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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 6, 2002
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Celsion Corporation
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(Exact Name of Registrant as Specified in Charter)
Delaware 000-14242 52-1256615
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
10220-I Old Columbia Road, Columbia, Maryland 21046-1705
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (410) 290-5390
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
On August 6, 2002, the Board of Directors (the "Board") of Celsion
Corporation (the "Corporation") declared a dividend distribution of one
preferred share purchase right (a "Right") for each outstanding share of common
stock, par value $0.01 per share of the Corporation (the "Common Stock"). The
dividend is payable to the stockholders of record on August 6, 2002 (the "Record
Date"), and with respect to shares of Common Stock issued thereafter until the
Distribution Date (as defined below) and, in certain circumstances, with respect
to shares of Common Stock issued after the Distribution Date. Except as set
forth below, when it becomes exercisable, each Right entitles the registered
holder to purchase from the Corporation one ten-thousandth (1/10,000) of a share
of Series C Junior Participating Preferred Stock, par value $0.01 per share of
the Corporation (the "Preferred Stock"), at a price of $4.46 per one
ten-thousandth (1/10,000) of a share of Preferred Stock (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement (the "Agreement") between the Corporation and American Stock
Transfer & Trust Company, as rights agent (the "Rights Agent"), dated as of
August 15, 2002.
Initially, the Rights will be attached to all certificates representing
shares of Common Stock outstanding as of the Record Date, and no separate
certificates representing the Rights ("Right Certificates") will be distributed.
The Rights will separate from the Common Stock upon the earlier to occur of (A)
a person or group of affiliated or associated persons having acquired Beneficial
Ownership (as defined in the Agreement) of fifteen percent (15%) or more of the
outstanding shares of Common Stock or (B) ten (10) days (or such later date as
the Board may determine) after the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the completion of which
would result in a person or group of affiliated or associated persons becoming
an Acquiring Person (as defined below) (in either case, the "Distribution
Date"). A person or group whose acquisition of shares of Common Stock cause a
Distribution Date pursuant to clause (A) above is an "Acquiring Person," with
certain exceptions set forth in the Agreement. The date on which a person or
group is first publicly announced to have become such by the Corporation or such
Acquiring Person or an earlier date on which a majority of the then-sitting
members of the Board becomes aware of the existence of such Acquiring Person is
referred to below and in the Agreement as the "Stock Acquisition Date".
The Agreement provides that, until the Distribution Date, the Rights
will be transferred only with the associated shares of 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 shares of Common Stock will contain a notation incorporating the
Agreement by reference; however, the surrender for transfer of any certificates
for shares of Common Stock outstanding as of the Record Date, even without such
notation or a copy of the Summary of Rights (a copy of which is attached as
Exhibit C to the Agreement) being attached thereto, will also constitute the
transfer of the Rights associated with the shares of Common Stock represented by
such certificate. As soon as practicable after the Distribution Date, Right
Certificates will be mailed to the holders of record of the shares of Common
Stock as of the Close of Business (as defined in the Agreement) on the
Distribution Date (and to each initial record holder of certain shares of Common
Stock issued after the Distribution Date), and such separate Right Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the Close of Business on August 15, 2012, unless earlier redeemed by
the Corporation as described below.
If any person becomes an Acquiring Person, each holder of a Right will
thereafter have the right (the "Flip-In Right") to receive, upon exercise, the
number of shares of Common Stock (or, in certain circumstances, one
2
ten-thousandth (1/10,000) of a share of Preferred Stock) or other securities of
the Corporation having a value (immediately before such triggering event) equal
to two (2) times the exercise price of the Right. Notwithstanding the foregoing,
after the Flip-In Right is triggered as described above, all Rights that are, or
(under certain circumstances specified in the Agreement) were, Beneficially
Owned by any Acquiring Person or any affiliate or associate thereof will be null
and void. The Board has the option, at any time after any person becomes an
Acquiring Person but before an Acquiring Person becomes the Beneficial Owner of
fifty percent (50%) or more of the Common Stock, to exchange all or part of the
then-exercisable Rights (excluding those that have become void, as described in
the immediately preceding sentence) for shares of Common Stock, at a one-to-one
exchange ratio.
If, at any time after the Stock Acquisition Date, (A) the Corporation
consolidates or mergers with another Person (as defined in the Agreement), (B)
any Person merges with and into the Corporation, with the Corporation being the
surviving corporation and, in connection with such merger, all or part of the
Common Stock is changed into or exchanged for stock or other securities of any
other Person (or of the Corporation) or cash or any other property, or (C) the
Corporation sells or otherwise transfers, in one or more transactions, assets or
earning power aggregating fifty percent (50%) or more of its consolidated assets
or earning power to any other Person, then each holder of a Right (except Rights
which previously have been voided as set forth above) shall thereafter have the
right (the "Flip-Over Right") to receive, upon exercise, common shares of the
acquiring company (or, in certain circumstances, its parent), having a value
equal to two times the exercise price of the Right. The holder of a Right will
continue to have the Flip-Over Right whether or not such holder exercises or
surrenders the Flip-In Right.
