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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 13, 2000
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TRANSKARYOTIC THERAPIES, INC.
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation)
000-21481 04-3027191
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(Commission File Number) (IRS Employer Identification No.)
195 ALBANY STREET, CAMBRIDGE, MASSACHUSETTS 02139
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(Address of Principal Executive Offices) (Zip Code)
(617) 349-0200
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Registrant's Telephone Number, Including Area Code
NOT APPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. OTHER EVENTS.
On December 13, 2000, the Board of Directors of Transkaryotic
Therapies, Inc. (the "Company"), declared a dividend of one Right for each
outstanding share of the Company's Common Stock to stockholders of record at the
close of business on December 26, 2000 (the "Record Date"). Each Right entitles
the registered holder to purchase from the Company one one-thousandth of a share
of Series B Junior Participating Preferred Stock, $0.01 par value per share (the
"Preferred Stock"), at a Purchase Price of $289 in cash, subject to adjustment.
The description and terms of the Rights are set forth in a Rights Agreement
dated as of December 13, 2000 (the "Rights Agreement") between the Company and
EquiServe Trust Company, N.A., as Rights Agent.
Initially, the Rights are not exercisable and will be attached to all
Common Stock certificates representing shares then outstanding, and no separate
Rights Certificates will be distributed. The Rights will separate from the
Common Stock and a Distribution Date will occur upon the earlier of (i) 10
business days following the first date of 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 20% or more of the
outstanding shares of Common Stock (other than certain specified entities
affiliated with E.M. Warburg, Pincus & Co., LLC, which will have the right to
acquire beneficial ownership of up to 30% of the Company's Common Stock) (the
"Stock Acquisition Date"), or (ii) 10 business days following the commencement
of a tender offer or exchange offer that would result in a person or group
beneficially owning 20% or more of such outstanding shares of Common Stock
(other than certain specified entities associated with Warburg Pincus, which
will have the right to acquire beneficial ownership of up to 30% of the
Company's Common Stock). Under the Rights Plan, for all purposes, including
determining the specified percentage of Common Stock necessary to trigger a
Distribution Date, the Company's outstanding Series A Convertible Preferred
Stock shall be treated as if its holders had converted such shares into Common
Stock at the then applicable conversion rate. The Distribution Date may be
deferred by the Board of Directors. In addition, certain inadvertent
acquisitions will not trigger the occurrence of the Distribution Date. Until the
Distribution Date (or earlier redemption or expiration of the Rights), (i) the
Rights will be evidenced by the Common Stock certificates outstanding on the
Record Date, together with a Summary of Rights to be mailed to stockholders, or
by new Common Stock certificates issued after the Record Date which contain a
notation incorporating the Rights Agreement by reference, (ii) the Rights will
be transferred with and only with such Common Stock certificates; and (iii) the
surrender for transfer of any certificates for Common Stock outstanding (with or
without a copy of the Summary of Rights or such notation) will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate.
The Rights are not exercisable until the Distribution Date and will
expire upon the close of business on December 13, 2010 (the "Final Expiration
Date") unless earlier redeemed or exchanged as described below. As soon as
practicable after the Distribution Date, separate 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, and except for shares of Common Stock issued upon exercise,
conversion or exchange of then outstanding
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options, convertible or exchangeable securities or other contingent obligations
to issue shares or pursuant to any employee benefit plan or arrangement, only
shares of Common Stock issued prior to the Distribution Date will be issued with
Rights.
In the event that any Person becomes an Acquiring Person, then,
promptly following the first occurrence of such event, each holder of a Right
(except as provided below and in Section 7(e) of the Rights Agreement) shall
thereafter have the right to receive, upon exercise, that number of shares of
Common Stock of the Company (or, in certain circumstances, cash, property or
other securities of the Company) which equals the exercise price of the Right
divided by 50% of the current market price (as defined in the Rights Agreement)
per share of Common Stock at the date of the occurrence of such event. However,
Rights are not exercisable following such event until such time as the Rights
are no longer redeemable by the Company as described below. Notwithstanding any
of the foregoing, following the occurrence of such event, 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. The event
summarized in this paragraph is referred to as a "Section 11(a)(ii) Event."
For example, at an exercise price of $300.00 per Right, each Right not
owned by an Acquiring Person (or by certain related parties) following a Section
11(a)(ii) Event would entitle its holder to purchase for $300.00 such number of
shares of Common Stock (or other consideration, as noted above) as equals
$300.00 divided by one-half of the current market price (as defined in the
Rights Agreement) of the Common Stock. Assuming that the Common Stock had a
market price of $50.00 per share at such time, the holder of each valid Right
would be entitled to purchase twelve shares of Common Stock, having a market
value of 12 x $50, or $600.00, for $300.00.
In the event that, at any time after any Person becomes an Acquiring
Person, (i) the Company is consolidated with, or merged with and into, another
entity and the Company is not the surviving entity of such consolidation or
merger or if the Company is the surviving entity, but shares of its outstanding
Common Stock are changed or exchanged for stock or securities (of any other
person) or cash or any other property, or (ii) more than 50% 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, that number of shares of common stock
of the acquiring company which equals the exercise price of the Right divided by
50% of the current market price (as defined in the Rights Agreement) of such
common stock at the date of the occurrence of the event. The events summarized
in this paragraph are referred to as "Section 13 Events." A Section 11(a)(ii)
Event and Section 13 Events are collectively referred to as "Triggering Events."
