<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
-------- --------
COMMISSION FILE NUMBER: 0-17995
AMTECH CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 75-2216818
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
17304 PRESTON ROAD
BUILDING E-100
DALLAS, TEXAS 75252
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(972) 733-6600
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS) AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
--- ---
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
CLASS OUTSTANDING AT NOVEMBER 7, 1997
- -------------------------------------- --------------------------------
COMMON STOCK, PAR VALUE $.01 PER SHARE 16,934,563
<PAGE>
INDEX
PART I-FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets at September 30, 1997
and December 31, 1996 3
Condensed Consolidated Statements of Operations for the
three months and nine months ended September 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows for the
nine months ended September 30, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 8
PART II-OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES 10
ITEM 5. OTHER INFORMATION 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
</TABLE>
2
<PAGE>
AMTECH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(In thousands)
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 259 $ 5,296
Short-term marketable securities 5,914 11,852
Accounts receivable, net of allowance for doubtful 32,811 28,030
accounts of $989,000 in 1997 and $1,006,000 in 1996
Inventories 13,454 13,497
Deferred income taxes -- 2,401
Prepaid expenses 718 1,256
------- -------
Total current assets 53,156 62,332
Property and equipment, at cost 29,002 27,638
Accumulated depreciation (15,910) (12,994)
------- -------
13,092 14,644
Deferred income taxes -- 1,003
Intangible assets, net 6,948 8,214
Other assets 5,723 4,848
------- -------
$ 78,919 $ 91,041
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,847 $ 6,815
Note payable -- 1,839
Accrued expenses 10,754 8,391
Deferred revenues 1,686 2,240
------- -------
Total current liabilities 19,287 19,285
Contingencies
Stockholders' equity:
Preferred stock, $1 par value, 10,000,000 shares
authorized; none issued -- --
Common stock, $.01 par value, 30,000,000 shares
authorized; 14,802,663 issued, 14,722,663
outstanding in 1997 and 1996 148 148
Additional paid-in capital 76,072 76,510
Treasury stock, at cost (393) (393)
Accumulated deficit (16,195) (4,509)
------- -------
Total stockholders' equity 59,632 71,756
------- -------
$ 78,919 $ 91,041
======= =======
</TABLE>
See accompanying notes.
3
<PAGE>
AMTECH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
------------------ ------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales $ 30,185 $ 27,971 $ 83,215 $ 86,114
Operating costs and expenses (a):
Cost of sales 19,363 15,961 52,511 50,177
Research and development 3,008 2,263 8,780 7,384
Marketing, general and administrative 9,603 10,255 31,726 30,328
------ ------ ------- ------
31,974 28,479 93,017 87,889
------ ------ ------- ------
Operating loss (1,789) (508) (9,802) (1,775)
Investment income 159 344 894 2,710
Interest expense --- (49) (65) (219)
------ ------ ------- ------
Income (loss) before income taxes (1,630) (213) (8,973) 716
Provision (benefit) for income taxes (a) 37 (150) 2,713 446
------ ------ ------- ------
Net income (loss) $ (1,667) $ (63) $ (11,686) $ 270
====== ====== ======= ======
Earnings (loss) per share $ (0.11) $ 0.00 $ (0.79) $ 0.02
====== ====== ======= ======
Shares used in computing earnings (loss) per share 14,723 14,622 14,723 14,749
====== ====== ======= ======
</TABLE>
(a) The three months ended September 30, 1997 include special charges of
$1,750,000 included in operating costs and expenses related to the
disposition of the IDG. The nine months ended September 30, 1997 include
special charges of $3,825,000 included in operating costs and expenses
related to the disposition of the IDG and $4,680,000 in provision for
income taxes representing the effect of establishing a valuation allowance
for U.S. deferred tax assets. See Note 3 to Condensed Consolidated
Financial Statements included herein for additional information.
See accompanying notes.
4
<PAGE>
AMTECH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended September 30
------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (11,686) $ 270
Adjustments to reconcile net income (loss) to net cash
used by operating activities:
Depreciation and amortization 3,831 3,413
Deferred income taxes 3,404 (1)
Realized gain on sale of marketable securities -- (2,150)
Stock option compensation -- 446
Tax benefit from exercise of stock options -- 14
Change in assets and liabilities:
(Increase) decrease in accounts receivable (5,369) 1,428
(Increase) decrease in inventories 43 (2,896)
(Increase) decrease in prepaid expenses 538 (420)
(Increase) decrease in intangibles and other assets 832 (2,427)
Increase (decrease) in accounts payable
and accrued expenses 2,395 (618)
Decrease in deferred revenues (554) (631)
------- -------
Net cash used by operating activities (6,566) (3,572)
Cash flows from investing activities:
Purchases of property and equipment (1,559) (3,066)
Purchase of Cardkey Systems (1,868) (952)
Purchases of marketable securities (4,916) (9,582)
Sales and maturities of marketable securities 10,854 7,204
Increase in other assets (1,132) (227)
Other (66) (404)
------- -------
Net cash provided (used) by investing activities 1,313 (7,027)
Cash flows from financing activities:
Proceeds from issuance of common stock -- 97
Other 69 --
------- -------
Net cash provided by financing activities 69 97
Effect of exchange rate changes on cash and cash equivalents 147 88
------- -------
Decrease in cash and cash equivalents (5,037) (10,414)
Cash and cash equivalents, beginning of period 5,296 17,669
------- -------
Cash and cash equivalents, end of period $ 259 $ 7,255
======= =======
</TABLE>
See accompanying notes.
5
<PAGE>
AMTECH CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying financial statements, which should be read in conjunction
with the audited consolidated financial statements included in the Company's
1996 Annual Report to Shareholders and Form 10-K, are unaudited but have been
prepared in the ordinary course of business for the purpose of providing
information with respect to the interim periods. The Condensed Consolidated
Balance Sheet at December 31, 1996 was derived from the audited Consolidated
Balance Sheet at that date which is not presented herein. Management of the
Company believes that all adjustments necessary for a fair presentation for such
periods have been included and are of a normal recurring nature except for the
special charges as explained in Note 3. The results of operations for the nine-
month period ended September 30, 1997 are not necessarily indicative of the
results to be expected for the full year.
Earnings per share is computed based on the weighted average number of
shares of common stock and dilutive common equivalent shares outstanding.
2. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
Raw materials $ 6,847,000 $ 7,355,000
Work in process 2,813,000 2,307,000
Finished goods 3,794,000 3,835,000
----------- -----------
$13,454,000 $13,497,000
=========== ===========
</TABLE>
3. SPECIAL OPERATING AND INCOME TAX CHARGES
In July 1997, the Company announced that it would withdraw from the
wireless LAN terminal market and seek buyers for its Interactive Data Group
("IDG") business. As a result, operating results for the quarter ended June 30,
1997 included non-cash charges of $2,075,000 to reduce the assets of the IDG to
their estimated net realizable values. In the quarter ended September 30, 1997,
as expected, special charges of $900,000 were incurred for employee severance
costs and winding up of operating activities. In addition, further asset
writedowns of $750,000, relating primarily to inventories, were recorded in the
third quarter as a result of concluding a transaction in November 1997 whereby
the IDG business was sold. Allocation of the special charges to operating costs
and expenses for the three months ended September 30, 1997 are $800,000 in cost
of sales, $200,000 in research and development expense and $750,000 in
marketing, general and administrative expense, offset by $100,000 in sales.
