UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 18, 2007
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DEL GLOBAL TECHNOLOGIES CORP.
(Exact name of registrant as specified in charter)
New York 0-3319 13-1784308
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
11550 West King Street, Franklin Park, IL 60131
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (847) 288-7000
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (SEE General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On January 18, 2007, the registrant entered into an amendment ("Amendment
No. 5") to that certain loan and security agreement by and among the registrant,
RFI Corporation, Del Medical Imaging Corp. (collectively, the "Borrowers") and
North Fork Business Capital Corporation (the "Lender") dated as of August 1,
2005 (the "Loan and Security Agreement"). A copy of Amendment No. 5 to the Loan
and Security Agreement is attached hereto as Exhibit 99.02 and incorporated
herein by reference. The following summary of Amendment No. 5 to the Loan and
Security Agreement does not purport to be complete and is subject to and
qualified in its entirety by reference to the actual text of such agreement. The
terms of the Loan and Security Agreement were amended to permit a dividend
distribution of common stock purchase rights pursuant to a stockholders rights
plan and the issuance of shares of common stock upon the exercise of any such
common stock purchase rights.
On January 22, 2007, Del Global Technologies Corp. (the "Company") entered
into a stockholders rights plan (the "Rights Plan"). The Rights Plan provides
for a dividend distribution of one Common Stock purchase right (a "Right") for
each outstanding share of the Company's Common Stock, par value $0.10 (the
"Common Stock"). The dividend is payable on February 2, 2007 to the Company's
stockholders of record at the close of business on that date (the "Record
Date"). The terms of the Rights and the Rights Plan are set forth in a Rights
Agreement, dated as of January 22, 2007, by and between Del Global Technologies
Corp. and Mellon Investor Services LLC, as Rights Agent.
The Company's Board of Directors adopted the Rights Plan to protect
stockholder value by protecting the Company's ability to realize the benefits of
its net operating loss carryforwards ("NOLs") and capital loss carryforwards.
The Company has experienced substantial operating and capital losses in previous
years. Under the Internal Revenue Code and rules promulgated by the Internal
Revenue Service, the Company may "carry forward" these losses in certain
circumstances to offset current and future earnings and thus reduce its federal
income tax liability, subject to certain requirements and restrictions. Assuming
that the Company has future earnings, the Company may be able to realize the
benefits of NOLs and capital loss carryforwards. These NOLs and capital loss
carryforwards constitute a substantial asset to the Company. If the Company
experiences an "Ownership Change," as defined in Section 382 of the Internal
Revenue Code, its ability to use the NOLs and capital loss carryforwards could
be substantially limited or lost altogether.
In general terms, the Rights Plan imposes a significant penalty upon any
person or group that acquires 5% or more of the Company's outstanding Common
Stock without the prior approval of its Board of Directors. Stockholders that
own 5% or more of the Company's outstanding Common Stock as of the close of
business on the Record Date may acquire up to an additional 1% of the Company's
outstanding Common Stock without penalty so long as they maintain their
ownership above the 5% level (such increase subject to downward adjustment by
the Company's Board of Directors if it determines that such increase will
endanger the availability of the Company's NOLs and/or its capital loss
carryforwards). In addition, the Company's Board of Directors may exempt any
person or group that owns 5% or more of the Company's outstanding Common Stock
if the Board of Directors determines that the person or group's ownership will
not endanger the availability of the Company's NOLs and/or its capital loss
carryforwards. A person or group that acquires a percentage of the Company's
Common Stock in excess of the applicable threshold is called an "Acquiring
Person." Any Rights held by an Acquiring Person are void and may not be
exercised. Common stock acquired in a rights offering shall not alone cause a
person to become an "Acquiring Person."
The Company's Board of Directors authorized the issuance of one Right per
each share of the Company's Common Stock outstanding on the Record Date. If the
Rights become exercisable, each Right would allow its holder to purchase from
the Company one share of the Company's Common Stock for a purchase price of
$25.00 (the "Purchase Price"). Prior to exercise, a Right does not give its
holder any dividend, voting or liquidation rights.
The Rights will not be exercisable until the earlier of: (i) 10 days after
a public announcement by the Company that a person or group has become an
Acquiring Person; and (ii) 10 business days (or a later date determined by the
Company's Board or Directors) after a person or group begins a tender or
exchange offer that, if completed, would result in that person or group becoming
an Acquiring Person.
