SRS Labs, Inc. Sells Its Interest in Valence Technology Limited
July 14 2006 - 7:30PM
Business Wire
On July 14, 2006, SRS Labs, Inc. ("SRS") (NASDAQ:SRSL) entered into
a definitive Sale and Purchase Agreement ("Purchase Agreement") to
sell its semiconductor business, Valence Technology Limited
("Valence") to Noblehigh Enterprises Inc. ("Noblehigh"). Noblehigh
is owned by Willas Array Electronics (Holding) Limited
("Willas-Array") as well as certain members of management of
Valence, including Lionel Cheng, President of Valence, Hong Wa
Poon, Sze Chuen Pele Lai, Kim Chiu Chang, Kwok Kwan Tong and Kai
Ming Wong (collectively such individuals are referred to herein as
the "Management Buyers"). The sale to Noblehigh will be affected
through two simultaneous transactions: (1) the repurchase by
Valence of approximately 74% of the outstanding shares of Valence
from SRS and (2) the purchase by Noblehigh of the remaining
outstanding shares of Valence from SRS for $4.3 million. Valence
will repurchase shares from SRS using its existing cash, cash
equivalents and other current assets, all of which are already
reflected on SRS's balance sheet. The purchase price is subject to
adjustment dependent upon Valence's net current assets as of June
30, 2006 as determined by the parties' auditors. In connection with
the sale of Valence to Noblehigh, management personnel of Valence
(other than Reivlin Cham) will execute Waiver of Change of Control
agreements to confirm that they are not entitled to any payments or
other benefits as a result of the sale of Valence. As a result of
the sale of Valence, Reivlin Cham, Vice President Finance of
Valence, will be entitled to receive approximately $156,000 as a
result of a Change of Control Agreement. The change of control
payment to Mr. Cham will be payable by SRS. Also, subject to the
sale of Valence, SRS will repurchase from Management Buyers up to
550,000 shares of SRS common stock, which such individuals may
obtain through the exercise of vested employee stock options. The
repurchase price payable for such shares shall be equal the average
closing price of SRS common stock for the 10 trading days prior to
the closing date of the sale of Valence. The repurchase of any
shares from the Management Buyers will occur concurrently with the
closing of the sale of Valence. The Purchase Agreement contains
customary representations, covenants, warranties, indemnification
and termination provisions. The closing of the sale of Valence is
subject to a number of conditions, including the approval of the
transaction by the shareholders of Willas-Array. "The sale of
ownership interest in Valence and our previously announced sale of
the CHS/SRS LLC joint venture will allow SRS to focus increased
management attention and financial resources on its core licensing
business, which we believe presents more significant marketing and
sales opportunity," said Thomas C.K. Yuen, chairman and chief
executive officer of SRS Labs, Inc. "By focusing our attention on
these key areas, we expect to capture the most growth potential.
These moves also position us to aggressively expand our market
presence with our software partners and with the Original Equipment
Manufacturing customers across our core market segments." About SRS
Labs, Inc. SRS Labs develops advanced audio, voice and surround
sound technology solutions that optimize and improve the listening
experience through techniques based on the latest research into the
human auditory system. With over 600 million products shipped
worldwide, SRS Labs is a leader in audio. Incorporated in products
ranging from HDTVs and mobile phones to PCs and automotive
entertainment, SRS Labs audio and speech signal processing provides
the best possible sound on every form factor and in every
environment. SRS Labs surround sound solutions enable the
professional broadcast and recording industries with
high-performance production, back-haul, storage, and transmission
capability. SRS Labs supports manufacturers worldwide with offices
in the US, China, Japan, Taiwan, Europe and Korea. Except for
historical information contained in this release, statements in
this release, including those by Mr. Yuen may constitute
forward-looking statements regarding our assumptions, projections,
expectations, targets, intentions or beliefs about future events
that are based on management's belief, as well as assumptions made
by, and information currently available to, management. While the
Company believes that its expectations are based upon reasonable
assumptions, there can be no assurances that the Company's goals
and strategy will be realized. Numerous factors, including risks
and uncertainties, may affect the Company's actual results and may
cause results to differ materially from those expressed in
forward-looking statements made by or on behalf of the Company.
Some of these factors include the acceptance of new SRS Labs'
products and technologies, the impact of competitive products and
pricing, the timely development and release of technologies by the
Company, general business and economic conditions, especially in
Asia, and other factors detailed in the Company's Form 10-K and
other periodic reports filed with the SEC. SRS Labs specifically
disclaims any obligation to update or revise any forward-looking
statement whether as a result of new information, future
developments or otherwise.
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