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): July 25, 1997
PremiumWear, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 1-63 41-0429620
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
7566 Market Place Drive
Minneapolis, Minnesota 55344
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 943-5000
<PAGE>
Item 5. Other Events.
On July 25, 1997, the Board of Directors of PremiumWear, Inc. (the
"Company") declared a dividend of one Right for each outstanding share of the
Company's Common Stock, $.01 par value per share (the "Common Stock"), to the
stockholders of record at the close of business on November 12, 1997 (the
"Record Date"). Except as set forth below, each Right entitles the registered
holder to purchase from the Company one one-hundredth (1/100) of a share of
Series B Junior Participating Preferred Stock, no par value (the "Preferred
Stock"), at a price of $32 per one one-hundredth of a share (the "Purchase
Price"). The terms of the Rights are set forth in a Rights Agreement dated as of
July 25, 1997 (the "Rights Agreement") between the Company and Norwest Bank
Minnesota, N.A., as Rights Agent. The Rights are intended to replace similar
outstanding rights which expire on November 12, 1997.
Initially, the Rights will be attached implicitly to all Common Stock
certificates representing shares then outstanding, and no separate Right
certificates will be distributed. Until the earlier to occur of ten days
following (i) a public announcement that, without the prior consent of the Board
of Directors, a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of voting securities having 15% or more of the voting power of the
Company (the "Stock Acquisition Date"), or (ii) the commencement of (or a public
announcement of an intention to make) a tender offer or exchange offer which
would result in any person or group and related persons having beneficial
ownership of voting securities having 15% or more of the voting power of the
Company (the earlier of such dates referred to in (i) and (ii) above being
called the "Distribution Date"), the Rights will be evidenced, with respect to
any of the Common Stock certificates outstanding as of the Record Date, by such
Common Stock certificates.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with Common Stock certificates. From as
soon as practicable after the Record Date and until the Distribution Date (or
earlier redemption or expiration of the Rights), new Common Stock certificates
issued after the Record Date upon transfer or new issuance of the Common Stock
will contain a notation incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Stock outstanding as of
the Record Date will also constitute the transfer of the Rights associated with
the Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Rights Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date, and the separate Rights
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on November 12, 2007, unless earlier redeemed by the Company as
described below.
In the event that any person becomes the beneficial owner of 15% or
more of the voting power of the Company, ten (10) days thereafter (the "Flip-In
Event") each holder of a Right will thereafter have the right to receive, upon
exercise thereof at the then current Purchase Price of the Right, Common Stock
(or, in certain circumstances, a combination of cash, other property, Common
<PAGE>
Stock or other securities) which has a value of two times the Purchase Price of
the Right (such right being called the "Flip-In Right"). In the event that the
Company is acquired in a merger or other business combination transaction where
the Company is not the surviving corporation or in the event that 50% or more of
its assets or earning power is sold, proper provision shall be made so that each
holder of a Right will thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price of the Right, common stock of the
acquiring entity which has a value of two times the Purchase Price of the Right
(such right being called the "Flip-Over Right"). The holder of a Right will
continue to have the Flip-Over Right whether or not such holder exercises the
Flip-In Right. Upon the occurrence of the Flip-In Event, any Rights that are or
were at any time owned by an Acquiring Person shall become null and void insofar
as they relate to the Flip-In Right.
For example, at a Purchase Price of $32 per Right, if any person
becomes the beneficial owner of 15% or more of the voting power of the Company,
ten (10) days thereafter each Right other than a Right owned by such 15%
beneficial owner would entitle its holder to purchase $64 worth of the Company's
Common Stock (or other consideration, as noted above) for $32. Assuming that the
Common Stock had a per share value of $8 at such time, the holder of each Right
would effectively be entitled to purchase 8 shares of Common Stock for $32.
Similarly, assuming, following the Stock Acquisition Date, the
occurrence of a business combination with another entity in which the Company's
Common Stock is converted or exchanged, or a sale of 50% or more of the
Company's assets or earning power, each Right would entitle its holder to
purchase $64 worth of the acquiring entity's stock for $32.
The Purchase Price payable, and the number of shares of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from 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 or convertible
securities 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) or of
subscription rights or warrants (other than those referred to above).
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the voting power of
the Company and prior to the acquisition by such person or group of 50% or more
of the voting power of the Company, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group 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 Preferred Stock (or of a share of a
class or series of the Company's preferred stock having equivalent rights,
preferences and privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractions of shares will be
<PAGE>
issued and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Stock on the last trading date prior to the date
of exercise.
