SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
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PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): MAY 13, 1998
KEY TECHNOLOGY, INC.
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(Exact name of registrant as specified in its charter)
OREGON 93-0822509
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(State of Incorporation or Organization) (I.R.S. Employer
Identification no.)
150 AVERY STREET, WALLA WALLA, WASHINGTON 99362
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(Address of principal executive offices) (Zip Code)
Registrant's telephone no., including area code: (509) 529-2161
NOT APPLICABLE
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
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On June 18, 1998, Key Technology, Inc. (the "Company") issued a press
release relating to the adoption by its Board of Directors (the "Board") of a
Shareholder Rights Plan. The June 18, 1998 press release of the Company is
attached hereto as Exhibit 99.1.
Pursuant to a Rights Agreement dated as of June 20, 1998 (the "Rights
Agreement") between the Company and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent (the "Rights Agent"), the Company's Board of Directors has declared
a dividend of one right ("Right") to purchase one one-thousandth of a
share of the Company's Series A Junior Participating Preferred Stock ("Series A
Junior Participating Preferred Stock") for each outstanding share of Common
Stock, no par value ("Common Stock"), of the Company. The dividend is payable
to shareholders of record as of the close of business on June 30, 1998 (the
"Record Date"). Each Right entitles the registered holder to purchase from the
Company one one-thousandth of a share of Series A Junior Participating Preferred
Stock at an exercise price of $45.00, subject to adjustment (the "Purchase
Price").
The following summary of the principal terms of the Rights Agreement is a
general description only and is subject to the detailed terms and conditions of
the Rights Agreement. A copy of the Rights Agreement is attached as Exhibit 4.1
to the Company's Registration Statement on Form 8-A filed concurrently herewith
and is incorporated herein by reference.
RIGHTS EVIDENCED BY COMMON STOCK CERTIFICATES
The Rights will not be exercisable until the Distribution Date (defined
below). Prior to the Distribution Date, certificates for the Rights ("Rights
Certificates") will not be sent to shareholders and the Rights will attach to
and trade only together with the Common Stock. Accordingly, Common Stock
certificates outstanding on the Record Date will evidence the Rights related
thereto, and Common Stock certificates issued after the Record Date will contain
a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender or transfer of any certificates for Common Stock, outstanding as of
the Record Date, even without notation thereon, will also constitute the
surrender or transfer of the Rights associated with the Common Stock represented
by such certificate.
DISTRIBUTION DATE
The Rights will separate from the Common Stock, Rights Certificates will be
issued and the Rights will become exercisable upon the earlier of: (i) the close
of business on the tenth business day following a public announcement that a
person or group of affiliated or associated persons who are not affiliated with
the Company or any subsidiary (such person or group being an "Acquiring Person")
has acquired, obtained the right to acquire, or otherwise obtained beneficial
ownership of 15% or more of the then outstanding shares of Common Stock ("Stock
Acquisition Date"), or (ii) the close of business on the tenth business day
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following the commencement of, or the announcement of an intent to commence, a
tender or exchange offer that would result in a person or group becoming an
Acquiring Person (such person or group upon the consummation of such offer
becoming an "Acquiring Person") or (iii) the close of business on the tenth
business day after the Board of Directors determines that a person is an Adverse
Person (as defined below). The earlier to occur of such events is the
"Distribution Date."
An "Adverse Person" is any person that, alone or together with its affiliates
and associates, has become the beneficial owner of a number of shares of Common
Stock which the Board of Directors determines to be substantial (at least 10% of
the outstanding shares of Common Stock), and with respect to whom the Board
determines, after reasonable inquiry and investigation, including consultation
with such persons as they deem appropriate and consideration of such factors as
are permitted by applicable law, that (A) such beneficial ownership is intended
to cause the Company to repurchase shares of Common Stock owned by such person,
or to cause pressure on the Company to take action or enter into a transaction
intended to provide such person with short-term financial gain under
circumstances where the Board determines that the best long-term interests of
the Company would not be served by taking such action or entering into such
transaction, or (B) such beneficial ownership is causing or reasonably likely to
cause a material adverse impact, (including but not limited to impairment of
relationships with customers or of the Company's ability to maintain its
competitive position) on the business or prospects of the Company.
