<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 24, 1997
Registration No. 333 - ___________
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
KENT ELECTRONICS CORPORATION
(Exact name of issuer as specified in its charter)
TEXAS 74-1763541
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
7433 HARWIN DRIVE
HOUSTON, TEXAS 77036-2015
(Address of principal executive offices) (Zip Code)
STOCK OPTION PLAN AND AGREEMENT
FOR EXECUTIVE VICE PRESIDENT OF SALES-DISTRIBUTION
STOCK OPTION PLAN AND AGREEMENT
FOR EXECUTIVE VICE PRESIDENT OF OPERATIONS-DISTRIBUTION
STOCK OPTION PLAN AND AGREEMENT
FOR VICE PRESIDENT, SECRETARY AND TREASURER
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1996 EMPLOYEE INCENTIVE PLAN
STOCK OPTION PLAN AND AGREEMENT
FOR VICE PRESIDENT, CORPORATE CONTROLLER
MONAHAN AGREEMENT
(Full title of the plans)
STEPHEN J. CHAPKO
KENT ELECTRONICS CORPORATION
7433 HARWIN DRIVE
HOUSTON, TEXAS 77036-2015
(Name and address of agent for service)
(713) 780-7770
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=====================================================================================================================
Proposed maximum Proposed
Title of securities to be Amount to be offering price maximum aggregate Amount of
registered registered (1) per share (2) offering price (2) registration fee
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value 1,960,900 (3) $28.75 $41,730,299 $12,646
=====================================================================================================================
</TABLE>
(1) The number of shares listed represents the maximum number of shares of
Common Stock of the Registrant (i) which could be purchased upon the
exercise of all stock options granted under the above plans and (ii) that
will be issued in connection with payment of the value appreciation bonus
under the Monahan Agreement dated September 25, 1996, among the
Registrant, Futronix Systems Corp., Futronix Acquisition Company, Wire &
Cable Specialties Corporation, Theodore J. Bruno and Paul R. Monahan (the
"Monahan Agreement").
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) and (h), based on the option exercise prices of options to
acquire 1,295,888 shares of Common Stock which have been granted under the
Stock Option Plan and Agreement for Executive Vice President of
Sales-Distribution, Stock Option Plan and Agreement for Executive Vice
President of Operations-Distribution, Stock Option Plan and Agreement for
Vice President, Secretary and Treasurer, 1996 Non-Employee Director Stock
Option Plan, 1996 Employee Incentive Plan and Stock Option Plan and
Agreement for Vice President, Corporate Controller, and the average of the
high and low prices reported on the New York Stock Exchange Composite Tape
on January 17, 1997, with respect to 665,012 shares of Common Stock (i) as
to which awards have not been granted under the 1996 Non-Employee
<PAGE> 2
Director Stock Option Plan and the 1996 Employee Incentive Plan and (ii)
to be issued in connection with payment of the value appreciation bonus
under the Monahan Agreement.
(3) There are also registered hereunder 653,634 preferred share purchase
rights associated with the shares of Common Stock being registered.
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<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which have been filed with the Securities and
Exchange Commission (the "Commission") by Kent Electronics Corporation (the
"Company"), are incorporated herein by reference and made a part hereof:
(a) The Company's Annual Report on Form 10-K for the year ended March
30, 1996;
(b) The Company's Quarterly Report on Form 10-Q for the three months
ended June 29, 1996;
(c) The Company's Quarterly Report on Form 10-Q for the three months
ended September 28, 1996;
(d) The Company's Current Report on Form 8-K filed on September 24,
1996;
(e) The description of the Company's Common Stock contained in a
registration statement on Form 8-A filed on May 20, 1986 under
Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); and
(f) The description of the Preferred Stock Purchase Rights ("Rights")
contained in a registration statement on Form 8-A filed on June 18,
1990 under Section 12 of the Exchange Act.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date hereof and prior to the
filing of a post-effective amendment which indicates that all securities
offered have been sold, or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference herein and to be part
hereof from the date of the filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
None.
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<PAGE> 4
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 2.02-1 of the Texas Business Corporation Act provides that any
director or officer of a Texas corporation may be indemnified against
judgments, penalties, fines, settlements and reasonable expenses actually
incurred by him in connection with or in defending any action, suit or
proceeding in which he is or is threatened to be made a named defendant by
reason of his position as director or officer, provided that he conducted
himself in good faith and reasonably believed that, in the case of conduct in
his official capacity as director or officer, such conduct was in the
corporation's best interests, or, in all other cases, that such conduct was not
opposed to the corporation's best interests. In the case of any criminal
proceeding, a director or officer may be indemnified only if he had no
reasonable cause to believe his conduct was unlawful. If a director or officer
is wholly successful, on the merits or otherwise, in connection with such a
proceeding, such indemnification is mandatory.
Section 6.10 of the Amended and Restated Bylaws of the Company provides
for indemnification of present and former officers and directors of the Company
to the maximum extent permissible under applicable provisions of the Texas
Business Corporation Act and expressly authorizes the Company to purchase
insurance on behalf of its directors, officers and employees. The Company has
purchased a directors and officers liability insurance policy which provides
for insurance of the directors and officers of the Company against certain
liabilities they may incur in their capacities as such.
In addition, Article X of Kent's Amended and Restated Articles of
Incorporation provides:
A director of the corporation shall not be liable to the corporation
or its shareholders for monetary damages for an act or omission in the
director's capacity as a director, except that this Article X does not
eliminate or limit the liability of a director for:
(1) a breach of a director's duty of loyalty to the corporation or
its shareholders;
(2) an act or omission not in good faith or that involves
intentional misconduct or a knowing violation of the law;
(3) a transaction from which a director received an improper
benefit, whether or not the benefit resulted from an action
taken within the scope of the director's office;
(4) an act or omission for which the liability of a director is
expressly provided for by statute; or
(5) an act related to an unlawful stock repurchase or payment of a
dividend.
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<PAGE> 5
If the Texas Miscellaneous Corporation Laws Act or other applicable
law is amended after approval by the shareholders of this Article X to
authorize further eliminating or limiting the personal liability of
directors, then the liability of a director of the corporation shall be
eliminated or limited to the fullest extent permitted by the Texas
Miscellaneous Corporation Laws Act or other applicable law, as so amended.
No amendment to or repeal of this Article X shall apply to or have
any effect on the liability or alleged liability of any director of the
corporation for or with respect to any acts of omissions of such director
occurring prior to such amendment or repeal.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibit No. Exhibit
----------- -------
*4.1 Amended and Restated Articles of Incorporation of Kent
Electronics Corporation. Incorporated by reference to
Exhibit 3.1 to the Company's Registration Statement on
Form S-3 (Registration No. 333-20265) filed with the
Commission on January 23, 1997.
*4.2 Certificate of Designation, Preferences and Rights of
Series A Preferred Stock. Incorporated by reference to
Exhibit 3.3 to the Company's Annual Report on Form 10-K
for the Fiscal Year Ended March 30, 1991.
*4.3 Amended and Restated Bylaws of Kent Electronics
Corporation. Incorporated by reference to Exhibit 3.5 to
the Company's Annual Report on Form 10-K for the Fiscal
Year Ended March 30, 1996.
*4.4 Specimen stock certificate for the Common Stock of Kent
Electronics Corporation. Incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on
Form S-2 (Registration No. 33-40066) filed with the
Commission on April 19, 1991.
*4.5 Rights Agreement dated as of May 14, 1990 between
Kent Electronics Corporation and Ameritrust Company
National Association. Incorporated by reference to
Exhibit 4 to the Company's Current Report on Form
8-K dated May 23, 1990.
*4.6 First Amendment to Rights Agreement dated as of May
14, 1990 between Kent Electronics Corporation and
Ameritrust Company National Association.
Incorporated by reference to Exhibit 4.3 to the
Company's Annual Report on Form 10-K for the Fiscal
Year Ended March 28, 1992.
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<PAGE> 6
5.1 Opinion and Consent of Liddell, Sapp, Zivley, Hill &
LaBoon, L.L.P.
23.1 Consent of Grant Thornton, LLP
99.1 Stock Option Plan and Agreement for Executive Vice
President of Sales-Distribution between Kent
Electronics Corporation and Larry D. Olson dated May 8,
1995.
99.2 Stock Option Plan and Agreement for Executive Vice
President of Operations-Distribution between Kent
Electronics Corporation and Mark A. Zerbe dated May 8,1995.
99.3 Stock Option Plan and Agreement for Vice President,
Secretary and Treasurer between Kent Electronics
Corporation and Stephen J. Chapko dated May 8, 1995.
*99.4 1996 Non-Employee Director Stock Option Plan.
Incorporated by reference to Appendix A to the
Company's Proxy Statement dated May 22, 1996, relating
to its annual meeting of shareholders held on June 27,
1996 (the "1996 Proxy Statement").
*99.5 1996 Employee Incentive Plan. Incorporated by
reference to Appendix B to the Company's 1996 Proxy
Statement.
*99.6 Stock Option Plan and Agreement for Vice-President,
Corporate Controller between Kent Electronics
Corporation and David D. Johnson dated May 9, 1996.
Incorporated by reference to Appendix C to the
Company's 1996 Proxy Statement.
99.7 Monahan Agreement dated September 25, 1996, among Kent
Electronics Corporation, Futronix Systems Corp.,
Futronix Acquisition Company, Wire & Cable Specialties
Corporation, Theodore J. Bruno and Paul R. Monahan.
- ---------------------------
* Incorporated by reference
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended (the "Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof)
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<PAGE> 7
which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in this
registration statement or any material change to such information in
this registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3, Form S-8, or Form F-3, and
the information required or to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
registrant pursuant to section 13 or section 15(d) of the Exchange Act
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
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.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement 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.
(c) Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, 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 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 Act and will be governed by the final
adjudication of such issue.
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<PAGE> 8
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-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on this 24th day of
January, 1997.
KENT ELECTRONICS CORPORATION
By: /s/Morrie K. Abramson
------------------------------------------
Morrie K. Abramson
Chairman of the Board
Chief Executive Officer and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Morrie K. Abramson Chairman of the Board, Chief January 24,
------------------------ Executive Officer and President 1997
Morrie K. Abramson (Principal Executive Officer)
/s/ Stephen J. Chapko Executive Vice President, Treasurer January 24,
------------------------ and Secretary (Principal Financial 1997
Stephen J. Chapko Officer)
/s/ David D. Johnson Vice President, Corporate Controller January 24,
------------------------ (Principal Accounting Officer) 1997
David D. Johnson
/s/ Terrence M. Hunt Director January 24,
------------------------ 1997
Terrence M. Hunt
/s/ Max S. Levit Director January 24,
------------------------ 1997
Max S. Levit
/s/ David Siegel Director January 24,
------------------------ 1997
David Siegel
/s/ Richard C. Webb Director January 24,
------------------------ 1997
Richard C. Webb
/s/ Alvin L. Zimmerman Director January 24,
------------------------ 1997
Alvin L. Zimmerman
</TABLE>
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<PAGE> 9
INDEX OF EXHIBITS
Exhibit Document
- ------- --------
*4.1 -- Amended and Restated Articles of Incorporation of Kent
Electronics Corporation. Incorporated by reference to Exhibit
3.1 to the Company's Registration Statement on Form S-3
(Registration No. 333-20265) filed with the Commission on
January 23, 1997.
*4.2 -- Certificate of Designation, Preferences and Rights of Series A
Preferred Stock. Incorporated by reference to Exhibit 3.3 to
the Company's Annual Report on Form 10-K for the Fiscal Year
Ended March 30, 1991.
*4.3 -- Amended and Restated Bylaws of Kent Electronics Corporation.
Incorporated by reference to Exhibit 3.5 to the Company's
Annual Report on Form 10-K for the Fiscal Year Ended March 30,
1996.
*4.4 -- Specimen stock certificate for the Common Stock of Kent
Electronics Corporation. Incorporated by reference to Exhibit
4.1 to the Company's Registration Statement on Form S-2
(Registration No. 33-40066) filed with the Commission on April
19, 1991.
