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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 AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 20, 1999
SECURITY DYNAMICS TECHNOLOGIES, INC.
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(Exact name of registrant as specified in charter)
Delaware 000-25120 04-2916506
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(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification No.)
36 Crosby Drive, Bedford, MA 01730
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 301-5000
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Item 5. OTHER EVENTS.
On July 20, 1999, the Board of Directors of Security Dynamics Technologies,
Inc. (the "Company"), declared a dividend of one Right for each outstanding
share of the Company's common stock, $.01 par value per share ("Common Stock"),
to stockholders of record at the close of business on July 30, 1999 (the "Record
Date"). Each Right entitles the registered holder to purchase from the Company
one share of Common Stock, at a Purchase Price of $125.00 in cash, subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement dated as of July 20, 1999 (the "Rights Agreement") between the Company
and State Street Bank and Trust Company, 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) ten business days (or such
later date as may be determined by the Board of Directors of the Company)
following the later of (a) the first date of 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 15% or more
of the outstanding shares of Common Stock or (b) the first date on which an
executive officer of the Company has actual knowledge that an Acquiring Person
has become such (the "Stock Acquisition Date"), or (ii) ten business days (or
such later date as may be determined by the Board of Directors of the Company)
following the commencement of a tender offer or exchange offer that would result
in a person or group beneficially owning 15% or more of such outstanding shares
of Common Stock. Until the Distribution Date (or earlier redemption or
expiration of the rights), (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 the Record Date
will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates for Common Stock
outstanding, even without such notation, 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
upon the close of business on July 20, 2009 (the "Final Expiration Date") unless
earlier redeemed or exchanged as described below. As soon as practicable after
the Distribution Date, separate 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.
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In the event that any Person becomes an Acquiring Person, then promptly
following the first occurrence of such event, each holder of a Right (except as
provided below and in Section 7(e) of the Rights Agreement) shall thereafter
have the right to receive, upon exercise, that number of shares of Common Stock
of the Company (or, in certain circumstances, cash, property or other securities
of the Company) which equals the exercise price of the Right divided by 50% of
the current market price (as defined in the Rights Agreement) per share of
Common Stock at the date of the occurrence of such event. However, Rights are
not exercisable following such event until such time as the Rights are no longer
redeemable by the Company as described 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
summarized in this paragraph is referred to as a "Section 11(a)(ii) Event."
In the event that, at any time after any Person becomes an Acquiring
Person, (i) the Company is consolidated with, or merged with and into, another
entity and the Company is not the surviving entity of such consolidation or
merger or if the Company is the surviving entity, but shares of its outstanding
Common Stock are changed or exchanged for stock or securities (of any other
person) or cash or any other property, 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
50% of the current market price of such common stock at the date of the
occurrence of the event. The events summarized in this paragraph are referred to
as "Section 13 Events." A Section 11(a)(ii) Event and Section 13 Events are
collectively referred to as "Triggering Events."
At any time after the occurrence of a Section 11(a)(ii) Event, subject to
certain conditions, the Board of Directors of the Company may exchange the
Rights (other 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
per Right (subject to adjustment).
The Purchase Price payable, and the number of shares of Common 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 Common
Stock, (ii) if holders of the Common Stock are granted certain rights or
warrants to subscribe for Common Stock or convertible securities at less than
the then-current market price of the Common Stock, or (iii) upon the
distribution to holders of the Common Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings) 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
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dividend on the Common Stock payable in Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
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 Common Stock will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of the Common Stock
on the last trading date prior to the date of exercise.
At any time prior to the earlier of (i) the tenth Business Day (or such
later date as may be determined by the Board of Directors of the Company) after
the Stock Acquisition Date, or (ii) the Final Expiration Date, the Company may
redeem the Rights in whole, but not in part, at a price of $.001 per Right (the
"Redemption Price"), 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
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.
Subject to certain exceptions, any of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Company prior to such
time as the Rights are no longer redeemable.
The Rights Agreement between the Company and the Rights Agent specifying
the terms of the Rights, which includes as Exhibit A the Form of Rights
Certificate and as Exhibit B the Summary of Rights to Purchase Common Stock, is
an Exhibit hereto which is incorporated herein by reference. The foregoing
description of the Rights does not purport to be complete and 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
Exhibit No. Description
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4.1 Rights Agreement dated as of July 20, 1999 between
Security Dynamics Technologies, Inc. and State Street
Bank and Trust Company, which includes as Exhibit A
the Form of Rights Certificate, and as Exhibit B the
Summary of Rights to Purchase Common Stock. Pursuant
to the Rights Agreement, Rights Certificates will not
be mailed until after the Distribution Date (as that
term is defined in the Rights Agreement).
