ADESTO TECHNOLOGIES CORPORATION (NASDAQ:IOTS) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry Into a Material Definitive Agreement.
On May9, 2018, the Company completed its acquisition of 50% of the issued capital (the “Acquisition”) of S3 Asic Semiconductors Limited, a private company limited by shares and incorporated in Ireland (“S3”), to the Share Purchase Agreement dated as of May9, 2018 (the “Agreement”). S3 is headquartered in Ireland and its subsidiaries are in the United States, Portugal and the Czech Republic. S3 and its subsidiaries are engaged in the business of tailoring silicon solutions to service providers, original equipment manufacturers and semiconductor vendors.
Consideration and Earn-Outs
Subject to the terms and conditions of the Agreement, the Company agreed to the Acquisition for an aggregate base purchase price of $35 million, subject to adjustments for working capital and reductions for indebtedness (the “Completion Payment”). The Completion Payment was paid by the Company entirely in cash to the sellers under the Agreement, except that a portion was withheld therefrom and will be contributed to an escrow account.
The Company may become obligated to make earn-out consideration payments to the sellers (the “Earn-out”). The obligation of the Company to pay the Earn-Out is based on S3’s performance under the Financial Measure Earn-Out, the Performance Indicators Earn-out, and the Unit Revenue Earn-out, as each are defined below. The aggregate amount potentially payable to the Earn-Out based on the S3’s revenue during a period beginning April1, 2018 and ending March31, 2019 (the “Financial Measure Earn-Out) is $10.95 million. The aggregate amount potentially payable to the Earn-out based on S3’s entry into and performance under certain supply contracts during a period beginning April1, 2018 and ending December31, 2018 (the “Performance Indicators Earn-out”) is $4.60 million. The aggregate amount potentially payable to the Earn-out based on S3’s revenues earned from the sales of semi-conductor devices during a period from January1, 2019 until December31, 2019 (the Unit Revenue Earn-out) is $1.40 million.
Representations and Warranties
The Agreement contains customary representations and warranties of each of the Company and certain of the sellers. The representations and warranties of each party set forth in the Agreement have been made solely for the benefit of the other parties to the Agreement, and such representations and warranties should not be relied on by any other person. Such representations and warranties (i)have been qualified by a disclosure letter that the parties have exchanged in connection with the execution of the agreement, (ii)are subject to certain materiality standards, (iii)were made as of a specific date and in certain cases limited to a particular period, and (iv)may have been used for purposes of allocating risks between the respective parties rather than establishing matters of fact. Accordingly, no person should rely on the representations and warranties as characterizations of the actual state of facts. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the execution of the Agreement.
Each of the directors and members, as applicable, of the Company and S3 and its subsidiaries approved the Agreement and/or related transactions, as appropriate.
The foregoing description of the Agreement (including the description of the consideration paid and payable in connection with the Acquisition) does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Agreement, which is filed as Exhibit 2.01 to this Form 8-K and incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
The description of the Acquisition set forth in Item 1.01 above is incorporated by reference into this Item 2.01.