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): December 3, 1998
Cell Pathways, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 00024889 23-2969600
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(State or other (Commission (IRS Employer
incorporation) File Number) Identification No.)
702 Electronic Drive
Horsham, Pennsylvania 19044
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (215) 706-3800
Not Applicable
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(Former name or former address, if changed since last report)
Item 5. Other Events.
On December 3, 1998, the Board of Directors of Cell Pathways,
Inc. (the "Company") declared a dividend distribution of one Right for each
outstanding share of Common Stock, par value $.01 per share, of the Company
("Common Stock"). The distribution is payable to the stockholders of
record at the close of business on December 15, 1998. Each Right entitles
the registered holder to purchase from the Company one one-hundredth of a
share of a series of the Company's preferred stock designated as Series A
Junior Participating Preferred Stock ("Preferred Stock") at a price of $90
per one one-hundredth of a share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between the Company and Registrar
and Transfer Company, as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. Subject to certain exceptions specified
in the Rights Agreement, the Rights will separate from the Common Stock and
a Distribution Date will occur upon the earlier of (i) 10 business days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired beneficial
ownership of 15% or more of the outstanding shares of Common Stock (the
"Stock Acquisition Date"), other than as a result of repurchases of stock
by the Company or certain inadvertent actions by institutional or certain
other stockholders, or (ii) 10 business days (or such later date as the
Board shall determine prior to any person becoming an Acquiring Person)
following the commencement of a tender offer or exchange offer that would
result in a person or group becoming an Acquiring Person. Until the
Distribution Date, (i) the Rights will be evidenced by the Common Stock
certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after the Record
Date will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any certificates for
Common Stock outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate. 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
shares of Preferred Stock will be issued.
The Rights are not exercisable until the Distribution Date and
will expire at 5:00 P.M. (New York City time) on December 14, 2008 (the
"Expiration Date"), unless such date is extended or the Rights are earlier
redeemed or exchanged by the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock as of
the close of business on the Distribution Date and, thereafter, the
separate Rights 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 Person becomes an Acquiring Person, except
pursuant to an offer for all outstanding shares of Common Stock which the
independent directors determine to be fair and not inadequate and to
otherwise be in the best interests of the Company and its stockholders,
after receiving advice from one or more investment banking firms (a
"Qualified Offer"), each holder of a Right will thereafter have the right
to receive, upon exercise, Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to
two times the exercise price of the Right. Notwithstanding any of the
foregoing, following the occurrence of the event set forth in this
paragraph, all Rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by any Acquiring Person
will be null and void. However, Rights are not exercisable following the
occurrence of the event set forth above until such time as the Rights are
no longer redeemable by the Company as set forth below.
For example, at an exercise price of $90 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 $180 worth of Common Stock (or other consideration, as noted
above) for $90. Assuming that the Common Stock had a per share value of
$15 at such time, the holder of each valid Right would be entitled to
purchase 12 shares of Common Stock for $90.
In the event that, on or at any time after a Stock Acquisition
Date, the Company (i) engages in a merger or other business combination
transaction in which the Company is not the surviving corporation (other
than with an entity which acquired the shares pursuant to a Qualified
Offer), (ii) the Company engages in a merger or other business combination
transaction in which the Company is the surviving corporation and any
shares of the Company's Common Stock are changed into or exchanged for
other securities or assets or (iii) 50% or more of the assets, cash flow or
earning power of the Company and its subsidiaries (taken as a whole) are
sold or transferred so that each holder of a Right (except as noted below)
shall 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
would have a market value (determined as provided in the Rights Agreement)
of two times the exercise price of the Right. The events set forth in this
paragraph and in the second preceding paragraph are referred to as the
"Triggering Events."
At any time until the tenth business day after a Stock
Acquisition Date, the Company may redeem the rights in whole, but not in
part, at a price of $.01 per Right, (payable in cash, Common Stock or other
consideration deemed appropriate by the Board of Directors). Immediately
upon the action of the Board of Directors of the Company electing to redeem
the Rights, the Rights will terminate and the only right of the holders of
Rights will be to receive the $.01 Redemption Price.
At any time after a person becomes an Acquiring Person and prior
to the acquisition by such person or group of fifty percent (50%) or more
of the outstanding Common Stock, the Board may exchange the Rights (other
than Rights owned by such person or group which have become void), in whole
or in part, for Common Stock at an exchange ratio of one share of Common
Stock, or one one-hundredth of a share of Preferred Stock (or of a share
of a class or series of the Company's preferred stock having equivalent
rights, preferences and privileges), per Right (subject to adjustment).
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 Common
Stock (or other consideration) of the Company or for common stock of the
acquiring company or in the event of the redemption of the Rights as set
forth above.
Any of the provisions of the Rights Agreement may be amended by
the Board of Directors of the Company prior to the Distribution Date.
After the Distribution Date, the provisions of the Rights Agreement may be
amended by the Board in order to cure any ambiguity, to make changes which
do not adversely affect the interests of holders of Rights, or to shorten
or lengthen any time period under the Rights Agreement. The foregoing
notwithstanding, no amendment may be made at such time as the Rights are
not redeemable.
The Rights Agreement, dated as of December 3, 1998, between the
Company and Registrar and Transfer Company, as Rights Agent, specifying the
terms of the Rights is attached hereto as an exhibit and is incorporated
herein by reference. The foregoing description of the Rights is qualified
in its entirety by reference to such exhibit.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Exhibit
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4 Rights Agreement, dated as of December 3, 1998, between
Cell Pathways, Inc. and Registrar and Transfer Company,
which includes as Exhibit B thereto, the Form of Rights
Certificates.
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.
CELL PATHWAYS, INC.
By: /s/ Robert Towarnicki
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Name: Robert Towarnicki
Title: CEO
Date: December 18, 1998
INDEX TO EXHIBITS
Exhibit No. Exhibit Page
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4 Rights Agreement, dated as of December 3, 1998,
between Cell Pathways, Inc. and Registrar and
Transfer Company, which includes as Exhibit B
thereto, the Form of Rights Certificates.