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): April 9, 1998
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AMERICAN ECO CORPORATION
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(Exact name or registrant as specified in its charter)
Ontario, Canada 0-10621 52-1742490
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number Identification No.)
154 University Avenue, Toronto, Ontario M5H 3Y9
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (416) 340-2727
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N/A
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(Former name or former address, if changed since last report.)
ITEM 5. OTHER EVENTS.
On April 9, 1998, the Board of Directors of American
Eco Corporation (the "Company") authorized the issuance,
effective at 12:01 a.m. (Toronto time) on April 20, 1998, of
one common share purchase right (a "Right") for each
outstanding common share, no par value, of the Company (a
"Common Share"), outstanding at such time (the "Record Time").
Each Right entitles the registered holder to purchase from the
Company one Common Share at an initial purchase price equal to
one-half of the per share market price of the Common Shares,
subject to adjustment (the "Exercise Price"). The description
and terms of the Rights are set forth in the Shareholder Rights
Plan Agreement, dated as of April 9, 1998 (the "Rights
Agreement"), between the Company and The CIBC Mellon Trust
Company as rights agent.
Under the Rights Agreement, a bidder making a
Permitted Bid (as defined below) for the Common Shares may not
take up any shares before the close of business on the 90th day
after the date of the bid and unless, on such date, at least
50% of the Common Shares not beneficially owned by the person
making the bid and certain related parties are deposited, in
which case, a public announcement of that fact must be made and
the bid must be extended for ten business days on the same
terms. The Rights Agreement is designed to encourage an
offeror to proceed by way of a Permitted Bid, or to approach
the Board with a view to negotiation by creating the potential
for substantial dilution of the offeror's position. The
Permitted Bid provisions of the Rights Agreement are to ensure
that in any take-over bid all shareholders are treated equally,
receive the maximum available value for their investment and
are given adequate time to properly assess the bid on a fully
informed basis.
A Permitted Bid is defined in the Rights Agreement as
a take-over bid made by a take-over bid circular and which also
complies with the following requirements: (1) is made to all
holders of the Company's voting shares as registered on the
books of the Company; and (2) is open for at least 90 days and
more than 50% of the voting shares of the Company (other than
shares beneficially owned by the offeror and certain related
parties) are deposited under the bid and not withdrawn before
any shares may be taken up and paid for and if 50% of the
voting shares of the Company are so deposited and not
withdrawn, an announcement of such fact is made and the bid
remains open for an additional ten business days.
Although the Rights Agreement is currently effective
with a record date of April 20, 1998, the Rights Agreement, and
Rights issued in connection therewith, will terminate and will
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be void and of no further force or effect unless confirmed by
the shareholders of the Company within six months by the
affirmative vote of a majority of the votes cast by the
shareholders in person or by proxy. One proposal at the 1998
Annual and Special Meeting of Shareholders to be held on May
28, 1998 will be confirmation of the Rights Agreement.
Initially, the Rights will be evidenced, with respect
to any of the Common Share certificates outstanding as of the
Record Time, by such Common Share certificate. From and after
the Separation Time, the Rights will be exercisable and the
registration and transfer of Rights shall be separate from and
independent of the Common Shares. The Separation Time is the
close of business on the eighth trading day after the earlier
to occur of (i) the first date of public announcement by the
Company or an Acquiring Person (as defined below) that a person
or group of affiliated or associated persons (collectively, a
"Person") has acquired (other than pursuant to a Permitted Bid
or certain other exemptions under the Rights Agreement)
beneficial ownership of 20% or more of the outstanding Common
Shares and any other shares in the capital of the Company
entitled to vote generally in the election of directors (such
Person being hereinafter referred to as an "Acquiring Person"
and such date being hereinafter referred to as the "Stock
Acquisition Date") or (ii) the date of the commencement of or
first public announcement of an intention of any Person (other
than the Company or any of its subsidiaries) to commence a
transaction the consummation of which would result in such
Person becoming an Acquiring Person (or such later date as may
be determined by action of the Board of Directors of the
Company).
Until the Separation Time (i) the Rights will be
evidenced by the certificates for Common Shares and will be
transferred with and only with such Common Share certificates,
(ii) new certificates for Common Shares issued after the Record
Time will contain a legend incorporating the Rights Agreement
by reference, and (iii) the surrender for transfer of any such
certificate for Common Shares outstanding on the Record Time
will also constitute the transfer of the Rights associated with
the Common Shares represented thereby. Promptly following the
Separation Time, separate certificates evidencing the Rights
("Rights Certificates") will be mailed to holders of record of
the Common Shares as of the close of the Separation Time and
such separate Rights Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Separation
Time and will expire (the "Expiration Time") on the earlier of
(i) the close of business on April 9, 2008, (ii) the time at
which the Rights are redeemed by the Company, or (iii) if a
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Person has become an Acquiring Person, the time at which the
Rights (other than Rights which are void as described below)
are exchanged for Common Shares at an exchange ratio of one
Common Share per Right, as adjusted by the Company; provided,
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however, that the Rights Agreement and the Rights will
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terminate and will be void and of no further force or effect
unless (a) confirmed by the shareholders of the Company within
six months from April 9, 1998, and (b) reconfirmed by the
shareholders of the Company at every third annual meeting
following the 1998 Annual and Special Meeting of Shareholders.
