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): _September 23, 1998
Ashworth, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware
000-18553
84-105-2000
(State or Other Jurisdiction
of Incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
2791 Loker Avenue West, Carlsbad California
92008
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code: (760) 438-6610
N/A
(Former Name or Former Address, if Changed Since Last Report)
Total of sequentially numbered pages: 3.
Item 5. Other Events
On September 23, 1998, the board of directors of Ashworth, Inc. (the
"Company") adopted a stockholder rights plan. Pursuant to General Instruction
F of Form 8-K, the following documents are incorporated by reference herein
and attached as exhibits hereto:
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibit Description
99.1 Summary of the Rights issued pursuant to the Rights Agreement
dated as of October 6, 1998 between Ashworth, Inc. and American
Securities Transfer & Trust, Inc..
99.2 Ashworth, Inc. press release of September 30, 1998 regarding its
adoption of a stockholder rights plan.
99.3 Form of letter to be sent to stockholders announcing the adoption
of a stockholder rights plan and transmitting a summary of the
rights.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this current report to be signed on its behalf by
the undersigned hereunto duly authorized.
Ashworth, Inc.
Date: October 9, 1998 By: /s/ RANDALL L. HERREL, SR.
Randall L. Herrel, Sr.
President and Chief Executive Officer
EXHIBIT 99.1
SUMMARY OF THE RIGHTS
On September 23, 1998 (the "Rights Dividend Declaration Date"), the Board of
Directors of Ashworth, Inc. (the "Company") declared a dividend of one right
(a "Right") to purchase one share of Common Stock, par value $.001 per share
(the "Common Stock") and, under certain circumstances, other securities, for
each outstanding share of the Company's Common Stock, to be distributed to
stockholders of record at the close of business on October 11, 1998 (the
"Record Date"). The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") dated as of October 6, 1998 between
the Company and American Securities Transfer & Trust, Inc., as Rights Agent.
The following is a brief description of the Rights. It is intended to provide
a general description only and is qualified in its entirety by reference to
the Rights Agreement, which has been filed as an exhibit to the Company's
Registration Statement on Form 8-A filed with the Securities and Exchange
Commission concurrently herewith.
A. Issuance of the Rights
Each share of Common Stock outstanding at the close of business on the Record
Date will receive one Right. In addition, prior to the earliest of the
Distribution Date, a Section 13 Event or the Expiration Date (as each is
hereinafter defined), one additional Right (as such number may be adjusted
pursuant to the provisions of the Rights Agreement) shall be issued with each
share of Common Stock issued after the Record Date. Following the
Distribution Date and prior to the expiration or redemption of the Rights, the
Company will issue one Right (as such number may be adjusted pursuant to the
provisions of the Rights Agreement) for each share of Common Stock issued
pursuant to the exercise of stock options or under employee plans or upon the
exercise, conversion or exchange of securities issued by the Company prior to
the Distribution Date. A "Section 13 Event" shall mean any event in which (i)
the Company merges or consolidates with another and the Company is not the
surviving corporation; (ii) the Company merges or consolidates with another,
the Company is the surviving corporation, and all or part of the Company's
common stock is exchanged for other securities, cash or property; or (iii) the
Company sells or transfers more than 50% of its assets or earning power. The
"Expiration Date" shall mean the earliest of (i) October 5, 2008; (ii) the
date of redemption of the Rights; (iii) the date the Board orders an exchange
of Rights; or (iv) the date of consummation of a tender offer approved as fair
to and in the best interests of the Company and its stockholders and
adequately priced with each stockholder receiving the same consideration per
share in the same manner.
B. Common Stock Certificates Represent the Rights Prior to the
Distribution Date
Prior to the Distribution Date (as hereinafter defined), no separate Rights
certificates will be issued. Instead, the Rights will be evidenced by the
certificates for the Common Stock to which they are attached and will be
transferred with and only with such Common Stock certificates. The surrender
for transfer of any certificates for Common Stock outstanding will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate. New Common Stock certificates issued after
the Record Date will contain a legend incorporating the Rights Agreement by
reference.
