UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM i 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
i SHARPS COMPLIANCE CORP.
(Exact Name Of Registrant As Specified In Its Charter)
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i Delaware
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i 74-2657168
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(State Or Other Jurisdiction Of Incorporation Or Organization)
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(Commission File Number)
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(IRS Employer Identification No.)
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i 9220 Kirby Drive, i Suite 500
i Houston, i Texas i 77054
(Address Of Principal Executive Offices)
i 713- i 432-0300
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name Or Former Address, If Changed Since Last Report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the Registrant under any of the
following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Trading Symbol
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Name of Each Exchange on Which Registered
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i Common Shares, $0.01 Par Value
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i SMED
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The NASDAQ Capital Market
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Indicate by check mark whether
the registrant is a an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this
chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company i ☐
If an emerging growth company, indicate by check mark if
the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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Introductory Note
As previously disclosed in the Current Report on Form 8-K filed with the Securities and Exchange Commission (the “
SEC”)
on
July 13, 2022 by Sharps Compliance Corp., a Delaware corporation (the “
Company”),
the Company entered into an Agreement and
Plan of Merger (as amended, the “
Merger
Agreement”) with Raven Buyer, Inc., a Delaware corporation (“
Parent”), and Raven Houston Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“
Merger Sub”). Parent and Merger Sub are affiliates of Aurora Capital Partners.
In accordance with the Merger Agreement, on
July 25, 2022, Merger Sub commenced a cash tender offer to purchase all of the outstanding shares of common
stock of
the Company, $0.01 par value per share (the “
Shares”), at a purchase price per Share of $8.75 in cash (the “
Offer Price”), without interest, and
subject to any required withholding of taxes, upon the terms and conditions set forth in the Offer to Purchase, dated
July 25, 2022 (together with any amendments or supplements thereto, the “
Offer to Purchase”)
and in the related letter of transmittal (together with any amendments or supplements thereto, which, together with the Offer to Purchase collectively constitute the “
Offer”), filed as Exhibit (a)(1)(A)
and Exhibit (a)(1)(B), respectively, to the Tender Offer Statement on Schedule TO filed on
July 25, 2022 (as amended and supplemented from time to time).
The Offer and all withdrawal rights thereunder expired at one minute following 11:59 p.m., New York City time, on
August 19, 2022. Computershare Trust
Company, N.A., as the depositary and paying agent (the “
Depositary and Paying Agent”), advised that, as of the Expiration Date (as defined in the Merger Agreement), a total of 16,830,657 Shares had been
validly tendered into and not withdrawn from the Offer (not including 182,350 Shares tendered by Notice of Guaranteed Delivery), representing approximately 82% of the then issued and outstanding Shares of
the Company on a fully diluted basis. The
number of Shares tendered satisfied the Minimum Condition (as defined in the Merger Agreement and the Offer). All Offer Conditions (as defined in the Merger Agreement) having been satisfied or waived, Merger Sub accepted for payment, on
August 22,
2022, all Shares validly tendered into and not withdrawn from the Offer and payment for such Shares was made to the Depositary and Paying Agent on
August 23, 2022.
As a result of its acceptance of the Shares tendered into the Offer, Merger Sub acquired sufficient Shares to consummate the Merger pursuant to Section
251(h) of the General Corporation Law of the State of Delaware (“
DGCL”) without a vote or any further action by the stockholders of
the Company. Accordingly, on
August 23, 2022, Merger Sub merged with and
into
the Company (the “
Merger”), pursuant to Section 251(h) of the DGCL, with
the Company being the surviving corporation (the “
Surviving Corporation”).
In the Merger, each Share that was not tendered and irrevocably accepted pursuant to the Offer was cancelled and converted into the right to receive cash
in an amount equal to the Offer Price, without interest (the “
Merger Consideration”) and subject to any required withholding of taxes, other than Shares (i) held in the treasury of
the Company, (ii) owned
directly or indirectly by Parent or Merger Sub immediately prior to the effective time of the Merger (the “
Effective Time”), or (iii) held by stockholders who properly exercised their appraisal rights
under Delaware law.
At the Effective Time, each Company stock option granted under any Company stock plan, whether vested or unvested or exercisable, that was outstanding
immediately prior to the Effective Time was cancelled and, in exchange therefor, the Surviving Corporation will pay to each former holder of any such cancelled Company stock option as soon as practicable following the Effective Time an amount in cash
(without interest, and subject to deduction for any required withholding tax) equal to the product of (i) the excess of the Merger Consideration over the applicable exercise price per Share under such Company stock option and (ii) the number of
Shares subject to such Company stock option; provided, that if the exercise price per Share of any such Company stock option was equal to or greater than the Merger Consideration, such Company stock option was cancelled without any cash payment being
made in respect thereof.
