim,
issue or matter as to which such director or officer shall have been adjudged
liable to the corporation, unless and only to the extent that a court determines
that the director or officer is fairly and reasonably entitled to indemnity
(B.C.L. Section 722(c)). A corporation may also indemnify directors and officers
who are parties to other actions or proceedings (including actions or
proceedings by or in the right of any other corporation or other enterprise
which the director or officer served at the request of the corporation) against
"judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys" fees, actually or necessarily incurred as a result of such actions or
proceedings, or any appeal therein, provided the director or officer acted in
good faith, for a purpose which he reasonably believed to be in the best
interests of the corporation (or in the case of service to another corporation
or other enterprise at the request of such corporation, not opposed to the best
interests of such corporation) and, in criminal cases, that he also had no
reasonable cause to believe that his conduct was unlawful (B.C.L. Section
722(a)). Any indemnification under Section 722 may be made only if authorized in
the specific case by disinterested directors, or by the board of directors upon
the opinion in writing of independent legal counsel that indemnification is
proper, or by the shareholders (B.C.L. Section 723(b)), but even without such
authorization, a court may order indemnification in certain circumstances
(B.C.L. Section 724). Further, any director or officer who is "successful, on
the merits or otherwise," in the
II-2
defense of an action or proceeding is entitled to indemnification as a matter of
right (B.C.L. Section 723(a)).
A New York corporation may generally purchase insurance, consistent with
the limitations of New York insurance law and regulatory supervision, to
indemnify the corporation for any obligation which it incurs as a result of the
indemnification of directors and officers under the provisions of the B.C.L., so
long as no final adjudication has established that the directors" or officers"
acts of active and deliberate dishonesty were material to the cause of action so
adjudicated or that the directors or officers personally gained in fact a
financial profit or other advantage (B.C.L. Section 726).
The registrant's directors and officers are currently covered as insureds
under directors" and officers" liability insurance. Such insurance is subject to
renewal in August 2001 and provides an aggregate maximum of $100,000,000 of
coverage for directors and officers of the Registrant and its subsidiaries
against claims made during the policy period relating to certain civil
liabilities, including liabilities under the Securities Act of 1933 (the
"Securities Act").
Item 16. Exhibits
The index to exhibits appears immediately following the signature pages of
this post-effective amendment.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes as follows:
(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;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this 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 this Registration Statement (Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the change in
volume represents no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement); and
II-3
(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 this Registration
Statement;
provided, however, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") that are incorporated by reference in this Registration
Statement.
(2) For the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) For purposes of determining any liability under the Securities Act,
each filing of the Company's annual report pursuant to Section 13(a) or Section
15(d) of the Exchange Act that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in Item 15, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
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 Amendment to be
signed on its behalf by the undersigned, thereunto duly authorized, in the city
of Phoenix, State of Arizona, on the 8th day of June, 2001.
AVNET, INC.
By: /s/Raymond Sadowski
-------------------------------
Raymond Sadowski
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this amendment
has been signed on June 8, 2001, by the following persons in the capacities
indicated:
Signature Title
--------- -----
*
- ------------------------ Chairman of the Board, Chief
Roy Vallee Executive Officer and Director
* Director
- ------------------------
Eleanor Baum
* Director
- ------------------------
J. Veronica Biggins
* Director
- ------------------------
Lawrence W. Clarkson
* Director
- ------------------------
Ehud Houminer
II-5
Signature Title
--------- -----
* Director
- ------------------------
James A. Lawrence
* Director
- ------------------------
Salvatore J. Nuzzo
* Director
- ------------------------
Ray M. Robinson
* Director
- ------------------------
Frederic Salerno
* Director
- ------------------------
Gary L. Tooker
/s/ Raymond Sadowski
- --------------------
Raymond Sadowski Senior Vice President and
Chief Financial Officer
*
- ------------------------ Controller and
John F. Cole Chief Accounting Officer
- -------------
* By: /s/Raymond Sadowski
--------------------
Raymond Sadowski
Attorney-in-Fact
II-6
EXHIBIT INDEX
Exhibit No.
----------
2 Amended and Restated Agreement and Plan of Merger, dated
as of March 21, 2001, by and between Avnet, Inc. and Kent
Electronics Corporation, included as Appendix A to the
proxy statement/ prospectus constituting Part I of
pre-effective amendment no. 1 to this registration
statement. The copy so included does not include the
schedules to the Agreement and Plan of Merger as listed in
the table of contents thereto. The Registrant undertakes
to furnish any such schedules to the Commission upon its
request.