For example, at an exercise price of $300.00 per Right, each valid
Right following a Section 13 Event would entitle its holder to purchase for
$300.00 such number of shares of common stock of the acquiring company as equals
$300.00 divided by one-half of the current market price (as defined in the
Rights Agreement) of such common stock. Assuming that such common stock had a
market price of $50.00 per share at such time, the holder of each valid Right
would be entitled to purchase twelve shares of common stock of the acquiring
company, having a market value of 12 x $50, or $600.00, for $300.00.
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At any time after the occurrence of a Section 11(a)(ii) Event, when no
person owns a majority of the Common Stock, the Board of Directors of the
Company may exchange the Rights (other than Rights owned by such Acquiring
Person which have become void), in whole or in part, at an exchange ratio of one
share of Common Stock, or one one-thousandth 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).
The Purchase Price payable, and the number of units 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) if holders of the Preferred Stock are granted certain
rights or warrants to subscribe for Preferred Stock or convertible securities at
less than the then-current market price (as defined in the Rights Agreement) 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 out of earnings or retained earnings) or of subscription rights
or warrants (other than those referred to above). The number of Rights
associated with each share of Common Stock is 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 Common Stock or subdivisions, consolidations or combinations of
the Common Stock occurring, in any such case, prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Preferred Stock (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock) will be
issued and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Stock on the last trading date prior to the date
of exercise.
Preferred Stock purchasable upon exercise of the Rights will not be
redeemable. Each share of Preferred Stock will be entitled to receive, when, as
and if declared by the Board of Directors, a minimum preferential quarterly
dividend payment of $10 per share or, if greater, an aggregate dividend of 1,000
times the dividend declared per share of Common Stock. In the event of
liquidation, the holders of the Preferred Stock will be entitled to a minimum
preferential liquidation payment of $1,000 per share, plus an amount equal to
accrued and unpaid dividends, and will be entitled to an aggregate payment of
1,000 times the payment made per share of Common Stock. Each share of Preferred
Stock will have 1,000 votes, voting together with the Common Stock. In the event
of any merger, consolidation or other transaction in which Common Stock is
changed or exchanged, each share of Preferred Stock will be entitled to receive
1,000 times the amount received per share of Common Stock. These rights are
protected by customary antidilution provisions. Because of the nature of the
Preferred Stock's dividend, liquidation and voting rights, the value of one
one-thousandth of a share of Preferred Stock purchasable upon exercise of each
Right should approximate the value of one share of Common Stock.
At any time prior to the earlier of (i) the tenth Business Day (or such
later date as may be determined by the Board of Directors of the Company) after
the Stock Acquisition Date, or (ii) the Final Expiration Date, the Company may
redeem the Rights in whole, but not in part, at a
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price of $0.001 per Right (the "Redemption Price"), payable in cash or stock.
Immediately upon the redemption of the Rights or such earlier time as
established by the Board in the resolution ordering the redemption of the
Rights, the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price. The Rights may also be redeemable
following certain other circumstances specified 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. 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 as set forth above.
Any provision of the Rights Agreement, other than the redemption price,
may be amended by the Board prior to such time as the Rights are no longer
redeemable. Once the Rights are no longer redeemable, the Board's authority to
amend the Rights is limited to correcting ambiguities or defective or
inconsistent provisions in a manner that does not adversely affect the interest
of holders of Rights.
The Rights are intended to protect the stockholders of the Company in
the event of an unfair or coercive offer to acquire the Company and to provide
the Board with adequate time to evaluate unsolicited offers. The Rights may have
anti-takeover effects. The Rights will cause substantial dilution to a person or
group that attempts to acquire the Company without conditioning the offer on a
substantial number of Rights being acquired. The Rights, however, should not
affect any prospective offeror willing to make an offer at a fair price and
otherwise in the best interests of the Company and its stockholders, as
determined by a majority of the Board. The Rights should not interfere with any
merger or other business combination approved by the Board.
The Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit A the form of
Certificate of Designations of Series B Junior Participating Preferred Stock, as
Exhibit B the form of Rights Certificate, and as Exhibit C the Summary or Rights
to Purchase Common Stock, is an Exhibit hereto. The foregoing description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to such Exhibits.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
4.1 Rights Agreement, dated as of December 13, 2000, between
Transkaryotic Therapies, Inc. and Equiserve Trust Company,
N.A., which includes as Exhibit A the form of Certificate of
Designations of Series B Junior Participating Preferred Stock,
as Exhibit B the form of Rights Certificate and as Exhibit C
the Summary of Rights to Purchase Common Stock.
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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 hereunto duly authorized.
Date: December 14, 2000 REGISTRANT
TRANSKARYOTIC THERAPIES, INC.
By: /s/ Daniel E. Geffken
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Daniel E. Geffken
Vice President, Finance and
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
4.1 Rights Agreement, dated as of December 13, 2000, between
Transkaryotic Therapies, Inc. and EquiServe Trust Company,
N.A., which includes as Exhibit A the form of Certificate of
Designations of Series B Junior Participating Preferred Stock,
as Exhibit B the form of Rights Certificate and as Exhibit C
the Summary of Rights to Purchase Common Stock.
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