UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 14, 1999
BENCHMARK ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 1-10560 74-2211011
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
3000 TECHNOLOGY DRIVE, ANGLETON, TEXAS 77515
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (409) 849-6550
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ITEM 5. OTHER EVENTS.
On December 15, 1999, Benchmark Electronics, Inc. made the press
release attached hereto as Exhibit 99.1 concerning the Complaint
filed by Benchmark in the United States District Court for the
Southern District of Texas on December 14, 1999 attached hereto as
Exhibit 99.2
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The following materials are filed as exhibits to this Current Report
on Form 8-K.
EXHIBIT
NUMBER DESCRIPTION
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99.1 Press Release dated December 15, 1999.
99.2 Complaint styled BENCHMARK ELECTRONICS, INC. V.
J.M. HUBER CORPORATION, filed in the United States
District Court for the Southern District of Texas
on December 14, 1999.
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S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BENCHMARK ELECTRONICS, INC.
Dated: December 15, 1999 By: /S/ CARY T. FU
--------------------------------------
Cary T. Fu
Executive Vice President
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EXHIBIT INDEX
Exhibit
NUMBER DESCRIPTION
- ------- -----------
99.1 Press Release dated December 15, 1999.
99.2 Complaint styled BENCHMARK ELECTRONICS, INC. V. J.M.
HUBER CORPORATION, filed in the United States District
Court for the Southern District of Texas on December
14, 1999.
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EXHIBIT 99.1
PRESS RELEASE
FOR MORE INFORMATION CALL:
CARY T. FU DECEMBER 15, 1999
EXECUTIVE VICE PRESIDENT
BENCHMARK ELECTRONICS, INC.
(409) 849-6550
FOR IMMEDIATE RELEASE
BENCHMARK ELECTRONICS, INC. SUES J. M. HUBER
CORPORATION FOR BREACH OF CONTRACT
ANGLETON, Texas, December 15, 1999 -- Benchmark Electronics, Inc.
(NYSE/BHE) announced today that it has filed suit against J. M. Huber
Corporation for breach of contract in connection with the Amended and Restated
Stock Purchase Agreement, dated August 12, 1999 between the parties whereby
Benchmark acquired all of the stock of AVEX Electronics, Inc. and Kilbride
Holdings B.V. from J. M. Huber Corporation.
The suit filed on December 14, 1999 in the United States District Court
for the Southern District of Texas, alleges breach of contract, fraud and
negligent misrepresentation and seeks an unspecified amount of damages.
Benchmark Electronics, Inc. is a leading independent provider of
electronics manufacturing and engineering services to original equipment
providers in the telecommunication, enterprise computer and peripherals,
high-end video/audio/entertainment, industrial control, testing and
instrumentation, computer, and medical device markets. Benchmark's global
operations include 14 facilities in 8 countries. Benchmark's Common Stock trades
on the New York Stock Exchange under the symbol BHE.
###
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EXHIBIT 99.2
IN THE UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
BENCHMARK ELECTRONICS, INC., )
)
Plaintiff, )
) CIVIL ACTION NO. __________
v. )
) JURY DEMANDED
J.M. HUBER CORPORATION, )
)
Defendant. )
COMPLAINT
Plaintiff Benchmark Electronics, Inc. ("Benchmark"), respectfully
complains of Defendant J.M. Huber Corporation ("J.M. Huber"), and prays for
recovery of damages proximately resulting from fraud, negligent
misrepresentation, and breach of contract committed by J.M. Huber as follows:
JURISDICTION
1. Plaintiff Benchmark is a corporation incorporated under the laws of the
State of Texas having its principal place of business in the State of Texas.
Defendant J.M. Huber is a corporation incorporated under the laws of the State
of New Jersey having its principal place of business in a State other than the
State of Texas. The amount
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in controversy exceeds $75,000. This Court has jurisdiction over this case
pursuant to 28 U.S.C. ss. 1332.