*4.5 -- Rights Agreement dated as of May 14, 1990 between Kent
Electronics Corporation and Ameritrust Company National
Association. Incorporated by reference to Exhibit 4 to the
Company's Current Report on Form 8-K dated May 23, 1990.
*4.6 -- First Amendment to Rights Agreement dated as of May 14, 1990
between Kent Electronics Corporation and Ameritrust Company
National Association. Incorporated by reference to Exhibit 4.3
to the Company's Annual Report on Form 10-K for the Fiscal Year
Ended March 28, 1992.
5.1 -- Opinion and Consent of Liddell, Sapp, Zivley, Hill & LaBoon,
L.L.P.
23.1 -- Consent of Grant Thornton LLP
99.1 -- Stock Option Plan and Agreement for Executive Vice President
of Sales-Distribution between Kent Electronics Corporation and
Larry D. Olson dated May 8, 1995.
99.2 -- Stock Option Plan and Agreement for Executive Vice President of
Operations-Distribution between Kent Electronics Corporation
and Mark A. Zerbe dated May 8, 1995.
99.3 -- Stock Option Plan and Agreement for Vice President, Secretary
and Treasurer between Kent Electronics Corporation and Stephen
J. Chapko dated May 8, 1995.
<PAGE> 10
*99.4 -- 1996 Non-Employee Director Stock Option Plan. Incorporated by
reference to Appendix A to the Company's Proxy Statement dated
May 22, 1996, relating to its annual meeting of shareholders
held on June 27, 1996 (the "1996 Proxy Statement").
*99.5 -- 1996 Employee Incentive Plan. Incorporated by reference to
Appendix B to the Company's 1996 Proxy Statement.
*99.6 -- Stock Option Plan and Agreement for Vice-President, Corporate
Controller between Kent Electronics Corporation and David D.
Johnson dated May 9, 1996. Incorporated by reference to
Appendix C to the Company's 1996 Proxy Statement.
99.7 -- Monahan Agreement dated September 25, 1996, among Kent
Electronics Corporation, Futronix Systems Corp., Futronix
Acquisition Company, Wire & Cable Specialties Corporation,
Theodore J. Bruno and Paul R. Monahan.
- ---------------------------
* Incorporated by reference
<PAGE> 1
EXHIBIT 5.1
January 24, 1997
Kent Electronics Corporation
7433 Harwin Drive
Houston, Texas 77036
Gentlemen:
We have acted as counsel for Kent Electronics Corporation, a Texas
corporation (the "Company"), in connection with the registration, pursuant to a
Registration Statement on Form S-8 to be filed with the Securities and Exchange
Commission (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act"), of the offering and sale to certain employees and
directors of the Company of up to 1,960,900 shares of the Company's common
stock, no par value ("Common Stock"), which may be issued (i) upon the exercise
of certain options granted under the Stock Option Plan and Agreement for
Executive Vice President of Sales-Distribution, Stock Option Plan and
Agreement for Executive Vice President of Operations-Distribution, Stock Option
Plan and Agreement for Vice President, Secretary and Treasurer, 1996 Non-
Employee Director Stock Option Plan, 1996 Employee Incentive Plan, and Stock
Option Plan and Agreement for Vice President, Corporate Controller
(collectively, the "Plans") and (ii) in connection with payment of the value
appreciation bonus under the Monahan Agreement dated September 25, 1996, among
the Company, Futronix Systems Corp., Futronix Acquisition Company, Wire & Cable
Specialties Corporation, Theodore J. Bruno and Paul R. Monahan (the "Monahan
Agreement").
In rendering this opinion, we have examined the corporate records of the
Company, including its amended and restated articles of incorporation, amended
and restated bylaws and minutes of meetings of its directors and shareholders.
We have also examined the Registration Statement, together with the exhibits
thereto, and such other documents as we have deemed necessary for the purposes
of expressing the opinions contained herein. With respect to certain factual
matters we have relied on statements of officers of the Company.
Based upon the foregoing, we are of the opinion that (i) when the stock
options granted under the respective Plans have been exercised in accordance
with the terms of the respective Plans, the Common Stock issued thereupon will
be validly issued, fully paid and nonassessable, and (ii) the shares of Common
Stock issued in connection with the payment of the value
<PAGE> 2
Kent Electronics Corporation
January 24, 1997
Page 2
appreciation bonus in accordance with the terms of the Monahan Agreement will
be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as Exhibit 5.1 to the Registration Statement. In giving
this consent, we do not thereby admit that we are within the category of
persons whose consent is required under Section 7 of the Act and the rules and
regulations thereunder.
Very truly yours,
Liddell, Sapp, Zivley,
Hill & LaBoon, L.L.P.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated May 6, 1996, accompanying the
consolidated financial statements and schedule of Kent Electronics Corporation
and Subsidiaries appearing in the Annual Report on Form 10-K for the year ended
March 30, 1996, which are incorporated by reference in this Registration
Statement. We consent to the incorporation by reference in the Registration
Statement of the aforementioned reports.
GRANT THORNTON LLP
Houston, Texas
January 23, 1997
<PAGE> 1
EXHIBIT 99.1
KENT ELECTRONICS CORPORATION
STOCK OPTION PLAN AND AGREEMENT
FOR EXECUTIVE VICE PRESIDENT OF SALES-DISTRIBUTION
1. Grant. Under the terms, provisions, and conditions of this Stock
Option Plan and Agreement by and between Kent Electronics Corporation (the
"Company"), and Larry D. Olson (the "Optionee"), the Company hereby grants to
Optionee the option to purchase 37,500 shares of the Company's Common Stock,
without par value (the "Stock"), at the option price specified herein, subject
to adjustment as provided herein (the "Option"). The Option is not an
"incentive stock option" as described in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
2. Duration of Option and Option Price. The Option shall be for a
term commencing on the date hereof and ending fifteen (15) years from the date
hereof. The option price payable by the Optionee upon exercise of the Option
as to each share subject to the Option will be $14.50, which equals one-half of
the closing price of one share of the Stock, as reported by the New York Stock
Exchange, on the date hereof.
3. Amount Exercisable and Schedule of Exercisability. Except as
otherwise provided herein, this Option may be exercised as to 3,750 shares, on
and after May 1, 1999; as to an additional 7,500 shares, on and after May 1,
2000; as to an additional 11,250 shares, on and after May 1, 2001; and as to
all remaining shares, on and after May 1, 2002. This Option shall immediately
become fully vested and exercisable as to all shares subject hereto upon the
death or Disability (as hereinafter defined) of Optionee, or upon the
occurrence of a "Change in Control" (as hereinafter defined), or upon the
Company's termination of its employment of Optionee at the election of the
Company, or upon Optionee's termination of his employment by the Company for
"Good Reason" (as defined herein at Section 11), or such earlier date as set
forth in Section 9 hereof. The Option may be exercised, so long as it is valid
and outstanding, from time to time in whole (as to shares then exercisable) or
in part; provided, however, no fractional shares of Stock shall be issued. The
Option is cumulative, and may be exercised as to any or all shares of Stock
covered hereby from and after the time it becomes exercisable as to such shares
through the date of termination of the Option.
4. Exercise of Options. The Option shall be exercisable, in whole
or in part, by the delivery of written notice to the Company setting forth the
number of shares of Stock with respect to which the Option is to be exercised.
In order to be effective, such written notice shall be accompanied at the time
of its delivery to the Company by payment of the option price for such shares
of Stock, which payment shall be made (a) in cash or by personal check,
cashier's check, certified check, or postal or express money order payable to
the order of the Company in an amount (in United States dollars) equal to the
option price multiplied by the number of shares of Stock with respect to which
the Option is exercised or (b) in shares of Stock as set forth in this Section
4. Such notice may be delivered in person or by messenger or courier service
to the Secretary of the Company, or shall be sent by registered mail, return
receipt requested, to the Secretary of the Company, and in all such cases
delivery shall be deemed to have been made on the date such notice is received.
<PAGE> 2
At the time when the Optionee (or other holder of the Option pursuant to
Section 5) makes payment to the Company for the shares of Stock issuable upon
the exercise of the Option, the Company may require the Optionee to pay to the
Company an additional amount equal to any federal, state or local taxes (which
the Company deems necessary or appropriate to be withheld in connection with
the exercise of such Option) in such forms of payment as are described in the
first paragraph of this Section 4. In the event that Optionee does not pay to
the Company any such amount required for withholding taxes, to the extent
applicable, the employer (for payroll tax purposes) of Optionee shall have the
right to withhold such required amount from any sum payable, or to become
payable, to Optionee, upon such terms and conditions as the Company in its
discretion shall prescribe.
Payment of the option price may be made, in whole or in part, in shares
of Stock previously held by the Optionee (or other holder of the Option
pursuant to Section 5). If payment is made in whole or in part in shares of
Stock, then the Optionee (or other holder of the Option pursuant to Section 5)
shall deliver to the Company, in payment of the option price of the shares of
Stock with respect to which such Option is exercised, (i) certificates
registered in the name of such Optionee (or other holder of the Option pursuant
to Section 5) representing a number of shares of Stock legally and beneficially
owned by such Optionee (or other holder of the Option pursuant to Section 5),
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 Stock with respect to which such Option is to be exercised
exceeds the fair market value of such shares of Stock, cash or a personal
check, cashier's check, certified check, or postal or express money order
payable to the order of the Company in an amount (in United States dollars)
equal to the amount of such excess. If the fair market value of such Shares of
Stock delivered to the Company exceeds the option price of the shares of Stock
with respect to which such Option is to be exercised, the Company shall
promptly deliver, or cause to be delivered, to Optionee a replacement share
certificate representing the number of shares of Stock in excess of those
surrendered in payment of the option price.
As promptly as practicable after the receipt by the Company of (i) such
written notice from the Optionee (or other holder of the Option pursuant to
Section 5) setting forth the number of shares of Stock with respect to which
such Option is to be exercised, (ii) payment of the option price of such shares
in the form required by the foregoing provisions of this Section 4, and (iii)
an amount equal to any federal, state or local taxes which the Company deems
necessary or appropriate to be withheld incident to the exercise of the Option,
the Company shall cause to be delivered to such Optionee (or other holder of
the Option pursuant to Section 5) certificates representing the number of
shares of Stock with respect to which such Option has been so exercised.
All proceeds received pursuant to the exercise of the Option shall be
added to the general funds of the Company to be used for any corporate purpose.
-2-
<PAGE> 3
For purposes of determining the value of shares of Stock delivered in
payment of all or any portion of the option price pursuant to this Section 4,
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 Stock as reported by
the New York Stock Exchange (or such other principal exchange or market on
which the 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.
5. Transferability of Option. The Option shall not be subject to
sale, assignment or transfer, other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Code. The designation of a beneficiary by Optionee shall not constitute a
transfer. The Option shall be exercisable (i) during Optionee's lifetime, only
by Optionee (or in the event of his incapacity, by his legal representative) or
(ii) following Optionee's death, by such persons as set forth in Section 6.
6. Termination of Options in Certain Cases. In the event of the
death of the Optionee while in the employ of the Company (or while affiliated
with the Company in the discretion of the Board), the Option shall become fully
vested and shall terminate on the earlier of (i) the date of expiration of the
Option, or (ii) twelve (12) months following the date of 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, shall have the right, at any time prior to the expiration of the
period described in the first sentence of this paragraph, to exercise the
Option.
If, before the date of expiration of the Option, the Optionee shall be
retired in good standing from the employ of the Company (or from another
affiliation with the Company in the discretion of the Board) including
retirement for reasons of Disability, the Option shall terminate on the earlier
of (i) the date of expiration of the Option, or (ii) three (3) years following
the date of such retirement. As used herein, the term "Disability" shall mean
a total and permanent disability resulting from a mental or physical incapacity
which prevents Optionee from performing the full scope of his duties for the
Company (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 Board of
Directors of the Company 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, at any time prior to the expiration
of the period described in the first sentence of this paragraph, to exercise
the Option to the same extent to which he was entitled to exercise it
immediately prior to such retirement (and, in the case of retirement for
Disability or under circumstances constituting a termination of Optionee's
employment by the Company at the Company's election, the Option shall fully
vest and become exercisable, as set forth herein).
