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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): December 10, 1998
APPLIED MICROSYSTEMS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
WASHINGTON 0-26778 91-1074996
(State or Other Jurisdiction (Commission File (IRS Employer ID.
of Incorporation or Number) No.)
Organization)
5020 148th Avenue N.E.
Redmond, Washington 98052
(Address of Principal Executive Offices) (Zip Code)
(206) 882-2000
(Registrant's Telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On December 10, 1998, the Board of Directors of Applied Microsystems
Corporation (the "Company") declared a dividend distribution of one preferred
share purchase right (each a "Right") for each outstanding share of Common
Stock, par value $0.01 per share, of the Company (the "Common Shares"), payable
to the holders of record of the Common Shares on December 21, 1998 (the "Record
Date"). The Rights dividend was declared by the Board of Directors in
connection with its adoption of the Shareholder Rights Plan, dated December 10,
1998, between the Company and ChaseMellon Shareholder Services, LLC (the "Rights
Plan").
Until the earliest to occur of (i) a public announcement that, without
the prior approval of the Board of Directors of the Company, a person or group,
including any affiliates or associates of such person or group (an "Acquiring
Person"), acquired, or obtained the right to acquire, beneficial ownership of
fifteen percent or more of the outstanding Common Shares (the "Shares
Acquisition Date") or (ii) ten business days (or such later date as the Board
may determine) following the commencement or announcement of an intention (which
is not subsequently withdrawn within five business days after such announcement)
to make a tender offer or exchange offer which would result in any person or
group (and related persons) having beneficial ownership of fifteen percent or
more of the outstanding Common Shares without the prior consent of the Board of
Directors (the earliest of such dates being called the "Distribution Date"), the
Rights will be attached to all Common Share certificates and will be evidenced
by the Common Share certificates. The Rights Plan provides that, until the
Distribution Date, the Rights will be transferred with and only with the Common
Shares. Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Share certificates issued after the Record Date upon
transfer, replacement or new issuance of Common Shares will contain a legend
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption, exchange or expiration of the Rights), the surrender for
transfer of any Common Share certificates outstanding as of the Record Date,
even without such a notation, will also constitute the transfer of the Right
associated with each of the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be sent by first class mail
to holders of record of the Common Shares as of the close of business on the
Distribution Date, and the separate Rights Certificates alone will evidence the
Rights and the Rights will be separately transferable from the Common Shares.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on December 21, 2008, unless earlier redeemed or exchanged by
the Company as described below.
The preferred stock purchasable upon exercise of the Rights is
nonredeemable and junior to any other series of preferred stock the Company may
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issue (unless otherwise provided in the terms of the Company's Articles of
Incorporation, as such may be amended from time to time). Each share of
preferred stock will have a preferential quarterly dividend in an amount equal
to 100 times the dividend declared on each Common Share. In the event of
liquidation, the holders of Preferred Stock will receive a preferred liquidation
payment per share equal to 100 times the payment made to each Common Share.
Each share of preferred stock will have 100 votes, voting together with the
Common Shares unless otherwise required by law. In the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, each
share of preferred stock will be entitled to receive 100 times the amount and
type of consideration received per Common Share. The rights of the preferred
stock as to dividends, liquidation and voting, and mergers and consolidations,
are protected by customary anti-dilution provisions. Fractional shares of
preferred stock may be issued and such fractional shares shall entitle the
holder thereof, in proportion to such holder's fractional shares, to have the
benefit of all other rights of holders of preferred stock.
In the event that any person becomes an Acquiring Person, each holder
of a Right generally will thereafter have the right for a sixty day period after
the later of the date of such event and the effectiveness of an appropriate
registration statement (or such other longer period set by the Board of
Directors) to receive upon exercise of the Right that number of Common Shares
(or, in the discretion of the Board of Directors, one one-hundredths of a
preferred share or other securities or property) having a market value of two
times the exercise price of the Right (such right being called the "Subscription
Right"). Notwithstanding the foregoing, following the occurrence of a person
becoming an Acquiring Person, all Rights that are, or under certain
circumstances specified in the Rights Plan were, beneficially owned by the
Acquiring Person will be null and void.
In the event that, at any time on or following the Shares Acquisition
Date, the Company is acquired in a merger or other business combination
transaction (whether or not the Company is the surviving entity) or 50% or more
of the Company's assets or earning power are sold (in one transaction or a
series of transactions), proper provision shall be made so that each holder of a
Right (except Rights that have been rendered void under the Rights Plan) shall
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of common stock of
the acquiring company (or, in the event there is more than one acquiring
company, the acquiring company receiving the greatest portion of the assets or
earning power transferred) which at the time of such transaction would have a
market value of two times the exercise price of the Right (such right being
called the "Merger Subscription Right"). The holder of a Right will continue to
have the Merger Subscription Right whether or not such holder exercises the
Merger Subscription Right.
