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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 3, 1998
GADZOOKS, INC.
(Exact Name of Registrant as Specified in Charter)
Texas 0-26732 74-2261048
(State of Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
4121 International Parkway
Carrollton, Texas 75007
(Address of Principal Executive Offices) (Zip Code)
(972) 307-5555
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. Other Events.
On September 3, 1998, the Board of Directors of Gadzooks, Inc. (the
"Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of common stock, par value $0.01 per share
(the "Common Shares"), of the Company. The dividend is payable on September
15, 1998 (the "Record Date") to the shareholders of record on that date. Each
Right entitles the registered holder to purchase from the Company one
one-thousandth of a share of Junior Participating Preferred Stock, Series A,
par value $1.00 per share (the "Preferred Shares"), of the Company at a price
of $110 per one one-thousandth of a Preferred Share (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 (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 20% or more of the
outstanding Common Shares or (ii) 10 business days (or such later date as may
be determined by action of the Board of Directors 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 20% or more of the outstanding Common Shares
(the earlier of such dates being called the "Distribution Date"), the Rights
will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate with a copy
of a Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued
after the Record Date upon transfer or new issuance of Common Shares 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 Shares outstanding as of
the Record Date, even without such notation or a copy of the Summary of Rights
being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares 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 Shares as of the close of business on the Distribution Date and such
separate Rights Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on September 15, 2008 (the "Final Expiration Date"), 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 Preferred Shares 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
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reclassification of, the Preferred Shares, (ii) upon the grant to holders of
the Preferred Shares of certain rights or warrants to subscribe for or purchase
Preferred Shares at a price, or securities convertible into Preferred Shares
with a conversion price, less than the then current market price of the
Preferred Shares, or (iii) upon the distribution to holders of the Preferred
Shares of evidences of indebtedness or assets (excluding regular periodic cash
dividends paid out of earnings or retained earnings or dividends payable in
Preferred Shares) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights and the number of one one-thousandths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such
case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled 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 Common Share. In the
event of liquidation, the holders of the Preferred Shares will be entitled to a
minimum preferential liquidation payment of $1000 per share but will be
entitled to an aggregate payment of 1000 times the payment made per Common
Share. Each Preferred Share will have 1000 votes, voting together with the
Common Shares. Finally, in the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each Preferred Share will be
entitled to receive 1000 times the amount received per Common Share. These
rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
In the event that 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 after a person or group has become an Acquiring Person,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the Right. In the event that any
person or group of affiliated or associated persons becomes an Acquiring
Person, proper provision shall be made so that each holder of a Right, other
than Rights beneficially owned by the Acquiring Person (which will thereafter
be void), will thereafter have the right to receive upon exercise that number
of Common Shares having 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 acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which will have
become void), in whole or in part, at an exchange ratio of one Common Share, or
one one-thousandth of a Preferred Share, per Right (subject to adjustment).
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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 Preferred Shares will be issued (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 20% or more of the
outstanding Common Shares, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $0.01 per Right (the
"Redemption Price"). The redemption of the Rights may be made effective at
such time on such basis with such conditions as the Board of Directors in its
sole discretion may 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.
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights, except that from
and after such time as any person or group of affiliated or associated persons
becomes an Acquiring Person no such amendment may adversely affect the
interests of the holders of the Rights.
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 Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors, except pursuant to
an offer conditioned on a substantial number of Rights being acquired. The
Rights should not interfere with any merger or other business combination
approved by the Board of Directors since the Rights may be redeemed by the
Company at the Redemption Price prior to the time that a person or group has
acquired beneficial ownership of 20% or more of the Common Shares.
The Rights Agreement, dated as of September 3, 1998, between the
Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent,
specifying the terms of the Rights and including the form of Statement of
Resolutions setting forth the terms of the Preferred Shares as an exhibit
thereto, and the form of press release announcing the declaration of the Rights
are incorporated herein by reference as exhibits hereto. The foregoing
description of the Rights is qualified in its entirety by reference to such
exhibit.
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ITEM 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(c) Exhibits.
4.1 Rights Agreement, dated as of September 3, 1998,
between GADZOOKS, INC. and ChaseMellon Shareholder
Services, L.L.C. which includes the form of Statement
of Resolutions setting forth the terms of the Junior
Participating Preferred stock, Series A, par value $1
per share, as Exhibit A, the form of Rights
Certificate as Exhibit B and the Summary of Rights to
Purchase Preferred Shares as Exhibit C.
(Incorporated by reference to Form 8-A filed
September 4, 1998)
99.1 Press Release issued by the Company on September 3,
1998. (Incorporated by reference to Form 8-A filed
September 4, 1998)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
GADZOOKS, INC.
By: /s/ Monty R. Standifer
-----------------------------------
Name: Monty R. Standifer
Title: Secretary
Dated: September 4, 1998
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
4.1 Rights Agreement, dated as of September 3, 1998, between GADZOOKS, INC. and ChaseMellon Shareholder
Services, L.L.C. which includes the form of Statement of Resolutions setting forth the terms of the
Junior Participating Preferred stock, Series A, par value $1 per share, as Exhibit A, the form of
Rights Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Shares as Exhibit C.
(Incorporated by reference to Form 8-A filed September 4, 1998)
99.1 Press Release issued by the Company on September 3, 1998. (Incorporated by reference to Form 8-A filed
September 4, 1998)
</TABLE>
