Item 1.01 Entry into a Material Definitive Agreement.
On April 8, 2021, HealthEquity, Inc., a Delaware corporation ("HealthEquity"),
entered into an Asset and Unit Purchase Agreement (the "Purchase Agreement")
with Viking Acquisition Corp., a Delaware corporation and wholly owned
subsidiary of HealthEquity ("Viking"), MII Life Insurance, Incorporated d/b/a
Further, a Minnesota corporation ("MII Life"), and Aware Integrated, Inc., a
Minnesota nonprofit corporation ("Aware" and, together with MII Life,
"Sellers").
The Purchase Agreement provides that Viking will, at the closing of the
transactions contemplated thereby (the "Closing"), pay an aggregate purchase
price of $500 million (the "Purchase Price") as consideration for its
acquisition of, among other things, MII Life's and Aware's (through its wholly
owned subsidiary SamCo Services, LLC ("SamCo")) business of establishing,
administering and providing custodian and other related services to HSAs and
other Accounts (each as defined in the Purchase Agreement) (the "Spending
Account Business").
The Purchase Agreement provides that, upon the terms and conditions set forth
therein, Viking will acquire (the "Acquisition") the Spending Account Business
through (a) the purchase from MII Life of certain assets and the assumption of
certain liabilities related to the operation of the Spending Account Business,
and (b) the acquisition from Aware of 100% of the issued and outstanding units
of SamCo. Pursuant to Section 4.10 of the Purchase Agreement, HealthEquity will
guarantee, among other things, the performance of Viking's obligations and the
payment of the Purchase Price. The guarantee provided by HealthEquity terminates
upon the Closing.
The Purchase Agreement provides that, unless otherwise agreed to by
HealthEquity, Viking and Sellers, the Closing will occur on the later of
September 7, 2021 and the second Business Day (as defined in the Purchase
Agreement) following the date on which the last of the conditions to the Closing
(discussed below) is fulfilled or waived.
Consummation of the Acquisition is subject to satisfaction of certain conditions
at the Closing, including, without limitation (i) the nonexistence of any
governmental order prohibiting the consummation of the Acquisition, (ii) the
delivery of certain required consents, (iii) Viking receiving customary lien
release documentation in respect of the Spending Account Business, (iv) there
being no Material Adverse Effect (as defined in the Purchase Agreement) between
the signing of the Purchase Agreement and the Closing and (v) the execution and
delivery of certain customary closing certificates, instruments, documents and
other items by the parties to the Purchase Agreement.
The Purchase Agreement contains customary representations, warranties and
covenants for a transaction of this type, including representations and
warranties by (a) each Seller regarding, among other things, (i) its corporate
organization, (ii) its authority to enter into the Purchase Agreement and
perform its obligations thereunder, (iii) the absence of certain legal
proceedings, (iv) compliance with law and (v) title, and (b) each of
HealthEquity and Viking regarding, among other things, its (i) corporate
organization and (ii) authority to enter into the Purchase Agreement and perform
their respective obligations thereunder.
The Purchase Agreement provides that, except in the case of fraud, no Seller
will have liability after the Closing with respect to any of such Sellers'
representations or warranties to be performed prior to the Closing. Sellers
shall be jointly and severally liable for, among other things, any loss incurred
by Viking and its affiliates arising from (a) Sellers' failure to perform any of
their covenants under the Purchase Agreement and certain other transaction
documents, (b) Excluded Assets and Excluded Liabilities (each as defined in the
Purchase Agreement) and (c) certain pre-Closing Taxes (as defined in the
Purchase Agreement) of SamCo. Viking will obtain a customary buyer's
representation and warranty insurance policy.
Pursuant to the Purchase Agreement, at the Closing, Viking and Stella Resources
Co., Inc., a Delaware corporation and affiliate of MII Life ("Stella"), will
enter into a customary transition services agreement pursuant to which Stella
will provide to Viking certain mutually agreed upon transition, migration and
separation services. Such agreed-upon services will generally be provided for
periods ranging from one month to 24 months following the Closing. In addition,
Stella will provide Viking with such other services requested to be received by
Viking and that were previously provided by Stella to the Spending Account
Business in the 12 months prior to the Closing. Such other services will
generally be provided for a period of 6 months following the Closing (or 12
months in the case of certain recurring services provided on an annual basis).
