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As Filed With the Securities and Exchange Commission on April 14, 1997
Registration No. 333-_________
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SECURITIES AND EXCHANGE COMMISSION
Washington. D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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UNIT INSTRUMENTS, INC.
(Exact name of registrant as specified in its charter)
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California 33-0077406
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
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22600 Savi Ranch Parkway, Yorba Linda, California 92887
(714) 921-2640
(Address, including zip code, and telephone number, including area code of
registrant's principal executive offices)
Gary N. Patten, Vice President and Chief Financial Officer
Unit Instruments, Inc.
22600 Savi Ranch Parkway
Yorba Linda, California 92887
(714) 921-2640
(Name, address, including zip code, and telephone number, including area code of
agent for service)
Copy to:
Nick E. Yocca, Esq.
Jeffrey B. Coyne, Esq.
Stradling, Yocca, Carlson & Rauth, a Professional Corporation
660 Newport Center Drive, Suite 1600, Newport Beach, California 92660
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
CALCULATION OF REGISTRATION FEE
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Proposed maximum Proposed maximum
Title of securities Amount to be offering price aggregate offering Amount of
to be registered registered per share/1/ price/1/ registration fee
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Common Stock, 282,457 $8.375 $2,365,577 $717
$.15 par value shares
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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/1/ The offering price is estimated solely for the purpose of calculating the
registration fee in accordance with Rule 457(c), using the average of the
high and low price reported to Nasdaq National Market for the Common Stock
on April 10, 1997, which was approximately $8.375 per share.
Page 1 of 24 Pages
Exhibit Index on Page 21
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Information contained herein is subject to completion or amendment. A
registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. The prospectus shall not constitute an offer to sell or the
solicitation of an offer by buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
UNIT INSTRUMENTS, INC.
282,457 SHARES OF COMMON STOCK
($.15 par value)
------------------------
There may be offered for sale from time to time for the accounts of the
shareholders of Unit Instruments, Inc. (the "Company"), identified herein (the
"Selling Shareholders") up to 282,457 shares of Common Stock, $.15 par value per
share (the "Common Stock"), of the Company which were issued to the former
shareholders (the "Former CSI Shareholders") of Control Systems, Inc., a New
Mexico corporation ("CSI") pursuant to an Agreement and Plan of Reorganization
and Merger, dated April 23, 1996 among the Company, CSI, CSI Acquisition
Corporation, a California corporation and wholly-owned subsidiary of the
Company, Thomas A. Barr, Jaime C. Barr and Christopher V. Barr (the "CSI Merger
Agreement"), under which the Company, effective June 3, 1996, acquired 100% of
the outstanding common stock of CSI.
The Company's Common Stock is traded on the Nasdaq National Market under
the symbol UNII. The average of the high and low price of the Common Stock on
April 10, 1997, as reported by Nasdaq, was $8.375.
All or a portion of the Common Stock offered by this Prospectus may be
offered for sale, from time to time on the Nasdaq National Market or on one or
more exchanges, or otherwise at prices and terms then obtainable, or in
negotiated transactions. The distribution of these securities may be effected
in one or more transactions that may take place on the over-the-counter market,
including, among others, ordinary brokerage transactions, privately negotiated
transactions or through sales to one or more dealers for resale of such
securities as principals, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. Usual
and customary or specifically negotiated brokerage fees or commissions may be
paid by the Selling Shareholders.
The Company will not receive any part of the proceeds from the sale of
Common Stock. See "Use of Proceeds." The Selling Shareholders and
intermediaries through whom such securities are sold may be deemed
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), in which event commissions received by such broker may be
deemed to be underwriting commissions under the Securities Act.
All expenses of the registration of securities covered by this Prospectus
are to be borne by the Company, except that the Selling Shareholders will pay
any applicable underwriters' commissions and expenses, brokerage fees or
transfer taxes.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is April 14, 1997.
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TABLE OF CONTENTS
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PAGE
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Available Information............................. 2
Incorporation of Certain Documents by Reference... 3
The Company....................................... 4
Risk Factors...................................... 4
Use of Proceeds................................... 10
Selling Shareholders.............................. 10
Plan of Distribution.............................. 11
Legal Matters..................................... 11
Experts........................................... 11
Indemnification of Officers and Directors......... 12
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No person is authorized to give any information or to make any
representations, other than those contained or incorporated by reference in this
Prospectus, in connection with the offering described herein, and, if given or
made, such information or representations must not be relied upon as having been
authorized by the Company or the Selling Shareholders or any underwriters,
brokers or agents. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, nor shall there be any sale of these securities
by any person in any jurisdiction in which it is unlawful for such person to
make such offer, solicitation or sale. Neither the delivery of this Prospectus
nor any sale made hereunder shall under any circumstances create an implication
that the information contained herein is correct as of any time subsequent to
the date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act of 1934 and in accordance therewith files reports, proxy statements and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by Commission
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices at 500 West Madison Street, Chicago, Illinois
60606 and 7 World Trade Center, New York, New York 10048. Copies of such
material can also be obtained at prescribed rates from the Public Reference
Section of the Commission at its principal office at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. Such material may be obtained
electronically by visiting the Commission's web site on the Internet at
http://www.sec.gov. The Common Stock of the Company is traded on the Nasdaq
National Market System. Reports, proxy statements and other information
concerning the Company may be inspected at the National Association of
Securities Dealers, Inc., at 1735 K Street, N.W., Washington D.C. 20006.