If, before the date of expiration of the Option, the Optionee's
employment by the Company shall be terminated by the Company at its election,
or shall be terminated by Optionee for Good Reason, this Option shall
immediately vest fully and become exercisable as to all shares covered hereby.
In such event, Optionee shall have the right to exercise the Option at
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any time prior to the earlier of (i) the date of expiration of the Option or
(ii) twelve (12) months following the date of such termination of employment.
If, before the date of expiration of the Option, the Optionee's
employment or other affiliation with the Company terminates at the election of
Optionee for any reason other than Good Reason (other than in connection with
Optionee's retirement in accordance with the second paragraph of this Section
6), the Option shall terminate on the earlier of (i) the date of expiration of
such Option, or (ii) ninety (90) days after the date of termination of the
Optionee's employment or other affiliation with the Company. In such event,
the Option shall be exercisable and shall vest as to all shares that, pursuant
to the schedule set forth in Section 3 hereof, become exercisable on or prior
to the date of termination of the Option.
For purposes of this Stock Option Plan and Agreement, employment by the
Company shall include employment by any subsidiary of the Company.
7. No Rights as Shareholder. No holder of the Option shall have any
rights as a shareholder with respect to shares covered by the Option until the
date of exercise of the Option as to such shares; and, except as otherwise
provided in Section 9 hereof, no adjustment for dividends, or otherwise, shall
be made if the record date therefor is prior to the date of such exercise.
8. Employment or Affiliation Obligation. The grant of this Option
shall not impose upon the Company any obligation to employ or to continue any
employment or other affiliation with the Optionee. The right of the Company to
terminate its employment or affiliate relationship with any person, including
the Optionee, shall not be diminished or affected by reason of the fact that
this Option has been granted.
9. Changes in the Company's Capital Structure. The existence of the
Option shall not affect in any way the right or power of the Company or its
shareholders 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
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.
The number of shares covered by this Option and the price per share
thereof shall be proportionately adjusted for any increase or decrease in the
number of issued shares of 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 the Company or any other decrease therein effected without a
distribution of cash, property, or other securities in connection therewith.
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If (i) the Company is merged into or consolidated with another
corporation under circumstances where the Company is not the surviving
corporation or where the Stock is converted into other securities, cash or
other property in connection with such merger or consolidation, (ii) the
Company is recapitalized in such a manner that shares of Stock are converted
into or exchanged for other securities of the Company, (iii) the Company sells
or otherwise disposes of substantially all its assets to another person,
corporation or entity, or (iv) a tender offer is announced that, if
successfully completed, would result in a Change in Control, then in any such
case, on a date at least 30 days prior to the effective date of any such
merger, consolidation, recapitalization, exchange, sale or acquisition or
tender offer (or, in the case of such tender offer, on such later date as is
practicable, but in any such case at least ten days prior to the termination of
such tender offer), as the case may be, any limitations as to amount
exercisable each year shall be modified so that Option from and after such date
shall be exercisable in full. In addition, with respect to any event described
in the preceding sentence, after the effective date of such merger,
consolidation, recapitalization, exchange, sale or acquisition, as the case may
be, Optionee shall be entitled, upon exercise of such Option to receive in lieu
of shares of Stock, shares of such stock or other securities of the Company or
the surviving or acquiring corporation or such other property at the rate per
share as the holders of shares of Stock received pursuant to the terms of the
merger, consolidation, exchange, recapitalization, sale or acquisition.
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class or securities convertible into shares of stock of
any class for cash or property or for labor or services, either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number, class or price of shares of Stock
then subject to the Option.
10. Change in Control. A "Change in Control" shall be deemed to have
occurred on the earliest of the following dates:
(i) 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, thirty percent (30%) or more of the outstanding common
shares of the Company;
(ii) The date the shareholders of the Company approve a
definitive agreement (A) to merge or consolidate the Company with or
into another corporation, in which the Company is not the continuing or
surviving corporation or pursuant to which any common shares of the
Company would be converted into cash, securities or other property of
another corporation, other than a merger of the Company in which holders
of common shares 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 the Company; or
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<PAGE> 6
(iii) The first date as of which Continuing Directors (as
defined in Article IX of the Company's Articles of Incorporation) fail
to constitute a majority of the members of the Company's Board of
Directors.
11. Termination of Employment by Optionee for Good Reason. For
purposes of this Stock Option Plan and Agreement a termination of Optionee's
employment for "Good Reason" shall be deemed to occur if Optionee tenders his
resignation to the 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 the Company as of the
effective date of this Agreement (which shall include, but not be limited to,
the appointment of any officer to whom Optionee shall report other than the
Chairman of the Board and Chief Executive Officer or the President and Chief
Operating Officer), and such diminishment lasts for at least thirty (30)
consecutive days and is not cured or corrected by the Company within ten (10)
days after Optionee provides notice of same to the Company pursuant to the
notice provisions hereof. Executive's termination of his employment with the
Company 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.
Such termination for Good Reason shall result in the Option immediately
becoming fully vested and exercisable as to all shares covered hereby.
12. Limited Stock Appreciation Rights. Notwithstanding any other
provisions in this Stock Option Plan and Agreement, upon the occurrence of any
Change in Control, and thereafter so long as this Option is in effect, Optionee
shall have the right to require the Company (or if the Company is not the
survivor of a merger, consolidation or reorganization, such survivor) to
purchase from him any or all unexercised options granted under this Stock
Option Plan and Agreement at a purchase price equal to (i) the excess of the
Change in Control Price (as hereinafter defined) per share over the option
price per share multiplied by (ii) the number of shares subject to the Option
specified by the Optionee for purchase in a written notice to the Company or
such survivor, addressed to the attention of the Corporate Secretary.
For purposes of this Stock Option Plan and Agreement, the term "Change
in Control Price" of shares of Stock shall mean (a) except in the case of a
Change in Control that results from a merger, consolidation or reorganization
in which the Company is not the survivor or shares of Stock are converted into
cash or other securities or other assets (a "Termination Merger"), the higher
of (I) the highest sales price per share of the Stock on the New York Stock
Exchange (or if the Company's Stock is not then traded on the New York Stock
Exchange, on the principal exchange or market where such Stock is actively
traded) on the trading days during the thirty (30) days immediately preceding
the date the Optionee so notified the Company of his election pursuant to the
preceding paragraph or (II) the highest sales price per share of the Stock on
the New York Stock Exchange (or if the Company's Stock is not then traded on
the New York Stock Exchange, on the principal exchange or market where such
stock is actively traded) on the trading days during the thirty (30) days
immediately preceding the date of the Change in Control; and (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
Stock
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<PAGE> 7
of the Company 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 thirty (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 Committee
(hereinafter defined) in good faith exercised in a reasonable manner) or (II)
the amount determined pursuant to clause (a)(II) of this Section 12. The
amount payable to Optionee by the Company or the survivor in a Termination
Merger, as the case may be, shall be paid in cash or by certified check, and
shall be reduced by the amount of any taxes required to be withheld.
13. Administration. This Stock Option Plan and Agreement shall be
administered by a committee of at least two persons to be appointed by the
Board of Directors of the Company (the "Committee"). All members of the
Committee shall be persons who are "disinterested persons," as set forth in
Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or any
successor rule thereto ("Rule 16b-3"). Meetings shall be held at such times
and places as shall be determined by the Committee. A majority of the members
of the Committee shall constitute a quorum for the transaction of business, and
the vote of a majority of those members present at any meeting shall decide any
question brought before the meeting. No member of the Committee shall be
liable for any act or omission of any other member of the Committee or for any
act or omission on his own part, including but not limited to the exercise of
any power or discretion given to him under this Stock Option Plan and
Agreement, except those resulting from his own gross negligence or willful
misconduct.
14. Notices. Any notice, consent, request or other communication
("Notice") required or permitted to be given hereunder shall be in writing.
Such Notice shall be (a) personally delivered or delivered by messenger, or (b)
mailed by certified mail, return receipt requested, postage prepaid, or (c)
sent by telecopy or the equivalent (provided, however, that the original Notice
of which a facsimile has been transmitted shall in all cases be delivered to
the addressee within two (2) business days following such transmission).
Notices given hereunder shall be addressed as follows:
If to Company: If to Optionee:
Kent Electronics Corporation Larry D. Olson
7433 Harwin Drive Kent Electronics Corporation
Houston, Texas 77036 7433 Harwin Drive
Attention: Secretary Houston, Texas 77036
Any Notice given in accordance herewith shall be deemed effective and to
have been received by the party to whom such Notice is directed (a) upon
delivery, if delivered personally or by messenger or sent by telecopy or the
equivalent, or (b) three (3) days after the date of deposit in the U.S. Mail,
if sent by mail and the return receipt is received by the sender, or
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<PAGE> 8
upon actual receipt by the party receiving Notice in the event that such return
receipt is not received by the sender.
15. Amendment. This Stock Option Plan and Agreement may be modified
or amended only by a written instrument executed by Company and Optionee, and
any such modification or amendment may be authorized on behalf of the Company
by the Committee; provided, however, that so long as Optionee and the Company
desire that this Stock Option Plan and Agreement comply with Rule 16b-3, or any
successor or similar provisions thereto, any such amendment that would require
the vote or approval of a specified percentage of the Company's shareholders in
order to assure that this Stock Option Plan and Agreement complies with Rule
16b-3, or any successor or similar provisions thereto, shall only be made upon
obtaining such required shareholder vote, or taking such other action in
connection with such amendment as the Board of Directors or such authorized
Committee deems advisable to operate this Stock Option Plan and Agreement in
accordance with Rule 16b-3 or such successor or similar rule. However, no
termination or amendment of this Stock Option Plan and Agreement may, without
the consent of the Optionee, adversely affect the rights of Optionee as to any
portion of the Option then outstanding.
16. Severability. In the event that any provision of this Stock
Option Plan and Agreement shall be held illegal, invalid, or unenforceable for
any reason, such provision shall be fully severable, but shall not affect the
remaining provisions hereof, and this Stock Option Plan and Agreement shall be
construed and enforced as if the illegal, invalid, or unenforceable provision
had not been included herein.
17. Gender, Tense and Headings. Whenever the context so requires,
words of the masculine gender used herein shall include the feminine and
neuter, and words used in the singular shall include the plural. Section
headings as used herein are inserted solely for convenience and reference and
are not to be interpreted as part of the construction of this Stock Option Plan
and Agreement.
18. Governing Law. The provisions of this Stock Option Plan and
Agreement shall be construed according to the laws of the State of Texas,
except as superseded by federal law. This Agreement is performable in Harris
County, Texas. In the event that any dispute arises under this Agreement, the
Optionee shall have the right, in addition to all other rights and remedies
provided by law, at his election to seek arbitration in Houston, Texas under
the rules of the American Arbitration Association by serving a notice to
arbitrate upon the Company, or to institute a judicial proceeding in a court of
competent jurisdiction located in Harris County, Texas. In the event that the
Company institutes any legal proceeding against the Optionee to resolve a
dispute under this Agreement, the Optionee shall have the right either to seek
arbitration in Houston, Texas or to institute a judicial proceeding in a court
located in Harris County, Texas, as provided in the preceding sentence, and the
Company shall dismiss its proceeding or take such other action as may be
reasonably requested by the Optionee in order for such proceeding to be brought
in the forum selected by the Optionee in accordance with the preceding
sentence.
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<PAGE> 9
19. Shareholder Approval. This Stock Option Plan and Agreement is
subject to approval and ratification by the vote of the holders of a majority
of shares of Stock present in person or by proxy and entitled to vote at a
meeting of shareholders of the Company. If such shareholder approval is not
received on or before December 31, 1995, the Option shall be null and void.
