SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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) October 15, 1999
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FRANKLIN ELECTRIC CO., INC.
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(Exact name of registrant as specified in its charter)
Indiana 0-362 35-0827455
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
400 East Spring Street, Bluffton, Indiana 46714
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(Address of principal executive offices) (Zip Code)
(219) 824-2900
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Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
On October 15, 1999, the Board of Directors (the "Board") of
Franklin Electric Co., Inc. (the "Corporation") declared a dividend
distribution of one right (each a "New Right") for each outstanding
share of the common stock, par value $0.10 per share, of the
Corporation ("Common Stock") to stockholders of record at the close of
business on the earlier of February 28, 2001, the date on which the
Rights Agreement, dated as of February 11, 1991, between the
Corporation and Lincoln National Bank & Trust Co. of Fort Wayne, a
national banking association, as rights agent (the "1991 Rights
Agreement"), expires, or the date on which the rights issued under the
1991 Rights Agreement (the "1991 Rights") are exchanged or redeemed
or are no longer outstanding in accordance with the provisions of the
1991 Rights Agreement (such date being referred to as the "Record Date").
Each New Right will entitle the registered holder to purchase from the
Corporation one one-hundredth of a share of Series I Junior Participating
Preference Stock, no par value (the "Preference Stock"), of the
Corporation at an exercise price of $300.00, subject to adjustment
(as adjusted from time to time, the "Purchase Price"). The description
and terms of the New Rights are set forth in a Rights Agreement, dated
as of October 15, 1999 (the "New Rights Agreement"), between the
Corporation and Illinois Stock Transfer Company, as Rights Agent.
The New Rights Agreement was adopted by the Board to replace the
1991 Rights Agreement upon the expiration or redemption of the 1991
Rights, which will occur no later than February 28, 2001. In no event
will both the 1991 Rights and the New Rights be exercisable.
Initially following the Record Date, the New Rights will be
attached to all certificates representing shares of Common Stock then
outstanding, and no separate Rights Certificates will be distributed.
Unless previously redeemed by the Board in accordance with the New
Rights Agreement, the New Rights will separate from the Common Stock
and a "Distribution Date" will occur upon the earlier of (i) 20 days
following the Stock Acquisition Date (as defined below) or (ii) 20
days (or such later date as the Board shall determine, provided that
under certain circumstances any decision to defer such date will
require the concurrence of a majority of the Continuing Directors (as
defined below)) after the date a tender or exchange offer that would
result in a person or group beneficially owning 15 % or more of the
outstanding shares of Common Stock is first published, sent or given
to the Corporation's stockholders.
The "Stock Acquisition Date" is defined as the earlier of (x) the
first date of public announcement by the Corporation that any person
or group (other than certain exempt persons or groups) has acquired,
or obtained the right to acquire, beneficial ownership of 15% or more
of the shares of Common Stock then outstanding or (y) the date on
which any Offering Person (as defined below) or any affiliate or
associate thereof enters into an agreement with the Corporation
providing for an Acquisition Transaction (as defined below), if such
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date is within 180 days after a majority of the Board is elected by
stockholder action by written consent or is comprised of persons who
were not nominated by the Board in office immediately prior to their
election (any person described in clause (x) or clause (y) above is
referred to as an "Acquiring Person"). Neither Patricia Schaefer nor
Diane D. Humphrey or any of their respective descendants or certain
related trusts or other entities (or a group comprised solely of such
persons) will be deemed to be an Acquiring Person as long as all such
persons beneficially own less than 20% of the outstanding shares of
Common Stock. An "Offering Person" is defined as any person (other
than the Corporation or any of its subsidiaries) who, at the time that
a majority of the Board is elected by stockholder action by written
consent or is comprised of persons who were not nominated by the Board
in office immediately prior to their election, (i) has commenced, or
has publicly announced its intent to commence, a tender or exchange
offer if upon consummation thereof such person, together with its
affiliates and associates, would beneficially own 15% or more of the
shares of Common Stock then outstanding, or (ii) has made by public
announcement or by written communication that is or becomes the
subject of a public announcement, or has publicly announced its intent
to make, a proposal to the Corporation or its stockholders for (x) a
merger, consolidation or similar transaction involving the Corporation
or any of its subsidiaries, (y) a purchase or other acquisition of all
or a substantial portion of the assets of the Corporation and its
subsidiaries, or (z) a purchase or other acquisition of securities
representing 15% or more of the shares of Common Stock then outstanding
(any transaction of the type described in clauses (x), (y) or (z) above,
an "Acquisition Transaction").