4 Amended and Restated Stock Purchase Warrant dated June 8, 2001.
5* Opinion of David R. Birk, Senior Vice President and General
Counsel of Avnet.
8 Opinion of Carter, Ledyard & Milburn re tax matters.
23.1* Consent of David R. Birk (included in Exhibit 5).
23.2 Consent of Arthur Andersen LLP.
24* Powers of Attorney.
99.1 Kent Electronics Corporation 1991 Non-Employee Director
Stock Option Plan, filed as Exhibit 10.2 to Kent's Annual
Report on Form 10-K for the fiscal year ended March 28,
1992, and incorporated herein by reference.
99.2 Amendment to Kent Electronics Corporation 1991
Non-Employee Director Stock Option Plan, filed as Exhibit
10.4 to Kent's Quarterly Report on Form 10-Q/A for the
quarterly period ended September 27, 1997 (the "1997 Form
10-Q/A"), and incorporated herein by reference.
- -------------------
* Previously filed as an exhibit to this Registration Statement.
II-7
Exhibit No.
----------
99.3 Kent Electronics Corporation Amended and Restated 1996
Non-Employee Director Stock Option Plan, filed as Exhibit
10.2 to Kent's Annual Report on Form 10-K for the fiscal
year ended April 1, 2000, and incorporated herein by
reference.
99.4 Kent Electronics Corporation 1996 Employee Incentive Plan,
filed as Exhibit 10.14 to Kent's Annual Report on Form 10-K for
the fiscal year ended March 30, 1996, and incorporated herein
by reference.
99.5 Kent Electronics Corporation Amended and Restated 1998
Stock Option Plan, filed as Exhibit 10.2 to Kent's
Quarterly Report on Form 10-Q for the quarterly period
ended December 30, 2000, and incorporated herein by
reference.
99.6 Kent Electronics Corporation Amended and Restated 1999
Stock Option Plan, filed as Exhibit 10.3 to Kent's
Quarterly Report on Form 10-Q for the quarterly period
ended December 30, 2000, and incorporated herein by
reference.
99.7 Stock Option Plan and Agreement between Kent Electronics
Corporation and Larry D. Olson dated May 8, 1995, filed as
Exhibit 10.11 to Kent's Annual Report on Form 10-K for the
fiscal year ended April 1, 1995 (the "1995 Form 10-K"),
and incorporated herein by reference.
99.8 Amendment dated July 2, 1997, to Exhibit 99.7, filed as
Exhibit 10.6 to the 1997 Form 10-Q/A and incorporated
herein by reference.
99.9 Stock Option Plan and Agreement between Kent Electronics
Corporation and Mark A. Zerbe dated May 8, 1995, filed as
Exhibit 10.12 to the 1995 Form 10-K and incorporated
herein by reference.
99.10 Amendment dated July 2, 1997, to Exhibit 99.9, filed as
Exhibit 10.7 to the 1997 Form 10-Q/A and incorporated
herein by reference.
99.11 Stock Option Plan and Agreement between Kent Electronics
Corporation and Stephen J. Chapko dated May 8, 1995, filed
as Exhibit 10.13 to the 1995 Form 10-K and incorporated
herein by reference.
II-8
Exhibit No.
----------
99.12 Amendment dated July 2, 1997, to Exhibit 99.11, filed as
Exhibit 10.8 to the 1997 Form 10-Q/A and incorporated
herein by reference.
99.13 Stock Option Plan and Agreement between Kent Electronics
Corporation and David D. Johnson dated May 9, 1999, filed
as Exhibit 10.13 to Kent's Annual Report on Form
10-K for the fiscal year ended March 30, 1996, and
incorporated herein by reference.
99.14 Amendment dated July 2, 1997, to Exhibit 99.13, filed as
Exhibit 10.9 to the 1997 Form 10-Q/A and incorporated
herein by reference.
II-9
EXHIBIT 4
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM
REGISTRATION.
For the Purchase of 261,000 Shares
AMENDED AND RESTATED
STOCK PURCHASE WARRANT
TO PURCHASE SHARES OF COMMON STOCK OF
AVNET, INC.