PERTINENT FACTS
2. Benchmark is one of the world's leading electronic manufacturing
services companies. It is headquartered in Angleton, Texas. During the last few
years, Benchmark has acquired several contract manufacturers in order to expand
globally and meet the needs of existing and potential Original Equipment
Manufacturer customers on a worldwide basis.
3. J.M. Huber is a conglomerate of manufacturing companies and other
businesses. The Oil and Gas Division of J.M. Huber is headquartered and has
operating offices in Houston. Other divisions and subsidiary corporations of
J.M. Huber have production facilities or otherwise operate in Harris County.
4. In early 1999 J.M. Huber was aware that Benchmark had been looking into
international expansion opportunities and had an interest in considering the
acquisition of a J.M. Huber subsidiary, AVEX Electronics, Inc. ("AVEX"), and
AVEX subsidiaries engaged in electronic manufacturing service at many locations
around the world. AVEX had a history of troubled operations, and J.M. Huber
decided to sell the stock of AVEX. J.M. Huber accordingly approached Benchmark
in early 1999, provided Benchmark with written material on the business of AVEX,
and invited Benchmark to indicate its potential interest in a transaction
involving AVEX.
5. Benchmark was sufficiently interested in the prospects offered by AVEX
to begin negotiations with J.M. Huber. Benchmark retained counsel, investment
bankers, and accountants in Houston to assist with its due diligence into the
financial condition of AVEX and to provide advice and professional assistance
with any negotiated transaction. After a period of investigation and
negotiation, Benchmark agreed to acquire all of the stock of AVEX from J.M.
Huber for approximately $255 million in cash and one million shares of Benchmark
stock, which was then trading in the market at over $30 per share. J.M. Huber
and Benchmark agreed to the sale of the stock of AVEX under these general terms
and pursuant to the specific provisions of an Amended and Restated Stock
Purchase Contract dated as of August 12, 1999 (the "Stock Purchase Contract").
J.M. Huber and Benchmark closed the Stock Purchase Contract in August 1999 (the
"closing").
6. After closing, however, Benchmark discovered that material
representations made by J.M. Huber that had induced Benchmark to acquire AVEX
were not true, that the financial condition of AVEX did not satisfy the
representations and warranties made
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by J.M. Huber in the Stock Purchase Contract, and that J.M. Huber is taking
steps to prevent Benchmark from obtaining the full benefits of the Stock
Purchase Contract.
CIRCUMSTANCES OF THE FRAUD
7. J.M. Huber, through the identified agents or written presentations at
the noted times and places, made the following representations to Benchmark
about the financial condition of AVEX before closing:
a. At various times in and after March 1999, during personal
meetings in Angleton, Houston, New Jersey and elsewhere, and
during telephone conversations between J.M. Huber offices in
New Jersey, AVEX offices in Huntsville, Alabama, or elsewhere
and the Benchmark offices in Angleton or the offices of
Benchmark advisers in Houston, senior executives and advisers
of J.M. Huber and senior executives of AVEX authorized by J.M.
Huber to disclose the financial condition of AVEX to Benchmark
represented to senior management personnel of Benchmark and
their advisers that the then current management of AVEX had
made AVEX profitable in 1999 and for the future and that all
appropriate charges against income had been taken by AVEX in
its 1998 financial statements in order to properly state the
financial condition of AVEX in 1999 and for the future;
b. On various occasions during this same time period, these same
J.M. Huber and AVEX senior executives and advisers represented
to decision-making executives at Benchmark and their advisers
in the same or similar communications in or between the same
locations that AVEX relations with key customers had not
suffered any recent material adverse consequences, but would
remain strong and would result in increased future sales by
AVEX;
c. At various times in June and July 1999, agents of J.M. Huber
responsible for supplying written financial information about
AVEX to Benchmark delivered or transmitted income statements
and other written accounting materials based on data supplied
by agents of J.M. Huber to Benchmark.
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The foregoing representations were false. AVEX financial statements supplied to
Benchmark were not accurate. Before closing J.M. Huber learned, but did not
disclose to Benchmark, that several key customers had in fact decided to
discontinue or significantly reduce purchases from AVEX or AVEX facilities.
