Optibase Ltd. (NASDAQ:OBAS) today announced the successful closing of the sale of its video solutions business pursuant to an asset purchase agreement entered into on March 16, 2010 (“APA”), by and between Optibase Ltd., our subsidiary Optibase Inc. (collectively "Optibase") and Optibase Technologies Ltd. and Stradis Inc., both wholly owned subsidiaries of S.A. Vitec (also known as Vitec Multimedia) (S.A. Vitec and Optibase Technologies Ltd., collectively “Vitec”).
Pursuant to the transaction, Vitec acquired all rights, title and interest in and to all of Optibase's assets and assumed certain liabilities, related to Optibase's video solutions business only (the “Acquired Assets”). Optibase's video solutions business includes the design, development, manufacture, production, supply, sale, marketing and distribution of video devices and related services.
As consideration for the Acquired Assets and the assumption of Optibase's liabilities, Vitec paid Optibase a sum of $8 million of which a sum of $6.7 million was paid in cash at closing and $1 million and $0.3 million were deposited in escrow accounts for certain periods as a security for the indemnity undertakings of Optibase pursuant to the APA and as security for any compensation to be paid by Optibase to Vitec if any consortium agreements to which Optibase is party are not assigned to Vitec. In addition, Optibase expects to receive approximately $1 million during the next year from Vitec relating to receivables and payables as of June 30, 2010.
In addition, under to the APA, the consideration may be further adjusted according to an earn-out mechanism pursuant to which 45% of Vitec’s revenues deriving from the Video Solutions Business and exceeding $14 million in the year following the closing of the Transaction, will be paid to Optibase.S.A. Vitec has undertaken to fully guarantee all undertakings, representations, warranties and obligations of Optibase Technologies Ltd. and Stradis Inc. under the APA.