NEOPHOTONICS CORPORATION (NYSE:NPTN) Files An 8-K Entry into a Material Definitive Agreement

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NEOPHOTONICS CORPORATION (NYSE:NPTN) Files An 8-K Entry into a Material Definitive Agreement
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On December 14, 2016, two of the wholly-owned Chinese subsidiaries of NeoPhotonics Corporation (the “Company”) (NeoPhotonics Dongguan Co., Ltd. and NeoPhotonics (China) Co., Ltd.) entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with APAT Optoelectronics Components Co., Ltd. (the “Purchaser”), to which agreement the Purchaser agreed to purchase the assets and assume certain liabilities of the Company’s and its subsidiaries’ access network and low speed transceiver product lines.

The transaction is valued at approximately $26.4 million, including post-closing payments under a transition services agreement with the Purchaser.  The transaction value consists of an equivalent of $25.0 million purchase price plus an additional equivalent of $1.4 million to be paid as certain transition services are delivered.  The Purchaser may pay up to $2.0 million of the total purchase price in a U.S. dollar denominated promissory note.  The Purchaser will also assume outstanding supply chain purchase commitments and will be responsible for payment of value-added tax obligations. 

If issued as part of the purchase price, the promissory note would be in a principal amount of up to $2.0 million, would be for an initial term of six months with an initial interest rate of 6.0% per annum.  The note would be renewable at six month intervals with an increase in the interest rate by an additional 4% per annum.  The note will be secured by certain non-PRC assets being purchased in the transaction.

The purchase price is subject to adjustment after closing for inventory adjustments, and by up to $10.0 million for breaches by the Company subsidiaries of certain transaction warranties, including designation of the Purchaser as an approved vendor of selected customers, introduction of the Purchaser to selected distributors, and revenue and gross profit from the acquired products over the first six months of 2017 to be at least 70% of forecasted amounts.  In the event that any of these warranties are not met, the Company subsidiaries will be obligated to refund a portion of the purchase price to the Purchaser.

Consummation of the transaction is subject to customary closing conditions and is expected to close in January 2017. The Purchaser is subject to a $1.0 million breakup fee to be held in escrow, which will be applied to the purchase price upon closing or forfeited if the transaction does not close due to certain reasons attributable to the Purchaser.

The foregoing description of the Asset Purchase Agreement is not intended to be complete and is qualified in its entirety by reference to the full text of the Asset Purchase Agreement, a copy of which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

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About NEOPHOTONICS CORPORATION (NYSE:NPTN)

NeoPhotonics Corporation develops, manufactures and markets optoelectronic products that transmit, receive and switch digital optical signals for communications networks. The Company develops and manufactures Transmitter Products, Receiver Products and Switch Products that are used in ultra-high speed digital optical communications, high speed switching and provisioning, and access connections for wireless and fiber-to-the-home communications networks. Its products are categorized into groups, including High Speed Products and Network Products and Solutions. High Speed Products include products designed for 100G and beyond for telecom and datacenter or content provider networks and applications. Its Network Products and Solutions consist of various products designed for applications below 100G, and include 40G products. It combines its transmitter and receiver products into Transceiver modules.

NEOPHOTONICS CORPORATION (NYSE:NPTN) Recent Trading Information

NEOPHOTONICS CORPORATION (NYSE:NPTN) closed its last trading session down -0.11 at 12.49 with 850,552 shares trading hands.