8. J.M. Huber was aware that the representations made to Benchmark were
false or recklessly ignored whether these representations were true or false.
These representations about the financial condition, past performance, and
customer relations of AVEX were material to a decision by Benchmark or any
similarly-situated company to acquire AVEX from J.M. Huber on the terms
reflected in the Stock Purchase Contract. Benchmark relied on the
representations listed in paragraph 7 in closing the AVEX transaction. Benchmark
would not have closed the acquisition of AVEX as agreed had it known the truth
about AVEX.
DAMAGES
9. As a direct and proximate result of the fraudulent conduct of J.M.
Huber and its responsible agents inducing the acquisition of AVEX, Benchmark has
suffered enormous economic loss. The value paid by Benchmark for AVEX exceeds
the actual value of AVEX by many tens of millions of dollars. The value of AVEX
as represented by J.M. Huber to Benchmark prior to closing likewise exceeds the
actual value of AVEX by many tens of millions of dollars.
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10. As a proximate and consequential result of the foregoing fraud
inducing Benchmark to acquire AVEX, Benchmark has already suffered and will
continue to suffer economic loss in addition to that described in paragraph 10.
The fraudulently induced acquisition of AVEX, coupled with the inevitable
discovery that AVEX will operate below the financial levels represented by J.M.
Huber, have contributed to a decline in the market price of Benchmark stock
resulting in a series of securities lawsuits against Benchmark. The expenses of
defending such lawsuits have been and will be a proximate result of actionable
conduct by J.M. Huber.
CAUSES OF ACTION
STATUTORY FRAUD
11. The AVEX Stock Purchase Contract embodied a "transaction involving
stock in a corporation" within the meaning of TEX. BUS. & COMM. CODE ss.
27.01(a). The representations listed in paragraph 7 above were "representations
of a past or existing material fact" and were "made" by J.M. Huber "to"
Benchmark "for the purpose of inducing Benchmark to" enter into the Stock
Purchase Contract, all within the meaning of TEX. BUS. & COMM. CODE ss.
27.01(a)(1)(A). Benchmark "relied on" those representations "in entering into"
the Stock Purchase Contract within the meaning of TEX. BUS. & COMM. CODE ss.
27.01(a)(1)(B). J.M. Huber made the "false representations" listed in paragraph
7 "with actual awareness of the falsity thereof" within the meaning of TEX. BUS.
& COMM. CODE ss. 27.01(c). J.M. Huber is liable to Benchmark for its "actual
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damages" pursuant to TEX. BUS. & COMM. CODE ss. 27.01(b). J.M. Huber is liable
to Benchmark for "exemplary damages" pursuant to TEX. BUS. & COMM. CODE ss.
27.01(c). J.M. Huber is liable to Benchmark for its "reasonable and necessary
attorney's fees, expert witness fees, costs for copies of depositions, and costs
of court" pursuant to TEX. BUS. & COMM. CODE ss. 27.01(d).
FRAUDULENT INDUCEMENT
12. The representations made by J.M. Huber to Benchmark to induce the AVEX
sale detailed in paragraph 7 above were material and false. J.M. Huber knew that
those representations were false when made or asserted those representations
without knowledge of their truth. J.M Huber made those representations with the
intention that Benchmark act upon them. Benchmark did in fact rely on those
representations in closing the acquisition of AVEX on the agreed terms. The
fraudulently induced acquisition of AVEX has proximately caused injury to
Benchmark in at least the respects explained in paragraphs 9 and 10 above. This
fraudulent inducement entitles Benchmark to recover both these actual damages
and punitive damages from J.M. Huber.
NEGLIGENT MISREPRESENTATION
13. J.M. Huber supplied the information described in paragraph 7 to
Benchmark in connection with a transaction in which J.M. Huber had a pecuniary
interest, namely the sale of AVEX. J.M. Huber supplied that information for the
guidance of Benchmark in its business. J.M. Huber did not exercise reasonable
care in obtaining or supplying Benchmark with that false, material
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information. As a proximate result of its justifiable reliance on these
negligent misrepresentations by J.M. Huber, Benchmark suffered at least the
damages explained in paragraph 9 and 10 above. These negligent
misrepresentations entitle Benchmark to recover these damages from J.M. Huber.
