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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
AUGUST 21, 1998
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(Date of earliest event reported)
FILM ROMAN, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-29642 95-4215913
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(State or other juris- (Commission (IRS Employer
diction or incorporation) File Number) Identification No.)
12020 CHANDLER BLVD., SUITE 200, NORTH HOLLYWOOD, CALIFORNIA 91607
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (818) 761-2544
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ITEM 5. OTHER EVENTS.
On August 12, 1998, the Board of Directors of Film Roman, Inc. (the
"COMPANY") adopted a Stockholder Rights Plan (the "RIGHTS PLAN"). The purpose
of the Rights Plan is to deter certain coercive takeover tactics and enable the
Board of Directors to represent effectively the interests of stockholders in the
event of a takeover attempt. The Rights Plan does not deter negotiated mergers
or business combinations that the Board of Directors determines to be in the
best interests of the Company and its stockholders.
To implement the Rights Plan the Board of Directors declared a dividend of
one preferred share purchase right (a "RIGHT") for each outstanding share of
common stock (the "COMMON SHARES") of the Company. The dividend was paid on
September 1, 1998 to the stockholders of record on that date. Each Right
entitles the registered holder to purchase from the Company one one-hundredth of
a share of Series A Preferred Stock of the Company, par value $.01 per share
(the "PREFERRED SHARES"), at a price of $12 per one one-hundredth of a Preferred
Share, subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement (the "RIGHTS AGREEMENT") between the Company and
American Stock Transfer & Trust Corporation, as Rights Agent.
RIGHTS ATTACH TO COMMON SHARES INITIALLY
Initially and until a Distribution Date (as defined below) occurs, the
Rights are attached to all Common Shares and no separate Rights certificates
will be issued. During this initial period,
. the Rights are not exercisable;
. the Rights are transferred with the Common Shares and are not
transferable separately from the Common Shares;
. new Common Share certificates or book entry shares issued will contain
a notation incorporating the Rights Agreement by reference; and
. the transfer of any Common Shares will also constitute the transfer of
the Rights associated with those Common Shares.
DISTRIBUTION OF RIGHTS
Separate certificates evidencing the Rights will be mailed to holders of
record of the Common Shares on the "DISTRIBUTION DATE." The Distribution Date
is the earlier to occur of the following three events (or such later date as may
be determined by the Board of Directors, upon approval by a majority of
Continuing Directors as defined below):
. the tenth day after a public announcement that a person or group of
affiliated or associated persons has become an Adverse Person or has
acquired 15% or more of the outstanding Common Shares (thereby
becoming an "ACQUIRING PERSON" under the Rights Plan); or
. the tenth day after the commencement of a tender offer or exchange
offer, or an announcement of a person's intent to commence a tender or
exchange offer, that would result in a person or group beneficially
owning 15% or more of the outstanding Common Shares; or
. the tenth day after the filing by any person of a registration
statement with respect to a contemplated exchange offer to acquire
beneficial ownership of 15% or more of the outstanding Common Shares.
Acquisitions by the following persons will not result in the person
becoming an Acquiring Person: The Company, any subsidiary or employee benefit
plan of the Company, or Phil Roman but only to the extent Mr. Roman acquires
additional Common Shares as a result of the exercise of stock options granted to
him by the Company.
After the Distribution Date, the Rights will be tradable separately from
the Common Shares. After the Distribution Date and after the Company's right to
redeem (as described below) has expired, the Rights will be exercisable in two
different ways depending on the circumstances as set forth below.
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RIGHT TO PURCHASE COMPANY STOCK
Because of the nature of the Preferred Shares' dividend, liquidation and
voting rights, the value of the one one-hundredth interest in a Preferred Share
that may be purchased upon exercise of each Right should approximate the value
of one Common Share. For convenience, the discussion relating to the Right to
Purchase Company Stock and the Right to Purchase Acquiring Person Stock, each
immediately below, is expressed in terms of the exercise of a Right to purchase
Common Shares.
If a person or group acquires 15% or more of the outstanding Common Shares
(thereby becoming an Acquiring Person) and the Company's redemption right has
expired, each holder of a Right (except those held by the Acquiring Person and
its affiliates and associates) will have the right to purchase, upon exercise,
Common Shares having a value equal to two times the exercise price of the Right.
In other words, the Rights holders other than the Acquiring Person may purchase
Common Shares at a 50% discount.
For example, at the exercise price of $12 per Right, each Right not owned
by an Acquiring Person would entitle its holder to purchase $24 worth of Common
Shares (or other consideration, as noted above) for $12. Assuming a value of
$1.50 per Common Share at such time, the holder of each valid Right would be
entitled to purchase 16 Common Shares for $12.