The Purchase Agreement contains certain customary termination rights prior to
the Closing for both Viking and Sellers. In addition, the Purchase Agreement
provides that each of Viking, on the one hand, and Sellers, on the other hand,
may terminate the Purchase Agreement if the Closing has not occurred before
September 15, 2021.
In consideration of the Purchase Price, each Seller has agreed to (a) a
customary non-competition provision preventing such Seller from participating in
certain competitive activities, and (b) a customary non-solicitation provision
preventing such Seller from soliciting, among others, clients, accounts or
vendors obtained by Viking in connection with the Acquisition, in each case, for
a period of seven years following the Closing.
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The Purchase Agreement has been included as an exhibit to this Form 8-K to
provide investors with information regarding its terms. It is not intended to
provide any other factual information about HealthEquity, Viking, MII Life,
Aware, SamCo or any of their respective subsidiaries or affiliates. The
representations, warranties and covenants contained in the Purchase Agreement
were made only for purposes of the Purchase Agreement and as of specific dates,
were solely for the benefit of the parties to the Purchase Agreement, may be
subject to limitations agreed upon by the contracting parties, including being
qualified by confidential disclosures made for the purposes of allocating
contractual risk between the parties to the Purchase 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
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 parties thereto or any of their respective
subsidiaries or affiliates. Moreover, information concerning the subject matter
of representations and warranties may change after the date hereof, which
subsequent information may or may not be fully reflected in HealthEquity's
public disclosures.
The foregoing description of the Purchase Agreement does not purport to be
complete and is subject to, and qualified in its entirety by, the full text of
the Purchase Agreement, a copy of which is filed as Exhibit 2.1 and incorporated
herein by reference.
Cautionary Statement Regarding Forward-Looking Statements
This Form 8-K and the exhibits attached hereto and incorporated herein by
reference contain "forward-looking statements" within the meaning of the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995,
including but not limited to, statements regarding the proposed transaction
between HealthEquity, Viking and Sellers and the timing of such proposed
transaction. All statements other than statements of historical fact that
address activities, events or developments that HealthEquity expects, believes
or anticipates will or may occur in the future are forward-looking statements.
Forward-looking statements reflect current expectations regarding future events,
results or outcomes, and are typically identified by words such as "will",
"shall" or similar expressions that convey the prospective nature of events or
outcomes. Factors that could cause actual results to differ include, but are not
limited to: the conditions to the completion of the proposed transaction,
including the receipt of all required regulatory approvals; the ability of
HealthEquity to successfully integrate the Spending Account Business into
HealthEquity's current business; that such integration may be more difficult,
time-consuming or costly than expected; that operating costs, customer loss and
business disruption (including, without limitation, difficulties in maintaining
relationships with employees, customers or suppliers) may be greater than
expected following the proposed transaction or the public announcement of the
proposed transaction; and that the retention of certain key employees of the
Spending Account Business may be difficult. Although HealthEquity believes the
expectations reflected in the forward-looking statements are reasonable,
HealthEquity gives no assurance these expectations will prove to be correct.
Actual events, results and outcomes may differ materially from expectations due
to a variety of known and unknown risks, uncertainties and other factors,
including those described above. For a detailed discussion of other risk
factors, please refer to the risks detailed in HealthEquity's filings with the
Securities and Exchange Commission, including, without limitation,
HealthEquity's most recent Annual Report on Form 10-K and subsequent periodic
and current reports. HealthEquity undertakes no intention or obligation to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Forward-looking statements should not
be relied upon as representing views as of any date subsequent to the date of
this Form 8-K.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
Exhibit
Number Description
2.1 Asset and Unit Purchase Agreement, dated as of April 8, 2021, by and
among Viking Acquisition Corp., HealthEquity, Inc., MII Life
Insurance, Incorporated d/b/a Further and Aware Integrated, Inc.*
104 Cover Page Interactive Data File (formatted in Inline XBRL and
contained in Exhibit 101)
* Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. HealthEquity hereby undertakes to furnish supplementally copies
of any of the omitted schedules upon request by the SEC.
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