As filed with the Securities and Exchange Commission on October 8, 1998
Registration No. 333-59397
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM S-3 / A-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
WILLIAMS CONTROLS, INC.
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(Exact name of Registrant as specified in charter)
Delaware 3714
--------------------------------- ----------------------------
(State or other jurisdiction (Primary Standard Industrial
of incorporation or organization) Classification Code Number)
14100 SW 72nd Avenue
Portland, Oregon 97224
(303) 790-2990 (503) 684-8600
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(I.R.S. Employer (Address, including zip code,
Identification No.) and telephone number, including
area code, of Registrant's
principal executive offices)
Thomas W. Itin
President, Chairman and Chief Executive Officer
14100 SW 72nd Avenue
Portland, Oregon 97224
(503) 684-8600
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(Name, address and telephone number, including
area code, of agent for service)
--------------------
Copies of communication, including all communication sent to
the agent for service, should be sent to:
Gerald Raskin, Esq.
Seth Weiss, Esq.
Friedlob Sanderson Raskin Paulson & Tourtillott, LLC
1400 Glenarm Place, Suite 300
Denver, Colorado 80202
Telephone Number (303) 571-1400
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Approximate date of commencement of proposed sale to public:
As soon as practicable after effectiveness of registration statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: / /
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, check the following box: /X/
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<PAGE>
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Title of each class Proposed maximum Proposed maximum
of securities to be Amount to be offering price aggregate Amount of
registered registered per share offering price registration fee
- -------------------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value 6,567,793 $2.78 (2) $18,258,465 $5,532
Common Stock underlying 2,909,091 $2.75 $8,000,000 $2,424
Series A 7 1/2 % Convertible
Redeemable Preferred Stock (1)
Common Stock underlying 203,637 $3.30 $672,002 $204
Placement Agent's Warrants (1)
Common Stock underlying
Other Options and Options 1,200,000 (3) $2,600,065 $788
Total 10,880,521 _____ $29,530,532 $8,948
__________________
</TABLE>
(1) Plus indeterminable number of shares of Common Stock as may be issuable by
reason of the anti-dilution provision for such convertible preferred stock
or Placement Agent's Warrants.
(2) In accordance with 457(c), the fee has been calculated as follows:
6,567,793 shares at $2.78 per share.
(3) Represents shares underlying: (i) 150,000 options each to purchase one
share of Common Stock for $.41; (ii) 50,000 options each to purchase one
share of Common Stock for $2.44; (iii) 25,000 options each to purchase one
share of Common Stock for $2.50; (iv) 25,000 options each to purchase one
share of Common Stock for $3.625; (v) 50,000 options each to purchase one
share of Common Stock for $2.625; (vi) 330,000 options each to purchase one
share of Common Stock for $2.44; (vii) 30,000 options each to purchase one
share of Common Stock for $2.656; (viii) 30,000 options each to purchase
one share of Common Stock for $3.00; (ix) 30,000 options each to purchase
one share of Common Stock for $3.66; (x) 30,000 options each to purchase
one share of Common Stock for $2.937; and (xi) 450,000 options each to
purchase one share of Common Stock for $2.132.
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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SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED OCTOBER 8, 1998
PROSPECTUS
----------
WILLIAMS CONTROLS, INC.
10,880,521 SHARES OF COMMON STOCK INCLUDING 2,909,091 SHARES UNDERLYING
CONVERTIBLE PREFERRED STOCK AND 1,403,637 SHARES UNDERLYING COMMON STOCK
PURCHASE WARRANTS.
This Prospectus relates to the offer and sale of 10,880,521 shares (the
"Shares") of common stock, $.01 par value (the "Common Stock") of Williams
Controls, Inc., a Delaware corporation (the "Company"), being offered by certain
selling security holders (the "Selling Securityholders"). The Shares include
2,909,091 shares issuable upon the conversion of the Company's outstanding
shares of Series A 7 1/2% Convertible Redeemable Preferred Stock (the
"Convertible Preferred Stock") and 1,403,637 shares of Common Stock issuable
upon the exercise of certain outstanding common stock purchase warrants and
options (collectively, the "Warrants"). The Shares are being registered pursuant
to registration rights previously granted to the Selling Securityholders. None
of the shares of Convertible Preferred Stock or Warrants are being registered.
The 6,567,793 Shares that are not underlying the Warrants or Convertible
Preferred Stock were issued pursuant to the exercise of outstanding options,
warrants or stock acquisition rights, or were issued to various persons in
private placements of the Company's securities.
The Convertible Preferred Stock is comprised of 80,000 shares of Series A 7
1/2% Convertible Redeemable Preferred Stock, each share of which is convertible
into shares of the Company's Common Stock at the conversion rate of $2.75 per
share, subject to certain adjustments (the "Conversion Price"), and is
redeemable by the Company at any time prior to conversion for $100 per share,
plus accrued and unpaid dividends to the date of redemption. If not earlier
redeemed, the Company may force a conversion of the Convertible Preferred Stock
if: (i) the Common Stock issuable upon conversion is the subject of a currently
effective registration statement; and (ii) the average closing bid price of the
Common Stock as listed on the National Association of Securities Dealers
Automated Quotation System, the New York Stock Exchange, the American Stock
Exchange or wherever the Company's Common Stock then trades, is at least 150% of
the Conversion Price for 20 trading days within a 30 consecutive trading day
period ending no more than ten days prior to the date set forth for conversion.
The Warrants are comprised of: (i) 203,637 Placement Agent's Warrants, each
entitling the holder to purchase one share of Common Stock for $3.30, subject to
certain adjustments, exercisable until April 20, 2003; (ii) 150,000 Acrodyne
Options, each entitling the holder to purchase one share of Common Stock for
$.41, exercisable until November 10, 1999; (iii) 50,000 Enercorp Options, each
entitling the holder to purchase one share of Common Stock for $2.44,
exercisable until March 12, 2003; (iv) 25,000 Enercorp Options, each entitling
the holder to purchase one share of Common Stock for $2.50, exercisable until
August 4, 1999; (v) 25,000 Enercorp Options, each entitling the holder to
purchase one share of Common Stock for $3.625, exercisable until May 3, 2000;
(vi) 50,000 Enercorp Options, each entitling the holder to purchase one share of
Common Stock for $2.625, exercisable until September 13, 1999; (vii) 330,000
options each to purchase one share of Common Stock for $2.44; (viii) 30,000
options each to purchase one share of Common Stock for $2.656; (ix) 30,000
options each to purchase one share of Common Stock for $3.00; (x) 30,000 options
each to purchase one share of Common Stock for $3.66; (xi) 30,000 options each
to purchase one share of Common Stock for $2.937; and (xii) 450,000 options each
to purchase one share of Common Stock for $2.132.
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This Prospectus may be used by the Selling Securityholders to sell the
Share and for the resale of the Shares received upon exercise of the Warrants.
The Company will not receive any of the proceeds from the sale of the Shares by
the Selling Securityholders. The Company will, however, receive the net proceeds
from any exercise of the Warrants, as described under "Use of Proceeds." See
"Selling Securityholders."
THE DISTRIBUTION
----------------
The distribution of the Shares by the Selling Securityholders may be
effected from time to time in one or more transactions (which may involve block
transactions) on the NASDAQ National market or on any other exchange on which
the Common Stock may be traded, may be effected from time to time in one or more
transactions in the over-the-counter market, in privately-negotiated
transactions, or a combination of such methods of sale. Such sales will be made
at the market prices prevailing at the time of sale, at prices relating to such
prevailing market prices or at negotiated prices. The Selling Securityholders
may effect such transactions by selling the Shares to or through broker/dealers
who may receive compensation in the form of underwriting discounts, concessions
or commissions from the Selling Securityholders or the purchases of the Shares
for whom the broker/dealer acts as agent. Such compensation may be less than or
in excess of customary commissions. The Selling Securityholders and any
brokers/dealers who participate in the distribution of the Shares may be deemed
to be underwriters, and any compensation received by them, including any profit
on their resale of such Shares, may be deemed to be underwriting discount and
commissions under the Securities Act of 1933, as amended (the "Securities Act").
Certain of the Selling Securityholders are market makers in the Common Stock.
The Common Stock is listed on the NASDAQ National Market. On July 14, 1998,
the closing price of the Common Stock on the NASDAQ National Market was $2.78
per share.
Pursuant to agreements between the Company and the Selling Securityholders,
the Company has agreed to pay the expenses incurred in connection with the
registration of the Shares and the Company and certain of the Selling
Securityholders have agreed to indemnify each other against certain liabilities,
including liabilities under the Securities Act.
___________________
SEE "RISK FACTORS" COMMENCING ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK
OFFERED HEREBY.
__________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSIONER NOR HAS THE COMMISSION
OR ANY STATE SECURITIES 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 October 8, 1998
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AVAILABLE INFORMATION
The Company is subject to the information and reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") 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 may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street N.W., Room
1024, Washington D.C. 20549; at the Commission's New York Regional Office, 7
World Trade Center, Suite 1300, New York, NY 10048; and at the Commission's
Chicago Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois
60621. Copies of such material can be obtained from the Public Reference Section
of the Commission at 450 Fifth Street N.W., Washington, D.C. 20549, at
prescribed rates. In addition, the Company files its reports, proxy statements
and certain other information with the Commission electronically through the
EDGAR System. Information filed via EDGAR may be obtained at the Web site
maintained by the Commission at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference into this Prospectus the
following documents filed with the Commission:
1. The Company's Annual Report on Form 10-K for the year ended September
30, 1997.
2. The Company's Quarterly Report for the fiscal quarter ended December
31, 1997.
3. The Company's Quarterly Report for the fiscal quarter ended March 31,
1998.