The Purchase Price payable, the number of Rights and the number of
shares of Preferred Stock, Common Shares or other securities or property
issuable, upon exercise of the Rights are subject to adjustment form time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of the Preferred Stock, (ii) upon
the grant to holders of the Preferred Stock of certain rights or warrants to
subscribe for Preferred Stock, certain convertible
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securities or securities having the same or more favorable rights, privileges
and preferences as the Preferred Stock at less than the current market price of
the Preferred Stock or (iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets excluding regular quarterly cash
dividends out of earnings or retained earnings and dividends payable in
Preferred Stock or of subscription rights or warrants (other than those referred
to above). With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least one
percent in such Purchase Price.
If at any time following the Record Date the Company shall pay a
dividend on the Common Shares in the form of Common Shares or effect a
subdivision, combination or consolidation of the outstanding Common Shares
into a greater or lesser number of Common Shares, then each outstanding
Common Share following such event shall continue to have one Right associated
with it and the exercise price of each Right will be proportionately adjusted.
At any time prior to the earliest to occur of (i) the close of
business on the Shares Acquisition Date or (ii) the expiration of the Rights,
the Company may redeem the Rights in whole, but not in part, at a price of
$0.01 per Right (the "Redemption Price"), which redemption shall be effective
immediately upon the action of the Board of Directors. Additionally,
following the Shares Acquisition Date and the expiration of the period during
which the Subscription Right is exercisable, the Company may redeem the then
outstanding Rights in whole, but not in part, at the Redemption Price. In
addition, the Board of Directors of the Company may also redeem all of the
Rights in connection with any merger, consolidation or sale or other transfer
of fifty percent or more of the Company's assets or earning power (a
"Transaction") in which all holders of Common Shares are treated alike and
such transaction either (i) does not involve an Acquiring Person or (ii) the
Acquiring Person has yet to obtain beneficial ownership of fifty percent or
more of the Common Shares and there exists no other Acquiring Person at that
time. The Company may, at its option, pay the Redemption Price in Common
Shares or cash. Upon the effective date of the redemption of the Rights, the
right to exercise the Rights will terminate and the only right of Rights
holders will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including the right to vote or to
receive dividends or any other incidents of ownership associated with the Common
Shares.
The Board of Directors of the Company may, at its option, after there
exists an Acquiring Person, exchange all or part of the then outstanding Rights
(other than those held by the Acquiring Person) for Common Shares having a value
per Right equal to the difference between the value of the Common Shares
receivable upon exercise of the Right and the Purchase Price, and such exchange
consideration may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the Record Date.
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after the Acquiring Person becomes the
beneficial owner of fifty percent or more of the Common Shares then outstanding.
Immediately upon the action of the Board of Directors of the Company ordering
the
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exchange of any Rights, the right to exercise such Rights shall terminate. The
Board of Directors, at its option, may substitute preferred stock for some or
all of the Common Shares exchangeable for the Rights.
Except as set forth above, the terms of the Rights may be amended by
the Board of Directors of the Company without the approval of the Rights
holders, (i) prior to the Distribution Date in any manner and (ii) on or after
the Distribution Date to cure any ambiguity, to correct or supplement any
provision of the Rights Agreement which may be defective or inconsistent with
any other provisions, or in any manner not adversely affecting the interests of
the holders of the Rights (excluding the interests of any Acquiring Person), or,
subject to certain limitations, to shorten or lengthen any time period under the
Rights Agreement.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on the Rights being redeemed or a substantial
number of Rights being acquired. However, the Rights generally should not
interfere with any merger or other business combination approved by the Board of
Directors.
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<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
4.1 Rights Agreement, dated as of December 10, 1998, between Applied
Microsystems Corporation, and ChaseMellon Shareholder Services,
L.L.C., incorporated herein by reference from Exhibit 1 to the
Company's Registration Statement on Form 8-A12B filed
December 11, 1998.
99.1 Press release issued December 11, 1998.
99.2 Form of letter to shareholders
</TABLE>
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SIGNATURE
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.
APPLIED MICROSYSTEMS CORPORATION
Date: December 10, 1998 By:
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A. James Beach
Its: Vice President, Secretary, Treasurer
and Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
<S> <C>
4.1 Rights Agreement, dated December 10, 1998, between
Applied Microsystems Corporation and ChaseMellon
Shareholder Services, L.L.C., incorporated herein
by reference from Exhibit 1 to the Company's
Registration Statement on Form 8-A12B, dated
December 11, 1998.
99.1 Press release issued December 11, 1998.
99.2 Form of letter to shareholders.
</TABLE>
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SAMPLE PRESS RELEASE
APPLIED MICROSYSTEMS CORPORATION
ADOPTS A SHAREHOLDER RIGHTS PLAN
Redmond, Washington, December 10, 1998 (Nasdaq: "APMC")--The Board of
Directors of Applied Microsystems Corporation, a Washington corporation (the
"Company"), today announced that it has adopted a shareholder rights plan (the
"Rights Plan"). Pursuant to the Rights Plan, the Board declared a dividend
distribution of one preferred share purchase right (a "Right") for each
outstanding share of common stock of the Company. Each right will entitle
shareholders to buy 1/100th of a share of the Company's Series A Preferred Stock
at an exercise price of $30.00. The Rights will become exercisable upon the
earlier to occur of a person or related group announcing an acquisition of 15%
or more of the common stock of the Company or announcing the commencement of a
tender or exchange offer which would result in ownership by the person or group
of 15% or more of the common stock of the Company. The Company will be entitled
to redeem the Rights at $0.01 per Right at any time on or before the acquisition
by a person or group of 15% or more of the common stock of the Company and in
certain circumstances to permit transactions where all of the Company's
shareholders are treated equally.
