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): June 30, 1995
ZONIC CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 0-12283 31-0791199
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
Park 50 TechneCenter, 50 West TechneCenter Drive, Milford, Ohio 45150-9777
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (513) 248-1911
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Item 2. Acquisition or Disposition of Assets
On June 30, 1995, Zonic Corporation ("Zonic") sold its 40% ownership interest
in its World Class Analyzer product line (the "WCA Product") to A&D Company,
Ltd. ("A&D"), the owner of the remaining 60% ownership interest in the WCA
Product, pursuant to a WCA Rights Sale Agreement (Exhibit 2.1).
The WCA Product is a noise and vibration analysis system which was jointly
developed by Zonic and A&D and is integrated with an Apple Macintosh
computer. The WCA Product can be configured to acquire 2 to 32 channels of
data, has a broad range of analysis capabilities, and a full color graphic
user interface. Zonic's ownership interest in the WCA Product sold to A&D
included its ownership for the intellectual property, know-how, drawings,
source and machine executable software, manufacturing drawings, manufacturing
fixtures, manufacturing procedures, marketing and distribution rights, and
all patents or trademarks either issued or pending for the WCA Product.
Zonic sold its 40% ownership interest in the WCA Product for the purchase
price of $2,397,275. $2,000,000 of the purchase price was used by Zonic to
repay a portion of its existing indebtedness to A&D pursuant to an Amendment
to Credit Agreement (Exhibit 2.2). The remaining $397,275 constituted accrued
but unpaid interest on loans made by A&D to Zonic as of June 30, 1995 which
was forgiven by A&D. The purchase price was determined through arms length
negotiation and based upon the following factors: (1) an analysis of
estimated WCA Product sales over a five year period; (2) a calculation of
Zonic's 40% interest in the estimated WCA Product sales; (3) future interest
expense reduction resulting from the interest forgiveness and reduced debt
outstanding; and (4) the amount of the debt reduction.
A&D is a Japanese instrument manufacturing company which has had a significant
relationship with Zonic since 1988 and currently owns a 28% ownership
interest in the Company. In addition, A&D has a stock option to purchase
1,000,000 shares of Zonic's common stock at a purchase price of $2.00 per
share, which is not currently exercisable. Mr. Shoichi Sekine, a director
and officer of A&D, is also a director and the Executive Vice President of
Zonic.
In conjunction with the sale of Zonic's 40% ownership interest in the WCA
Product, the credit limit under the Credit Agreement between Zonic and A&D
was reduced from $6,000,000 to $4,000,000. Borrowing by Zonic under the
Credit Agreement currently consists of $3,500,000 in bank loans guaranteed by
A&D and $480,000 in loans by A&D, which loans will continue to accrue
interest after June 30, 1995. In addition, the Control Agreement between the
parties which granted A&D the right to purchase a sufficient number of shares
of Zonic's common stock to give A&D a majority of Zonic's common stock in the
event certain events occur, was terminated.
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Zonic and A&D also entered into an Amendment to Distribution Agreement
(Exhibit 2.3) which added the WCA Product to the existing Distribution
Agreement between the parties. Zonic and A&D further agreed to customize
certain operational features of the WCA Product software and provide Zonic
with technical information and advice (Exhibit 2.4). A&D also granted Zonic
the right to configure, assemble, test and support WCA systems for sale to
end users or agents, as well as an unlimited license to manufacture all
printed circuit boards, assemblies and other items which are specific to the
construction of WCA Portable systems (Exhibit 2.5).
The above summary does not purport to be complete and is subject to and
qualified in its entirety by reference to the WCA Rights Sale Agreement and
related agreements.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
NOT APPLICABLE.
(b) Pro forma financial information.
NOT APPLICABLE.
(c) Exhibits.
2.1 WCA Rights Sale Agreement, dated June 30, 1995,
between Zonic Corporation and A&D Company, Ltd.
2.2 Amendment to Credit Agreement, dated June 30, 1995,
between Zonic Corporation and A&D Company, Ltd.
2.3 Amendment to Distribution Agreement, dated June 30, 1995
between Zonic Corporation and A&D Company, Ltd.
2.4 WCA Software Source Agreement, dated June 30, 1995,
between Zonic Corporation and A&D Company, Ltd.
2.5 WCA Manufacturing Agreement, dated June 30, 1995,
between Zonic Corporation and A&D Company, Ltd.
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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 hereunto duly authorized.
ZONIC CORPORATION
Date: August 21, 1995 By: JAMES B. WEBB
James B. Webb,
Senior Vice President
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EXHIBIT 2.1
WCA RIGHTS SALE AGREEMENT
This Agreement is made and entered into as of this 30th day of June, 1995 by
and between A&D Company, Ltd., a Japanese Corporation, having its principal
place of business at 3-23-14 Higashi-Ikebukuro, Toshima-ku, Tokyo 170, Japan
("A&D") and Zonic Corporation, an Ohio Corporation having its principal place
of business at 50 West TechneCenter Drive, Milford, Ohio, 45150 U.S.A.