4. The Company's Quarterly Report for the fiscal quarter ended June 30,
1998.
5. The Company's Current Report on Form 8-K filed on paper on April 1,
1998 and on Edgar on April 2, 1998.
6. The Company's Current Report on Form 8-K filed on June 30, 1998.
7. The Company's Current Report on Form 8-K filed July 15, 1998.
8. The Company's Current Report on Form 8-K filed July 29, 1998.
9. The Company's Proxy Statement for the 1998 Annual Meeting of
Stockholders held on March 27, 1998.
10. The description of the Company's Common Stock contained in a
Registration Statement on Form 8-A, Commission File No. 0-18083, as
filed with the Commission on November 1, 1989.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14,
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering made hereby shall be deemed incorporated by
reference in this Prospectus to and be a part hereof from the date of the filing
of such documents. See "Additional Information." Any statement contained in a
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<PAGE>
document incorporated or deemed to be incorporated herein by reference 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 which 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 this
Prospectus is delivered, upon request of any such person, a copy of any or all
of the foregoing documents incorporated herein by reference (other than exhibits
to such documents not specifically incorporated by reference). Written or
telephone requests for such documents should be directed to the Chief Financial
Officer of the Company at 14100 SW 72nd Avenue, Portland, Oregon 97224 (503)
684-8600.
PROSPECTUS SUMMARY
------------------
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS PROSPECTUS. THIS SUMMARY IS NECESSARILY INCOMPLETE AND SELECTIVE AND IS
QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION CONTAINED ELSEWHERE
IN THIS PROSPECTUS, INCLUDING THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN.
Certain statements contained in this summary, elsewhere in this Prospectus
and in the documents incorporated by reference herein, constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act, as amended, and Section 21E of the Exchange Act, as amended. These
forward-looking statements can be identified by the use of predictive,
future-tense or forward-looking terminology, such as "believes," "anticipates,"
"expects," "estimates," "may," "will" or similar terms. Forward-looking
statements also include projections of financial performance, statements
regarding management's plans and objectives and statements concerning any
assumption relating to the foregoing. Certain important factors regarding the
Company's business, operations and competitive environment which may cause
actual results to vary materially from these forward-looking statements are
discussed below under the caption "Risk Factors."
6
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THE COMPANY
Williams Controls, Inc., is a Delaware corporation formed in 1988. The
Company's vehicle component segment, its primary business segment, was founded
by Norman C. Williams in 1939 and acquired by the Company in 1988. The Company's
operating subsidiaries are divided into the following three industry segments:
--VEHICLE COMPONENTS. The Company's transportation component product lines
include electronic throttle control systems ("ETC"), exhaust brakes and
pneumatic and hydraulic controls. These products are used in applications which
include trucks, utility and off-highway equipment, transit buses and underground
mining machines. Markets for the Company's ETC are developing in smaller classes
of trucks and diesel-powered pick-up trucks. The Company believes that
gasoline-powered automobiles and pick-up trucks may convert to ETC, although
such conversion requires engine redesign by the automotive manufacturers which
is presently ongoing. The Company estimates that it has over 65% market share of
ETC for Class 7 and 8 trucks. The majority of these products are sold directly
to original equipment manufacturers such as Freightliner, Navistar, Volvo,
Isuzu, MotorCoach Industries and Blue Bird Corporation. The Company also sells
these products through a well-established network of independent distributors.
--Electrical Components and GPS. The electrical components product line
includes the design and production of microcircuits, cable assemblies and other
electronic products used in the telecommunication, computer and transportation
industries. The Global Positioning System ("GPS") product line includes commuter
railroad train tracking and agricultural cyber-farming using global positioning
and geographic information systems. Major customers include Tri-Rail, Florida
Department of Transportation and Via Tropical Fruit.
--AGRICULTURAL EQUIPMENT. The agricultural equipment product lines include
rotary cutters, discs, harrows and sprayers. These products are sold to
independent equipment dealers located primarily in the Southeastern United
States.
Set forth below is a list of the Company's operating subsidiaries, all of
which are 100% owned, except as otherwise noted, and a brief description of each
operating subsidiary's business:
VEHICLE COMPONENTS:
WILLIAMS CONTROLS INDUSTRIES, INC. manufactures vehicle components sold
primarily in the transportation industry.
PREMIER PLASTIC TECHNOLOGIES, INC. manufactures plastic components for the
automotive industry and manufactures prototype and production molds using rapid
prototyping processes.
NESC WILLIAMS, INC. installs conversion kits to allow vehicles to use
compressed natural gas and provides natural gas well metering services.
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WILLIAMS AUTOMOTIVE, INC. was formed to market the Company's products to
the automotive industry.
ELECTRONIC COMPONENTS and GPS:
APTEK WILLIAMS, INC. develops and produces sensors, microcircuits, cable
assemblies and other electronic products for the telecommunications and
transportation industries, and conducts research and development activities to
develop commercial applications of sensor related products for the subsidiaries
of the Company.
GEOFOCUS, INC. develops train tracking and cyber-farming systems using GPS
and geographical information systems.
AGRICULTURAL EQUIPMENT:
AGROTEC WILLIAMS, INC. manufactures spraying equipment for the professional
lawn care, nursery and pest control industries.
HARDEE WILLIAMS, INC. manufactures equipment used in farming, highway and
park maintenance. This entity is 80% owned by the Company.
WACCAMAW WHEEL WILLIAMS, INC. manufactures solid rubber tail wheels and
other rubber products, used on agricultural equipment, from recycled truck and
bus tires. This entity is 80% owned by the Company.
TECHWOOD WILLIAMS, INC. manufactured and distributed commercial wood
chippers used in landscaping and farming. Techwood ceased operations in fiscal
1997.
OTHER SUBSIDIARIES:
WILLIAMS TECHNOLOGIES, INC. supports all subsidiaries of the Company by
establishing new technologies and developing business relationships to promote
"technology partnering."
WILLIAMS WORLD TRADE, INC. located in Kuala Lumpur, Malaysia. It manages
foreign sourcing for all subsidiaries of the Company, affiliates and third party
customers.
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MARKETING and DISTRIBUTION. The Company sells its products to customers in
diversified industries worldwide; however, approximately 77% of its sales from
continuing operations are to customers in the vehicle component segment. For the
fiscal years ended September 30, 1997, 1996 and 1995, Freightliner accounted for
13%, 14% and 17%, respectively, of net sales from continuing operations.
Navistar and Volvo each accounted for 11% of net sales from continuing
operations in 1997 and fiscal 1996 and 11% and 8%, respectively, in fiscal 1995.
Approximately 11%, 15% and 18% of net sales from continuing operations in fiscal
1997, 1996 and 1995, respectively, were to customers outside of the United
States, primarily in Canada, and to a lesser extent, in Europe and Australia.
The Company performs ongoing credit evaluations of its customers' financial
condition and maintains allowances for potential credit losses. Actual
losses/allowances have been within management's expectations.
GOVERNMENT REGULATION. The Company's vehicle component products must comply
with the National Traffic and Motor Vehicle Safety Act of 1966, as amended and
regulations promulgated thereunder which are administered by the National
Highway Traffic Safety Administration ("NHTSA"). If, after an investigation,
NHTSA finds that the Company is not in compliance with any of its standards or
regulations, among other things, it may require the Company to recall its
products which are found not to be in compliance and repair or replace such
products. The Company believes it is currently in compliance with NHTSA.
PRODUCT RESEARCH DEVELOPMENT. The Company's operating facilities engage in
engineering, research and development and quality control activities to improve
the performance, reliability and cost-effectiveness of the Company's product
lines. The Company's engineering staff works closely with its customers in the
design and development of new products and adapting products for new
applications. During fiscal 1997, 1996 and 1995, the Company spent $1,849,000,
$2,144,000 and $1,445,000, respectively, on these activities for continuing
operations. The Company intends to increase its research and development
expenditures in fiscal 1998 to design ETC products compatible with gasoline
powered vehicles, develop commercial applications for inertia, tilt, Hall effect
and optical sensor products, and further develop train tracking products. The
Company is in early stages of development of these programs and expects to
increase research and development spending by approximately $1 million in fiscal
1999. The majority of the additional expense will be spent on developing a low
cost foot pedal, which is in early stages of development.
RAW MATERIALS. The Company produces its products from raw materials,
including brass, aluminum, steel, plastic, rubber and zinc, which currently are
widely available at reasonable terms. The Company relies upon, and expects to
continue to rely upon CTS Corporation, Robertshaw and Caterpillar, Inc. as
single source suppliers for critical components and/or products. Although these
suppliers have been able to meet the Company's needs on a timely basis, and
appear to be willing to continue being suppliers to the Company, there is no
assurance that a disruption in a supplier's business, such as a strike, would
not disrupt the supply of a component. Although the Company has recently
experienced stable prices, prices for aluminum zinc, rubber, steel, and
mechanical components such as gearboxes, hydraulics, and contact position
sensors could fluctuate and affect profitability.
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PRODUCT WARRANTY. The Company warrants its products to the first retail
purchaser and subsequent owners against malfunctions occurring during the
warranty period resulting from defects in material or workmanship, subject to
specified limitations. The warranty on vehicle components is limited to a
specified time period, mileage or hours of use, and varies by product and
application. The Company has established a warranty reserve based upon its
estimate of the future cost of warranty and related service costs. The Company
regularly monitors its warranty reserve for adequacy in response to historical
experience and other factors.