C. Distribution Date; Issuance of Rights Certificates
The Rights will separate from the Common Stock and become exercisable and a
Distribution Date will occur (the "Distribution Date") upon the earlier of the
close of business on the tenth day after (i) public announcement that a person
or group of affiliated or associated persons has acquired beneficial ownership
of 15% or more of the outstanding shares of Common Stock (an "Acquiring
Person") or such earlier date as a majority of the directors shall become
aware of the existence of an Acquiring Person (the "Stock Acquisition Date"),
or (ii) the commencement of a tender or exchange offer by any person or group,
if upon consummation thereof, such person or group of affiliated or associated
persons would be the beneficial owner of 15% or more of the shares of Common
Stock then outstanding. 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 Rights.
D. Exercise of the Rights
1. Rights Initially Not Exercisable. Prior to the Distribution Date,
the Rights are not exercisable.
2. Exercise of the Rights to Purchase Common Stock of the Company.
At any time after the Distribution Date but prior to the earlier of the
expiration, exchange or redemption of the Rights, each Right may be exercised
at the stated purchase price of $40 (subject to adjustment, the "Exercise
Price") for one share of Common Stock.
3. Exercise of the Rights to Purchase Common Stock of the Company at
a Discount. In the event that at any time following the Rights Dividend
Declaration Date, a person, alone or with affiliates, becomes the beneficial
owner of 15% or more of the then outstanding shares of the Company's Common
Stock (except pursuant to an offer for all outstanding shares of Common Stock
which is determined by both (i) the Board of Directors acting by Special Vote,
and (ii) a majority of the Directors who are not associated with an Acquiring
Person ("Continuing Directors") and who are also not employees of the Company,
to be fair to and otherwise in the best interests of the Company and its
stockholders (a "Permitted Offer")), then each holder of a Right will
thereafter have the right to exercise the Right for Common Stock (or, in
certain circumstances, cash, property or other securities of the Company)
having a value equal to two times the Exercise Price of the Right. If the
Company does not have sufficient Common Shares available for all Rights to be
exercised, the Company may substitute for all or any portion of the Common
Stock that would be issuable upon exercise of the Rights, cash, assets, or
other securities having the same aggregate value as such Common Stock. The
Rights are exercisable as described in this paragraph only after the Company's
right of redemption (as described below) has expired. Notwithstanding any of
the foregoing, following the occurrence of the event set forth in this
paragraph (a "Section 11(a)(ii) Event"), all Rights that are, or under certain
circumstances specified in the Rights Agreement were, beneficially owned by an
Acquiring Person will be null and void. A "Special Vote" of the Board of
Directors is approval by both a majority of the Continuing Directors and a
majority of the entire Board, including the Continuing Directors.
4. Exercise of the Rights to Purchase Common Stock of An Acquiring
Corporation. In the event that, at any time following the Stock Acquisition
Date, (i) the Company is merged or consolidated with another company in a
business combination transaction in which the Company is not the surviving
corporation or in which the Company is the surviving corporation and all or
part of the Common Stock of the Company is exchanged for stock of any other
person, cash or any other property (other than a merger which follows an offer
described in the preceding paragraph), or (ii) more than 50% of the assets or
earning power of the Company and its subsidiaries (taken as a whole) is sold
or transferred, then each holder of a Right (except Rights which previously
have been voided as set forth above) shall thereafter have the right to
exercise the Right for common stock of the acquiring company having a value
equal to two times the Exercise Price of the Right. (An event described in
this paragraph is a "Section 13 Event.")
5. Adjustment of Number of Rights, Purchase Price and Number of
Shares of Common Stock. The Exercise Price payable and/or the number of
shares of Common Stock or other securities or property issuable upon exercise
of the Rights are subject to proportionate 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 Common Stock, (ii) in the event
holders of the Common Stock are granted certain rights or warrants to
subscribe for Common Stock or convertible securities at less than the current
market price of the Common Stock, or (iii) upon the distribution to holders of
the Common Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above). If at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date the Company declares a
stock dividend on, subdivides or combines the outstanding shares of Common
Stock, the number of Rights associated with each share of Common Stock shall
be proportionately adjusted.
E. Fractional Rights and Fractional Shares
The Company is generally not required to issue fractional Rights, fractions of
shares of Common Stock and, in lieu thereof, an adjustment in cash will be
made based on the market price of the Rights or Common Stock, respectively.