20. Requirement of Bonus Payment In Certain Circumstances. (a) In
the event that the Optionee is deemed to have received an excess parachute
payment (as such term is defined in Section 280G(b) of the Internal Revenue
Code of 1986, as amended (the "Code")) which is subject to the excise taxes
(the "Excise Taxes") imposed by Section 4999 of the Code in respect of any
payment of compensation to the Optionee from the Company pursuant to this Stock
Option Plan and Agreement, whether in the form of cash, property, stock, stock
options, securities or otherwise, the Company shall make the Bonus Payment to
the Optionee promptly after the date on which the Optionee received or is
deemed to have received any excess parachute payments.
(b) (i) The term "Bonus Payment" means a cash payment in an amount
equal to the sum of (A) all Excise Taxes payable by the Optionee, plus
(B) all additional Excise Taxes and federal or state income taxes to the
extent such taxes are imposed in respect of the Bonus Payment, such that
the Optionee shall be in the same after-tax position and shall have
received the same benefits that he would have received if the Excise
Taxes had not been imposed. For purposes of calculating any income
taxes attributable to the Bonus Payment, the Optionee shall be deemed
for all purposes to be paying income taxes at the highest marginal
federal income tax rate, taking into account any applicable surtaxes and
other generally applicable taxes which have the effect of increasing the
marginal federal income tax rate and, if applicable, at the highest
marginal state income tax rate to which the Bonus Payment and the
Optionee are subject.
(ii) An example of the calculation of the Bonus Payment is set
forth below: Assume that the Excise Tax rate is 20%, that the highest
federal marginal income tax rate is 36% and that the Optionee is not
subject to state income taxes. Assume that the Optionee has received an
excess parachute payment in the amount of $1,000,000, on which $200,000
in Excise Taxes are payable. The amount of the required Bonus Payment
is $454,545.45. The Bonus Payment, less Excise Taxes of $90,909.09 and
income taxes of $163,636.36, yields $200,000.00, the amount of the
Excise Taxes payable in respect of the excess parachute payment.
(c) The Optionee agrees to cooperate reasonably with the Company to
minimize the amount of the excess parachute payments, including without
limitation assisting the Company in establishing that some or all of the
payments received by the Optionee contingent on a change described in Section
280G(b)(2)(A)(i) of the Code are reasonable compensation for personal services
actually rendered by the Optionee before the date of such change or to be
rendered by the Optionee on or after the date of such change. In the event
that the Company is able to establish that the amount of the excess parachute
payments is less than originally anticipated by
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<PAGE> 10
the Optionee, the Optionee shall refund to the Company any excess Bonus Payment
to the extent not required to pay Excise Taxes or income taxes (including those
incurred in respect of the payment of the Bonus Payment). Notwithstanding the
foregoing, the Optionee shall not be required to take any actions which his tax
advisor advises him in writing (i) is improper or (ii) exposes the Optionee to
material personal liability, and the Optionee may require the Company to
deliver to the Optionee an indemnification agreement in form and substance
satisfactory to the Optionee as a condition to taking any action required by
this Section 20.
(d) The Company shall make any payment required to be made under this
Agreement in cash and on demand. Any payment required to be paid by the
Company under this Agreement which is not paid within five days of receipt by
the Company of the Optionee's demand therefor shall thereafter be deemed
delinquent, and the Company shall pay to the Optionee immediately upon demand
interest at the highest nonusurious rate per annum allowed by applicable law
from the date such payment becomes delinquent to the date of payment of such
delinquent sum.
(e) In the event that there is any change to the Code which results
in the recodification of Section 280G or Section 4999 of the Code, or in the
event that either such section of the Code is amended, replaced or supplemented
by other provisions of the Code of similar import ("Successor Provisions"),
then this Agreement shall be applied and enforced with respect to such new Code
provisions in a manner consistent with the intent of the parties as expressed
herein, which is to assure that the Optionee is in the same after-tax position
and has received the same benefits that he would have been in and received if
any taxes imposed by Section 4999 or any Successor Provisions had not been
imposed.
(f) There shall be no right of set-off or counterclaim, in respect of
any claim, debt or obligation, against any payments required under this Section
20 to the Optionee provided for in this Agreement. No right or interest to or
in any payments required under this Section 20 shall be assignable by the
Optionee; provided, however, that this provision shall not preclude him from
designating one or more beneficiaries to receive any amount that may be payable
after his death and shall not preclude the legal representative of his estate
from assigning any right hereunder to the person or persons entitled thereto
under his will or, in the case of intestacy, to the person or persons entitled
thereto under the laws of intestacy applicable to his estate. The term
"beneficiary" as used in this Agreement shall mean a beneficiary or
beneficiaries so designated to receive any such amount or, if no beneficiary
has been so designated, the legal representative of the Optionee's estate. No
right, benefit or interest under this Section 20 shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
21. Successors to the Company. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of the Company
and any successor of the
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Company, including, without limitation, any corporation or other entity
acquiring directly or indirectly all or substantially all of the assets of the
Company whether by merger, consolidation, sale or otherwise (and such successor
shall thereafter be deemed "the Company" for the purposes of this Agreement),
but shall not otherwise be assignable by the Company.
IN WITNESS WHEREOF, this Stock Option Plan and Agreement is executed,
subject to shareholder approval as set forth herein, effective as of the 8th
day of May, 1995.
KENT ELECTRONICS CORPORATION
By: /s/ MORRIE K. ABRAMSON
---------------------------------
Morrie K. Abramson, Chairman
and Chief Executive Officer
OPTIONEE
/s/ LARRY D. OLSON
------------------------------------
Larry D. Olson
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<PAGE> 1
EXHIBIT 99.2
KENT ELECTRONICS CORPORATION
STOCK OPTION PLAN AND AGREEMENT
FOR EXECUTIVE VICE PRESIDENT OF OPERATIONS - DISTRIBUTION
1. Grant. Under the terms, provisions, and conditions of this
Stock Option Plan and Agreement by and between Kent Electronics Corporation
(the "Company"), and Mark A. Zerbe (the "Optionee"), the Company hereby grants
to Optionee the option to purchase 37,500 shares of the Company's Common Stock,
without par value (the "Stock"), at the option price specified herein, subject
to adjustment as provided herein (the "Option"). The Option is not an
"incentive stock option" as described in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
2. Duration of Option and Option Price. The Option shall be for
a term commencing on the date hereof and ending fifteen (15) years from the
date hereof. The option price payable by the Optionee upon exercise of the
Option as to each share subject to the Option will be $14.50, which equals
one-half of the closing price of one share of the Stock, as reported by the New
York Stock Exchange, on the date hereof.
3. Amount Exercisable and Schedule of Exercisability. Except as
otherwise provided herein, this Option may be exercised as to 3,750 shares, on
and after May 1, 1999; as to an additional 7,500 shares, on and after May 1,
2000; as to an additional 11,250 shares, on and after May 1, 2001; and as to
all remaining shares, on and after May 1, 2002. This Option shall immediately
become fully vested and exercisable as to all shares subject hereto upon the
death or Disability (as hereinafter defined) of Optionee, or upon the
occurrence of a "Change in Control" (as hereinafter defined), or upon the
Company's termination of its employment of Optionee at the election of the
Company, or upon Optionee's termination of his employment by the Company for
"Good Reason" (as defined herein at Section 11), or such earlier date as set
forth in Section 9 hereof. The Option may be exercised, so long as it is valid
and outstanding, from time to time in whole (as to shares then exercisable) or
in part; provided, however, no fractional shares of Stock shall be issued. The
Option is cumulative, and may be exercised as to any or all shares of Stock
covered hereby from and after the time it becomes exercisable as to such shares
through the date of termination of the Option.
4. Exercise of Options. The Option shall be exercisable, in
whole or in part, by the delivery of written notice to the Company setting
forth the number of shares of Stock with respect to which the Option is to be
exercised. In order to be effective, such written notice shall be accompanied
at the time of its delivery to the Company by payment of the option price for
such shares of Stock, which payment shall be made (a) in cash or by personal
check, cashier's check, certified check, or postal or express money order
payable to the order of the Company in an amount (in United States dollars)
equal to the option price multiplied by the number of shares of Stock with
respect to which the Option is exercised or (b) in shares of Stock as set forth
in this Section 4. Such notice may be delivered in person or by messenger or
courier service to the Secretary of the Company, or shall be sent by registered
mail, return receipt requested, to the Secretary of the Company, and in all
such cases delivery shall be deemed to have been made on the date such notice
is received.
<PAGE> 2
At the time when the Optionee (or other holder of the Option pursuant
to Section 5) makes payment to the Company for the shares of Stock issuable
upon the exercise of the Option, the Company may require the Optionee to pay to
the Company an additional amount equal to any federal, state or local taxes
(which the Company deems necessary or appropriate to be withheld in connection
with the exercise of such Option) in such forms of payment as are described in
the first paragraph of this Section 4. In the event that Optionee does not pay
to the Company any such amount required for withholding taxes, to the extent
applicable, the employer (for payroll tax purposes) of Optionee shall have the
right to withhold such required amount from any sum payable, or to become
payable, to Optionee, upon such terms and conditions as the Company in its
discretion shall prescribe.
Payment of the option price may be made, in whole or in part, in
shares of Stock previously held by the Optionee (or other holder of the Option
pursuant to Section 5). If payment is made in whole or in part in shares of
Stock, then the Optionee (or other holder of the Option pursuant to Section 5)
shall deliver to the Company, in payment of the option price of the shares of
Stock with respect to which such Option is exercised, (i) certificates
registered in the name of such Optionee (or other holder of the Option pursuant
to Section 5) representing a number of shares of Stock legally and beneficially
owned by such Optionee (or other holder of the Option pursuant to Section 5),
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 Stock with respect to which such Option is to be exercised
exceeds the fair market value of such shares of Stock, cash or a personal
check, cashier's check, certified check, or postal or express money order
payable to the order of the Company in an amount (in United States dollars)
equal to the amount of such excess. If the fair market value of such Shares of
Stock delivered to the Company exceeds the option price of the shares of Stock
with respect to which such Option is to be exercised, the Company shall
promptly deliver, or cause to be delivered, to Optionee a replacement share
certificate representing the number of shares of Stock in excess of those
surrendered in payment of the option price.
As promptly as practicable after the receipt by the Company of (i)
such written notice from the Optionee (or other holder of the Option pursuant
to Section 5) setting forth the number of shares of Stock with respect to which
such Option is to be exercised, (ii) payment of the option price of such shares
in the form required by the foregoing provisions of this Section 4, and (iii)
an amount equal to any federal, state or local taxes which the Company deems
necessary or appropriate to be withheld incident to the exercise of the Option,
the Company shall cause to be delivered to such Optionee (or other holder of
the Option pursuant to Section 5) certificates representing the number of
shares of Stock with respect to which such Option has been so exercised.
All proceeds received pursuant to the exercise of the Option shall be
added to the general funds of the Company to be used for any corporate purpose.
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<PAGE> 3
For purposes of determining the value of shares of Stock delivered in
payment of all or any portion of the option price pursuant to this Section 4,
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 Stock as reported by
the New York Stock Exchange (or such other principal exchange or market on
which the 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.
5. Transferability of Option. The Option shall not be subject to
sale, assignment or transfer, other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Code. The designation of a beneficiary by Optionee shall not constitute a
transfer. The Option shall be exercisable (i) during Optionee's lifetime, only
by Optionee (or in the event of his incapacity, by his legal representative) or
(ii) following Optionee's death, by such persons as set forth in Section 6.
6. Termination of Options in Certain Cases. In the event of the
death of the Optionee while in the employ of the Company (or while affiliated
with the Company in the discretion of the Board), the Option shall become fully
vested and shall terminate on the earlier of (i) the date of expiration of the
Option, or (ii) twelve (12) months following the date of 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, shall have the right, at any time prior to the expiration of the
period described in the first sentence of this paragraph, to exercise the
Option.