On February 2, 2000, Kent Electronics Corporation, a Texas corporation
("Kent"), issued to Applied Materials, Inc., a Delaware corporation, a warrant
to purchase 300,000 shares of the common stock of Kent at a price of $22-13/16
per share. Such warrant is hereby being amended and restated inter alia to
effect the changes required by Section 6.4 thereof resulting from the merger of
Kent into Avnet, Inc., a New York corporation, pursuant to an amended and
restated agreement and plan of merger dated as of March 21, 2001, by and between
Kent and Avnet, Inc. This merger became effective on June 8, 2001.
* * *
This Amended and Restated Stock Purchase Warrant (this "Warrant") certifies
that, for value received, Applied Materials, Inc., a Delaware corporation, or
Assigns (the "Holder"), is entitled, subject to the terms and conditions of this
Warrant, at any time or from time to time during the period commencing on the
date hereof and terminating on February 2, 2005 (the "Exercise Period"), to
purchase up to 261,000 shares of common stock, par value $1.00 per share
("Common Stock"), of Avnet, Inc., a New York corporation (the "Company"). This
Warrant is fully vested, so that Holder may exercise all or part of it at any
time or from time to time. The exercise price per share applicable to this
Warrant (the "Exercise Price") shall be $26.221264. The Exercise Price and the
number of shares for which this Warrant is exercisable shall be subject to
adjustment as set forth in this Warrant.
1. Exercise of Warrant.
1.1 Exercise. The purchase rights represented by this Warrant are
exercisable by Holder within the Exercise Period at any time or from time
to time in installments or in whole upon surrender to the Company at its
principal office (as designated in Section 10 herein) of this Warrant,
together with the Notice of Exercise attached hereto duly completed and
signed, and upon payment to the Company of the aggregate Exercise Price for
the shares
1
so purchased. Payment of the aggregate Exercise Price with respect to the
portion of this Warrant being exercised shall be made in cash, by wire
transfer, or by certified or official bank check, payable to the order of
the Company. Subject to the restrictions and requirements of Section 2
herein, not later than ten days after the exercise of this Warrant in whole
or in part and the payment of the Exercise Price as set forth above, the
Company shall prepare and issue a certificate for the Common Stock so
purchased in the name of the Holder of this Warrant or as such Holder may
direct in writing.
If this Warrant is exercised in respect of less than all of the Common
Stock at that time purchasable hereunder, the Holder hereof shall be
entitled, upon surrender of this Warrant, to receive a new Warrant covering
the number of shares in respect of which this Warrant shall not have been
exercised; provided, however, that this Warrant and all rights and options
hereunder shall expire at the end of the Exercise Period and shall be
wholly void to the extent this Warrant is not exercised before it expires.
1.2 Net Exercise. In lieu of exercising this Warrant, the Holder may
elect to receive shares of Common Stock equal to the value of this Warrant
(or the proportionate part thereof if exercised in part) by surrender of
this Warrant at the principal office of the Company (as designated in
Section 10 herein) with notice of such election, in which event the Company
shall issue to the Holder a number of shares of Common Stock computed using
the following formula:
Y (A - B)
---------
X = A
Where
X = The number of shares of Common Stock to
be issued to the Holder.
Y = The number of shares of Common Stock
exercised at such time under this Warrant.
A = The Fair Market Value (as defined below)
of one share of the Common Stock.
B = The Exercise Price (as adjusted to the
date of such calculations).
For purposes of this Section 1.2, the "Fair Market Value" of the
Common Stock shall be determined in good faith by the Board of Directors of
the Company, provided, that if the Company's Common Stock is then trading
on a national securities exchange or in the over-the-counter-market, such
determination shall be the last closing price of the Common Stock
immediately preceding the exercise of the Warrant.
2
2. Representations and Warranties of Holder.
2.1 Purchase Entirely for Own Account. This Warrant and the Common
Stock issuable upon exercise hereof (collectively, the "Securities") will
be acquired for Holder's own account, not as a nominee or agent and not
with a view to the resale or distribution of any part thereof, and Holder
has no present intention of selling, granting any participation in or
otherwise distributing the same. Holder represents that it has full power
and authority to enter into this Warrant.
2.2 Restricted Securities. Holder understands that the Securities are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and agrees that the Common Stock received upon
exercise of this Warrant may not be transferred without an effective
registration statement therefor under the Securities Act of 1933, as
amended (the "Act"), and applicable state securities laws or unless the
proposed transaction is exempt from registration. Unless registered, any
Common Stock issued to Holder upon exercise of this Warrant shall bear a
legend similar to the following:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state, and may not be sold, offered for sale,
pledged or hypothecated in the absence of such registration unless
such transaction is exempt from registration.