RIGHT TO PURCHASE ACQUIRING PERSON STOCK
Alternatively, if, in a transaction not approved by the Board of Directors
and the Continuing Directors, the Company is acquired in a merger or other
business combination or 50% or more of its assets or earning power are sold
after a person or group has become an Acquiring Person, and the Company's
redemption right has expired, proper provision will be made so that each holder
of a Right will thereafter have the right to purchase, upon exercise, that
number of shares of common stock of the acquiring company as have a market value
of two times the exercise price of the Right. In other words, a Rights holder
may purchase the acquiring company's common stock at a 50% discount.
EXCHANGE OF COMPANY STOCK FOR RIGHTS
At any time after any person or group becomes an Acquiring Person and
before the Acquiring Person acquires 50% or more of the outstanding Common
Shares, the Board of Directors may exchange the Rights (other than Rights owned
by the Acquiring Person which will have become void), in whole or in part, for
Common Shares for consideration per Right consisting of one-half of the
securities that otherwise would be issuable.
REDEMPTION
The Rights are redeemable by the Company, in whole but not in part, at a
price of $.001 per Right at any time up to and including the tenth day after the
time that a person or a group has become an Acquiring Person, subject to
extension of this redemption period by the Board of Directors. Immediately upon
redemption, the right to exercise will terminate and the only right of holders
will be to receive the redemption price.
EXPIRATION OF RIGHTS
The Rights will expire on August 31, 2008 unless the expiration date is
extended by amendment as described below or unless the Rights are earlier
redeemed or exchanged by the Company as described above.
AMENDMENTS
Prior to a Distribution Date, the terms of the Rights may be amended by the
Board of Directors in its discretion without the consent of the Rights holders.
After a Distribution Date, the Board of Directors may, subject to certain
limitations, amend the Rights Agreement to clarify or resolve any ambiguity,
defect or inconsistency, to shorten or lengthen any time period under the Rights
Agreement or to make other changes that do not adversely affect the interests of
the Rights holders (excluding the interests of Acquiring Persons).
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MISCELLANEOUS
"CONTINUING DIRECTOR" means a member of the Board of Directors, who is not
an Acquiring Person or a representative or nominee of an Acquiring Person, and
who either (i) was a member of the Board of Directors on the date of the Rights
Agreement or (ii) thereafter became a member of the Board of Directors, and
whose nomination for election or reelection to the Board of Directors was
recommended or approved by a majority of the Continuing Directors then on the
Board of Directors.
"ADVERSE PERSON" shall mean any Person other than an Exempt Person who is
declared to be an Adverse Person by the Board of Directors upon a determination
that such Person, alone or together with its affiliates and associates, has, at
any time after the Declaration Date, become the beneficial owner of a number of
Common Shares that the Board of Directors determines to be substantial (which
amount shall in no event be less than 10% of the then outstanding Common Shares)
and a determination by a majority of the Board of Directors after reasonable
inquiry and investigation, that (i) such beneficial ownership by such Person is
intended to cause the Company to repurchase the Common Shares beneficially owned
by such Person or to cause pressure on the Company to take action or enter into
a transaction or series of transactions intended to provide such Person with
short-term financial gain under circumstances where the Board of Directors
determines that the best long-term interest of the Company and its stockholders
would not be served by taking such action or entering into such transaction or
series of transactions at that time, or (ii) such beneficial ownership is
causing or reasonably likely to cause a material adverse impact on the business
or prospects of the Company.
The number of outstanding Rights and the number of one one-hundredths of a
Preferred Share issuable upon exercise of each Right are subject to adjustment
under certain circumstances.
Until a Right is exercised, a Rights holder, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
August 31, 1998. A copy of the Rights Agreement is available to Rights holders
free of charge upon request to the Corporate Secretary of the Company.
This summary description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
4.1. Rights Agreement, dated as of August 21, 1998, between the Company and
American Stock Transfer and Trust Corporation, as Rights Agent.
Incorporated by reference to Exhibit 1 to Form 8-A filed September 1,
1998.
4.2. Certificate of Designation of Rights, Preferences and Privileges of
Preferred Stock (Exhibit A to the Rights Agreement filed as Exhibit 1
hereto). Incorporated by reference to Exhibit 1 to Form 8-A filed
September 1, 1998.
4.3. Form of Right Certificate (Exhibit B to the Rights Agreement filed as
Exhibit 1 hereto). Incorporated by reference to Exhibit 2 to Form 8-A
filed September 1, 1998.
