Item 1.01. Entry into a Material Definitive Agreement.
Asset Purchase Agreement
On August 16, 2017, Roka Bioscience, Inc., a Delaware corporation the “Company”) entered into a definitive agreement (the “Asset Purchase Agreement”) with Rokabio, Inc. (the “Buyer”), a newly formed subsidiary of Institute for Environmental Health (“IEH” or the “Buyer”), providing for the sale of substantially all of the assets of the Company in an all-cash transaction for an aggregate purchase price of $17,500,000, subject to certain adjustments set forth in the Asset Purchase Agreement (the “Asset Sale”).
IEH’s focus is to provide comprehensive risk management services to the food industry. In addition, the IEH family of companies is involved in the production and distribution of reagents, supplies, test kits and equipment to food testing laboratories and food companies. The IEH group operates in the U.S., Canada, Mexico, Germany, Austria, England, China and Australia.
Pursuant to the terms of the Asset Purchase Agreement, the Company is required to provide transition services to the Buyer for a period of time following the closing of the Asset Sale through the earlier of (i) December 31, 2017 and (ii) the date as of which the Company has provided Buyer with an aggregate of 900,000 assay tests (the “Transition Period”). IEH has guaranteed all obligations of Buyer under the Asset Purchase Agreement, including the obligation to pay the purchase price.
The closing of the Asset Sale is subject to certain customary conditions, including the receipt of consent of the Company’s lender and approval by the Company’s stockholders of the transactions contemplated by the Asset Purchase Agreement.
As part of the transaction, the Company will be required to make a
$2.5 million milestone payment pursuant to its license agreement with Hologic, Inc. The Asset Sale is the initial step in a contemplated liquidation of the Company. Stockholder approval will also be required for the plan of liquidation.
The Board of Directors of the Company has unanimously approved the proposed transactions set forth in the Asset Purchase Agreement. The Board of Directors had engaged Duff & Phelps Securities, LLC to assist the Board in reviewing a range of strategic alternatives for the Company. The proposed Asset Sale represents the conclusion of this process. In connection with the Board’s approval of the Asset Purchase Agreement, the Board received a fairness opinion from Empire Valuation Consultants LLC.
The Company has made customary representations, warranties and covenants in the Asset Purchase Agreement. The Asset Purchase Agreement does not contain any ongoing indemnification obligations of the Company. The Asset Purchase Agreement contains a “no shop” restriction on the Company’s ability to solicit third party proposals and on its ability to provide information and engage in discussions and negotiations with unsolicited third parties. The no shop provision is subject to a “fiduciary out” provision that allows the Company to provide information and participate in discussions and negotiations with respect to unsolicited third party acquisition proposals submitted after the date of the Asset Purchase Agreement that the Company’s Board of Directors determines in good faith are reasonably likely to result in a Superior Proposal, as defined in the Asset Purchase Agreement.
The Company may terminate the Asset Purchase Agreement under certain circumstances, including if its Board of Directors determines in good faith that it has received a Superior Proposal and that it is required to terminate the Asset Purchase Agreement in order to comply with its fiduciary duties, and otherwise complies with certain terms of the Asset Purchase Agreement. In connection with such termination or a termination after the Company’s stockholders have approved the Asset Purchase Agreement, the Company must pay a termination fee of $770,000 to the Buyer. In addition, the Asset Purchase Agreement contains certain other termination rights for the Company.
The Company cannot assure you that the conditions to the closing of the transactions contemplated by the Asset Purchase Agreement will be satisfied, or that the transactions will be completed. In the event the Company does not successfully complete the transactions contemplated by the Asset Purchase Agreement or complete a transaction resulting from a Superior Proposal, the Company will have limited options for financing its ongoing operations and will likely cease its operations or file for bankruptcy protection.
The Company has filed a copy of the Asset Purchase Agreement as
Exhibit 2.1
to this current report on Form 8-K. The Asset Purchase Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the Company or the Buyer. The representations, warranties and covenants contained in the Asset Purchase Agreement were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement, and may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Asset Purchase Agreement. The representations, warranties and covenants may have been made for the purposes of allocating contractual risk between the parties to the agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third party beneficiaries under the Asset Purchase Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or the Buyer any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Asset Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.