EMPLOYEES. As of June 30, 1998, the Company employs approximately 509
employees, including 138 union employees. The non-union employees of the Company
are engaged in sales and marketing, accounting and administration, product
research and development, production and quality control. The union employees
are engaged in manufacturing vehicle components in the Portland, Oregon facility
and are represented by the International Union, United Automobile Workers of
America and Amalgamated Local 492 (the "Union"). The Company and the Union have
a collective bargaining agreement that expires in September 2002, which provides
for wages and benefits (including pension, death, disability, health care,
unemployment, vacation and other benefits) and contains provisions governing
other terms of employment, such as seniority, grievances, arbitration and union
recognition. Management of the Company believes that its relationships with its
employees and the union are good.
The Company's executive offices are located at 14100 SW 72nd Avenue,
Portland, Oregon 97224. Its telephone number is (503) 684-8600.
The Offering
Common Stock Outstanding
Before the Offering................ 18,181,088 shares (1)
Common Stock Offered by the
Selling Securityholders............ 10,880,521 shares (2)
Common Stock Outstanding after
exercise or Conversion of
Warrants and Convertible
Preferred Stock.................... 22,493,816 shares (3)
Use of Proceeds...................... The net proceeds from the exercise
of the Warrants, if any, may be
used for general working capital
purposes. See "Use of Proceeds."
NASDAQ National Market Symbol........ WMCO
________________
(1) Does not include Common Stock reserved for issuance as follows: (i)
2,325,300 shares issuable upon exercise of currently outstanding options; and
(ii) 874,700 shares reserved for additional options to be granted under the
Company's stock option plans.
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(2) Includes 2,909,091 shares issuable upon conversion of Convertible
Preferred Stock and 1,403,637 shares issuable upon exercise of Warrants.
(3) The Company is not aware of any arrangements for the exercise of the
Warrants and there is no assurance that all or any of the outstanding Warrants
will be exercised.
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS,
AS WELL AS THE OTHER INFORMATION SET FORTH IN THIS PROSPECTUS, BEFORE MAKING AN
INVESTMENT IN THE COMPANY.
CHANGES IN DIVERSIFICATION STRATEGY. For the period from fiscal 1994
through fiscal 1996, the Company pursued an acquisition strategy to diversify
its operations during which the Company made several acquisitions of companies
that were involved in unrelated businesses. During fiscal 1997, the Company
discontinued its diversification acquisition strategy in order to focus its
corporate and financial resources on opportunities emerging in the vehicle
components and GPS train tracking markets and also for the development of
commercial applications of sensor related products. No assurance can be given
that the Company will be able to capitalize on opportunities emerging in vehicle
components, GPS train tracking markets and/or the development of commercial
applications of sensor related products, or if the Company is successful in one
or more of its endeavors, that such endeavors will be profitable for the
Company.
DEPENDENCE UPON A SINGLE PRODUCT. Sales of the Company's ETC product
represent approximately 42% of the total sales of the Company. Any material
reduction of sales due to increased competition, new competitors entering the
market, new technologies or other factors could materially adversely affect the
operating results of the Company. The Company utilizes a contact position sensor
in its ETC. Alternative sensor technologies exist which are more expensive than
those utilized by the Company. There is no assurance that customers would not
switch to an alternative sensor technology which could have a materially adverse
affect on sales and operating earnings of the Company if it could not provide
the alternative sensor technology. The Company's ETC products are used on
highway vehicles and any large-scale product failure could materially adversely
affect the reputation of the Company and its future sales and operating profits.
HIGHLY COMPETITIVE MARKET. In general, the Company's products are sold in
highly competitive markets to customers who are sophisticated and demanding
concerning price, performance and quality. Products are sold in competition with
other independent suppliers (some of which have substantial financial resources
and significant technological capabilities), and many of these products are, or
could be, produced by the manufacturers to which the Company sells these
products. The Company's competitive position varies among its product lines.
In the vehicle components segment the Company is the dominant producer of ETCs
sold in the heavy truck ETC market. The Company has only one primary competitor
in the diesel heavy truck market. The Company also manufactures pneumatic and
air control systems for the heavy truck market, which is comprised of numerous
highly fragmented competitors. The Company believes the principal method of
competition for ETC in the trucking industry is quality and engineering added
value and reputation. In addition, attainment of the ISO 9001 and QS 9000
quality certifications is critical to qualifying as a supplier to the automotive
industry and certain manufacturers in the truck industry. The Company's two
manufacturing facilities in its vehicle components segment have attained these
certifications. In the automotive market, ETC are not yet a well established
product line; however, the Company believes that there are approximately five
major competitors currently supplying foot pedals to the major automobile
manufacturers and competing for the automotive ETC market. These companies are
substantially larger than the Company and have longstanding relationships with
their customers, which could be a significant barrier to the Company entering
into this market.
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In the agricultural equipment segment, the Company competes primarily against
four competitors, three of which are substantially larger than the Company. The
principal methods of competition in this segment are price, delivery and payment
terms. Competitors in this industry currently provide seasonal dating for
payment of accounts receivable, in some cases up to 180 days for payment of
invoices.
The primary revenues from the Company's electronic components and GPS segment
are derived from sales of thick film hybrids. This industry has numerous
competitors, which compete primarily on engineering capability and price.
Although a GPS product designed for freight train tracking is currently
available on the market, the Company does not believe there are any major
competitors for its commuter train tracking product.
ENTRANCE INTO NEW MARKETS. The Company plans to introduce its ETC product
into new markets including international markets, higher-volume small truck
markets, and gasoline engine automotive markets. Although the Company's ETC
product has been successful in the domestic heavy-duty truck market, there is no
assurance that this product will be accepted in these new markets. Additional
penetration of the Company sales into the diesel ETC market will be dependent
upon conversion of smaller diesel engines to electronic engines which is
controlled by the engine manufacturers in the United States. Conversion of
smaller diesel engines to ETC that are not yet electronic in Western Europe is
dependent upon compliance with and tightening of air control standards in this
region.
INTRODUCTION OF ETC INTO GASOLINE ENGINES. Introduction of ETC into
gasoline engines will require modification or redesign of engine components that
will depend upon the timing of development by the automotive manufacturers and
their original equipment manufacturers. Currently, the throttle mechanism on a
gasoline engine is controlled by a cable connected to the foot pedal. ETC would
require a motor or other mechanical device to open and shut the throttle upon
receiving an electronic signal. An experimental version of ETC was installed on
the 1997 and 1998 car models for Corvette and certain models of BMW, Lexus and
Mercedes. These experimental ETC's were manufactured by existing suppliers to
the automotive companies. The Company believes that the major domestic
automobile manufacturers' advanced design teams are evaluating ETC and planning
to introduce ETC in future models, but the Company has no control over whether
ETC will be introduced into automobiles or, if introduced, the timing of the
introduction of ETC into the automotive or higher-volume truck markets. The
Company will be competing against much larger competitors in these markets with
financial resources much greater than those of the Company and with existing
long term supplier relationships with the automotive industry.
GOVERNMENT REGULATION. Because many of the products that the Company
manufactures are integral in maintaining the safety of the vehicles using them
while operating on highways, the products are subject to adherence to regulatory
standards and close scrutiny from agencies of the Federal government.
The Company's vehicle component products must comply with the National Traffic
and Motor Vehicle Safety Act of 1966, as amended, and regulations promulgated
thereunder which are administered by the National Highway Traffic Safety
Administration ("NHTSA"). If, after an investigation, NHTSA finds that the
Company is not in compliance with any of its standards or regulations, among
other things, it may require the Company to recall its products which are found
not to be in compliance and repair or replace such products. The Company
believes it is currently in compliance with NHTSA.
12
<PAGE>
FACTORS AFFECTING PRODUCT DEMAND. The Company's vehicle component segment
is heavily dependent upon the truck, utility vehicle and heavy equipment
manufacturing industries. The performance of such industries, and thus their
demand for component parts, tend to mirror general economic trends. During
periods of economic expansion, when industrial production is increasing, demand
for diesel engines ordinarily increases, and during recessionary times the
diesel engine industry is adversely affected by declines in demand. Recently,
the Company has experienced an increase in sales of its ETC which it believes
is, in part, a result of an economic expansion. Due in part to the maturity of
the heavy-diesel engine industry, there can be no assurance that such an
increase in sales related to economic expansion or other factors will be
sustained. These industries could experience downturns which would affect the
Company's sales at its primary manufacturing facility. The Company's
agricultural equipment segment is dependent upon sales to farmers in the
Southeastern United States. Sales to these customers are dependent greatly upon
farm income and could be affected by crop yields, weather, government subsidies
for farming such as tobacco subsidies, and other factors. The Company has
recently experienced a downturn in this market, primarily because of weather and
reduced government subsidies for tobacco.
CONCENTRATION OF SALES. The Company sells its products to customers in
diversified industries worldwide; however, approximately 77% of its sales from
continuing operations are to customers in the vehicle component segment. For the
fiscal years ended September 30, 1997, 1996 and 1995, Freightliner accounted for
13%, 14% and 17%, respectively, of net sales for continuing operations. Navistar
and Volvo each accounted for 11% of net sales from continuing operations in 1997
and fiscal 1996 and 11% and 8%, respectively, in fiscal 1995.
RISKS RELATED TO FOREIGN SALES. Approximately 11%, 15% and 18% of net sales
for continuing operations in fiscal 1997, 1996 and 1995, respectively, were to
customers outside of the United States, primarily in Canada, and to a lesser
extent, in Europe and Australia. The loss of one or more of its significant
customers or a material decline in sales to one or more of such customers could
have a material adverse effect on the Company. The Company is attempting to
increase foreign sales. Based on the Company's current level of foreign sales
and expected future levels, the Company's results could be significantly
affected by weak economic conditions in countries in which it does significant
business and by changes in foreign currency exchange rates affecting those
countries. The Company's sales are currently denominated in U.S. currency and
does not have a foreign currency exchange risk.