4.4. Summary of Share Purchase Rights (Exhibit C to the Rights Agreement
filed as Exhibit 1 hereto). Incorporated by reference to Exhibit 3 to
Form 8-A filed September 1, 1998.
99.1. Press Release, dated August 21, 1998, which announced the adoption of
the Rights Plan.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
FILM ROMAN, INC.
Dated: August 31, 1998 By: /s/ David Pritchard
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Name: David Pritchard
Title: President and Chief Executive Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page No.
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<S> <C>
4.1 Rights Agreement, dated as of August 21, 1998, between the
Company and American Stock Transfer and Trust Corporation,
as Rights Agent. Incorporated by reference to Exhibit 1 to
Form 8-A filed September 1, 1998.
4.2 Certificate of Designation of Rights, Preferences and Privileges of
Preferred Stock (Exhibit A to the Rights Agreement filed as Exhibit 1
hereto). Incorporated by reference to Exhibit 1 to Form 8-A filed
September 1, 1998.
4.3 Form of Right Certificate (Exhibit B to the Rights Agreement
filed as Exhibit 1 hereto). Incorporated by reference to
Exhibit 2 to Form 8-A filed September 1, 1998.
4.4 Summary of Share Purchase Rights (Exhibit C to the Rights
Agreement filed as Exhibit 1 hereto). Incorporated by reference
to Exhibit 3 to Form 8-A filed September 1, 1998.
99.1 Press Release, dated August 21, 1998, which announced the
adoption of the Rights Plan.
</TABLE>
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Aug. 21, 1998--Film Roman Inc. (Nasdaq:ROMN) Friday announced that it had
adopted a stockholders' rights plan to protect the company and its stockholders
from unsolicited attempts or inequitable offers to acquire the company.
The rights plan has no immediate dilutive effect and does not diminish the
ability of the company or its stockholders to accept an offer for the company
approved by the board.
To implement this stockholder rights plan, the company has declared a
dividend distribution of one preferred share purchase right on each
outstanding share of Film Roman common stock outstanding on Sept. 1, 1998. Each
right will entitle stockholders to buy one one-hundredth of a share of the
company's preferred stock at an exercise price of $ 12.
The rights will become exercisable (with certain limited exceptions provided
in the rights agreement) following the 10th day after: (a) a person or group
announces acquisition of 15 percent or more of the company's common stock, (b) a
person or group announces commencement of a tender offer the consummation of
which would result in ownership by the person or group of 15 percent or more
of the company's common stock, (c) the filing of a registration statement for
any such exchange offer under the Securities Act of 1933, as amended, or (d) the
company's board of continuing directors determines that a person is an "adverse
person," as defined in the rights plan.
The company will be entitled to redeem the rights at $ .001 per right at
certain times as provided in the rights agreement. The rights will expire on
Aug. 31, 2008.
If a person acquires 15 percent or more of the company's common stock
(with certain limited exceptions provided in the rights agreement) or is
determined by a majority of the company's "continuing directors" to be an
"adverse person," then all Rights holders except the buyer or adverse person
will be entitled to acquire company common stock at a discount.
The effect will be to discourage acquisitions of more than 15 percent of
the company's common stock without negotiations with the board of directors.
In addition, if the company sells more than 50 percent of its assets or
earning power or is acquired in a merger or other business combination
transaction in which it is not the surviving corporation, the acquiring person
must assume the obligations under the rights, which will become exercisable
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Business Wire, August 21, 1998
upon the occurrence of certain events to acquire preferred stock of the
acquiring person at the discounted price.
Founded in 1984, Film Roman is one of the leading independent animation
studios in the country. Currently, Film Roman produces such top animated hits as
"The Simpsons" and "King of the Hill," and is in production on "The Mr. Potato
Head Show," which is expected to debut in the fall of 1998 on the Fox Kids
Network, and "Family Guy" for 20th Century Fox Television, which is tentatively
scheduled to air on Fox next year.
This news release contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements relate to, among other things, the debut of "The Mr. Potato Head
Show" on the Fox Kids Network in the fall of 1998 and the new series "Family
Guy" for 20th Century Fox Television, which is tentatively scheduled to air on
Fox next year. These forward-looking statements are based largely on Film
Roman's current expectations and are subject to a number of risks and
uncertainties. Such risks and uncertainties include, but are not limited to,
risks that the episodes may not air in the number or time period contemplated,
or at all, and other risks described in Film Roman's annual report on Form 10-K
for the year ended Dec. 31, 1997, and other Securities and Exchange Commission
reports and filings. Actual results could differ materially from these forward-
looking statements.
CONTACT: Saltzman Communications
Michael Saltzman, 323/692-7887
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