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): June 12, 1996
-----------------------
BIO-VASCULAR, INC.
------------------
(Exact name of registrant as specified in its charter)
Minnesota 0-13907 41-1526554
--------- ------- ----------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
2575 University Avenue, St. Paul, Minnesota 55114-1024
- ------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 612/603-3700
------------
ITEM 5. OTHER EVENTS
------------
On June 12, 1996, the Board of Directors of Bio-Vascular, Inc. (the
"Company") declared a dividend distribution of one common stock purchase right
(a "Right") for each outstanding share of the Company's Common Stock, par value
$.01 per share (the "Common Shares"), payable to shareholders of record at the
close of business on July 15, 1996 (the "Record Date"). Each Right entitles the
registered holder to purchase from the Company at any time following the
Distribution Date (as defined below) one-tenth of a Common Share, or a
combination of securities and assets of equivalent value, at a purchase price of
$6.00 per one-tenth Common Share (the "Purchase Price"), subject to adjustment.
The description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") dated as of June 12, 1996, between the Company and American
Stock Transfer & Trust Company, as Rights Agent.
Initially, the Rights will be evidenced, with respect to any of the Common
Share certificates outstanding as of the Record Date, by such Common Share
certificates, and no separate Rights Certificates will be distributed. The
Rights will separate from the Common Shares and will be distributed to the
holders thereof on the "Distribution Date," which shall be the first to occur of
the following: (i) the close of business on the tenth business day 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 15% or more of the outstanding Common Shares, other than
as a result of a Permitted Offer, as defined (the "Stock Acquisition Date");
(ii) the close of business on the tenth business day (or such later date as the
Board of Directors, acting by a majority of the Continuing Directors, may
determine) following the commencement of a tender offer or exchange offer (other
than a Permitted Offer, as defined) that would result in a person or group
beneficially owning 15% or more of the outstanding Common Shares; or (iii) the
close of business on the tenth business day after a determination by at least a
majority of the Continuing Directors that a Person is an Adverse Person, and
that such Person, alone or together with its affiliates and associates, has
become the beneficial owner of a substantial amount of Common Shares (which
amount shall in no event be less than 10% of the Common Shares then outstanding)
and (a) such beneficial ownership by such Person is intended to cause the
Company to repurchase the Common Shares beneficially owned by such Person or to
cause pressure on the Company to take action or enter into a transaction or
series of transactions intended to provide such Person with short-term financial
gain under circumstances where at least a majority of the Continuing Directors
determines that the best long-term interests of the Company and its shareholders
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 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).
A "Permitted Offer" means a tender or exchange offer which is for all
outstanding Common Shares at a price and on terms determined, prior to the
purchase of shares under such tender or exchange offer, by at least a majority
of the members of the Board who are Continuing Directors, who are not officers
of the Company and who are not Acquiring Persons or Affiliates, Associates,
nominees or representatives of an Acquiring Person, to be adequate and otherwise
in the best interests of the Company and its shareholders (other than the Person
or any Affiliate or Associate thereof on whose behalf the offer is being made).
2
A "Continuing Director" is (i) any person who is a member of the Board of
Directors prior to June 12, 1996, while such person is a member of the Board of
Directors, who is not an Acquiring Person or an Adverse Person, or an affiliate
or associate of either of the foregoing, or a representative or designee of an
Acquiring Person or an Adverse Person or any such affiliate or associate, or
(ii) any person who subsequently becomes a member of the Board of Directors who
is not an Acquiring Person or an Adverse Person, or an affiliate or associate of
either of the foregoing, or a representative or designee of an Acquiring Person,
an Adverse Person or any such affiliate or associate, and whose nomination or
election to the Board of Directors is recommended or approved by a majority of
the Continuing Directors.
Until the Distribution Date, (i) the Rights will be evidenced by Common
Share certificates and will be transferred with and only with such Common Share
certificates, (ii) new Common Share certificates issued after July 15, 1996 will
contain a notation incorporating the Rights Agreement by reference and (iii) the
surrender for transfer of any certificate for Common Shares outstanding will
also constitute the transfer of the Rights associated with the Common Shares
represented by such certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on June 11, 2006, unless earlier redeemed or exchanged
by the Company as described below (the earliest of all such dates, the
"Expiration Date").
As soon as practical 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, thereafter, the separate Rights Certificates alone
will represent the Rights. All Common Shares issued prior to the earlier of the
Distribution Date and the Expiration Date will be issued with Rights. Common
Shares issued after the Distribution Date upon the exercise of employee stock
options, issuances under other employee stock benefit plans or the conversion of
convertible securities issued prior to the Distribution Date will be issued with
Rights.
In the event (i) that a person or group, with certain exceptions, becomes
the beneficial owner of more than 15% of the then outstanding Common Shares,
other than as a result of a Permitted Offer or (ii) at least a majority of the
Continuing Directors determines that a person is an Adverse Person, then each
holder of a Right will thereafter have the right to receive, upon exercise for a
purchase price equal to ten times the Purchase Price of the Right, that number
of Common Shares (or in certain circumstances, cash, property or other
securities of the Company) having a market value equal to twenty times the
Purchase Price of the Right. The Rights, however, are not exercisable following
the occurrence of either of the events set forth above until such time as the
Rights are no longer redeemable by the Company as set forth below.
Notwithstanding any of the foregoing, following the occurrence of either of the
events set forth above, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person or Adverse Person (or certain related persons and transferees) will be
null and void. The events set forth in this paragraph are referred to as
"Section 11(a)(ii) Events."
