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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
November 5, 1998
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Date of Report (Date of earliest event reported)
Martek Biosciences Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-22354 52-1399362
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
6480 Dobbin Road, Columbia, Maryland 21045
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(410) 740-0081
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Not applicable
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(Former name or former address, if changed since last report)
Exhibit Index on Page 4
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Item 5. Other Events.
On November 5, 1998 Martek amended its Shareholder Rights
Agreement (the "Rights Plan"), to eliminate those provisions that require
that certain actions may only be taken by "Continuing Directors." This First
Amendment to the Rights Plan was made in response to the Delaware Court of
Chancery's recent decision in Carmody v. Toll Brothers, Inc. In the view of
the Martek Board of Directors, based on advice of counsel, the Toll Brothers
decision has cast doubt on the legality under Delaware law of so-called
"dead-hand" provisions in many existing shareholder rights plans. Although
the opinion related to the denial of a motion to dismiss an action
challenging the "dead-hand" provision and not an opinion addressing the
actual validity of the provision under Delaware law, the Delaware court
stated that a "dead-hand" provision was open to challenge under Delaware law
on both statutory and fiduciary grounds. A so-called "dead-hand" provision
is a provision which provides that outstanding rights can only be redeemed by
"continuing directors," which is generally defined to mean directors who were
members of the board at the time the Rights Agreement was adopted and any
other person who subsequently becomes a member of the board if such person's
nomination for election to the board was recommended or approved by a
majority of the continuing directors. The Board of Directors believes the
disputed validity of these provisions under the Toll Brothers opinion
warrants action to amend the Rights Plan. The Form of First Amendment to the
Rights Agreement is attached hereto as Exhibit 99.1 and is incorporated by
reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
99.1 Form of First Amendment to Rights Agreement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned thereunto duly authorized.
Martek Biosciences Corporation
Date: November 9, 1998 By: /s/ Steve Dubin
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Steve Dubin
Senior Vice President,
Business Development, Secretary
and General Counsel
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
99.1 Form of First Amendment to Rights Agreement
</TABLE>
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EXHIBIT 99.1
FORM OF FIRST AMENDMENT TO RIGHTS AGREEMENT
AMENDMENT NO. 1
TO
RIGHTS AGREEMENT
THIS AMENDMENT NO. 1 TO RIGHTS AGREEMENT (this "Amendment No. 1")
is entered into as of November __, 1998, between Martek Biosciences
Corporation, a Delaware corporation (the "Company"), and Registrar and
Transfer Company (the "Rights Agent").
WHEREAS, the Company and the Rights Agent entered into the Rights
Agreement, dated as of January 24, 1996 (the "Rights Agreement");
WHEREAS, the Company and the Rights Agent desire to amend the
Rights Agreement on the terms and conditions hereinafter set forth; and
WHEREAS, for purposes of this Amendment No. 1, capitalized terms
not otherwise defined herein shall have the respective meanings set forth in
the Rights Agreement, as amended by this Amendment No. 1.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. Certain Definitions. Section 1 of the Rights Agreement is
amended as follows: (A) deleting the text of paragraph (i) thereof and
replacing it with the phrase "Intentionally Omitted."; (B) deleting the
phrase "a majority of the Continuing Directors" in paragraph (j) thereof and
replacing it with the phrase "the Board prior to such time as any Person
becomes an Acquiring Person"; and (C) deleting the text of paragraph (n)
thereof and replacing it with the phrase "Intentionally Omitted.".
2. Form of Rights Certificates. Section 4(b) of the Rights
Agreement is amended by deleting the phrase "Continuing Directors" and
replacing it with the word "Board".
3. Exercise of Rights; Purchase Price; Expiration Date of
Rights. Section 7(e) of the Rights Agreement is amended by deleting the
phrase "Continuing Directors" and replacing it with the word "Board".
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4. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights.
(A) Section 11(a)(ii) of the Rights Agreement is amended by
deleting the phrase "a majority of the Outside Directors" and replacing it
with the phrase "two-thirds of the Board".
(B) Section 11(a)(iii) of the Rights Agreement is amended by
deleting the parenthetical phrase "(acting by at least a majority of the
Continuing Directors)".
(C) Section 11(m) of the Rights Agreement is amended by
deleting the word "it" and replacing such word with the phrase "the Board".
5. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. Section 13(c)(i)(B) of the Rights Agreement is amended by
inserting the word "Securities" immediately before the word "Act".
6. Redemption. Section 23(a) of the Rights Agreement is amended
as follows: (A) deleting in the first sentence thereof the phrase "then
there must be Continuing Directors then in office and such authorization
shall require the concurrence of a majority of such Continuing Directors" and
replacing it with the phrase "then such authorization shall require the
concurrence of two-thirds of the Board"; and (B) deleting in the second
sentence thereof the parenthetical phrase "(with the concurrence of a
majority of the Continuing Directors)" and replacing it with the phrase ", by
a vote of two-thirds of the Board,".
7. Determinations and Actions by the Board, etc. Section 29 of
the Rights Agreement is amended by deleting the phrase "the Continuing
Directors or Outside Directors" each of the three times it appears therein
and replacing it in each such place with the phrase "two-thirds of the Board".
8. Exhibit C. Exhibit C to the Rights Agreement is amended as
follows: (A) with respect to the second paragraph following the capitalized
legend on the first page thereof, deleting the phrase "Continuing Directors
(as defined in the Rights Agreement)" and replacing it with the phrase "Board
of Directors"; and (B) with respect to the seventh paragraph following the
capitalized legend on the first page thereof, (i) deleting the phrase "a
majority of the Continuing Directors" and replacing it with the phrase
"two-thirds of the Board of Directors"; (ii) inserting the phrase "a
two-thirds vote of" between the phrases "reinstatement is approved by" and
"the Company's Board of Directors"; and (iii) deleting the parenthetical
"(with the concurrence of a majority of the Continuing Directors)".
9. Benefits. Nothing in the Rights Agreement, as amended by
this Amendment No. 1, shall be construed to give to any Person other than the
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Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Stock) any legal or equitable right, remedy or claim under the
Rights Agreement, as amended by this Amendment No.1; but the Rights
Agreement, as amended by this Amendment No. 1, shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders
of the Rights certificates (and, prior to the Distribution Date, registered
holders of Common Stock).
10. Descriptive Headings. Descriptive headings of the several
Sections of this Amendment No. 1 are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
11. Governing Law. This Amendment No. 1 shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the laws of such State.
12. Other Terms Unchanged. The Rights Agreement, as amended by
this Amendment No. 1, shall remain and continue in full force and effect and
is in all respects agreed to, ratified and confirmed hereby. Any reference
to the Rights Agreement after the date first set forth above shall be deemed
to be a reference to the Rights Agreement, as amended by this Amendment No. 1.
13. Counterparts. This Amendment No. 1 may be executed in any
number of counterparts. It shall not be necessary that the signature of or
on behalf of each party appears on each counterpart, but it shall be
sufficient that the signature of or on behalf of each party appears on one or
more of the counterparts. All counterparts shall collectively constitute a
single agreement. It shall not be necessary in any proof of this Amendment
No. 1 to produce or account for more than a number of counterparts containing
the respective signatures of or on behalf of all of the parties.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to be duly executed and attested, all as of the day and year first
above written.
Attest: MARTEK BIOSCIENCES CORPORATION
By: By:
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Attest: REGISTRAR AND TRANSFER COMPANY
By: By:
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