Allocation of the special charges to operating costs and expenses for the nine
months ended September 30, 1997 are $1,800,000 in cost of sales, $300,000 in
research and development expense and $1,725,000 in marketing, general and
administrative expense, offset by $100,000 in sales.
Additionally, the nine month provision for income taxes includes
$4,680,000, representing the effect of establishing in the second quarter a
valuation allowance for U.S. deferred tax assets, in
6
<PAGE>
accordance with the requirements of Statement of Financial Accounting Standards
(SFAS) No. 109 "Accounting for Income Taxes". Management concluded in the second
quarter that the Company would have three years of cumulative U.S. losses (1995-
1997) and that such "negative evidence" per SFAS No. 109 could not be overcome
due to the Company's operating losses and the uncertainty surrounding the
outcome of the Company's review of its strategic alternatives.
4. CONTINGENCIES
WaveNet International, Inc. and certain of its employees are the subject of
a Canadian $11,000,000 (approximately U.S. $8,000,000) suit brought by Teklogix,
Inc., their former employer. The suit alleges improper use of confidential
information in WaveNet International, Inc.'s products, theft of technology,
misappropriation of business opportunities, copyright infringement, and similar
improprieties. The Company sold its interest in WaveNet International, Inc. in
November 1997 and does not expect to incur any material financial liability
associated with this litigation.
5. SUBSEQUENT EVENT
Effective November 3, 1997, the Company and UNOVA, Inc. ("UNOVA") entered
into an agreement whereby UNOVA paid the Company $10,000,000 cash in exchange
for 2,211,900 newly issued unregistered shares of the Company's common stock and
the Company's commitment to negotiate in good faith certain agreements with
UNOVA for future product development.
7
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company is organized into two market-oriented groups. The
Transportation Systems Group ("TSG"), which includes Amtech Systems Corporation,
Amtech World Corporation and Amtech International S.A., develops and provides
high-frequency radio frequency identification (RFID) solutions to the
transportation and logistics markets. These markets include electronic toll and
traffic management (ETTM), rail, airport, parking and access control,
intermodal, and motor freight. The Electronic Security Group ("ESG"), which
focuses on products and services for electronic access control applications,
includes Amtech Europe Limited and Cardkey Systems, Inc.
In July 1997, the Company announced that it would withdraw from the
wireless LAN terminal market and seek buyers for its Interactive Data Group
("IDG") business, consisting of WaveNet, Inc. and WaveNet International, Inc. As
a result, special charges of $2,075,000 were recorded in the quarter ended June
30, 1997 to adjust the assets of the IDG to their then estimated net realizable
values. In the quarter ended September 30, 1997, as expected, special charges of
$900,000 were incurred for employee severance costs and winding-up of operating
activities. In addition, further asset writedowns of $750,000, relating
primarily to inventories, were recorded in the third quarter as a result of
concluding a transaction in November 1997 whereby the IDG business was sold.
RESULTS OF OPERATIONS
Sales for the three months and nine months ended September 30, 1997
increased $2,214,000 or 8% and decreased $2,899,000 or 3%, respectively, from
the comparable periods in 1996. Sales for the three months in 1997 increased in
both the TSG and ESG by approximately $1,000,000 each with the increase in the
order rate leading to greater sales order backlog amounts at the end of the
quarter. Sales for the nine months in 1997 as compared to the same period in
1996 were unchanged for the ESG and down approximately $2,500,000 for the TSG,
due to delays in timing of revenue recognition of certain system integration
contracts and European manufacturing delays, all occurring primarily in the
first quarter of 1997. Also, TSG sales to a single systems integration services
contract decreased from $10,850,000 in 1996 to $3,656,000 in 1997 as the project
nears completion. Sales order backlog at September 30, 1997 increased 65% to
approximately $61,000,000 as compared to $37,000,000 at the end of 1996's third
quarter.
Gross profit as a percentage of total sales decreased from 43% in 1996 to
36% in 1997 for the three month periods and from 42% in 1996 to 37% in 1997 for
the nine month periods. The decrease in the three month and nine month periods
is primarily due to special charges of $800,000 and $1,800,000, respectively, to
adjust certain IDG assets to their estimated net realizable values. Also
affecting the decrease in both periods is a reduction in TSG's gross profit
margin from 40% in 1996 to 30% in 1997 for the three month periods and from 38%
in 1996 to 32% in 1997 for the nine month periods, primarily due to lower margin
systems integration project work in the ETTM market. The ESG's gross profit
margin remained constant at 42% for all periods.
Research and development for the three months and nine months ended
September 30, 1997 increased $745,000 or 33% and $1,396,000 or 19% from the
comparable periods in 1996, primarily due to an increase in development
activities in the TSG. Expenditures by the TSG increased from $1,124,000 in 1996
to $2,018,000 in 1997 for the three month periods and from $3,674,000 in 1996 to
$5,193,000 in 1997 for the nine month periods.
Marketing, general and administrative expenses for the three months and
nine months ended September 30, 1997 decreased $652,000 or 6% and increased
$1,398,000 or 5% from the comparable
8
<PAGE>
periods in 1996. For the three month periods, a $900,000 decrease was
attributable to the TSG and ESG primarily due to certain cost reductions and
overall expense controls affecting discretionary expenditures. The three month
and nine month periods include special charges relating to the IDG of $750,000
and $1,725,000, respectively, for employee severance costs, winding-up of
operating activities and adjusting certain assets to their estimated net
realizable values.
As a result of the foregoing, the Company experienced total operating
losses of $1,789,000 and $9,802,000 for the three months and nine months ended
September 30, 1997, including IDG losses of $1,650,000 and $5,633,000,
respectively. This compares to total operating losses of $508,000 and $1,775,000
for the comparable periods in 1996, including IDG losses of $732,000 and
$1,967,000, respectively.
Investment income for the three months and nine months ended September 30,
1997 decreased from $344,000 to $159,000 and from $2,710,000 to $894,000,
respectively. The decrease for the three month period is attributable to the
reduction in the amount of invested cash and short-term marketable securities.
The decrease for the nine month period is primarily attributable to non-
recurring gains of $2,150,000 realized in 1996 from the sale of remaining U.S.
corporate equity securities in the Company's investment portfolio.
The income tax provision of $2,713,000 for the nine months ended September
30, 1997 includes $4,680,000, representing the effect of establishing in the
second quarter a valuation allowance for U.S. deferred tax assets, in accordance
with the requirements of Statement of Financial Accounting Standards (SFAS) No.