This Prospectus does not contain all of the information set forth in the
Registration Statement of which this Prospectus is a part and which the Company
has filed with the Commission. For further information with respect to the
Company and the securities offered hereby, reference is made to the Registration
Statement, including the exhibits filed as a part thereof, copies of which can
be inspected at, or obtained at prescribed rates from the Public Reference
Section of the Commission at the address set forth above. Additional updating
information with respect to the Company may be provided in the future by means
of appendices or supplements to this Prospectus.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company with the
Commission under the Exchange Act and are incorporated by reference herein:
a. The Company's Annual Report on Form 10-K for the fiscal year ended May
31, 1996, filed with the Commission on August 12, 1996.
b. The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended August 31, 1996, filed with the Commission on October 8, 1996.
c. The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended November 30, 1996, filed with the Commission on January 13,
1997.
d. The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 1, 1997, filed with the Commission on April 2, 1997.
e. The description of the Company's Common Stock contained in the
Registration Statement on Form 8-A filed by the Company's predecessor,
Autoclave Engineers, Inc., under the Exchange Act, including any
amendment or report filed for the purpose of updating such
description.
f. The Company's Current Report on Form 8-K filed with the Commission on
March 27, 1996, as amended by the Current Report on Form 8-K/A filed
with the Commission on August 14, 1996.
g. All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since the end of the Company's fiscal year
ended May 31, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this Prospectus and
to be part hereof from the date of filing such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, upon written or oral request of such person, a
copy of any and all of the information that has been or may be incorporated by
reference herein (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference into such documents). Such requests
should be directed to Unit Instruments, Inc., Attention: Gary N. Patten, Vice
President and Chief Financial Officer, 22600 Savi Ranch Parkway, Yorba Linda,
California 92887, telephone number (714) 921-2640.
<PAGE>
THE COMPANY
The Company was incorporated in California on November 13, 1984, and is the
successor entity to Autoclave Engineers, Inc., a Pennsylvania corporation, the
Company's former parent corporation, which was merged with and into the Company
on January 31, 1996. The principal office of the Company is located at 22600
Savi Ranch Parkway, Yorba Linda, California 92887, and its telephone number is
(714) 921-2640. Unless the context otherwise requires, references to the
"Company" herein include Unit Instruments, Inc. and each of its operating
subsidiaries.
RISK FACTORS
The following factors should be considered carefully in evaluating the
Company and its business before making an investment in the Common Stock offered
hereby, together with all of the other information set forth or incorporated by
reference in this Prospectus.
DEPENDENCE ON MFC PRODUCTS AND MFC MARKET
The Company designs, manufactures and markets mass flow controllers
("MFCs") used primarily in the fabrication of integrated circuits and has
historically derived substantially all of its total revenues from such systems.
Sales and maintenance of MFC products are expected to continue to account for
substantially all of the Company's total revenues for the foreseeable future.
However, there can be no assurance that the Company will be able to sustain the
current level of such product sales. In addition, there can be no assurance
that the market for MFC products in general will support the Company's planned
operations in the future. Any decrease in the overall level of sales of, or the
prices for, the Company's existing family of products due to introductions by
the Company's competitors of products, whether based on new technologies or new
industry standards, a decline in the demand for semiconductor manufacturing
equipment, product obsolescence or any other reason would have a material
adverse effect on the Company's business, operating results and financial
condition.
If the market for MFC products fails to grow or grows more slowly than the
Company currently anticipates, or if the Company's MFC technology does not
maintain its market acceptance, or develops more slowly than the Company
expects, the Company's business, operating results and financial condition could
be materially adversely affected.
CUSTOMER CONCENTRATION
A small number of customers account for a substantial portion of the
Company's sales. During the fiscal year ended May 31, 1996, sales to Applied
Materials Inc. accounted for approximately 30% of the Company's total sales and
sales to Lam Research Corporation accounted for approximately 20% of total
sales. Sales of MFC's to semiconductor manufacturing equipment suppliers are
expected to continue to account for a substantial majority of the Company's
product sales. A limited number of large OEMs account for a majority of MFC
purchases in the semiconductor manufacturing equipment market, and the Company's
success will be dependent upon its ability to establish and maintain
relationships with these types of customers. There can be no assurance that a
major customer will not reduce, delay or eliminate its purchases from the
Company, which could have a material adverse effect on the Company's
<PAGE>
business, results of operations and financial condition. In addition, major
customers also have significant leverage and may attempt to change the terms,
including pricing, upon which the Company and such customers do business,
thereby adversely affecting the Company's business, results of operations and
financial condition. Further, one or more of these customers may determine to
manufacture MFCs internally thus reducing or eliminating its purchases from the
Company and possibly becoming a direct competitor of the Company. As a result,
the Company's success will depend on its ability to expand its customer base
and, in particular, to successfully market its products to OEMs for
semiconductor manufacturing equipment.
