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): August 29, 1997
DATA TRANSMISSION NETWORK CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-15405 47-0669375
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
9110 West Dodge Road, Suite 200, Omaha, Nebraska 68114
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (402)390-2328
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Item 5. Other Events.
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On August 29, 1997, the Board of Directors of Data Transmission Network
Corporation (the "Company") declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of common stock, par value $.001
per share, of the Company (the "Common Stock"). The dividend is payable on
September 2, 1997 (the "Record Date") to the stockholders of record on that
date. Each Right entitles the registered holder to purchase from the Company one
one-thousandth of a share of Series A Junior Participating Preferred Stock, par
value $.50 per share, of the Company (the "Preferred Stock") at a price of
$150.00 per one-thousandth of a share of Preferred Stock (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement dated as of August 29, 1997, as the same may be amended from
time to time (the "Rights Agreement"), between the Company and First National
Bank of Omaha, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 11% or more of the
outstanding shares of Common Stock or (ii) 10 business days (or such later date
as may be determined by action of a majority of Continuing Directors then in
office prior to such time as any person or group of affiliated persons becomes
an Acquiring Person) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of 11% or more of
the outstanding shares of Common Stock (the earlier of such dates 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 certificate together with a summary description of the Rights attached
thereto. The term "Acquiring Person" excludes the Company, any subsidiary of the
Company, any employee benefit plan of the Company or any subsidiary of the
Company, and Roger R. Brodersen (the founder of the Company) and certain related
persons and entities. In addition, any other person whose current level of
beneficial ownership exceeds 11% but is less than 14% of the Common Stock will
become an Acquiring Person only if its level of beneficial ownership exceeds 14%
of the Common Stock.
The Rights Agreement provides that, until the Distribution Date (or
earlier expiration of the Rights), the Rights will be transferred with and only
with the Common Stock. Until the Distribution Date (or earlier expiration of the
Rights), new Common Stock certificates issued after the Record Date upon
transfer or new issuances of Common Stock will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date (or earlier
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expiration of the Rights), the surrender for transfer of any certificates for
shares of Common Stock outstanding as of the Record Date, even without such
notation or a summary description of the Rights being attached thereto, will
also constitute the transfer of the Rights associated with the shares of Common
Stock represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and such separate Right Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on August 29, 2007 (the "Final Expiration Date"), unless the Final
Expiration Date is advanced or extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of shares of Preferred Stock
or other securities or property issuable, upon exercise of the Rights is 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 or purchase Preferred Stock at a price, or
securities convertible into Preferred Stock with a conversion price, less than
the then 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 periodic cash dividends or dividends payable in
Preferred Stock) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights is subject to adjustment in the event
of a stock dividend on the Common Stock payable in shares of Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring, in
any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights will
not be redeemable. Each share of Preferred Stock will be entitled, when, as and
if declared, to a minimum preferential quarterly dividend payment of $1.00 per
share but will be entitled to an aggregate dividend of 1000 times the dividend
declared per share of Common Stock. In the event of liquidation, dissolution or
winding up of the Company, the holders of the Preferred Stock will be entitled
to a minimum preferential payment of $150.00 per share (plus any accrued but
unpaid dividends) but will be entitled to an aggregate payment of 1000 times the
payment made per share of Common Stock. Each share of Preferred Stock will have
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1000 votes, voting together with the Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which outstanding shares of Common
Stock are converted or exchanged, each share of Preferred Stock will be entitled
to receive 1000 times the amount received per share of Common Stock. These
rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become void),
will thereafter have the right to receive upon exercise of a Right that number
of shares of Common Stock having a market value of two times the exercise price
of the Right.
In the event that, after a person or group has become an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
proper provisions will be made so that each holder of a Right (other than Rights
beneficially owned by an Acquiring Person which will have become void) will
thereafter have the right to receive upon the exercise of a Right that number of
shares of common stock of the person with whom the Company has engaged in the
foregoing transaction (or its parent) that at the time of such transaction have
a market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and
prior to the earlier of one of the events described in the previous paragraph or
the acquisition by such Acquiring Person of 50% or more of the outstanding
shares of Common Stock, the Board of Directors of the Company (with the
concurrence of a majority of the Continuing Directors then in office) may
exchange the Rights (other than Rights owned by such Acquiring Person which will
have become void), in whole or in part, for shares of Common Stock or Preferred
Stock (or a series of the Company's preferred stock having equivalent rights,
preferences and privileges), at an exchange ratio of one share of Common Stock,
or a fractional share of Preferred Stock (or other preferred stock) equivalent
in value thereto, per Right.
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The Rights Agreement defines "Continuing Director" as any member of the
Company's Board of Directors who 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 and either (i) was a member of the Board of
Directors prior to the date of the Rights Agreement or (ii) subsequently becomes
a Board member, if such person's nomination for election or election to the
Board is recommended or approved by a majority of the Continuing Directors.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock or Common Stock
will be issued (other than fractions of Preferred Stock which are integral
multiples of one one-thousandths of a share of Preferred Stock, which may, at
the election of the Company, be evidenced by depository receipts), and in lieu
thereof an adjustment in cash will be made based on the current market price of
the Preferred Stock or the Common Stock.
At any time prior to the time an Acquiring Person becomes such, the
Board of Directors of the Company (with the concurrence of a majority of the
Continuing Directors) may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price"). The redemption of the Rights
may be made effective at such time, on such basis and with such conditions as
the Board of Directors and the majority of such Continuing Directors may in
their discretion establish. Immediately upon any 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.
For so long as the Rights are then redeemable, the Company may by
majority vote of the Board of Directors and majority vote of the Continuing
Directors, except with respect to the redemption price, amend the Rights
Agreement in any manner. After the Rights are no longer redeemable, the Company
may, except with respect to the redemption price, amend the Rights Agreement in
any manner that does not adversely affect the interests of holders of the
Rights.
Until a Right is exercised or exchanged, the holder thereof, as such,
will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.
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The Rights Agreement is being filed with the Securities and Exchange
Commission as an Exhibit hereto and is incorporated herein by reference. 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 and Exhibits.
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(a) and (b) Financial Statements and Pro Forma Financial Infor-
mation. None.
(c) Exhibits. The following exhibits are filed with
this report, and the foregoing description is
modified by reference to such exhibits:
1. Rights Agreement, dated as of August 29,
1997, between Data Transmission Network
Corporation and First National Bank of
Omaha, as Rights Agent, which includes the
Form of Certificate of Designation of Series
A Junior Participating Preferred Stock as
Exhibit A, the Form of Right Certificate as
Exhibit B, and the Summary of Rights to
Purchase Shares of Preferred Stock as
Exhibit C.
Signatures
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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.
Date: August 29, 1997.
DATA TRANSMISSION NETWORK CORPORATION
By: /s/ Brian L. Larson
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Brian L. Larson, Vice
President, Chief Financial
Officer, Secretary and
Treasurer
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EXHIBIT INDEX
Page Number
In Sequential
Exhibit Numbering
No. System
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(1) 1 Rights Agreement, dated as of
August 29, 1997, between Data
Transmission Network Corporation and
First National Bank of Omaha,
as Rights Agent, which includes
the Form of Certificate of
Designation of Series A Junior
Participating Preferred Stock as
Exhibit A, the Form of Right Certificate
as Exhibit B, and the Summary of Rights
to Purchase Shares of Preferred Stock
as Exhibit C.
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(1) Exhibit 1 hereto was previously filed as an exhibit to the
Registration Statement of Data Transmission Network Corporation on
Form 8-A dated August 29, 1997, registering its Preferred Stock
Purchase Rights, which is incorporated herein by this reference.
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