At the Effective Time, each restricted stock award granted under any Company stock plan, whether vested or unvested, that was outstanding immediately
prior to the Effective Time was cancelled and, in exchange therefor, was converted automatically into and represents the right to receive the Merger Consideration with respect to each Share subject to the cancelled restricted stock award.
The foregoing summary description of the Merger Agreement and related transactions does not purport to be complete and is qualified in its entirety by
reference to the full text of the Merger Agreement, which is filed as Exhibits 2.1 and 2.2 hereto and is
incorporated herein by reference.
| Item 1.01 |
Entry into a Material Definitive Agreement.
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In connection with the consummation of the Merger,
on
August 23, 2022, Parent entered into an amendment (the “
Credit Agreement Amendment”) to its existing credit agreement (the “
Existing Credit Agreement”; as amended by the Credit Agreement Amendment, the “
Credit Agreement”) providing for a senior
secured incremental term loan facility in an aggregate principal amount of $95.0 million and an increase to the
commitments under its senior secured revolving credit facility in an aggregate principal amount of $15.0 million (the “Incremental Facilities”).
The loans under the Incremental Facilities bear interest at a rate per annum equal to, at the election of Parent, (1) an adjusted base rate
(calculated in a customary manner) plus an applicable margin or (2) an adjusted SOFR rate (calculated in a customary manner) plus an applicable margin.
In connection with the Credit Agreement Amendment,
the Company and its
subsidiaries joined the Credit Agreement as guarantors and granted
liens on substantially all of their assets (subject to certain customary exceptions) to secure the obligations of Parent under the Credit Agreement.
The Credit Agreement contains covenants that, among other things, limit
the Company and certain of its
subsidiaries’ ability to incur,
issue, assume, or guarantee certain indebtedness, issue shares of disqualified or preferred stock, pay dividends on equity, make investments, grant liens, consummate certain mergers and acquisitions or consummate certain asset sales or
affiliate transactions. Additionally, certain customary events of default may result in an acceleration of the credit facilities under the Credit Agreement.
| Item 1.02 |
Termination of a Material Definitive Agreement.
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On
August 23, 2022, in connection with the consummation of the Merger,
the Company terminated and repaid in full all outstanding obligations (other than
certain surviving obligations) due under (i) the Amended and Restated Loan Agreement, dated as of
March 18, 2022, by and among,
inter alios, Sharps Compliance, Inc. of Texas and the lender
thereto, and (ii) the Master Equipment Finance Agreement, dated as of
August 21, 2019, by and among,
inter alios, Sharps Compliance, Inc. of Texas and the lender thereto.
| Item 2.01 |
Completion of Acquisition or Disposition of Assets.
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As described in the Introductory Note above, on
August 22, 2022, Merger Sub irrevocably accepted for payment all Shares validly tendered and not
withdrawn pursuant to the Offer on or prior to the expiration of the Offer. On
August 23, 2022, the Merger was completed pursuant to Section 251(h) of the DGCL, with no vote of
the Company’s stockholders required to consummate the Merger. Upon the
consummation of the Merger,
the Company became a wholly-owned subsidiary of Parent.
The consideration paid to the Company’s stockholders and equityholders in the Offer and
the Merger was approximately $176,975,068 million. The consideration and
related fees and expenses were funded by proceeds from debt financing described above in Item 1.01 of this Current Report on Form 8-K, as well as by an equity contribution from certain funds affiliated with Aurora Capital Partners (the “Aurora
Funds”) and certain co-investors in the Aurora Funds.
The information contained in the Introductory Note of this Current Report on Form 8-K is
incorporated by reference into this Item 2.01.
| Item 2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
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| Item 3.01 |
Notice of Delisting or Failure to Satisfy a Continuing Listing Rule or Standard; Transfer of Listing.
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On
August 23, 2022, in connection with the consummation of the Merger,
the Company notified the NASDAQ Capital Market (“
Nasdaq”)
of the consummation of the Merger and requested that Nasdaq suspend trading of the Shares effective as of before the opening of trading on
August 23, 2022, and file with the SEC a Form 25 Notification of Removal from Listing and/or Registration to
delist and deregister the Shares under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “
Exchange Act”). Nasdaq filed the Form 25 with the SEC on
August 23, 2022.