The Purchase Price payable, the number of Rights, and the number of
shares of Preferred or Common Stock or other securities or property issuable
upon exercise of the Rights are subject to adjustment from time to time in
connection with the dilutive issuances by the Corporation as set forth in the
Agreement. With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least one
percent (1%) in such Purchase Price.
The number of outstanding Rights and the number of one ten-thousandths
(1/10,000s) 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 Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
before the Distribution Date.
Preferred Stock purchasable upon exercise of the Rights will not be
redeemable. Each share of Preferred Stock will be entitled to ten thousand
(10,0000) votes per share (subject to customary antidilution provisions) on
matters submitted to a vote of the shareholders. Each share of Preferred Stock
will be entitled to a minimum preferential quarterly dividend payment of $100
per share but, if greater, will be entitled to a total dividend per share of ten
thousand (10,000) times the dividend declared per share of Common Stock. In the
event of liquidation, the holders of shares of the Preferred Stock will be
entitled to a minimum preferential liquidation payment per share in an amount
equal to the greater of $4.46 or ten thousand (10,000) times the payment made
per share of Common Stock plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment.
Finally, in the event of any merger, consolidation or other transaction in which
shares of Common Stock are exchanged, each share of Preferred Stock will be
entitled to receive ten thousand (10,000) times the amount received per share of
Common Stock. These rights are protected by customary antidilution provisions.
Because of the nature of the dividend, liquidation and voting rights,
the value of the one ten-thousandth (1/10,000) of a share of Preferred Stock
purchasable upon the exercise of a Right should approximate the value of one (1)
share of Common Stock.
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No fractional shares of Preferred Stock will be issued (other than
fractions which are one ten-thousandth (1/10,000) or integral multiples of one
ten-thousandth (1/10,000) of a share of Preferred Stock, which may, at the
election of the Corporation, be evidenced by depositary receipts) and in lieu
thereof, an adjustment in cash will be made based on the market price of the
Preferred Stock on the last trading day before the date of exercise.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least one
percent (1%) in the Purchase Price.
At any time before the earlier to occur of (A) a person becoming an
Acquiring Person or (B) the expiration of the Rights, and under certain other
circumstances, the Corporation may redeem the Rights in whole, but not in part,
at a price (payable in cash or, at the Corporation's election, in Common Stock)
of $0.01 per Right (the "Redemption Price"). Any redemption would be effective
upon the action of the Board.
For so long as the Rights are then redeemable, the Company may, except
with respect to the Redemption Price, amend the Agreement in any manner. After
the Rights are no longer redeemable, the Company may, except with respect to the
Redemption Price, amend the Agreement in any manner that does not adversely
affect the interests of holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Corporation, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights will
not be taxable to shareholders of the Corporation, shareholders may, depending
upon the circumstances, recognize taxable income should the Rights become
exercisable or upon the occurrence of certain events thereafter.
The Rights are designed to protect and maximize the value of
shareholders' interests in the Corporation in the event of an unsolicited
takeover attempt in a manner or on terms not approved by the Board of Directors.
The Rights are not intended to prevent a takeover of the Corporation and are not
expected to do so. The Rights may be redeemed by the Company as described in
Section 23 of the Agreement, and accordingly, the Rights should not interfere
with any merger or business combination approved by the Board of Directors.
Issuance of the Rights should not weaken the Company or interfere with its
business plans. The issuance of the Rights themselves has no dilutive effect,
will not affect reported earnings per share, should not be taxable to the
Corporation or to its shareholders, and will not change the way in which the
Corporation's shares are presently traded. The Corporation's Board believes that
the Rights represent a sound and reasonable means of addressing the complex
issues of corporate policy created by potential takeover attempts. However, the
Rights may have the effect of rendering more difficult or discouraging an
acquisition of the Corporation deemed undesirable by the Board. The Rights may
cause substantial dilution to a person or group that attempts to acquire the
Corporation on terms or in a manner not approved by the Corporation's Board,
except pursuant to an offer conditioned upon the negation, purchase or
redemption of the Rights.
As of August 6, 2002, there were 90,699,556 shares of Common Stock
issued and outstanding. As long as the Rights are attached to the Common Stock,
the Corporation will issue one Right with each new share of Common Stock so that
all such shares will have Rights attached.
The Agreement and the press release announcing the declaration of the
Rights are attached hereto as exhibits and are incorporated herein by reference.
The foregoing description of the Rights is qualified in its entirety by
reference to such exhibits. A copy of the Agreement is also available free of
charge from the Corporation or from the Rights Agent, upon request.
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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 thereunto duly authorized.
CELSION CORPORATION
Date: August 21, 2002 By: /s/ Anthony P. Deasey
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Anthony P. Deasey
Executive Vice President - Finance
and Administration and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit 99.1
Number Description
99.1 Rights Agreement dated as of August 15, 2002, between Celsion
Corporation and American Stock Transfer & Trust Company, which
includes as Exhibits A, B and C, respectively, the Form of
Certificate of Designations for the Series C Junior
Participating Preferred Stock, the Form of Right Certificate,
and a Summary of the Rights.
99.2 Press Release dated August 16, 2002 announcing the Rights
dividend.
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