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________________________________________________________________________________
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: AUGUST 12, 1997
(Date of earliest event reported)
NETWORK COMPUTING DEVICES, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 0-20124 77-0177255
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
350 NORTH BERNARDO AVENUE, MOUNTAIN VIEW, CA 94043
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 694-0650
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Item 5. OTHER EVENTS.
On August 12, 1997, the Board of Directors of Network Computing Devices,
Inc. (the "Company") declared a dividend distribution of one "Right" for each
outstanding share of common stock, no par value (the "Common Stock"), of the
Company to shareholders of record at the close of business on September 2,
1997 (the "Record Date"). Except as set forth below, each Right, when
exercisable, entitles the registered holder to purchase from the Company one
one-hundredth of a share of a new series of preferred stock, designated as
Series A Participating Preferred Stock, no par value (the "Preferred Stock"),
at a price of $50.00 (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and ChaseMellon Shareholder Services,
L.L.C., as "Rights Agent."
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights certificates
will be distributed. The Rights will separate from the Common Stock and a
"Distribution Date" will occur upon the earliest of (i) a public announcement
that a person, entity or group of affiliated or associated persons and/or
entities (an "Acquiring Person") has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding shares of
Common Stock, other than as a result of repurchases of stock by the Company
or certain inadvertent actions by institutional or certain other
shareholders, or (ii) ten days (unless such date is extended by the Board of
Directors) following the commencement of (or a public announcement of an
intention to make) a tender offer or exchange offer which would result in any
person, entity or group of affiliated or associated persons and/or entities
becoming an Acquiring Person.
Until 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 this Summary of Rights. 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 (with or without this Summary of Rights attached) 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 the earliest of (i) August 12, 2007, (ii) consummation of a
merger transaction with a Person or group who acquired Common Stock pursuant
to a Permitted Offer (as defined below), and is offering in the merger the
same price per share and form of consideration paid in the Permitted Offer,
or (iii) redemption or exchange of the Rights by the Company as described
below.
The number of Rights associated with each share of Common Stock shall be
proportionately adjusted to prevent dilution in the event of a stock dividend
on, or a subdivision, combination or reclassification of, the Common Stock.
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
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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, certain
convertible securities or securities having the same or more favorable
rights, privileges and preferences as the Preferred Stock 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 out of earnings or retained
earnings) or of subscription rights or warrants (other than those referred to
above). With certain exceptions, no adjustments in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least 1%
in such Purchase Price.
In the event that, after the first date of public announcement by the
Company or an Acquiring Person that an Acquiring Person has become such, the
Company is involved in a merger or other business combination transaction
(whether or not the Company is the surviving corporation) or 50% or more of
the Company's assets or earning power are sold (in one transaction or a
series of transactions), proper provision shall be made so that each holder
of a Right (other than an Acquiring Person) shall thereafter have the right
to receive, upon the exercise thereof at the then current Purchase Price,
that number of shares of common stock of either the Company, in the event
that it is the surviving corporation of a merger or consolidation, or the
acquiring company (or, in the event there is more than one acquiring company,
the acquiring company receiving the greatest portion of the assets or earning
power transferred) which at the time of such transaction would have a market
value of two times the Purchase Price (such right being called the "Merger
Right"). In the event that a Person becomes the beneficial owner of 15% or
more of the outstanding shares of Common Stock (unless pursuant to a tender
offer or exchange offer for all outstanding shares of Common Stock at a price
and on terms determined prior to the date of the first acceptance of payment
for any of such shares by at least a majority of the members of the Board of
Directors who are not officers of the Company and are not Acquiring Persons
or Affiliates or Associates thereof to be both adequate and otherwise in the
best interests of the Company and its shareholders (a "Permitted Offer")),
then proper provision shall be made so that each holder of a Right will for a
60-day period (subject to extension under certain circumstances) thereafter
have the right to receive upon exercise that number of shares of Common Stock
(or, at the election of the Company, which election may be obligatory if
sufficient authorized shares of Common Stock are not available, a combination
of Common Stock, property, other securities (E.G., Preferred Stock) and/or a
reduction in the exercise price of the Right) having a market value of two
times the Purchase Price (such right being called the "Subscription Right").
