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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) - January 26, 1998
OPEN MARKET, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-28436 04-3214536
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(State or other juris- (Commission (IRS Employer
diction of incorporation) File No.) Identification No.)
245 First Street, Cambridge, Massachusetts 02142
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 949-7000
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Not applicable
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(Former name or former address, if changed since last report)
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As of January 26, 1998 the Board of Directors of Open Market, Inc. (the
"Company") declared a dividend distribution of one Right for each outstanding
share of the Company's Common Stock to stockholders of record at the close of
business on February 12, 1998. Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of Series A Junior
Participating Preferred Stock, $.10 par value (the "Preferred Stock") at a
Purchase Price of $65.00 in cash, subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and BankBoston N.A., 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 earlier of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 18% or more of the outstanding shares of Common Stock (the "Stock
Acquisition Date"), or (ii) 15 business days following the commencement of a
tender offer or exchange offer that would result in a person or group
beneficially owning 18% or more of such outstanding shares of Common Stock.
Until the Distribution Date, (i) the Rights will be evidenced by the Common
Stock certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after February 12, 1998
will contain a notation incorporating the Rights Agreement by reference and
(iii) 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.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on January 26, 2008 unless earlier redeemed or
exchanged by the Company as described below.
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. Except as otherwise determined by
the Board of Directors, and except for shares of Common Stock issued upon
exercise, conversion or exchange of then outstanding options, convertible or
exchangeable securities or other contingent obligations to issue shares, only
shares of Common Stock issued prior to the Distribution Date will be issued with
Rights.
In the event that a Person becomes the beneficial owner of 18% or more of
the then outstanding shares of Common Stock, except pursuant to an offer for all
outstanding shares of Common Stock which the independent directors determine to
be fair to, and otherwise in the best interests of, stockholders, each holder of
a Right
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will thereafter have the right to receive, upon exercise, that number of shares
of Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) which equals the exercise price of the Right divided
by one-half of the current market price (as defined in the Rights Agreement) of
the Common Stock at the date of the occurrence of the event. However, Rights are
not exercisable following the event set forth above until such time as the
Rights are no longer redeemable by the Company as set forth below.
Notwithstanding any of the foregoing, following the occurrence of such event,
all Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will be null and
void. The event set forth in this paragraph is referred to as a "Section
11(a)(ii) Event."
For example, at an exercise price of $65 per Right, each Right not owned by
an Acquiring Person (or by certain related parties) following an event set forth
in the preceding paragraph would entitle its holder to purchase for $65 such
number of shares of Common Stock (or other consideration, as noted above) as
equals $65 divided by one-half of the current market price (as defined in the
Rights Agreement) of the Common Stock. Assuming that the Common Stock had a per
share value of $13 at such time, the holder of each valid Right would be
entitled to purchase 10 shares of Common Stock for $65.
In the event that, at any time after any person has become an Acquiring
Person, (i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation or its Common
Stock is changed or exchanged (other than a merger which follows an offer
determined by the independent directors to be fair as described in the first
sentence of the second preceding paragraph), or (ii) 50% or more of the
Company's assets or earning power is sold or transferred, each holder of a Right
(except Rights which previously have been voided as set forth above) shall
thereafter have the right to receive, upon exercise, that number of shares of
common stock of the acquiring company which equals the exercise price of the
Right divided by one-half of the current market price of such common stock at
the date of the occurrence of the event.
For example, at an exercise price of $65 per Right, each Right following an
event set forth in the preceding paragraph would entitle its holder to purchase
for $65 such number of shares of common stock of the acquiring company as equals
$65 divided by one-half of the current market price (as defined in the Rights
Agreement) of such common stock. Assuming that such common stock had a per
share value of $13 at such time, the holder of each valid Right would be
entitled to purchase 10 shares of common stock of the acquiring company for
$65.
At any time after the occurrence of a Section 11(a)(ii) Event, and subject
to the concurrence of a majority of the Continuing Directors (as defined in the
Rights Agreement), the Board of Directors of the Company may exchange the Rights
(other
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than Rights owned by such Acquiring Person which have become void), in whole or
in part, at an exchange ratio of one share of Common Stock, or one one-
thousandth 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).
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) if holders of the Preferred Stock are granted 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).
The number of Rights associated with each share of Common Stock is also
subject to adjustment in the event of a stock split of the Common Stock or a
stock dividend on the Common Stock payable in Common Stock or subdivisions,
consolidations or combinations of Common Stock occurring, in any such case,
prior to the Distribution Date.
