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 18, 1996.
CHRONIMED INC.
(Exact name of registrant as specified in its charter)
Minnesota 0-19952 41-1515691
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
13911 Ridgedale Drive, Minnetonka, MN 55305
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 541-0239
Not Applicable
(Former name or former address, if changed since last report.)
ITEM 5. OTHER EVENTS
On December 18, 1996, the Board of Directors of Chronimed Inc. (the
"Company"), declared a dividend of one preferred share purchase right (a
"Right") per share for each outstanding share of Common Stock, par value $.01
(the "Common Shares"), of the Company. The dividend is payable on December 31,
1996 (the "Record Date") to shareholders of record on that date.
Each Right entitles the registered holder to purchase from the Company
one one-thousandth of a share of Series A Junior Participating Preferred Stock,
par value $.01 (the "Preferred Shares"), of the Company at a price of $120 per
one-thousandth of a Preferred 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 December 18, 1996, between the
Company and Norwest Bank Minnesota, National Association, as Rights Agent (the
"Rights Agent").
Initially, the Rights will be evidenced by the certificates
representing Common Shares then outstanding and no separate Right Certificates
will be distributed. The Rights will separate from the Common Shares, and a
Distribution Date for the Rights will occur upon the earlier of: (i) the first
date of public announcement that a Person or group of affiliated or associated
Persons has become an "Acquiring Person" (I.E., has become, subject to certain
exceptions, the beneficial owner of 15% or more of the outstanding Common
Shares) (except pursuant to a Permitted Offer, as hereinafter defined) and (ii)
the 10th day following the commencement or public announcement of a tender offer
or exchange offer, the consummation of which would result in a Person or group
of affiliated or associated Persons becoming, subject to certain exceptions, the
beneficial owner of 15% or more of the outstanding Common Shares (or such later
date as may be determined by the Board of Directors of the Company prior to a
Person or group of affiliated or associated Persons becoming an Acquiring
Person) (the earlier of such dates being called the "Distribution Date").
Until the Distribution Date, (i) the Rights will be evidenced by the
Common Share certificates and will be transferred with and only with the Common
Shares, (ii) new Common Share certificates issued after the Record Date upon
transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference, and (iii) the surrender for
transfer of any Common Share certificate, even without such notation or a copy
of this Summary of Rights attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate.
As promptly as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date, and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on December 18, 2006, unless extended or earlier redeemed or
exchanged by the Company as described below.
The Purchase Price payable and the number 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) upon the grant to holders of the Preferred Shares of certain
rights, options or warrants to subscribe for or purchase Preferred Shares or
convertible securities at less than the then 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 periodic cash
dividends or dividends payable in Preferred Shares) or of subscription rights or
warrants (other than those described in clause (ii) of this paragraph). With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in the Purchase
Price.
No fraction of a Preferred Share (other than fractions in integral
multiples of one one-thousandth of a share) will be issued and, in lieu thereof,
an adjustment in cash will be made based on the closing price on the last
trading date prior to the date of exercise.
The number of outstanding Rights and the number of one one-thousandth
of a Preferred Share 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.
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 $.01 per share but will be entitled to an
aggregate dividend of 1,000 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 $.01 per share but will be entitled
to an aggregate payment of 1,000 times the payment made per Common Share. Each
Preferred Share will have 1,000 votes, voting together with the Common Shares.
Finally, in the event of any merger, consolidation or other transaction in which
Common Shares are exchanged, each Preferred Share will be entitled to receive
1,000 times the amount received per Common Share. These rights are subject to
adjustment in the event of a stock dividend on the Common Shares or a
subdivision, combination or consolidation of the Common Shares.
In the event that a person or group becomes an Acquiring Person (except
pursuant to a Permitted Offer (as defined below)), each holder of a Right, other
than the Acquiring Person or the affiliates, associates or transferees thereof
(whose Rights will thereafter be void), will thereafter have the right to
receive upon exercise thereof at the then current exercise price of the Right
that number of Common Shares having a market value of two times the exercise
price of the Right, subject to certain possible adjustments.
In the event that the Company is acquired in certain mergers or other
business combination transactions or 50% or more of the assets or earning power
of the Company and its subsidiaries (taken as a whole) are sold after a person
or group becomes an Acquiring Person (except pursuant to a Permitted Offer),
holders of the Rights will thereafter have the Right to receive, upon exercise
thereof at the then current exercise price of the Right, that number of Common
Shares of the acquiring company (or, in certain cases, one of its Affiliates)
having a market value of two times the exercise price of the Right.
A "Permitted Offer" is a tender offer or an exchange offer for all
outstanding Common Shares of the Company at a price and on terms determined by a
majority of the Board of Directors of the Company who are not officers of the
Company and who are not Acquiring Persons or affiliates or associates of an
Acquiring Person and after receiving advice from one or more investment banking
firms, to be (a) fair to shareholders (taking into account all factors which the
Board of Directors deems relevant) and (b) otherwise in the best interests of
the Company and its shareholders, employees, customers, suppliers and creditors
and the communities in which the Company does business, and which the Board of
Directors determines to recommend to the shareholders of the Company.