At any time prior to the earlier to occur of (i) the Stock 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 $.001 per Right (the "Redemption Price"),
which redemption shall be effective at such time as the Board of Directors shall
establish. Additionally, the Continuing Directors may, following the Stock
Acquisition Date, redeem the then outstanding Rights in whole, but not in part,
at the Redemption Price provided that either (a) the Acquiring Person reduces
his beneficial ownership to less than 15% of the voting power of the Company in
a manner which is satisfactory to the Continuing Directors and there are no
other Acquiring Persons, or (b) such redemption is incidental to a merger or
other business combination transaction or series of transactions involving the
Company but not involving an Acquiring Person or any person who was an Acquiring
Person. The redemption of Rights described in the preceding sentence shall be
effective only after ten (10) business days prior notice. Upon the effective
date of the redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
The Preferred Stock purchasable upon exercise of the Rights will be
nonredeemable. Each share of Preferred Stock will have a preferential quarterly
dividend in an amount equal to 100 times the dividend declared on each share of
Common Stock. In the event of liquidation, the holders of Preferred Stock will
receive a preferred liquidation payment of $100 per whole share of Preferred
Stock. Each whole share of Preferred Stock will have 100 votes, voting together
with the Common Stock. In the event of any merger, consolidation or other
transaction in which Common Stock are exchanged, each share of Preferred Stock
will be entitled to receive 100 times the amount and type of consideration
received per share of Common Stock. The rights of the Preferred Stock as to
dividends and liquidations, and in the event of mergers and consolidations, are
protected by customary anti-dilution provisions. Fractional shares of Preferred
Stock in integral multiples of one one-hundredth of a share of Preferred Stock
will be issued unless the Company elects to distribute depositary receipts in
lieu of such fractional shares. In lieu of fractional shares other than
fractions that are multiples of one one-hundredth of a share, an adjustment in
cash will be made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
Until a Right is exercised, it will not entitle the holder to any
rights as a stockholder of the Company (other than those as an existing
stockholder), including, without limitation, the right to vote or to receive
dividends.
The terms of the Rights may be amended by the Board of Directors of the
Company (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.
As of July 25, 1997, there were 2,319,330 shares of Common Stock issued
and outstanding and 176,750 shares reserved for issuance pursuant to the
exercise of outstanding stock options. Each
<PAGE>
outstanding share of Common Stock on November 12, 1997 will receive one Right.
As long as the Rights are attached to the Common Stock, the Company will issue
one Right for each share of Common Stock issued between the Record Date and the
Distribution Date so that all such shares will have attached Rights. There will
be 75,000 shares of Preferred Stock reserved for issuance upon exercise of the
Rights.
The Rights Agreement is designed to protect shareholders in the event
of an unsolicited attempt to acquire the Company for an inadequate price and to
protect against abusive practices that do not treat all shareholders equally,
including partial and two-tier tender offers, coercive offers, and creeping
stock accumulation programs. Such practices can pressure shareholders into
tendering their investments prior to realizing the full value or total potential
of such investments. The Rights Agreement is intended to make the cost of such
abusive practices prohibitive and create an incentive for a potential acquiror
to negotiate in good faith with the Board. The Rights Agreement is not intended
to, and will not, prevent all unsolicited offers to acquire the Company. If an
unsolicited offer is made, and the Board determines that it is fair and in the
best interests of the Company and its shareholders, then, pursuant to the terms
of the Rights Agreement, the Board has the authority to redeem the Rights and
permit the offer to proceed. Essentially, the Rights Agreement will provide the
Board with sufficient opportunity to evaluate the fairness of any unsolicited
offer and the credibility of the bidder, and will therefore enable the Board to
represent the interests of all shareholders more effectively. Of course, in
deciding whether to redeem the Rights in connection with any unsolicited offer,
the Board will be bound by its fiduciary obligations to act in the best
interests of the Company and its shareholders.
The form of Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit B the form of
Rights Certificate, is incorporated herein by reference as Exhibit 1 hereto. The
foregoing description of the Rights does not purport to be complete and is
qualified in its entirety by reference to such Exhibit.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibit 1. Form of Rights Agreement, dated as of July 25, 1997,
between the Company and Norwest Bank Minnesota, National
Association, is incorporated by reference to Exhibit 1
to the Company's Form 8-A which became effective
September 22, 1997.
<PAGE>
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, thereunto duly authorized.
PremiumWear, Inc.
By /s/Thomas D. Gleason
--------------------------------------
Thomas D. Gleason, Chief Executive Officer
Dated:September 24, 1997