The Company currently sells to its major customers under purchase orders
which are usually placed with short delivery requirements. As such, while the
Company receives periodic order forecasts from its major customers, such
customers have no obligation to purchase the forecasted amounts. Nonetheless,
the Company maintains significant work-in-progress and raw materials inventory
as well as maintaining increased levels of technical production staff to meet
order forecasts. To the extent its major customers purchase less than the
forecasted amounts, the Company will have higher levels of inventory than
otherwise needed, increasing the risk of obsolescence, and the Company will have
increased levels of production support staff to support such forecasted orders,
Such higher levels of inventory and increased employee levels would reduce the
Company's liquidity and could have a material adverse effect on the Company's
results of operations and financial condition. In addition, in the event the
Company's major customers desire to purchase products in excess of the
forecasted amounts, the Company may not have sufficient inventory or
manufacturing capacity to fill such increased orders, which could have a
material adverse effect on the Company's relationships and future business with
its customers.
DEPENDENCE ON SOLE AND LIMITED SOURCE SUPPLIERS AND INDEPENDENT CONTRACT
MANUFACTURERS
The Company purchases certain materials used in its products from third
parties, including certain machined parts and raw materials that are obtained
from a single source or a limited number of suppliers. The Company's dependence
on third-party suppliers involves several risks, including limited control over
pricing, availability, quality and delivery schedules. Because of the Company's
reliance on these vendors, the Company may also be subject to increases in
supply costs which could have a material adverse affect on its business,
operating results and financial condition. In addition, selected raw materials
have an extended lead-time. Any delays or shortages of the supplies could cause
delays in the shipment of the Company's products. There can be no assurance
that the Company will not experience quality control problems, extended lead
times for raw materials, supply shortages or price increases with respect to one
or more of these materials in the future. Any quality control problems,
interruptions in supply or materials price increases with respect to one or more
supplies could have a material adverse effect on the Company's business,
operating results and financial condition.
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EXPOSURE TO RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON PRODUCT DEVELOPMENT
The market for the Company's MFC products is characterized by rapid
technological advances, changes in end user requirements, new product
introductions and enhancements, and evolving industry standards. The
introduction of products by either the Company or its competitors embodying new
technologies and the emergence of new industry standards can render the
Company's existing or future products obsolete. The Company's future
performance will depend upon its ability to address the increasingly
sophisticated needs of its customers by enhancing its current products and by
developing and introducing new products on a timely basis that keep pace with
technological developments and emerging industry standards, respond to evolving
end user requirements and achieve market acceptance. The development of new,
technologically-advanced products and product enhancements is a complex and
uncertain process requiring high levels of innovation, as well as the accurate
anticipation of technological and market trends, and requires the investment of
significant financial resources. Any failure by the Company to anticipate or
adequately respond to technological developments or end user requirements, or
any significant delays in product development or introduction, could result in a
loss of competitiveness or revenue. There can be no assurance that the Company
will be successful in developing and marketing product enhancements or new
products on a timely basis if at all, that the Company will not experience
difficulties that could delay or prevent the successful development,
introduction and sale of these products, or that any of its new products and
product enhancements will adequately meet the requirements of the marketplace
and achieve market acceptance. If the Company is unable, for technological or
any other reasons, to develop, introduce and sell its products in a timely
manner, the Company's business, operating results and financial condition would
be materially adversely affected. From time to time, the Company or its present
or future competitors may announce new products, capabilities or technologies
that have the potential to replace or shorten the life cycles of the Company's
existing products. There can be no assurance that announcements of currently
planned or other new products will not cause customers to delay or alter their
purchasing decisions in anticipation of such products, which could have a
material adverse effect on the Company's business, operating results and
financial condition.
IMPACT OF COMPETITION
The market for the Company's mass flow controllers is highly competitive.
The Company has three major domestic competitors and two major Japanese
competitors. The Company believes that its ability to compete in the market for
mass flow controllers is based upon such factors as: investment in engineering,
manufacturing process improvements, marketing and quality of customer support
services, documentation and training. The Company has experienced significant
price competition and expects price competition in the sale of MFCs to increase.
No assurance can be given that the Company's competitors will not develop new
technologies or enhancements to existing products or introduce new products that
will offer superior price or performance features. The Company expects its
competitors to offer new and existing products at prices necessary to gain or
regain market share. Certain of the Company's competitors have substantial
financial resources, which may enable them to withstand sustained price
competition or a downturn in the market. There can be no assurance that the
Company will be able to compete successfully in the pricing of its products, or
otherwise, in the future. In
<PAGE>
addition,there can be no assurance that new entrants, which may include large
foreign companies, and some of which may have substantially greater financial
resources than the Company, will not seek to enter the MFC market.
