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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) DECEMBER 31, 1998
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XETEL CORPORATION
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(Exact name of registrant as specified in charter)
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DELAWARE 0-27482 742310781
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(State of incorporation or organization) (Commission File Number) (IRS Employer Identification No.)
2105 GRACY FARMS LANE, AUSTIN, TEXAS 78758
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code (512) 435-1000
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NONE
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On December 28, 1998, the Board of Directors of XeTel Corporation (the
"Company") declared a dividend of one preferred share purchase right (a "Right")
for each outstanding share of Common Stock (the "Common Stock"), par value
$.0001 per share, of the Company. The dividend is payable on January 11, 1999
(the "Record Date") to the stockholders of record on that date. Each Right
entitles the registered holder to purchase from the Company one ten-thousandth
of a share (a "Unit") of Series A Junior Participating Preferred Stock, par
value $.0001 per share (the "Series A Preferred Stock"), of the Company at a
price of $20.00 per Unit (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement dated as
of December 31, 1998 (the "Rights Agreement") between the Company and American
Stock Transfer & Trust Company, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) the close of business on the tenth
day following the date of a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") have acquired
beneficial ownership of 15% or more of the outstanding Common Stock or (ii) the
close of business on the tenth business day (or such later date as may be
determined by action of the Board of Directors prior to such time as any Person
becomes an Acquiring Person) following the commencement of, or announcement of
an intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of 15% or more of
such outstanding Common Stock (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Stock certificates outstanding as of the Record Date, by such Common
Stock certificate with a copy of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date, upon transfer or new
issuance of Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Stock, outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the Close of Business on the
Distribution Date and such separate Rights Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on December 31, 2008 (the "Final Expiration
Date"), unless the Final Expiration Date is extended or unless the Rights are
earlier redeemed or exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of Units of Series A
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Series A Preferred Stock, (ii) upon the grant to
holders of the Units of Series A Preferred Stock of certain rights or warrants
to subscribe for or purchase Units of Series A Preferred Stock at a price, or
securities convertible into Units of Series A Preferred Stock with a conversion
price, less than the then current market price of the Units of Series A
Preferred Stock or (iii) upon the distribution to holders of the Units of Series
A Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings or dividends
payable in Units of Series A Preferred Stock) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights and the number of Units of Series A
Preferred Stock issuable upon exercise of each Rights are also subject to
adjustment in the event of a stock split of the Common Stock or a stock dividend
on the Common Stock payable in Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.
Units of Series A Preferred Stock purchasable upon exercise of the
Rights will not be redeemable. Each Unit of Series A Preferred Stock will be
entitled to an aggregate dividend equal to the dividend declared per share of
Common Stock. In the event of liquidation, each holder of the Units of Series A
Preferred Stock will be entitled to an aggregate payment equal to the payment
made per share of Common Stock. Each Unit of Series A Preferred
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Stock will have one vote, voting together with the Common Stock. Finally, in the
event of any merger, consolidation or other transaction in which shares of
Common Stock are exchanged, each Unit of Series A Preferred Stock will be
entitled to receive an amount equal to the amount received per share of Common
Stock. These rights are protected by customary anti-dilution provisions.
Because of the nature of the dividend, liquidation and voting rights,
the value of the Series A Preferred Stock, the Units of Series A Preferred Stock
purchasable upon exercise of each Rights should approximate the value of one
share of Common Stock.
In the event that, after the Rights become exercisable, the Company is
acquired in a merger or other business combination transaction with an Acquiring
Person or an affiliate thereof, or 50% or more of its consolidated assets or
earning power are sold to an Acquiring Person or an affiliate thereof, proper
provision will be made so that each holder of a Rights will thereafter have the
right to receive, upon exercise thereof at the then current exercise price of
the Rights, that number of shares of common stock of the acquiring company which
at the time of such transaction will have a market value of two times the
exercise price of the Rights.
In the event that any person or group of affiliated or associated
persons becomes the beneficial owner of 15% or more of the outstanding shares of
Common Stock proper provision shall be made so that each holder of a Right,
other than Rights beneficially owned by the Acquiring Person (which will
thereafter be void), will thereafter have the right to receive upon exercise
that number of shares of Common Stock or Units of Series A Preferred Stock (or
cash, other securities or property) having a market value of two times the
exercise price of the Rights.
