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 THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): July 16, 2001
Kadant Inc.
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(Exact name of Registrant as Specified in its Charter)
Delaware 1-11406 52-1762325
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
245 Winter Street, Waltham Massachusetts 02451
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(Address of Principal Executive Offices) Zip Code)
Registrant's telephone number, including area code: (781) 622-1000
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Not Applicable
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(Former Name or Former Address if Changed Since Last Report)
ITEM 5: OTHER EVENTS.
On July 16, 2001, the Board of Directors (the "Board") of Kadant Inc. (the
"Company"), declared a dividend of one preferred stock purchase right
(collectively, the "Rights") on each share of the Company's common stock, $0.01
par value per share (the "Common Stock") outstanding at the close of business on
August 6, 2001 (the "Record Date"). Each Right entitles the registered holder to
purchase from the Company one ten-thousandth of a share of Series A junior
participating preferred stock, $0.01 par value per share (the "Preferred
Stock"), at a purchase price of $75.00 in cash, subject to adjustment (the
"Purchase Price"). The description and terms of the Rights are set forth in a
Rights Agreement dated July 16, 2001 (the "Rights Agreement") between the
Company and American Stock Transfer & Trust Company, as rights agent, a copy of
which is filed as Exhibit 4.1 to this Current Report on Form 8-K.
As described more fully below, initially, the Rights are not exercisable and
will be attached to all certificates representing shares of Common Stock
("Common Stock Certificates") outstanding, and no separate certificates
representing the Rights ("Rights Certificates") will be distributed. The Rights
will separate from the Common Stock, and the "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 15% or more of the outstanding shares of 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 15% or more of the outstanding shares of Common Stock. The
Distribution Date may be deferred in circumstances determined by the Board. 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,
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 will not be exercisable until the Distribution Date and will expire
upon the close of business on July 16, 2011 (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 at 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, and except for shares of
Common Stock issued upon exercise, conversion or exchange of then outstanding
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, unless the event
causing the 15% threshold to be crossed is a Permitted Offer (as defined in the
Rights Agreement), 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 $75 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 $75 such number of shares of
Common Stock (or other consideration, as noted above) as equals $75 divided by
one-half of the Current Market Price of the Common Stock at the time of such
Section 11(a)(ii) Event. Assuming that the Common Stock had a Current Market
Price of $25 per share at such time, the holder of each valid Right would be
entitled to purchase six shares of Common Stock at the time of such Section
11(a)(ii) Event, having a market value of 6 x $25, or $150, for $75.
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 (other
than a consolidation or merger which follows a Permitted Offer) 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 (other than the Acquiring
Person and certain related parties) 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 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 $75 per Right, each Right not owned by an
Acquiring Person (or by certain related parties) following a Section 13 Event
would entitle its holder to purchase for $75 such number of shares of common
stock of the acquiring company as equals $75 divided by one-half of the Current
Market Price of such common stock at the time of such Section 13 Event. Assuming
that such common stock had a Current Market Price of $25 per share at such time,
the holder of each valid Right would be entitled to purchase six shares of
common stock of the acquiring company, having a market value of 6 x $25, or
$150, for $75.
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 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 ten-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 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 ten-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, a minimum preferential quarterly dividend payment of $100
per share or, if greater, an aggregate dividend of 10,000 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 $10,000 per share, plus an amount equal to accrued and unpaid
dividends, and will be entitled to an aggregate payment of 10,000 times the
payment made per share of Common Stock. Each share of Preferred Stock will have
10,000 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 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 Preferred
Stock's dividend, liquidation and voting rights, the value of one ten-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 tenth business day (or such later date as may be
determined by the Board) after the Stock Acquisition Date, the Company may
redeem the Rights in whole, but not in part, at a 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. Although the distribution of the Rights should 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 Company has entered into the Rights Agreement in anticipation of the
proposed distribution by its parent corporation, Thermo Electron Corporation
("TMO"), of all of the shares of the Company's Common Stock (together with the
associated Rights) held by TMO to the stockholders of TMO (the "Spinoff
Distribution"). The shares of the Company's Common Stock (together with the
associated Rights) held by TMO will be distributed in the Spinoff Distribution
on August 8, 2001 to all stockholders of record of TMO on July 30, 2001. The
ownership by TMO of shares of the Company's Common Stock prior to consummation
of the Spinoff Distribution will not trigger the occurrence of the Distribution
Date or the exercisability of the Rights.
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
attached to this Current Report on Form 8-K as Exhibit 4.1 and incorporated
herein by reference.
ITEM 7: FINANCIAL STATEMENTS, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired: not applicable.
(b) Pro Forma Financial Information: not applicable.
(c) Exhibits:
4.1 Rights Agreement dated July 16, 2001 by and between Kadant
Inc. and American Stock Transfer & Trust Company, as
Rights Agent, which includes as Exhibit A the Form of
Certificate of Designations of Series A Junior
Participating Preferred Stock, as Exhibit B the Form of
Rights Certificate and as Exhibit C the Summary of Rights
to Purchase Common Stock
4.2 Certificate of Amendment to Certificate of Incorporation
of Thermo Fibertek Inc.
4.3 Certificate of Designations of Series A Junior
Participating Preferred Stock of Kadant Inc.
Exhibit Index
Exhibit No. Description
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4.1 Rights Agreement dated July 16, 2001 by and between
Kadant Inc. and American Stock Transfer & Trust
Company, as Rights Agent, which includes as Exhibit A
the Form of Certificate of Designations of Series A
Junior Participating Preferred Stock, as Exhibit B
the Form of Rights Certificate and as Exhibit C the
Summary of Rights to Purchase Common Stock
4.2 Certificate of Amendment to Certificate of
Incorporation of Thermo Fibertek Inc.
4.3 Certificate of Designations of Series A Junior
Participating Preferred Stock of Kadant Inc.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on this 16th day of July, 2001.
KADANT INC.
/s/ William A. Rainville
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William A. Rainville
President and Chief Executive Officer