At any time after a Person becomes an Acquiring Person (subject to
certain exceptions), and prior to the acquisition by a Person of 50% or more of
the outstanding Common Shares, the Continuing Directors may exchange all or part
of the Rights for Common Shares at an exchange ratio per Right equal to the
result obtained by dividing the exercise price of a Right by the current per
share market price of the Common Shares, subject to adjustment.
At any time before a Person has become an Acquiring Person, the
Continuing Directors may redeem the Rights in whole, but not in part, at a price
of $.01 per Right (the "Redemption Price"), subject to adjustment. The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as such Continuing Directors may, in their sole discretion,
establish.
A "Continuing Director" is a member of the Board of Directors who was a
member of the Board on December 18, 1996, or who subsequently became or becomes
a member of the Board of Directors with the recommendation or approval of a
majority of the Continuing Directors. Continuing Directors do not include any
Acquiring Person or affiliate or associate of an Acquiring Person.
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.
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
hereby incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(C) EXHIBITS
99.1 Press Release dated December 18, 1996.
99.2 Rights Agreement, dated as of December 18, 1996,
between Chronimed Inc. and Norwest Bank Minnesota,
National Association, as Rights Agent (incorporated
by reference to the Company's Registration Statement
on Form 8-A, dated December 18, 1996).
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, hereto duly authorized.
CHRONIMED INC.
Date: December 18, 1996
By /s/ Norman A. Cocke
--------------------------------------
Norman A. Cocke
Senior Vice President, Chief Financial
Officer and Secretary
EXHIBIT INDEX
PAGE
EXHIBIT DESCRIPTION OF EXHIBIT NUMBER
- ------- ---------------------- ------
99.1 Press Release dated December 18, 1996 7
99.2 Rights Agreement, dated as of December 18, 1996,
between Chronimed Inc. and Norwest Bank Minnesota, National
Association, as Rights Agent (incorporated by reference to
the Company's Registration Statement on Form 8-A, dated
December 18, 1996).
Exhibit 99.1
CHRONIMED INC. LETTERHEAD
PRESS RELEASE
CHRONIMED INC. ADOPTS SHAREHOLDER RIGHTS PLAN
MINNEAPOLIS, MINNESOTA, DECEMBER 18, 1996 -- CHRONIMED INC. (NASDAQ: CHMD),
announced today that its Board of Directors has adopted a Shareholder Rights
Plan in which preferred stock purchase rights will be distributed as a
non-taxable dividend at the rate of one Right for each share of Common Stock
held as of the close of business on December 31, 1996.
Each Right will entitle stockholders to buy one-one thousandth of a newly issued
share of Series A Junior Participating Stock of the Company at an exercise price
of $120.00. The Rights will be exercisable only if a person or group, other than
an exempted person, acquires beneficial ownership of, or makes a tender for, 15
percent or more of the Company's outstanding Common Stock.
If any person other than an exempted person becomes the beneficial owner of 15
percent or more of the Company's outstanding Common Stock, then each Right not
owned by such person or certain related parties will entitle its holder to
purchase at the Right's then current exercise price shares of the Company's
Common Stock (or, in certain circumstances, cash, property or other securities
of the Company) having a market value equal to twice the then current exercise
price. In addition, if after a person becomes the beneficial owner of 15 percent
or more of the Company's outstanding Common Stock, the Company is involved in a
merger or other business combination transaction with another person after which
its Common Stock does not remain outstanding, or sells 50 percent or more of its
assets or earning power to another person, each Right will entitle its holder to
purchase at the Right's then current exercise price shares of common stock of
such other person having a market value equal to twice the then current exercise
price.
The Company's Board of Directors will be entitled to redeem the Rights at $.01
per Right at any time prior to a person or group acquiring 15 percent or more of
the Company's Common Stock. Otherwise, the rights will expire on December 18,
2006.
Maurice R. Taylor, Chronimed's President, Chief Executive Officer and Chairman
said, "The shareholder rights plan is not being adopted in response to any
acquisition or merger proposal. However, in the event of such a proposal, it is
intended to insure that all shareholders receive equal treatment and a fair
price by encouraging anyone seeking to acquire Chronimed to negotiate with the
Board of Directors. We believe the Company is undervalued at current trading
prices for our stock, and the Board determined that adoption of a Rights Plan
would help protect shareholder interests."
Chronimed Inc., with annualized sales exceeding $100 million, is a health care
company specializing in the unique needs of patients with chronic diseases.
Chronimed develops, markets and distributes pharmaceuticals, general medical
products, patient education materials, and clinical nutrition products directly
to the individual and to the patients of managed care and case management
companies nationwide, along with institutions that serve these patients.