F. Redemption of the Rights
In general, the Company may redeem all (but not less than all) of the Rights
at a price of $.001 per Right (subject to adjustment to reflect stock splits,
stock dividends, or similar transactions), at any time until the earlier of
the tenth day following the Stock Acquisition Date or the close of business on
October 5, 2008 (provided that any redemption after any person becomes an
Acquiring Person may be effected only by the Board of Directors acting by
Special Vote). This redemption period may be extended by the Board of
Directors by amending the Rights Agreement as described in Paragraph H below
prior to the time when the Rights become nonredeemable. The redemption price
may be paid in cash, shares of Common Stock, or any other consideration the
Board of Directors deems appropriate. Immediately upon the action of the
Board of Directors ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
$.001 redemption price.
G. Exchange of the Rights
At any time after a Section 11(a)(ii) Event or a Section 13 Event and before
any person or group acquires 50% or more of the outstanding Common Stock, the
Board of Directors of the Company, acting by Special Vote, may cause the
Company to exchange some or all of the outstanding and exercisable Rights for
Common Stock at a one-to-one exchange ratio (appropriately adjusted to reflect
stock splits, dividends or similar transactions). Rights may not be exercised
after the Board orders their exchange. If there is not sufficient authorized
unissued Common Stock to fund an exchange, the Board, acting by Special Vote,
may fund the exchange through other consideration, including issuance of debt
and/or equity. In addition, at any time before any person or group becomes in
Acquiring Person, the Board, acting by Special Vote, may exchange some or all
of the Rights for rights of substantially equivalent value.
H. Amendments
Other than those provisions relating to the redemption price of the Rights,
any of the provisions of the Rights Agreement may be supplemented or amended
by the Board of Directors of the Company prior to the Distribution Date,
without approval of the Rights holders, whether or not a supplement or
amendment is adverse to the Rights holders. From and after the Distribution
Date, any provisions of the Rights Agreement (other than those provisions
relating to the redemption price of the Rights) may be amended by the Board of
Directors acting by Special Vote in order to (i) cure any ambiguous, defective
or inconsistent provision, (ii) shorten or lengthen any time period hereunder,
or (iii) otherwise change a provision which the Board of Directors acting by
Special Vote may deem necessary or desirable and which does not materially and
adversely affect the interests of holders of Rights (other than any Acquiring
Person); provided, the Rights Agreement may not be amended to (A) make the
Rights again redeemable after the Rights have ceased to be redeemable, or (B)
change any other time period unless such change is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to the
holders of the Rights (other than any Acquiring Person).
I. Expiration
The Rights will expire upon the earliest to occur of the close of business on
October 5, 2008, the exchange or redemption of the Rights by the Company, or
the consummation of a Permitted Offer transaction followed by a merger or
consolidation of the Company with another company in which all stockholders of
the Company receive the same consideration and terms as in the Permitted
Offer.
J. No Stockholder Rights Prior to Exercise
Until a Right is exercised, 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.
K. Anti-Takeover Effects
The Rights are designed to protect and maximize the value of stockholders'
interests in the Company in the event of an unsolicited takeover attempt in a
manner or on terms not approved by the Board of Directors. Takeover attempts
frequently include coercive tactics to deprive the Board of Directors and
stockholders of any real opportunity to determine the destiny of the Company.
The Rights have been declared by the Board in order to deter such tactics,
including a gradual accumulation in the open market of a 15% or greater
position, followed by a merger or a partial or two-tier tender offer that does
not treat all stockholders equally. These tactics can unfairly pressure
stockholders, squeeze them out of their investment without giving them any
real choice and deprive them of the full value of their shares.
The Rights are not intended to prevent a takeover of the Company and will not
do so. The rights may be redeemed by the Company as described in Paragraph F,
and accordingly, the Rights should not interfere with any merger or business
combination approved by the Board of Directors.
Issuance of the Rights does not weaken the Company or interfere with its
business plans. The issuance of the Rights themselves has no dilutive effect,
will not affect reported earnings per share, should not be taxable to the
Company or to its stockholders, and will not change the way in which the
Company's shares are presently traded. The Company's Board of Directors
believes that the Rights represent a sound and reasonable means of addressing
the complex issues of corporate policy created by the current takeover
environment.
However, the Rights may have the effect of rendering more difficult or
discouraging an acquisition of the Company deemed undesirable by the Board of
Directors. The Rights may cause substantial dilution to a person or group
that attempts to acquire the Company on terms or in a manner not approved by
the Company's Board of Directors, except pursuant to an offer conditioned upon
the negation, purchase or redemption of the Rights.
