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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 AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): June 18, 1998
SI DIAMOND TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in its Charter)
Texas
(State or Other Jurisdiction of Incorporation)
1-11602 76-0273345
(Commission File No.) (I.R.S. Employer Identification No.)
3006 Longhorn Boulevard
Suite 107
Austin, Texas 78758
(Address of Principal Executive Offices)
(512) 339-5070
(Registrant's Telephone Number, Including Area Code)
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Item 5. Other Events
On June 18, 1998, the Board of Directors of SI Diamond Technology,
Inc. (the "Company") declared a dividend of one Right for each outstanding
common share, $.001 par value, of the Company (the "Common Shares"), payable on
June 18, 1998, to shareholders of record at the close of business on that date.
Each Right entitles the registered holder to purchase from the Company a unit
(the "Unit") consisting of one-one-hundredth of a Series H Junior Partic
ipating Preferred Share, stated value $1.00 per share (the "Preferred Shares"),
at a Purchase Price of $1.00 per Unit, subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement dated as of June
18, 1998 (the "Rights Agreement") between the Company and American Securities
Transfer, Incorporated, as Rights Agent.
Initially, the Rights will be attached to all certificates
representing outstanding Common Shares, and no separate Rights Certificates
will be distributed. The Rights will separate from the Common Shares and a
"Distribution Date" will occur upon the earlier of (i) ten 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 20% or more of the outstanding Common Shares (the date
of the announcement being the "Shares Acquisition Date"), or (ii) ten business
days (or such later date as may be determined by the Company's Board of
Directors (with the concurrence of a majority of the Continuing Directors (as
defined below)) before the Distribution Date occurs) following the commencement
of a tender offer or exchange offer that would result in a person's becoming an
Acquiring Person. Until the Distribution Date, (a) the Rights will be evidenced
by the Common Shares certificates (together with a copy of this Summary of
Rights or bearing the notation referred to below) and will be transferred with
and only with such Common Share certificates, (b) new Common Share certificates
issued after June 18, 1998 will contain a notation incorporating the Rights
Agreement by reference and (c) the surrender for transfer of any certificate
for Common Shares outstanding (with or without a copy of this Summary of
Rights) will also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate. The Company, its subsidiaries
and their employee benefit plans will not at any time be deemed Acquiring
Persons.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on June 18, 2008, unless earlier redeemed or
exchanged by the Company as described below. Pursuant to the Rights Agreement,
the Company reserves the right to require prior to the occurrence of a
Triggering Event (as defined below) that, upon any exercise of Rights, a number
of Rights be exercised so that only whole Preferred Shares will be issued.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Shares as of the
close of business on the Distribution Date and, from and after the Distribution
Date, the separate Rights Certificates alone will represent the Rights. All
Common Shares issued prior to the Distribution Date will be issued with Rights.
Common Shares issued after the Distribution Date in connection with certain
employee benefit plans or upon exercise or conversion of certain securities
will be issued with Rights. Except as
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otherwise determined by the Board of Directors, no other Common Shares issued
after the Distribution Date will be issued with Rights.
In the event that a Person becomes an Acquiring Person, each holder of
a Right will there after have the right to receive, upon exercise of such Right,
a number of Common Shares (or, in certain circumstances, cash, property or other
securities of the Company) having a Current Market Price (as defined in the
Rights Agreement) equal to two times the exercise price of the Right.
Notwithstanding any of the foregoing, following the occurrence of any such
event, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person (or by
certain related parties) will be null and void in the circumstances set forth in
the Rights Agreement. However, Rights are not exercisable following the
occurrence of any such event until such time as the Rights are no longer
redeemable by the Company as set forth below.
For example, at the exercise price of $1.00 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 $2.00
worth of the Common Shares (or other consideration, as noted above), based upon
their Current Market Price, for $1.00. Assuming that the Common Shares had a
Current Market Price of $0.40 per share at such time, the holder of each valid
Right would be entitled to purchase 5 Common Shares for $1.00.
In the event that, at any time on or after the Shares Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction or (ii) 50% or more of the Company's assets or earning power is sold
or transferred, each holder of a Right (except Rights that previously have been
voided as set forth above) shall thereafter have the right to receive, upon
exercise, a number of common shares of the acquiring company having a Current
Market Price equal to two times the exercise price of the Right. The events
described in this and the two preceding paragraphs are collectively referred to
as "Triggering Events."
