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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 29, 1996
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Sentex Sensing Technology, Inc.
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(Exact name of registrant as specified in its charter)
New Jersey 0-13328 22-2333899
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation
553 Broad Avenue, Ridgefield, New Jersey 07657
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 946-3694
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(Former name or former address, if changed since last report.)
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SENTEX SENSING TECHNOLOGY, INC.
Current Report on Form 8-K
Item 2. Acquisition or Disposition of Assets.
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Effective November 30, 1996, Monitek Technologies, Inc., a
Delaware corporation ("Monitek") became a wholly owned subsidiary of Sentex
Sensing Technology, Inc., a New Jersey corporation ("Sentex"), pursuant to a
merger (the "Merger") of Sentex Merger Corp., a Delaware corporation and wholly
owned subsidiary of Sentex, with and into Monitek. Monitek will now operate its
business as a wholly owned subsidiary of Sentex. Monitek designs, develops,
assembles and markets instruments for the measurement of clarity (turbidity),
suspended solid content, color, purity, flow, level and volume of liquids in
industrial waste water environments. Monitek also operates its business through
a wholly owned German subsidiary of Monitek named Monitek GmbH, which over the
last three years has accounted for over 60% of Monitek's total revenues. Sentex
plans to integrate the operations of Monitek with the operation of Sentex
Systems, Inc., the operating subsidiary of Sentex.
Prior to the Merger, there were two classes of Monitek common
stock outstanding. Upon the consummation of the Merger, the shares of Common
Stock, $0.01 par value, of Monitek (the "Monitek Common Stock") were exchanged
for an aggregate of 11,659,681 Common Shares, without par value, of Sentex (the
"Sentex Common Shares"), or 6.8974890 Sentex Common Shares for each share of
Monitek Common Stock. The shares of Monitek Class A Common Stock, $0.01 par
value, of Monitek (the "Monitek Class A Common Stock") were exchanged for
Class A Convertible Notes in the aggregate principal amount of $485,586 (the
"Class A Convertible Notes"), each share of Monitek Class A Common Stock being
exchanged for $0.3876389 of principal of a Class A Convertible Note. The
principal amount of the Class A Convertible Notes can be converted into an
aggregate of 8,640,320 Sentex Common Shares (at a rate of $0.0562 per share)
after approximately three years (or earlier under certain conditions). The
conversion rate of $0.0562 will enable the holders of the Class A Convertible
Notes to receive on conversion 6.8974890 Sentex Common Shares for each share of
Monitek Class A Common Stock owned by such holders immediately prior to the
consummation of the Merger.
Clarion Capital Corporation, a Delaware corporation and the
principal stockholder of Monitek prior to the Merger ("Clarion"), exchanged a
promissory note issued by Monitek in the aggregate principal amount of $476,940
that was secured by substantially all the assets of Monitek for a convertible
note issued by Sentex in the principal amount of $136,414 (the "Clarion Note").
The principal amount of the Clarion Note can be converted into 7,031,649 Sentex
Common Shares (at a rate of $0.0194 per share) after approximately three years
(or earlier under certain conditions).
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The exchange ratios relating to the Sentex Common Shares
issuable for the Monitek Common Stock and the Class A Notes issuable for the
Monitek Class A Common Stock were based on the relative values of Sentex and
Monitek that were agreed to by the parties. It was agreed that Sentex had a
value of approximately $0.0562 per share and Monitek had a value of $0.388 per
share. These were the values on which the final number of Sentex Common Shares
issued or issuable was based.
Sentex's acquisition of Monitek was an arms length transaction
and no material relationships existed between Sentex or any of its affiliates,
any director or officer of Sentex or any associate of such officer or director,
on the one hand, and Monitek or any of its affiliates, any director or officer
of Monitek or any associates of any such officer or director, on the other hand.
Item 5. Other Events.
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Upon conversion of Clarion's Class A Convertible Note and the
Clarion Note, Clarion will receive approximately 15,671,969 Sentex Common
Shares, which at the time of issuance will represent approximately 16% percent
of the issued and outstanding Sentex Common Shares (assuming no other Sentex
Common Shares are issued after the date of this Report). Both notes are
generally convertible after three years, but are convertible earlier if (i)
Sentex proposes to declare a dividend or other distribution to the Sentex
shareholders other than a stock split or reverse stock split; (ii) Sentex
proposes to offer the Sentex shareholders the opportunity to subscribe for
additional equity securities of Sentex or Sentex issues any equity securities
pursuant to either a private or public sale thereof; (iii) Sentex proposes to
reclassify or change the outstanding Sentex Common Shares (other than a change
in par value or as a result of a stock split); (iv) Sentex proposes to
consolidate or merge with another entity (other than a consolidation or merger
in which Sentex will be the surviving corporation and which does not result in
any reclassification or change in the Sentex Common Shares; (v) Sentex proposes
to sell or convey substantially all of its assets to another company); (vi)
Robert S. Kendall, the Chairman of the Board and President of Sentex, dies or
becomes permanently disabled; or (vii) there is a change in control of Sentex.