If, before the date of expiration of the Option, the Optionee shall be
retired in good standing from the employ of the Company (or from another
affiliation with the Company in the discretion of the Board) including
retirement for reasons of Disability, the Option shall terminate on the earlier
of (i) the date of expiration of the Option, or (ii) three (3) years following
the date of such retirement. As used herein, the term "Disability" shall mean
a total and permanent disability resulting from a mental or physical incapacity
which prevents Optionee from performing the full scope of his duties for the
Company (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 Board of
Directors of the Company 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, at any time prior to the expiration
of the period described in the first sentence of this paragraph, to exercise
the Option to the same extent to which he was entitled to exercise it
immediately prior to such retirement (and, in the case of retirement for
Disability or under circumstances constituting a termination of Optionee's
employment by the Company at the Company's election, the Option shall fully
vest and become exercisable, as set forth herein).
If, before the date of expiration of the Option, the Optionee's
employment by the Company shall be terminated by the Company at its election,
or shall be terminated by Optionee for Good Reason, this Option shall
immediately vest fully and become exercisable as to all shares covered hereby.
In such event, Optionee shall have the right to exercise the Option at
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any time prior to the earlier of (i) the date of expiration of the Option or
(ii) twelve (12) months following the date of such termination of employment.
If, before the date of expiration of the Option, the Optionee's
employment or other affiliation with the Company terminates at the election of
Optionee for any reason other than Good Reason (other than in connection with
Optionee's retirement in accordance with the second paragraph of this Section
6), the Option shall terminate on the earlier of (i) the date of expiration of
such Option, or (ii) ninety (90) days after the date of termination of the
Optionee's employment or other affiliation with the Company. In such event,
the Option shall be exercisable and shall vest as to all shares that, pursuant
to the schedule set forth in Section 3 hereof, become exercisable on or prior
to the date of termination of the Option.
For purposes of this Stock Option Plan and Agreement, employment by
the Company shall include employment by any subsidiary of the Company.
7. No Rights as Shareholder. No holder of the Option shall have
any rights as a shareholder with respect to shares covered by the Option until
the date of exercise of the Option as to such shares; and, except as otherwise
provided in Section 9 hereof, no adjustment for dividends, or otherwise, shall
be made if the record date therefor is prior to the date of such exercise.
8. Employment or Affiliation Obligation. The grant of this
Option shall not impose upon the Company any obligation to employ or to
continue any employment or other affiliation with the Optionee. The right of
the Company to terminate its employment or affiliate relationship with any
person, including the Optionee, shall not be diminished or affected by reason
of the fact that this Option has been granted.
9. Changes in the Company's Capital Structure. The existence of
the Option shall not affect in any way the right or power of the Company or its
shareholders 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
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.
The number of shares covered by this Option and the price per share
thereof shall be proportionately adjusted for any increase or decrease in the
number of issued shares of 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 the Company or any other decrease therein effected without a
distribution of cash, property, or other securities in connection therewith.
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If (i) the Company is merged into or consolidated with another
corporation under circumstances where the Company is not the surviving
corporation or where the Stock is converted into other securities, cash or
other property in connection with such merger or consolidation, (ii) the
Company is recapitalized in such a manner that shares of Stock are converted
into or exchanged for other securities of the Company, (iii) the Company sells
or otherwise disposes of substantially all its assets to another person,
corporation or entity, or (iv) a tender offer is announced that, if
successfully completed, would result in a Change in Control, then in any such
case, on a date at least 30 days prior to the effective date of any such
merger, consolidation, recapitalization, exchange, sale or acquisition or
tender offer (or, in the case of such tender offer, on such later date as is
practicable, but in any such case at least ten days prior to the termination of
such tender offer), as the case may be, any limitations as to amount
exercisable each year shall be modified so that Option from and after such date
shall be exercisable in full. In addition, with respect to any event described
in the preceding sentence, after the effective date of such merger,
consolidation, recapitalization, exchange, sale or acquisition, as the case may
be, Optionee shall be entitled, upon exercise of such Option to receive in lieu
of shares of Stock, shares of such stock or other securities of the Company or
the surviving or acquiring corporation or such other property at the rate per
share as the holders of shares of Stock received pursuant to the terms of the
merger, consolidation, exchange, recapitalization, sale or acquisition.
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class or securities convertible into shares of stock of
any class for cash or property or for labor or services, either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number, class or price of shares of Stock
then subject to the Option.
10. Change in Control. A "Change in Control" shall be deemed to
have occurred on the earliest of the following dates:
(i) 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, thirty percent (30%) or more of the outstanding
common shares of the Company;
(ii) The date the shareholders of the Company approve a
definitive agreement (A) to merge or consolidate the Company with or
into another corporation, in which the Company is not the continuing
or surviving corporation or pursuant to which any common shares of the
Company would be converted into cash, securities or other property of
another corporation, other than a merger of the Company in which
holders of common shares 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 the Company; or
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<PAGE> 6
(iii) The first date as of which Continuing Directors (as
defined in Article IX of the Company's Articles of Incorporation) fail
to constitute a majority of the members of the Company's Board of
Directors.
11. Termination of Employment by Optionee for Good Reason. For
purposes of this Stock Option Plan and Agreement a termination of Optionee's
employment for "Good Reason" shall be deemed to occur if Optionee tenders his
resignation to the 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 the Company as of the
effective date of this Agreement (which shall include, but not be limited to,
the appointment of any officer to whom Optionee shall report other than the
Chairman of the Board and Chief Executive Officer or the President and Chief
Operating Officer), and such diminishment lasts for at least thirty (30)
consecutive days and is not cured or corrected by the Company within ten (10)
days after Optionee provides notice of same to the Company pursuant to the
notice provisions hereof. Executive's termination of his employment with the
Company 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.
Such termination for Good Reason shall result in the Option immediately
becoming fully vested and exercisable as to all shares covered hereby.
12. Limited Stock Appreciation Rights. Notwithstanding any other
provisions in this Stock Option Plan and Agreement, upon the occurrence of any
Change in Control, and thereafter so long as this Option is in effect, Optionee
shall have the right to require the Company (or if the Company is not the
survivor of a merger, consolidation or reorganization, such survivor) to
purchase from him any or all unexercised options granted under this Stock
Option Plan and Agreement at a purchase price equal to (i) the excess of the
Change in Control Price (as hereinafter defined) per share over the option
price per share multiplied by (ii) the number of shares subject to the Option
specified by the Optionee for purchase in a written notice to the Company or
such survivor, addressed to the attention of the Corporate Secretary.
For purposes of this Stock Option Plan and Agreement, the term "Change
in Control Price" of shares of Stock shall mean (a) except in the case of a
Change in Control that results from a merger, consolidation or reorganization
in which the Company is not the survivor or shares of Stock are converted into
cash or other securities or other assets (a "Termination Merger"), the higher
of (I) the highest sales price per share of the Stock on the New York Stock
Exchange (or if the Company's Stock is not then traded on the New York Stock
Exchange, on the principal exchange or market where such Stock is actively
traded) on the trading days during the thirty (30) days immediately preceding
the date the Optionee so notified the Company of his election pursuant to the
preceding paragraph or (II) the highest sales price per share of the Stock on
the New York Stock Exchange (or if the Company's Stock is not then traded on
the New York Stock Exchange, on the principal exchange or market where such
stock is actively traded) on the trading days during the thirty (30) days
immediately preceding the date of the Change in Control; and (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
Stock
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<PAGE> 7
of the Company 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 thirty (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 Committee
(hereinafter defined) in good faith exercised in a reasonable manner) or (II)
the amount determined pursuant to clause (a)(II) of this Section 12. The
amount payable to Optionee by the Company or the survivor in a Termination
Merger, as the case may be, shall be paid in cash or by certified check, and
shall be reduced by the amount of any taxes required to be withheld.
13. Administration. This Stock Option Plan and Agreement shall be
administered by a committee of at least two persons to be appointed by the
Board of Directors of the Company (the "Committee"). All members of the
Committee shall be persons who are "disinterested persons," as set forth in
Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or any
successor rule thereto ("Rule 16b-3"). Meetings shall be held at such times
and places as shall be determined by the Committee. A majority of the members
of the Committee shall constitute a quorum for the transaction of business, and
the vote of a majority of those members present at any meeting shall decide any
question brought before the meeting. No member of the Committee shall be
liable for any act or omission of any other member of the Committee or for any
act or omission on his own part, including but not limited to the exercise of
any power or discretion given to him under this Stock Option Plan and
Agreement, except those resulting from his own gross negligence or willful
misconduct.
14. Notices. Any notice, consent, request or other communication
("Notice") required or permitted to be given hereunder shall be in writing.
Such Notice shall be (a) personally delivered or delivered by messenger, or (b)
mailed by certified mail, return receipt requested, postage prepaid, or (c)
sent by telecopy or the equivalent (provided, however, that the original Notice
of which a facsimile has been transmitted shall in all cases be delivered to
the addressee within two (2) business days following such transmission).
Notices given hereunder shall be addressed as follows:
If to Company: If to Optionee:
Kent Electronics Corporation Mark A. Zerbe
7433 Harwin Drive Kent Electronics Corporation
Houston, Texas 77036 7433 Harwin Drive
Attention: Secretary Houston, Texas 77036
Any Notice given in accordance herewith shall be deemed effective and
to have been received by the party to whom such Notice is directed (a) upon
delivery, if delivered personally or by messenger or sent by telecopy or the
equivalent, or (b) three (3) days after the date of deposit in the U.S. Mail,
if sent by mail and the return receipt is received by the sender, or
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<PAGE> 8
upon actual receipt by the party receiving Notice in the event that such return
receipt is not received by the sender.
15. Amendment. This Stock Option Plan and Agreement may be
modified or amended only by a written instrument executed by Company and
Optionee, and any such modification or amendment may be authorized on behalf of
the Company by the Committee; provided, however, that so long as Optionee and
the Company desire that this Stock Option Plan and Agreement comply with Rule
16b-3, or any successor or similar provisions thereto, any such amendment that
would require the vote or approval of a specified percentage of the Company's
shareholders in order to assure that this Stock Option Plan and Agreement
complies with Rule 16b-3, or any successor or similar provisions thereto, shall
only be made upon obtaining such required shareholder vote, or taking such
other action in connection with such amendment as the Board of Directors or
such authorized Committee deems advisable to operate this Stock Option Plan and
Agreement in accordance with Rule 16b-3 or such successor or similar rule.
However, no termination or amendment of this Stock Option Plan and Agreement
may, without the consent of the Optionee, adversely affect the rights of
Optionee as to any portion of the Option then outstanding.
16. Severability. In the event that any provision of this Stock
Option Plan and Agreement shall be held illegal, invalid, or unenforceable for
any reason, such provision shall be fully severable, but shall not affect the
remaining provisions hereof, and this Stock Option Plan and Agreement shall be
construed and enforced as if the illegal, invalid, or unenforceable provision
had not been included herein.
17. Gender, Tense and Headings. Whenever the context so requires,
words of the masculine gender used herein shall include the feminine and
neuter, and words used in the singular shall include the plural. Section
headings as used herein are inserted solely for convenience and reference and
are not to be interpreted as part of the construction of this Stock Option Plan
and Agreement.
18. Governing Law. The provisions of this Stock Option Plan and
Agreement shall be construed according to the laws of the State of Texas,
except as superseded by federal law. This Agreement is performable in Harris
County, Texas. In the event that any dispute arises under this Agreement, the
Optionee shall have the right, in addition to all other rights and remedies
provided by law, at his election to seek arbitration in Houston, Texas under
the rules of the American Arbitration Association by serving a notice to
arbitrate upon the Company, or to institute a judicial proceeding in a court of
competent jurisdiction located in Harris County, Texas. In the event that the
Company institutes any legal proceeding against the Optionee to resolve a
dispute under this Agreement, the Optionee shall have the right either to seek
arbitration in Houston, Texas or to institute a judicial proceeding in a court
located in Harris County, Texas, as provided in the preceding sentence, and the
Company shall dismiss its proceeding or take such other action as may be
reasonably requested by the Optionee in order for such proceeding to be brought
in the forum selected by the Optionee in accordance with the preceding
sentence.
