U.S. 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): NOVEMBER 27, 1996
ITI TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-24900 06-1340453
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
2266 NORTH 2ND STREET
NORTH ST. PAUL, MINNESOTA 55109
(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code: (612) 777-2690
NOT APPLICABLE
(Former name or former address, if changed since last report.)
(The remainder of this page was intentionally left blank.)
ITEM 5. OTHER EVENTS.
Adoption of Rights Agreement
On November 27, 1996, the Board of Directors of ITI Technologies, Inc.
(the "Company") declared a dividend distribution of one common share purchase
right (a "Right") for each outstanding share of the Company's Common Stock, par
value $.01 per share (the "Common Stock"), payable to stockholders of record at
the close of business on December 9, 1996 (the "Record Date"). Each Right
entitles the registered holder to purchase from the Company at any time
following the Distribution Date (as defined below) one-half of a share of Common
Stock, or a combination of securities and assets of equivalent value, subject to
adjustment, at a purchase price of $25.00 per one-half of a share of Common
Stock (the "Purchase Price"). The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement") dated as of November 27,
1996 between the Company and Norwest Bank Minnesota, National Association, as
Rights Agent.
Initially, 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, and no separate Rights Certificates will be distributed. The
Rights will separate from the Common Stock and will be distributed to the
holders thereof on the "Distribution Date," which shall be the first to occur of
the following: (i) the close of business on the tenth business day 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 20% or more of the outstanding shares of Common Stock,
other than as a result of a Permitted Offer, as defined (the "Stock Acquisition
Date"); (ii) the close of business on the tenth business day (or such later date
as the Board may determine prior to such time as any person has become an
Acquiring Person) following the commencement of a tender offer or exchange offer
(other than a Permitted Offer, as defined) that would result in a person or
group beneficially owning 20% or more of the outstanding shares of Common Stock;
or (iii) the close of business on the tenth business day after a determination
by the Board that a Person is an Adverse Person, and that such Person, alone or
together with its Affiliates and Associates, has become the beneficial owner of
a substantial amount of shares of Common Stock (which amount shall in no event
be less than the greater of (a) 15% or (b) the sum of .001% and the largest
percentage of the outstanding shares of Common Stock then known by the Company
to be beneficially owned by the Company, any Subsidiary of the Company, or any
employee benefit plan of the Company or any Subsidiary of the Company, or any
Person organized, appointed or established by the Company and holding Common
Stock for or pursuant to the terms of any such plan), and either (y) such
beneficial ownership by such Person is intended to cause the Company to
repurchase the shares of Common Stock beneficially owned by such Person or to
cause pressure on the Company to take action or enter into a transaction or
series of transactions intended to provide such Person with short-term financial
gain under circumstances where the Board determines that the best long-term
interests of the Company and its stockholders would not be served by taking such
action or entering into such transaction or series of transactions at that time
or (z) such beneficial ownership is causing or reasonably likely to cause a
material adverse impact (including, but not limited to, impairment of
relationships with customers or impairment of the Company's ability to maintain
its competitive position).
A "Permitted Offer" means a tender or exchange offer which is for all
outstanding shares of Common Stock at a price and on terms determined, prior to
the purchase of shares under such tender or exchange offer, by the Board to be
fair to the Company's stockholders (taking into account all factors as the Board
deems relevant) and otherwise in the best interests of the Company and its
stockholders (other than the Person or any Affiliate or Associate thereof on
whose behalf the offer is being made) taking into account all factors as the
Board may deem relevant and which the Board, after receiving advice from one or
more investment banking firms selected by the Board, determines to recommend to
the Company's stockholders.
A "Continuing Director" is (i) any person who is a member of the Board
of Directors prior to November 27, 1996, while such person is a member of the
Board of Directors, who is not an Acquiring Person or an Adverse Person, or an
affiliate or associate of either of the foregoing, or a representative or
designee of an Acquiring Person or an Adverse Person or any such affiliate or
associate, or (ii) any person who subsequently becomes a member of the Board of
Directors who is not an Acquiring Person or an Adverse Person, or an affiliate
or associate of either of the foregoing, or a representative, nominee or
designee of an Acquiring Person, an Adverse Person or any such affiliate or
associate, and whose initial nomination or initial election to the Board of
Directors is recommended or approved by a majority of the Continuing Directors.
Until the Distribution Date, (i) the Rights will be evidenced by Common
Stock certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after December 9, 1996
will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificate for shares of Common Stock
outstanding will also constitute the transfer of the Rights associated with the
shares of Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and, subject
to extension, will expire at the close of business on November 26, 2006, unless
earlier redeemed or exchanged by the Company as described below (the earliest of
all such dates, the "Expiration Date").