The holder of a Right will continue to have the Merger Right whether or not
such holder exercises the Subscription Right. Notwithstanding the foregoing,
upon the occurrence of any of the events giving rise to the exercisability of
the Merger Right or the Subscription Right, any Rights that are or were at
any time after the Distribution Date owned by an Acquiring Person shall
immediately become null and void.
At any time prior to the earlier to occur of (i) a Person becoming an
Acquiring Person or (ii) the expiration of the Rights, the Company may redeem
the Rights in whole, but not in part, at a price of $0.01 per Right (the
"Redemption Price"), which redemption shall be effective upon the action of
the Board of Directors. Additionally, the Company may thereafter redeem the
then outstanding Rights in whole, but not in part, at the Redemption Price
(i) if 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 certain related Persons or (ii) following an event
giving rise to, and the expiration of the exercise period for, the
Subscription Right if and for as long as the Acquiring Person triggering the
Subscription Right beneficially owns securities
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representing less than 15% of the outstanding shares of Common Stock and at
the time of redemption there are no other Acquiring Persons. The redemption
of Rights described in the preceding sentence shall be effective only as of
such time when the Subscription Right is not exercisable, and in any event,
only after ten 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.
Subject to applicable law, the Board of Directors, at its option, may at
any time after a Person becomes an Acquiring Person (but not after the
acquisition by such Person of 50% or more of the outstanding Common Stock),
exchange all or part of the then outstanding and exercisable Rights (except
for Rights which have become void) for shares of Common Stock at a rate of
one share of Common Stock per Right or, alternatively, for substitute
consideration consisting of cash, securities of the Company or other assets
(or any combination thereof).
The Preferred Stock purchasable upon exercise of the Rights will be
nonredeemable and junior to any other series of preferred stock the Company
may issue (unless otherwise provided in the terms of such stock). 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, but
in no event less than $25.00. In the event of liquidation, the holders of
shares of Preferred Stock will receive a preferred liquidation payment equal
to the greater of $1,000.00 or 100 times the payment made per each share of
Common Stock. Each share of Preferred Stock will have 100 votes, voting
together with the shares of Common Stock. In the event of any merger,
consolidation or other transaction in which shares of 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, liquidation and
voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions. Fractional shares of Preferred Stock will
be issuable; however, (i) the Company may elect to distribute depositary
receipts in lieu of such fractional shares and (ii) 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, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends. The Company and the Rights Agent
retain broad authority to amend the Rights Agreement; however, following any
Distribution Date any amendment may not adversely affect the interests of
holders of Rights.
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. A
copy of the Rights Agreement is available free of charge from 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
INCORPORATED HEREIN BY REFERENCE.
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Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
4.1 Rights Agreement dated as of August 12, 1997 between Network Computing
Devices, Inc. and ChaseMellon Shareholder Services, L.L.C., which
includes as Exhibit B the form of Rights Certificate. Pursuant to the
Rights Agreement, Rights Certificates will not be mailed until the
earlier of (i) a public announcement that a person or a group of
affiliated or associated persons has acquired beneficial ownership of
securities representing 15% or more of the outstanding common stock or
(ii) ten days after a person or a group of affiliated or associated
persons has commenced or announced an intent to commence a tender
offer or exchange offer which, upon consummation thereof, would cause
such person or group to own beneficially securities representing 15%
or more of the outstanding common stock (filed as Exhibit 4.1 to the
Company's Registration Statement on Form 8-A relating to the Series
A Participating Preferred Stock Purchase Rights and incorporated
herein by reference).
99.1 Press release dated August 13, 1997.
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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 hereunto duly authorized.
Dated: August 14, 1997.
NETWORK COMPUTING DEVICES, INC.