On July 22, 1998 the U.S. Securities and Exchange Commission published Staff
Legal Bulletin No. 6 (CF/MR/IM) which requires disclosure related to the impact
of the conversion by the eleven member states of the European Union to a common
currency, the "euro" on January 1, 1999. The Company is addressing the risk
associated with this conversion; however, it is unaware at this time of any
potential material adverse effect associated with the conversion. The Company is
in the process of developing a plan to analyze the impact, if any, from the euro
conversion.
13
<PAGE>
RELIANCE ON SINGLE SOURCE SUPPLIERS. The Company relies upon, and expects
to continue to rely upon CTS Corporation, Robertshaw and Caterpillar, Inc., as
single source suppliers for critical components and/or products as these
suppliers are currently the only manufacturers of sensors made specifically for
the Company's ETC. The Company manufactures a foot pedal using a contact
position sensor manufactured by Caterpillar, Inc. used exclusively on
Caterpillar engines. Caterpillar supplies this sensor and requires that its
sensor be used on all Caterpillar engines; therefore, the Company does not
consider the Caterpillar sensor supply to be at risk. There can be no assurance
that suppliers will be able to meet the Company's future needs on a timely
basis, or be willing to continue to be a supplier to the Company, or that a
disruption in a supplier's business, such as a strike, would not disrupt the
supply of a component that could not easily be replaced as other suppliers of
such products currently do not exist.
RAW MATERIALS. Although the Company has recently experienced stable prices,
prices for aluminum zinc, rubber, steel, and mechanical components such as
gearboxes, hydraulics, and contact position sensors could fluctuate and affect
profitability.
LABOR COSTS. As of June 30, 1998, the Company employs approximately 509
employees, including 138 union employees. The non-union employees of the Company
are engaged in sales and marketing, accounting and administration, product
research and development, production and quality control. The union employees
are engaged in manufacturing vehicle components in the Portland, Oregon
facility. The Company and the union have a collective bargaining agreement that
expires in September 2002 which provides for specific wage increases during the
term of the contract. Management of the Company believes that its relationships
with its employees and the union are good. The Company could experience changes
in non-union labor costs as a result of changes in local economies and general
wage increases.
POTENTIAL PRODUCT LIABILITY. Certain of the Company's products are integral
parts of braking and acceleration systems for heavy equipment, buses, and
long-haul trucks, and failure of any part of the system may result in personal
injury to the operator or other persons in the area, for which injured parties
may attempt to hold the Company liable.
PRODUCT WARRANTY. The Company provides a standard limited warranty on
certain of its products. The Company has established a reserve for future
warranty claims based on its estimate of the future cost of warranty and related
service costs. The Company believes that these reserves are reasonable, based on
its experience with products and claims. However, there can be no assurance that
the amount of this reserve will be sufficient to cover future warranty claims
against the Company.
CONTROL BY MANAGEMENT. As of June 30, 1998, Thomas W. Itin, Chairman,
President, Chief Executive Officer and Treasurer of the Company beneficially
owns approximately 28.2% of the Company's Common Stock. Mr. Itin also owns
approximately 18.5% of Enercorp, Inc., an entity that beneficially owns
approximately an additional 10.7% of the Company's Common Stock. H. Samuel
Greenawalt, a director of the Company, who beneficially owns 1.1% of the
Company's Common Stock, also owns approximately 2.4% of Enercorp, Inc. Further,
all executive officers and directors of the Company as a group (ten persons)
beneficially own approximately 40.2% of the Company's Common Stock. As a result,
the Company's management, and Mr. Itin in particular, are in a position to
significantly influence the direction and policies of the Company, the election
of the Board of Directors of the Company and the outcome of any other matters
requiring shareholder approval.
ENVIRONMENTAL. The Company has identified certain contaminants in the soil
and groundwater at and around its Portland, Oregon manufacturing facility which
the Company believes may have been disposed of on the property by the previous
property owner. The Company has conducted tests to determine the levels of
contaminants and the lateral and vertical extent of the contamination.
Concentrations of trichloroethane ("TCE") have been discovered in shallow
groundwater samples in amounts that are greater than the Federal drinking water
maximum contaminant levels. However, the manufacturing facility is located in an
industrial area and the impacted groundwater is not used nor is it anticipated
to be used for drinking water. The Company believes that the contamination is
not a reportable condition under the current Oregon statutes, but there is no
assurance that the Oregon Department of Environmental Quality ("DEQ") would not
14
<PAGE>
take the position that the event is reportable or that state environmental laws
adopted in the future would make this a reportable event. Under Oregon statutes,
the Company and other potentially responsible parties are required to
investigate further and possibly remediate the contamination. The Company
believes that, if required, the remediation would take the form of permanent
monitoring, but could include the treatment or removal of the contamination. The
Company cannot estimate the costs of permanent monitoring, treatment or clean up
at the present time. However, any costs of treatment or cleanup could adversely
affect the Company materially.
Under the terms of the agreement for the sale of the Portland manufacturing
facility, the Company is obligated to provide $3.2 million of debt financing to
the purchaser until the Company receives a no-further-action letter from the DEQ
related to the environmental issue. The Company provided a $3.2 million loan to
the purchaser in April 1998. The Company intends to seek indemnification from
the prior property owner under the terms of the asset purchase agreement with
the prior owner and require the prior owner either to provide such required
financing or to pay for the costs of investigation and remediation that would
result in a no-further-action letter. The prior property owner has advised the
Company that it would dispute any liability for remediation costs. The Company
believes it can enforce available claims against the prior property owner for
any costs of investigation and remediation. The Company believes it is currently
in compliance with environmental regulations.
BUILDING REPURCHASE OBLIGATION. The Company sold its Portland manufacturing
facilities under a sale-leaseback for $4.6 million in April 1997. As stated in
Environmental, under the terms of the purchase agreement, the Company was
obligated to provide $3.2 million of debt financing to the purchaser until the
Company receives a no-further-action letter from the DEQ related to the
environmental issue. In addition, the Company may be require to, and also has
the option to, repurchase the building from the purchaser if it does not receive
a no-further-action letter before April 18, 1999.
BANK INDEBTEDNESS. The Company has significant bank indebtedness that bears
interest at rates that fluctuate with the prime rate. The Company's net earnings
would be adversely affected by any significant increase in the prime rate. In
addition, the Company's current bank credit facility secures substantially all
of the Company assets as collateral for the loan, and the Company is required to
maintain minimum tangible net worth and minimum working capital and is limited
as to the amount of capital spending by the Company in any twelve-month period.
HISTORY OF OPERATING LOSSES OF CERTAIN SUBSIDIARIES. Certain subsidiaries
of the Company have a history of operating losses since acquisition. Although
the Company has hired management, adopted business plans, disposed of one
significant subsidiary and instituted operational changes that it believes will
improve operating results, there is no assurance that these subsidiaries will
achieve profitability. The Company has not adopted a formal plan to dispose of
any of such operations. If the Company is unsuccessful in achieving
profitability at these facilities, the Company may decide to sell or otherwise
dispose of them. There is no assurance that the Company would be able to sell
such operations at a price that would not result in a loss upon the sale.
15
<PAGE>
SALE OF KENCO WILLIAMS, INC. On March 16, 1998, the Company completed the
sale of a substantial portion of the assets of Kenco Williams, Inc. ("Kenco")
and entered into warehousing and lease agreements with the purchaser.
Consideration to the Company consisted of $1.1 million cash, a receivable from
the purchaser for inventory sold of $430,000, assumption of $1 million of trade
payables and other liabilities, and $2 million of Series A Preferred Stock of
the purchaser. The purchaser has agreed to purchase from the Company
approximately $2.6 million of remaining inventory on or before September 30,
1998 and has agreed to lease the building from the Company until September 30,
1998. If the purchaser achieves certain financial operating performance targets
before March 31, 1999, the Company anticipates that it would convert the
preferred stock into common shares of the purchaser and dividend such shares in
a spin-off transaction to the Company's stockholders. Holders of the Company's
Series A 7 1/2% Convertible Redeemable Preferred Stock would be entitled a pro
rata share of any spin-off.
INVESTMENT IN AJAY SPORTS, INC. ("AJAY"). The Company owns approximately
18% of Ajay and is required to account for this investment under the equity
method of accounting due to the common ownership by the Chairman of the Company
who is also the Chairman and a significant shareholder of Ajay. The Company was
a guarantor of Ajay's bank loans to a prior bank which were in default during
fiscal 1997. The Ajay and Company loans were refinanced through a joint and
several loan agreement on July 14, 1997. On June 30, 1998, the Company entered
into an agreement (the "Agreement") with Ajay which restructured the Company's
investment in Ajay to allow Ajay to have the opportunity to prove its earnings
potential and allowed the Company to amend its Credit Agreement with its lender.
Under the Agreement, the Company agreed to invest $2 million into Ajay and
convert $5 million of its loans and advances to Ajay into Ajay convertible
preferred stock and the remaining loans of up to $3.6 million into a new secured
promissory note. As a result of the additional investment, previously agreed
assumption of certain liabilities and payments of certain Ajay bank
indebtedness, the Company's investment in and loans to Ajay could increase to up
to $8.6 million. In consideration for the additional investment in Ajay and the
conversion of $5 million of the investment into preferred stock, the Company and
Ajay obtained separate loan facilities from the bank and thereby eliminated the
joint and several liability obligation and also all loan guarantees of Ajay debt
by the Company. On the three year anniversary of the restructuring, the notes
payable become due and the dividend rate of the preferred stock increases
substantially which will likely require Ajay to refinance the $5 million
preferred stock and the notes payable that were part of the restructuring. The
Chairman of the Company has provided a guaranty to the Company of the
investments in and loans to Ajay.