FLUCTUATIONS IN QUARTERLY RESULTS
The Company experiences, and expects to continue to experience, significant
fluctuations in sales and operating results from quarter to quarter. Quarterly
results fluctuate due to a number of factors, any of which could have a material
advese effect on the Company's business, results of operations and financial
condition. In particular, the Company's quarterly results of operations can
vary due to the timing, cancellation, or rescheduling of customer orders and
shipments; variations in manufacturing capacities, efficiencies and costs; the
availability and cost of components; the timing, availability and sale of new
products by the Company; changes in the mix of products having differing gross
margins; warranty expenses; changes in average sales prices; long sales cycles
associated with the Company's products; and variations in product development
and other operating expenses. The Company's quarterly revenues are also
affected by volume discounts given to certain customers for large volume
purchases over a given period of time. In addition, the Company's quarterly
results of operations are influenced by competitive factors, including pricing,
availability and demand for the Company's and competing products. A large
portion of the Company's expenses are fixed and difficult to reduce in a short
period of time. If net sales do not meet the Company's expectations, the
Company's fixed expenses would exacerbate the effect of such net sales
shortfall. Furthermore, announcements by the Company or its competitors
regarding new products and technologies could cause customers to defer purchases
of the Company's products. In addition, while the Company receives periodic
order forecasts from its major customers, such customers have no binding
obligation to purchase the forecasted amounts. See "--Customer Concentration."
Order deferrals and cancellations by the Company's customers, declining average
sales prices, delays in the Company's introduction of new products and longer
than anticipated sales cycles for the Company's products have in the past
adversely affected the Company's quarterly results of operations. There can be
no assurance that the Company's quarterly results of operations will not be
similarly adversely affected in the future.
Due to the foregoing factors, the Company believes that period-to-period
comparisions of its operating results are not necesssarily meaningful and that
such comparisons cannot be relied upon as indicators of future performance.
There can be no assurance that the Company will be profitable in the future or
that future revenues and operating results will not be below the expectations of
public market analysts and investors. In either case, the price of the
Company's Common Stock could be materially adversely affected.
RISKS ASSOCIATED WITH INTERNATIONAL SALES
A substantial portion of the Company's total revenues are derived from
international sales. In fiscal years 1996, 1995 and 1994, international sales
represented approximately 17%, 17% and 21%, respectively, of the Company's total
revenues, and the Company believes that its future performance is dependent in
part upon its ability to increase sales in international markets. The Company
intends to continue to expand its operations outside of the United States and
enter
<PAGE>
additional international markets, both of which will require significant
management attention and financial resources. There can be no assurance,
however, that the Company will be able to successfully maintain or expand its
international sales. International sales are subject to inherent risks,
including unexpected changes in regulatory requirements, tariffs and other
barriers, fluctuating exchange rates, difficulties in staffing and managing
foreign sales and support operations, greater working capital requirements,
political and economic instability and potentially limited intellectual property
protection.
A portion of the Company's sales and expenses outside of North America are
transacted in local currencies, and accordingly, the Company is subject to the
risks associated with fluctuations in currency rates. The Company has in the
past incurred losses due to fluctuating exchange rates associated with
international sales. In addition, increases in the value of the dollar against
foreign currencies decrease the dollar value of foreign sales, requiring the
Company either to increase its prices in the local currency, which could render
the Company's products less competitive, or to suffer reduced revenues and gross
margins as measured in U.S. dollars. There can be no assurance that any of
these factors will not have a material adverse effect on the Company's future
international sales and, consequently, on the Company's business, operating
results and financial condition.
The Company's products are subject to restrictions on their export to and
reexport from many foreign countries. These restrictions require the Company to
obtain a validated export license prior to the sale of its products to
purchasers in such countries, thereby making many of the Company's sales to
foreign countries subject to the approval of the U.S. Department of Commerce.
To date, such requirements have not had a material adverse effect on the
Company. However, there can be no assurance that the U.S. Commerce Department
will not assume a more hostile attitude in the future towards the Company's
products or, due to the political or diplomatic climate or for human rights
reasons, one or more countries where the Company desires to sell its products.
Such a change in attitude could adversely effect the Company's ability to sell
its products in such countries, which in turn could have a material adverse
effect on the Company's business, operating results and financial condition.