109 "Accounting for Income Taxes". Management concluded in the second quarter
that the Company would have three years of cumulative U.S. losses (1995-1997)
and that such "negative evidence" per SFAS No. 109 could not be overcome due to
the Company's operating losses and the uncertainty surrounding the outcome of
the Company's review of its strategic alternatives. Additionally, the Company's
financial statements do not reflect tax benefits for losses in foreign
jurisdictions.
As a result of the foregoing, the Company experienced a net loss of
$1,667,000 and $11,686,000 for the three months and nine months ended September
30, 1997 as compared to a net loss of $63,000 and net income of $270,000 for the
same periods in 1996.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share," which is required to be adopted on December 31,
1997. At that time, the Company will be required to change the method it
currently uses to compute earnings per share and to restate all prior periods.
Under the new requirements for calculating primary earnings per share, the
dilutive effect of stock options will be excluded. These new requirements are
not expected to materially change primary or fully diluted earnings per share
for the three months and nine months ended September 30, 1997 and 1996.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997 the Company's principal source of liquidity is its
net working capital position of $33,869,000. The Company's net working capital
position increased significantly in November 1997 when the Company and UNOVA,
Inc. entered into an agreement whereby UNOVA paid the Company $10,000,000 cash
in exchange for 2,211,900 newly issued unregistered shares of the Company's
common stock and the Company's commitment to negotiate in good faith certain
agreements with UNOVA for future product development. For the nine months ended
September 30, 1997 the Company used cash of $6,566,000 for operating activities,
primarily to fund operating losses and the growth in accounts receivable, and
$2,217,000 for the final note payment associated with the acquisition of
Cardkey. The IDG recorded pretax losses of approximately $5,600,000 in the first
nine months of 1997; however, the Company's disposition of the IDG will benefit
future operating results and cash flows. During the third quarter 1997, the
Company replaced its pledge of nearly $4,000,000 of the Company's short-term
marketable securities to support a TSG performance bond for a large systems
integration services contract
9
<PAGE>
with the pledge of the real property of its manufacturing and engineering
facility in Albuquerque, New Mexico. The Company expects to invest up to an
additional $500,000 in 1997 for property and equipment and will be required to
invest several million dollars during the remainder of 1997 and 1998 for working
capital to support large systems integration services contracts of the TSG. In
the near term, the Company plans to establish a working capital line of credit
for up to $10,000,000. Additional acquisitions, if any, would be financed by the
most attractive alternative available.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
The Company and UNOVA, Inc. ("UNOVA") entered into an agreement, dated as
of October 31, 1997, whereby UNOVA paid the Company $10,000,000 cash in exchange
for 2,211,900 newly issued unregistered shares of the Company's common stock and
the Company's commitment to negotiate in good faith certain agreements with
UNOVA for future product development. The issuance of these shares, which were
issued on November 3, 1997, was exempt from registration under the Securities
Act of 1933, as amended, by virtue of Section 4(2) thereof and Regulation D
thereunder. UNOVA, the sole purchaser, has advised the Company that it is an
"accredited investor" within the meaning of applicable securities laws, and the
issuance of the shares was effected without any public solicitation.
ITEM 5. OTHER INFORMATION
Effective October 27, 1997 and November 1, 1997, Elmer W. Johnson and Gary
J. Fernandes, respectively, resigned their position as directors of the Company.
Michael E. Keane, a designee of UNOVA, was elected as a director of the Company
effective November 3, 1997.
Effective December 1, 1997, the Company's new address for its Dallas-based
operations will be 19111 Dallas Parkway, Suite 300, Dallas, Texas 75287.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
The following is a list of exhibits filed as part of this
Quarterly Report on Form 10-Q.
DESCRIPTION OF EXHIBITS
-----------------------
10.1* Agreement between Amtech Corporation and UNOVA, Inc.,
dated as of October 31, 1997.
10.2* Press Release dated November 3, 1997 announcing the
UNOVA, Inc. purchase of Amtech Corporation Common
Stock.
27.1* Financial Data Schedule.
(B) No reports of the registrant on Form 8-K have been filed with the
Securities and Exchange Commission during the three months ended
September 30, 1997.
- --------------------------------------------------------------------------------
*Filed herewith.
10
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
AMTECH CORPORATION
(Registrant)
Date: November 14, 1997 By: /s/ Steve M. York
------------------------------
Steve M. York
Senior Vice President, Chief Financial
Officer, and Treasurer
(Principal Financial Officer and
Duly Authorized Officer)
11
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EXHIBIT 10.1
AMTECH CORPORATION
AGREEMENT
as of October 31, 1997
October 31, 1997
UNOVA, Inc.
360 North Crescent Drive
Beverly Hills, CA 90210-4867
Attention: Michael E. Keane, Chief Financial Officer
Ladies and Gentlemen:
Amtech Corporation (the "Company"), a Texas corporation, hereby agrees with
UNOVA, Inc. ("UNOVA"), a Delaware corporation, as follows:
1. Agreement.
---------
(a) UNOVA shall pay the Company an aggregate of $10,000,000 in cash, which
shall represent the following: (i) payment for the number of shares of newly-
issued Company common stock, par value $0.01 per share (the "Company Stock")
determined as set forth in this paragraph (a) (the "Purchase Price"), and (ii)
an advance fee for research and development work to be performed by the Company
as referred to in paragraph 4(h) of this Agreement (the "Advance Fee"). UNOVA
and the Company agree that the aggregate cash payment made by UNOVA to the
Company shall be allocated seventy-five percent (75%) to the Purchase Price for
the Company Stock (which reflects a twenty-five percent (25%) discount to the
market price of the Company Stock as a result of restrictions on transferability
imposed thereon), and twenty-five percent (25%) to the Advance Fee for research
and development work. Subject to the terms and conditions contained in this
Agreement, on the "Closing Date" (as defined in paragraph 1(d)), the Company
shall issue and sell to UNOVA the number of whole shares (the "Shares") of
Company Stock determined by dividing $ 10,000,000 by the average of the "Daily
Price" (as defined below) of Company Stock for each trading day during the
period (the "Measurement Period") beginning on October 1, 1997 and ending on
October 31, 1997. The "Daily Price" means the mean between the high and the low
reported sales prices of Company Stock on NASDAQ as reported in the Wall Street
Journal, on each trading day during the Measurement Period.
(b) The purchase and sale of the Shares shall be effected at the "Closing"
(as defined in paragraph 1(d)) by the Company executing and delivering to UNOVA
duly
<PAGE>
UNOVA, Inc.
October 31, 1997
Page 2
executed stock certificates evidencing the Shares, duly registered in its name,
against delivery to the Company of the Purchase Price.
(c) At the Closing, UNOVA shall pay and remit $10,000,000 to the Company,
by wire transfer of immediately available funds to the Company's bank account at
NationsBank of Texas, N.A., Dallas, Texas, Account Number 1090947168, ABA
Routing Code 111000025.
