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)
May 1, 1995
DESIGNS, INC.
(Exact name of registrant as specified in charter)
Delaware 0-15898 04-2623104
(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification no.)
Boylston Street, Chestnut Hill, Massachusetts 02167
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:
(617) 739-6722
There are 65 pages in this Report, including exhibits.
Page 1 of 65
Item 5 - Other Events
On May 1, 1995, the Board of Directors of the Company adopted a
Shareholder Rights Agreement (the "Rights Agreement"). The following
description of the terms of the Rights Agreement does not purport to be
complete and is qualified in its entirety by reference to the Rights
Agreement which is attached hereto as an exhibit and is incorporated herein
by reference.
Pursuant to the terms of the Rights Agreement, the Board of Directors
declared a dividend distribution of one Preferred Stock Purchase Right (a
"Right") for each outstanding share of Common Stock of the Company (the
"Common Stock") to stockholders of record as of the close of business on
May 15, 1995 (the "Record Date"). Each Right entitles the registered holder
to purchase from the Company a unit consisting of one one-thousandth of a
share (a "Unit") of Series A Junior Participating Cumulative Preferred Stock,
par value $0.01 per share (the "Preferred Stock"), at a cash exercise price
of $56.00 per Unit (the "Exercise Price"), subject to adjustment.
Initially, the Rights will not be exercisable and will be attached to
all shares of Common Stock outstanding as of, and issued subsequent to, the
Record Date. The Rights will separate from the Common Stock and will become
exercisable upon the earliest of (i) the close of business on the tenth
business day following the first public announcement that a person or group
of affiliated or associated persons has acquired beneficial ownership of 15%
or more of the outstanding shares of Common Stock (an "Acquiring Person")
(the date of said announcement being referred to as the "Stock Acquisition
Date"), (ii) the close of business on the tenth business day (or such other
business day as the Board of Directors may determine) following the
commencement of a tender offer or exchange offer that would result upon its
consummation in a person or group becoming the beneficial owner of 15% or
more of the outstanding shares of Common Stock or (iii) the determination by
the Board of Directors that any person is an "Adverse Person" (the earliest of
such dates being herein referred to as the "Distribution Date").
The Board of Directors may declare a person to be an Adverse Person after
a determination that such person, alone or together with its affiliates and
associates, has become the beneficial owner of 10% or more of the outstanding
shares of Common Stock and a determination by the Board of Directors, after
reasonable inquiry and investigation, including such consultation, if any,
with such persons as the directors shall deem appropriate, that (a) such
beneficial ownership by such person is intended to cause, is reasonably
likely to cause or will cause the Company to repurchase the 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 which would
provide such person with short-term financial gain under circumstances where
the Board of Directors determines that the best long-term interests of the
Company and its stockholders, but for the actions and possible actions of
such person, would not be served by taking such action or entering into
such transaction or series of transactions at that time or (b) such
beneficial ownership is causing, or is 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) on the business or prospects of the Company. However,
the Board of Directors may not declare a person to be an Adverse Person if,
prior to the time that the person acquired 10% or more of the outstanding
shares of Common Stock, such person provided to the Board of Directors in
writing a statement of the person's purpose and intentions in connection with
the proposed acquisition of Common Stock, together with any other information
reasonably requested of the person by the Board of Directors, and the Board
of Directors, based on such statement and such reasonable inquiry and
investigation, including such consultation, if any, with such person as the
Board of Directors shall deem appropriate, determines to notify and notifies
such person in writing that it will not declare the person to be an Adverse
Person; provided, however, that the Board of Directors may expressly
condition in any manner a determination not to declare a person an Adverse
Person on such conditions as the Board of Directors may select, including,
without limitation, such person's not acquiring more than a specified amount
of stock and/or on such person's not taking actions inconsistent with the
purposes and intentions disclosed by such person in the statement provided
to the Board of Directors. No delay or failure by the Board of Directors to
declare a Person to be an Adverse Person shall in any way waive or otherwise
affect the power of the Board of Directors subsequently to declare a person
an Adverse Person. In the event that the Board of Directors should at any
time determine, upon reasonable inquiry and investigation, including
consultation with such persons as the Board of Directors shall deem
appropriate, that such person has not met or complied with any condition
specified by the Board of Directors, the Board of Directors may at any
time thereafter declare the person to be an Adverse Person.
Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), (a) the Rights will be evidenced by the Common
Stock certificates and will be transferred with and only with such Common
Stock certificates, (b) new Common Stock certificates issued after the Record
Date will contain a notation incorporating the Shareholder Rights Agreement
by reference, and (c) the surrender for transfer of any certificates for
Common Stock 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 May 1, 2005, unless previously redeemed
or exchanged by the Company as described below.
