Westell Technologies 8-K 2012
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 31, 2011
WESTELL TECHNOLOGIES, INC.
(Exact name of registrant as specified in charter)
Registrants telephone number, including area code: (630) 898-2500
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
On December 31, 2011, Westell Technologies, Inc., a Delaware corporation (Westell Technologies or the Company), completed the previously announced sale of 100% of the issued and outstanding stock of its subsidiary Conference Plus, Inc. (ConferencePlus) pursuant to the terms of the Stock Purchase Agreement (the Agreement), dated December 20, 2011, among Arkadin S.A.S., an entity organized under French law (Parent), Arkadin Inc., a Delaware corporation and subsidiary of Parent, and Westell Technologies.
The consideration received from the sale was $41.0 million in cash for the stock of ConferencePlus. The purchase price is subject to a post-closing working capital adjustment. Of the purchase price, $4.1 million was placed in escrow at closing for one year as security for certain indemnity obligations of Westell Technologies, including breaches of representations and warranties made by Westell Technologies. In connection with the transaction, Westell Technologies also agreed not to compete with the ConferencePlus business for a period of three years.
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement, a copy of which is filed as Exhibit 2.1 hereto and is incorporated herein by reference. A copy of the press release announcing the completion of the transaction is filed as Exhibit 99.1 hereto and is incorporated herein by reference.
On December 31, 2011, Westell Technologies entered into a General Waiver and Release Agreement (the Release Agreement) with Timothy Reedy. Mr. Reedy served as Senior Vice President and as President and Chief Executive Officer of ConferencePlus until the December 31, 2011 closing of the sale of ConferencePlus. It is expected that Mr. Reedy will serve as a non-officer employee of Westell Technologies through January 31, 2012 (the Termination Date) to assist with administrative matters related to the sale of ConferencePlus.
The Release Agreement provides that Mr. Reedy shall be entitled to severance pay and severance benefits described below provided he is not terminated for cause or he does not voluntarily terminate his employment prior to the Termination Date and he signs the general release and waiver form attached to the Release Agreement.
Severance pay to Mr. Reedy consists of a lump sum payment of $104,120 and other payments totaling $214,650, which is an amount equal to nine months base salary at the rate in effect for Mr. Reedy as of the Termination Date, payable in regular installments. Other severance benefits consist of Company paid continued benefits under COBRA through October 31, 2012 as it applies to the medical and dental benefits for Mr. Reedy and those of his dependents who were covered dependents as of the Termination Date and reimbursement for outplacement services for up to $5,000.
The Release Agreement also contains a one year non-solicitation covenant and a confidentiality covenant.
The foregoing description of the Release Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Release Agreement, a copy of which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.
Also, on December 31, 2011, ConferencePlus and Westell Technologies entered into a Settlement Agreement and Release (the Settlement Agreement) with Mr. Reedy pursuant which Mr. Reedy will receive a lump sum payment of $349,871 on the Termination Date, which is the agreed upon amount equal to 5% of the ConferencePlus EBITDA run rate for the previous twelve months ended December 31, 2011, less any required tax withholdings. The benefits provided under the Settlement Agreement are in lieu of the benefits under an offer letter agreement (the Offer Letter) between Mr. Reedy and Westell Technologies that was entered into in connection with Mr. Reedy joining Westell Technologies in 2002. Under the terms of the Offer Letter, in the event of a sale of ConferencePlus, Mr. Reedy was entitled to receive compensation as of the time of sale based on the greater of 5% of ConferencePlus EBITDA for the trailing twelve months or $250,000, with a cap of $1,250,000.
The foregoing description of the Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Settlement Agreement, a copy of which is filed as Exhibit 10.2 hereto and is incorporated herein by reference.
(b)(1) Pro Forma Financial Information
The pro forma unaudited financial information required to be filed in connection with the disposition described in Item 2.01 above is filed as Exhibit 99.2 hereto.
The unaudited pro forma financial statements are presented for illustrative purposes only. The unaudited pro forma financial statements are not necessarily indicative of the operating results or financial position that would have been achieved had the disposition been consummated as of the dates indicated or of the results that may be obtained in the future.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.