BREACH OF CONTRACT
14. J.M. Huber agreed in the Stock Purchase Contract to supply to
Benchmark a working capital schedule prepared by its accountant and a report
demonstrating compliance of that schedule with generally accepted accounting
principles. The purpose of the schedule was to serve as a basis for resolving
working capital adjustments to compute the final price paid for the AVEX stock
by Benchmark. In violation of P. 2.2 of the Stock Purchase Agreement, J.M. Huber
provided Benchmark with a working capital schedule and report with no supporting
detail that are transparently designed to prevent Benchmark from equitably
resolving working capital adjustments prescribed in the Stock Purchase Contract.
As a proximate result of this breach of the Stock Purchase Contract, Benchmark
will be forced to incur unnecessary expense and will be prevented from
effectively protecting its legitimate interests as it attempts to participate in
the contractual process for deriving the final purchase price of the AVEX stock.
This breach of contract entitles Benchmark to recover its actual and
consequential damages and reasonable attorneys' fees.
15. J.M. Huber made a series of representations and warranties in the
Stock Purchase Contract about the financial condition and performance of AVEX.
The true facts about the financial condition and performance of AVEX and the
relations between AVEX and its customers materially contradict representations
and warranties
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contained in P. P. 3.6, 3.7, 3.15, 3.24, and 3.26 of the Stock Purchase
Contract. As a proximate result of these substantial breaches of these
representations and warranties by J.M. Huber, Benchmark has suffered substantial
economic loss. These breaches of contract entitle Benchmark to recover damages
sufficient for Benchmark to recover the benefit of the bargain struck in the
Stock Purchase Contract, together with consequential damages and reasonable
attorney's fees.
BREACH OF DUTY OF GOOD FAITH AND FAIR DEALING
16. By refusing to supply supporting detail for the working capital
schedule and report required by the Stock Purchase Contract, J.M. Huber violated
the implied covenant of good faith and fair dealing imposed on J.M. Huber as a
matter of the New York law chosen by the parties to govern the Stock Purchase
Contract. Benchmark is entitled to recover all direct and consequential damages
proximately caused by this violation by J.M. Huber of this duty of good faith
and fair dealing, together with the reasonable attorneys' fees incurred by
Benchmark in pursuing this claim.
JURY DEMAND
17. Benchmark demands a trial by jury of all the issues raised by its
claims in this lawsuit.
WHEREFORE, Benchmark Electronics, Inc., demands judgment against J.M.
Huber Corporation in the sum of
(a) all actual damages suffered by Benchmark as a result of the fraud,
negligent misrepresentations, and/or breach of contract committed by
J.M. Huber;
(b) "exemplary damages" and/or punitive damages as determined by the
jury;
(c) reasonable and necessary attorney's fees, expert witness
fees, and costs for copies of depositions;
(d) prejudgment and post-judgment interest calculated in accordance with
law;
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(e) its recoverable costs of court; and
(f) such other and further relief to which Benchmark may show itself
entitled.
Respectfully submitted,
/S/ JOE W. REDDEN, JR.
Joe W. Redden, Jr.
State Bar No. 16660600
Federal I.D. No. 2139
BECK, REDDEN & SECREST, L.L.P.
1221 McKinney, Suite 4500
Houston, Texas 77010-2010
(713) 951-3700
(713) 951-3720 (fax)
Attorney-in-Charge for Benchmark
Electronics, Inc.
Of Counsel:
B.D. Daniel
State Bar No. 05362200
Federal I.D. No. 1394
BECK, REDDEN & SECREST, L.L.P.
1221 McKinney, Suite 4500
Houston, Texas 77010-2010
(713) 951-3700
(713) 951-3720 (fax)
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