"Continuing Director" means a director of the Corporation who (i)
either (a) was a member of the Board prior to the date of the New
Rights Agreement, or (b) subsequently became a director of the
Corporation and whose election or nomination for election subsequent
to such date was approved by a vote of a majority of the Continuing
Directors then on the Board and (ii) is not an Acquiring Person or an
affiliate or associate of an Acquiring Person or a representative of
an Acquiring Person or any such affiliate or associate.
Following the Record Date and until the Distribution Date, (i)
the New Rights will be evidenced by the Common Stock certificates and
will be transferred with and only with such Common Stock certificates,
(ii) new Common Stock certificates issued after the Record Date will
contain a notation incorporating the New Rights Agreement by reference
and (iii) the surrender for transfer of any certificate for Common
Stock outstanding will also constitute the transfer of the New Rights
associated with the Common Stock represented by such certificate.
The New Rights will not be exercisable until the Distribution
Date and will expire at the close of business on February 28, 2011,
unless earlier redeemed by the Corporation as described below.
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As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date and, thereafter,
the separate Rights Certificates alone will represent the New Rights.
Except as otherwise determined by the Board, only shares of Common
Stock issued prior to the Distribution Date will be issued with New
Rights.
In the event (a "Flip-in Event") that any person, at any time
after the date of the New Rights Agreement, becomes an Acquiring
Person (except as a result of an acquisition of shares of Common Stock
made pursuant to an offer for all outstanding shares of Common Stock
which a majority of the members of the Board who are not officers of
the Corporation and who are Continuing Directors determine, after
receiving advice from the Board's financial advisor, to be fair to and
otherwise in the best interests of the Corporation and its
stockholders (a "Qualifying Offer")), each holder of a New Right
thereafter will have the right to receive, upon exercise thereof,
Common Stock (or, in certain circumstances, cash, property or other
securities of the Corporation) having a value equal to two times the
Purchase Price. Notwithstanding any of the foregoing, following the
occurrence of a Flip-in Event, all New Rights that are, or (under
certain circumstances specified in the New Rights Agreement) were,
beneficially owned by an Acquiring Person, any of its associates or
affiliates, and certain of its transferees, will be null and void.
Moreover, the New Rights will not be exercisable following the first
occurrence of a Flip-in Event until such time as the New Rights are no
longer redeemable by the Corporation as described below.
In the event that, at any time following the Stock Acquisition
Date, (i) the Corporation is acquired in a merger or other business
combination transaction in which the Corporation is not the surviving
corporation or in which the Corporation is the surviving entity but
the Common Stock is changed or exchanged, or (ii) 50% or more of the
Corporation's assets or earning power is sold or transferred (each, a
"Flip-over Event"), each holder of a New Right (except New Rights
which previously have been voided as described above) shall thereafter
have the right to receive, upon exercise thereof, common stock or
other securities of the acquiring company having a value equal to two
times the Purchase Price, provided that holders of New Rights will not
be entitled to such right to receive acquiring company common stock in
connection with any transaction described in this paragraph if such
transaction is consummated with a person who acquired shares of Common
Stock pursuant to a Qualifying Offer.
The Purchase Price payable, and the number of shares of
Preference Stock or other securities or property issuable, upon
exercise of the New Rights are subject to adjustment from time to time
in accordance with customary antidilution provisions. Following the
occurrence of a Flip-in Event or a Flip-over Event, the antidilution
provisions will apply to the Common Stock or other securities for
which the New Rights are then exercisable.