The date that the Rights become exercisable is known as the "Distribution
Date." Until the Distribution Date, the Company's Common Stock certificates will
also evidence the Rights and will contain a notation to that effect. Any
transfer of shares of Common Stock prior to the Distribution Date will
constitute a transfer of the associated Rights. After the Distribution Date, the
Rights will separate from the Common Stock and be evidenced by Rights
certificates, which the Company will mail to all holders of Rights that have not
become void.
FLIP-IN EVENT. After the Distribution Date, all holders of Rights, except
the Acquiring Person, may exercise their Rights upon payment of the Purchase
Price to purchase shares of the Company's Common Stock (or other securities or
assets as determined by the Company's Board of Directors) with a market value of
two times the Purchase Price (a "Flip-In Event").
FLIP-OVER EVENT. After the Distribution Date, if a Flip-In Event has
already occurred and the Company is acquired in a merger or similar transaction,
all holders of Rights except the Acquiring Person may exercise their Rights upon
payment of the Purchase Price, to purchase shares of the acquiring corporation
with a market value of two times the Purchase Price of the Rights (a "Flip-Over
Event").
The Rights will expire on February 2, 2017 unless earlier redeemed or
exchanged.
The Company's Board of Directors may redeem all (but not less than all) of
the Rights for a redemption price of $0.01 per Right at any time before the
later of the Distribution Date and the date of the first public announcement or
disclosure by the Company that a person or group has become an Acquiring Person.
Once the Rights are redeemed, the right to exercise Rights will terminate, and
the only right of the holders of Rights will be to receive the redemption price.
The redemption price will be adjusted if the Company declares a stock split or
issues a stock dividend on its Common Stock.
After the later of the Distribution Date and the date of the first public
announcement by the Company that a person or group has become an Acquiring
Person, but before an Acquiring Person owns 50% or more of the Company's
outstanding Common Stock, the Company's Board of Directors may exchange each
Right (other than Rights that have become void) for one share of Common Stock or
an equivalent security.
The Company's Board of Directors may adjust the Purchase Price of the
Rights, the number of shares of Common Shares issuable and the number of
outstanding Rights to prevent dilution that may occur as a result of certain
events, including among others, a stock dividend, a stock split or a
reclassification of the Common Stock. No adjustments to the Purchase Price of
less than 1% will be made.
Before the time the Rights cease to be redeemable, the Company's Board of
Directors may amend or supplement the Rights Plan without the consent of the
holders of the Rights, except that no amendment may decrease the redemption
price below $0.10 per Right. At any time thereafter, the Company's Board of
Directors may amend or supplement the Rights Plan only to cure an ambiguity, to
alter time period provisions, to correct inconsistent provisions or to make any
additional changes to the Rights Plan, but only to the extent that those changes
do not impair or adversely affect any Rights holder and do not result in the
Rights again becoming redeemable.
The description of the Rights Plan is qualified in its entirety by
reference to the Rights Plan (including as Exhibit A the Form of Right
Certificate and as Exhibit B the Summary of Rights to Purchase Common Stock), a
copy of which is attached as Exhibit 4.1 to this Current Report and incorporated
herein by reference. The Company's press release dated January 22, 2007 is
attached hereto as Exhibit 99.1 and incorporated herein by reference.
ITEM 3.03. MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS
See description set forth under "Item 1.01. Entry into a Material
Definitive Agreement," of this Current Report on Form 8-K which is incorporated
herein by reference.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
4.1 Rights Agreement, dated as of January 22, 2007, by and between Del
Global Technologies Corp. and Mellon Investor Services LLC, as
rights agent (including as Exhibit A the Form of Right Certificate
and as Exhibit B the Summary of Rights to Purchase Common Stock).
99.1 Press release, dated January 22, 2007 announcing the Rights
Agreement.
99.2 Amendment No. 5 dated as of January 18, 2007 to the Loan and
Security Agreement by and among the registrant, RFI Corporation, Del
Medical Imaging Corp. and North Fork Business Capital Corporation,
dated as of August 1, 2005.
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.
DEL GLOBAL TECHNOLOGIES CORP.
(Registrant)
Date: January 22, 2007
By: /s/ Mark A. Zorko
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Name: Mark A. Zorko
Title: Chief Financial Officer and Secretary