As a result of the Ajay restructuring, the Company and its lender amended
its Credit Agreement to eliminate Ajay from the Credit Agreement and eliminate
the Company's guarantee of Ajay's debt. Previously, the Company and Ajay had
been joint borrowers under a $34.1 million joint and several liability Credit
Agreement. The amended Credit Agreement provides for total borrowings up to
$16.5 million, reduces the interest rate on the revolving loan to the Bank's
prime rate and increases advance rates against inventory and accounts
receivable.
DEPENDENCE UPON PERSONNEL. The Company is dependent upon the services of
Thomas W. Itin and Gerard H. Herlihy. Mr. Itin is Chairman, President, Chief
Executive Officer and Treasurer of the Company. Mr. Herlihy is Chief
Administrative and Chief Financial Officer and Secretary of the Company. The
Company has an employment agreement with Mr. Itin that expires in August 2002.
The Company does not have an employment agreement with Mr. Herlihy. If either of
such individual's services were to become unavailable to the Company for any
reason, the Company's success could be materially and adversely affected. The
Company does not carry key-man life insurance.
NO DIVIDENDS. The Company has never paid any cash dividends on its Common
Stock and does not anticipate paying cash dividends on the Common Stock in the
foreseeable future. The payment of dividends on the Common Stock by the Company
will depend on its earnings, financial condition and other business and economic
factors including borrowing restrictions affecting the Company at such time as
the Board of Directors may consider relevant. In addition, the Company's loan
agreement currently prevents the payment of dividends on common or new preferred
shares without permission of the bank. Payments of the dividend on the Series A
preferred are allowed under the terms of the loan agreement.
16
<PAGE>
ANTI-TAKEOVER PROVISIONS OF CHARTER AND BYLAWS. Certain provisions of the
Company's charter and bylaws may delay or frustrate the removal of incumbent
directors and may prevent or delay a merger, tender offer or proxy contest
involving the Company that is not approved by the Board of Directors, even if
such events may be beneficial to the interests of stockholders. For example, the
Company's Board of Directors, without stockholder approval, has the authority
and power to issue all authorized and unissued shares of Common Stock and
preferred stock which have not otherwise been reserved for issuance. Thus, the
Board of Directors could currently issue 26,584,832 shares of Common Stock on
such terms as the Board of Directors determines. The Board of Directors could
currently also issue 49,920,000 shares of preferred stock (assuming that all
80,000 shares of Convertible Preferred Shares are sold) and such preferred stock
could have voting or conversion rights which could adversely affect the voting
power of the holders of Common Stock. Furthermore, the Company's charter
provides for three classes of directors with staggered terms of office. In
addition, the Delaware General Corporation Law contains provisions that may have
the effect of making it more difficult or delaying attempts by other to obtain
control of the Company.
"PENNY STOCK" RULES. The Company's Common Stock is presently traded on the
NASDAQ National Market System. If the Company fails to maintain such listing for
its Common Stock, and no other exclusion from the definition of "penny stock"
under the Exchange Act is available, then any broker engaging in a transaction
in the Company's securities would be required to provide any customer with a
risk disclosure document and the compensation of the broker/dealer in the
transaction and monthly account statements showing the market values of the
Company's securities held in the customers accounts. The bid and offer
quotations and compensation information must be provided prior to effecting the
transaction and must be contained on the customer's confirmation. If brokers
become subject to the "penny stock" rules when engaging in transaction in the
Company's securities, they would become less willing to engage in such
transaction, thereby making it more difficult for holders of shares of Common
Stock to dispose of their shares.
SUBSTANTIAL DILUTION. Dilution may also be incurred upon the exercise of
outstanding options and warrants granted under the Company's stock option plans
and other options, warrants and outstanding convertible securities.
USE OF PROCEEDS
---------------
It is not likely that any outstanding Warrants will be exercised unless the
market price of the Common Stock increases significantly. Alternatively, the
Company may lower the exercise price of the Warrants to below the current market
price, thereby encouraging their exercise. If the Warrants are exercised at
their current prices, which is unlikely at this time, the Company will receive
net proceeds from such exercise of approximately $3,278,317. See "Plan of
Distribution." The proceeds may be used for working capital purposes.
17
<PAGE>
SELLING SECURITYHOLDERS
-----------------------
The following tables set forth the number of Shares and the total number of
Shares assuming the conversion or exercise of all Convertible Preferred Stock
and Warrants owned by each of the Selling Securityholders and registered
hereunder. Except as indicated, the Selling Securityholders are offering all of
the shares of Common Stock owned by them or received by them upon the exercise
or conversion of the Warrants or Convertible Preferred Stock and none of the
Selling Securityholders is the beneficial owner of one percent or more of the
outstanding shares of Common Stock (including the Shares offered hereby).
Because the Selling Securityholders may offer all or part of the Shares or
the shares of Common Stock received upon conversion or exercise of the
Convertible Preferred Stock and/or Warrants, which they hold pursuant to the
Offering contemplated by this Prospectus, and because their offering is not
being underwritten on a firm commitment basis, no estimate can be given as to
the amount of Convertible Preferred Stock and/or Warrants that will be held upon
termination of this Offering. The Shares and the shares of Common Stock received
upon conversion or exercise of the Convertible Preferred Stock and/or Warrants
offered by this Prospectus may be offered from time to time by the Selling
Securityholders named below.
18
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
TABLE: Shares and Shares underlying Convertible Preferred Stock, and Warrants to
be registered and offered by the Selling Securityholders.
Shares
Convertible Placement Owned After
Preferred Agent's Total Completion
Selling Securityholder Shares Stock Warrants Other Options Shares of the Offer
- ---------------------- ------------ ----------- ----------- ------------- ------------ ------------
Acrodyne 1,050,000 150,000 1,200,000 0
Acrodyne Profit Sharing Plan 400,000 400,000 0
Ajay Sports, Inc. 206,719 206,719 0
John F. Alexander, Jr. 42,255 42,255 0
Robert W. and Susan M. Allen 90,909 90,909 0
Jude Aririguzo 3,636 3,636 0
E.H. Arnold 181,819 181,819 0
Gary P. Arnold 18,182 18,182 0
Hamilton T. Bailey 5,455 5,455 0
Russell J. Bernier 1,000 1,000 0
Josephine Besemer 12,000 12,000 0
Bonat FBO Spangler Candy & Related
Companies Retirement Trust 72,727 72,727 0
Alvin R. Bonnette Rev. Trust
dtd 1/31/85 14,545 14,545 0
Bernard Brown Trust A/C #1 IRA
Rollover, Crestar Bank, Custodian 18,182 18,182 0
Bernard Brown Trust A/C #2 IRA
Rollover, Crestar Bank, Custodian 29,091 29,091 0
Michael J. Brunone 1,000 1,000 0
Richard Buchakjian 14,545 14,545 0
19
<PAGE>
Shares
Convertible Placement Owned After
Preferred Agent's Total Completion
Selling Securityholder Shares Stock Warrants Other Options Shares of the Offer
- ---------------------- ------------ ----------- ----------- ------------- ------------ ------------
Peter M. Burns 15,500 15,500 0
Rosemary C. Butcher 15,000 15,000 0
R. William Caldwell 5,000 50,000 55,000 0
David Carr 2,115 2,115 0
Phillip E. and Betty Casey 36,364 36,364 0
William Chaney 3,636 3,636 0
Charles Schwab & Co., Inc. FBO
Dr. Neil Kantor IRA 36,364 36,364 0
Christiana Companies Inc. Employee
Savings & Profit Sharing Plan 9,091 9,091 0
Jeanne Copeland, IRA, Crestar
Bank, Custodian 9,091 9,091 0
Ralph J. Cuomo 2,000 2,000 0
Joseph G. D'Amadeo 29,750 29,750 0
Joseph and Tracy D'Amadeo 7,273 7,273 0
Jack Dangermond 10,560 10,560 0
Dearborn Wheels, Inc. 59,000 59,000 0
Guerino DeLuca 14,545 14,545 0
Dolphin Offshore Partners, L.P. 463,637 463,637 0
Paul Dratel 200 200 0
EBS Micro Cap Partners 54,545 54,545 0
EBS Partners, L.P. 109,091 109,091 0
John W. and Mary Sue Egan 3,636 3,636 0
Emanon Partners, L.P. 127,273 127,273 0
20
<PAGE>
Shares
Convertible Placement Owned After
Preferred Agent's Total Completion
Selling Securityholder Shares Stock Warrants Other Options Shares of the Offer
- ---------------------- ------------ ----------- ----------- ------------- ------------ ------------
EMJAYCO FBO Theumling Industries
Products PSP 10,909 10,909 0
Enercorp, Inc. 1,852,329 150,000 2,002,329 0
The Equity Group Profit Sharing
Plan and Trust 81,819 81,819 0
John C. Ernst Revocable Trust 36,364 36,364 0
Elsa V. Finnel 9,091 9,091 0
Dennis Fortin 36,364 36,364 0
James E. Foy 18,182 18,182 0
Keith M. Ganzer 6,000 6,000 0
Robert D. Goldstein 45,455 45,455 0
Justin Gasarch 9,091 9,091 0