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<PAGE> 9
19. Shareholder Approval. This Stock Option Plan and Agreement is
subject to approval and ratification by the vote of the holders of a majority
of shares of Stock present in person or by proxy and entitled to vote at a
meeting of shareholders of the Company. If such shareholder approval is not
received on or before December 31, 1995, the Option shall be null and void.
20. Requirement of Bonus Payment In Certain Circumstances. (a) In
the event that the Optionee is deemed to have received an excess parachute
payment (as such term is defined in Section 280G(b) of the Internal Revenue
Code of 1986, as amended (the "Code")) which is subject to the excise taxes
(the "Excise Taxes") imposed by Section 4999 of the Code in respect of any
payment of compensation to the Optionee from the Company pursuant to this Stock
Option Plan and Agreement, whether in the form of cash, property, stock, stock
options, securities or otherwise, the Company shall make the Bonus Payment to
the Optionee promptly after the date on which the Optionee received or is
deemed to have received any excess parachute payments.
(b) (i) The term "Bonus Payment" means a cash payment in an
amount equal to the sum of (A) all Excise Taxes payable by the
Optionee, plus (B) all additional Excise Taxes and federal or state
income taxes to the extent such taxes are imposed in respect of the
Bonus Payment, such that the Optionee shall be in the same after-tax
position and shall have received the same benefits that he would have
received if the Excise Taxes had not been imposed. For purposes of
calculating any income taxes attributable to the Bonus Payment, the
Optionee shall be deemed for all purposes to be paying income taxes at
the highest marginal federal income tax rate, taking into account any
applicable surtaxes and other generally applicable taxes which have
the effect of increasing the marginal federal income tax rate and, if
applicable, at the highest marginal state income tax rate to which the
Bonus Payment and the Optionee are subject.
(ii) An example of the calculation of the Bonus Payment is
set forth below: Assume that the Excise Tax rate is 20%, that the
highest federal marginal income tax rate is 36% and that the Optionee
is not subject to state income taxes. Assume that the Optionee has
received an excess parachute payment in the amount of $1,000,000, on
which $200,000 in Excise Taxes are payable. The amount of the
required Bonus Payment is $454,545.45. The Bonus Payment, less Excise
Taxes of $90,909.09 and income taxes of $163,636.36, yields
$200,000.00, the amount of the Excise Taxes payable in respect of the
excess parachute payment.
(c) The Optionee agrees to cooperate reasonably with the Company
to minimize the amount of the excess parachute payments, including without
limitation assisting the Company in establishing that some or all of the
payments received by the Optionee contingent on a change described in Section
280G(b)(2)(A)(i) of the Code are reasonable compensation for personal services
actually rendered by the Optionee before the date of such change or to be
rendered by the Optionee on or after the date of such change. In the event
that the Company is able to establish that the amount of the excess parachute
payments is less than originally anticipated by
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<PAGE> 10
the Optionee, the Optionee shall refund to the Company any excess Bonus Payment
to the extent not required to pay Excise Taxes or income taxes (including those
incurred in respect of the payment of the Bonus Payment). Notwithstanding the
foregoing, the Optionee shall not be required to take any actions which his tax
advisor advises him in writing (i) is improper or (ii) exposes the Optionee to
material personal liability, and the Optionee may require the Company to
deliver to the Optionee an indemnification agreement in form and substance
satisfactory to the Optionee as a condition to taking any action required by
this Section 20.
(d) The Company shall make any payment required to be made under
this Agreement in cash and on demand. Any payment required to be paid by the
Company under this Agreement which is not paid within five days of receipt by
the Company of the Optionee's demand therefor shall thereafter be deemed
delinquent, and the Company shall pay to the Optionee immediately upon demand
interest at the highest nonusurious rate per annum allowed by applicable law
from the date such payment becomes delinquent to the date of payment of such
delinquent sum.
(e) In the event that there is any change to the Code which
results in the recodification of Section 280G or Section 4999 of the Code, or
in the event that either such section of the Code is amended, replaced or
supplemented by other provisions of the Code of similar import ("Successor
Provisions"), then this Agreement shall be applied and enforced with respect to
such new Code provisions in a manner consistent with the intent of the parties
as expressed herein, which is to assure that the Optionee is in the same
after-tax position and has received the same benefits that he would have been
in and received if any taxes imposed by Section 4999 or any Successor
Provisions had not been imposed.
(f) There shall be no right of set-off or counterclaim, in respect
of any claim, debt or obligation, against any payments required under this
Section 20 to the Optionee provided for in this Agreement. No right or
interest to or in any payments required under this Section 20 shall be
assignable by the Optionee; provided, however, that this provision shall not
preclude him from designating one or more beneficiaries to receive any amount
that may be payable after his death and shall not preclude the legal
representative of his estate from assigning any right hereunder to the person
or persons entitled thereto under his will or, in the case of intestacy, to the
person or persons entitled thereto under the laws of intestacy applicable to
his estate. The term "beneficiary" as used in this Agreement shall mean a
beneficiary or beneficiaries so designated to receive any such amount or, if no
beneficiary has been so designated, the legal representative of the Optionee's
estate. No right, benefit or interest under this Section 20 shall be subject
to anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
21. Successors to the Company. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
Company and any successor of the
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Company, including, without limitation, any corporation or other entity
acquiring directly or indirectly all or substantially all of the assets of the
Company whether by merger, consolidation, sale or otherwise (and such successor
shall thereafter be deemed "the Company" for the purposes of this Agreement),
but shall not otherwise be assignable by the Company.
IN WITNESS WHEREOF, this Stock Option Plan and Agreement is executed,
subject to shareholder approval as set forth herein, effective as of the 8th
day of May, 1995.
KENT ELECTRONICS CORPORATION
By: /s/ MORRIE K. ABRAMSON
------------------------------------
Morrie K. Abramson, Chairman and
Chief Executive Officer
OPTIONEE
/s/ MARK A. ZERBE
---------------------------------------
Mark A. Zerbe
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<PAGE> 1
EXHIBIT 99.3
KENT ELECTRONICS CORPORATION
STOCK OPTION PLAN AND AGREEMENT
FOR VICE PRESIDENT, SECRETARY AND TREASURER
1. Grant. Under the terms, provisions, and conditions of this
Stock Option Plan and Agreement by and between Kent Electronics Corporation
(the "Company"), and Stephen J. Chapko (the "Optionee"), the Company hereby
grants to Optionee the option to purchase 18,750 shares of the Company's Common
Stock, without par value (the "Stock"), at the option price specified herein,
subject to adjustment as provided herein (the "Option"). The Option is not an
"incentive stock option" as described in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
2. Duration of Option and Option Price. The Option shall be for
a term commencing on the date hereof and ending fifteen (15) years from the
date hereof. The option price payable by the Optionee upon exercise of the
Option as to each share subject to the Option will be $14.50, which equals
one-half of the closing price of one share of the Stock, as reported by the New
York Stock Exchange, on the date hereof.
3. Amount Exercisable and Schedule of Exercisability. Except as
otherwise provided herein, this Option may be exercised as to 1,875 shares, on
and after May 1, 1999; as to an additional 3,750 shares, on and after May 1,
2000; as to an additional 5,625 shares, on and after May 1, 2001; and as to all
remaining shares, on and after May 1, 2002. This Option shall immediately
become fully vested and exercisable as to all shares subject hereto upon the
death or Disability (as hereinafter defined) of Optionee, or upon the
occurrence of a "Change in Control" (as hereinafter defined), or upon the
Company's termination of its employment of Optionee at the election of the
Company, or upon Optionee's termination of his employment by the Company for
"Good Reason" (as defined herein at Section 11), or such earlier date as set
forth in Section 9 hereof. The Option may be exercised, so long as it is valid
and outstanding, from time to time in whole (as to shares then exercisable) or
in part; provided, however, no fractional shares of Stock shall be issued. The
Option is cumulative, and may be exercised as to any or all shares of Stock
covered hereby from and after the time it becomes exercisable as to such shares
through the date of termination of the Option.
4. Exercise of Options. The Option shall be exercisable, in
whole or in part, by the delivery of written notice to the Company setting
forth the number of shares of Stock with respect to which the Option is to be
exercised. In order to be effective, such written notice shall be accompanied
at the time of its delivery to the Company by payment of the option price for
such shares of Stock, which payment shall be made (a) in cash or by personal
check, cashier's check, certified check, or postal or express money order
payable to the order of the Company in an amount (in United States dollars)
equal to the option price multiplied by the number of shares of Stock with
respect to which the Option is exercised or (b) in shares of Stock as set forth
in this Section 4. Such notice may be delivered in person or by messenger or
courier service to the Secretary of the Company, or shall be sent by registered
mail, return receipt requested, to the Secretary of the Company, and in all
such cases delivery shall be deemed to have been made on the date such notice
is received.
<PAGE> 2
At the time when the Optionee (or other holder of the Option pursuant
to Section 5) makes payment to the Company for the shares of Stock issuable
upon the exercise of the Option, the Company may require the Optionee to pay to
the Company an additional amount equal to any federal, state or local taxes
(which the Company deems necessary or appropriate to be withheld in connection
with the exercise of such Option) in such forms of payment as are described in
the first paragraph of this Section 4. In the event that Optionee does not pay
to the Company any such amount required for withholding taxes, to the extent
applicable, the employer (for payroll tax purposes) of Optionee shall have the
right to withhold such required amount from any sum payable, or to become
payable, to Optionee, upon such terms and conditions as the Company in its
discretion shall prescribe.
Payment of the option price may be made, in whole or in part, in
shares of Stock previously held by the Optionee (or other holder of the Option
pursuant to Section 5). If payment is made in whole or in part in shares of
Stock, then the Optionee (or other holder of the Option pursuant to Section 5)
shall deliver to the Company, in payment of the option price of the shares of
Stock with respect to which such Option is exercised, (i) certificates
registered in the name of such Optionee (or other holder of the Option pursuant
to Section 5) representing a number of shares of Stock legally and beneficially
owned by such Optionee (or other holder of the Option pursuant to Section 5),
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 Stock with respect to which such Option is to be exercised
exceeds the fair market value of such shares of Stock, cash or a personal
check, cashier's check, certified check, or postal or express money order
payable to the order of the Company in an amount (in United States dollars)
equal to the amount of such excess. If the fair market value of such Shares of
Stock delivered to the Company exceeds the option price of the shares of Stock
with respect to which such Option is to be exercised, the Company shall
promptly deliver, or cause to be delivered, to Optionee a replacement share
certificate representing the number of shares of Stock in excess of those
surrendered in payment of the option price.
As promptly as practicable after the receipt by the Company of (i)
such written notice from the Optionee (or other holder of the Option pursuant
to Section 5) setting forth the number of shares of Stock with respect to which
such Option is to be exercised, (ii) payment of the option price of such shares
in the form required by the foregoing provisions of this Section 4, and (iii)
an amount equal to any federal, state or local taxes which the Company deems
necessary or appropriate to be withheld incident to the exercise of the Option,
the Company shall cause to be delivered to such Optionee (or other holder of
the Option pursuant to Section 5) certificates representing the number of
shares of Stock with respect to which such Option has been so exercised.
All proceeds received pursuant to the exercise of the Option shall be
added to the general funds of the Company to be used for any corporate purpose.
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<PAGE> 3
For purposes of determining the value of shares of Stock delivered in
payment of all or any portion of the option price pursuant to this Section 4,
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 Stock as reported by
the New York Stock Exchange (or such other principal exchange or market on
which the 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.
5. Transferability of Option. The Option shall not be subject to
sale, assignment or transfer, other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Code. The designation of a beneficiary by Optionee shall not constitute a
transfer. The Option shall be exercisable (i) during Optionee's lifetime, only
by Optionee (or in the event of his incapacity, by his legal representative) or
(ii) following Optionee's death, by such persons as set forth in Section 6.
6. Termination of Options in Certain Cases. In the event of the
death of the Optionee while in the employ of the Company (or while affiliated
with the Company in the discretion of the Board), the Option shall become fully
vested and shall terminate on the earlier of (i) the date of expiration of the
Option, or (ii) twelve (12) months following the date of 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, shall have the right, at any time prior to the expiration of the
period described in the first sentence of this paragraph, to exercise the
Option.
