Item 1.01 Entry into a Material Definitive Agreement.
On December 30, 2021, Intevac, Inc. ("Intevac" or the "Company"), Intevac
Photonics, Inc., a Delaware corporation and wholly-owned subsidiary of the
Company ("Photonics"), and EOTECH, LLC, a Michigan limited liability company
("Buyer"), entered into an Asset Purchase Agreement (the "Purchase Agreement")
governing the sale by the Company of its Photonics business (the "Photonics
Business") to Buyer (such transaction, the "Photonics Sale Transaction") in
exchange for (i) $70.0 million in cash consideration (as may be increased or
decreased by certain closing net working capital adjustments), (ii) up to
$30.0 million in earnout payments and (iii) the assumption of certain
liabilities of the Photonics Business as specified in the Purchase Agreement.
Under the Purchase Agreement, Buyer has agreed to pay Photonics, if earned,
earnout payments of up to an aggregate of $30.0 million based on achievement of
fiscal year 2023, 2024 and 2025 Photonics Business revenue targets for the
Integrated Visual Augmentation System ("IVAS") program as specified in the
Purchase Agreement. At any time prior to December 31, 2024, Buyer may elect to
pay to Photonics $14.0 million, which would terminate Buyer's obligations with
respect to any remaining earnout payments.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On December 30, 2021, the Company completed the sale of the Photonics Business
to Buyer in accordance with the Purchase Agreement. At the closing of the
Photonics Sale Transaction, Buyer paid Photonics approximately $70.0million in
cash, which was based on the $70.0 million initial cash purchase price. This
amount may be further adjusted to reflect the final closing net working capital
amount.
The above description of the Purchase Agreement and the Photonics Sale
Transaction is only a summary, does not purport to be complete and is qualified
in its entirety by reference to the full text of the Purchase Agreement, a copy
of which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is
incorporated herein by reference. The representations, warranties and covenants
contained in the Purchase Agreement were made only for purposes of the Purchase
Agreement and as of specified dates, were solely for the benefit of the parties
to the Purchase 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 Purchase
Agreement. The representations and warranties have been made for the purpose 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 should not rely on the representations,
warranties and covenants or any description thereof as characterizations of the
actual state of facts or condition of the Company, Photonics or Buyer. Moreover,
information concerning the subject matter of the representations, warranties and
covenants may change after the date of the Purchase Agreement, which subsequent
information may or may not be fully reflected in public disclosures.
Item 2.05 Costs Associated with Exit or Disposal Activities.
In contemplation of the closing of the Photonics Sale Transaction, the
employment of approximately 58 employees of Photonics was terminated, including
Mr. Timothy Justyn, Executive Vice President and General Manager of the
Photonics Division. Buyer hired 73 former employees effective as of the closing
of the Photonics Sale Transaction as described in the Purchase Agreement. For up
to twelve months, 21 of the above-mentioned employees will remain mutual
employees of both the Company and the Buyer to assist in the assignment and
novation of all government contracts and to sponsor the Buyer's facility
clearance from the Defense Counterintelligence and Security Agency of the U.S.
government. As provided in the Purchase Agreement, Photonics is responsible for
any severance obligations arising out of such termination including Mr. Justyn
as discussed below. The Company will record a charge in the first quarter of
2022 relating to employee severance payments that is expected to be
approximately $521,000. The Company also expects to record a non-cash charge of
approximately $411,000 relating to the acceleration and settlement of
outstanding equity awards under the Company's 2020 Equity Incentive Plan and the
Company's 2012 Equity Incentive Plan.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Departure of Officer
Mr. Justyn did not receive an employment offer from Buyer. On December 30, 2021,
the Company terminated the employment of Mr. Justyn and his position as a
Company officer.
In accordance with the change of control agreement between the Company and
Mr. Justyn effective as of March 2, 2018, a copy of which was previously filed
as Exhibit 10.3 to the Company's Form 10-Q filed on May 1, 2018, Mr. Justyn will
be paid (i) a severance benefit equal to $320,000 or 12 months base salary, paid
in equal installments on the Company's normal payroll schedule over the 12-month
period following the closing of the Photonics Sale Transaction, and
(ii) continuing payments to defray health care costs of $2,000 per month for 12
months from the closing date. In addition, as permitted under the change of
control agreement, Mr. Justyn received the pay out of his 2021 bonus in the
amount of $96,000, the same amount he would have received had he remained an
employee of the Company through the date such bonus payments were made. Further,
in accordance with his change of control agreement, on December 30, 2021,
Mr. Justyn's outstanding Company equity awards vested in full, both with respect
to time-based Company equity awards and Company equity awards with
performance-based vesting. On December 30, 2021, Mr. Justyn delivered a general
release of claims as a condition to the receipt of the foregoing severance
benefits. Pursuant to the change of control agreement, if Mr. Justyn commences
employment with Buyer within 12 months from the closing date, he will cease
receiving his severance benefits under the change of control agreement, and, to
the extent permitted under applicable law, he will be required to repay the cash
value of the severance benefits that he already received under the agreement.
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Item 7.01 Regulation FD Disclosure.
On January 3, 2022, the Company issued a press release announcing the entry into
the Purchase Agreement and the consummation of the Photonics Sale Transaction, a
copy of which is attached as Exhibit 99.1.
The information set forth under this Item 7.01, including Exhibit 99.1, shall
not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") or incorporated by reference in any
filing under the Securities Act of 1933, as amended, or the Exchange Act, except
as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(b) Pro Forma Financial Information
The pro forma financial information required by Item 9.01(b) of Form 8-K is
attached hereto as Exhibit 99.2 and is incorporated herein by reference.
(d) Exhibits
Exhibit No. Description
2.1 Asset Purchase Agreement, dated as of December 30, 2021, by and
between Intevac, Inc., Intevac Photonics, Inc. and EOTECH, LLC*
99.1 Press release dated January 3, 2022
99.2 Unaudited pro forma condensed balance sheet and combined
statements of operations of the Company
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
* The schedules and other attachments to this exhibit have been omitted. The
Company agrees to furnish a copy of any omitted schedules or attachments to the
SEC upon request.
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