-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HYQuE/AcDzVK8w3NOLkJTjEOYuusOj5UsV0Usmg4CqEzgJnw2Wt8YPqT+vDnO1Iv ki/sLQaR51EzSf3kvXuJQw== 0001047469-98-021512.txt : 19980522 0001047469-98-021512.hdr.sgml : 19980522 ACCESSION NUMBER: 0001047469-98-021512 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980507 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980521 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ODS NETWORKS INC CENTRAL INDEX KEY: 0000736012 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER COMMUNICATIONS EQUIPMENT [3576] IRS NUMBER: 751911917 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-20191 FILM NUMBER: 98629934 BUSINESS ADDRESS: STREET 1: 1101 E ARAPAHO ROAD CITY: RICHARDSON STATE: TX ZIP: 75081 BUSINESS PHONE: 2142346400 MAIL ADDRESS: STREET 1: 1101 E ARAPAHO ROAD CITY: RICHRICHARDSON STATE: TX ZIP: 75081 FORMER COMPANY: FORMER CONFORMED NAME: OPTICAL DATA SYSTEMS INC DATE OF NAME CHANGE: 19950517 8-K 1 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): May 7, 1998 ----------------------------- ODS NETWORKS, INC. - ------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Delaware - ------------------------------------------------------------------------------- (State of Other Jurisdiction of Incorporation) 0-20191 75-1911917 - ------------------------------------------------------------------------------- (Commission File Number) (IRS Employer Identification No.) 1101 East Arapaho Road, Richardson, Texas 75081 - ------------------------------------------------------------------------------- (Address of Principal Executive offices) (Zip Code) (214) 234-6400 - ------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) N/A - ------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On May 7, 1998, the Registrant acquired Essential Communication Corporation, a Delaware corporation ("Essential"), by the merger (the "Essential Merger") of ECC Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the Registrant ("ECC"), with and into Essential. The Essential Merger was effected pursuant to an Agreement and Plan of Merger, dated April 30, 1998 (the "Merger Agreement"), by and among the Registrant, ECC and Essential. As a result of the Essential Merger, the Registrant became the owner of all of the issued and outstanding capital stock of Essential and (a) each outstanding share of the Series A Preferred Stock of Essential was converted into the right to receive $3.75 in cash, (b) each outstanding share of the Series B Preferred Stock of Essential was converted into the right to receive $5.00 in cash, and (c) each outstanding share of Essential Common Stock was converted into the right to receive approximately $0.75537 in cash and approximately 0.28577 of a share of the Registrant's Common Stock. The shares of the Registrant's Common Stock exchanged for shares of Essential Common Stock in the Merger are subject to the placement of an aggregate of approximately 101,790 shares of the Registrant's Common Stock, or approximately .0952 of a share of the Registrant's Common Stock for each share of Common Stock of Essential, into escrow for a period of twelve months to secure indemnification obligations pursuant to the Merger Agreement. The terms of the Essential Merger were the result of arm's-length negotiations among the Registrant and Essential. A total of approximately $5,807,550 in cash is payable, and approximately 409,000 shares of the Registrant's Common Stock are issuable, to former Essential stockholders and optionholders in exchange for the acquisition by the Registrant of all outstanding Essential capital stock and all unexpired and unexercised options to acquire Essential capital stock. Essential stock options to purchase Essential Common Stock were assumed by the Registrant and remain outstanding as options to purchase shares of the Registrant's Common Stock. All cash consideration from Registrant in this transaction was paid out of Registrant's existing working capital. All shares of Common Stock issued in this transaction were issued (and will be issued) out of Registrant's authorized but unissued Common Stock. Essential provides end-to-end gigabit networking solutions used in workgroups, backbones, cluster computing, storage management and visual computing, including High Performance Parallel Interface (HIPPI) switches and network interface cards. The Registrant intends to continue such business. The shares issued to the stockholders of Essential were issued pursuant to the exemption from the registration requirements of the Securities Act of 1933 provided by Section 4(2) thereof. Immediately prior to the Essential Merger, all of the issued and outstanding shares of capital stock of Essential were owned by the stockholders of Essential. The Registrant is not aware of any pre-existing material relationships between such stockholders and the Registrant, its affiliates, its directors or officers, or any associate of any such director or officer. ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS. (a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED: As of this filing, it is impracticable for the Registrant to provide the financial statements of Essential for the fiscal year ending March 31, 1998. In accordance with the requirements of Item 7(a) of Form 8-K, the requisite financial statements, if any, will be filed within 60 days after the date that this initial report on Form 8-K must be filed, as a part of a subsequent filing on Form 8-K. (b) PRO FORMA FINANCIAL INFORMATION. As of this filing, it is impracticable for the Registrant to provide the pro forma financial information required by Item 7(b) of Form 8-K. In accordance with the requirements of Item 7(b) of Form 8-K, the requisite pro forma financial information, if any, will be filed within 60 days after the date that this initial report on Form 8-K must be filed, as a part of a subsequent filing on Form 8-K. (c) EXHIBITS. 2.1 Agreement and Plan of Merger, dated April 30, 1998, by and among the Registrant, ECC Acquisition Corp. and Essential Communication Corporation (incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998). 99.1 Text of press release of the Registrant, dated April 30, 1998 (announcing the Essential Merger). 99.2 Text of press release of the Registrant, dated May 7, 1998 (announcing the closing of the Essential Merger). 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ODS NETWORKS, INC. By: /s/ TIMOTHY W. KINNEAR ---------------------------------- Timothy W. Kinnear, Vice President and Chief Financial Officer Dated: May 21, 1998 3 EXHIBIT INDEX Exhibit No. Description of Exhibit - ----------- ---------------------- 2.1 Agreement and Plan of Merger, dated April 30, 1998, by and among the Registrant, ECC Acquisition Corp. and Essential Communication Corporation (incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998). 99.1 Text of press release of the Registrant, dated April 30, 1998 (announcing the Essential Merger). 99.2 Text of press release of the Registrant, dated May 7, 1998 (announcing the closing of the Essential Merger). 4 EX-99.1 2 EXHIBIT 99.1 EXHIBIT 99.1 FOR IMMEDIATE RELEASE ODS NETWORKS TO ACQUIRE ESSENTIAL COMMUNICATIONS -- Products From Leader in HIPPI Technology Enhance Offerings for High-Speed Enterprise Networks -- RICHARDSON, Texas, April 30, 1998 - ODS Networks, Inc. (NASDAQ: ODSI) today announced it has signed a definitive agreement to acquire Essential Communications Corporation (Essential), a privately held company based in Albuquerque, New Mexico. Essential is a market leader in High Performance Parallel Interface (HIPPI) switches and network interface cards and Gigabit Ethernet network interface cards. The combined ODS Networks-TM- (ODS) and Essential product lines will allow companies with high-performance scientific and technical computing, image processing, data warehousing, data mining, transaction processing, and video and film archiving applications to interconnect their HIPPI networks to more common desk-top interfaces, including Gigabit Ethernet, for real-time network solutions. By the end of 1998, ODS and Essential also plan to offer a next generation Gigabyte System Network (GSN), also known as HIPPI-6400, switch that can move media at more than six times the speed of current Fibre Channel or Gigabit Ethernet solutions. "Essential Communications is a leader in the next generation 6.4 gigabits per second GSN technology," said G. Ward Paxton, chairman, CEO and president of ODS. "By combining ODS' LANBlazer-TM- Gigabit Ethernet switch and Essential's 6.4 gigabits per second GSN technology, we will be able to offer unique, high-speed, standards-based solutions to customers in the government, entertainment, petroleum and other industries that require the timely movement of large amounts of information." "The combination of ODS and Essential will offer many benefits to Essential's customers," said Michael McGowen, CEO of Essential. "Now they can connect numerous environments at very high speeds through HIPPI and move that data across to their existing desktops in real-time." FINANCIAL DETAILS The acquisition will be accounted for as a purchase with ODS exchanging a combination of $5.8 million of cash and approximately 305,500 shares of ODS common stock (worth approximately $2.6 million based upon ODS' April 29, 1998 closing price of $8.375) for all outstanding shares of Essential. In addition, ODS will assume the Essential stock option plan, and ODS will reserve approximately 100,500 shares of ODS stock to be issued upon the exercise of such options. In connection with the acquisition, ODS expects to recognize a one-time charge against after-tax earnings of between $4.5 million and $5.5 million, or $0.27 to $0.33 per share, for in-process technology in the second fiscal quarter of 1998. The acquisition has been