(d) Consummation of the transactions provided for in this Agreement (the
"Closing") shall take place at the offices of UNOVA, located at 360 North
Crescent Drive, Beverly Hills, CA 90210-4867, on November 3, 1997 (the "Closing
Date") commencing at 10:00 AM, or such other place or date or time as the
parties may mutually agree in writing.
2. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to UNOVA as follows, which representations and
warranties shall be deemed reaffirmed on the Closing Date as if made again on
such date:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas, with the corporate power and
authority to own, lease and operate its properties and conduct its business as
now conducted. The Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its ownership
or lease of property or the conduct of its business requires qualification,
except where the failure to so qualify would not have a material adverse effect
on the condition (financial or other), properties, business or results of
operations of the Company and its subsidiaries taken as a whole.
(b) Each "Significant Subsidiary" (as defined below) is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, with the corporate power and authority to own, lease and operate
its properties and conduct its business as now conducted. Each Significant
Subsidiary is duly qualified to do business as a foreign corporation in good
standing in all other jurisdictions in which its ownership or lease of property
or the conduct of its business requires qualification, except where the failure
to so qualify would not have a material adverse effect on the condition
(financial or other), properties, business or results of operations of the
Company and its subsidiaries taken as a whole. All of the issued and
outstanding capital stock of each Significant Subsidiary has been duly
authorized and validly issued and is fully paid and nonassessable; and the
capital stock of each Significant Subsidiary is owned by the Company, directly
or through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity. For purposes of this Agreement,
"Significant Subsidiary" means any direct or indirect subsidiary of the Company
that owns, directly or indirectly, any single service or manufacturing facility,
or portion thereof, the book value of which (after deducting accumulated
depreciation) as of the date the determination is being made
<PAGE>
UNOVA, Inc.
October 31, 1997
Page 3
is greater than one percent (1%) of consolidated net assets. As used in this
definition, "service or manufacturing facility" means property, plant and
equipment used for actual performance of services, and it excludes sales offices
and facilities used only for general administration.
(c) A description of the authorized, issued and outstanding capital stock
of the Company is set forth on Schedule 2(c). The Company has authorized the
issuance of at least 2,275,000 shares of Company Stock for purposes of this
Agreement. The Shares and all other outstanding shares of capital stock of the
Company have been duly authorized; all outstanding shares of capital stock of
the Company are, and when the Shares have been delivered and paid for in
accordance with this Agreement, the Shares will be duly and validly issued,
fully paid and nonassessable; and the stockholders of the Company have no
preemptive rights with respect to the Shares.
(d) There are no contracts, agreements or understandings between the
Company and any person that would give rise to a valid claim against the Company
for a brokerage commission, finder's fee or like payment in connection with this
Agreement.
(e) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Securities Act of 1933, as amended (the
"Act"), with respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities in the
securities registered pursuant to any registration statement filed by the
Company under the Act.
(f) Neither the Company nor any Significant Subsidiary is in violation of
its charter or by-laws or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Company or any of its Significant Subsidiaries is subject, or in violation
of any applicable law, administrative regulation or administrative or court
order or decree, which violation or default would, singly or in the aggregate,
have a material adverse effect on the condition (financial or other),
properties, business or results of operations of the Company and its
subsidiaries taken as a whole.
(g) No authorization, approval or consent of any court or governmental
authority or agency, domestic or foreign, is necessary in connection with the
issuance or sale of the Shares hereunder, except such as may be required under
the Act or the rules and regulations of the Securities and Exchange Commission
(the "Commission") or under state or foreign securities laws, all of which have
been obtained or made and are or will be at the Closing Date in full force and
effect.
(h) The execution, delivery and performance of this Agreement and the
issuance and sale of the Shares will not result in a breach or violation of any
of the terms
<PAGE>
UNOVA, Inc.
October 31, 1997
Page 4
and provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, any statute, any rule,
regulation or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company or any subsidiary of the Company
or any of their properties, or any agreement or instrument to which the Company
or any such subsidiary is a party or by which the Company or any such subsidiary
is bound or to which any of the properties of the Company or any such subsidiary
is subject, or the charter or by-laws of the Company or any such subsidiary, and
the Company has full power and authority to authorize, issue and sell the Shares
as contemplated by this Agreement.
(i) This Agreement has been duly authorized by all necessary corporate
action and has been duly executed and delivered by the Company.
(j) Set forth on Schedule 2(j) is a list and description of all real
properties owned by the Company and its subsidiaries or in which any of them
have any equity interest. Except as set forth on Schedule 2(j), the Company and
its subsidiaries have good and sufficient title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or proposed to be made thereof by them,
other than liens for taxes not yet due and payable, workers', repairmen's and
similar liens imposed by law incurred in the ordinary course of business, and
retention of title agreements with suppliers entered into in the ordinary course
of business; and the Company and its subsidiaries hold any leased real or
personal property which, individually or in the aggregate, is material to the
Company and its subsidiaries taken as a whole, under valid and enforceable
leases with no exceptions that would materially interfere with the use made or
proposed to be made thereof by them.
(k) The Company and its Significant Subsidiaries possess such material
certificates, authorities or permits issued by appropriate governmental agencies
or bodies necessary to conduct the business now operated by them, and neither
the Company nor any of its Significant Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authority or permit that, if determined adversely to the Company or any of its
Significant Subsidiaries, would individually or in the aggregate have a material
adverse effect on the condition (financial or other), properties, business or
results of operations of the Company and its subsidiaries taken as a whole.
(l) No strike, work stoppage or similar labor dispute with the employees of
the Company or any subsidiary exists or, to the knowledge of the Company, is
imminent that might have a material adverse effect on the condition (financial
or other), properties, business or results of operations of the Company and its
subsidiaries taken as a whole.
<PAGE>
UNOVA, Inc.
October 31, 1997
Page 5
(m) The Company and its subsidiaries own, possess or have the right to
employ, or can acquire on reasonable terms, the patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks and trade names (collectively, the
"Patent and Proprietary Rights") presently employed by them in connection with
the business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Patent and
Proprietary Rights, and which infringement or conflict (if the subject of any
unfavorable decision, ruling or finding), singly or in the aggregate, would
result in any material adverse change in the condition (financial or other),
properties, business or results of operations of the Company and its
subsidiaries taken as a whole. The use of such intellectual property rights in
connection with the business and operations of the Company and its subsidiaries
does not, to the Company's knowledge, infringe on the rights of any persons.
The Company has previously advised UNOVA of a matter in which an infringement
claim has been made by a third party.
(n) Except as set forth on Schedule 2(n), to the knowledge of the Company,
neither the Company nor any of its subsidiaries is in violation of any statute,
any rule, regulation or order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or release of hazardous or
toxic substances or relating to the protection or restoration of the environment
or human exposure to hazardous or toxic substances (collectively, the
"environmental laws"), owns or operates any real property contaminated with any
substance that is subject to any environmental laws, is liable for any off-site
disposal or contamination pursuant to any environmental laws, or is subject to
any claim relating to any environmental laws, which violation, contamination,
liability or claim would individually or in the aggregate have a material
adverse effect on the condition (financial or other), properties, business or
results of operations of the Company and its subsidiaries taken as a whole. Set
forth on Schedule 2(n) is a list and description of all sites in which the
Company or any of its subsidiaries is a "potentially responsible party" as
defined in the environmental laws and all proceedings brought by any
governmental agency under the environmental laws which could reasonably be
expected to result in a fine or penalty in excess of $100,000.
