Item 1.01 - Entry into a Material Definitive Agreement
Asset Purchase Agreement and Related Agreements
On July 9, 2018, Bovie Medical Corporation (the “Company”) entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Specialty Surgical Instrumentation Inc., a Tennessee corporation (“Buyer”) and a wholly-owned subsidiary of Symmetry Surgical Inc., a Delaware corporation (“Symmetry”), pursuant to which the Company will sell its electrosurgical “Core” business segment and related intellectual property, including the Bovie
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brand, to Buyer for gross proceeds of $97 million in cash (the “Transaction”). The Purchase Agreement and the transactions contemplated thereby were approved by the Company’s Board of Directors (the “Board”) on July 8, 2018.
In connection with the Purchase Agreement, the Company and Buyer will also enter into a transition services agreement, a patent licensing agreement, a disposables supply agreement and a generator manufacturing and supply agreement, the latter of which will establish the Company as an OEM-provider of generators to Buyer for a period of at least 10 years.
Conditions to the Transaction
Each party’s obligation to implement the Transaction is subject to certain customary conditions, including, without limitation: (i) the affirmative vote of the holders of a majority of outstanding shares of the Company’s common stock to adopt and approve the Purchase Agreement (the “Stockholder Approval”), (ii) the expiration or early termination of all applicable waiting periods (and any extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) the absence of any order issued or pending seeking to enjoin the Purchase Agreement or any of the other transactions contemplated by the Purchase Agreement, (iv) the truth and accuracy of the parties’ respective representations and warranties in the Purchase Agreement, and (v) the performance of, and compliance with, the parties’ respective agreements and covenants under the Purchase Agreement.
Representations, Warranties and Covenants
The Purchase Agreement contains customary representations and warranties by the Company and Buyer. The Company has also entered into certain customary covenants in the Purchase Agreement, including, without limitation, covenants regarding: (i) the conduct of the business prior to the closing date of the Transaction; (ii), non-competition and non-solicitation; (iii) the filing of a proxy statement with the U.S. Securities and Exchange Commission (“SEC”) within fifteen calendar days following the date of the Purchase Agreement; and (iv) the calling and holding of a meeting of stockholders of the Company for the purpose of obtaining the Stockholder Approval to be held no later than 45 calendar days following effectiveness of the definitive proxy statement.
Pursuant to the Purchase Agreement, the Company is subject to a customary “no-shop” restriction, which prohibits the Company from, among other things, (i) soliciting, initiating, facilitating, assisting, inducing or knowingly encouraging any inquiry or the making of any proposal, offer or inquiry that constitutes, or is reasonably expected to lead to, an acquisition proposal, (ii) participating or engaging in discussions or negotiations with respect to an acquisition proposal, and (iii) furnishing any non-public information relating to the Company or its subsidiaries or affording any access to the business, properties, assets, books, records or other non-public information or personnel of the Company or its subsidiaries with the intent to induce the making, submission or announcement of, or to encourage, facilitate or assist, any proposal, offer or inquiry that constitutes, or is reasonably expected to lead to, an acquisition proposal.
Termination
The Purchase Agreement may be terminated by mutual written consent of the Company and Buyer. The Purchase Agreement also contains certain termination rights, including, among others, the right of either party to terminate if (i) the closing of the Transaction shall not have been consummated by January 9, 2019, (ii) the Stockholder Approval is not obtained, or (iii) the other party breaches a representation, warranty or covenant of such party under the Purchase Agreement and such breach would result in the closing conditions not being satisfied.
The summary of the terms of the Purchase Agreement is intended to provide information about the terms of the Transaction. The foregoing information about the Transaction should not be relied on as disclosures about the Company without consideration of the entirety of public disclosure by the Company as set forth in all of its public reports with the SEC. The terms of the Purchase Agreement (such as the representations and warranties) govern the contractual rights and relationships, and allocate risks, between the parties in relation to the Transaction. In particular, the representations and warranties made by the parties to each other in the Purchase Agreement have been negotiated between the parties with the principal purpose of setting forth their respective rights with respect to their obligation to close the Transaction should events or circumstances change or be different from those stated in the representations and warranties. Circumstances may change from the state of affairs contemplated by the representations and warranties. The Company will provide additional disclosure in its public reports to the extent that it is aware of the existence of any material facts that are required to be disclosed under federal securities law and that might otherwise contradict the terms and information contained in the Purchase Agreement and will update such disclosure as required by federal securities laws.
The foregoing summary of the Purchase Agreement is subject to, and qualified in its entirety by, the full text of the Purchase Agreement, a copy of which is attached hereto as Exhibit 2.1 and is incorporated by reference herein.