INTELLECTUAL PROPERTY
The Company holds various U.S. and foreign patents on certain design and
functional aspects of its mass flow controllers. The Company has developed
proprietary information relating to the design and manufacture of its products,
along with the metrology of gases used in the IC manufacturing process. The
Company's ability to compete successfully and achieve future revenue growth will
depend, in part, on its ability to protect its proprietary technology and
operate without infringing upon the rights of others. There can be no assurance
that the Company will be able to successfully protect its intellectual property
or that the Company's intellectual property or proprietary technology will not
otherwise become known or independently developed by competitors. In addition,
the laws of certain countries in which the Company's products are or may be sold
may not protect the Company's products and intellectual property rights to the
same extent as the laws of the United States. The inability of the Company to
protect its intellectual property and proprietary technology could have a
material adverse effect on its business, results of operations and financial
condition. As the number of patents, copyrights and other intellectual property
rights in the Company's industry increases, and as the coverage of these rights
and the
<PAGE>
functionality of the products in the market further overlap, the Company
believes that its products may increasingly become the subject of infringement
claims. The Company may in the future be notified that it is infringing upon
certain patent or other intellectual property rights of others. Although the
Company has not received any such notification to date and there are no pending
or threatened intellectual property lawsuits against the Company, there can be
no assurance that such litigation or infringement claims will not occur in the
future. Such litigation or claims could result in substantial costs and
diversion of resources and could have a material adverse effect on the Company's
business, results of operations and financial condition. A third party claiming
infringement may also be able to obtain an injunction or other equitable relief,
which could effectively block the ability of the Company or its customers to
distribute, sell or import to the United States allegedly infringing products.
If it appears necessary or desirable, the Company may seek licenses under
patents or other rights from third parties covering intellectual property that
the Company is allegedly infringing. No assurance can be given, however, that
any such licenses could be obtained on terms acceptable to the Company, if at
all. The failure to obtain the necessary licenses or other rights could have a
material adverse effect on the Company's buisness, results of operations and
financial condition.
ENVIRONMENTAL COMPLIANCE
The Company has identified ground water and soil contamination at its
previously owned Erie, Pennsylvania operation of Autoclave Engineers Group.
These findings have been reported to the appropriate authorities and the Company
has established a reserve of $661,000 for estimated costs of further
investigation and potential remediation related to the matter. There can be no
assurance that such reserve will be adequate, or that this matter will not have
a material adverse effect on the Company's financial position or results of
operations.
LITIGATION
The predecessor to the Company, Autoclave Engineers, Inc., has been a named
co-defendant, along with numerous other companies, in several lawsuits in state
and federal courts in which plaintiffs have alleged personal injury from
exposure to asbestos-related products. As of the date hereof, Autoclave is not
a party to any current asbestos-related litigation. Autoclave manufactured
marine steam valves that may have contained some minor quantities of asbestos,
but ceased the production of these products several years ago. While the
Company has product liability insurance and has generally been successful in
being dismissed from these types of actions, and to date, has not incurred any
financial liability related to asbestos-related litigation, there can be no
assurance that it will not be named in future actions, or that such actions, if
filed, would not have a material adverse effect on the Company's business,
results of operations and financial condition.
DEPENDENCE ON KEY PERSONNEL
Due to the specialized nature of the Company's business, the Company is
highly dependent on the continued services of, and on its ability to attract and
retain, qualified technical, marketing and managerial personnel. Competition
for such personnel is intense, and the loss of any such persons, as well as the
failure to recruit and train additional technical personnel in a timely manner,
could have a material adverse effect on the Company's business, results of
operation and financial condition. In particular, the Company's
success is dependent upon the services of Michael J. Doyle, a founder of the
Company and its President. The loss of his services would materially adversely
affect the Company.
<PAGE>
USE OF PROCEEDS
The proceeds from the sale of each Selling Shareholders' Common Stock will
belong to the Selling Shareholders. The Company will not receive any proceeds
from such sales of the Common Stock.
SELLING SHAREHOLDERS
FORMER CSI SHAREHOLDERS
The Company issued 289,308 shares of Common Stock to the Former CSI
Shareholders on June 3, 1996, pursuant to the terms of the CSI Merger Agreement
under which CSI was merged with a subsidiary of the Company, becoming a wholly-
owned subsidiary of the Company. Subsequent to such issuance, that Company
repurchased a total of 6,851 shares of Common Stock from certain of such Former
CSI Shareholders. Pursuant to the CSI Merger Agreement, the Company agreed to
file a registration statement with the Commission to register the shares of
Common Stock received by the Former CSI Shareholders for resale by them, and to
keep the registration statement effective for a period of up to 18 months after
such registration statement is declared effective. The Registration Statement
of which this Prospectus is a part was filed with the Commission pursuant to the
CSI Merger Agreement.
The following table sets forth (i) the name of each Former CSI Shareholder
who holds shares of the Company's Common Stock acquired pursuant to the CSI
Merger Agreement and (ii) the number and percentage of shares of Common Stock
owned by each such Former CSI Shareholder prior to the offering and being
registered hereby. Upon completion of the offering, assuming all of the shares
held by such Former CSI Shareholders being registered hereby are sold and that
such Former CSI Shareholders acquire no additional shares of Common Stock prior
to the completion of this offering, the Former CSI Shareholders will
beneficially own no shares of Common Stock of the Company.
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SHARES OWNED PERCENT OF COMMON STOCK
NAME PRIOR TO OFFERING PRIOR TO OFFERING
---- ----------------- -----------------
<S> <C> <C>
Thomas A. and Jaime C. Barr 187,289 4.3%
Christopher V. Barr 74,306 1.7%
James C. Elliott 18,577 *
Dirk A. Frew 1,904 *
Christopher W. Collins 381 *
------- ----
Total 282,457 6.5%
</TABLE>
- --------------------
* Less than 1%
In connection with the acquisition of 100% of the outstanding common stock
of CSI by the Company, CSI entered into (i) an employment agreement with Mr.