(o) Except as disclosed in the "SEC Reports" (as defined in paragraph
2(p)), there is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or any of
its subsidiaries, which could reasonably be expected to affect consummation of
this Agreement or could reasonably be expected to result in an adverse judgment
or settlement against the Company or any of its subsidiaries in excess of
$500,000.
<PAGE>
UNOVA, Inc.
October 31, 1997
Page 6
(p) The financial statements contained in the Company's latest annual
report as filed with the Commission on Form 10-K and latest quarterly report as
filed with the Commission on Form 10-Q (collectively, the "SEC Reports") present
fairly the financial position of the Company and its consolidated subsidiaries
as of the dates shown and their results of operations and cash flows for the
periods shown, and such financial statements have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis.
(q) Except as disclosed in the SEC Reports and except for potential
additional writedowns of WaveNet assets, up to a maximum of $1,600,000, pending
the outcome of the sale of the business to parties in current negotiations,
since the date of the latest audited financial statements included in the SEC
Reports, there has been no material adverse change in the condition (financial
or other), properties, business or results of operations of the Company and its
subsidiaries taken as a whole, and there have been no transactions entered into
by the Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material to the Company and its subsidiaries taken
as a whole; and except as disclosed in the SEC Reports, there has been no
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
(r) Neither the Company nor any of its affiliates does business with the
government of Cuba or with any person or affiliate located in Cuba within the
meaning of Section 527.075, Florida Statutes, and the Company agrees to comply
with such Section if prior to the Closing it commences doing such business.
3. Representations and Warranties of UNOVA. UNOVA hereby represents and
---------------------------------------
warrants to the Company as follows, which representations and warranties shall
be deemed reaffirmed on the Closing Date as if made again on such date:
(a) UNOVA is acquiring the Shares for its own account for investment and
not with a view to, or for sale or other disposition in connection with, any
distribution thereof, except (i) in an offering covered by a registration
statement filed with the Commission under the Act covering the Shares or (ii)
pursuant to an applicable exemption under the Act.
(b) UNOVA has such experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Shares.
UNOVA is an "accredited investor" as defined in Section 501 of Regulation D
under the Act.
(c) UNOVA understands that the issuance and sale of the Shares have not
been registered under the Act or any state securities laws on the basis that the
issuance and sale of the Shares hereunder is exempt from registration under the
Act based in part on the representations of UNOVA contained in this Agreement,
and that the Shares will bear a restrictive legend restricting transfer except
in accordance with the Act.
<PAGE>
UNOVA, Inc.
October 31, 1997
Page 7
(d) UNOVA is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with the corporate power and
authority to own, lease and operate its properties and conduct its business as
now conducted. UNOVA is duly qualified to do business as a foreign corporation
in good standing in all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires qualification, except where the
failure to so qualify would not have a material adverse effect on the condition
(financial or other), properties, business or results of operations of UNOVA and
its subsidiaries taken as a whole.
(e) There are no contracts, agreements or understandings between UNOVA and
any person that would give rise to a valid claim against UNOVA for a brokerage
commission, finder's fee or like payment in connection with this Agreement.
(f) No authorization, approval or consent of any court or governmental
authority or agency, domestic or foreign, is necessary in connection with the
purchase of the Shares hereunder, except such as may be required under the Act
or the rules and regulations of the Commission or under state or foreign
securities laws, all of which have been obtained or made and are or will be at
the Closing Date in full force and effect.
(g) This Agreement has been duly authorized by all necessary corporate
action and has been duly executed and delivered by UNOVA.
(h) UNOVA has the financial capability to consummate the transactions
contemplated by this Agreement.
4. Certain Agreements of the Company. The Company hereby agrees with UNOVA as
---------------------------------
follows:
(a) At all times during which UNOVA shall hold at least eighty percent
(80%) of the Shares, the Company shall nominate UNOVA's designee (which shall be
the Chief Executive Officer ("CEO"), the Chief Financial Officer or such other
Senior Vice President of UNOVA as may be designated by the CEO) to serve on the
Board of Directors of the Company.
(b) If at any time following the Closing the Company proposes to register
any shares of Company Stock under the Act (other than in connection with the
registration of securities issuable pursuant to an employee stock option, stock
purchase or similar plan, or in connection with a stock for stock merger
registered on Form S-4), the Company shall give UNOVA notice of such proposed
registration at least 30 days prior to the filing of a registration statement.
At the written request of UNOVA within 15 days after the receipt of such notice
from the Company, which request shall state the number of Shares that UNOVA
wishes to sell or distribute publicly under the registration statement
<PAGE>
UNOVA, Inc.
October 31, 1997
Page 8
proposed to be filed by the Company, the Company shall promptly use its best
efforts to register such Shares under the Act and to cause such registration to
become effective. The Company shall have the right to select the underwriters
and managers to administer any such offering, subject to the approval of UNOVA,
which approval shall not be unreasonably withheld or delayed; provided, however,
that nothing herein shall prevent the Company from, at any time, abandoning or
delaying any registration under this paragraph 4(b). Notwithstanding the
foregoing, if the managing underwriter determines and advises in writing that
the inclusion of UNOVA's shares would interfere with the successful marketing of
such securities, then the number of shares that the managing underwriter
believes may be sold in such underwritten public offering shall be allocated for
inclusion in the registration statement first, to the Company, and second, to
UNOVA.
(c) From and after the date which is 15 months following the Closing Date,
UNOVA shall have the right, on three occasions only, to demand in writing that
the Company register all or a portion of the Shares, provided, however, that the
number of Shares that UNOVA demands to register would be expected to yield at
least $8,000,000 of gross proceeds upon sale. In the event of such demand, the
Company shall promptly use its best efforts to register under the Act the number
of Shares specified by UNOVA in such demand and to cause such registration to
become effective as soon as possible after the filing thereof. Notwithstanding
the foregoing, if the Company determines that the offering of shares at the time
of UNOVA's demand would have a material adverse effect on the market for Company
Stock, or that corporate developments make it inadvisable to register the Shares
at that time, the Company may, on one occasion upon any single demand, delay the
filing of the registration statement for up to 180 days; provided, however, that
if UNOVA so elects, such registration shall continue without delay, but UNOVA
shall be required to reimburse the Company for all of its costs and expenses
incurred in connection with such registration. If the filing of the
registration statement is delayed pursuant to the preceding sentence, UNOVA
shall have the right to withdraw its demand, in which case the demand will not
count as a demand for registration under this paragraph, or leave the demand in
place. UNOVA's demand rights under this paragraph shall survive until the
earlier to occur of the following: (i) UNOVA's beneficial ownership is reduced
to less than five percent (5%) of the total number of issued and outstanding
shares of Company Stock (except as a result of new issuances of Company Stock by
the Company), (ii) UNOVA is able to sell all of the Shares then held by it under
Rule 144(k) (or its successor rule), or (iii) the fifth anniversary of the
Closing Date.
