Item 1.01 Entry Into a Material Definitive Agreement
Purchase Agreement
On
Transaction Structure; Reorganization
This transaction is structured such that
Purchase Price; Use of Proceeds
The purchase price payable by the Purchaser to the Seller will be an amount
equal to the
The Holdback Amount will be based on the aggregate value of certain inventory of
the PRC Subsidiary that is held for sale to or through AOI, which value will be
determined based on an audit of the PRC Subsidiary's financial statements (the
"Completion Audit"). The Completion Audit is to be conducted only after certain
filings are made with the
Half of the Initial Consideration will be paid to the Seller upon the later of
(i) the issuance of the Completion Audit, and (ii) the Purchaser obtaining
certain outbound direct investment filings, approvals, and/or certificates from
the competent
Amounts from the Holdback Amount will be released to the Seller after the Closing in monthly installments equal to the value of certain inventory of the PRC Subsidiary depleted during the applicable month, for twelve months or until all of such inventory has been depleted.
As a condition to Closing, the Seller will be required to use a portion of the Initial Consideration to (i) repay certain account payables owed by AOI or its affiliates to the PRC Subsidiary as of the reference date for the Completion Audit; and (ii) provide payment for all of the then outstanding principal amounts and accrued interests of the secured borrowings of the PRC Subsidiary (which payments are subject to reimbursement at Closing) and cause any liens on the PRC Subsidiary's real property securing such borrowings to be released. Similarly, within seven (7) business days after the Closing, the Purchaser will be required to pay all account payables owed to AOI or its affiliates (excluding the PRC Subsidiary and Newco) as of the reference date for the Completion Audit. The net impact of these obligations to settle inter-company balances cannot yet be determined.
The Seller will also be required to make capital contributions to the PRC
Subsidiary in an amount determined with reference to (i) fifty percent (50%) of
the difference between the PRC Subsidiary's net asset value as of
Prior to the Closing, AOI anticipates investing an amount equal to between 4% and 10% of the estimated proceeds from the transaction in exchange for a 10% equity interest in the Purchaser. Additional details regarding such investment are subject to further negotiation between the parties.
AOI currently intends that the remainder of the net proceeds from the transaction would be used for general working capital purposes.
Representations and Warranties; Covenants
Pursuant to the Purchase Agreement, the Seller and the Purchaser made customary
representations and warranties for transactions of this type. In addition, the
Seller agreed to be bound by certain covenants that are customary for
transactions of this type, including obligations to operate its businesses in
the ordinary course and to refrain from taking certain specified actions without
the prior written consent of the Purchaser, in each case, subject to certain
exceptions and qualifications. Additionally, for a period of seven years from
the Closing, the Purchase Agreement restricts the ability of the Seller and its
affiliates to engage in businesses competitive with the Transferred Business
anywhere in the world, and restricts the ability of the Purchaser and its
affiliates to engage in the CATV business in
Conditions to Closing
The Closing is subject to the satisfaction or waiver of certain closing
conditions, including, without limitation: (i) the parties obtaining CFIUS
Approval, (ii) the Purchaser obtaining the ODI Approval, (iii) approval of the
Newco Sale and related transactions by the Company's stockholders or the
Company's receipt and delivery to the Purchaser of an opinion of
Termination
If any of the conditions to Closing have not been satisfied by
If the Purchase Agreement is terminated for certain specified reasons prior to the Closing, the Purchaser or the Seller, as applicable, will be required to pay a breakup fee equal to 2% of the Purchase Price. The breakup fee payable by the Purchaser may be reduced to 1% of the Purchase Price if such termination is a result of the Purchaser's failure to obtain the ODI Approval due to Purchaser's breach of certain of its obligations under the Purchase Agreement. No termination fee applies in the event the Purchase Agreement is terminated due to a failure to receive CFIUS approval, provided that the parties comply with their obligations to seek CFIUS approval.
Ancillary Agreements
The Purchase Agreement requires that the parties enter into a (i) Trademark License Agreement, pursuant to which AOI will license certain trademarks to the PRC Subsidiary and the Purchaser, (ii) Technology Cross-License Agreement, pursuant to which the certain intellectual property will be licensed to certain licensee(s), (iii) Product Supply Agreement, pursuant to which the Purchaser will purchase certain products and services from AOI, and (iv) Contract . . .
Item 7.01 Regulation FD Disclosure
On
The information in Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, and it shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or under the Exchange Act, whether made before or after the date hereof, except as expressly set forth by specific reference in such filing to Item 7.01 of this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits Exhibit No. Description 2.1* Agreement for the Sale and Purchase of aNew Company to Be Established inHong Kong Special Administrative Region ofThe People's Republic Of China , dated as ofSeptember 15, 2022 , by and betweenPrime World International Holdings Ltd. ,Applied Optoelectronics, Inc. andYuhan Optoelectronic Technology (Shanghai) Co., Ltd. 10.1 Form of Trademark License Agreement, by and amongApplied Optoelectronics, Inc. Global Technology Co., Ltd. , andYuhan Optoelectronic Technology (Shanghai) Co., Ltd. 10.2 Form of Technology Cross-License Agreement, by and amongApplied Optoelectronics, Inc. Global Technology Co., Ltd. , andYuhan Optoelectronic Technology (Shanghai) Co., Ltd. 10.3* Form of Product Supply Agreement, by and betweenApplied Optoelectronics, Inc. andYuhan Optoelectronic Technology (Shanghai) Co., Ltd. 10.4* Form of Contract Manufacturing Agreement, by and amongApplied Optoelectronics, Inc. Global Technology Co., Ltd. , andYuhan Optoelectronic Technology (Shanghai) Co., Ltd. 99.1** Press Release ofApplied Optoelectronics, Inc. , datedSeptember 15, 2022 104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
* Certain portions of this exhibit have been omitted pursuant to Item 601(a)(5)
and 601(b)(2) of Regulation S-K. A copy of the omitted portions will be
furnished supplementally to the
** Furnished herewith, not filed.
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