For example, at a Purchase Price of $6.00 per Right, each Right not owned
by an Acquiring Person or an Adverse Person (or by certain related parties)
following a Section 11(a)(ii) Event would entitle its holder to purchase $120
worth of Common Shares (or other consideration as noted above) for $60.
3
In the event that, at any time following the Stock Acquisition Date, other
than pursuant to a Permitted Offer, (i) the Company is acquired in a merger or
other business combination transaction in which the Company is not the surviving
corporation or the Common Shares are changed or exchanged 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 thereof for a purchase price
equal to ten times the current Purchase 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 equal to twenty times the Purchase Price of
the Right. The events set forth in this paragraph are referred to as "Section 13
Events," and the Section 11(a)(ii) Events and the Section 13 Events are
collectively referred to as the "Triggering Events."
At any time after the occurrence of a Section 11(a)(ii) Event, at the
election of a majority of the Continuing Directors, the Company may exchange the
Rights (other than Rights which have become void), in whole or in part, for
Common Shares, with each Right to be exchanged for a number of Common Shares
equal to the result obtained by dividing (x) a number equal to ten times the
Purchase Price by (y) the current market price per Common Share (subject to
adjustment). In any such exchange, the Company, at its option, may substitute a
series of preferred stock of the Company with rights, privileges and other terms
substantially the same as the Common Shares.
The Purchase Price payable and the number of Common Shares 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, split,
combination, consolidation or reclassification of, the Common Shares, (ii) if
all holders of any security of the Company are granted rights, options or
warrants to subscribe for or purchase Common Shares or convertible securities at
less than the current market price of the Common Shares, or (iii) upon the
distribution to holders of Common Shares of evidences of indebtedness or assets
(excluding quarterly cash dividends) or of subscription rights or warrants
(other than those referred to above).
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company will not be required to issue fractional Common Shares, and,
in lieu of such fractional Common Shares, an adjustment in cash will be made
based on the market price of the Common Shares on the last trading date prior to
the date of exercise.
In general, at any time prior to the first to occur of (i) ten days
following the Stock Acquisition Date, (ii) ten days after a person is determined
to be an Adverse Person, or (iii) the Final Expiration Date, the Company, acting
by a majority of the Continuing Directors, may redeem the Rights in whole, but
not in part, at a price of $.001 per Right (payable in cash, stock or other
consideration deemed appropriate by the Board of Directors). Immediately upon
redemption of the Rights, the Rights will terminate and the only right of the
holders of the Rights will be to receive the $.001 redemption price.
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 receive dividends. The creation of the Rights should not be taxable
to shareholders. Shareholders may, however, 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 stock of an
acquiring company as set forth above.
4
Any of the provisions of the Rights Agreement, including the definition of
Acquiring Person or the Purchase Price, may be amended by at least a majority of
the Continuing Directors prior to the Distribution Date. After the Distribution
Date, the provisions of the Rights Agreement may be amended by at least a
majority of the Continuing Directors in order to cure any ambiguity, to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person or Adverse Person), or to
shorten or lengthen certain time periods under the Rights Agreement. However, no
amendment to adjust the time period governing redemption can be made at such
time as the Rights are not redeemable.
As of June 1, 1996, there were 9,440,622 Common Shares outstanding and
2,442,245 Common Shares reserved for issuance under outstanding warrants and
various stock-based compensation plans of the Company. Each outstanding Common
Share on July 15, 1996 will receive one Right. So long as the Rights Agreement
remains in effect and the Rights continue to remain attached to and trade with
the Common Shares, the Company will issue one Right for each Common Share issued
between the Record Date and any Distribution Date, so that all outstanding
shares will have attached Rights. Assuming 9,440,622 shares of Common Stock are
outstanding on the Record Date, the Company will have initially reserved for
issuance upon exercise of the Rights 944,062 Common Shares.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors. The Rights should not
interfere with any merger or other business combination approved by at least a
majority of the Continuing Directors of the Company because the Continuing
Directors may, at their option, either (i) declare the transaction to be a
"permitted offer," or (b) at any time before the close of business on the 10th
business day following the Stock Acquisition Date or the date on which a person
is determined to be an Adverse Person, redeem the then outstanding Rights at the
redemption price.
ITEM 7. EXHIBITS.
--------
4.1 Form of Rights Agreement, dated as of June 12, 1996, between Bio-
Vascular, Inc. and American Stock Transfer & Trust Company, which
includes as Exhibit A the form of Rights Certificate (filed herewith
electronically). Pursuant to the Rights Agreement, printed Rights
Certificates will not be mailed until as soon as practicable after the
Distribution Date (as defined therein).
99.1 Press Release dated June 19, 1996 (filed herewith electronically).
5
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.
Dated: June 24, 1996 BIO-VASCULAR, INC.
By:/s/ JOHN T. KARCANES
-------------------
John T. Karcanes
President and Chief Executive Officer
6
INDEX TO EXHIBITS
-----------------
ITEM
- ----
NO. DESCRIPTION METHOD OF FILING
- --- ----------- ----------------
4.1 Form of Rights Agreement, dated
as of June 12, 1996, between
Bio-Vascular, Inc. and American
Stock Transfer & Trust Company,
which includes as Exhibit A the form
of Rights Certificate. Pursuant to
the Rights Agreement, printed Rights
Certificates will not be mailed
until as soon as practicable after
the Distribution Date (as defined
therein)............................ Filed herewith electronically.
99.1 Press Release dated June 19, 1996... Filed herewith electronically.