As soon as practical after the Distribution Date, Rights Certificates
will be mailed to holders of record of the shares of Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. All shares of Common Stock issued
prior to the earlier of the Distribution Date and the Expiration Date will be
issued with Rights.
In the event (i) that a person or group, with certain exceptions,
becomes the beneficial owner of more than 20% of the then outstanding shares of
Common Stock, other than as a result of a Permitted Offer or (ii) the Board
determines that a person is an Adverse Person, then each holder of a Right will
thereafter have the right to receive, upon exercise for a purchase price equal
to twice the amount paid to purchase the Right, that number of shares of Common
Stock (or in certain circumstances, cash, property or other securities of the
Company) having a market value equal to twice the amount paid to purchase the
Right. The Rights, however, are not exercisable following the occurrence of
either of the events 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 either of the events set forth above, all
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person or Adverse Person
(or certain related persons and transferees) will be null and void. The events
described in this paragraph are referred to as "Section 11(a)(ii) Events."
For example, at a Purchase Price of $25.00 per Right, each Right not
owned by an Acquiring Person or an Adverse Person (or by certain related
parties) following a Section 11(a)(ii) Event would entitle its holder to
purchase $100.00 worth of Common Stock (or other consideration as noted above)
for $50.00. If the Common Stock had a per share value of $20.00 at such time,
the holder of each valid Right would be entitled to purchase for $50.00 five
shares of Common Stock with a market value of $100.00.
In the event that, at any time following the Stock Acquisition Date,
other than pursuant to a Permitted Offer, (i) the Company is acquired in a
merger or other business combination transaction in which the Company is not the
surviving corporation or the shares of Common Stock are changed or exchanged 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 thereof for a purchase price equal to two times the current Purchase
Price of the Right, that number of shares of common stock of the acquiring
company or an Affiliate which at the time of such transaction will have a market
value equal to twice the amount paid to purchase the Right. The events set forth
in this paragraph are referred to as "Section 13 Events," and the Section
11(a)(ii) Events and the Section 13 Events are collectively referred to as the
"Triggering Events."
At any time after the occurrence of a Section 11(a)(ii) Event and prior
to the acquisition of 50% or more of the outstanding shares of Common Stock by a
Person or group, the Company may exchange the Rights (other than Rights which
have become void), in whole or in part, for shares of Common Stock, with each
Right to be exchanged for a number of shares of Common Stock equal to the result
obtained by dividing (x) a number equal to two times the Purchase Price by (y)
the current market price per share of Common Stock (subject to adjustment). In
any such exchange, the Company, at its option, may substitute a series of
preferred stock of the Company with rights, privileges and other terms
substantially the same as the shares of Common Stock to the extent authorized,
unissued and unreserved Common Stock is not available.
The Purchase Price payable and the number of shares of Common Stock
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,
split, combination, consolidation or reclassification of, the shares of Common
Stock, (ii) if all holders of any security of the Company are granted rights,
options or warrants to subscribe for or purchase shares of Common Stock or
convertible securities at less than the current market price of the shares of
Common Stock, or (iii) upon the distribution to holders of shares of Common
Stock of evidences of indebtedness or assets (excluding quarterly cash
dividends) 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 amount to at least 1% of the Purchase
Price. Subject to certain exceptions, the Company will not be required to issue
fractional shares of Common Stock, and, in lieu of such fractional shares of
Common Stock, an adjustment in cash will be made based on the market price of
the Common Stock on the last trading day prior to the date of exercise.
In general, at any time prior to the first to occur of (i) ten days
following the Stock Acquisition Date, (ii) ten days after a person is determined
to be an Adverse Person, or (iii) the Final Expiration Date, the Company, acting
by a majority of the Continuing Directors, may redeem the Rights in whole, but
not in part, at a price of $.001 per Right (payable in cash, stock or other
consideration deemed appropriate by the Board of Directors), provided that no
such redemption may occur after a Person becomes an Acquiring Person or is
designated an Adverse Person unless a majority of the numbers of the Board are
then Continuing Directors. Immediately upon redemption of the Rights, the Rights
will terminate, and the only right of the holders of the Rights will be to
receive the $.001 redemption price. In certain circumstances, the redemption
period may be extended.
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 receive dividends. The creation of the Rights should not be taxable
to stockholders. Stockholders may, however, depending upon the circumstances,
recognize taxable income in the event that the Rights become exercisable for
shares of Common Stock (or other consideration) of the Company or for common
stock of an acquiring company or an Affiliate as set forth above.