ISSUANCE OF RIGHTS CERTIFICATES; EXPIRATION OF RIGHTS
As soon as practicable following the Distribution Date, separate 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 from and after the Distribution Date. All Common
Stock issued prior to the Distribution Date will be issued with Rights. The
Rights will expire on the earlier of (i) November 14, 2007 (the "Final
Expiration Date") and (ii) redemption or exchange of the Rights as described
below.
INITIAL EXERCISE OF THE RIGHTS
Following the Distribution Date, and until one of the further events
described below, each Right will entitle its holder to receive, upon exercise
and the payment of the Purchase Price, one one-thousandth of a share of the
Series A Junior Participating Preferred Stock. The payment of the Purchase Price
may be made in cash or by certified bank check or bank draft payable to the
order of the Company.
TRIGGERING EVENTS FOR DECREASE IN EXERCISE PRICE; NULLIFICATION OF
CERTAIN RIGHTS
Unless earlier redeemed, in the event that (i) a person or group (other than the
Company, any of its subsidiaries, or any employee benefit plan of the Company)
becomes an Acquiring Person (unless the tender or exchange offer is for all
outstanding shares of Common Stock at a price and on terms determined by at
least a majority of the independent directors, after receiving advice from one
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or more investment banking firms, to be (A) at a price which is fair to
shareholders (taking into account all factors which such directors deem relevant
including, without limitation, prices which could reasonably be achieved if the
Company or its assets were sold on an orderly basis designed to realize maximum
value) and (B) otherwise in the best interests of the Company and its
shareholders (a "Qualifying Offer")), or (ii) the Board has determined the
existence of an Adverse Person (either of such events being a "Triggering
Event"), then, in each such case, each holder of a Right shall have the right to
receive, upon exercise and payment of the Purchase Price, the number of shares
of the Company's Common Stock (or, in certain circumstances, cash, property or
other securities of the Company) purchasable for the Purchase Price at a price
of 50% of the current market value of such shares. Notwithstanding any of the
foregoing, following the occurrence of one of the foregoing events, all Rights
that are, or (under certain circumstances specified in the Rights Agreement)
were, beneficially owned by an Acquiring Person or an Adverse Person will be
null and void.
RIGHT TO BUY ACQUIRING COMPANY STOCK
Similarly, unless the Rights are earlier redeemed, in the event that,
after the Stock Acquisition Date, (i) the Company is acquired in a merger or
other business combination transaction (other than a Subsidiary), or (ii) 50% or
more of the Company's assets or earning power are sold (any of such events also
being a "Triggering Event"), proper provision will be made so that each holder
of a Right which has not theretofore been exercised (other than Rights
beneficially owned by the Acquiring Person, which will thereafter be void) will
thereafter have the right to receive, upon exercise and payment of the Purchase
Price, the number of shares of common stock of the Acquiring Person purchasable
for the Purchase Price at a price of 50% of the current market value of such
shares. Notwithstanding the above, the Agreement provides that no Triggering
Event will be deemed to have occurred if (i) the transaction is consummated with
a person who acquired shares of Common Stock pursuant to a Qualifying Offer,
(ii) the price per share of Common Stock offered in such transaction is not less
than the price per share of Common Stock paid to acquire shares of Common Stock
pursuant to the tender or exchange offer, and (iii) the form of consideration
being offered is the same as the form paid pursuant to such tender offer or
exchange offer.
OPTIONAL EXCHANGE OF RIGHTS
At any time after any person becomes an Acquiring Person or is determined to be
an Adverse Person, the Board of Directors of the Company may exchange the Rights
(other than Rights owned by such person which have become void), in whole or in
part, at an exchange ratio of one share of Common Stock per Right (subject to
adjustment). The Company, at its option, may substitute shares of Series A
Junior Participating Preferred Stock at the initial rate of one one-thousandth
of a share of Series A Junior Participating Preferred Stock for each share of
Common Stock, subject to adjustment as provided in the Rights Agreement.
Notwithstanding the foregoing, the Board of Directors of the Company will not
have the power to effect an exchange of the Rights at any time after any person
becomes the beneficial owner of 50% or more of the Company's Common Stock then
outstanding.
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REDEMPTION OF RIGHTS
The Rights are redeemable at $.01 per Right (the "Redemption Price"), subject to
adjustment, by a majority of the independent directors of the Board, payable, at
the election of such majority of independent directors, in cash or shares of
Common Stock, at any time prior to the earlier of (i) the close of business on
the tenth day after the Stock Acquisition Date, or (ii) the close of business on
the expiration date. The Board may not redeem any Rights following a
determination that a person is an Adverse Person. The Company may pay the
redemption in cash, shares of Common Stock or other form of consideration deemed
appropriate by the Board of Directors. Immediately upon any redemption of the
Rights, the right to exercise the Rights will become a right to receive the
Redemption Price. Unless earlier redeemed, the Rights will expire on the Final
Expiration Date.