Thomas A. Barr pursuant to which Mr. Barr served as President of CSI until his
resignation on December 2, 1996, and (ii) an employment agreement with Mr.
Christopher V. Barr whereby Mr. Barr will serve as a Vice President of CSI until
June 2, 1999. The other Former CSI Shareholders listed above are, and have
<PAGE>
been since June 2, 1996, employees of CSI with the exception of James C. Elliott
who terminated his employment with CSI on December 20, 1996. Other than as
described herein, the Former CSI Shareholders listed above do not have any
material relationships with the Company.
PLAN OF DISTRIBUTION
All or a portion of the Common Stock offered by this Prospectus may be
offered for sale from time to time on the Nasdaq National Market or on one or
more exchanges, or otherwise at prices and terms then obtainable, or in
negotiated transactions. The distribution of these securities may be effected in
one or more transactions that may take place on the over-the-counter market,
including, among others, ordinary brokerage transactions, privately negotiated
transactions or through sales to one or more dealers for resale of such
securities as principals, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. Usual
and customary or specifically negotiated brokerage fees or commissions may be
paid by the Selling Shareholders.
The Company will not receive any part of the proceeds from the sale of
Common Stock. The Selling Shareholders and intermediaries through whom such
securities are sold may be deemed "underwriters" within the meaning of the
Securities Act, in which event commissions received by such intermediary may be
deemed to be underwriting commissions under the Securities Act.
All expenses of the registration of securities covered by this Prospectus
are to be borne by the Company, including the reasonable fees and expenses of
counsel for the CSI Shareholders. The Selling Shareholders will pay any
applicable underwriters' commissions and expenses, brokerage fees or transfer
taxes.
Any securities covered by this Prospectus which qualify for sale pursuant
to Rule 144 under the Securities Act may be sold under Rule 144 rather than
pursuant to this Prospectus.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Stradling, Yocca, Carlson & Rauth, a Professional
Corporation, Newport Beach, California.
EXPERTS
The financial statements of the Company incorporated in this Prospectus by
reference to the Annual Report on Form 10-K for the year ended May 31, 1996 have
been so incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The financial statements of Control Systems, Inc. incorporated in this
Prospectus by reference to the Current Report on Form 8-K dated March 27, 1996,
or as amended by the Current Report on Form 8-K/A dated August 14, 1996, have
been so incorporated in reliance on the report of Atkinson & Co., Ltd.,
independent certified public accountants, given on the authority of said firm as
experts in auditing and accounting.
<PAGE>
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 317 of the California General Corporation Law makes provision for
the indemnification of officers and directors in terms sufficiently broad to
include indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Act"). The Articles of Incorporation of the Company authorize
the Company to provide indemnification of its officers, directors and agents for
breach of duty to the Company and its shareholders through bylaw provisions or
indemnification agreements, or both, to the fullest extent permitted by
California law, subject to certain limitations. Article III, Section 15 of the
Company's Bylaws provides, among other things, that the Company shall indemnify
its directors and officers to the fullest extent permitted by California law, as
amended from time to time. The effect of this provision is to obligate the
Company to indemnify its directors and officers in respect of all liabilities
and expenses arising out of third party claims, derivative claims and criminal,
administrative, and investigative proceedings, even if these persons were
negligent or grossly negligent, provided that the director or officer acted in
good faith and in a manner which he or she reasonably believed to be in the best
interest of the Company and, with respect to any criminal action or proceeding,
had no reasonable cause to believe that his or her conduct was unlawful.
In addition, the Company has entered into indemnification agreements with
its officers and directors which would contractually obligate the Company to
indemnify officers and directors to the fullest extent permitted by law. Such
indemnification agreements require the Company to indemnify its directors and
officers against expenses (including attorneys' fees) judgments, fines and
amounts paid in settlement in connection with any lawsuit or proceeding, whether
civil, criminal, administrative or investigative (other than actions by or in
the right of the Company) if the officer or director acted in good faith and in
a manner he or she reasonably believed to be in the best interest of the
Company. In the case of derivative actions, indemnification extends only to
expenses incurred in connection with the defense or settlement of the action,
unless court approval is obtained for indemnification of amounts paid in
settlement to the Company. By its terms, the benefits of the indemnification
agreements are not available if or to the extent the officer or director (i) has
other indemnification or insurance coverage for the claim or with respect to the
matters giving rise to the claim, or (ii) committed an act, transaction or
omission for which he or she may not be relieved of liability under the
California General Corporation Law or federal securities laws.
In addition, as permitted by Section 204(a)(10) of the California General
Corporation Law, the Articles of Incorporation of the Company provide that a
director of the Company shall not be liable to the Company or its shareholders
for monetary damages to the fullest extent permissible under California law.