The Purchase Price payable, and the number of Units of Preferred Shares
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) if holders of the Preferred Shares are granted certain
rights or warrants to subscribe for Preferred Shares or convertible securities
at less than the current market price of the Preferred Shares, or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights and the number of Units issuable upon
exercise of each Right are also subject to adjustment in the event of a stock
split of the Common Shares or a stock dividend on the Common Shares payable in
Common Shares or subdivisions, consolidations or combinations of the Common
Shares occurring, in any such case, prior to the Distribution Date.
The Preferred Shares purchasable upon exercise of the Rights will not
be redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of
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$.01 per share but will be entitled to an aggregate dividend of 100 times the
dividend declared per Common Share. In the event of liquidation, the holders of
the Preferred Shares will be entitled to a minimum preferential liquidation
payment of $1.00 per share.
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 Units will be issued and, in lieu thereof, an adjustment in
cash will be made based on the market price of the Preferred Shares on the last
trading date prior to the date of exercise.
At any time until ten days following the Shares Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right, payable, at the option of the Company, in cash, Common Shares or such
other consideration as the Board of Directors may determine. Under certain
circumstances set forth in the Rights Agreement, the decision to redeem the
Rights will require the concurrence of a majority of the Continuing Directors
(as defined below). After the redemption period has expired, the Company's
right of redemption may be reinstated (with the concurrence of the Continuing
Directors) if an Acquiring Person reduces his beneficial ownership to 20% or
less of the outstanding Common Shares in a transaction or series of
transactions not involving the Company and there are no other Acquiring
Persons. Immediately upon the effectiveness of 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 $.01 redemption
price.
The term "Continuing Director" means (i) any member of the Board of
Directors of the Company who was a member of the Board as of June 18, 1998, and
(ii) any person who is subsequently elected to the Board, if such person is
recommended or approved by a majority of the Continuing Directors then on the
Board of Directors, and such person is not an Acquiring Person or an affiliate,
associate, representative or nominee of an Acquiring Person.
At any time after a Person becomes an Acquiring Person, the Company
may exchange the Rights (other than Rights owned by an Acquiring Person or an
affiliate or an associate of an Acquiring Person, which will have become void),
in whole or in part, at an exchange ratio of one Common Share, and/or other
equity securities deemed to have the same value as one Common Share, per Right,
subject to adjustment.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder 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 shareholders or to the Company, shareholders may,
depending upon the circumstances, recognize taxable income in the event that
the Rights become exercisable for Common Shares (or other consideration) of the
Company or for common shares of the acquiring company as set forth above or are
exchanged as provided in the preceding paragraph.
Other than those provisions relating to the principal economic terms
of the Rights, any of the provisions of the Rights Agreement may be amended by
the Board of Directors (but only with the concurrence of a majority of the
Continuing Directors) of the Company prior to the Shares
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Acquisition Date. Thereafter, the provisions of the Rights Agreement may be
amended by the Board of Directors (but only with the concurrence of a majority
of the Continuing Directors) in order to cure any ambiguity, defect or
inconsistency, to make changes that do not materially adversely effect the
interests of holders of Rights (excluding the interests of any Acquiring Person
and certain related parties), or to shorten or lengthen any time period under
the Rights Agreement; provided, however, that no amendment to lengthen the time
period governing redemption shall be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to the Company's Current Report on Form 8-K
dated June 25, 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.
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
4.1 Form of Rights Agreement dated as of June 18, 1998 between The
Company and American Securities Transfer, Incorporated, as Rights Agent, which
includes as Exhibit A the form of Statement of Resolutions establishing and
designating Series of Preferred Stock as "Series H Junior Participating
Preferred Stock" and fixing and determining the relative rights and preferences
thereof, as Exhibit B the form of Rights Certificate and as Exhibit C the
Summary of Rights to Purchase Preferred Shares.
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.
SI DIAMOND TECHNOLOGY, INC.
By /s/ Douglas P. Baker
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Douglas P. Baker
Vice President and
Chief Financial Officer
Dated: June 25, 1998