("Zonic").
WHEREAS, A&D and Zonic entered into four (4) certain Development Agreements
dated June 1, 1989, May 23, 1990, May 23, 1990 and June 19, 1990
(collectively the "Development Agreements" which resulted in a product known
as the World Class Analyzer (the "WCA Product"); and
WHEREAS, the Development Agreements provide for the ownership rights of the
WCA Product to be shared by A&D and Zonic in the ratio of 60% to A&D
("A&D Share") and 40% to Zonic ("Zonic Share"). "Ownership" as used in this
Agreement means the ownership for the intellectual property, know-how,
drawings, source and machine executable software, manufacturing drawings,
manufacturing fixtures, manufacturing procedures, marketing and distribution
rights, and any patents or trademarks either issued or pending for the WCA
Product developed under the Development Agreements; and
WHEREAS, A&D has expressed a willingness to purchase Zonic Share and Zonic
has expressed a willingness to sell to A&D Zonic Share;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the parties hereto, the parties hereto
hereby agree as follows:
1. A&D agrees to pay to Zonic an amount of $2,000,000 (equal to Japanese
Yen 195,000,000) for Zonic Share on June 30, 1995 (the "Closing Date").
2. Zonic hereby agrees to sell, assign and transfer Zonic Share on the
Closing Date to A&D.
3. Zonic and A&D hereby agree to waive any and all rights and release any
and all claims to any profits due to each other for any past WCA product
sales which have been accrued prior to the Closing Date.
4. Zonic hereby agrees to execute and deliver any necessary instrument,
agreement, contract or document as A&D may request in connection with the
transfer of Zonic Share to A&D and the filing or recording of its ownership
of Zonic Share with appropriate governmental offices.
5. Zonic hereby represents and warrants that:
(i) It has owned Zonic Share free from any liens, encumbrances or security
interest and may sell, assign and transfer Zonic Share freely;
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(ii) the execution, delivery and performance by Zonic of this Agreement is
within the corporate powers of Zonic having been duly authorized by all
necessary corporate action, and do not violate, contravene or conflict
with or result in a breach of any agreement, contract or document to
which it is a party or by which it is bound or its properties or assets
is affected; and
(iii) this Agreement when duly executed, delivered will constitute a legal,
valid and binding obligation of Zonic, enforceable in accordance with
its terms.
6. Zonic may retain copies of or have access to all books and records
relating to the WCA Product sales, but shall transfer to A&D all information,
plans, specifications, engineering reports, test reports, etc. with respect
to the WCA Product developed under the Development Agreements on the Closing
Date.
7. The parties hereby acknowledge and agree that this Agreement applies only
to the WCA Product as developed under the Development Agreements including
derivatives thereof and that Zonic retains sole ownership of all other
products developed by Zonic including but not limited to the products known
as Workstation 7000, Machinery Monitorying System, PC2000 and products
arising from Zonic's work under it's SBIR development contract with the US
government whether such products were developed prior to, during, or after
completion of work under Development Agreements. The parties further agree
and acknowledge that this agreement in no way prohibits nor places
restrictions on Zonic from using technology, capabilities, and know-how
acquired during the course of work on the Development Agreements in Zonic's
other products, either existing at the time of this Agreement or developed
subsequent to this Agreement.
8. This agreement shall be governed by, and construed in accordance with,
the Laws of the State of Ohio, USA.
9. The parties hereto hereby agree to terminate the Development Agreements
on the Closing Date except that the confidential information non-disclosure
clause contained in paragraph 6 of each of the Development Agreements
shall remain in full force.
10. The parties hereto hereby agree any and all disclosure of any information
relating to this agreement, including the agreement itself, shall be jointly
approved by both Zonic and A&D prior to release of such information.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day first above
written.
A&D Company, Ltd. Zonic Corporation
by:/s/ Hirakaru Furukawa by:/s/ Gerald J. Zobrist
Hikaru Furukawa Gerald J. Zobrist
President President, Chief Executive Officer
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EXHIBIT 2.2
AMENDMENT TO CREDIT AGREEMENT
BETWEEN
ZONIC CORPORATION
AND
A&D COMPANY, LTD.
THIS AGREEMENT is made and entered into as of this 30th day of June, 1995 by
and between A&D Company, Ltd., a Japanese Corporation located in Tokyo,
Japan, hereinafter referred to as "A&D" and Zonic Corporation, an Ohio
Corporation located in Milford, Ohio, USA, hereinafter referred to as "Zonic".