H. Samuel Greenawalt 50,000 50,000 0
Douglas E. Hailey 3,636 35,487 39,123 0
Douglas E. Hailey Profit Sharing
Plan 5,455 5,455 0
Gregory Robert Hebard
Irrevocable Living Trust 103,000 103,000 0
Robert R. Hebard & Dawn E. Hebard
JTWROS 14,000 14,000 0
Whitney Lynn Hebard Irrevocable
Living Trust 103,000 103,000 0
Richard J. Hess 3,636 3,636 0
Hilltop Offshore Limited 10,000 10,000 0
21
<PAGE>
Shares
Convertible Placement Owned After
Preferred Agent's Total Completion
Selling Securityholder Shares Stock Warrants Other Options Shares of the Offer
- ---------------------- ------------ ----------- ----------- ------------- ------------ ------------
Hilltop Partners, L.P. 24,982 24,982 0
Nina Beardsley Itin Irrevocable
Living Trust 85,000 85,000 0
Shirley B. Itin TTEE Elinor Lee Itin
Irrevocable Living Trust 3,000 3,000 0
Shirley B. Itin TTEE Gregory Robert
Hebard Irrevocable Living Trust 3,000 3,000 0
Shirley B. Itin TTEE Whitney Lynn
Hebard Irrevocable Living Trust 3,000 3,000 0
Shirley B. Itin TTEE Wyatt Otto Itin
Irrevocable Living Trust 3,000 3,000 0
Thomas W. Itin 750,000 750,000 0
Timothy S. Itin 5,000 50,000 55,000 0
Timothy S. Itin Irrevocable Living
Trust 85,000 85,000 0
Jemautco, Inc. 90,909 90,909 0
David A. Jonas 3,636 3,636 0
Howard Kalka 9,091 9,091 0
Lawrence Kane 3,636 3,636 0
Cecelia King 10,560 10,560 0
Jeremy Kisner 9,091 9,091 0
Willis V. Kittleman, Jr. DDS PC 15,000 15,000 0
22
<PAGE>
Shares
Convertible Placement Owned After
Preferred Agent's Total Completion
Selling Securityholder Shares Stock Warrants Other Options Shares of the Offer
- ---------------------- ------------ ----------- ----------- ------------- ------------ ------------
William E. Kuntz 10,910 10,910 0
Brian S. and Debra L. Larson 14,545 14,545 0
Stanley Latimer 10,560 10,560 0
Kenward Lawson 200 200 0
Gustave L. Levinson 18,182 18,182 0
Ronald N. and Elizabeth Magruder 36,364 36,364 0
Robert Main 3,636 3,636 0
William P. Malone 2,500 2,500 0
Joseph A. Martha 3,636 3,636 0
Robert A. Maurin, III 10,909 10,909 0
Merrill Lynch, Custodian for
Raybourne Thompson, Jr. 36,364 36,364 0
Merrill Lynch, Custodian for
Spangler Candy Company Capital 54,545 54,545 0
Microcap Partners, L.P. 69,636 69,636 0
MLPF&S FBO James M. Vickers IRA
FBO James M. Vickers 36,364 36,364 0
Donald V. Moline 1,818 1,818 0
Harrison Mitchell 3,636 3,636 0
John V. Moynes 2,182 2,182 0
Steven J. Mucciolo 300 300 0
Charles F. Nelson 10,909 10,909 0
23
<PAGE>
Shares
Convertible Placement Owned After
Preferred Agent's Total Completion
Selling Securityholder Shares Stock Warrants Other Options Shares of the Offer
- ---------------------- ------------ ----------- ----------- ------------- ------------ ------------
Northridge Partners, Crestar
Bank, Custodian 72,727 72,727 0
Richard V. Nuttall 3,636 3,636 0
Richard Oh 4,250 4,250 0
John L. and Maria Palazzola 18,182 18,182 0
Vincent Palmieri 2,000 2,000 0
Lynn M. Parry IRA Rollover
Crestar Bank, Custodian 3,636 3,636 0
James Pendulik 3,636 3,636 0
Sandra K. Peruski 6,000 6,000 0
Phronesis Partners, L.P. 139,455 139,455 0
Kenneth Plotkin 9,818 9,818 0
R&D Investment Partnership, L.P. 109,091 109,091 0
Michael E. Recca 35,000 35,000 0
Karl C. Reeves 1,500 1,500 0
Joseph F. Regan 7,273 7,273 0
Rush Holdings, Inc. 225,000 225,000 0
Samuel Leonard Trust 3,636 3,636 0
Robert Sanville 3,636 3,636 0
Richard E. and Janet E. Saunders 7,273 7,273 0
Christopher C. Schreiber 7,273 13,250 20,523 0
Robert C. Schroeder 1,500 1,500 0
24
<PAGE>
Shares
Convertible Placement Owned After
Preferred Agent's Total Completion
Selling Securityholder Shares Stock Warrants Other Options Shares of the Offer
- ---------------------- ------------ ----------- ----------- ------------- ------------ ------------
Shadow Capital, LLC 54,545 54,545 0
SICO - A Michigan Co-Partnership 400,000 400,000 0
Valdemar A. Skov 3,636 3,636 0
Gordon Souaid 7,273 7,273 0
Robert G. Souaid 10,909 10,909 0
Sharon Stauber 3,636 3,636 0
Arthur D. Sterling 36,364 36,364 0
Michael A. Stern 350 350 0
James Tadych 18,182 18,182 0
Michael N. Taglich 47,272 29,750 77,022 0
Robert F. Taglich 54,545 29,750 84,295 0
Technology Licensing Corporation 20,000 20,000 0
Thirteen Pines Partnership 18,182 18,182 0
Christopher J. Thompson 350 350 0
TICO - A Michigan Co-Partnership 1,742,000 1,742,000 0
Morton L. Topfer 72,727 72,727 0
Wafgal Limited 3,636 3,636 0
Wechsler & Co., Inc. 36,364 36,364 0
William and Elizabeth A. Wieck 9,091 9,091 0
James Wilen 36,364 36,364 0
James Wilen IRA, Crestar
Bank, Custodian 18,182 18,182 0
Benjamin Williamowsky, IRA,
Crestar Bank, Custodian 9,091 9,091 0
25
<PAGE>
Shares
Convertible Placement Owned After
Preferred Agent's Total Completion
Selling Securityholder Shares Stock Warrants Other Options Shares of the Offer
- ---------------------- ------------ ----------- ----------- ------------- ------------ ------------
Williams Controls, Inc. Retirement
Income Plan 15,000 15,000 0
Wolfson Equities 19,564 19,564 0
Clarence H. Yahn 30,000 30,000 0
York Road Anesthesia Association
Defined Constitution Plan 3,636 3,636 0
Paul Zwick 31,695 31,695 0
Totals 6,567,793 2,909,091 203,637 1,200,000 10,880,521 0
</TABLE>
26
<PAGE>
PLAN OF DISTRIBUTION
--------------------
The Shares, from time to time, may be offered for sale either directly by the
Selling Securityholders or by their pledgees, donees, transferrees or other
successors in interest. Such sales may be made in the over-the-counter market or
in negotiated transactions. Sales of Shares in the over-the-counter market may
be by means of one or more of the following: (a) a block trade in which a broker
or dealer will attempt to sell the Shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction; (b) purchase by
a dealer as principal and resale by such dealer for its account pursuant to this
Prospectus; and (c) ordinary brokerage transactions and transactions in which
the broker solicits purchasers. In effecting sales, brokers or dealers engaged
by the Selling Securityholders may arrange for other brokers or dealer to
participate. In addition, any securities covered by this Prospectus which
qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than
pursuant to this Prospectus.
The Selling Securityholders have agreed to proportionately reduce their Shares
offered hereby if an underwriter of the Company's securities determines that the
total amount of Common Stock to be included in the offering exceeds the amount
which the underwriter deems to be appropriate for the Offering. In addition, the
Selling Securityholders have agreed not to sell the Shares offered hereby during
the time of any distribution of the Company's securities or while the Company is
repurchasing its securities if sales by the Selling Securityholders during such
times would violate federal securities laws.
Except as set forth above, the Selling Securityholders have advised the Company
that they have made no arrangement or agreements with any underwriters, brokers
or dealers regarding the resale of the Shares prior to the effective date of
this Prospectus. The Selling Securityholders may pay commissions or allow
discounts to any brokers or dealers participating in the resale of the Shares,
which commissions or discounts may be less than or in excess of the customary
rates of such brokers or dealers for similar transactions. The Shares will be
sold at market prices prevailing at the time of sale or at negotiated prices
which will be not less than prevailing market prices.
The Selling Securityholders that participate in sales of the Shares and any
underwriters, brokers or dealers engaged by them may be deemed underwriters, and
any profits on sales of the Shares by them and any discounts, commissions or
concessions received by any Selling Securityholder or underwriter, broker or
dealer may be deemed to be underwriting discounts or commissions under the
Securities Act.
Upon the Company being notified by a Selling Securityholder that any material
arrangement has been entered into with an underwriter, broker or dealer for the
sale of the Shares through a secondary distribution or a purchase by an
underwriter, broker or dealer, a supplemented prospectus will be filed, if
required, disclosing such of the following information as the Company believes
appropriate: (i) the name of each such Selling Securityholder and of the
participating underwriter, broker or dealer; (ii) the number of Shares involved;
(iii) the price at which such Shares were sold; (iv) the commissions paid or
discounts or concessions allowed to such underwriter, broker or dealer and (v)
other facts material to the transaction.
27
<PAGE>
The Company has agreed to indemnify the Selling Securityholders, and the Selling
Securityholders have agreed to indemnify the Company, against certain civil
liabilities, including liabilities under the Securities Act.
The Company is offering the Shares to the holders of the Warrants and the
Convertible Preferred Stock and will amend or supplement this Prospectus, from
time to time, to reflect the exercise of Warrants and the Convertible Preferred
Stock by the holders thereof and to permit the public sale of the Shares.
The Company is unable to predict the effect which sales of the Shares offered
hereby might have upon the Company's ability to raise further capital.
The Company will pay all of the expenses incident to the offering and sale of
the Shares to the public other than commissions and discounts of underwriters,
dealers or agents.