ADJUSTMENTS TO PREVENT DILUTION
The Purchase Price payable, the number of Rights, and the number of
shares of Series A Junior Participating Preferred Stock or Common Stock or other
securities issuable upon exercise of the Rights are subject to adjustment from
time to time in connection with dilutive issuances by the Company as set forth
in the Rights Agreement.
CASH PAID INSTEAD OF ISSUING FRACTIONAL SHARES
No fractional portion of a share of Common Stock will be issued upon exercise of
a Right, and in lieu thereof, an adjustment in cash will be made based on the
market price of the Common Stock on the last trading date prior to the date of
exercise.
NO SHAREHOLDERS' RIGHTS PRIOR TO EXERCISE
Until a Right is exercised, the holder thereof, as such, will have no rights as
a shareholder of the Company (other than any rights resulting from such holder's
ownership of Common Stock), including, without limitation, the right to vote or
to receive dividends.
AMENDMENT OF RIGHTS AGREEMENT
Other than those provisions relating to the rights, duties and obligations of
the Rights Agent, any of the provisions of the Rights Agreement may be
supplemented or amended by the Board of Directors in any manner prior to the
close of business on the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board in order to cure
any ambiguity, defect or inconsistency, to correct or supplement any defective
or inconsistent provisions, to shorten or lengthen any time periods, or to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person), or to shorten or lengthen any
time period under the Rights Agreement; provided, however, that no amendment
shall be made to lengthen (i) the time period governing redemptions at such time
as the Rights are not redeemable, or (ii) to adjust any other time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
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rights of the holders of Rights. Prior to the Distribution Date, the interests
of the holders of Rights shall be the interests of holders of Common Stock of
the Company.
RIGHTS AND PREFERENCES OF THE SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
Series A Junior Participating Preferred Stock purchasable upon exercise of the
Rights will not be redeemable. Each share of Series A Junior Participating
Preferred Stock will be entitled to an aggregate quarterly dividend of the
greater of (a)$0.01 or (b) 1,000 times the aggregate per share amount for all
cash dividends, and 1,000 times the aggregate per share amount (payable in kind)
of all non-cash dividends or other distributions payable in shares of Common
Stock, declared on the Common Stock. Each share of Series A Junior Participating
Preferred Stock will have 1,000 votes, voting together with the Common Stock. If
at any time dividends on the Series A Junior Participating Preferred Stock shall
be in arrears in an amount equal to six quarterly dividends, then until all the
dividends are paid, the holders of Preferred Stock will have the right to elect
two directors to the Board of Directors of the Company.
In the event of liquidation, the holders of the Series A Junior Participating
Preferred Stock will receive the higher of (a) $0.01 per share plus all accrued
but unpaid dividends, or (b) an aggregate amount per share equal to 1,000 times
the per share amount to be distributed to the holders of the Common Stock after
certain adjustments. In the event of any merger, consolidation or other
transaction in which the Common Stock is changed or exchanged, each share of
Series A Junior Participating Preferred Stock will be entitled to receive 1,000
times the amount received per share of Common Stock.
All of the above-enumerated rights are protected by customary anti-dilution
provisions. Because of the nature of the dividend, liquidation and voting rights
of the shares of Series A Junior Participating Preferred Stock, the value of the
one one-thousandth interest in a share of Series A Junior Participating
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
CERTAIN ANTI-TAKEOVER EFFECTS
The Rights have certain 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 the Rights being redeemed or a substantial number of
Rights being acquired. However, the Rights should not interfere with any tender
offer or merger approved by the Company prior to the time that a person has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the Common Stock, because until such time the Rights may be redeemed by the
Company at $0.01 per Right.
The Rights are not intended to prevent a takeover of the Company and will not do
so. The Rights may be redeemed by the Company at $0.01 per Right within 10
business days (or such later date as may be determined by a majority of the
Board of Directors) after the accumulation of 15% or more of the Company's stock
by a single acquirer or group. In addition, the Rights do not become exercisable
in the event of an accumulation exempted by the Board of Directors. Accordingly,
the Rights should not interfere with any merger or business combination approved
by the Board of Directors.
