UNITED STATES
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
February 6, 2004
Date of Report (Date of earliest event reported)
Discovery Laboratories, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 000-26422 94-3171943
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
350 Main Street, Suite 307
Doylestown, Pennsylvania 18901
(Address of principal executive offices)
(215) 340-4699
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
Item 5. Other Events and Regulation FD Disclosure
On February 6, 2004, Discovery Laboratories, Inc. (the "Company"), issued a
press release which is attached hereto as Exhibit 99.1, to announce that it had
entered into a Rights Agreement dated as of February 6, 2004 (the "Rights
Agreement"), between the Company and Continental Stock Transfer & Trust Company
(the "Rights Agent"). Pursuant to the Rights Agreement and effective February 6,
2004, the Board of Directors of the Company declared a dividend of one preferred
stock purchase right (a "Right") for each share of common stock, par value $.001
per share, of the Company (the "Common Stock") issued through such date. The
dividend was issued to stockholders of record as of the close of business on
February 6, 2004. The Board also determined that each share of Common Stock
issued by the Company after such date through the Final Expiration Date (as
defined below) shall be issued with a tandem Right. Accordingly, as of the date
hereof, up to a total of sixty million Rights will be issued (which may be
increased), each in tandem with a share of the authorized Common Stock. Each
Right represents the right to purchase one ten-thousandth of a share of Series A
Junior Participating Cumulative Preferred Stock ("Preferred Stock"), of the
Company at an exercise price equal to $50 per Right (as the same may be
adjusted, the "Exercise Price"). The description and terms of the Rights are set
forth in the Rights Agreement.
The summary description of the Rights set out below does not purport to be
complete, and is qualified in its entirety by reference to the Rights Agreement,
which is attached hereto as Exhibit 10.1. The Rights shall be evidenced by
Common Stock certificates until the earlier to occur of (i) 10 days following a
public announcement that a person or group of affiliated or associated persons
(with certain exceptions, an "Acquiring Person") have acquired beneficial
ownership of 15% or more of the outstanding shares of Common Stock and (ii) 10
business days (or such later date as may be determined by action of the Board of
Directors prior to such time as any person or group of affiliated persons
becomes an Acquiring Person) following the commencement of, or announcement of
an intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of 15% or more of
the outstanding shares of Common Stock (the earlier of such dates being called
the "Distribution Date").
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights): (i) the Rights will be transferred with
and only with the Common Stock (and not by separate certificates); (ii) Common
Stock certificates will contain a notation incorporating the Rights Agreement by
reference; and (iii) the Rights will be transferable only in connection with the
transfer of the tandem shares of Common Stock such that the surrender for
transfer of any certificates for shares of Common Stock will also constitute the
transfer of the Rights associated with the shares of Common Stock represented by
such certificate. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Stock as of the close of business on
the Distribution Date and thereafter, such separate Right Certificates alone
will evidence the Rights. The Rights are not exercisable until the Distribution
Date. The Rights will expire upon the close of business on February 6, 2004 (the
"Final Expiration Date"), unless the Rights are earlier redeemed or exchanged by
the Company, in each case as described below.
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The Exercise Price payable, and the number of shares 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, for example, in the event of a
stock dividend on, or a subdivision, combination or reclassification of, the
Common Stock. The shares of Preferred Stock purchasable upon exercise of the
Rights will be entitled, when, as and if declared, to a minimum preferential
quarterly dividend payment of 10,000 times the per share amount of dividends
declared on the Common Stock. If no Common Stock dividend is declared in a
quarter, a preferred stock quarterly dividend of $1.00 per share will be
required. In the event of liquidation, dissolution or winding up of the Company,
the holders of the Preferred Stock will be entitled to a preferential
distribution payment of at least 10,000 times the payment made per share of
Common Stock. Each share of Preferred Stock will entitle the holder to 10,000
votes, voting together with the Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which shares of Common Stock are
converted or exchanged, the holder of each share of Preferred Stock will be
entitled to receive 10,000 times the amount of consideration received per share
of Common Stock in respect of such transaction. The Rights are protected by
customary anti-dilution provisions.
Because of the nature of the Preferred Stock's dividend and liquidation rights,
the fair market value of the one ten-thousandth of a share of Preferred Stock
purchasable upon exercise of each Right should approximate the fair market value
of one share of Common Stock. If any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of a Right, (other than Rights
beneficially owned by the Acquiring Person, which become void), will have the
right to receive upon exercise and payment of the then current Exercise Price,
that number of shares of Common Stock having a market value of two times the
Exercise Price.
If, after a person or group has become an Acquiring Person, the Company is
acquired in a merger or other business combination transaction, or 50% or more
of its consolidated assets or earning power are sold, proper provision will be
made so that each holder of a Right (other than Rights beneficially owned by an
Acquiring Person, which become void) will thereafter have the right to receive,
upon exercise at the then current Exercise Price, that number of shares of
Common Stock of the person with whom the Company has engaged in the foregoing
transaction (or its parent), which at the time of such transaction will have a
market value of two times the Exercise Price. In lieu of exercise, the Board of
Directors of the Company may exchange the Rights (other than Rights owned by an
Acquiring Person, which become void), in whole or in part, for such securities
or other property or rights as the Board may determine, including Common Stock
or preferred stock of the Company of any class or series.
No fractional shares of Preferred Stock will be issued, other than fractions
which are integral multiples of one thousandth of a share, which may, at the
election of the Company, be evidenced by depositary receipts. In lieu of any
other fractional interest, an adjustment in cash will be made based on the fair
market value of the Rights. At any time prior to the time an Acquiring Person
becomes such, the Board of Directors of the Company may redeem the Rights in
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whole, but not in part, at a price of $.001 per Right, subject to adjustment
(the "Redemption Price"). The redemption of the Rights may be made effective at
such time, on such basis and with such conditions as the Board of Directors may
establish. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price. The Rights may be amended by the Company to the
extent and on the conditions set out in the Rights Agreement.
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.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
(c) Exhibits:
10.1 Rights Agreement, dated as of February 6, 2004, between the
Company and Continental Stock Transfer & Trust Company.
99.1 Press Release dated February 6, 2004.
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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.
Discovery Laboratories, Inc.
By: /s/ Robert J. Capetola
--------------------------------
Name: Robert J. Capetola, Ph.D.
Title: President and Chief Executive
Officer
Date: February 6, 2004
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