However, as provided by California law, such limitation of liability will not
act to limit the liability of a director for (i) acts or omissions that involve
intentional misconduct or a knowing and culpable violation of law, (ii) acts or
omissions that a director believes to be contrary to the best interest of the
Company or its shareholders or that involve the absence of good faith on the
party of the director, (iii) any transaction from which a director derived an
improper personal benefit, (iv) acts or omissions that show a reckless disregard
for the director's duty to the Company or its shareholders in circumstances in
which the director was aware or should have been aware, in the ordinary course
of performing a director's duties, of a risk of serious injury to the Company or
its shareholders, (v) acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's duty to the Company
or its shareholders, (vi) any improper transaction
<PAGE>
between a director and the Company in which the director has a material
financial interest or (vii) any unlawful distributions to the shareholders of
the Company or any unlawful loan of money or property to, or a guarantee of the
obligation of, any director of officer of the Company.
Insofar as indemnification or liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
282,457 Shares
UNIT INSTRUMENTS, INC.
COMMON STOCK
--------
PROSPECTUS
--------
April 14, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
- -----------------------------------------------------
The following sets forth the costs and expenses, all of which shall be
borne by the Company, in connection with the offering of the shares of Common
Stock pursuant to this Registration Statement:
<TABLE>
<S> <C>
Securities and Exchange Commission Fee... $ 717
Accounting Fees and Expenses Fee......... $ 5,000*
Legal Fees and Expenses Fee.............. $10,283*
-------
Total............................... $16,000
</TABLE>
* Estimated
Item 15. Indemnification of Directors and Officers.
- ---------------------------------------------------
Section 317 of the California General Corporation Law makes provision for
the indemnification of officers and directors in terms sufficiently broad to
include indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Act"). The Articles of Incorporation of the Company authorize
the Company to provide indemnification of its officers, directors and agents for
breach of duty to the Company and its shareholders through bylaw provisions or
indemnification agreements, or both, to the fullest extent permitted by
California law, subject to certain limitations. Article III, Section 15 of the
Company's Bylaws provides, among other things, that the Company shall indemnify
its directors and officers to the fullest extent permitted by California law, as
amended from time to time. The effect of this provision is to obligate the
Company to indemnify its directors and officers in respect of all liabilities
and expenses arising out of third party claims, derivative claims and criminal,
administrative, and investigative proceedings, even if these persons were
negligent or grossly negligent, provided that the director or officer acted in
good faith and in a manner which he or she reasonably believed to be in the best
interest of the Company and, with respect to any criminal action or proceeding,
had no reasonable cause to believe that his or her conduct was unlawful.
In addition, the Company has entered into indemnification agreements with
its officers and directors which would contractually obligate the Company to
indemnify officers and directors to the fullest extent permitted by law. Such
indemnification agreements require the Company to indemnify its directors and
officers against expenses (including attorneys' fees) judgments, fines and
amounts paid in settlement in connection with any lawsuit or proceeding, whether
civil, criminal, administrative or investigative (other than actions by or in
the right of the Company) if the officer or director acted in good faith and in
a manner he or she reasonably believed to be in the best interest of the
Company. In the case of derivative actions, indemnification extends only to
expenses incurred in connection with the defense or settlement of the action,
unless court approval is obtained for indemnification of amounts paid in
settlement to the Company. By its terms, the benefits of the
II-1
<PAGE>
indemnification agreements are not available if or to the extent the officer or
director (i) has other indemnification or insurance coverage for the claim or
with respect to the matters giving rise to the claim, or (ii) committed an act,
transaction or omission for which he or she may not be relieved of liability
under the California General Corporation Law or federal securities laws.
In addition, as permitted by Section 204(a)(10) of the California General
Corporation Law, the Articles of Incorporation of the Company provide that a
director of the Company shall not be liable to the Company or its shareholders
for monetary damages to the fullest extent permissible under California law.
However, as provided by California law, such limitation of liability will not
act to limit the liability of a director for (i) acts or omissions that involve
intentional misconduct or a knowing and culpable violation of law, (ii) acts or
omissions that a director believes to be contrary to the best interest of the
Company or its shareholders or that involve the absence of good faith on the
party of the director, (iii) any transaction from which a director derived an
improper personal benefit, (iv) acts or omissions that show a reckless disregard
for the director's duty to the Company or its shareholders in circumstances in
which the director was aware or should have been aware, in the ordinary course
of performing a director's duties, of a risk of serious injury to the Company or
its shareholders, (v) acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's duty to the Company
or its shareholders, (vi) any improper transaction between a director and the
Company in which the director has a material financial interest or (vii) any
unlawful distributions to the shareholders of the Company or any unlawful loan
of money or property to, or a guarantee of the obligation of, any director of
officer of the Company.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
Item 16. Exhibits.
- ------------------
2.1 Agreement and Plan of Reorganization and Merger dated as of April 23,
1996, among Unit Instruments, Inc., Control Systems, Inc., and CSI
Acquisition Corporation, Thomas A. Barr, Jaime C. Barr and Christopher
V. Barr. Incorporated by reference to Exhibit 10.10 to the Company's
Annual Report on Form 10-K for the fiscal year ended May 31, 1996,
filed with the Commission on August 12, 1996.