If, before the date of expiration of the Option, the Optionee shall be
retired in good standing from the employ of the Company (or from another
affiliation with the Company in the discretion of the Board) including
retirement for reasons of Disability, the Option shall terminate on the earlier
of (i) the date of expiration of the Option, or (ii) three (3) years following
the date of such retirement. As used herein, the term "Disability" shall mean
a total and permanent disability resulting from a mental or physical incapacity
which prevents Optionee from performing the full scope of his duties for the
Company (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 Board of
Directors of the Company 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, at any time prior to the expiration
of the period described in the first sentence of this paragraph, to exercise
the Option to the same extent to which he was entitled to exercise it
immediately prior to such retirement (and, in the case of retirement for
Disability or under circumstances constituting a termination of Optionee's
employment by the Company at the Company's election, the Option shall fully
vest and become exercisable, as set forth herein).
If, before the date of expiration of the Option, the Optionee's
employment by the Company shall be terminated by the Company at its election,
or shall be terminated by Optionee for Good Reason, this Option shall
immediately vest fully and become exercisable as to all shares covered hereby.
In such event, Optionee shall have the right to exercise the Option at
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<PAGE> 4
any time prior to the earlier of (i) the date of expiration of the Option or
(ii) twelve (12) months following the date of such termination of employment.
If, before the date of expiration of the Option, the Optionee's
employment or other affiliation with the Company terminates at the election of
Optionee for any reason other than Good Reason (other than in connection with
Optionee's retirement in accordance with the second paragraph of this Section
6), the Option shall terminate on the earlier of (i) the date of expiration of
such Option, or (ii) ninety (90) days after the date of termination of the
Optionee's employment or other affiliation with the Company. In such event,
the Option shall be exercisable and shall vest as to all shares that, pursuant
to the schedule set forth in Section 3 hereof, become exercisable on or prior
to the date of termination of the Option.
For purposes of this Stock Option Plan and Agreement, employment by
the Company shall include employment by any subsidiary of the Company.
7. No Rights as Shareholder. No holder of the Option shall have
any rights as a shareholder with respect to shares covered by the Option until
the date of exercise of the Option as to such shares; and, except as otherwise
provided in Section 9 hereof, no adjustment for dividends, or otherwise, shall
be made if the record date therefor is prior to the date of such exercise.
8. Employment or Affiliation Obligation. The grant of this
Option shall not impose upon the Company any obligation to employ or to
continue any employment or other affiliation with the Optionee. The right of
the Company to terminate its employment or affiliate relationship with any
person, including the Optionee, shall not be diminished or affected by reason
of the fact that this Option has been granted.
9. Changes in the Company's Capital Structure. The existence of
the Option shall not affect in any way the right or power of the Company or its
shareholders 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
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.
The number of shares covered by this Option and the price per share
thereof shall be proportionately adjusted for any increase or decrease in the
number of issued shares of 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 the Company or any other decrease therein effected without a
distribution of cash, property, or other securities in connection therewith.
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<PAGE> 5
If (i) the Company is merged into or consolidated with another
corporation under circumstances where the Company is not the surviving
corporation or where the Stock is converted into other securities, cash or
other property in connection with such merger or consolidation, (ii) the
Company is recapitalized in such a manner that shares of Stock are converted
into or exchanged for other securities of the Company, (iii) the Company sells
or otherwise disposes of substantially all its assets to another person,
corporation or entity, or (iv) a tender offer is announced that, if
successfully completed, would result in a Change in Control, then in any such
case, on a date at least 30 days prior to the effective date of any such
merger, consolidation, recapitalization, exchange, sale or acquisition or
tender offer (or, in the case of such tender offer, on such later date as is
practicable, but in any such case at least ten days prior to the termination of
such tender offer), as the case may be, any limitations as to amount
exercisable each year shall be modified so that Option from and after such date
shall be exercisable in full. In addition, with respect to any event described
in the preceding sentence, after the effective date of such merger,
consolidation, recapitalization, exchange, sale or acquisition, as the case may
be, Optionee shall be entitled, upon exercise of such Option to receive in lieu
of shares of Stock, shares of such stock or other securities of the Company or
the surviving or acquiring corporation or such other property at the rate per
share as the holders of shares of Stock received pursuant to the terms of the
merger, consolidation, exchange, recapitalization, sale or acquisition.
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class or securities convertible into shares of stock of
any class for cash or property or for labor or services, either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number, class or price of shares of Stock
then subject to the Option.
10. Change in Control. A "Change in Control" shall be deemed to
have occurred on the earliest of the following dates:
(i) 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, thirty percent (30%) or more of the outstanding
common shares of the Company;
(ii) The date the shareholders of the Company approve a
definitive agreement (A) to merge or consolidate the Company with or
into another corporation, in which the Company is not the continuing
or surviving corporation or pursuant to which any common shares of the
Company would be converted into cash, securities or other property of
another corporation, other than a merger of the Company in which
holders of common shares 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 the Company; or
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<PAGE> 6
(iii) The first date as of which Continuing Directors (as
defined in Article IX of the Company's Articles of Incorporation) fail
to constitute a majority of the members of the Company's Board of
Directors.
11. Termination of Employment by Optionee for Good Reason. For
purposes of this Stock Option Plan and Agreement a termination of Optionee's
employment for "Good Reason" shall be deemed to occur if Optionee tenders his
resignation to the 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 the Company as of the
effective date of this Agreement (which shall include, but not be limited to,
the appointment of any officer to whom Optionee shall report other than the
Chairman of the Board and Chief Executive Officer or the President and Chief
Operating Officer), and such diminishment lasts for at least thirty (30)
consecutive days and is not cured or corrected by the Company within ten (10)
days after Optionee provides notice of same to the Company pursuant to the
notice provisions hereof. Executive's termination of his employment with the
Company 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.
Such termination for Good Reason shall result in the Option immediately
becoming fully vested and exercisable as to all shares covered hereby.
12. Limited Stock Appreciation Rights. Notwithstanding any other
provisions in this Stock Option Plan and Agreement, upon the occurrence of any
Change in Control, and thereafter so long as this Option is in effect, Optionee
shall have the right to require the Company (or if the Company is not the
survivor of a merger, consolidation or reorganization, such survivor) to
purchase from him any or all unexercised options granted under this Stock
Option Plan and Agreement at a purchase price equal to (i) the excess of the
Change in Control Price (as hereinafter defined) per share over the option
price per share multiplied by (ii) the number of shares subject to the Option
specified by the Optionee for purchase in a written notice to the Company or
such survivor, addressed to the attention of the Corporate Secretary.
For purposes of this Stock Option Plan and Agreement, the term "Change
in Control Price" of shares of Stock shall mean (a) except in the case of a
Change in Control that results from a merger, consolidation or reorganization
in which the Company is not the survivor or shares of Stock are converted into
cash or other securities or other assets (a "Termination Merger"), the higher
of (I) the highest sales price per share of the Stock on the New York Stock
Exchange (or if the Company's Stock is not then traded on the New York Stock
Exchange, on the principal exchange or market where such Stock is actively
traded) on the trading days during the thirty (30) days immediately preceding
the date the Optionee so notified the Company of his election pursuant to the
preceding paragraph or (II) the highest sales price per share of the Stock on
the New York Stock Exchange (or if the Company's Stock is not then traded on
the New York Stock Exchange, on the principal exchange or market where such
stock is actively traded) on the trading days during the thirty (30) days
immediately preceding the date of the Change in Control; and (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
Stock
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<PAGE> 7
of the Company 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 thirty (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 Committee
(hereinafter defined) in good faith exercised in a reasonable manner) or (II)
the amount determined pursuant to clause (a)(II) of this Section 12. The
amount payable to Optionee by the Company or the survivor in a Termination
Merger, as the case may be, shall be paid in cash or by certified check, and
shall be reduced by the amount of any taxes required to be withheld.
13. Administration. This Stock Option Plan and Agreement shall be
administered by a committee of at least two persons to be appointed by the
Board of Directors of the Company (the "Committee"). All members of the
Committee shall be persons who are "disinterested persons," as set forth in
Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or any
successor rule thereto ("Rule 16b-3"). Meetings shall be held at such times
and places as shall be determined by the Committee. A majority of the members
of the Committee shall constitute a quorum for the transaction of business, and
the vote of a majority of those members present at any meeting shall decide any
question brought before the meeting. No member of the Committee shall be
liable for any act or omission of any other member of the Committee or for any
act or omission on his own part, including but not limited to the exercise of
any power or discretion given to him under this Stock Option Plan and
Agreement, except those resulting from his own gross negligence or willful
misconduct.
14. Notices. Any notice, consent, request or other communication
("Notice") required or permitted to be given hereunder shall be in writing.
Such Notice shall be (a) personally delivered or delivered by messenger, or (b)
mailed by certified mail, return receipt requested, postage prepaid, or (c)
sent by telecopy or the equivalent (provided, however, that the original Notice
of which a facsimile has been transmitted shall in all cases be delivered to
the addressee within two (2) business days following such transmission).
Notices given hereunder shall be addressed as follows:
If to Company: If to Optionee:
Kent Electronics Corporation Stephen J. Chapko
7433 Harwin Drive Kent Electronics Corporation
Houston, Texas 77036 7433 Harwin Drive
Attention: Secretary Houston, Texas 77036
Any Notice given in accordance herewith shall be deemed effective and
to have been received by the party to whom such Notice is directed (a) upon
delivery, if delivered personally or by messenger or sent by telecopy or the
equivalent, or (b) three (3) days after the date of deposit in the U.S. Mail,
if sent by mail and the return receipt is received by the sender, or
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<PAGE> 8
upon actual receipt by the party receiving Notice in the event that such return
receipt is not received by the sender.
15. Amendment. This Stock Option Plan and Agreement may be
modified or amended only by a written instrument executed by Company and
Optionee, and any such modification or amendment may be authorized on behalf of
the Company by the Committee; provided, however, that so long as Optionee and
the Company desire that this Stock Option Plan and Agreement comply with Rule
16b-3, or any successor or similar provisions thereto, any such amendment that
would require the vote or approval of a specified percentage of the Company's
shareholders in order to assure that this Stock Option Plan and Agreement
complies with Rule 16b-3, or any successor or similar provisions thereto, shall
only be made upon obtaining such required shareholder vote, or taking such
other action in connection with such amendment as the Board of Directors or
such authorized Committee deems advisable to operate this Stock Option Plan and
Agreement in accordance with Rule 16b-3 or such successor or similar rule.
However, no termination or amendment of this Stock Option Plan and Agreement
may, without the consent of the Optionee, adversely affect the rights of
Optionee as to any portion of the Option then outstanding.
16. Severability. In the event that any provision of this Stock
Option Plan and Agreement shall be held illegal, invalid, or unenforceable for
any reason, such provision shall be fully severable, but shall not affect the
remaining provisions hereof, and this Stock Option Plan and Agreement shall be
construed and enforced as if the illegal, invalid, or unenforceable provision
had not been included herein.
17. Gender, Tense and Headings. Whenever the context so requires,
words of the masculine gender used herein shall include the feminine and
neuter, and words used in the singular shall include the plural. Section
headings as used herein are inserted solely for convenience and reference and
are not to be interpreted as part of the construction of this Stock Option Plan
and Agreement.
18. Governing Law. The provisions of this Stock Option Plan and
Agreement shall be construed according to the laws of the State of Texas,
except as superseded by federal law. This Agreement is performable in Harris
County, Texas. In the event that any dispute arises under this Agreement, the
Optionee shall have the right, in addition to all other rights and remedies
provided by law, at his election to seek arbitration in Houston, Texas under
the rules of the American Arbitration Association by serving a notice to
arbitrate upon the Company, or to institute a judicial proceeding in a court of
competent jurisdiction located in Harris County, Texas. In the event that the
Company institutes any legal proceeding against the Optionee to resolve a
dispute under this Agreement, the Optionee shall have the right either to seek
arbitration in Houston, Texas or to institute a judicial proceeding in a court
located in Harris County, Texas, as provided in the preceding sentence, and the
Company shall dismiss its proceeding or take such other action as may be
reasonably requested by the Optionee in order for such proceeding to be brought
in the forum selected by the Optionee in accordance with the preceding
sentence.