By /s/ Robert G. Gilbertson
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Robert G. Gilbertson, President and
Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT PAGE
4.1 Rights Agreement dated as of August 12, 1997 between Network
Computing Devices, Inc. and ChaseMellon Shareholder Services,
L.L.C., which includes as Exhibit B the form of Rights
Certificate. Pursuant to the Rights Agreement, Rights
Certificates will not be mailed until the earlier of (i) a public
announcement that a person or a group of affiliated or associated
persons has acquired beneficial ownership of securities
representing 15% or more of the outstanding common stock or
(ii) ten days after a person or a group of affiliated or associated
persons has commenced or announced an intent to commence a tender
offer or exchange offer which, upon consummation thereof, would
cause such person or group to own beneficially securities
representing 15% or more of the outstanding common stock (filed
as Exhibit 4.1 to the Company's Registration Statement on Form 8-A
relating to the Series A Participating Preferred Stock Purchase
Rights and incorporated herein by reference).
99.1 Press release dated August 13, 1997.
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contact:
Rudy Morin
Executive Vice President, Operations & Finance
415-919-2734
Stuart Pearlman
Phase Two Strategies
212-370-4940
NCD ADOPTS SHAREHOLDER RIGHTS PLAN
MOUNTAIN VIEW, CA -- August 13, 1997 -- The board of directors of Network
Computing Devices, Inc. (Nasdaq: NCDI) has adopted a shareholder rights plan.
A letter containing details of the plan will be mailed to shareholders early
next month.
In making the announcement, the company said that the plan would
strengthen the board's ability to protect shareholders and other stakeholders
against acquisitions of control without paying all shareholders a fair
premium. NCD said that the plan is also designed to protect against coercive
tender offers or other inadequate offers, but the company added that the plan
is not intended to prevent an offer that its board concludes is in the best
interests of NCD and its shareholders.
To implement the plan, NCD's board declared a dividend of one preferred
stock purchase right for each of the company's approximately 16.3 million
common shares outstanding for stockholders of record Tuesday, September 2,
1997. Each right would enable the rightholder to purchase, under certain
circumstances, a fractional share of a newly issued series of NCD preferred
stock.
The rights would become exercisable, and trade independently from NCD's
common stock, upon the public announcement of the acquisition by a person or
group of 15% or more of NCD's common stock, or 10 days after commencement of
a tender or exchange offer for NCD common stock that would result in the
acquisition of 15% or more of that stock.
The rights expire August 12, 2007, unless redeemed earlier by NCD's
board, and can be redeemed by the board at a price of $0.01 per right at any
time before the rights become exercisable, but only in limited circumstances
after that time. NCD said it had been advised by counsel that the rights
distribution would not be taxable to shareholders.
About NCD: Founded in 1988, Network Computing Devices, Inc. is a leader
in the network computer industry. It provides network computer hardware and
software that delivers simultaneous, high-performance, easy-to-manage access
to any application on an enterprise network from any desktop. The company's
product lines include the Explora and HMX families of Universal Network
Computers, the WinCenter Pro multi-user Windows NT application server
software, and the PC-Xware software that connects PCs using MS Windows to
UNIX hosts with a selection of terminal emulation and network connectivity
tools. There are more than 350,000 NCD network computing installations. NCD's
technology is also incorporated into products sold by leading manufacturers
such as IBM, Sun and Novell. Network Computing Devices can be reached on the
Internet at www.ncd.com.
The forward statements in this release regarding NCD's plans and
strategies are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned that all
forward-looking statements involve risk and uncertainties that may cause
actual results to differ materially from expectations. Those risks and
uncertainties include, but are not limited to, continuing acceptance of NCD's
products, the Company's ability to develop new products, competitive pressures
in the network computing marketplace, the Company's ability to obtain
component parts, manage the transition to indirect channels, continued
overall growth in the network computing market, pricing pressures, changes in
customer requirements and product mix. Further information on factors that
could cause actual results to differ from those anticipated is included in
filings made by the Company from time to time with the Securities and
Exchange Commission, including but not limited to, the Form 10K for the year
ended December 31, 1996, and the form 10-Q for the quarter ended June 30,
1997.
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