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
shares of Common Stock and prior to the acquisition by such person or group of
50% or more of the outstanding Common Stock, the Board of Directors of the
Company may exchange the Rights (other than Rights owned by such person or group
which have become void), in whole or in part, at an exchange ratio of one Unit
of Series A Preferred Stock (subject to adjustment) which shall equal, subject
to adjustment to reflect stock splits, stock dividends and similar transactions
occurring after the date hereof, that number obtained by dividing the Purchase
Price by the then current per share market price per Unit of Series A Preferred
Stock on the earlier of (i) the date on which any Person becomes an Acquiring
Person and (ii) the date on which a tender or exchange offer is announced by any
Person, if upon consummation thereof such Person would be the Beneficial Owner
of 15% or more of the shares of Company Common Stock then outstanding.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Series A Preferred Stock will be
issued (other than fractions which are integral multiples of one ten-thousandth
of a share of Series A Preferred Stock, which may, at the election of the
Company, be evidenced by depositary receipts) and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Units of Series
A Preferred Stock on the last trading day prior to the date of exercise.
At any time on or prior to the close of business on the tenth day
following the date of a public announcement that a person or group of affiliated
or associated persons acquire beneficial ownership of 15% or more of the
outstanding Common Stock (unless the Board of Directors extends such ten-day
period), the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $.001 per Right (the "Redemption Price). The
redemption of the rights may be made effective at such time on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price. The Rights are also redeemable under other
circumstances as specified in the Rights Agreement.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights except that from and
after a Distribution Date no such amendment may adversely affect the interests
of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
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The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors, except pursuant to an
offer conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors since the Rights may be redeemed by the Company at the
Redemption Price prior to the occurrence of a Distribution Date.
The Rights Agreement, dated as of December 31, 1998, between the
Company and the Rights Agent, specifying the terms of the Rights, is attached
hereto as an exhibit and is incorporated herein by reference. The foregoing
description of the Rights is qualified in its entirety by reference to such
exhibit. The Certificate of Designation for the Series A Junior Participating
Preferred Stock is attached hereto as an exhibit. The foregoing description of
the Series A Junior Participating Preferred Stock is qualified in its entirety
by reference to such exhibit.
Item 7. Financial Statements and Exhibits.
Exhibit 4 Rights Agreement, dated as of December 31, 1998, between the
Company and American Stock Transfer & Trust Company, which
includes the form of Certificate of Designation for the Series
A Junior Participating Preferred Stock as Exhibit A, the form
of Rights Certificate as Exhibit B and the Summary of Rights to
Purchase Series A Preferred Shares as Exhibit C.(1)
Exhibit 20(a) Press Release dated December 31, 1998.
Exhibit 20(b) Form of Letter to Stockholders of XeTel Corporation
regarding the adoption of the Rights Agreement.
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(1) Incorporated by reference to the registrant's Registration Statement on
Form 8-A, as filed with the Securities and Exchange Commission on January 5,
1999.
3.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
XETEL CORPORATION
DATE: January 5, 1999 By: /s/ RICHARD CHILINSKI
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Name: Richard Chilinski
Title: Vice President, Chief Financial
officer and Assistant Secretary
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EXHIBIT INDEX
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EXHIBIT
NUMBER DOCUMENT DESCRIPTION
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4 Rights Agreement, dated as of December 31, 1998, between the Company and
American Stock Transfer & Trust Company, which includes the form of
Certificate of Designation for the Series A Junior Participating
Preferred Stock as Exhibit A, the form of Rights Certificate as Exhibit
B and the Summary of Rights to Purchase Series A Preferred Shares as
Exhibit C.(1)
20(a) Press Release dated December 31, 1998.
20(b) Form of Letter to Stockholders of XeTel Corporation regarding the
adoption of the Rights Plan pursuant to the Rights Agreement.
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(1) Incorporated by reference to the registrant's Registration Statement
on Form 8-A, as filed with the Securities and Exchange Commission on January 5,
1999.
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EXHIBIT 20(a)
PRESS RELEASE
CONTACT: ________________________________________
FOR IMMEDIATE RELEASE
XETEL CORPORATION
ADOPTS SHAREHOLDER RIGHTS PLAN
Austin, Texas; December 31, 1998 -- XeTel Corporation (NASDAQ:XTEL)
announced today that its Board of Directors adopted a Stockholder Rights Plan in
which preferred stock purchase rights will be distributed as a dividend at the
rate of one Right for each share of Common Stock held as of the close of
business on January 11, 1999.
Each Right will entitle Stockholders to buy one ten-thousandth of a
share of Series A Preferred Stock of the Company at an Exercise Price of $20.00.
The Rights are designed to guard against partial tender offers and other abusive
and coercive tactics that might be used in an attempt to gain control of the
Company or to deprive Stockholders of their interest in the long-term value of
the Company. The rights plan has not been adopted in response to a specific
threat to gain control of the Company.
The Rights will be exercisable only if a person or group acquires 15%
or more of the Company's Common Stock or announces a tender offer the
consummation of which would result in ownership by a person or group of 15% or
more of the Company's Common Stock. Each Right will entitle stockholders to buy
one ten-thousandth of a share of a new series of junior participating preferred
stock at an exercise price of $20.00 upon certain events. The Plan, pursuant to
which the Rights are granted, permits Rohm U.S.A., Inc. to continue to hold its
approximately 47% stake in the Company.
