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Offering”) which closes within sixty (60) days of the
Closing Date, Read-Rite shall issue to Conner that
number of shares of Common Stock $.0001 par value of
Read-Rite determined by dividing $27,500,000 (subject
to adjustment as provided in Section 2.2) by the per
share price to the public in the Initial Public
Offering. Any fractional share shall be rounded to the
nearest whole share.
The Asset Purchase Agreement also provided for an
adjustment to the purchase price as follows:
2.2 Adjustment to Purchase Price. The
$27,500,000 aggregate consideration described in
Section 2.1 shall be subject to adjustment, on a dollar
for dollar basis, to the extent that the aggregate net
value of the Inventory and Fixed Assets at the Closing,
as determined in accordance with this Section 2.2, is
greater than or less than $14,000,000. Notwithstanding
the foregoing, no adjustment shall be made for an
aggregate deviation from $14,000,000 less than or equal
to $500,000, and any adjustment shall be made only to
the extent that such aggregate net value exceeds
$14,500,000 or is less than $13,500,000. To the extent
that the Purchase Price after such adjustment exceeds
$27,500,000, Read-Rite shall pay such excess amount to
Conner in cash on the Closing Date. To the extent that
the Purchase Price after such adjustment is less than
27,500,000, the number of shares delivered to Conner
shall be appropriately reduced.
Ernst and Young appraised the inventory and fixed assets in
the amount of $5,266,237. As a result, there was a net downward
adjustment to the purchase price from $27,500,000 to
$19,266,237. Thus, while it was originally contemplated that
Conner Malaysia would exchange its assets for 2,391,304 shares
of Read-Rite stock, representing approximately 8.9 percent of
Read-Rite’s outstanding shares after the IPO, the actual number
of Read-Rite shares that were delivered to Conner Malaysia was
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Last modified: May 25, 2011