As soon as practicable after the Distribution Date, Right Certificates
will be mailed to holders of record of Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Right
Certificates alone will represent the Rights. Except as otherwise determined
by the Board of Directors, only shares of Common Stock issued prior to
the Distribution Date will be issued with Rights.
In the event that a Stock Acquisition Date occurs or the Board of
Directors determines that a person is an Adverse Person, proper provision
will be made so that each holder of a Right (other than an Acquiring Person,
an Adverse Person or their affiliates or associates, whose Rights shall
become null and void) will thereafter have the right to receive upon exercise
that number of Units of Preferred Stock of the Company having a market value
of two times the exercise price of the Right (such right being referred to
as the "Subscription Right"). In the event that, at any time following the
Stock Acquisition Date, (i) the Company consolidates with, or merges with
and into, any other person, and the Company is not the continuing or
surviving corporation, (ii) any person consolidates with the Company, or
merges with and into the Company and the Company is the continuing or
surviving corporation of such merger and, in connection with such merger, all
or part of the shares of Common Stock are changed into or exchanged for stock
or other securities of any other person or cash or any other property, or
(iii) 50% or more of the Company's assets or earning power is sold,
mortgaged or otherwise transferred, each holder of a Right shall thereafter
have the right to receive, upon exercise, common stock of the acquiring
company having a market value equal to two times the exercise price of the
Right (such right being referred to as the "Merger Right"). The holder of
a Right will continue to have the Merger Right whether or not such holder
has exercised the Subscription Right. Rights that are or were beneficially
owned by an Acquiring Person or an Adverse Person may (under certain
circumstances specified in the Rights Agreement) become null and void.
At any time after a Stock Acquisition Date occurs or the Board of
Directors determines that a person is an Adverse Person, the Board of
Directors may, at its option, exchange all or any part of the then
outstanding and exercisable Rights for shares of Common Stock or Units of
Preferred Stock at an exchange ratio of one share of Common Stock or one
Unit of Preferred Stock per Right. Notwithstanding the foregoing, the Board
of Directors generally will not be empowered to effect such exchange at any
time after any person becomes the beneficial owner of 50% or more of the
Common Stock of the Company.
The Exercise Price payable, and the number of Units 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).
With certain exceptions, no adjustment in the Exercise Price will be
required until cumulative adjustments amount to at least 1% of the Exercise
Price. The Company is not obligated to issue fractional Units. If the
Company elects not to issue fractional Units, in lieu thereof an adjustment
in cash will be made based on the fair market value of the Preferred Stock on
the last trading date prior to the date of exercise. Any of the provisions of
the Rights Agreement may be amended by the Board of Directors of the Company
at any time prior to the Distribution Date.
The Rights may be redeemed in whole, but not in part, at a price of
$0.01 per Right (payable in cash, Common Stock or other consideration deemed
appropriate by the Board of Directors) by the Board of Directors only
until the earliest of (i) the date on which a person is declared to be an
Adverse Person, (ii) the close of business on the tenth business day after
the Stock Acquisition Date, or (iii) the expiration date of the Rights
Agreement. Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and thereafter the only
right of the holders of Rights will be to receive the redemption price.
The Rights Agreement may be amended by the Board of Directors in its
sole discretion until the Distribution Date. After the Distribution Date,
the Board of Directors may, subject to certain limitations set forth in the
Rights Agreement, amend the Rights Agreement only to cure any ambiguity,
defect or inconsistency, to shorten or lengthen any time period, or to make
changes that do not adversely affect the interests of Rights holders
(excluding the interests of an Acquiring Person, an Adverse Person or their
associates or affiliates). In addition, the Board of Directors may at any
time prior to such time as any person becomes an Acquiring Person amend
the Rights Agreement to lower the threshold at which a person becomes an
Acquiring Person to not less than the greater of (i) the sum of .001% and
the largest percentage of the outstanding Common Stock then owned by any
person and (ii) 10%.
Until a Right is exercised, the holder will have no rights as a
stockholder of the Company (beyond those as an existing stockholder),
including 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 Units, other
securities of the Company, other consideration or for common stock of an
acquiring company.
The Rights Agreement between the Company and the Rights Agent, which
sets forth the terms of the Rights and includes as Exhibit B the form of
Right Certificate, is attached hereto as Exhibit 4.1 and 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 the Rights Agreement which is incorporated herein by reference.
Item 7 - Financial Statements, Pro Forma Financial Information and Exhibits
Exhibit 4.1 - Shareholder Rights Agreement, dated as of May 1, 1995,
between Designs, Inc. and The First National Bank of
Boston, as Rights Agent.
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.
DESIGNS, INC.
Date: May 1, 1995 By: /s/ Joel H. Reichman
Joel H. Reichman, President and
Chief Executive Officer