TEARLAB CORPORATION (NASDAQ:TEAR) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry Into a Material Definitive Agreement.

Merger Agreement

 

On May 11, 2020, TearLab Corporation, a Delaware corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Accelmed Partners II LP, a Cayman Islands exempted limited partnership (“Buyer”), and Accelmed Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Buyer (“Merger Sub”). The Merger Agreement provides that, subject to the terms and conditions set forth therein, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger and becoming a wholly owned subsidiary of Buyer. Capitalized terms used herein but not otherwise defined have the meaning set forth in the Merger Agreement.

The terms of the Merger Agreement provide that, unless otherwise specified in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each issued and outstanding share of common stock and preferred stock of the Company will be canceled and converted into the right to receive an amount equal to $0.0586 per share in cash (other than (a) shares that are then owned by Buyer, Merger Sub, certain affiliate funds of CRG L.P. (“CRG”), or any of their respective Affiliates, or (b) shares that are then owned by the Company or any of its subsidiaries).

The terms of the Merger Agreement also provide that each stock option of the Company that is outstanding and unexercised immediately prior to the Effective Time, whether or not then vested or exercisable, will be cancelled without any consideration payable therefor and each holder of such stock options will cease to have any rights with respect to such stock options.

The terms of the Merger Agreement also provide that each warrant to purchase stock of the Company will be cancelled and terminated and of no further force or effect.

The Merger and the Merger Agreement have been approved by the board of directors of the Company.

Completion of the transaction is subject to closing conditions set forth in Article VI of the Merger Agreement, including (i) the absence of any order, judgment or decree by any governmental entity that has the effect of making the transactions contemplated by the Merger Agreement illegal, otherwise restraining or prohibiting the consummation of such transactions or causing any of such transactions to be rescinded following completion, (ii) subject to certain exceptions, the accuracy of each party’s representations and warranties, (iii) compliance in all material respects by each party with its obligations under the Merger Agreement, (iv) that the Amendment (as defined below) is in full force and effect, (v) achievement of certain threshold figures for free cash and transaction expenses of the Company, (vi) the amendment of certain employee agreements, and (vii) a minimum number of shares subject to appraisal claims under applicable law. The transaction is not subject to a financing condition.

The Merger Agreement contains customary representations and warranties of both the Company and Buyer. The Company has also agreed to customary covenants regarding the operation of the Company and its subsidiaries prior to the closing of the Merger, including covenants not to, during the pendency of the Merger, solicit alternative transactions or, subject to certain exceptions, enter into discussions concerning, or provide confidential information in connection with, an alternative transaction.

The Merger Agreement contains certain customary termination rights for the Company and Buyer, including a right for either party to terminate the Merger Agreement if the Merger is not completed by August 31, 2020. The Merger Agreement further provides that, upon termination of the Merger Agreement under certain specified circumstances, the Company will be obligated to pay Buyer a termination fee of $500,000. Additionally, Buyer will have the right to terminate the Merger Agreement under certain circumstances in connection with its due diligence findings or, subject to the payment to the Company of a termination fee of $500,000, if Buyer determines that, as a result of the COVID-19 pandemic, the transactions contemplated by the Merger Agreement have become impracticable.

The foregoing summary of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement attached hereto as Exhibit 2.1 and incorporated herein by reference.

The Merger Agreement has been attached as an exhibit hereto to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company, Buyer or Merger Sub, their respective businesses, or the actual conduct of their respective businesses during the period prior to the consummation of the Merger. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of the Merger Agreement as of the specific dates therein, were solely for the benefit of NTD: being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger 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. Accordingly, the representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time and investors should not rely on them as statements of fact.

Amendment to Loan Agreement

On May 11, 2020, the Company entered into a Consent and Amendment No. 9 (the “Amendment”) to its Term Loan Agreement, dated as of March 4, 2015, as amended by the Omnibus Amendment Agreement, dated as of April 2, 2015, Amendment 2, dated as of August 6, 2015, Amendment 3, dated as of December 31, 2015, Amendment 4, dated as of April 7, 2016, Amendment 5, dated as of October 12, 2017, Amendment 6, dated as of April 4, 2018, Amendment 7, dated as of November 12, 2018, and Amendment 8, dated as of October 4, 2019, by and among the Company, certain of its subsidiaries from time to time party thereto as guarantors and certain affiliate funds of CRG as lenders (the “Loan Agreement”). The Amendment provides for the lenders’ consent to the transactions contemplated in connection with the Merger. to the Amendment and the related Trigger Exchange Agreement described below, the Company prepaid on the Amendment effective date $694,417.68 in aggregate principal of the loans outstanding under the Loan Agreement by issuing to the lenders thereunder 11,850,131 shares of common stock of the Company in exchange for and satisfaction of such partial principal prepayment.

The Amendment also provides for, among others, the following additional amendments to the Loan Agreement to become effective upon the consummation of the Merger, the contribution of $17 million to the Company from Buyer and satisfaction of the other conditions set forth in the Amendment (the “Accelmed Closing Date”):

2.1	Agreement and Plan of Merger, dated May 11, 2020, by and among Buyer, Merger Sub, and the Company *
10.1	Consent and Amendment No. 9 to Term Loan Agreement, dated May 11, 2020
10.2	Trigger Exchange Agreement, dated May 11, 2020
99.1	Press release, dated May 11, 2020

* The schedules to the Agreement and Plan of Merger have been omitted from this filing to Item 601(b)(2) of Regulation S-K. The Company will furnish copies of any such schedules to the U.S. Securities and Exchange Commission upon request.

TearLab Corp Exhibit
EX-2.1 2 ex2-1.htm   Exhibit 2.1   Execution Version   Agreement and Plan of Merger   among   Accelmed Partners II L.P.   and   Accelmed Merger Sub,…
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About TEARLAB CORPORATION (NASDAQ:TEAR)

TearLab Corporation is an in-vitro diagnostic company. The Company has commercialized a tear testing platform, the TearLab Osmolarity System, which enables eye care practitioners to test for sensitive and specific biomarkers using nanoliters of tear film at the point-of-care. The Company, through its subsidiary TearLab Research, Inc., develops technologies to enable eye care practitioners to test a range of biomarkers (chemistries, metabolites, genes and proteins) at the point-of-care. Its product, the TearLab Osmolarity System, enables the measurement of tear osmolarity in the doctor’s office. The TearLab Osmolarity System consists of approximately three components: the TearLab disposable, the TearLab Pen, and the TearLab Reader. The TearLab disposable is a single-use microfluidic microchip. The TearLab Pen is a hand-held device that interfaces with the TearLab disposable. The TearLab Reader is a small desktop unit that allows for the docking of the TearLab Pen.