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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
SECURITIES EXCHANGE ACT OF 1934
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DATE OF EARLIEST EVENT REPORTED: SEPTEMBER 1, 1999
ZONAGEN, INC.
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 0-21198 76-0233274
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
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2408 TIMBERLOCH PLACE, SUITE B-4
THE WOODLANDS, TEXAS 77380
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (281) 719-3400
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ITEM 5. OTHER EVENTS
RIGHTS AGREEMENT
On September 1, 1999, the Board of Directors of the Company declared a dividend
distribution of one preferred stock purchase right (a "Right") for each
outstanding share of Common Stock. The distribution is payable on September 13,
1999 (the "Record Date") to the stockholders of record on that date. Each Right
entitles the registered holder thereof to purchase from the Company one
one-hundredth of a share of Preferred Stock at a price of $20.00, subject to
adjustment. The following is a summary of the Rights; the full description and
terms of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and Harris Trust and Savings Bank, as rights agent (the
"Rights Agent").
Copies of the Rights Agreement and the Certificate of Designation are
available free of charge from the Company. This summary description of the
Rights and the Preferred Stock does not purport to be complete and is qualified
in its entirety by reference to all the provisions of the Rights Agreement and
the Certificate of Designation for the Preferred Stock, including the
definitions therein of certain terms, which Rights Agreement and Certificate of
Designation are incorporated herein by reference.
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock and
the Distribution Date will occur upon the earlier of (i) 10 days following the
date of public announcement that a person or group of persons has become an
Acquiring Person (as hereinafter defined) or (ii) 10 business days (or such
later date as may be determined by action of the Board of Directors prior to the
time a person becomes an Acquiring Person) following the commencement of, or the
announcement of an intention to make, a tender offer or exchange offer upon
consummation of which the offeror would, if successful, become an Acquiring
Person (the earlier of such dates being called the "Distribution Date"). The
term "Acquiring Person" means any person who or which, together with all of its
affiliates and associates, shall be the beneficial owner of 20% or more of the
outstanding Common Stock, but shall not include the Company or any Subsidiary of
the Company or any employee benefit plan of the Company.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date, upon transfer or new
issuance of Common Stock, will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Stock, outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and such separate Rights Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on September 13, 2002 (the "Expiration Date").
The Purchase Price payable, and the number of one one-hundredths of a
share 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) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for or purchase
shares of Preferred Stock at a price, or securities convertible into Preferred
Stock with a conversion price, less than the then current market price of the
Preferred Stock or (iii) upon the distribution to holders of the Preferred Stock
of evidences
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of indebtedness or assets (excluding regular periodic cash dividends paid or
dividends payable in Preferred Stock) or of subscription rights or warrants
(other than those referred to in (ii) above).
The number of outstanding Rights and the number of one one-hundredths
of a share of Preferred Stock issuable upon exercise of each Right are 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 the Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
In the event that following a Shares Acquisition Date (the date of
public announcement that an Acquiring Person has become such) the Company is
acquired in a merger or other business combination transaction or more than 50%
of its consolidated assets or earning power are sold, proper provision will be
made so that each holder of a Right will 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 will have a market value of two times the exercise price of the
Right (the "Flip-Over Right").
In the event that a person (other than an Exempt Person) becomes an
Acquiring Person, proper provision shall be made so that each holder of a Right
(other than the Acquiring Person and its affiliates and associates) will
thereafter have the right to receive upon exercise that number of shares of
Common Stock (or, under certain circumstances, cash, other equity securities or
property of the Company) having a market value equal to two times the Purchase
Price of the Rights (the "Flip-In Right"). Upon the occurrence of the foregoing
event giving rise to the exercisability of the Rights, any Rights that are or
were at any time owned by an Acquiring Person shall become void.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. Upon exercise of the Rights, no fractional shares of
Preferred Stock will be issued other than fractions which are integral multiples
of one one-hundredth of a share of Preferred Stock; cash will be paid in lieu of
fractional shares of Preferred Stock that are not integral multiples of one
one-hundredth of a share of Preferred Stock.
At any time prior to the earlier to occur of (i) 5:00 p.m., Houston,
Texas time on the 10th day after the Shares Acquisition Date or (ii) the
expiration of the Rights, the Company may redeem the Rights in whole, but not in
part, at a price of $0.01 per Right (the "Redemption Price"); provided, that (i)
if the Board of Directors authorizes redemption on or after the time a person
becomes an Acquiring Person, then such authorization must be by Board Approval
(as hereinafter defined) and (ii) the period for redemption may, upon Board
Approval, be extended by amending the Rights Agreement. The term "Board
Approval" means the approval of a majority of the directors of the Company.