(Incorporated by reference to Exhibit 1 to the
Company's Registration Statement on Form 8-A (File
No. 000-25120))
99 Press Release dated July 20, 1999 announcing adoption
of the Stockholder Rights Plan.
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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.
Date: July 23, 1999 SECURITY DYNAMICS TECHNOLOGIES, INC.
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(Registrant)
By: /s/ Arthur W. Coviello, Jr.
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Name: Arthur W. Coviello, Jr.
Title: President
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EXHIBIT INDEX
Exhibit No. Description
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4.1 Rights Agreement dated as of July 20, 1999 between
Security Dynamics Technologies, Inc. and State Street
Bank and Trust Company, which includes as Exhibit A
the Form of Rights Certificate, and as Exhibit B the
Summary of Rights to Purchase Common Stock. Pursuant
to the Rights Agreement, Rights Certificates will not
be mailed until after the Distribution Date (as that
term is defined in the Rights Agreement).
(Incorporated by reference to Exhibit 1 to the
Company's Registration Statement on Form 8-A (File
No. 000-25120))
99 Press Release dated July 20, 1999 announcing adoption
of the Stockholder Rights Plan.
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EXHIBIT 99
Security Dynamics Technologies, Inc. Adopts Stockholder Rights Plan
BEDFORD, Mass., July 20, 1999 -- Security Dynamics Technologies, Inc. (Nasdaq:
SDTI - news) announced today that its Board of Directors has adopted a
Stockholder Rights Plan in which common stock purchase rights will be
distributed as a dividend at the rate of one Right for each share of the
Company's Common Stock outstanding as of the close of business on July 30, 1999.
"The Rights Plan is designed to allow all Security Dynamics stockholders to
realize the long-term value of their investment in the Company and to protect
stockholders in the event of an unfair, coercive offer to acquire the Company,"
said Charles R. Stuckey, Jr., chairman of the board and chief executive officer
of Security Dynamics.
According to Mr. Stuckey, the Board adopted the Rights 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 stockholders. "Coercive tactics can unfairly
pressure stockholders and squeeze them out of their investment without giving
them any real choice," said Mr. Stuckey. He added that the Company was not aware
of any unsolicited offer or takeover attempt, and that over 3,500 public
companies currently have similar Rights Plans in place.
Each Right will entitle Security Dynamics stockholders to purchase one share of
Common Stock of the Company at an exercise price of $125.00. The Rights will be
exercisable if another party acquires beneficial ownership of 15 per cent or
more of Security Dynamics' Common Stock, or upon the commencement of a tender or
exchange offer that, if consummated, would result in another party acquiring 15
per cent or more of Security Dynamics' Common Stock.
In the event of such an acquisition or similar event as described in the Rights
Plan, each Right, except those owned by the acquiring party, will enable the
holder of the Right to purchase that number of shares of Security Dynamics'
Common Stock which equals the exercise price of the Right divided by one-half of
the market price of such Common Stock.
In addition, if Security Dynamics is involved in a merger or other transaction
with another company in which it is not the surviving corporation, or it sells
or transfers 50 per cent or more of its assets or earning power to another
company, each Right will entitle its holder to purchase 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 market price of such company's common stock.
The Company will generally be entitled to redeem the Rights at $0.001 per Right
at any time until the tenth business day following the later of a public
announcement that an acquiring party has acquired 15% or more of the Company's
Common Stock
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or the actual knowledge by an executive officer of the Company of such
acquisition. Unless the Rights are redeemed or exchanged earlier, they will
expire on July 20, 2009.
About Security Dynamics
Security Dynamics is a leading provider of enterprise network and data security
solutions that help companies conduct business securely, protect corporate
information assets and facilitate business-to-business electronic commerce. With
more than 4.5 million users of its SecurID(R) authentication technology,
Security Dynamics is the world leader in two-factor user identification and
authentication. RSA Data Security, Inc., a wholly owned subsidiary of Security
Dynamics, is a leading supplier of software components that secure electronic
data, with more than 400 million copies of RSA encryption and authentication
technologies installed worldwide. RSA technologies are part of existing and
proposed standards for the Internet and World Wide Web, ISO, ITU-T, ANSI, IEEE,
and business, financial, and electronic commerce networks around the globe.
Security Dynamics and RSA can be found on the World Wide Web at
www.securitydynamics.com and www.rsa.com, respectively.
NOTE: SecurID is a registered trademark of Security Dynamics Technologies, Inc.