If, prior to redemption, exchange or expiration of the Rights, a person or
group acquires 15% or more of the common stock of the Company, each Right not
owned by a holder of 15% or more of the common stock will entitle its holder to
purchase, at the Right's then current exercise price, that number of shares of
common stock of the Company (or, in certain circumstances as determined by the
Board, cash, other property or securities) having a market value at that time of
twice the Right's exercise price. If, on or after the date a person or group
acquires 15% or more of the common stock of the Company, the Company sells more
than 50% of its assets or earning power or is acquired in a merger or other
business combination transaction, the acquiring person must assume the
obligations under the Rights Plan and the Rights will become exercisable to
acquire Common Stock of the acquiring person at the same discounted price. At
any time after an event triggering the exercisability of the Rights and prior to
the acquisition by the acquiring person of 50% or more of the outstanding Common
Stock, the Board of Directors of the Company may exchange the Rights (other than
those owned by the acquiring person or its affiliates) for common stock of the
Company with a value per Right equal to the difference between the value of
Common Shares issued upon exercise of the Right and the Purchase Price per Right
(subject to adjustment under certain circumstances).
The Rights are designed to assure that the Company's shareholders are
treated equitably in the event of any proposed takeover of the Company and to
guard against partial or two-tiered tender offers and other coercive tactics
that can be designed to gain control of the Company without paying all
shareholders the fair value for their shares,
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including a "control premium." The Rights may increase the Company's ability to
negotiate with would be acquirors to maximize shareholder value.
The dividend distribution will be made on or about December 21, 1998 to
shareholders of record at the close of business on that date. The Company will
mail to each shareholder a summary of the terms and conditions of the Rights
within approximately two weeks after December 21, 1998. The Rights will expire
December 21, 2008. Further details of the terms and conditions of the Rights
will be set forth in a letter that will be mailed to all the Company's
shareholders.
ABOUT APPLIED MICROSYSTEMS CORPORATION
Applied Microsystems Corporation (NASDAQ "APMC"), based in Redmond, WA, is
a leader and innovator in embedded systems solutions. The Company's products
help engineers and computer scientists develop, simulate, debug and test
embedded products faster, more reliably and at a lower cost. For more
information, visit the Company's home page on the World Wide
Web: HTTP://WWW.AMC.COM.
Except for the historical information contained herein, this news release
discusses certain forward-looking matters that involve risks and uncertainties,
including future market opportunities for products and relationships with third
parties, customer order cycles and product acceptance, the management of growth,
sufficient availability and retention of qualified personnel, changes in
international operations including exchange rate risks, changes in market
conditions for the Company's products and the other risks detailed from
time-to-time in the Company's Security and Exchange Commission reports.
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APPLIED MICROSYSTEMS CORPORATION
5020 148TH AVENUE N.E.
REDMOND, WASHINGTON 98052
DECEMBER 21, 1998
To our Shareholders:
Your Board of Directors has adopted a Shareholder Rights Plan (the "Rights
Plan"). To implement the Rights Plan, the Board of Directors has declared a
dividend distribution of preferred share purchase rights (the "Rights") on the
outstanding shares of the Company's common stock. This letter describes the
Rights Plan and the Board's reasons for adopting it. The accompanying summary
of Rights describes the terms of the Rights as set forth in the Rights Plan
pursuant to which the Rights have been issued.
The Rights are designed to protect and maximize the value of your interest
in the Company. We believe that the Rights Plan, while not intended to prevent
a takeover, will provide protection to you, our shareholders, from the abusive
and coercive tactics that can occur in unsolicited takeover transactions.
The Rights contain provisions to protect shareholders in the event of an
unsolicited takeover attempt through such methods as a gradual accumulation of
shares in excess of 15% of the outstanding stock followed by a two-tier tender
offer or other tactics that do not treat all shareholders equally. These
tactics may unfairly pressure shareholders, deprive them of the full value of
their shares, or force them out of their investment without giving them any
meaningful choice. With hundreds of other companies having established
shareholder rights plans, we consider the Rights Plan to be the best available
means of protecting the full value of your investment in the Company, while not
preventing a fair acquisition offer for the Company.
The Rights will initially trade with shares of the Company's common stock
and have no impact on the way in which you can presently trade the Company's
stock. As explained in more detail in the attached Summary of Rights, the
Rights are not exercisable until after a person or group announces the
acquisition of 15% or more of the Company's outstanding common stock or the
commencement of a tender offer which would result in ownership by the person or
group of 15% or more of the outstanding common stock.
In implementing this Rights Plan, we have exercised our continued
confidence in the Company's future and our determination that you, our
shareholders, be given every opportunity to participate fully in that future.
On behalf of the Board of Directors,
Anthony A. Miadich
Chairman of the Board of Directors