3. Transfer Taxes. The Company will pay when due and payable any and all
United States federal and state transfer taxes and charges that may be payable
in respect of the issuance or delivery to the Holder of this Warrant or of any
Common Stock upon the exercise of this Warrant, but the Holder shall be
responsible for and pay when due any and all such taxes and changes that may be
payable in respect of the transfer of this Warrant or the issuance of Common
Stock upon the exercise of this Warrant to any person other than the Holder.
4. Lost or Destroyed Warrant. In case this Warrant shall be lost, stolen,
destroyed or mutilated, the Company shall execute, issue and deliver in exchange
and substitution for and upon cancellation of the mutilated Warrant, or in lieu
of and substitution for the lost, stolen or destroyed Warrant, a new Warrant of
like tenor and representing an equivalent right or interest; but only upon
receipt of evidence satisfactory to the Company of such loss, theft or
destruction of this Warrant and an indemnity agreement, if requested, reasonably
satisfactory to the Company.
5. Reservation and Issuance of Shares of Common Stock. The Company will at
all times reserve for issuance from its authorized and unissued shares of Common
Stock the number of shares of Common Stock needed for issuance upon the exercise
of this Warrant. The Company
3
covenants that all Common Stock which may be issued upon the exercise of this
Warrant will, upon exercise of the rights represented by this Warrant, be fully
paid and nonassessable and free from all preemptive rights, taxes, liens and
charges in respect of the issuance thereof (other than taxes payable by the
Holder in respect of any transfer occurring contemporaneously with such issue).
The Company covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the exercise of the purchase rights under this Warrant.
6. Certain Adjustments. The existence of this Warrant shall not affect in
any way the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or the rights
thereof, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
6.1 Subdivisions. In case the Company shall at any time fix a record
date to effect a split or subdivision of the outstanding shares of the
Common Stock, or to determine the holders of Common Stock entitled to
receive a dividend or other distribution payable in additional shares of
Common Stock or other securities or rights convertible into, or entitling
the holder thereof to receive directly or indirectly, additional shares of
Common Stock (the "Common Stock Equivalents") without payment of any
consideration by such holder for the additional shares of Common Stock or
Common Stock Equivalents (including the additional shares of Common Stock
issuable upon conversion or exercise thereof), then, as of such record date
(or the date of such distribution, split or subdivision if no record date
is fixed) the Exercise Price in effect immediately prior to such
subdivision shall be proportionately decreased.
6.2 Combinations. In case the Company shall at any time combine the
outstanding shares of its Common Stock, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased as
of the date of such combination.
6.3 Common Stock Dividends. If the Company shall pay a dividend with
respect to Common Stock payable in Common Stock or Common Stock
Equivalents, or make any other distribution of Common Stock or Common Stock
Equivalents with respect to Common Stock, then the Exercise Price per share
shall be reduced, from and after the date of determination of the
shareholders entitled to receive such dividend or distribution, to that
price determined by multiplying the per share purchase price in effect by a
fraction (a) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution
and (b) the denominator of which shall be the total number of shares of the
Common Stock outstanding immediately after such dividend or distribution,
assuming the conversion to Common Stock of all Common Stock
4
Equivalents is issued in such dividend or distribution, provided that the
Exercise Price per share shall be increased and recalculated pursuant to
this sentence at such time as any Common Stock Equivalents issued in such
dividend or distribution cease to be outstanding prior to being converted
into Common Stock.
6.4 Reorganization, Reclassification, Consolidation or Merger. In
case, at any time after the date of this Warrant, of any capital
reorganization, or any reclassification of the stock of the Company (other
than a change in par value or as a result of a stock dividend or
subdivision, split-up or combination of shares), or the consolidation or
merger of the Company with or into another entity (other than a
consolidation or merger in which the Company is the continuing entity and
which does not result in any change in the Common Stock), this Warrant
shall, after such reorganization, reclassification, consolidation or
merger, be exercisable into the kind and number of shares of stock or other
securities or property of the Company or of the entity resulting from such
consolidation or surviving such merger to which Holder would have been
entitled if immediately prior to such reorganization, reclassification,
consolidation or merger, Holder had exercised this Warrant for Common
Stock. The provisions of this Subsection shall similarly apply to
successive reorganizations, reclassifications, consolidations or mergers.
