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UNITED STATES
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
SECURITIES EXCHANGE ACT OF 1934
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DATE OF EARLIEST EVENT REPORTED: OCTOBER 6, 1999
ARONEX PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 0-20111 76-0196535
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
8707 TECHNOLOGY FOREST PLACE
THE WOODLANDS, TEXAS 77381-1191
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (281) 367-1666
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ITEM 5. OTHER EVENTS
RIGHTS AGREEMENT
On October 6, 1999, the Board of Directors of Aronex Pharmaceuticals,
Inc. (the "Company") declared a dividend distribution of one preferred stock
purchase right (a "Right") for each outstanding share of common stock, par value
$0.001 per share ("Common Stock"), of the Company. The distribution is payable
on October 18, 1999 (the "Record Date") to the stockholders of record on that
date. Each Right entitles the registered holder thereof to purchase from the
Company one one-hundredth of a share of Series One Junior Participating
Preferred Stock, par value $0.001 per share, of the Company (the "Preferred
Stock") at a price of $32.00, subject to adjustment. The following is a summary
of the Rights; the full description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between the Company and American Stock
Transfer & Trust Company, as Rights Agent (the "Rights Agent").
Copies of the Rights Agreement and the Certificate of Designation are
available free of charge from the Company. This summary description of the
Rights and the Preferred Stock does not purport to be complete and is qualified
in its entirety by reference to all the provisions of the Rights Agreement and
the Certificate of Designation, including the definitions therein of certain
terms, which Rights Agreement and Certificate of Designation are incorporated
herein by reference.
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock and
the Distribution Date will occur upon the earlier of (i) 10 days following the
date of public announcement that a person or group of persons has become an
Acquiring Person (as hereinafter defined) or (ii) 10 business days (or such
later date as may be determined by action of the Board of Directors prior to the
time a person becomes an Acquiring Person) following the commencement of, or the
announcement of an intention to make, a tender offer or exchange offer upon
consummation of which the offeror would, if successful, beneficially own 20% or
more of the outstanding Common Stock (the earlier of such dates being called the
"Distribution Date"). The term "Acquiring Person" means any person who or which,
together with all of its affiliates and associates, shall be the beneficial
owner of 20% or more of the outstanding Common Stock, but shall not include the
Company, any Subsidiary of the Company or any employee benefit plan of the
Company.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date, upon transfer or new
issuance of Common Stock, will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Stock, outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and such separate Rights Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on October 18, 2009 (the "Expiration Date").
The Purchase Price payable, and the number of one one-hundredths of a
share 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) upon
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the grant to holders of the Preferred Stock of certain rights or warrants to
subscribe for or purchase shares of Preferred Stock at a price, or securities
convertible into Preferred Stock with a conversion price, less than the then
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 periodic cash dividends paid or dividends payable in Preferred Stock) or
of subscription rights or warrants (other than those referred to in (ii) above).
The number of outstanding Rights and the number of one one-hundredths
of a share of Preferred Stock issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Stock or a
stock dividend on the Common Stock payable in the Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
In the event that following a Shares Acquisition Date (the date of
public announcement that an Acquiring Person has become such) the Company is
acquired in a merger or other business combination transaction, or more than 50%
of its consolidated assets or earning power are sold, proper provision will be
made so that each holder of a Right will thereafter have the right to receive,
upon the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the exercise price of the
Right (the "Flip-Over Right").
In the event that a person becomes an Acquiring Person, proper
provision shall be made so that each holder of a Right (other than the Acquiring
Person and its affiliates and associates) will thereafter have the right to
receive upon exercise that number of shares of Common Stock (or, under certain
circumstances, cash, other equity securities or property of the Company) having
a market value equal to two times the Purchase Price of the Rights (the "Flip-In
Right"). Upon the occurrence of the foregoing event giving rise to the
exercisability of the Rights, any Rights that are or were at any time owned by
an Acquiring Person shall become void.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. Upon exercise of the Rights, no fractional shares of
Preferred Stock will be issued other than fractions which are integral multiples
of one one-hundredth of a share of Preferred Stock; cash will be paid in lieu of
fractional shares of Preferred Stock that are not integral multiples of one
one-hundredth of a share of Preferred Stock.