Preferred Stock purchasable upon exercise of the Rights will not be
redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $100 per share and will be entitled
to an aggregate dividend of 1,000 times the dividend declared per share of
Common Stock. In the event of liquidation, the holders of the Preferred Stock
will be entitled to a minimum preferential liquidating payment of $100 per share
and will be entitled to an aggregate payment of 1,000 times the payment made per
share of Common Stock. Each share of Preferred Stock will have 1,000 votes,
voting together with the Common Stock. Finally, in the event of any merger,
consolidation or other transaction in which Common Stock is changed or
exchanged, each share of Preferred Stock will be entitled to receive 1,000 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 one one-thousandth of a share of Preferred Stock
purchasable upon exercise of each Right should approximate the value of one
share of Common Stock.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Preferred Stock (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock) will be
issued and, in lieu
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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 until ten days following the Stock Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $.001 per
Right (payable in cash or stock). 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. The Rights may also be redeemable following certain other circumstances
specified in the Rights Agreement.
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. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
Prior to the Distribution Date, the terms of the Rights are subject to
amendment by the Board of Directors without the consent of the holders of the
Rights, except that the redemption price of the Rights is not subject to
amendment. After the Distribution Date, only limited terms of the Rights are
subject to amendment by the Board.
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 on
January 30, 1998. 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
The exhibits listed in the Exhibit Index filed as part of this report
are filed as part of or are included in this report.
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SIGNATURES
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: January 26, 1998 OPEN MARKET, INC.
/s/ Regina O. Sommer
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Regina O. Sommer
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
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Exhibit No. Description
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4.1 Rights Agreement, dated as
of January 26, 1998 between Open
Market, Inc. and BankBoston N.A.,
which includes as Exhibit A Terms
of the Series A Junior
Participating Preferred Stock, as
Exhibit B the Form of Rights
Certificate, and as Exhibit C the
Summary of Rights to Purchase
Preferred Stock./(1)/
99.1 Press Release dated January 26, 1998.
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/(1)/ Incorporated by reference to the Registrant's Registration Statement
on Form 8-A, dated January 26, 1998 and filed by the Registrant with the
Commission (Commission File No. 0-28439).
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FOR IMMEDIATE RELEASE
Investor Contact: Julie Lorigan
617 949-7589
[email protected]
OPEN MARKET ADOPTS SHAREHOLDER RIGHTS PLAN
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Cambridge, MA-- January 26, 1998--Open Market, Inc. (NASDAQ: OMKT) announced
that its Board of Directors has adopted a Shareholder Rights Plan in which
preferred stock purchase rights will be distributed on February 12, 1998 as a
dividend at the rate of one Right for each share of Open Market common stock
outstanding as of the close of business on that date.
"The Rights Plan is designed to allow all shareholders of Open Market to
realize the long-term value of their investment in the Company and will not
restrict consideration by the Board of any offer on terms favorable to all
shareholders," said Shikhar Ghosh, Chairman of the Board of Directors of Open
Market.
According to Ghosh, Open Market's Board adopted the plan as a means of
deterring possible coercive or unfair takeover tactics and to prevent a
potential acquirer from gaining control of the Company without offering a fair
price to all of the Company's shareholders.
"Abusive tactics can unfairly pressure shareholders and squeeze them out of
their investment without giving them any real choice," said Ghosh. "The Board
acted prudently to ensure that shareholders in such a situation could not be
deprived of the full value of their shares. While we strongly believe that
independence is the best way to maximize the value for all of our stockholders,
in the event of an unsolicited takeover attempt, rights plans can enhance the
value of stockholders' shares." Mr. Ghosh said that similar plans have been
adopted by over 1,993 public companies.
Each Right will entitle the Open Market stockholders to purchase one one-
thousandth of a share of a new series of junior participating preferred stock of
the Company at an exercise price of $65.00. The Rights will be exercisable if
another party acquires or announces its intention to acquire beneficial
ownership of 18% or more of Open Market's common stock. Such percentages may,
at the Board's discretion, be lowered, although in no event below 10%.
In the event of such an acquisition or similar event as described in the
plan, each Right, except those owned by the 18% or more stockholder, will enable
the holder of the Right to purchase that number of shares of Open Market common
stock
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which equals the exercise price of the Right divided by one-half of the market
price of such common stock.
In addition, if Open Market is involved in a merger or other transaction
with another party in which it is not the surviving corporation, or it sells or
transfers 50% or more of its assets or earning power to another party, each
Right will entitle its holder to purchase that number of shares of common stock
of the other party which equals the exercise price of the Right divided by one-
half of the market price of such common stock.
The Rights will expire on the close of business on January 26, 2008 unless
earlier redeemed or exchanged by the Company as described in the Shareholder
Rights Plan.
The Company will be entitled to redeem the Rights at $.001 per Right at any
time until the 10th day following public announcement that an 18% stock position
has been acquired and in certain other circumstances.
More About Open Market
Founded in 1994, Open Market, Inc. (NASDAQ:OMKT) provides high-performance
software products and services that allow its customers to engage in business-
to-consumer and business-to-business Internet commerce, information commerce,
and commercial publishing. Among Open Market's distinguished roster of customers
are the world's largest telecommunications firms and publishing companies, among
others. The Company is headquartered in Cambridge, Massachusetts, with offices
worldwide. For more information, call 888.OPEN.MKT or visit
http://www.openmarket.com.
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