6.5 Cash or Other Dividends or Distributions. No adjustment will be
made to the Exercise Price on account of dividends or distributions paid on
or with respect to the Common Stock in cash, property or securities other
than Common Stock or Common Stock Equivalents.
7. Fractional Interests. The Company shall not be required to issue
fractional shares of Common Stock upon the exercise of this Warrant. In lieu
thereof, the Company shall pay Holder a sum in cash equal to any such fractional
shares based upon the difference between the Fair Market Value of such
fractional shares and the Exercise Price allocable thereto.
8. No Rights as Stockholders. Nothing contained in this Warrant shall be
construed as conferring upon the Holder the right to vote or to receive
dividends or to consent to or receive notice as a stockholder in respect of any
meeting of stockholders for the election of directors of the Company or any
other matter, or any rights whatsoever as a stockholder of the Company.
9. Warrant Register. The Company shall maintain at its principal office (as
designated in Section 10 herein) a registry for the registration of Warrants and
the registration of the transfer of Warrants. Prior to the Company's receipt of
written notice from Holder to the contrary, the Company shall be entitled to
rely in all respects upon such registry and may deem and treat Holder as the
owner hereof for all purposes.
10. Notices. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be
5
deemed duly given if (and then two business days after) it is sent by registered
or certified mail, return receipt requested, postage prepaid, and addressed to
the intended recipient as set forth below or duly given upon receipt if made by
hand delivery, facsimile or e-mail transmission (with receipt confirmation) or
other personal delivery:
If to the Company, to:
Avnet, Inc.
2211 South 47th Street
Phoenix, Arizona 85034
Attention: Raymond Sadowski
Telephone: 480-643-7764
Fax: 480-643-7929
E-Mail: ray.sadowski@avnet.com
If to Applied, to:
Applied Materials, Inc.
3050 Bowers Avenue, M/S 2047
Santa Clara, California 95054
Attention: George S. Davis, Treasurer
Telephone: 408-748-5338
Fax: 408-563-0822
E-Mail: george_davis@amat.com
With a copy to:
Applied Materials, Inc.
3050 Bowers Avenue, M/S 2064
Santa Clara, California 95054
Attention: Joseph J. Sweeney, Group Vice President,
Legal Affairs and Intellectual Property
Telephone: 408-748-5420
Fax: 408-563-4635
Either party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address set forth above
using any other means, but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Either party may change the
address to which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other party notice in the manner
herein set forth.
6
11. Amendments; Waivers. No amendment to, modification of, or waiver of any
provision of this Warrant will be binding unless in writing and signed by a duly
authorized representative of the party sought to be bound.
12. Successors and Assigns. The terms of this Warrant shall be binding upon
and shall inure to the benefit of any successor or assign of the Company and of
the holder or holders hereof and of the Common Stock issued upon exercise of
this Warrant, and all obligations of the Company relating to the Common Stock
issuable upon exercise of this Warrant shall survive the exercise of this
Warrant.
13. Construction of Dates. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall be a
Saturday or a Sunday or shall be a legal holiday, then such action may be taken
or such right may be exercised, except as to the payment of the Exercise Price,
on the next succeeding day not a legal holiday.
14. Severability and Validity. Any term or provision of this Warrant that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
15. Governmental Filings. The Company shall assist and cooperate with the
Holder, on the Holder's written request and at the Holder's expense, to make any
governmental filings or obtain any governmental approvals required prior to or
in connection with any exercise of this Warrant.
16. Governing Law. This Warrant shall be governed by, be subject to, and be
construed in accordance with the internal laws of the State of Texas, excluding
conflicts of law rules. The parties agree that any suit arising out of this
Warrant, for any claim or cause of action, whether in contract, in tort,
statutory, at law or in equity, shall exclusively be brought in the United
States District Court for the Western District of Texas, Austin Division, or the
Texas State District Courts of Travis County, Texas, provided that such court
has jurisdiction over the subject matter of the action. Each party agrees that
each of the named courts shall have personal jurisdiction over it and consents
to such jurisdiction. Each party further agrees that venue of any suit arising
out of this Warrant is proper and exclusive in any of the courts identified
above; each party consents to such venue therein.