In order to comply with certain states' securities laws, if applicable, the
Shares will be sold in such jurisdictions only through registered or licensed
brokers or dealers. In addition, in certain states, the Shares may not be sold
unless they have been registered or qualified for sale in such states or an
exemption from registration or qualification is available and complied with.
INDEMNIFICATION PROVIDED IN CONNECTION WITH
THE OFFERING BY THE SELLING SECURITYHOLDERS
-------------------------------------------
The placement agent for and investors in the private placements of the Company's
securities occurring in April 1998, and the Selling Securityholders have agreed
to indemnify, to the extent permitted by law, the Company, its directors, its
officers and each person who controls the Company (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of material fact or any
omission or alleged omission of a material fact required to be stated in a
registration statement, prospectus, private placement memorandum or any
amendment thereof or supplement thereto or necessary to make the statements
therein (in the case of a prospectus, in the light of the circumstances under
which they were made) no misleading, in each case to the extent, but only to the
extent, that any such loss, liability, claim, damage or expense arises out of or
is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with written
information or affidavits relating to such investors or the placement agent
furnished to the Company for use therein.
Insofar as indemnification for liabilities arising under the Securities Act 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 Commission, such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
28
<PAGE>
LEGAL MATTERS
-------------
The legality of the shares of Common Stock being offered will be passed on for
the Company by Friedlob Sanderson Raskin Paulson & Tourtillott, LLC, Denver,
Colorado.
EXPERTS
-------
The audited consolidated financial statements and schedule of Williams Controls,
Inc. and subsidiaries incorporated herein by reference have been so incorporated
in reliance upon the report of Horwath Gelfond Hochstadt Pangburn & Co., Denver,
Colorado, independent certified public accountants, given upon their authority
as experts in accounting and auditing.
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS.
ANY INFORMATION OR REPRESENTATIONS NOT HEREIN CONTAINED, IF GIVEN OR MADE, MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN RESPECT TO THESE SECURITIES IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE
DELIVERY OF THIS PROSPECTUS SHALL NOT, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE OF THIS PROSPECTUS. HOWEVER, IN THE EVENT OF A MATERIAL CHANGE, THIS
PROSPECTUS WILL BE AMENDED OR SUPPLEMENTED ACCORDINGLY.
29
<PAGE>
TABLE OF CONTENTS WILLIAMS CONTROLS, INC.
----------------- -----------------------
AVAILABLE INFORMATION................. 5
PROSPECTUS SUMMARY.................... 6
10,880,521 SHARES OF COMMON STOCK,
$.01 PAR VALUE, INCLUDING
RISK FACTORS.......................... 11 2,909,091 SHARES UNDERLYING
CONVERTIBLE PREFERRED STOCK, AND
1,403,637 SHARES UNDERLYING
USE OF PROCEEDS....................... 17 STOCK PURCHASE WARRANTS
AND OPTIONS
SELLING SHAREHOLDERS................. 18
October 8, 1998
PLAN OF DISTRIBUTION................. 27
LEGAL MATTERS........................ 29 _____________________
PROSPECTUS
EXPERTS.............................. 29 _____________________
30
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
--------------------------------------------
The following is an itemization of all expenses (subject to future
contingencies) incurred or to be incurred by the Company in connection with the
issuance and distribution of the securities being offered. All expenses are
estimated except the registration fee.
Registration and filing fee $ 8,948
NASD listing fee 7,500
Printing 500
Accounting fees and expenses 3,000
Legal fees and expenses 3,000
Blue sky filing fees and expenses 0
Transfer and Warrant Agent fees 4,000
Miscellaneous 582
--------
Total $ 27,530
========
Item 15. Indemnification of Directors and Officers.
------------------------------------------
Indemnification Provided Under the Company's Articles of Incorporation
Section 145 of the Delaware General Corporation Law and Article Ninth of
the Company's Certificate of Incorporation provides for, under certain
circumstances, the indemnification of the Company's officers, directors,
employees and agents against liabilities which they may incur in such
capacities. A summarization of the circumstances in which such indemnifications
provided for is contained herein, but that description is qualified in its
entirety by reference to Article Ninth of the Company's Certificate of
Incorporation and the relevant Section of the Delaware General Corporation Law.
In general, the statute provides that any director, officer, employee or
agent of a corporation may be indemnified against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement, actually and reasonably
incurred in a proceeding (including any civil, criminal, administrative or
investigative proceeding) to which the individual was a party by reason of such
status. Such indemnity may be provided if the indemnified person's actions
resulting in the liabilities: (i) were taken in good faith; (ii) were reasonably
believed to have been in or not opposed to the Company's best interest; and
1
<PAGE>
(iii) with respect to any criminal action, such person had no reasonable cause
to believe the actions were unlawful. Unless ordered by a court, indemnification
generally may be awarded only after a determination of independent members of
the Board of Directors or a committee thereof, by independent legal counsel or
by vote of the stockholders that the applicable standard of conduct was met by
the individual to be indemnified.
The statutory provisions further provide that to the extent a director,
officer, employee or agent is wholly successful on the merits or otherwise in
defense of any proceeding to which he was a party, he is entitled to receive
indemnification against expenses, including attorneys' fees, actually and
reasonably incurred in connection with the proceeding.
Indemnification in connection with a proceeding by or in the right of the
Corporation in which the director, officer, employee or agent is successful is
permitted only with respect to expenses, including attorneys' fees actually and
reasonably incurred in connection with the defense. In such actions, the person
to be indemnified must have acted in good faith, in a manner believed to have
been in the Company's best interest and must not have been adjudged liable to
the Company unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability, in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expense which the Court of Chancery or such other court shall deem proper.
Indemnification is otherwise prohibited in connection with a proceeding brought
on behalf of the Company in which a director is adjudged liable to the Company,
or in connection with any proceeding charging improper personal benefit to the
director in which the director is adjudged liable for receipt of an improper
personal benefit.
Delaware law authorizes the Company to reimburse or pay reasonable expenses
incurred by a director, officer, employee or agent in connection with a
proceeding in advance of a final disposition of the matter. Such advances of
expenses are permitted if the person furnishes to the Company a written
agreement to repay such advances if it is determined that he is not entitled to
be indemnified by the Company.
The statutory section cited above further specifies that any provisions for
indemnification of or advances for expenses does not exclude other rights under
the Company's Certificate of Incorporation, Bylaws, resolutions of its
stockholders or disinterested directors, or otherwise. These indemnification
provisions continue for a person who has ceased to be a director, officer,
employee or agent of the corporation and inure to the benefit of the heirs,
executors and administrators of such persons.
The statutory provision cited above also grants the power to the Company to
purchase and maintain insurance policies which protect any director, officer,
employee or agent against any liability asserted against or incurred by him in
such capacity arising out of his status as such. Such policies may provide for
indemnification whether or not the corporation would otherwise have the power to
provide for it. No such policies providing protection against liabilities
imposed under the securities laws have been obtained by the Company.
2
<PAGE>
Article VIII of the Company's Bylaws provides that the Company shall
indemnify its directors, officers, employees and agents to the fullest extent
permitted by the Delaware General Corporation Law. In addition, the Company has
entered into agreements with its directors indemnifying them to the fullest
extent permitted by the Delaware General Corporation Law.
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 Act and is therefore unenforceable.
Item 16. Exhibits and Financial Statement Schedules.
-------------------------------------------
(a) Exhibits. The following is a complete list of exhibits filed
as a part of this Registration Statement:
Exhibit
Number Description
- ------ -----------
3.1 Certificate of Incorporation of the Registrant as amended.
(Incorporated by reference to Exhibit 3.1 to the Registrant's annual
report on Form 10-K for the fiscal year ended September 30, 1995 (the
"1995 Form 10-K"))
3.2 Bylaws of the Registrant. (Incorporated by reference to Exhibit 3.2 to
the Registrant's Registration Statement on Form S-18, Registration No.
33-30601-S, as filed with the Commission on August 18, 1989 (the "1989
Form S-18"))
4.1 Specimen Unit Certificate (including Specimen Certificate for shares
of Common Stock). (Incorporated by reference to Exhibits 1.1 and 1.2
to the Registrant's Registration Statement on Form 8-A, Commission
File No. 0-18083, filed with the Commission on November 1, 1989)
4.2 Form of Placement Agent's Warrant Agreement. (Incorporated by
reference to exhibit 4.2 to the Registrant's Registration Statement
No. 333-59397, as filed with the Commission on July 17, 1998 (the
"1998 Form S-3"))
5.1 Opinion of Friedlob Sanderson Raskin Paulson & Tourtillott, LLC.
(Incorporated by reference to the exhibit 5.1 on the 1998 Form S-3.)
10.1(a) Indemnification Agreement for Thomas W. Itin ("Itin Indemnification
Agreement"). (Incorporated by reference to Exhibit 10.9 to the 1989
Form S-18)
3
<PAGE>
Exhibit
Number Description
- ------ -----------
10.1(b) Amendment No. 1 to Itin Indemnification Agreement. (Incorporated by
reference to Exhibit 10.1(b) to the Registrant's Annual Report on Form
10-K for the fiscal year ended September 30, 1993 (the "1993 Form
10-K"))
10.1(c) Form of Indemnification Agreement for R. William Caldwell, H.
Samuel Greenawalt and Timothy Itin. (Incorporated by reference to
Exhibit 10.1(c) to the Registrant's 1993 Form 10-K)
10.2(a) Credit Agreement dated July 11, 1997 among Registrant and its
subsidiaries and Ajay Sports, Inc. ("Ajay") and its subsidiaries, all
as borrowers, and Wells Fargo Bank, National Association, as lender
(the "Credit Agreement"). (Incorporated by reference to Exhibit 10.1
to the Registrant's Quarterly Report on Form 10-Q for the period ended
June 30, 1997 (the "June 1997 Form 10-Q"))
10.2(b) First Amendment to the Credit Agreement dated June 30, 1998.