WHEREAS, Zonic and A&D entered into a Credit Agreement (the "Credit
Agreement") dated December 7, 1992 which also included a Control Agreement of
even date (the "Control Agreement"); and,
WHEREAS, the parties have entered into the WCA Rights Sale Agreement and
related Agreements, whereby Zonic sold its 40% WCA ownership rights; and,
WHEREAS, Zonic and A&D now desire to amend said Credit Agreement and
terminate the Control Agreement.
NOW, THEREFORE, in consideration of the above premises and mutual covenants
hereafter set forth, the parties agree as follows:
1. The "aggregate principal amount of all loans" as defined in paragraph 1.1
of the Credit Agreement shall be reduced to $4,000,000.
2. Paragraph 4.2 is eliminated from the Credit Agreement in its entirety and
all references to the Control Agreement including Paragraphs 8(h) and 10.5.
3. The Control Agreement is terminated in its entirety and A&D hereby waives
any and all of its rights that may have resulted from the Control Agreement,
including any rights thereunder to purchase stock in Zonic.
4. A&D agrees to cancel and surrender the existing Promissory Note for
$6,000,000 included with the Credit Agreement and Zonic agrees to provide a
new Promissory Note in the amount of $4,000,000.
5. Except as set forth herein, the Credit Agreement shall otherwise remain
the same.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed by their respective authorized officers as of the day first above
written.
A&D Company, Ltd. Zonic Corporation
by:/s/ Hikaru Furukawa by:/s/ Gerald J. Zobrist
Hikaru Furukawa Gerald J. Zobrist
President President, Chief Executive Officer
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EXHIBIT 2.3
AMENDMENT TO DISTRIBUTION AGREEMENT
BETWEEN
ZONIC CORPORATION
AND
A&D COMPANY, LTD.
WCA Product Addition
THIS AMENDMENT dated as of June 30, 1995 is made by and between Zonic
Corporation ("Zonic") and A&D Company, Ltd. ("A&D").
WHEREAS, Zonic and A&D entered into that certain Product Distribution
Agreement dated October 7, 1988 (the "Distribution Agreement"); and:
WHEREAS, A&D wishes to amend the Distribution Agreement by adding certain
products to the list of products as set forth in the Distribution Agreement.
NOW, THEREFORE, in consideration of the above premises and mutual covenants
hereinafter set forth, the parties hereto agree as follows.
A. The Distribution Agreement is amended as follows:
1. "Products" as defined in paragraph 1.1 of the Distribution Agreement
shall be amended by inserting the "World Class Analyzer" ("WCA Products")
manufactured and/or owned by A&D as listed in the revised schedule "A" dated
June 30, 1995, attached hereto.
2. "Prices" as defined in Paragraph 4 of the Distribution Agreement shall
be defined as Zonic's net purchase price in yen for all products shown in
revised Schedule "A" dated June 30, 1995, attached hereto.
3. Paragraph 5 of the Distribution Agreement is amended by providing for
payments by Zonic in yen according to payment terms mutually agreed upon at
purchase order placement by Zonic.
B. Except as amended hereby, the Distribution Agreement remains in full
force and effect.
C. This Amendment is contingent upon the execution of the following
agreements between the parties hereto:
WCA Manufacturing Agreement
WCA Software Source Agreement
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed by their respective authorized officers as of the day first above
written.
A&D Company, Ltd. Zonic Corporation
by:/s/ Hikaru Furukawa by:/s/ Gerald J. Zobrist
Hikaru Furukawa Gerald J. Zobrist
President President, Chief Executive Officer
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Revised Schedule "A"
June 30, 1995
A&D Net Price List for
1. All 35XX Products
(To be listed by product number)
2. All WCA Products
(To be listed by product number)
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EXHIBIT 2.4
WCA SOFTWARE SOURCE AGREEMENT
This Agreement is made and entered into as of this 30th day of June, 1995 by
and between A&D Company, Ltd., a Japanese Corporation, having its principal
place of business at 3-23-14 Higashi-Ikebukuro, Toshima-ku, Tokyo 170, Japan
("A&D") and Zonic Corporation, an Ohio Corporation, having its principal
place of business at 50 West TechneCenter Drive, Milford, Ohio 45150 U.S.A.
("Zonic").
WHEREAS, Zonic and A&D have entered into that certain WCA Rights Sale
Agreement dated June 30, 1995 (the "Sale Agreement") whereby Zonic has sold
to A&D Zonic Share (as defined in the Sale Agreement) in analyzer product
jointly developed by A&D and Zonic known as the World Class Analyzer (the
"WCA Product"); and,
WHEREAS, Zonic and A&D have executed an Amendment to Distribution Agreement
dated June 30, 1995 (the "Amended Distribution Agreement") so as to add the
WCA product for certain geographic territories in the Zonic Corporation/A&D
Company, Ltd. Distribution Agreement dated October 7, 1988; and
WHEREAS, the parties hereto acknowledge that certain operational features of
the software running on WCA systems need to be customized for the markets
into which they are sold.