Immediately upon any redemption of the Rights described in this paragraph, 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 terms of the Rights may be amended by the Board of Directors
without the consent of the holders of the Rights at any time and from time to
time provided that such amendment does not adversely affect the interests of the
holders of the Rights. In addition, during any time that the Rights are subject
to redemption, the terms of the Rights may be amended by Board Approval,
including an amendment that adversely affects the interests of the holders of
the Rights, without the consent of the holders of Rights.
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 Preferred Stock (or other consideration).
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DESCRIPTION OF PREFERRED STOCK
Each one-hundredth of a share of the Preferred Stock ("Preferred Share
Fraction") that may be acquired upon exercise of the Rights will be
nonredeemable and subordinate to any other shares of preferred stock that may be
issued by the Company.
Each Preferred Share Fraction will have a minimum preferential
quarterly dividend rate of $0.01 per Preferred Share Fraction but will, in any
event, be entitled to a dividend equal to the per share dividend declared on the
Company Common Stock.
In the event of liquidation, the holder of a Preferred Share Fraction
will receive a preferred liquidation payment equal to the greater of $0.01 per
Preferred Share Fraction or the per share amount paid in respect of a share of
Company Common Stock.
Each Preferred Share Fraction will have one vote, voting together with
the Company Common Stock.
In the event of any merger, consolidation or other transaction in which
shares of Company Common Stock are exchanged, each Preferred Share Fraction will
be entitled to receive the per share amount paid in respect of each share of
Company Common Stock.
The rights of holders of the Preferred Stock to dividends, liquidation
and voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the economic value of one Preferred Share Fraction that may
be acquired upon the exercise of each Right should approximate the economic
value of one share of the Company's Common Stock.
Additional information regarding the Rights is set forth in the Rights
Agreement which is filed herewith as Exhibit 1 and incorporated herein by
reference.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
4.1 Rights Agreement dated as of September 1, 1999 (incorporated by
reference to Form 8-A of Zonagen, Inc. filed on September 3, 1999).
99.1 Press Release dated September 2, 1999, with respect to the Rights
Agreement.
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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 thereunto duly authorized.
ZONAGEN, INC.
By: /s/ Joseph S. Podolski
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Joseph S. Podolski
President and
Chief Executive Officer
Date: September 3, 1999
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INDEX TO EXHIBITS
EXHIBIT
NUMBER
1. Rights Agreement dated as of September 1, 1999 (incorporated by
reference to Form 8-A of Zonagen, Inc. filed on September 3, 1999).
2. Press Release dated September 2, 1999, with respect to the Rights
Agreement.
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EXHIBIT 99.1
ZONAGEN
FOR IMMEDIATE RELEASE
ZONAGEN, INC.
ANNOUNCES RIGHTS PROGRAM
September 2, 1999 (The Woodlands, Texas), Zonagen, Inc. ("Zonagen" or
the "Company") (Nasdaq: ZONA; PACIFIC: ZNG) today announced that its Board of
Directors has adopted a Rights Plan designed to protect the Company's
stockholders from coercive or unfair takeover techniques.
Terms of the Rights Plan provide for a dividend distribution of one
Preferred Stock Purchase Right for each outstanding share of Common Stock to
holders of record at the close of business on September 13, 1999. The Rights
Plan would be triggered if an acquiring party accumulates or initiates a tender
offer to purchase 20% or more of the Company's Common Stock and would entitle
holders of the Rights to purchase either the Company's stock or shares in an
acquiring entity at half of market value. The Company would generally be
entitled to redeem the Rights at $.01 per Right at any time until the tenth day
following the time the Rights become exercisable. The Rights will expire on
September 13, 2002.
The Rights are not being distributed in response to any specific effort
to acquire the Company. The Rights are designed to assure that all stockholders
of the Company receive fair and equal treatment in the event of any proposed
takeover of the Company and to guard against partial tender offers, open market
accumulations and other tactics designed to gain control of the Company, without
paying all stockholders a fair price. The Rights are not presently exercisable
and are not represented by separate certificates. No action is required to be
taken by the Company's stockholders at the present time.
Commenting on the Rights Plan, Joseph S. Podolski, the Company's
President and Chief Executive Officer, said: "The Board of Directors believes
that the Rights Plan represents a sound and reasonable means of safeguarding the
interests of the Company's stockholders. The Board of Directors is not aware of
any current effort of any kind to acquire control of the Company." Mr. Podolski
said the Rights Plan is similar to those adopted by over 2,000 other companies,
and that details of the new Rights Plan will be outlined in the Company's Form
8-K filing with the SEC and in a letter to be mailed to stockholders of record
on September 13, 1999.
Zonagen, Inc. is engaged in the development of pharmaceutical products for the
reproductive system, including sexual dysfunction, urology, contraception and
infertility.
A copy of this press release may be obtained via facsimile by dialing
1-888-329-0920 or via the Internet by accessing www.zonagen.com.