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<PAGE> 9
19. Shareholder Approval. This Stock Option Plan and Agreement is
subject to approval and ratification by the vote of the holders of a majority
of shares of Stock present in person or by proxy and entitled to vote at a
meeting of shareholders of the Company. If such shareholder approval is not
received on or before December 31, 1995, the Option shall be null and void.
20. Requirement of Bonus Payment In Certain Circumstances. (a) In
the event that the Optionee is deemed to have received an excess parachute
payment (as such term is defined in Section 280G(b) of the Internal Revenue
Code of 1986, as amended (the "Code")) which is subject to the excise taxes
(the "Excise Taxes") imposed by Section 4999 of the Code in respect of any
payment of compensation to the Optionee from the Company pursuant to this Stock
Option Plan and Agreement, whether in the form of cash, property, stock, stock
options, securities or otherwise, the Company shall make the Bonus Payment to
the Optionee promptly after the date on which the Optionee received or is
deemed to have received any excess parachute payments.
(b) (i) The term "Bonus Payment" means a cash payment in an
amount equal to the sum of (A) all Excise Taxes payable by the
Optionee, plus (B) all additional Excise Taxes and federal or state
income taxes to the extent such taxes are imposed in respect of the
Bonus Payment, such that the Optionee shall be in the same after-tax
position and shall have received the same benefits that he would have
received if the Excise Taxes had not been imposed. For purposes of
calculating any income taxes attributable to the Bonus Payment, the
Optionee shall be deemed for all purposes to be paying income taxes at
the highest marginal federal income tax rate, taking into account any
applicable surtaxes and other generally applicable taxes which have
the effect of increasing the marginal federal income tax rate and, if
applicable, at the highest marginal state income tax rate to which the
Bonus Payment and the Optionee are subject.
(ii) An example of the calculation of the Bonus Payment is
set forth below: Assume that the Excise Tax rate is 20%, that the
highest federal marginal income tax rate is 36% and that the Optionee
is not subject to state income taxes. Assume that the Optionee has
received an excess parachute payment in the amount of $1,000,000, on
which $200,000 in Excise Taxes are payable. The amount of the
required Bonus Payment is $454,545.45. The Bonus Payment, less Excise
Taxes of $90,909.09 and income taxes of $163,636.36, yields
$200,000.00, the amount of the Excise Taxes payable in respect of the
excess parachute payment.
(c) The Optionee agrees to cooperate reasonably with the Company
to minimize the amount of the excess parachute payments, including without
limitation assisting the Company in establishing that some or all of the
payments received by the Optionee contingent on a change described in Section
280G(b)(2)(A)(i) of the Code are reasonable compensation for personal services
actually rendered by the Optionee before the date of such change or to be
rendered by the Optionee on or after the date of such change. In the event
that the Company is able to establish that the amount of the excess parachute
payments is less than originally anticipated by
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<PAGE> 10
the Optionee, the Optionee shall refund to the Company any excess Bonus Payment
to the extent not required to pay Excise Taxes or income taxes (including those
incurred in respect of the payment of the Bonus Payment). Notwithstanding the
foregoing, the Optionee shall not be required to take any actions which his tax
advisor advises him in writing (i) is improper or (ii) exposes the Optionee to
material personal liability, and the Optionee may require the Company to
deliver to the Optionee an indemnification agreement in form and substance
satisfactory to the Optionee as a condition to taking any action required by
this Section 20.
(d) The Company shall make any payment required to be made under
this Agreement in cash and on demand. Any payment required to be paid by the
Company under this Agreement which is not paid within five days of receipt by
the Company of the Optionee's demand therefor shall thereafter be deemed
delinquent, and the Company shall pay to the Optionee immediately upon demand
interest at the highest nonusurious rate per annum allowed by applicable law
from the date such payment becomes delinquent to the date of payment of such
delinquent sum.
(e) In the event that there is any change to the Code which
results in the recodification of Section 280G or Section 4999 of the Code, or
in the event that either such section of the Code is amended, replaced or
supplemented by other provisions of the Code of similar import ("Successor
Provisions"), then this Agreement shall be applied and enforced with respect to
such new Code provisions in a manner consistent with the intent of the parties
as expressed herein, which is to assure that the Optionee is in the same
after-tax position and has received the same benefits that he would have been
in and received if any taxes imposed by Section 4999 or any Successor
Provisions had not been imposed.
(f) There shall be no right of set-off or counterclaim, in respect
of any claim, debt or obligation, against any payments required under this
Section 20 to the Optionee provided for in this Agreement. No right or
interest to or in any payments required under this Section 20 shall be
assignable by the Optionee; provided, however, that this provision shall not
preclude him from designating one or more beneficiaries to receive any amount
that may be payable after his death and shall not preclude the legal
representative of his estate from assigning any right hereunder to the person
or persons entitled thereto under his will or, in the case of intestacy, to the
person or persons entitled thereto under the laws of intestacy applicable to
his estate. The term "beneficiary" as used in this Agreement shall mean a
beneficiary or beneficiaries so designated to receive any such amount or, if no
beneficiary has been so designated, the legal representative of the Optionee's
estate. No right, benefit or interest under this Section 20 shall be subject
to anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
21. Successors to the Company. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
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Company and any successor of the Company, including, without limitation, any
corporation or other entity acquiring directly or indirectly all or
substantially all of the assets of the Company whether by merger,
consolidation, sale or otherwise (and such successor shall thereafter be deemed
"the Company" for the purposes of this Agreement), but shall not otherwise be
assignable by the Company.
IN WITNESS WHEREOF, this Stock Option Plan and Agreement is executed,
subject to shareholder approval as set forth herein, effective as of the 8th
day of May, 1995.
KENT ELECTRONICS CORPORATION
By: /s/ MORRIE K. ABRAMSON
------------------------------------
Morrie K. Abramson, Chairman and
Chief Executive Officer
OPTIONEE
/s/ STEPHEN J. CHAPKO
---------------------------------------
Stephen J. Chapko
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<PAGE> 1
EXHIBIT 99.7
MONAHAN AGREEMENT
This Agreement is made as of the 25th day of September, 1996 by and
among Kent Electronics Corporation, a Texas corporation (the "Company"),
Futronix Systems Corp., a Delaware corporation ("Futronix Systems"), Futronix
Acquisition Company, a Texas corporation ("Futronix"), Wire & Cable
Specialities Corporation, a Georgia corporation ("W&C"), Theodore J. Bruno, a
Georgia resident ("Bruno"), and Paul Monahan, a Georgia resident ("Monahan").
Background
This Agreement is being entered into in connection with a Reorganization
Agreement, dated the date hereof, among the Company, the Acquisition Company,
Futronix, W&C, Terrence M. Hunt, Bruno, Monahan and the Futronix Shareholder
Parties (the "Reorganization Agreement"). Terms are used as defined in the
Reorganization Agreement unless otherwise defined herein.
The Reorganization Agreement contemplates that the Company and Monahan
will take certain actions in connection with the Transactions, and this
Agreement sets forth the terms and conditions of such actions.
Witnesseth
Now, therefore, in consideration of the respective covenants contained
herein and in the Reorganization Agreement and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Employment Agreement. At the Closing, Monahan shall execute and
deliver to Futronix and the Company the Employment Agreement contemplated by
the Reorganization Agreement (the "New Employment Agreement"). Upon the
Company's execution and delivery to Monahan of the New Employment Agreement,
the Employment Agreement between Monahan and W&C, dated February 26, 1993, as
amended (the "Old Employment Agreement"), shall thereupon terminate, and
neither Monahan nor W&C shall have any rights or obligations thereunder.
2. Value Appreciation Bonus. Upon Monahan's completion of seven
days of employment with Futronix after the Closing (or on the next business day
if such seventh day is
<PAGE> 2
not a business day), the Company shall pay to Monahan the Value Appreciation
Bonus (defined in Section 4 hereof). This payment will not be forfeited in the
event that, subsequent to the Closing, Monahan is unable to fulfill this
condition as the result of his death, disability or termination without "cause"
(as defined in Section 5(d) of the New Employment Agreement).
3. Settlement of Value Appreciation Bonus Obligations. The payment
to Monahan of a bonus in an amount equal to 48,400 shares of Company Common
Stock plus cash equal to the product of 82% of such number of shares multiplied
by the value of a share of Company Common Stock as determined for reporting
such bonus for federal income tax purposes (the "Value Appreciation Bonus")
shall satisfy in full any and all rights of Monahan to receive a bonus under
Section 6 of the Old Employment Agreement.
4. Option from Bruno. At the Closing, Bruno and Monahan shall enter
into the Option Agreement specified in Section 10.9 of the Reorganization
Agreement and the Option Agreement between them, dated February 26, 1993, shall
thereupon terminate, and neither Bruno or Monahan shall have any rights or
obligations thereunder.
5. Old Monahan Agreement. The Monahan Agreement dated August 7,
1996 by and among Futronix Systems, the Acquisition Company, Futronix, W & C ,
Bruno and Monahan is hereby terminated, and no party thereto shall have any
rights thereunder.
6. Termination. This Agreement shall terminate and none of the
parties shall have any rights or obligations hereunder upon a termination of
the Reorganization Agreement.
7. Contents of Agreement. This Agreement, together with the other
Transaction Documents, sets forth the entire understanding of the parties
hereto with respect to the Transaction and supersedes all prior agreements or
understandings among the parties regarding those matters.
8. Amendment, Parties in Interest, Assignment, Etc. This Agreement
may be amended, modified or supplemented only by a written instrument duly
executed by each of the parties hereto. If any provision of this Agreement
shall for any reason be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective heirs, legal representatives, successors and
permitted assigns of the parties hereto. No party hereto shall assign this
Agreement or any right, benefit or obligation hereunder. Any term or provision
of this Agreement may be waived at any time by the Party entitled to the
benefit thereof by a written instrument duly executed by such party. The
parties hereto shall execute and deliver any and all documents and take any and
all other actions that may be deemed reasonably necessary by their respective
counsel to complete the Transactions.
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<PAGE> 3
9. Interpretation. Unless the context of this Agreement clearly
requires otherwise, (a) references to the plural include the singular, the
singular the plural, the part the whole, (b) references to any gender include
all genders, (c) "or" has the inclusive meaning frequently identified with the
phrase "and/or," (d) "including" has the inclusive meaning frequently
identified with the phrase "but not limited to" and (e) references to
"hereunder" or "herein" relate to this Agreement. The section and other
headings contained in this Agreement are for reference purposes only and shall
not control or affect the construction of this Agreement or the interpretation
thereof in any respect. Section, subsection, Disclosure Schedule and Exhibit
references are to this Agreement unless otherwise specified. Each accounting
term used herein that is not specifically defined herein shall have the meaning
given to it under GAAP.
10. Governing Law. This Agreement shall be construed and interpreted
in accordance with the laws of the State of Texas without regard to its
provisions concerning conflict of laws.
11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be binding as of the date first written
above, and all of which shall constitute one and the same instrument. Each
such copy shall be deemed an original, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such
counterpart.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the day and year first written above.
KENT ELECTRONICS CORPORATION
By: /s/Morrie K. Abramson
--------------------------------
Title: Chairman & CEO
FUTRONIX SYSTEMS CORP.
By: /s/Terrence M. Hunt
--------------------------------
Title: President
FUTRONIX ACQUISITION COMPANY
By: /s/Morrie K. Abramson
--------------------------------
Title: President
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<PAGE> 4
FUTRONIX CORPORATION
By: /s/Terrence M. Hunt
--------------------------------
Title: President
WIRE & CABLE SPECIALITIES CORPORATION
By: /s/Theodore J. Bruno
--------------------------------
Title: President
/s/Theodore J. Bruno
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THEODORE J. BRUNO
/s/Paul Monahan
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PAUL MONAHAN
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