(d) The Company shall indemnify and hold harmless UNOVA, the officers and
directors of UNOVA and each underwriter of any registration of Shares pursuant
to paragraphs 4(b) or 4(c) (and any person who controls an underwriter within
the meaning of Section 15 of the Act) against all claims, losses, damages,
liabilities, actions and expenses resulting from any untrue statement or alleged
untrue statement of a material fact contained in a prospectus or in any related
registration statement, notification or the like or from any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar
<PAGE>
UNOVA, Inc.
October 31, 1997
Page 9
as the same may have been based on information furnished to the Company by
UNOVA, its officers and/or directors or such underwriter, expressly authorized
for use therein and used in accordance with such authorization. Subject to the
last paragraph of this Section 4(d), the Company agrees to reimburse each person
indemnified pursuant to this paragraph for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such loss,
claim, damage, liability, action or expense.
UNOVA, by acceptance of the registration provisions provided herein, agrees
to: (i) furnish to the Company such information concerning UNOVA and the
proposed sale or distribution of Shares as shall, in the opinion of counsel for
the Company, be necessary in connection with any such registration or
qualification; and (ii) indemnify and hold harmless the Company, its officers
and directors and each of its underwriters (and any person who controls an
underwriter within the meaning of Section 15 of the Act) against all claims,
losses, damages, liabilities, actions and expenses resulting from any untrue
statement or alleged untrue statement of a material fact furnished to the
Company by UNOVA, its officers and/or directors pursuant to this paragraph 4(d),
expressly authorized for use in connection with such registration or
qualification and used in accordance with such authorization, and from any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading.
Promptly after receipt by an indemnified party of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will promptly notify the
indemnifying party of the commencement of such action. The indemnifying party
shall then have the right to participate in, and to the extent that it may wish,
assume the defense of such action, with counsel satisfactory to the indemnified
party. If the indemnifying party assumes the defense of such action, the
indemnifying party will not be liable to the indemnified party for any legal or
other expenses subsequently incurred by the indemnified party. If the
indemnifying party does not assume the defense thereof within a reasonable
period of time following receipt of the notice, the indemnified party may defend
against the claim and the indemnifying party shall reimburse the indemnified
party for reasonable attorneys fees and costs incurred in the investigation or
defense of such claim.
(e) In the event that any Shares are to be registered or qualified pursuant
to this Section 4 (the "Registration Shares"), the Company covenants and agrees
to promptly use its best efforts to effect the registration and/or qualification
and to cooperate in the sale of the Registration Shares and to:
(i) furnish to UNOVA copies of any registration statement with respect
to the Registration Shares (as well as any necessary amendments or supplements
thereto) and any prospectus forming a part thereof prior to filing with the
Commission;
(ii) notify UNOVA, promptly after the Company shall receive notice
thereof, of the time when said registration statement becomes effective or when
any amendment or supplement to any prospectus forming part of said registration
statement has been filed;
<PAGE>
UNOVA, Inc.
October 31, 1997
Page 10
(iii) notify UNOVA promptly of any request by the Commission for the
amending or supplementing of such registration statement or prospectus or for
additional information;
(iv) advise UNOVA after the Company shall receive notice or obtain
knowledge of the issuance of any order by the Commission suspending the
effectiveness of any such registration statement or amendment thereto or of the
initiation or threatening of any proceeding for that purpose, and to promptly
use its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal promptly if such stop order should be issued;
(v) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus forming a part
thereof as may be necessary to keep such registration statement effective for
the lesser of: (a) a period of time necessary to permit UNOVA pursuant to such
registration statement to dispose of all such Shares; (b) 120 days; or (c) the
maximum period of time permitted by law to keep effective a registration
statement;
(vi) furnish to UNOVA such number of copies of such registration
statement, each amendment and supplement thereto, the prospectus included in
such registration statement (including each preliminary prospectus) and such
other documents as UNOVA may reasonably request in order to facilitate the
disposition of the Registration Shares;
(vii) use its best efforts to register or qualify the Registration
Shares under such securities or blue sky laws of such jurisdictions as
determined by the underwriter after consultation with the Company and UNOVA, and
to do any and all other acts and things which may be necessary or advisable to
enable UNOVA to consummate the disposition in such jurisdictions of such Shares,
provided, however, that the Company shall not for any purpose be required to
execute a general consent to service of process or to qualify to do business as
a foreign corporation in any jurisdiction where it is not so qualified, or,
subject itself to taxation in a jurisdiction where it had not previously been
subject to taxation, or take any other action that would subject the Company to
service of process in a lawsuit other than one arising out of the registration
of the Shares;
(viii) notify UNOVA at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which such registration statement contains an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and, at the request of
UNOVA, to prepare a supplement or amendment to such registration statement so
that such registration statement will not contain an untrue
<PAGE>
UNOVA, Inc.
October 31, 1997
Page 11
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading;
(ix) cause all Registration Shares to be listed on each securities
exchange on which similar securities issued by the Company are then listed;
(x) provide a transfer agent and (if required) a registrar for all
Registration Shares not later than the effective date of such registration
statement;
(xi) enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other actions as UNOVA or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of the Registration Shares;
(xii) make available for inspection by UNOVA, any underwriter
participating in any disposition pursuant to such registration statement, and
any attorney, accountant or other agent retained by UNOVA or such underwriter,
all financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors and employees to supply
all information reasonably requested by UNOVA, any such underwriter, attorney,
accountant or agent in connection with such registration statement;
(xiii) use its best efforts to cause the Registration Shares covered by
such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable UNOVA to
consummate the disposition of such Registration Shares; and
(xiv) use its best efforts to obtain, in addition to such consents as
may be necessary, a comfort letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by comfort letters as UNOVA may reasonably request.
(f) It shall be a condition precedent to the obligation of the Company to
register any Registration Shares pursuant to this Section 4 that UNOVA shall
have (i) furnished to the Company such information regarding the sellers of the
Registration Shares and the intended disposition of the Registration Shares and
other information concerning UNOVA as the Company shall reasonably request and
as shall be required in connection with any registration statement to be filed
by the Company; and (ii) agreed to abide by such additional or customary term
affecting any proposed offering of Company Stock, including reasonable lock-up
terms, as reasonably requested by the managing underwriter of such offering.
(g) Except as otherwise provided herein, Company shall pay all of the
expenses in connection with any registration pursuant to this Section 4,
including without limitation
<PAGE>
UNOVA, Inc.
October 31, 1997
Page 12
costs of complying with federal and state securities laws and regulations,
attorneys' and accounting fees of the Company, printing expenses and federal and
state filing fees, but the Company shall not be obligated to pay underwriting
discounts or commissions, or brokerage costs, transfer taxes, or the fees and
disbursements of any counsel for UNOVA.