5 Opinion of Stradling, Yocca, Carlson & Rauth, a Professional
Corporation.
23.1 Consent of Stradling, Yocca, Carlson & Rauth, a Professional
Corporation (included in Exhibit 5).
23.2 Consent of Price Waterhouse LLP.
23.3 Consent of Atkinson & Co., Ltd.
24 Power of Attorney (included on the signature page to the Registration
Statement - see pages II-4 and II-5).
II-2
<PAGE>
Item 17. Undertakings.
- ----------------------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this
registration statement or any material change to such
information in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934, that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in the City of Yorba Linda, State of California, on the 14th day of
April, 1997.
UNIT INSTRUMENTS, INC.
By: /s/ Michael J. Doyle
------------------------------------------
Michael J. Doyle, President and Chief
Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Unit Instruments, Inc. do
hereby constitute and appoint Michael J. Doyle and Gary N. Patten, or either of
them, our true and lawful attorneys and agents, to do any and all acts and
things in our name and behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our names in the capacities
indicated below, which said attorneys and agents, or either of them, may deem
necessary or advisable to enable said corporation to comply with the Securities
Act of 1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto or any
related registration statement that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act of 1933, as amended; and we do hereby
ratify and confirm all that the said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------- ------------------------------- ---------------
<S> <C> <C>
/s/ Michael J. Doyle President, Chief Executive April 14, 1997
- -------------------- Officer and Director
Michael J. Doyle (Principal Executive Officer)
/s/ Gary N. Patten Vice President, Chief April 14, 1997
- -------------------- Financial Officer and
Gary N. Patten Secretary (Principal Financial
and Accounting Officer)
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
/s/ James C. Levinson Chairman of the Board of April 14, 1997
- ----------------------- Directors
James C. Levinson
/s/ A. Wade Blackman, Jr. Director April 14, 1997
- -----------------------
A. Wade Blackman, Jr.
/s/ George Boyadjieff Director April 14, 1997
- -----------------------
George Boyadjieff
/s/ Edward Rogas, Jr. Director April 14, 1997
- -----------------------
Edward Rogas, Jr.
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NUMBER
- ------------------ -------------------------------------- -----------
<S> <C> <C>
5 Opinion of Stradling, Yocca,
Carlson & Rauth, a Professional
Corporation. 22
23.1 Consent of Stradling, Yocca,
Carlson & Rauth, a Professional
Corporation (included in Exhibit 5). --
23.2 Consent of Price Waterhouse LLP. 23
23.3 Consent of Atkinson & Co., Ltd. 24
24 Power of Attorney (included on the
signature page to the Registration
Statement -- see pages II-4 and II-5).
</TABLE>
<PAGE>
EXHIBIT 5
April 14, 1997
Unit Instruments
22600 Savi Ranch Parkway
Yorba Linda, California 92887
Re: Registration Statement on Form S-3
----------------------------------
Gentlemen:
We have examined the Registration Statement on Form S-3 being filed by you
with the Securities and Exchange Commission (the "Commission") on this date (as
such may be further amended or supplemented, the "Registration Statement"), in
connection with the registration under the Securities Act of 1933, as amended,
of an aggregate of 282,457 shares of your common stock, $0.15 par value (the
"Shares"). The Shares may be offered and from time to time by and for the
account of certain shareholders as described in such Registration Statement. We
have examined the proceedings taken and are familiar with the proceedings
proposed to be taken by you in connection with the sale and issuance of the
Shares.
Based on the foregoing, it is our opinion that, upon conclusion of the
proceedings being taken or contemplated by us as your counsel to be taken prior
to the issuance of the Shares, and upon completion of the proceedings taken in
order to permit such transactions to be carried out in accordance with the
securities laws of various states where required, the Shares, when issued and
sold in the manner described in the Registration Statement, will be legally and
validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the use of our name under the caption "Legal Matters" in the
Prospectus which is a part of the Registration Statement, including the
Prospectus constituting a part thereof and any amendment thereto.
Very truly yours,
/s/ STRADLING, YOCCA, CARLSON & RAUTH
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
July 12, 1996 appearing on page 20 of Unit Instruments, Inc.'s Annual Report on
Form 10-K for the year ended May 31, 1996. We also consent to the reference to
us under the heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
Costa Mesa, California
April 11, 1997
<PAGE>
EXHIBIT 23.3
[LETTERHEAD OF ATKINSON & CO. LTD.]
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated June 17, 1996 accompanying the financial
statements of Control Systems, Inc. appearing in Form 8-K filed by Unit
Instruments, Inc. dated March 27, 1996, as amended by Form 8-K/A dated August
14, 1996, which is incorporated by reference in this registration statement. We
consent to the incorporation by reference in this Registration Statement of the
aforementioned report.
/s/ Atkinson & Co., Ltd.
Atkinson & Co., Ltd.
Albuquerque, New Mexico
April 10, 1997
