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$ClearOne (CLRO.US)$ Item 1.01 Entry Into a Material Definitive Agreement.
On November 19, 2024, ClearOne, Inc. (the “Company”) entered into engagement letter (the “Engagement Letter”) with ARC Group Limited (“ARC”) for ARC to assist the Company with the sale of the Company by way of a negotiated merger or consolidation, including a reverse merger, the negotiated sale of all or substantially all of the Company’s assets, the sale, via negotiated tender offer, of the Company’s issued and outstanding shares of stock, or a spin-off of the Company’s current business and operations to its current stockholders (each, a “Strategic Transaction”).
The engagement of ARC is part of a comprehensive review of strategic alternatives being conducted by the Company’s Board of Directors (the “Board”) focused on maximizing shareholder value, including but not limited to, equity or debt financing alternatives, merger and acquisition transactions, divestiture of assets, licensing opportunities, joint ventures, collaborations or other partnerships with other companies, or a spin-off of the Company’s current business and operations. The Board has formed a special transaction committee of the Board (the “Special Transaction Committee”) consisting of independent and disinterested directors and delegated all power and authority of the Board to the Special Transaction Committee to oversee the Company’s evaluation of strategic alternatives. There is no set timetable for this process and there can be no assurance that this process will result in the Company pursuing a Strategic Transaction or that any transaction, if pursued, will be completed on attractive terms or at all. The Company does not expect to disclose developments with respect to this process unless and until the evaluation of strategic alternatives has been completed or the Company has concluded that disclosure is appropriate or legally required.
Pursuant to the terms and conditions of the Company’s Engagement Letter with ARC, ARC will act as the Company’s exclusive financial advisor and assist the Company with identifying potential acquisition or merger partners for the Company and negotiating and consummating a Strategic Transaction with one or more such parties. Under the terms of the Engagement Letter, prior to December 31, 2024, ARC is required to facilitate an equity investment of shares of common stock of the Company representing 19.99% of the then issued and outstanding shares of common stock. As consideration for the financial advisory services to be provided by ARC to the Company, the Company will pay ARC the following fees pursuant to the Engagement Letter:
• Up to $510,000 in aggregate milestone and success fees payable in cash;
• A success fee payable in securities of the Company or its successor equal to three percent (3%) of the transaction value of any completed Strategic Transaction;
• A cash retainer of $10,000 per quarter; and
• In connection with any sale of debt or equity securities contemplated by the Engagement Letter, a cash success fee of eight percent (8%) of the amount of capital raised.
The foregoing summary of the material terms of the Engagement Letter is qualified entirely by reference to Engagement Letter, a copy of which is filed herewith as Exhibit 10.1 and incorporated herein by reference.
On November 19, 2024, ClearOne, Inc. (the “Company”) entered into engagement letter (the “Engagement Letter”) with ARC Group Limited (“ARC”) for ARC to assist the Company with the sale of the Company by way of a negotiated merger or consolidation, including a reverse merger, the negotiated sale of all or substantially all of the Company’s assets, the sale, via negotiated tender offer, of the Company’s issued and outstanding shares of stock, or a spin-off of the Company’s current business and operations to its current stockholders (each, a “Strategic Transaction”).
The engagement of ARC is part of a comprehensive review of strategic alternatives being conducted by the Company’s Board of Directors (the “Board”) focused on maximizing shareholder value, including but not limited to, equity or debt financing alternatives, merger and acquisition transactions, divestiture of assets, licensing opportunities, joint ventures, collaborations or other partnerships with other companies, or a spin-off of the Company’s current business and operations. The Board has formed a special transaction committee of the Board (the “Special Transaction Committee”) consisting of independent and disinterested directors and delegated all power and authority of the Board to the Special Transaction Committee to oversee the Company’s evaluation of strategic alternatives. There is no set timetable for this process and there can be no assurance that this process will result in the Company pursuing a Strategic Transaction or that any transaction, if pursued, will be completed on attractive terms or at all. The Company does not expect to disclose developments with respect to this process unless and until the evaluation of strategic alternatives has been completed or the Company has concluded that disclosure is appropriate or legally required.
Pursuant to the terms and conditions of the Company’s Engagement Letter with ARC, ARC will act as the Company’s exclusive financial advisor and assist the Company with identifying potential acquisition or merger partners for the Company and negotiating and consummating a Strategic Transaction with one or more such parties. Under the terms of the Engagement Letter, prior to December 31, 2024, ARC is required to facilitate an equity investment of shares of common stock of the Company representing 19.99% of the then issued and outstanding shares of common stock. As consideration for the financial advisory services to be provided by ARC to the Company, the Company will pay ARC the following fees pursuant to the Engagement Letter:
• Up to $510,000 in aggregate milestone and success fees payable in cash;
• A success fee payable in securities of the Company or its successor equal to three percent (3%) of the transaction value of any completed Strategic Transaction;
• A cash retainer of $10,000 per quarter; and
• In connection with any sale of debt or equity securities contemplated by the Engagement Letter, a cash success fee of eight percent (8%) of the amount of capital raised.
The foregoing summary of the material terms of the Engagement Letter is qualified entirely by reference to Engagement Letter, a copy of which is filed herewith as Exhibit 10.1 and incorporated herein by reference.
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