EMERGENT BIOSOLUTIONS INC. (NYSE:EBS) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01Entry into a Material Definitive Agreement.

Share Purchase Agreement

The cash consideration payable at closing is subject to adjustment based on Adapt's outstanding indebtedness, cash, working capital, manufacturing capital expenditures, other third-party payments and unpaid transaction expenses as of closing. The total dollar amount of the Common Stock issuable as consideration for the Acquisition is subject to adjustment based on certain third-party payments payable at closing and the number of shares of Common Stock to be issued will be determined using the volume-weighted average price of the Common Stock for the ten-trading day period ending two trading days prior to the closing date. The milestone consideration consists of two earn-out payments of up to $50 million each, the first of which is payable if net sales of Adapt products (and any competing Emergent products, if any) exceed certain thresholds for the period beginning on January 1, 2018 and ending on December 31, 2019, and the second of which is payable if net sales of Adapt products (and any competing Emergent products, if any) exceed certain thresholds during any single calendar year ending on or prior to December 31, 2022. Any earn-out payments that become due and payable in the future will be subject to adjustment for certain third-party payments.

The Share Purchase Agreement contains customary representations, warranties and covenants, including, among others, covenants requiring Adapt to conduct its business in the ordinary course in the period between the execution of the Share Purchase Agreement and the closing and requiring Emergent and Adapt to use reasonable best efforts to cooperate in completing certain regulatory filings required in connection with the Acquisition. The Share Purchase Agreement also prohibits Adapt from facilitating or entering into any other business combination or material asset purchases, sales or licensing transactions during the period between the execution of the Share Purchase Agreement and the closing. The Share Purchase Agreement requires Emergent to use reasonable best efforts to obtain, arrange and consummate the debt financing for the Acquisition described below as soon as reasonably practicable.

The completion of the Acquisition is subject to certain closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and certain other customary conditions.

The Share Purchase Agreement also contains certain termination rights for Emergent and Adapt. Upon any termination of the Share Purchase Agreement, the Share Purchase Agreement will become void and have no effect, except that certain specified obligations of Emergent, Adapt and the Sellers will survive, including obligations concerning confidentiality.

The foregoing description of the terms and conditions of the Share Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Share Purchase Agreement, a copy of which is expected to be filed as an exhibit to Emergent's next Quarterly Report on Form 10-Q.

Financing of the Acquisition

In connection with its execution of the Share Purchase Agreement, Emergent entered into a commitment letter, dated August 28, 2018 (the "Commitment Letter"), with Wells Fargo Bank, National Association and Wells Fargo Securities, LLC (collectively, the "Committed Parties"), to which the Committed Parties agreed to (a) provide 50% of a new incremental term loan in the principal amount of $450 million (the "Term Loan") under Emergent's existing Credit Agreement, dated as of September 29, 2017, among Emergent, the lenders party thereto from time to time, and Wells Fargo Bank, National Association, as the administrative agent (the "Credit Agreement"), (b) provide 50% of an increase in the aggregate principal amount of $150 million (the "Revolving Credit Increase") to the existing $200 million revolving credit commitments under the Credit Agreement, and (c) if the consent to certain amendments to the Credit Agreement to permit the Term Loan and the Revolving Credit Increase as incremental facilities under the Credit Agreement and certain other amendments (the "Credit Agreement Amendments") cannot be obtained, provide 50% of a revolving credit facility in the aggregate principal amount of $200 million to replace the existing senior secured revolving credit facility under the Credit Agreement and to implement the Credit Agreement Amendments (the "Replacement Facility"). The proceeds of the Term Loan and the revolving credit facility, whether under the existing Credit Agreement or the Replacement Facility, as increased by the Revolving Credit Increase, as well as cash on hand, are to be used to fund the cash purchase price in connection with the consummation of the Acquisition.

The funding of the debt financing under the Commitment Letter is contingent upon the satisfaction of certain conditions set forth therein, including, among other things, (1) the absence of a "Company Material Adverse Effect" as defined in the Share Purchase Agreement, (2) the negotiation and execution of applicable definitive financing documents contemplated by the Commitment Letter, (3) the Acquisition being consummated in accordance with the terms of the Share Purchase Agreement prior to, or substantially concurrently with, the initial funding of the debt financing, (4) the delivery of certain unaudited financial statements and financial information, (5) the existence of no non-payment event of default under the Credit Agreement, (6) the existence of no bankruptcy or other insolvency event of default under the Credit Agreement and (7) a marketing period of not more than twenty (20) consecutive business days. Any borrowings under the revolving credit facility shall also be subject to the satisfaction of the other conditions set forth in the Credit Agreement.

The foregoing description of the Commitment Letter does not purport to be complete and is qualified in its entirety by reference to the Commitment Letter, which is filed as Exhibit 10.1 hereto, and is incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities.

The description set forth under Item 1.01 of this Current Report on Form 8-K related to the issuance of Common Stock as consideration for the Acquisition is incorporated into this Item 3.02 by reference. The Common Stock will be issued in a private placement in reliance upon the exemption from the registration requirements set forth in Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder. At the closing of the Acquisition, Seamus Mulligan and affiliated entities will agree, subject to customary exceptions, to a two-year lock-up on the sale, pledge or other disposition of the shares of Common Stock issued in connection with the Acquisition that are held by them.

Item 7.01Regulation FD Disclosure.

On August 28, 2018, Emergent issued a press release announcing the entry into the Share Purchase Agreement, which is furnished as Exhibit 99.1 hereto.

Item 9.01Financial Statements and Exhibits.

(d) Exhibits.

Emergent BioSolutions Inc. Exhibit
EX-99.1 2 exhibit99.htm                                                                                                                                                                              EXHIBIT 99.1 EMERGENT BIOSOLUTIONS JOINS EFFORT TO COMBAT NATIONAL PUBLIC HEALTH THREAT FROM OPIOID OVERDOSE THROUGH ACQUISITION OF ADAPT PHARMA AND ITS FLAGSHIP PRODUCT NARCAN® (naloxone HCl) NASAL SPRAY · Acquisition advances Emergent’s mission,…
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About EMERGENT BIOSOLUTIONS INC. (NYSE:EBS)

Emergent BioSolutions Inc. is a biopharmaceutical company that offers specialized products to healthcare providers and governments to address medical needs and emerging health threats. The Company develops, manufactures and delivers a portfolio of medical countermeasures primarily for government agencies in the areas of biological and chemical threats and emerging infectious diseases (EID). It also develops and commercializes therapeutics in areas of hematology/oncology, transplantation, infectious diseases and autoimmune disorders. Its two operating divisions include Biodefense and Biosciences. The Biodefense division is a pharmaceutical business focused on countermeasures that address public health threats, including chemical, biological, radiological, nuclear and explosives (CBRNE) threats, as well as EID. The Biosciences division is a pharmaceutical business focused on therapeutics in hematology/oncology with secondary on transplantation, infectious disease and autoimmunity.