The Exercise Price payable and the number of Common
Shares issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution in the event
of (i) a stock dividend on, or a subdivision, consolidation or
change of, the Common Shares, (ii) the issuance of rights,
options or warrants to subscribe for or purchase Common Shares
at a price, or securities convertible into Common Shares at a
conversion price, less than the then current market price for
the Common Shares, or (iii) a distribution to all holders of
the Common Shares of evidences of indebtedness, cash (excluding
regular cash dividends or dividends payable in Common Shares),
assets or rights, options or warrants (other than those
referred to above).
With certain exceptions, no adjustment in the
Purchase Price will be required unless such adjustment would
require an increase or decrease of at least 1% in the Exercise
Price. No fractional Rights will be issued and, in lieu
thereof, holders of the Rights with regard to which such
fractional Rights would otherwise be issuable will be paid an
amount in cash equal to the same fraction of the current market
value of a whole Right.
In the event that following the Stock Acquisition
Date (i) the Company consolidates with, or merges with and
into, any other person, (ii) any person consolidates with the
Company, or merges with and into the Company and the Company is
the continuing or surviving corporation of such merger and, in
connection therewith, all or part of the Common Shares are
changed into or exchanged for shares or other securities of any
other Person or cash or any other property, or (iii) the
Company sells or otherwise transfers in one or more
transactions, assets or earning power aggregating 50% or more
of the assets or earning power of the Company and its
subsidiaries, taken as a whole, to any other person, each
holder of a Right, except Rights which previously have been
voided as indicated below, will thereafter have the right to
receive, upon exercise thereof at the then current Exercise
Price, that number of common shares of the other person which
at the time of such transaction will have a market value equal
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to two times the Exercise Price of the Right for an amount in
cash equal to the Exercise Price.
In the event that any Person becomes an Acquiring
Person, each holder of a Right, other than Rights beneficially
owned by the Acquiring Person (which will thereafter be void),
will thereafter have the right to receive, upon exercise
thereof at the then current Exercise Price, that number of
Common Shares having a market value equal to two times the
Exercise Price of the Right for an amount in cash equal to the
Exercise Price.
Any Rights acquired or beneficially owned by any
Acquiring Person or certain related parties thereto will be
void, and any holder of such Rights will thereafter have no
right to exercise such Rights under any provision of the Rights
Agreement.
At any time prior to the earlier of (i) the close of
business on the eighth trading day following the Stock
Acquisition Date, or (ii) the final Expiration Time, the Board
of Directors of the Company may redeem the then outstanding
Rights in whole, but not in part, at a price of $.0001 per
Right, subject to adjustment (the "Redemption Price"). Under
certain circumstances set forth in the Rights Agreement, the
decision to redeem would require the concurrence of a majority
of the Independent Directors (as defined in the Rights
Agreement). Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right
of the holders of the Rights will be to receive the Redemption
Price.
The Company may, from time to time, make amendments
to the Rights Agreement to correct clerical or typographical
errors or which are required to maintain the validity of the
Rights Agreement as a result of changes in applicable law. All
other amendments after the Company's 1998 Annual and Special
Meeting of Shareholders will require shareholder approval.
Issuance of the Common Shares upon exercise of the
Rights will be subject to any necessary registration
requirements and regulatory approvals. Until a Right shall be
exercised, the holder thereof, as such, will have no right as a
shareholder of the Company, including without limitation, the
right to vote or to receive dividends.
The Rights Agreement which specifies the terms of the
Rights and includes as Attachment 1 thereto a form of the
Rights Certificate is attached hereto as Exhibit 4 and is
incorporated herein by reference. The foregoing description of
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the Rights does not purport to be complete and is qualified in
its entirety by reference to such Exhibit.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits:
4 Rights Agreement, dated as of April, 1998, between
American Eco Corporation and The CIBC Mellon Trust
Company, which includes as Attachment 1 thereto the
form of a Rights Certificate (incorporated by
reference to Exhibit 1 to the Registrant's
Registration Statement on Form 8-A, dated April
13, 1998).
99 Press Release.
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SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
AMERICAN ECO CORPORATION
Dated: April 13, 1998 By: /s/ Michael E. McGinnis
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Name: Michael E. McGinnis
Title: Chairman, President and
Chief Executive Officer
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EXHIBIT INDEX
Exhibit Description
4 Rights Agreement, dated as of April 9,
1998, between American Eco Corporation and
The CIBC Mellon Trust Company, which
includes as Attachment 1 thereto the form
of a Rights Certificate (incorporated by
reference to Exhibit 1 to the Registrant's
Registration Statement on Form 8-A, dated
April 13, 1998).
99 Press Release.
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