(h) As soon as practicable following the date hereof, the Company and UNOVA
shall enter into definitive agreements necessary to create a research and
development alliance (the "Alliance") between the Company and UNOVA in which the
parties will develop and market radio frequency identification ("RFID")
technology to be jointly identified and developed or acquired during the term of
the Alliance (the "RFID Technology"). Such agreements shall include without
limitation (i) a technology development agreement under which the Company will
develop certain RFID Technology and be compensated (whether in cash, licenses or
otherwise) for such development based on certain milestones, with the
acknowledgment that UNOVA shall have paid the Company on the Closing Date the
Advance Fee of $2,500,000 as partial payment for such work, and (ii) cross
licenses by and to the Company and UNOVA of the RFID Technology and certain
other existing proprietary technology of the Company and/or UNOVA.
Notwithstanding the foregoing, if UNOVA and the Company are unable to conclude
on mutually satisfactory terms (x) the acquisition of certain third party
technology that forms a basis for the Alliance, and (y) the technology
development agreement referred to above, in each case by January 31, 1998, the
15-month waiting period for demand registration rights set forth in paragraph
4(c) shall be deemed expired, UNOVA may immediately thereafter demand
registration of the Shares, and the payment and allocation set forth in
paragraph 1(a) shall be deemed to be $10,000,000 for the Purchase Price for the
Shares.
(i) During the period from the date of this Agreement until the Closing
Date, the Company shall operate its business solely in the ordinary course and
shall refrain from entering into any extraordinary transactions without the
prior written consent of UNOVA, other than as disclosed in paragraph 2(q).
5. Conditions of the Obligations of UNOVA. The obligation of UNOVA to purchase
---------------------------------------
the Shares shall be subject to the satisfaction on the Closing Date of each of
the following conditions:
(a) The representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects on the Closing
Date, and the Company shall have performed in all material respects all of the
obligations under this Agreement which are to be performed on or prior to the
Closing Date.
(b) The Company shall have delivered to UNOVA the certificate of the
President and Chief Executive Officer of the Company certifying as of the
Closing Date to the fulfillment of the conditions set forth in paragraph 5(a).
<PAGE>
UNOVA, Inc.
October 31, 1997
Page 13
(c) The Company shall have delivered to UNOVA the certificate of the
Secretary or Assistant Secretary of the Company certifying as of the Closing
Date to the authorization and approval of the transactions provided for in this
Agreement by duly adopted resolutions of its Board of Directors.
(d) No investigation, suit, action or other judicial or governmental
proceeding shall be pending or threatened before any court or governmental
agency which is likely to result in the restraint or prohibition, or the
obtaining of substantial damages in connection with this Agreement or the
consummation of the transactions provided for in this Agreement.
(e) All proceedings, corporate or other, to be taken by the Company in
connection with the issuance and sale of the Shares shall be reasonably
satisfactory in form and substance to UNOVA, and the Company shall have made
available to UNOVA for examination the originals or true and correct copies of
all documents which UNOVA may reasonably request in connection therewith.
(f) The Company shall have delivered to UNOVA the written opinion of Ronald
A. Woessner, Esq., Vice President and General Counsel of the Company, to the
effect set forth on Exhibit A.
(g) There shall have been no change, nor any development involving a
prospective change, in the condition (financial or other), business, properties
or results of operations of the Company or its subsidiaries which would
reasonably be expected to be material and adverse and which would make it
impractical or inadvisable to proceed with completion of the purchase of the
Shares.
6. Conditions of the Obligations of the Company. The obligation of the Company
---------------------------------------------
to issue and sell the Shares to UNOVA shall be subject to the satisfaction on
the Closing Date of each of the following conditions:
(a) The representations and warranties of UNOVA contained in this Agreement
shall be true and correct in all material respects on the Closing Date, and
UNOVA shall have performed in all material respects all of the obligations under
this Agreement which are to be performed on or prior to the Closing Date.
(b) UNOVA shall have delivered to the Company the certificate of a Vice
President of UNOVA certifying as of the Closing Date to the fulfillment of the
conditions set forth in paragraph 6(a).
(c) No investigation, suit, action or other judicial or governmental
proceeding shall be pending or threatened before any court or governmental
agency which is likely to result in the restraint or prohibition, or the
obtaining of substantial damages in connection with this Agreement or the
consummation of the transactions provided for in this Agreement.
<PAGE>
UNOVA, Inc.
October 31, 1997
Page 14
7. Termination. This Agreement may be terminated immediately by giving
-----------
written notice specifying the cause of termination, and the transactions
provided for in this Agreement may be abandoned, without liability on the part
of the party effecting such termination: (i) by mutual written consent of the
Company and UNOVA, (ii) by either UNOVA or the Company, if the purchase and sale
of the Shares has not been consummated (for any reason other than a breach of
any representation, warranty, covenant or agreement by the party seeking
termination) on or before November 15, 1997, (iii) by UNOVA, if any of the
conditions of Section 5 have not been satisfied on the intended Closing Date and
have not been waived by UNOVA in writing, or (iv) by UNOVA, if the Company files
on or before the Closing Date a petition in bankruptcy, reorganization,
liquidation or receivership or a petition in bankruptcy, reorganization or
receivership is filed on or before the Closing Date against the Company.
8. Miscellaneous Provisions.
------------------------
(a) No party shall make, issue or release any public announcement, press
release, public statement or public acknowledgment of the terms, conditions and
status of, the transactions provided for in this Agreement, without the prior
written consent of the other party as to the content and time of release and the
media in which such statement or announcement is to be made; provided, however,
that in the case of announcements, statements, acknowledgments or revelations
which any party, in the written opinion of such party's counsel, is required by
law or regulations, including those of public stock exchanges or automated
quotation systems on which the securities of such party or its affiliates are
traded or quoted, to make, issue or release (a "Legally Required Statement"),
the making, issuing or releasing of any such Legally Required Statement shall
not constitute a breach of this Agreement if such party shall have given, to the
extent reasonably possible, three days prior notice to the other party, and
shall have attempted, to the extent reasonably possible, to clear such
disclosure with the other party. Each party agrees that it will not
unreasonably withhold or delay any such consent or clearance.
(b) Except as otherwise provided in this Agreement, each party shall be
responsible for and bear its respective costs and expenses in connection with,
or arising out of, the negotiation and execution of this Agreement and
consummation of the transactions provided for herein.
(c) This Agreement may be amended, modified, supplemented or terminated
only by a writing executed on behalf of each of the parties.
(d) No party shall assign, in whole or in part, this Agreement or its
respective rights and obligations hereunder without the express prior written
consent of the other party.
<PAGE>
UNOVA, Inc.
