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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 (date of earliest event reported): April 17, 1997
RTW, INC.
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(Exact name of Registrant as specified in its charter)
MINNESOTA 0-25508 41-1440870
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
8500 Normandale Lake Blvd.
Suite 1400
BLOOMINGTON, MINNESOTA 55437
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 893-0403
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Item 5. OTHER EVENTS.
On April 17, 1997, the Board of Directors of RTW, Inc. (the "Company")
declared a dividend of one Right for each outstanding share of the Company's
Common Stock, no par value (the "Common Stock"), to the stockholders of record
at the close of business on June 30, 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 A Junior Participating
Preferred Stock, no par value (the "Preferred Stock"), at a price of $85 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 April 17, 1997 (the "Rights
Agreement") between the Company and Norwest Bank Minnesota, N.A., as Rights
Agent.
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. Certain shares held by David C. Prosser, the
Company's Chairman, President and Chief Executive Officer and his wife, Margaret
F. Prosser, have been excluded from the computation for determining whether a
person is an Acquiring Person.
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.
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The Rights are not exercisable until the Distribution Date. The Rights
will expire on April 17, 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 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 $85 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 $170 worth of the Company's Common Stock
(or other consideration, as noted above) for $85. Assuming that the Common
Stock had a per share value of $20 at such time, the holder of each Right would
effectively be entitled to purchase 8.5 shares of Common Stock for $85.
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 $170
worth of the acquiring entity's stock for $85.
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).
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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 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 tenth day after 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
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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 April 23, 1997, there were 11,845,523 shares of Common Stock issued
and outstanding and 689,600 shares reserved for issuance pursuant to the
exercise of outstanding stock options. Each outstanding share of Common Stock
on June 30, 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 250,000 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.
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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 April 17, 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 June 24, 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, thereunto duly authorized.
RTW, INC.
By /S/ David C. Prosser
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David C. Prosser, President
Dated: June 24, 1997