Sentex may compel conversion of the Class A Convertible Notes
upon written notice to the holder if (i) there is a proxy contest for control of
Sentex's board of directors or (ii) Sentex is unable, in the judgment of its
board of directors, without compelling such a conversion, to obtain the
requisite shareholder vote to approve a material transaction approved by
Sentex's board of directors. If the notes are converted before the third
anniversary of their issuance, CPS Capital, Ltd., the shareholder with effective
control of Sentex, will have the right to vote all of the Sentex Common Shares
held by Clarion as a result of conversion of the notes for the remainder of such
three year period.
CPS's three year voting rights are set forth in a shareholders
agreement among CPS, Clarion and certain other holders of the Class A
Convertible Notes (the "Shareholders Agreement"). The Shareholders Agreement was
entered into in connection with and as a condition of the Merger. In addition to
the voting rights of CPS, the Shareholders Agreement provides for (i) CPS and
Clarion not to make any purchases or sales of Sentex Common Shares on the open
market, without the approval of the other, for a period of three years; (ii)
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Clarion and Sentex to give the other a right of first refusal before making any
transfers of their respective Sentex Common Shares to any third party; and (iii)
in the event CPS desires to sell any of its Sentex Common Shares, either through
a public or private sale, to permit Clarion and certain other holders of the
Class A Convertible Notes to include a pro rata portion of their Sentex Common
Shares in such sale. The Shareholders Agreement will terminate if CPS ceases to
have effective control of Sentex.
In connection with the Merger, Sentex and Clarion entered into
a Board Representation Agreement (the "Board Agreement"), pursuant to which
Sentex increased the size of its board of directors from five to six members in
order to create a vacancy that was filled by Clarion, in accordance with the
Board Agreement. The current Clarion designee is Morton Cohen, the former
Chairman of Monitek. In the event Sentex decides to increase the size of its
board to more than six members, Clarion would have the right to designate a
percentage of all members of the board equal to the percentage of Sentex Common
Shares that Clarion and its affiliates own or would own upon conversion of its
Class A Convertible Note and the Clarion Note. Sentex has agreed to nominate for
election to the board any person that Clarion has the right to designate under
the Board Agreement. The Board Agreement will terminate if Clarion and its
affiliates fail to own more than 10,000,000 Sentex Common Shares. For purposes
of calculating the number of Sentex Common Shares owned by Clarion, the Board
Agreement assumes Clarion's Class A Convertible Note and the Clarion Note have
been converted.
Upon the consummation of the Merger, Sentex, Clarion, and
certain holders of the Class A Convertible Notes entered into a Participation
Rights Agreement (the "Participation Rights Agreement"), pursuant to which
Clarion and such holders will be allowed to participate in any public or private
offering by Sentex of any of its securities. Clarion and such holders will be
able to participate in such private sale or public offering in an amount
proportionate to Clarion's or such holder's percentage ownership of Sentex
Common shares. For the purpose of calculating such percentage, the Participation
Rights Agreement assumes that the Clarion Note and the Class A Convertible Notes
have been converted into Sentex Common Shares.
Item 7. Financial Statements, Pro Forma Financial Information & Exhibits.
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(a) Financial Statements of Business Acquired (1)
(b) Pro Forma Financial Information (1)
(c) Exhibits
2.1 Amended and Restated Agreement and Plan of Merger (2)
4.1 Class A Convertible Note (3)
4.2 Clarion Note (4)
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(1) Incorporated by reference to the Joint Proxy
Statement/Prospectus which is part of Amendment
No. 1 to the Registration Statement on Form S-4,
filed on October 4, 1996, File No. 333-12993 (the
"Joint Proxy Statement/Prospectus").
(2) Incorporated by reference to Annex A of the Joint
Proxy Statement/Prospectus ("Annex A").
(3) Incorporated by reference to Exhibit A to Annex A.
(4) Incorporated by reference to Exhibit D to Annex A.
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
SENTEX SENSING TECHNOLOGY, INC.
By: /s/ James G. Few
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James G. Few, Chief Operating Officer
Date: February 7, 1996
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