Item 1.01. Entry into a Material Definitive Agreement.
On June 9, 2017, ORBCOMM Inc. (ORBCOMM) entered into, and consummated the transactions contemplated by, an Asset Purchase Agreement (the
Asset Purchase Agreement) by and among ORBCOMM, Snowboard Holdings, LLC, a Delaware limited liability company and wholly-owned subsidiary of ORBCOMM (Purchaser), inthinc, inc., a Delaware corporation (Inthinc),
inthinc Technology Solutions, Inc., a Delaware corporation (ITS), tiwi, inc., a Delaware corporation (Tiwi), inthinc Telematics, Inc., a Canada corporation (Telematics), DriveAware, Inc., a Delaware corporation
(DriveAware), and inthinc Chile, SPA, a Chile company (Chile; Inthinc, ITS, Tiwi, Telematics, DriveAware, and Chile are collectively referred to as the Sellers), and inthinc Investors, L.P., a Delaware limited
partnership, in its capacity as Stockholder Representative.
Pursuant to the Asset Purchase Agreement, the Purchaser purchased substantially all of the
assets, and assumed certain liabilities, of each of the Sellers, and ORBCOMM has guaranteed the payment and performance of the Purchasers obligations under the Asset Purchase Agreement.
Consideration Paid
The aggregate consideration paid by
Purchaser at the closing was thirty five million dollars ($35,000,000) (the Closing Consideration), subject to adjustment for working capital. $34,235,878 of the Closing Consideration was paid in cash and the remaining $764,122 was paid
through the issuance of 76,796 shares of ORBCOMM common stock based on the twenty day trailing average closing price of ORBCOMM common stock ending on June 8, 2017.
In addition to the Closing Consideration, contingent consideration of up to twenty five million dollars ($25,000,000) (the
Earn-Out)
is payable by Purchaser to Inthinc over a two year period based on a two times multiple of incremental GAAP Service Revenues in excess of $17,500,000 as described in the Asset
Purchase Agreement.
The
Earn-Out
may be payable at ORBCOMMs option entirely in ORBCOMM common stock or in
any combination of ORBCOMM common stock and cash. If paid in stock, the number of shares of ORBCOMM common stock to be issued to the Sellers will be based upon the volume-weighted average trading price of ORBCOMM common stock on the Nasdaq Stock
Market, LLC for the twenty (20) trading days ending on (and inclusive of) the trading day that is the third full trading day prior to (and not inclusive of) the final determination of the applicable earnout statement.
Representations, Warranties and Covenants
The Asset
Purchase Agreement contains customary representations, warranties and covenants. The representations and warranties generally survive the closing for fifteen months. Purchaser also obtained an insurance policy to cover losses from any breaches of
representations by the Sellers under the Asset Purchase Agreement. The policy limit is $5,000,000 and the retention is $500,000.
2
The foregoing description of the Asset Purchase Agreement is qualified in its entirety by reference to the full
text of the Asset Purchase Agreement, a copy of which is filed as Exhibit 99.1 to this Current Report on Form
8-K
(this Report).