At any time prior to the earlier to occur of (i) 5:00 p.m., Houston,
Texas time on the 10th day after the Shares Acquisition Date or (ii) the
expiration of the Rights, the Company may redeem the Rights in whole, but not in
part, at a price of $0.001 per Right (the "Redemption Price"); provided, that
(i) if the Board of Directors authorizes redemption on or after the time a
person becomes an Acquiring Person, then such authorization must be by Board
Approval (as hereinafter defined) and (ii) the period for redemption may, upon
Board Approval, be extended by amending the Rights Agreement. The term "Board
Approval" means the approval of a majority of the directors of the Company.
Immediately upon any redemption of the Rights described in this paragraph, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
For so long as the Rights are redeemable, the terms of the Rights may
be amended by the Board of Directors without the consent of the holders of the
Rights provided that no amendment to the Rights may be made which decreases the
Redemption Price. At such time as the Rights are no longer redeemable, the
Rights Agreement and the terms of the Rights may be amended without the approval
of any holders of the Rights to (i) cure any ambiguity, (ii) correct or
supplement any defective or inconsistent provision, (iii) shorten or lengthen
any time period under the Rights Agreement, or (iv) change or supplement any
provision contained in the Rights Agreement which the Board of Directors deems
necessary; provided, that no such supplement or amendment may adversely affect
the interests of the holders of the Rights (other than an Acquiring Person and
its affiliates) and no such amendment shall cause the Rights to again become
redeemable or cause the Rights Agreement to again become amendable except as
provided therein.
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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 Preferred Stock (or other consideration).
DESCRIPTION OF PREFERRED STOCK
Each one-hundredth of a share of the Preferred Stock ("Preferred Share
Fraction") that may be acquired upon exercise of the Rights will be
nonredeemable and subordinate to any other shares of preferred stock that may be
issued by the Company.
Each Preferred Share Fraction will have a minimum preferential
quarterly dividend rate of $0.01 per Preferred Share Fraction but will, in any
event, be entitled to a dividend equal to the per share dividend declared on the
Company Common Stock.
In the event of liquidation, the holder of a Preferred Share Fraction
will receive a preferred liquidation payment equal to the greater of $0.01 per
Preferred Share Fraction or the per share amount paid in respect of a share of
Company Common Stock.
Each Preferred Share Fraction will have one vote, voting together with
the Company Common Stock.
In the event of any merger, consolidation or other transaction in which
shares of Company Common Stock are exchanged, each Preferred Share Fraction will
be entitled to receive the per share amount paid in respect of each share of
Company Common Stock.
The rights of holders of the Preferred Stock to dividends, liquidation
and voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the economic value of one Preferred Share Fraction that may
be acquired upon the exercise of each Right should approximate the economic
value of one share of the Company's Common Stock.
Additional information regarding the Rights is set forth in the Rights
Agreement which is filed herewith as Exhibit 4.1 and incorporated herein by
reference.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
4.1 Rights Agreement dated as of October 6, 1999 (incorporated by
reference to Form 8-A of Aronex Pharmaceuticals, Inc. filed on October 7, 1999).
99.1 Press Release dated October 7, 1999, with respect to the Rights
Agreement.
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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 thereunto duly authorized.
ARONEX PHARMACEUTICALS, INC.
By: /s/ Geoffrey F. Cox
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Geoffrey F. Cox
Chief Executive Officer
Date: October 7, 1999
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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4.1 Rights Agreement dated as of October 6, 1999 (incorporated by
reference to Form 8-A of Aronex Pharmaceuticals, Inc. filed on
October 7, 1999).
99.1 Press Release dated October 7, 1999, with respect to the Rights
Agreement.