Most of the provisions of the Rights Agreement, including the
definition of Purchase Price, may be amended by the Board prior to the
Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended by the Board in order to cure any ambiguity or to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of holders of any Rights which have become void).
However, no amendment may be made that lowers the thresholds for an Acquiring
Person or Adverse Person to less than the greater of (i) 15% or (ii) the sum of
.001% and the largest percentage of the outstanding shares of Common Stock then
known by the Company to be beneficially owned by the Company, any Subsidiary of
the Company, or any employee benefit plan of the Company or any Subsidiary of
the Company, or any Person organized, appointed or established by the Company
and holding Common Stock for or pursuant to the terms of any such plan, and no
amendment may be made to extend the redemption period for the Rights unless at
the time of such amendment, no Person has become an Acquiring Person or
designated an Adverse Person or a majority of the members of the Board are
Continuing Directors.
A copy of the Rights Agreement will be 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.
This Current Report on Form 8-K contains forward-looking statements
that involve risks and uncertainties. Actual results may differ from the results
discussed in the forward-looking statements due to many factors including,
without limitation, the unanticipated loss of business from major customers
and/or additional business from existing or new customers.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
Not applicable.
(c) EXHIBITS.
Exhibit 99.1 Press Release of ITI Technologies, Inc. dated
November 27, 1996.
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 hereunto duly authorized.
ITI Technologies, Inc.
Date: December 3, 1996. By /s/ Thomas L. Auth
Thomas L. Auth
President and Chief Executive Officer
Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact Jack A. Reichert, Vice President of Finance and Administration, ITI
Technologies, Inc., at 612-777-2690
ITI TECHNOLOGIES, INC. ADOPTS "POISON PILL"; DECLARES DIVIDEND
DISTRIBUTION OF COMMON STOCK PURCHASE RIGHTS
North St. Paul, Minnesota -- November 27, 1996
The Board of Directors of ITI Technologies, Inc. (ITII, NASDAQ) ("ITI")
announced today that it has adopted a Stockholder Rights Plan to protect ITI and
its stockholders from unsolicited attempts or inequitable offers to acquire ITI.
The Rights Plan has no immediate dilutive effect and does not diminish the
ability of ITI or its stockholders to accept a fair offer for ITI.
To implement this Stockholder Rights Plan, the Board of Directors has
declared a dividend distribution of one Common Stock Purchase Right on each
outstanding share of ITI's Common Stock outstanding on December 9, 1996. Each
Right will entitle stockholders to buy one-half share of the ITI's Common Stock
at an exercise price of $25.00. The Rights will become exercisable following the
tenth business day after: (i) a person or group announces acquisition of 20% or
more of ITI's Common Stock; (ii) a person or group announces commencement of a
tender offer the consummation of which would result in ownership by the person
or group of 20% or more of ITI's Common Stock; or (iii) ITI's Board of Directors
determines that a person is an "Adverse Person," as defined in the Rights Plan.
ITI will be entitled to redeem the Rights at $.001 per Right at certain
times as provided in the Rights Agreement.
The Rights are designed to assure that all stockholders of ITI receive
a fair and adequate price for their shares in the event of any takeover and are
not subject to other abusive tactics by third parties to gain control of ITI.
If, prior to redemption of the Rights, a person or group acquires 20%
or more of ITI's Common Stock or is determined by a majority of ITI's Board of
Directors to be an "Adverse Person," then each Right not owned by such a 20%
stockholder or Adverse Person will entitle its holder to purchase, for $50.00
(two times the Right's current exercise price), shares of ITI's Common Stock
having a then current market value of $100.00 (four times the Right's exercise
price). In addition, if ITI sells 50% or more of its assets or earning power or
is acquired in a merger or other business combination transaction in which it is
not the surviving corporation, the acquiring person must assume the obligations
under the Rights, which will become exercisable to acquire common stock of the
acquiring person at the discounted price.
Thomas L. Auth, President and Chief Executive Officer, said "This
Rights Agreement is intended to protect our stockholders should ITI
Technologies, Inc. become the target of hostile or unfriendly takeover tactics.
It is designed to assure that all stockholders of ITI receive a fair price for
their shares in the event of an acquisition of ITI. It is also designed to make
certain that all ITI Technologies, Inc. stockholders receive full and fair
treatment in the event of an attempted takeover." He further stated that "The
Rights Agreement was not adopted in response to any specific effort to acquire
control of the Company" and that "ITI Technologies, Inc. directors are not aware
of any such effort."
The dividend distribution will be made to stockholders of record on
December 9, 1996. The Rights will expire in ten years on November 26, 2006.
