| Description of Business | 1. Description of Business
Prior to February 1, 2013, Sycamore Networks, Inc. (the
“Company”) developed and marketed Intelligent Bandwidth
Management solutions for fixed line and mobile network operators
worldwide and provided services associated with such products (the
“Intelligent Bandwidth Management Business”), and,
prior to November 1, 2012, the Company also developed and
marketed a mobile broadband optimization solution (the
“IQstream Business”).
On October 23, 2012, the Company entered into an Asset
Purchase and Sale Agreement (the “Asset Sale
Agreement”) with Sunrise Acquisition Corp. (now known as
Coriant America Inc.), a portfolio company of Marlin Equity
Partners (“Buyer”), pursuant to which Buyer agreed to
acquire substantially all of the assets (the “Asset
Sale”) primarily related to the Intelligent Bandwidth
Management Business, including inventory, fixed assets, accounts
receivable, intellectual property rights (other than patents and
patent applications), contracts, certain real estate leases, the
Company’s subsidiaries in Shanghai, the Netherlands and
Japan, and certain shared facilities and assets for $18.75 million
in cash, subject to a working capital adjustment, and the
assumption by Buyer of certain liabilities. The Company’s
stockholders authorized the Asset Sale at a Special Meeting of
Stockholders held on January 29, 2013 (the “Special
Meeting”), and the Asset Sale was completed on
January 31, 2013 (the transfer of the Company’s equity
interests in its Shanghai subsidiary, which was subject to the
receipt of government approval, occurred on March 25, 2013).
Upon the closing of the Asset Sale, Buyer acquired substantially
all of the Company’s operating assets relating to the
Intelligent Bandwidth Management Business, including the
Company’s accounts receivable, inventories and prepaid and
other assets, and assumed most of the Company’s remaining
current liabilities, including substantially all of the
Company’s deferred revenue and accrued warranty
obligations.
In conjunction with the approval of the Asset Sale Agreement, the
Company’s Board of Directors (the “Board”) also
approved the liquidation and dissolution of the Company (the
“Dissolution”) pursuant to a Plan of Complete
Liquidation and Dissolution (the “Plan of Dissolution”)
following the completion of the Asset Sale. The Plan of Dissolution
was also approved by the stockholders at the Special Meeting and,
following a review of the Company’s strategic alternatives
for all of the Company’s assets and available options for
providing value to the Company’s stockholders, the Company
filed a certificate of dissolution with the Secretary of State of
the State of Delaware (the “Certificate of
Dissolution”) on March 7, 2013. For additional
information regarding the Dissolution, please see the
Company’s Definitive Proxy Statement on Schedule 14A filed
with the SEC on December 28, 2012 and its Current Report on
Form 8-K filed with the SEC on March 8, 2013.
In connection with the filing of the Certificate of Dissolution, on
March 7, 2013, the Company closed its stock transfer books and
discontinued recording transfers of its common stock, $0.001 par
value per share (the “Common Stock”). The Common Stock,
and stock certificates evidencing shares of the Common Stock, are
no longer assignable or transferable on the Company’s books,
other than transfers by will, intestate succession or operation of
law. The Company also submitted a request to The NASDAQ Stock
Market (“NASDAQ”) to suspend trading of the Common
Stock on The NASDAQ Global Select Market effective as of the close
of trading on March 7, 2013 and, on March 15, 2013, the
Company filed a Form 25 with the SEC to delist its Common Stock,
which became effective prior to the opening of trading on
March 25, 2013. Since the suspension of trading of the Common
Stock on The NASDAQ Global Select Market, shares of our Common
Stock held in street name with brokers have been trading in the
over-the-counter market on the Pink Sheets, an electronic bulletin
board established for unlisted securities.
As a result of the completion of the Asset Sale and the
Company’s previously announced halting of further development
and marketing in connection with the IQstream Business, the Company
no longer has any operating assets or revenue. Since the filing of
the Certificate of Dissolution, the Company has been operating in
accordance with the Plan of Dissolution, which contemplates an
orderly wind-down of the Company’s business, including the
sale or monetization of the Company’s remaining non-cash
assets and the satisfaction or settlement of its liabilities and
obligations, including contingent liabilities and claims. As of
July 31, 2016, the Company had one remaining employee. On
October 12, 2016, the Board approved the termination of
employment of the Company’s sole remaining employee, David
Guerrera, as the Company’s President, General Counsel and
Secretary, effective as of October 12, 2016. Pursuant to a
Services Consulting Agreement between the Company and
Mr. Guerrera dated as of October 12, 2016,
Mr. Guerrera will provide certain consulting and other
services to the Company relating to the completion of the
Dissolution through the end of the Dissolution period, and he will
continue to serve as the Company’s President, Secretary and
Principal Executive Officer on a non-employee basis.
During fiscal year 2014, the Company completed the sale of its
patent portfolios. On February 28, 2014, the Company completed
the sale of its portfolio of 40 patents and two patent applications
related to the Intelligent Bandwidth Management Business (the
“IBM Patents”) for $2.0 million to Dragon Intellectual
Property, LLC. On May 22, 2014, the Company completed the sale
of its portfolio of three United States patents, six United States
patent applications and certain foreign patents and patent
applications related to the IQstream Business (the “IQstream
Patents”) for $0.3 million to Citrix Systems, Inc. Following
the sale of the IQstream Patents, the Company has continued to
pursue the sale of certain technology and equipment relating to the
IQstream Business; however, the Company does not expect to receive
any additional material consideration for its remaining IQstream
assets.