17. Captions. All Section titles or captions contained in this Warrant or
in any Exhibit or Attachment annexed hereto or referred to herein are for
convenience only, shall not be deemed a part of this Warrant and shall not
constitute a waiver of any of Holder's rights under this Warrant, at law or in
equity.
7
IN WITNESS WHEREOF, the parties to this Amended and Restated Stock Purchase
Warrant have caused their names to be signed hereto by their respective duly
authorized officers as of this 8th day of June, 2001.
AVNET, INC.
a New York Corporation
By: /s/Raymond Sadowski
--------------------------------
Raymond Sadowski
Senior Vice President and
Chief Financial Officer
APPLIED MATERIALS, INC.
a Delaware corporation
By:
---------------------------------
Name:
Title:
8
Exhibit A
NOTICE OF EXERCISE
(To be executed by the Holder upon partial
or full exercise of the attached Warrant)
To: Avnet, Inc.
The undersigned hereby irrevocably elects to exercise the right to purchase
_______ shares of Common Stock covered by the Amended and Restated Warrant
issued by you dated June 8, 2001 (which is attached hereto), according to the
terms and conditions thereof and [Alternative One: herewith makes payment of the
Exercise Price of such shares in full in the amount of $_______ therefor]
[Alternative Two: herewith directs that the Exercise Price be paid from a
portion of such shares as provided in Section 1.2 of the Warrant] and requests
that the certificates for the Common Stock be issued in the name of the
undersigned.
APPLIED MATERIALS, INC.
a Delaware corporation
By:
----------------------
Name:
----------------------
Title:
----------------------
By:
----------------------
Name:
----------------------
Title:
----------------------
Dated: __________, ____.
9
EXHIBIT 8
CARTER, LEDYARD & MILBURN
COUNSELORS AT LAW
2 WALL STREET
NEW YORK, N.Y. 10005-2072
-----------
(212) 732-3200
FAX (212) 732-3232
June 8, 2001
Avnet, Inc.
2211 South 47th Street
Phoenix, Arizona 85034
Re: Registration Statement No. 333-58852
------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Avnet, Inc. (the "Company"), in connection
with the proposed offer and sale of up to 1,957,720 shares of Common Stock of
the Company (the "Shares") issuable upon exercise of director and employee stock
options and a stock purchase warrant issued by Kent Electronics Corporation
("Kent"). The offer and sale of the Shares are the subject of post-effective
amendment no.1 on Form S-3 (the "Amendment") to the Registration Statement on
Form S-4 (Registration No. 333-58852) filed by the Company in connection with
the Company's acquisition of Kent.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of all such agreements, certificates and other statements
of corporate officers and other representatives of the Company as we have deemed
necessary as a basis for this opinion. In such examination we have assumed the
genuineness of all signatures and the authenticity of all documents submitted to
us as originals and the conformity with the originals of all documents submitted
to us as copies.
Based on and subject to the foregoing, we are of the opinion that the
section entitled "Federal Income Tax Considerations" in the Amendment contains
an accurate general description, under currently applicable law, of the
principal United States federal income tax considerations that apply to
purchasers of the Shares pursuant to the exercise of the options and the warrant
described in the Amendment.
We consent to the filing of this opinion as an exhibit to the Amendment
and to the reference to us in the section entitled "Federal Income Tax
Considerations" in the Amendment. In giving this consent we do not acknowledge
that we come within the category of persons whose consent is required by the
Securities Act or the rules and regulations promulgated thereunder.
Very truly yours,
/s/Carter, Ledyard & Milburn
HJB/
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to (1) the incorporation by
reference in this Registration Statement on Form S-3 of our report dated June 8,
2001, included in Avnet Inc.'s Current Report on Form 8-K bearing cover date of
June 8, 2001, (2) the incorporation by reference in this Registration Statement
on Form S-3 of our report dated August 7, 2000 (except with respect to the stock
split discussed in Note 1, as to which the date is September 18, 2000), included
in Amendment No. 1 to Avnet Inc.'s Annual Report on Form 10-K for the year ended
June 30, 2000, (3) the incorporation by reference in this Registration Statement
on Form S-3 of our report dated August 25, 1999, on the consolidated financial
statements of Marshall Industries, which report is included in Avnet, Inc.'s
Current Report on Form 8-K bearing cover date of October 20, 1999 and (4) all
references to our firm included in this Registration Statement.
Phoenix, Arizona /s/ARTHUR ANDERSEN LLP
June 8, 2001