(Incorporated by reference to Exhibit 10.1 to the Registrant's Current
Report on Form 8-K filed July 15, 1998.)
10.2(c) Promissory Notes under the Credit Agreement:
(a) Revolving Credit Loans Promissory Note
(b) Term Loan I Promissory Note
(c) Term Loan II Promissory Note
(d) Real Estate Loan Promissory Note
(All incorporated by reference to Exhibit 10.2 to the
Registrant's June 1997 Form 10-Q)
10.2(d) Mortgage and Security Agreement between Aptek Williams, Inc. and
Wells Fargo Bank. (Incorporated by reference to Exhibit 10.3 to the
Registrant's June 1997 Form 10-Q)
10.2(e) Patent Assignment and Security Agreements for:
(a) Williams Controls Industries, Inc.
(b) Kenco Williams, Inc.
(c) Hardee Williams, Inc.
(d) Aptek Williams, Inc.
(All incorporated by reference to Exhibit 10.4 to the
Registrant's June 1997 Form 10-Q)
4
<PAGE>
Exhibit
Number Description
- ------ -----------
10.2(f) Trademark Security Agreements for:
(a) Agrotec Williams, Inc.
(b) Hardee Williams, Inc.
(c) Kenco Williams, Inc.
(All incorporated by reference to Exhibit 10.5 to the
Registrant's June 1997 Form 10-Q)
10.2(g) Continuing Unconditional Guaranty of Thomas W. Itin in favor of
Wells Fargo Bank. (Incorporated by reference to Exhibit 10.6 to the
June 1997 Form 10-Q)
10.3(a) Intercreditor Agreement dated July 11, 1997 among Registrant and
subsidiaries, Ajay Sports, Inc. and subsidiaries, United States
National Bank of Oregon ("US Bank"), Thomas W. Itin and Wells Fargo
Bank, National Association. (Incorporated by reference to Exhibit 10.7
to the Registrant's June 1997 Form 10-Q)
10.3(b) Consent, Reaffirmation and Release Agreement with US Bank.
(Incorporated by reference to Exhibit 10.8 to the Registrant's June
1997 Form 10-Q)
10.3(c) Promissory Note of Ajay for $2,340,000 to US Bank. (Incorporated by
reference to Exhibit 10.9 to the Registrant's June 1997 Form 10-Q)
10.3(d) Mortgage, Assignment of Rents, Security Agreement and Fixture
Filing by Aptek Williams, Inc. in favor of US Bank. (Incorporated by
reference to Exhibit 10.10 to the Registrant's June 1997 Form 10-Q)
10.3(e) Guaranty to US Bank. (Incorporated by reference to Exhibit 10.11 to
the Registrant's June 1997 Form 10-Q)
10.4 The Company's 1995 Stock Option Plan for Non-Employee Directors.
(Incorporated by referenced to Exhibit 10.3 to the Registrant's
Quarterly Report on Form 10-Q for the period ended March 31, 1995 (the
"March 1995 Form 10-Q")
10.5 Williams/Ajay Loan and Joint Venture Implementation Agreement dated
May 6, 1994, as amended by letter agreement dated April 3, 1995.
(Incorporated by reference to Exhibit 10.4 to the Registrant's March
1995 Form 10-Q)
10.6(a) Mortgage and Security Agreement, dated August 31, 1988, by
Sparkomatic Corporation in favor of MetLife Capital Credit
Corporation. (Incorporated by reference to Exhibit 10.7(a) to the
Registrant's 1993 Form 10-K)
5
<PAGE>
Exhibit
Number Description
- ------ -----------
10.6(b) Mortgage Note in the principal amount of $1,700,000, dated August
31, 1988, from Sparkomatic Corporation to MetLife Capital Credit
Corporation. (Incorporated by reference to Exhibit 10.7(b) to the
Registrant's 1993 Form 10-K)
10.6(c) Loan Assumption, Modification and Extension Agreement (the
"Assumption Agreement"), dated August 12, 1993, among Kenco Williams,
Inc., Sparkomatic Corporation and MetLife Capital Corporation and the
Guaranty given by Williams to MetLife to guaranty the obligations of
Kenco Williams, Inc. to MetLife thereunder. (Incorporated by reference
to Exhibit 10.9 to the Registrant's Post-Effective Amendment No. 1, as
filed with the Commission on September 23, 1993, on Form S-3 to the
1989 Form S-18 (the "Post-Effective Amendment"))
10.6(d) Guaranty dated as of March 31, 1994 made by the Registrant in favor
of MetLife Capital Corporation. (Incorporated by reference to Exhibit
10.1 to the Registrant's Quarterly Report on Form 10-Q for the period
ended March 31, 1994)
10.7(a) Guaranty dated as of October 2, 1995 by Thomas W. Itin to the
Registrant (the "Itin Guaranty"). (Incorporated by reference to
Exhibit 10.9 to the Registrant's 1995 Form 10-K)
10.7(b) Amendment One to the Itin Guaranty. (Incorporated by reference to
Exhibit 10.7(b) to the Registrant's Annual Report on Form 10-K for the
period ended September 30, 1997 (the "1997 Form 10-K")
10.7(c) Amendment Two to the Itin Guaranty. (Incorporated by reference to
Exhibit 10.7(c) to the Registrant's first amendment to the Form S-3 as
filed with the Commission on September 24, 1998)
10.8 Security Agreement between Ajay and its subsidiaries, as debtors, and
the Registrant and its subsidiaries, as secured parties. (Incorporated
by reference to Exhibit 10.8 to the 1997 Form 10-K)
21.1 List of Subsidiaries. See Item 1 in this report
23.1 Consent of Friedlob Sanderson Raskin Paulson & Tourtillott, LLC.
See Exhibit 5.1
23.2 Consent of Horwath Gelfond Hochstadt Pangburn & Co. FILED HEREWITH.
24.1 Power of Attorney. See signature page of this Registration Statement
6
<PAGE>
Item 17. Undertakings.
-------------
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 to include any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material
change to such information in the 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.
4. That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Company's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) 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 the initial bona
fide offering thereof.
7
<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, thereunto duly
authorized, in the City of West Bloomfield, State of Michigan, on October 7,
1998.
WILLIAMS CONTROLS, INC.
By /s/ Thomas W. Itin
-----------------------
Thomas W. Itin,
President, Chairman and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and/or
directors of Williams Controls, Inc., by virtue of their signatures appearing
below, hereby constitute and appoint Thomas W. Itin, with full power of
substitution, as attorney-in-fact in their names, places and steads, to execute
any and all amendments to this Registration Statement on Form S-3 in the
capacities set forth opposite their names below and hereby ratify all that said
attorney-in-fact may do by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
/s/ Thomas W. Itin Principal Executive October 7, 1998
------------------------ Officer and Director
Thomas W. Itin
/s/ Gerard A. Herlihy Chief Financial Officer, October 7, 1998
------------------------ Chief Administrative
Gerard A. Herlihy Officer, and Principal
Accounting Officer
/s/ R. William Caldwell Director October 7, 1998
------------------------
R. William Caldwell
/s/ H. Samuel Greenawalt Director October 7, 1998
------------------------
H. Samuel Greenawalt
/s/ Timothy S. Itin Director October 7, 1998
------------------------
Timothy S. Itin
<PAGE>
EXHIBIT 23.2
CONSENT OF HORWATH GELFOND HOCHSTADT PANGBURN & CO.
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of Williams Controls, Inc., of our reports dated December 18, 1997,
relating to the consolidated balance sheets of Williams Controls, Inc. and
subsidiaries as of September 30, 1997 and 1996, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
years in the three-year period ended September 30, 1997, and the related
financial statement schedule, which reports appear in the September 30, 1997
annual report on Form 10-K of Williams Controls, Inc. and to the reference to
our Firm under the caption "Experts" in the Prospectus.
HORWATH GELFOND HOCHSTADT PANGBURN & CO.
Denver, Colorado
July 15, 1998
THOMAS W. ITIN
"EAU VIVE"
4831 OLD ORCHARD TRAIL
ORCHARD LAKE, MICHIGAN 48324-3050
July 15, 1998
Mr. Gerard A. Herlihy
Chief Financial Officer
WILLIAMS CONTROLS, INC.
14100 S.W. 72nd Avenue
Portland, OR 97224
Re: Investment in Ajay Sports, Inc.
Dear Jerry:
Williams Controls, Inc. (the "Company"), and Ajay Sports, Inc. ("Ajay") entered
into an agreement dated June 30, 1998 (the "Agreement"), whereby the Company
agreed to invest $2,000,000 into Ajay, assume certain debts of Ajay, and convert
$5,000,000 of loans and advances to Ajay into Series D Convertible Preferred
Stock of Ajay. This agreement was made in consideration of the restructuring of
the Company's and Ajay's joint and several credit facilities with Wells Fargo
Bank, into separate loan facilities for the Company and Ajay.
I consented to that transaction and this letter shall serve as Amendment No. Two
to my guaranty dated October 2, 1995, as amended January 7, 1998 to the Company,
and confirms that the Company's loans and investments to Ajay under the
Agreement, including the additional $2,000,000 investment and the preferred
stock that was received in exchange for loans and advances to Ajay, are
Guaranteed Obligations (as defined in Amendment One to Guaranty).
Sincerely,
/s/ Thomas W. Itin
- ------------------
Thomas W. Itin
Acknowledged and accepted as of the date first above written.
WILLIAMS CONTROLS, INC.
By: /s/ Gerard A. Herlihy
---------------------
Gerard A. Herlihy