NOW, THEREFORE, the parties agree as follows:
1. A&D hereby grants Zonic the right to modify source level software for the
WCA Product as may be necessary to effect sales in the geographic territories
assigned to Zonic and to take all other actions to ensure the resultant
software to conforms to generally accepted industry quality standards.
2. Upon Zonic's request A&D may decide to provide to Zonic reasonable
amounts of technical information and advice, including copies of all necessary
source software as may from time to time be generated by A&D and as may be
required to accomplish the purpose of Paragraph 1 hereof.
3. Zonic agrees to destroy all WCA software information in its possession
except for that information reasonably required to accomplish Paragraph 1
hereof. Zonic will retain in confidence all technical information disclosed
by A&D in the course of its performance of obligations hereunder and not
disclose or make the information available to any third party without the
expressed written consent of A&D, except that this shall not apply to any
information which is in the public domain.
4. Zonic will provide to A&D copies of all source software modified by Zonic
including a list of those changes made to the software in written form at the
same time the software is made available for sale to customers in Zonic's
assigned territories.
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5 . This Agreement shall be governed by, and construed in accordance with,
the laws of Japan.
6. This Agreement constitutes the entire agreement between the parties
hereof and is superior to any and all prior agreements in connection with
source software for the WCA product.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day first above
written.
A&D Company, Ltd. Zonic Corporation
by:/s/ Hikaru Furukawa by:/s/ Gerald J. Zobrist
Hikaru Furukawa Gerald J. Zobrist
President President, Chief Executive Officer
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EXHIBIT 2.5
WCA MANUFACTURING AGREEMENT
This Agreement is made and entered into as of this 30th day of June, 1995 by
and between A&D Company, Ltd., a Japanese Corporation, having its principal
place of business at 3-23-14 Higashi-Ikebukuro, Toshima-ku, Tokyo 170, Japan
("A&D") and Zonic Corporation, an Ohio Corporation, having its principle
place of business at 50 West TechneCenter Drive, Milford, Ohio 45150 U.S.A.
("Zonic").
WHEREAS, Zonic and A&D have entered into that certain WCA Rights Sale
Agreement dated June 30, 1995 (the "Sale Agreement") whereby Zonic has sold
to A&D Zonic Share (as defined in the Sale Agreement) analyzer product
jointly developed by A&D and Zonic known as the World Class Analyzer (the
"WCA Product"); and,
WHEREAS, Zonic and A&D have executed an Amendment to Distribution Agreement
dated June 30, 1995 (the "Amended Distribution Agreement") so as to add the
WCA product for certain geographic territories in the Zonic Corporation/A&D
Company, Ltd. Distribution Agreement dated October 7, 1988; and
NOW, THEREFORE, the parties agree as follows:
1. A&D grants to Zonic the right to configure, assemble, test and support
WCA systems for sale to end users or agents in geographic territories as
defined in the Amended Distribution Agreement using components purchased from
A&D and other third party vendors in the case of those components not
manufactured by A&D. Zonic is also to provide maintenance services on these
products as necessary.
2. Upon Zonic's request, A&D may decide to provide to Zonic reasonable
amounts of technical information and advise as may be required to accomplish
the purpose of Paragraph 1 hereof.
3. Zonic agrees to destroy all hardware information in its possession except
for that information reasonably required to accomplish Paragraph 1 hereof.
Zonic will retain in confidence all technical information disclosed by A&D in
the course of its performance of obligation hereunder and not disclose or
make the information available to any third party without the expressed
written consent of A&D, except that this shall not apply to any information
which is in the public domain.
4. A&D grants Zonic an unlimited license to manufacture all printed circuit
boards, assemblies and other items which are specific to the construction of
WCA Portable systems for Zonic's sale in geographic territories assigned by
A&D to Zonic. A&D will supply those necessary printed circuit boards and
other assemblies which are possible to be supplied by A&D at their price.
5. Zonic acknowledges it has no right to manufacture WCA hardware except
that A&D, at their sole discretion, may license Zonic to manufacture printed
circuit boards and other assemblies for the WCA Product.
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6. This agreement constitutes the entire agreement between the parties and
is superior to any and all prior agreements in connection with manufacturing
of the WCA product.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day first above
written.
A&D Company, Ltd. Zonic Corporation
by:/s/ Hikaru Furukawa by:/s/ Gerald J. Zobrist
Hikaru Furukawa Gerald J. Zobrist
President President, Chief Executive Officer