EXHIBIT 99.2
ASHWORTH Contact: Gerald W. Montiel - Chairman
NEWS RELEASE (760) 929-6100
Randall L. Herrel, Sr. -
President & CEO
(760) 929-6142
John Newman - CFO
(760) 929-6101
For Immediate Release
ASHWORTH, INC. APPROVES ADOPTION OF
STOCKHOLDER RIGHTS PLAN
CARLSBAD, CA_September 30, 1998_ASHWORTH, INC. (Nasdaq: ASHW) today announced
that its Board of Directors has approved the adoption of a stockholder rights
plan.
In announcing the plan, Ashworth's Board of Directors said, "The rights plan
is intended to give the Board of Directors and management sufficient time to
evaluate and respond to any proposed change in control transaction and to
prevent an acquirer from gaining control of Ashworth without offering a fair
price to all of Ashworth's stockholders. The plan is not intended to prevent
a transaction on terms that are fair to and in the best interest of all
stockholders." The board believes Ashworth's shares are undervalued in the
current market, but that the plan was not adopted in response to any specific
takeover threat.
The rights plan provides for the distribution to Ashworth's stockholders of
one Right for each share of Common Stock outstanding at the close of business
on the October 11, 1998 record date and each share issued thereafter. The
Rights will initially not be exercisable, but upon the occurrence of certain
takeover-related events, the holders of the Rights (other than the acquiring
person or group) would, under certain circumstances, have the right to
purchase additional shares of Ashworth stock (or, in some cases, of the
acquiring entity) at a discount to the then market price. The rights can be
redeemed by Ashworth for $.001 at any time, and will otherwise expire on
October 5, 2008. The trigger threshold for the plan was set at 15% and the
exercise price for the plan was set at $40. Further details regarding the
rights plan will be provided to stockholders in a forthcoming letter.
Ashworth, Inc. is a Southern California-based designer and manufacturer of
golf-inspired lifestyle for men, women and young men sportswear distributed
domestically and internationally in golf pro shops, resorts and upscale
department and specialty stores.
EXHIBIT 99.3
FORM OF LETTER TO STOCKHOLDERS
Dear Stockholder:
In an effort to assure that all Ashworth, Inc. stockholders receive maximum
value in the event of an attempted or actual takeover of the Company, on
September 23, 1998, your Board of Directors adopted a stockholder rights plan.
We have enclosed a summary description of the plan, which we urge you to read
carefully.
Adoption of rights plans is a common practice among public companies in the
United States. Rights plans are intended to provide the Board of Directors
with additional time and bargaining power to protect stockholder interests in
the event of an unsolicited takeover bid. Ashworth's rights plan is not
intended to prevent a takeover of the Company on terms that are in the best
interests of all stockholders. The rights plan is designed to encourage a
potential acquiror to negotiate with the Board prior to attempting a takeover.
This should position the Board to protect your interests.
Ashworth's rights plan involves distributions of one "Right" for each share of
common stock outstanding at the close of business on October 11, 1998.
Thereafter, each newly issued share of common stock will also include a Right.
Initially, there will be no separate Rights certificates. Instead, each Right
will simply be a part of the share of common stock to which it is attached.
It will be represented by the common stock certificate, it will trade
automatically with the common stock, and it will not be separable or
exercisable unless certain events occur.
If a person or group acquires 15% or more of Ashworth's outstanding common
stock, each Right not owned by the acquiror or its affiliates will entitle its
holder to pay the Company $40 (the exercise price per Right) and receive newly
issued shares of common stock worth $80. For example, if the stock were
trading at $20, each Right would entitle its holder to purchase 4 shares for
$40, or $10 per share. This ability of stockholders other than the acquiror
to purchase additional shares at a 50% discount from market would cause an
unapproved takeover to be much more expensive to an acquiror. As a result, a
potential acquiror would have a strong incentive not to pursue a hostile
strategy, and instead to negotiate with your Board of Directors to redeem the
Rights or approve the transaction so that the Rights do not become
exercisable.
Adoption of the rights plan does not affect the financial strength of the
Company and will not interfere with our business strategy and plans. The
issuance of the Rights alone will not affect earnings per share or change the
way in which you can presently trade the Company's shares. The attached
summary describes the Rights in more detail. Thank you for your continued
support of Ashworth, Inc.
Sincerely,
Randall L. Herrel, Sr.
President and Chief Executive Officer