The Company intends
to file with the SEC a certification on Form 15 requesting that the Shares be deregistered and that
the Company’s reporting obligations under Section 13 and 15(d) of the Exchange Act be suspended.
| Item 3.03. |
Material Modification to Rights of Security Holders.
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The information contained in the Introductory Note, Item 2.01, 3.01, 5.01, and 5.03 of this Current Report on Form 8-K is
incorporated by reference into
this Item 3.03.
| Item 5.01. |
Change in Control of Registrant.
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The information contained in the Introductory Note, Items 2.01, 5.02, and 5.03 of this Current Report on Form 8-K is
incorporated by reference into this
Item 5.01.
As a result of Merger Sub’s acceptance for payment on
August 22, 2022 of all Shares that were validly tendered and not validly withdrawn in accordance
with the terms of the Offer, and the consummation of the Merger pursuant to Section 251(h) of the DGCL on
August 23, 2022, a change in control of
the Company occurred, and
the Company is now a wholly owned subsidiary of Parent. Parent is affiliated
with, and controlled by, the Aurora Funds.
| Item 5.02. |
Departure of Directors or Certain Officers: Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
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In connection with the consummation of the Merger, as contemplated by the Merger Agreement, W. Patrick Mulloy II, Sharon R. Gabrielson, Parris H.
Holmes, Susan N. Vogt, and Gary R. Enzor resigned from the Board of Directors of
the Company, effective as of the Effective Time.
Following consummation of the Merger, the following persons, who were members of the Board of Directors of Merger Sub, became the new members to the
Board of Directors of
the Company: Angela Klappa, Andrew Wilson, Matthew Laycock, Matthew Asperheim, Charles Veniez, and Robert Weil. Information about Ms. Klappa and Messrs. Wilson, Laycock, Asperheim, Veniez, and Weil is contained in the Offer
to Purchase, filed by Parent and Merger Sub as Exhibit (a)(1)(A) to the Tender Offer Statement on Schedule TO, originally filed with the SEC on
July 25, 2022, which information is
incorporated herein by reference.
In connection with the consummation of the Merger, Eric T. Bauer resigned as an officer of
the Company and terminated employment with
the Company,
effective as of
August 23, 2022. Pursuant to his employment agreement, subject to Mr. Bauer’s execution, delivery, and non-revocation of a release agreement in favor of
the Company and continued compliance with certain restrictive covenants,
including covenants relating to confidentiality, non-competition, and non-solicitation (the “
Release Agreement”), Mr. Bauer will receive severance payments equal to six months of base salary in the
amount of $137,500 plus $17,482.64, such amount equal to the pro rata portion of Mr. Bauer’s annual bonus for the fiscal year commenced
July 1, 2022 (collectively, the “
Severance Payments”). The
Severance Payments will be paid in a lump sum as soon as practicable following the effectiveness of the Release Agreement.
Following consummation of the Merger, the following persons were appointed officers of
the Company: John Pencak as Chief Financial Officer, and Allen
Ruttenberg as Chief Marketing Officer, joining the following existing officers of
the Company: W. Patrick Mulloy II, Chief Executive Officer and President,
Diana P. Diaz, Senior Vice President, Secretary, and Chief Accounting Officer, Gregory C.
Davis, Vice President of Operations, and Dennis P. Halligan, Vice President of Sales and Marketing.
In accordance with the terms of the Merger Agreement, the Sharps Compliance Corp. 2010 Stock Plan, as amended, was terminated effective as of the
Effective Time.
| Item 7.01. |
Regulation FD Disclosure.
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The information furnished in this Item 7.01 and in Exhibits 99.1 and 99.2 of this Current Report on Form 8-K shall not be deemed
“filed” for purposes
of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be
incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth
by specific reference in such filing.
| Item 9.01. |
Financial Statements and Exhibits.
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(d) Exhibits
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Exhibit
Number
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Description
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Agreement and Plan of Merger, dated as of July 12, 2022, by
and among Raven Buyer, Inc., Raven Houston Merger Sub, Inc., and the Sharps Compliance Corp. (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed by Sharps Compliance Corp. with the SEC on July 13, 2022)
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Second Amended and Restated Bylaws of Sharps Compliance Corp. |
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104.0
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Cover Page Interactive Data File (embedded within the Inline XBRL document)
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Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted
schedules upon request by the Securities and Exchange Commission or its staff. |
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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By: |
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Senior Vice President, Secretary, and Chief Accounting Officer
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