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The issuance of the Rights does not affect the financial condition or business
plans of the Company. The issuance of the Rights has no dilutive effect, will
not affect reported earnings per share, should not be taxable to the Company or
to its shareholders, and will not change the way in which the Company's stock is
presently traded.
However, the Rights may have the effect of rendering more difficult or
discouraging an acquisition of the Company deemed coercive and undesirable by
the Board of Directors. The Rights may cause substantial dilution to a person or
group that attempts to acquire the Company on terms or in a manner
not approved by the Company's Board of Directors except pursuant to an offer
conditioned upon the negation, purchase or redemption of the Rights.
ITEM 7. EXHIBITS
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4.1 Rights Agreement, dated as of June 20, 1998, between
Registrant and ChaseMellon Shareholder Services, L.L.C.
including the Articles of Amendment creating the Series A
Junior Participating Preferred Stock of the Registrant and the
form of Rights Certificate attached thereto as Exhibits A and
B, respectively(incorporated by reference to Registrant's
Registration Statement on Form 8-A (File No. 000-21820) filed
with the Securities and Exchange Commission on June 24, 1998).
99.1 Press Release issued by Key Technology, Inc. on June 18, 1998.
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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, hereunto duly authorized.
KEY TECHNOLOGY, INC.
Date: June 12, 1998 By: /s/ Thomas C. Madsen
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Thomas C. Madsen
President and Chief Executive Officer
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EXHIBIT INDEX
Exhibit
No. Exhibit
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4.1 Rights Agreement, dated as of June 20, 1998, between Key
Technology, Inc., and ChaseMellon Shareholder Services, L.L.C.
including the Articles of Amendment creating the Series A
Junior Participating Preferred Stock of Key Technology, Inc.
and the form of Rights Certificate attached thereto as
Exhibits A and B, respectively (incorporated by reference to
Registrant's Registration Statement on Form 8-A (File No.
000-21820) filed with the Securities and Exchange Commission
on June 24, 1998).
99.1 Press Release issued by Key Technology, Inc. on June 18, 1998.
[Key Technology, Inc. Letterhead]
FOR IMMEDIATE RELEASE CONTACT: Thomas Madsen
June 18, 1998 President/CEO
Key Technology, Inc.
(509) 529-2161
KEY TECHNOLOGY, INC. ADOPTS SHAREHOLDER RIGHTS PLAN
WALLA WALLA, Wash.-- June 18, 1998- The Board of Directors of Key
Technology, Inc. (NASDAQ: KTEC) today announced the adoption of a Shareholder
Rights Plan to assist its shareholders in realizing fair value and equal
treatment in the event of any future unsolicited efforts to acquire control of
the Company and to protect the Company and its shareholders against coercive
takeover tactics.
Under the Shareholder Rights Plan, a dividend of one Share Purchase
Right is being declared for each share of Common Stock outstanding at the close
of business on June 30, 1998. No separate certificates evidencing the Rights
will be issued unless and until they become exercisable.
The Rights generally will not be exercisable until a person or group
acquires 15% or more of the Common Stock of the Company or is determined by the
Board of Directors to be an "adverse person" (as defined in the Rights
Agreement) holding at least 10% of the Common Stock of the Company. In that
event, and unless an acquisition is approved by the Board of Directors, each
Right will entitle the holder, other than the unapproved acquiror, to buy, at a
price of 50% of the then current market value of such shares, the number of
shares of the Company's Common Stock purchasable for the Right's then current
exercise price. In addition, if the Rights were triggered by such a non-approved
acquisition attempt and the Company thereafter was acquired in a merger in which
all shareholders were not treated alike, shareholders with unexercised Rights
would be entitled to purchase common stock of the acquiror with a value of twice
the exercise price of the Rights.
The Company's Board of Directors may redeem the Rights for a nominal
amount at any time prior to an event that causes the Rights to become
exercisable. The Rights will expire on November 14, 2007.
# # #
Key Technology, an ISO-9000 certified company, is a leading designer
and manufacturer of process automation systems, integrating electro-optical
inspection and sorting, specialized conveying and product preparation equipment.
Key(R) systems allow processors to improve quality, increase yield and reduce
cost. With world-wide sales representation, the Company maintains a
demonstration facility at its headquarters in Walla Walla, Washington, U.S.A.
The Company's common stock trades on The Nasdaq Stock Market(SM) under the
symbol: KTEC.
