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OREGON
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0-21820
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93-0822509
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
8.01.
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Other
Events.
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In
September 2006, Key Technology, Inc. (the "Company") announced it
had
agreed in principle to sell its 50% interest in its InspX joint venture
to
that entity for a combination of cash and notes. Subsequent to September
30, 2006, the Company determined that this agreement was neither
likely to
be finalized in the short-term nor completed on terms as favorable to
the Company. Given the joint venture's continued operating losses,
financial condition, and cash flows, and the Company's inability to
sell its interest at favorable terms, the Company recorded an impairment
charge for 100% of its remaining $865,000 investment in the joint
venture.
The
Company continued its negotiations with its joint venture partner
regarding InspX and, on December 20, 2006, reached an agreement pursuant
to which the Company sold its interest in InspX to the InspX joint
venture. Under the agreement, InspX will redeem the Company's 50%
interest
in the joint venture in exchange for $1,500,000 plus a contingent
payment.
The $1,500,000 portion of the sale price consists of $750,000 in
cash that
was paid to the Company on December 20, 2006 and a term note payable
on
September 30, 2009 bearing interest at 5% per annum payable quarterly
until the note is paid in full. The note is unsecured and, due to
uncertainty related to the ultimate collectibility of the note, the
Company has established an allowance for the doubtful note receivable
for
the full amount of the note. The contingent portion of the sale price
consists of an additional $500,000, which is payable in the event
(1)
InspX revenues for the year ended December 31, 2008 are $9,000,000
or
higher, or (2) of the sale prior to December 31, 2008 by InspX or
any
existing owner of InspX of equity in InspX for $2,000,000 or more
at an
enterprise value for InspX of $10,000,000 or more. The contingent
payment
is payable to the Company at InspX's election either within 45 days
after
the event giving rise to the payment or in four equal annual installments
(plus interest) beginning one year after the event giving rise to
the
payment. The Company estimates that the cash payment received with
respect
to the Company's sale of its interest in the InspX joint venture
will add
approximately $750,000 to the Company's total other income in the
first
quarter of fiscal 2007. The Company and its former joint venture
partner
have agreed not to compete in the development or sale of certain
x-ray
based products for 18 months from the date of the agreement and
agreed informally to cooperate regarding future sales of the products
sold
by the former joint venture.
The
Unit Redemption Agreement among InspX, LLC, Key Technology, Inc.,
PECO
Controls Corporation and PECO, LLC, dated December 20, 2006, is attached
to this Current Report on Form 8-K as Exhibit 10.1.
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Item
9.01.
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FINANCIAL
STATEMENTS AND EXHIBITS
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(d)
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Exhibits
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The
following exhibit is furnished with this report on Form
8-K:
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10.1
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The
Unit Redemption Agreement among InspX, LLC, Key Technology, Inc.,
PECO
Controls Corporation and PECO, LLC, dated December 20,
2006
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KEY
TECHNOLOGY, INC.
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/s/
RONALD W. BURGESS
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Ronald
W. Burgess
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Senior
Vice President and Chief Financial
Officer
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Exhibit
No.
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Description
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10.1
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The
Unit Redemption Agreement among InspX, LLC, Key Technology, Inc.,
PECO
Controls Corporation and PECO, LLC, dated December 20,
2006
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