Item 1.01. Entry into a Material Definitive Agreement.
On October 14, 2009, Aware, Inc. entered into an Asset Purchase Agreement (the “Agreement”) with Lantiq Broadband Holdco Inc. and Lantiq Deutschland GmbH (together, “Lantiq”). Lantiq is a newly formed fabless semiconductor company being spun out of Infineon Technologies AG (“Infineon”) and funded
by Golden Gate Capital. Infineon is a current digital subscriber line (“DSL”) licensing customer of Aware.
Under the terms of the Agreement, Aware agreed to sell to Lantiq for $6.75 million substantially all of the assets related to Aware’s home networking and DSL licensing business, including an approximately 40-person silicon IP development team and certain patents relating to Aware’s home networking and DSL technologies. Lantiq
will assume certain liabilities related thereto. The parties agreed to indemnify each other for breaches of representations, warranties, covenants and other liabilities under certain circumstances, subject to limitations. Indemnification by either party for a breach of a representation or warranty survives for a period of eighteen (18) months following the closing of the sale and is capped at twenty-five percent (25%) of the purchase price, except for a breach of certain fundamental representations,
which survive indefinitely and are capped at the purchase price.
The closing of the sale is expected to occur by the end of 2009 and is subject to certain conditions relating to, among other things, the accuracy of Aware’s representations and warranties, the delivery of various certificates and ancillary agreements and the closing of the acquisition of Infineon’s Wireline Communications Division
by Golden Gate Capital/Lantiq.
Aware and Lantiq have agreed that, after the closing of the sale: (i) they will amend and restate the existing license agreement between Aware and Infineon to provide for Lantiq’s continuing royalty payment obligations to Aware; (ii) they will cooperate with each other with respect to embedded wireline diagnostic technology
and products; (iii) Aware will sublease certain office and lab space to Lantiq at its main facilities in Bedford, Massachusetts; and (iv) subject to certain exceptions, Aware will not participate in the design, development and license of home networking and DSL technology for the three years immediately following the closing of the sale.
Aware will file the Agreement as an exhibit to its Annual Report on Form 10-K for the fiscal year ended December 31, 2009.
Item 9.01. Financial Statements and Exhibits.
No financial statements are required to be filed as part of this Report.