If a person or group acquires 15% or more of the Company's outstanding
Common Stock, or a holder of 15% or more of the Company's Common Stock engages
in certain self-dealing transactions or a merger transaction in which the
Company is the surviving corporation and its Common Stock remains outstanding,
then each Right not owned by such person or certain related parties will entitle
its holder to purchase, at the Right's then-current exercise price, units of the
Company's Series A Preferred Stock (or, in certain circumstances, Company Common
Stock, cash, property or other securities of the Company) having a market value
equal to twice the then-current exercise price. In addition, if, after the
Rights become exercisable, XeTel Corporation is acquired in a merger or other
business combination
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transaction, or sells 50% or more of its assets or earnings power, each Right
will entitle its holder to purchase, at the Right's then-current price, a number
of the acquiring company's common shares having a market value at the time of
twice the Right's exercise price.
At any time on or prior to the close of business on the tenth day after
a public announcement that a person or group has acquired beneficial ownership
of 15% or more of the Company's Common Stock, the Rights are redeemable for
$.001 per Right at the option of the Board of Directors.
The Rights are intended to enable all stockholders to realize the
long-term value of their investment in the Company. The Rights will not prevent
a takeover attempt, but should encourage anyone seeking to acquire the Company
to negotiate with the Board prior to attempting a takeover.
The dividend distribution will be made on January 11, 1999 payable to
stockholders of record on that date. The Rights will expire on December 31,
2008. The initial distribution of Rights is not taxable to stockholders.
[OPTIONAL: INSERT BRIEF DESCRIPTION OF COMPANY]
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EXHIBIT 20(b)
[Letterhead of XeTel Corporation]
January 4, 1999
To Our Stockholders:
On December 28, 1998 your Board of Directors declared a dividend
distribution of Preferred Stock Purchase Rights (the "Rights"). The Rights were
issued on January 11, 1999 to stockholders of record on that date and will
expire in ten years. This letter and its attachment summarize certain key
features of the Stockholder Rights Plan and the Board of Directors' reasons for
adopting it. These documents should be kept with your Common Stock Certificates.
The Rights contain provisions that should, along with certain charter
and by-law provisions and certain provisions of the Delaware General Corporation
Law, help protect the stockholders of XeTel Corporation (the "Company") in the
event of an unsolicited attempt to acquire the Company, including a gradual
accumulation of shares in the open market, a partial or two-tier tender offer
that does not treat all stockholders equally, a squeeze-out merger and other
coercive or unfair takeover tactics. These tactics can unfairly pressure
stockholders, squeeze them out of their investment without giving them any real
choice and deprive them of the full value of their shares, and the Board of
Directors does not believe they are in the best interests of the Company's
stockholders.
Over 1,700 companies, including approximately half the Fortune 500
companies and two-thirds of the Fortune 200 companies, have issued similar
rights to protect their stockholders against these tactics. We consider the
Rights to be very valuable in protecting both your right to retain your equity
investment in the Company and the full value of that investment, while not
foreclosing a fair acquisition bid for the Company.
Your Board of Directors was aware when it acted that some people have
advanced arguments that securities of the sort we are issuing deter legitimate
acquisition proposals. We carefully considered these views and concluded that
the arguments are speculative and do not justify leaving stockholders without
any protection during the next year. Your Board of Directors believes that these
Rights represent a sound and reasonable means of addressing the complex issues
of corporate policy.
The Rights are not intended to prevent an acquisition of the Company
and will not do so. However, they should deter any attempt to acquire the
Company in a manner or on terms not approved by the Board of Directors. The
Rights may be redeemed by the Board of Directors at a price of $0.001 per Right
prior to the first public announcement of the accumulation, through open-market
purchases, a tender offer or otherwise, of 15% or more of the combined number of
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To Our Stockholders Page 2
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the Company's shares of Common Stock by a single acquiror or group, and
thereafter in certain circumstances. Thus, the Rights should not interfere with
any merger or business combination approved by the Board of Directors prior to
that time.
Issuance of the Rights does not in any way weaken the financial
strength of the Company or interfere with its business plans. The issuance of
the Rights has no dilutive effect, will not affect reported earnings per share
and will not change the way in which you can presently trade the Company's
shares.
The Rights will expire December 31, 2008 which should give the Company
adequate time to determine whether any further protection is required.
The Board of Directors has been advised by legal counsel for the
Company that the distribution of the Rights will not be taxable to you or to the
Company. However, stockholders may recognize taxable income upon the occurrence
of certain subsequent taxable events.
In declaring the Rights dividend, we have expressed our confidence in
the future of the Company and our determination that you, our stockholders, be
given every opportunity to participate in that future.
On behalf of the
Board of Directors
[Name]
[Title]