approved by the Board of Directors of each company and is expected to be completed in May of 1998 subject to various customary closing conditions including Essential stockholder approval. When the transaction is complete, Michael McGowen, CEO of Essential, will report to G. Ward Paxton, ODS chairman, CEO and president. Essential's sales organization will be integrated with ODS' sales force immediately. The other Essential employees will continue to operate under McGowen's leadership in Albuquerque, New Mexico. STRATEGIC INDUSTRY RELATIONSHIPS Essential's current product line includes HIPPI switches delivering 800 million bits per second per port bi-directionally and HIPPI network interface cards and drivers for most UNIX workstation vendors including Silicon Graphics Inc. (SGI), Sun Microsystems Inc. (Sun), Hewlett-Packard Co. (HP), Digital Equipment Corporation (DEC) and International Business Machines Corp. (IBM). Essential also offers Gigabit Ethernet network interface cards for Windows NT environments and Gigabit Ethernet network interface cards for SGI's Octane and Origin products. Essential's Gigabit Ethernet drivers are expected to be available for Sun's Solaris systems by mid-1998 and IBM's AIX systems by the end of 1998. Essential is currently collaborating with Raytheon E-Systems and SGI to develop a GSN switch designed to support up to 32 non-blocking ports at 6.4 gigabits per second per port, providing an aggregate bandwidth of over 400 gigabits per second. With significantly more capacity than Gigabit Ethernet or Fibre Channel, GSN technology will enable a cluster of commodity computers, servers and storage devices, located throughout a building or across a campus, to operate as the equivalent of a massively parallel supercomputer. Essential's first GSN switches are slated to ship by the end of 1998. SGI workstations and servers will be among the first in the industry to support GSN in 1998. GSN network interface cards for Sun, HP, DEC and IBM are also anticipated to pave the way for commodity supercomputing and numerous high-throughput applications. ACCESS TO HIPPI AND GSN SOLUTIONS By tightly coupling ODS' LANBlazer Gigabit Ethernet switch with Essential's HIPPI and GSN (HIPPI-6400) switches, ODS will be able to offer a real-time solution that is unique in the industry. "We envision a significant opportunity in the market for offering a SuperLAN architecture that utilizes GSN and HIPPI-800 switches for supercomputer clusters and 400 gigabit per second backbones connected to numerous LANBlazer switches. With HIPPI-800, ATM OC3 and OC12 uplinks, along with high Gigabit and Fast Ethernet port density, the LANBlazer combined with the Essential switch will offer a unique solution for desk-top to high-speed network connectivity," stated G. Ward Paxton. ODS' LANBlazer 7000 represents one of the highest capacity Gigabit Ethernet switches in the industry. "The combination of ODS' LANBlazer Gigabit Ethernet switches with Essential's Gigabit Ethernet network interface cards, HIPPI switches and network interface cards, and GSN switches and network interface cards will position ODS as a single-source solution for Gigabit and Gigabyte networking solutions," concluded Paxton. ABOUT ESSENTIAL COMMUNICATIONS Founded in 1992, Essential has focused on providing affordable, end-to-end gigabit networking solutions used in workgroups, backbones, cluster computing, storage management and visual computing. Its HIPPI and Gigabit Ethernet networking product families include switches and network interface cards. Essential's vertical markets cover film post production, petroleum, design engineering, scientific research, medical imaging, data mining, data warehousing and data backup. ABOUT ODS NETWORKS ODS develops, manufactures and markets a complete range of enterprise, workgroup, remote access and security networking products for large and mid-range organizations, including its award-winning InfiniteSwitch. ODS' InfiniteSwitch and LANBlazer switch family features a highly flexible architecture that combined supports Ethernet, Fast Ethernet, Gigabit Ethernet, FDDI, ATM and Token Ring and remote access while providing up to 45 Gigabits of switch throughput capacity and industry-leading performance in management, security and fault tolerance. The ODS SecureCom-TM- family offers advanced secure LAN infrastructure solutions for on-line intrusion detection, asset protection and auditing. This release, other than historical financial information, includes forward-looking statements with respect to completing the acquisition of Essential Communications Corporation, developing HIPPI-6400 and other products, and certain other matters. These statements are made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, including but not limited to the following: approval of the Essential Communications Corporation acquisition by its stockholders, delays in the development of