In accordance with the Purchase and Sale Agreement by and between
the Company and Princeton Tyngsborough Commons, LLC
(“Tyngsborough Commons”) dated October 10, 2014,
and amended on each of February 24, 2015, March 27,
2015, March 30, 2015, July 30,
2015, September 15, 2015, September 30, 2015
and October 9, 2015 (as amended, the “Purchase
Agreement”), on December 4, 2015 the Company completed
the sale of approximately 102 acres of undeveloped land located in
Tyngsborough, Massachusetts to Tyngsborough Commons for a total
purchase price of $2.5 million. In accordance with the terms of the
Purchase Agreement, all representations and warranties which
survived the closing expired on February 29, 2016.
On April 29, 2016, the Company paid a liquidating cash
distribution to stockholders of $0.29 per share of Common Stock, or
$8.38 million in the aggregate. The Board declared this liquidating
distribution after the Delaware Court of Chancery (the “Court
of Chancery”), on February 25, 2016, entered an order
extending Sycamore’s corporate existence for an additional
period of up to two years, ending on March 7, 2018, or such
shorter period as the Board deems necessary, to make a final
determination with respect to the Company’s remaining
non-cash assets. In accordance with that order, the Court of
Chancery affirmed that approximately $3.54 million is sufficient to
be retained for anticipated wind down costs and expenses, of which
any portion that is not required to cover such wind down costs and
expenses may be distributed from time to time to the
Company’s stockholders in the discretion of the Board in
accordance with its fiduciary duties.
On August 2, 2016, the Company completed the sale of all of
its equity shares of Tejas Networks Limited, an Indian private
company (“Tejas”), to Samena Spectrum Co, a company
incorporated under the laws of Mauritius (“Samena”),
pursuant to a Share Purchase Agreement dated as of August 2,
2016 (the “Share Purchase Agreement”) for an aggregate
purchase price of $3.5 million. Sycamore received net proceeds of
approximately $3.27 million after deduction of Indian withholding
and stamp duty taxes in the transaction. The Share Purchase
Agreement contains certain representations and warranties,
covenants and agreements of each of Sycamore and Samena, including
a covenant of Sycamore not to adopt a resolution authorizing the
completion of the liquidation of Company’s assets and the
making of a final liquidating distribution to the Company’s
stockholders in accordance with the General Corporation Law of the
State of Delaware (the “DGCL”) prior to the expiration
of the 90th calendar day following August 2, 2016, the closing
date under the Share Purchase Agreement.
Certain of the representations and warranties of each of Sycamore
and Samena contained in the Share Purchase Agreement, including
with respect to Sycamore’s authority to consummate the
transactions contemplated by the Share Purchase Agreement, its
title to the Tejas shares and its ability to execute, deliver and
perform the Share Purchase Agreement consistent with the terms and
conditions of the previously adopted Plan of Complete Liquidation
and Dissolution, survive the closing through January 29, 2017.
However, if the board of directors of Sycamore adopts a resolution
on or after November 1, 2016 authorizing the completion of the
liquidation of the Company’s assets and the making of a final
liquidating distribution to the Company’s stockholders in
accordance with the DGCL, Sycamore’s representations and
warranties that survived the closing will expire on the date
immediately preceding the date of such resolution and the Company
will be free to complete its liquidation and dissolution at that
time. All other representations and warranties contained in the
Share Purchase Agreement expired at the closing. Each of Sycamore
and Samena has agreed to indemnify and hold harmless the other
party against any and all claims, losses and other expenses
incurred as a result of any breach of such first party’s
representations and warranties contained in the Share Purchase
Agreement that survived the closing.
At this time, the Company expects to make a final liquidating
distribution and conclude the Dissolution period as promptly as
possible following the expiration of the survival period for
Sycamore’s representations and warranties and related
indemnification obligations under the Share Purchase Agreement,
which may occur as early as November 1, 2016. However, the
Dissolution process and the payment of any distribution to the
Company’s stockholders involve substantial risks and
uncertainties. Accordingly, it is not possible to predict the exact
timing of the completion of the Dissolution, the exact timing of
any further distributions to stockholders or the aggregate amount
of any such distributions, and no assurance can be given that the
distributions will equal or exceed the estimate of net assets
presented in Sycamore’s Statement of Net Assets included in
this Annual Report. Sycamore will continue to analyze its estimates
of liquidation expenses on an ongoing basis and determine whether
further distributions of assets to its stockholders are appropriate
at such times. In addition, Samena may assert a claim for
indemnification or commence litigation proceedings in connection
with the Share Purchase Agreement. No assurance can be given that
Samena or another third party will not seek indemnification under
the Share Purchase Agreement or otherwise commence litigation in
connection with the sale of the Tejas shares prior to the
conclusion of the Dissolution period, which may delay the
conclusion of the Dissolution period or decrease the amount
available for distribution to the Company’s stockholders. |
