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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
JULY 4, 2005
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DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
PCTEL, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 000-27115 77-0364943
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(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (IRS EMPLOYER
INCORPORATION) IDENTIFICATION NUMBER)
8725 W. HIGGINS ROAD, SUITE 400, CHICAGO, IL 60631
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(773) 243-3000
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2 (b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4 (c))
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
On July 4, 2005, PCTEL, Inc. ("PCTEL") acquired all of the outstanding
share capital of Sigma Wireless Technologies Limited, an Irish company ("SWT"),
pursuant to a Share Acquisition Agreement dated as of July 4, 2005 among PCTEL,
SWT, the holders of the outstanding share capital of SWT, and other parties (the
"Acquisition Agreement"). SWT is based in Dublin, Ireland and develops,
manufactures and distributes antenna products designed for wireless
communications. The selling shareholders of SWT consist of three
manager/directors of SWT and an Irish corporation owned by affiliates of SWT.
The total purchase price was 22.0 million Euro (approximately $26.8
million). 19.5 million Euro (approximately $23.7 million) of the total was paid
in cash at the close of the transaction, of which approximately 5.1 million Euro
was immediately used to discharge outstanding indebtedness or retirement of
preferred shares outstanding at the closing and the remaining 14.4 million Euro
was paid to the selling shareholders of SWT. In addition, there was the
assumption of approximately 2.5 million Euro of debt of SWT, consisting
principally of unfunded pension liability.
The Acquisition Agreement also provides for an "earn-out" provision in
favor of the selling shareholders of SWT, pursuant to which such shareholders
may receive up to an additional 7.5 million Euro (approximately $9.1 million) in
cash based on the revenue performance of SWT over the 18-month period ending
December 31, 2006. A cash payment of up to 5.75 million Euro (approximately
$7.0 million) of the 7.5 million Euro total possible earn-out will be made to
such shareholders based on SWT revenue performance during the period in excess
of 26 million Euro up to 35 million Euro; an additional cash payment of up to
1.75 million Euro (approximately $2.1 million) of the 7.5 million Euro total
possible earn-out will be made to such shareholders based on SWT revenue
performance during the period in excess of 35 million Euro up to 38 million
Euro. Revenue performance of SWT is measured quarterly, and earn-out payments,
if any, are to be made within 45 days of the end of the quarterly period.
The cash consideration paid and to be paid in connection with the
acquisition will be provided from PCTEL's existing cash.
Under the Acquisition Agreement, the selling shareholders of SWT are
required to indemnify PCTEL against losses resulting from breaches of
representations and warranties made by such shareholders in the agreement and
from failure of such shareholders to comply with covenants and agreements to be
performed under the agreement, and against other specified costs and expenses
expected to be incurred by SWT. The indemnification obligations of the SWT
selling shareholders survive for a period of 12 months from July 4, 2005, with
certain identified exceptions which survive for up to six years from such date.
A third-party escrow arrangement has been established under the Acquisition
Agreement for the benefit of PCTEL to satisfy the indemnification obligations of
the selling shareholders during the 12 month period following the closing date
of the acquisition, and the sum of 1.75 million Euro of the cash purchase price
paid at the closing has been deposited into the escrow.
Under the Acquisition Agreement, or in collateral agreements related to
the acquisition, other principal agreements among the parties included the
following:
- The principal selling shareholder of SWT, an Irish company owned by
affiliates of SWT, has agreed it will not engage in any activities
that are competitive with the business of
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SWT for a period of 24 months from July 4, 2005, nor will it solicit
the employees of SWT during that period.
- PCTEL will provide equity incentive grants in the form of stock
options or restricted shares of PCTEL common stock, aggregating
approximately 100,000 shares, under its 1997 Stock Option Plan to
those employees of SWT continuing with the combined companies as
PCTEL may determine. Approximately 100 employees of SWT will
continue with the combined companies.
- The key managers of SWT, who will continue as employees of the
combined companies, have entered into employment agreements with SWT
that include a non-competition covenant with a term of 9 months
beginning on the termination date of employment.
- PCTEL has entered into a lease agreement for the continued use of
the operating facility and offices where SWT is presently located in
Dublin, Ireland. PCTEL has the right to terminate the lease
beginning on the second anniversary of the closing date.
- An Irish company affiliated with the selling corporate shareholder
of SWT transferred and assigned to SWT all patent applications
relating to technology used by SWT in its business.
A copy of the Acquisition Agreement is filed as Exhibit 2.1 hereto and is
incorporated by reference into this report. The description of the Acquisition
Agreement set forth above is a summary of the material terms of that agreement.
A copy of the press release of PCTEL dated July 5, 2005 announcing the
acquisition is attached hereto as Exhibit 99.1.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
PCTEL will file such financial statements of the business acquired, as may
be required under Item 9.01 of Form 8-K, as soon as practicable pending
reconciliation of such financial statements to the requirements of United States
generally accepted accounting principles, and in any event not later than
September 16, 2005.
(b) Pro Forma Financial Information
PCTEL will file such pro forma financial statements of the business
acquired, as may be required under Item 9.01 of Form 8-K, as soon as practicable
pending reconciliation of the historical financial statements of the business
acquired to the requirements of United States generally accepted accounting
principles, and in any event not later than September 16, 2005.
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(c) Exhibits
Exhibit No. Description
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2.1* Share Acquisition Agreement dated as of July 4, 2005, among
PCTEL, Inc., Sigma Wireless Technologies Limited, and other
parties, with exhibits.
99.1 Press release dated July 5, 2005 announcing the acquisition of
Sigma Wireless Technologies Limited.
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* Pursuant to Item 601(b)(2) of Regulation S-K, certain schedules and similar
attachments to such agreement, containing operational and related information of
SWT or other non-material information incidental to the transactions
contemplated by such agreement, have been omitted. PCTEL agrees to furnish
supplementally a copy of such schedules and attachments to the Commission upon
request.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
PCTEL, Inc. has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 8, 2005
PCTEL, INC.
By: /s/ John W. Schoen
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John W. Schoen, Chief Financial Officer
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