October 31, 1997
Page 15
(e) All notices, requests, demands or other communications hereunder must
be in writing and executed by an authorized representative of the party
responsible therefor, and must be given either by hand or telecopy, telefax or
other telecommunication device capable of creating a written record which
acknowledges receipt, as follows:
(i) If such notice is directed to the Company, it shall be sent to:
Amtech Corporation, if on or after December 1, 1997, to 19111 Dallas Parkway,
Suite 300, Dallas, Texas 75287, and if before December 1, 1997, to 17304
Preston Road, Bldg. E100, Dallas, Texas 75252, Fax No. 972/733-6693, Attention:
General Counsel, with a copy to Hughes & Luce L.L.P., 1717 Main, Dallas, Texas
75201, Fax No. 214/939-5849, Attention: Kenneth G. Hawari, or to such other
person or place as the Company shall have specified to UNOVA in writing by a
notice in accordance with this paragraph 8(e).
(ii) If such notice is directed to UNOVA, it shall be sent to: UNOVA,
Inc., 360 North Crescent Drive, Beverly Hills, California 90210-4867, Fax No:
310/888-2848, Attention: General Counsel, or to such other person or place as
UNOVA shall have specified to the Company in writing by a notice in accordance
with this paragraph 8(e).
(f) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument, and any of such
counterparts may be delivered by facsimile transmission.
(g) No single or partial waiver of any breach of any provision of this
Agreement shall be held to be a waiver of any other or subsequent breach, and
the failure of a party to enforce at any time any provision of this Agreement
shall not be deemed a waiver of any right of any such party to subsequently
enforce such provision. All remedies afforded in this Agreement shall be taken
and construed as cumulative, that is, in addition to every other remedy provided
in this Agreement or by law.
(h) This Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of Texas without regard to its conflicts
of laws rules.
(i) All representations, warranties, covenants and agreements of the
parties contained in this Agreement shall survive the execution and delivery of
this Agreement and consummation of the transactions provided for in this
Agreement for a period of one year following the Closing Date, notwithstanding
any investigation heretofore or hereafter made by or on behalf of the respective
parties.
(j) This Agreement shall be interpreted without regard to any presumption
or rule requiring construction against the party causing such agreements to be
drafted.
<PAGE>
UNOVA, Inc.
October 31, 1997
Page 16
(k) This Agreement constitutes the sole understanding and agreement of the
parties with respect to the subject matter of this Agreement and supersedes and
cancels all prior understandings and agreements.
If the foregoing is in accordance with UNOVA's understanding of our agreement,
kindly sign and return to the Company one of the counterparts hereof, whereupon
it will become a binding agreement between UNOVA and the Company in accordance
with its terms.
Sincerely,
AMTECH CORPORATION
By:
------------------------------------
Title:
---------------------------------
ACCEPTED and AGREED
UNOVA, INC.
By:
------------------------------------
Title:
----------------------------------
<PAGE>
Schedule 2(c)
Authorized Capital Stock
------------------------
1. 30,000,000 shares of Common Stock, $.01 par value per share; authorized
2. 10,000,000 shares of Preferred Stock, $1.00 par value per share; authorized
3. 14,802,663 Common Stock issued
4. 14,722,663 Common Stock outstanding
<PAGE>
Schedule 2(j)
Real Properties; Liens
----------------------
1. 8.33 acre site owned by Amtech Systems Corporation in Albuquerque, New
Mexico. This property is subject to a lien in favor of International Bank of
Commerce, San Antonio, Texas, to secure a $3,855,000 letter of credit issued
in favor of Reliance Insurance Company.
2. Office/manufacturing facility leased (125 year ground lease, which commenced
in September 1979) by Amtech Europe Limited in Cambridge, England. This
property is subject to a lien in favor of Barclays Bank PLC to secure an
amount of up to (Pounds)750,000.
3. Also, the assets of Amtech Europe Limited are subject to a "blanket" lien in
favor of Barclays Bank PLC to secure an amount of up to (Pounds)750,000.
4. There is also a $1,000,000 letter of credit in favor of Alcatel Standard
Electrica, S.A. that is secured by a $1,000,000 certificate of deposit
issued by Nations Bank of Texas, N.A., Dallas, Texas.
<PAGE>
Schedule 2(n)
Environmental Matters
---------------------
1. The site of the office/manufacturing facility leased by Amtech Europe
Limited in Cambridge, England is a former clay pit, which may have had
domestic and industrial wastes deposited at the site.
<PAGE>
Exhibit A
---------
Opinion satisfactory to UNOVA to the effects set forth in paragraph 2(a), (b),
(c), (h), (i), and (o) (limited to consummation of the Agreement)
<PAGE>
EXHIBIT 10.2
Page 1 of 2
[AMTECH CORPORATION LETTERHEAD APPEARS HERE] NEWS RELEASE
For immediate release
Contact: Beverly V. Fuortes
tel: (972) 733-6059
fax: (972) 733-6699
email: invest@amtech
web: www.stockprofiles.com/amtc
UNOVA TAKES 13% EQUITY STAKE IN AMTECH
TECHNOLOGY ALLIANCE PLANNED
DALLAS -- November 3, 1997 -- Amtech Corporation (NASDAQ: AMTC) announced today
that UNOVA, Inc. (NYSE: UNA) has purchased approximately 2.2 million newly
issued unregistered shares of Amtech common stock in a transaction valued at $10
million. With approximately 16.9 million Amtech shares outstanding after the
transaction, UNOVA's ownership in Amtech is approximately 13%.
UNOVA, which was split on October 31, 1997, from Western Atlas, Inc. (NYSE:WAI),
is a $1.5 billion revenue company in the industrial automation market. UNOVA
owns, among others, Intermec Technologies, Norand Corporation and UBI, which are
leaders in the fields of automatic data capture via wireless LANs, handheld
terminals, bar code equipment and other related technologies.
Amtech's president and chief executive officer, G. Russell Mortenson, said,
"UNOVA and Amtech plan, as part of the transaction, to negotiate a series of
joint technology development agreements to take advantage of Amtech's expertise
in radio frequency identification (RFID) technology in broader applications
market arenas, using UNOVA's channels to market. The two companies will cross
license certain technologies, as well as embark on significant new product
development activities funded in part by UNOVA's investment in Amtech. We are
extremely pleased to have a strategic alliance with a quality partner like
UNOVA," he concluded.
Amtech also announced the election of Michael E. Keane, senior vice president
and chief financial officer of UNOVA, as a new director to fill a vacancy
created by the resignations of Gary J. Fernandes and Elmer W. Johnson from
Amtech's board of directors. With these changes, the board's size will be
reduced to eight.
-MORE-
<PAGE>
Page 2 of 2
Amtech Corporation is a leading global provider of systems and solutions using
wireless data and security technologies. The Amtech Transportation Systems
Group is the world's leading provider of wireless identification, tracking and
monitoring technologies for the intelligent transportation industry. The Amtech
Electronic Security Group is a global supplier of electronic access control and
security management systems and products marketed under the Cotag International
and Cardkey Systems brand names. For further investor information, visit
Amtech's investor web site: http://www.stockprofiles.com/amtc.
-END-
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