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With certain exceptions, no adjustment to the Purchase Price will
be required until cumulative adjustments amount to at least 1% of the
Purchase Price. No fractional shares will be issued, other than
fractional shares of Preference Stock that are integral multiples of
one one-hundredth of a share, and a cash payment will be made in lieu
thereof based on the market price of the Preference or Common Stock on
the last trading day prior to the date of exercise.
At any time after the New Rights become exercisable for Common
Stock, the Board may exchange the unexercised New Rights (other then
New Rights owned by any Acquiring Person which have become void), in
whole or in part, at an exchange ratio of one share of Common Stock,
or one one-hundredth of a share of Preference Stock (or of a share of
a class or series of the Corporation's preference stock having
equivalent rights, preferences and privileges), per New Right (subject
to adjustment). Under certain circumstances, authorization of any such
exchange must be by a majority of the Continuing Directors then in
office.
The Board is empowered to redeem the New Rights in whole, but not
in part, at a price of $0.01 per New Right (the "Redemption Price") at
any time before the earlier of (i) the expiration of twenty days
following the Stock Acquisition Date or (ii) the final expiration date
of the New Rights. Notwithstanding the foregoing, in the event that a
majority of the Board is elected by stockholder action by written
consent, or is comprised of persons who were not nominated by the
Board in office immediately prior to their election, then (i) for a
period of 180 days following the effectiveness of such election the
New Rights may not be redeemed, and (ii) thereafter redemption may
only be authorized with the concurrence of a majority of the
Continuing Directors. Immediately upon the action of the Board
ordering redemption of the New Rights the New Rights will terminate
and the only right of the holders of New Rights will be to receive the
Redemption Price.
Until a New Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Corporation, including, without
limitation, the right to vote or to receive dividends. While the
distribution of the New Rights will not be taxable to stockholders or
to the Corporation, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the New
Rights become exercisable for Common Stock (or other consideration) or
for common stock of an acquiring company as set forth above.
The Rights Agreement may be amended by the Board (a) prior to the
Distribution Date, in any manner (other than an amendment to the
Redemption Price or the number of one one-hundredths' of a share of
Preference Stock purchasable upon exercise of a New Right) and (b)
after the Distribution Date, in order to (i) cure any ambiguity, (ii)
correct or supplement provisions which may be defective or
inconsistent, (iii) make changes which do not adversely affect the
interests of holders of New Rights (other than those held by an
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Acquiring Person or certain related persons) or (iv) shorten or
lengthen any time period under the New Rights Agreement (including the
time period governing redemption), provided that no extension or
amendment to adjust the time period for redemption may be made at such
time as the New Rights are nonredeemable. Notwithstanding the
foregoing, in the event that a majority of the Board is elected by
stockholder action by written consent, or is comprised of persons who
were not nominated by the Board in office immediately prior to their
election, then (i) for a period of 180 days following the
effectiveness of such election, the New Rights Agreement may not be
amended, and (ii) thereafter the New Rights Agreement may only be
amended with the concurrence of a majority of the Continuing
Directors.
The New Rights Agreement is filed herewith as Exhibit 4.1 and is
incorporated herein by reference. The foregoing summary description of
the New Rights does not purport to be complete and is qualified in its
entirety by reference to the full text of the New Rights Agreement.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
4.1 Rights Agreement, dated as of October 15, 1999, between
Franklin Electric Co., Inc. and Illinois Stock Transfer
Company, as Rights Agent (incorporated by reference to
Exhibit 4.1 to Franklin Electric Co., Inc.'s Form 8-A filed
with the Securities and Exchange Commission on October 19,
1999).
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SIGNATURE
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 hereunto duly authorized.
FRANKLIN ELECTRIC CO., INC.
By: /s/ Gregg C. Sengstack
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Name: Gregg C. Sengstack
Title: Chief Financial Officer
Dated: October 18, 1999
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EXHIBIT INDEX
Exhibit No. Description
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4.1 Rights Agreement, dated as of October 15, 1999,
between Franklin Electric Co., Inc. and Illinois
Stock Transfer Company, as Rights Agent
(incorporated by reference to Exhibit 4.1 to
Franklin Electric Co., Inc.'s Form 8-A filed with
the Securities and Exchange Commission on October
19, 1999).
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