HIPPI-6400 or other products, the rate of adoption of new technology, competitive product introductions, competitive pricing actions and marketing programs, as well as risks concerning future technology and others identified in the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other Securities and Exchange Commission filings. These filings can be obtained by contacting ODS Investor Relations. ODS and ODS Networks are registered trademarks of ODS Networks, Inc. LANBlazer, InfiniteSwitch and SecureCom are trademarks of ODS Networks, Inc. All other trademarks are the property of their respective companies. CONTACT: Charleigh Shayne Terri Griffin Cynthia Stine Director of Investor Relations Director of Marketing PRTek, Inc. ODS Networks, Inc. ODS Networks, Inc. 972-276-5724 972-664-8061 972-664-8040 prtek@flash.net cshayne@ods.com tgriffin@ods.com EX-99.2 3 EXHIBIT 99.2 EXHIBIT 99.2 FOR IMMEDIATE RELEASE ODS NETWORKS COMPLETES ACQUISITION OF ESSENTIAL COMMUNICATIONS -- Acquisition of Leader in HIPPI Technology Enhance Offerings for High-Speed Enterprise Networks -- RICHARDSON, Texas, May 7, 1998 - ODS Networks, Inc. (NASDAQ: ODSI) today announced the completion of its acquisition of Essential Communications Corporation (Essential), a privately held company based in Albuquerque, New Mexico. Essential is a market leader in High Performance Parallel Interface (HIPPI) switches and network interface cards and Gigabit Ethernet network interface cards. On April 30, 1998, ODS Networks-TM- (ODS) announced that it had signed a definitive agreement to acquire all of the outstanding shares of Essential in exchange for approximately $5.8 million of cash and approximately 305,500 shares of ODS common stock (worth approximately $2.7 million based upon ODS' May 6, 1998 closing price of $9.00). As part of the acquisition, ODS assumed the Essential stock option plan, and ODS has reserved approximately 103,500 shares of ODS stock to be issued upon the exercise of such options. As a result of the acquisition, ODS expects to recognize a one-time charge against after-tax earnings of between $4.5 million and $5.5 million, or $0.27 to $0.33 per share, for in-process technology in the second fiscal quarter of 1998. The combined ODS and Essential product lines will allow companies with high-performance scientific and technical computing, image processing, data warehousing, data mining, transaction processing, and video and film archiving applications to interconnect their HIPPI networks to more common desk-top interfaces, including Gigabit Ethernet, for real-time network solutions. By the end of 1998, ODS and Essential also plan to offer a next generation Gigabyte System Network (GSN), also known as HIPPI-6400, switch that can move media at more than six times the speed of current Fibre Channel or Gigabit Ethernet solutions and will provide an aggregate bandwidth of over 400 gigabits per second. ABOUT ODS NETWORKS ODS develops, manufactures and markets a complete range of enterprise, workgroup, remote access and security networking products for large and mid-range organizations, including its award-winning InfiniteSwitch. ODS' InfiniteSwitch and LANBlazer switch family features a highly flexible architecture that combined supports Ethernet, Fast Ethernet, Gigabit Ethernet, FDDI, ATM and Token Ring and remote access while providing up to 45 Gigabits of switch throughput capacity and industry-leading performance in management, security and fault tolerance. The ODS SecureCom-TM- and CryptoCom-TM- security product families provide a complete suite of infrastructure and remote access-based solutions for both detecting network security violations and preventing them. This release, other than historical financial information, includes forward-looking statements with respect to developing HIPPI-6400 and other products and certain other matters. These statements are made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, including but not limited to the following: delays in the development of HIPPI-6400 or other products, the rate of adoption of new technology, competitive product introductions, competitive pricing actions and marketing programs, as well as risks concerning future technology and others identified in the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other Securities and Exchange Commission filings. These filings can be obtained by contacting ODS Investor Relations. ODS and ODS Networks are registered trademarks of ODS Networks, Inc. LANBlazer, InfiniteSwitch, SecureCom and CryptoCom are trademarks of ODS Networks, Inc. All other trademarks are the property of their respective companies. CONTACT: Charleigh Shayne Terri Griffin Cynthia Stine Director of Investor Relations Director of Marketing PRTek, Inc. ODS Networks, Inc. ODS Networks, Inc. 972-276-5724 972-664-8061 972-664-8040 prtek@flash.net cshayne@ods.com tgriffin@ods.com -----END PRIVACY-ENHANCED MESSAGE-----