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BMTI > SEC Filings for BMTI > Form 8-K on 19-Nov-2012All Recent SEC Filings

Show all filings for BIOMIMETIC THERAPEUTICS, INC.

Form 8-K for BIOMIMETIC THERAPEUTICS, INC.


19-Nov-2012

Entry into a Material Definitive Agreement, Change in Directors or


Item 1.01 Entry into a Material Definitive Agreement.

Merger Agreement

On November 19, 2012, BioMimetic Therapeutics, Inc., a Delaware corporation ("BioMimetic"), entered into an Agreement and Plan of Merger (the "Merger Agreement") with Wright Medical Group, Inc., a Delaware corporation ("Parent") and Parent's direct wholly-owned subsidiaries, Achilles Merger Subsidiary, Inc., a Delaware corporation ("Merger Sub"), and Achilles Acquisition Subsidiary, LLC, a Delaware limited liability company ("Sister Subsidiary" and, together with Merger Sub, the "Merger Subsidiaries"). The Merger Agreement provides that, upon the terms and subject to the conditions thereof, Merger Sub will be merged with and into BioMimetic (the "Initial Merger") followed by BioMimetic merging with and into Sister Subsidiary (together with the Initial Merger, the "Transaction"). As a result of the Transaction, BioMimetic will become a wholly-owned subsidiary of Parent and the stockholders of BioMimetic prior to the Initial Merger will own approximately 14.5% of Parent.

Pursuant to the terms of the Merger Agreement and subject to the conditions thereof, at the effective time of the Initial Merger (the "Effective Time"), each outstanding share of BioMimetic's common stock (other than shares owed by Parent, BioMimetic or their respective subsidiaries, or shares as to which dissenters' rights have been properly exercised) will be converted into the right to receive (i) $1.50 in cash, without interest, (ii) 0.2482 of a validly issued, fully paid and non-assessable share of Parent common stock, $0.01 par value per share ("Parent Common Stock") and (iii) one contingent value right (a "CVR") to be issued by Parent subject to and in accordance with the CVR Agreement described below.

The Merger Agreement includes customary representations, warranties and covenants of BioMimetic, Parent and the Merger Subsidiaries. BioMimetic has agreed to operate its business in the ordinary course consistent with past practice until the Effective Time, subject to certain agreed upon limitations, and has agreed to certain "non-solicitation" provisions that prohibit BioMimetic from soliciting proposals relating to alternative transactions and, subject to certain exceptions, entering into discussions or negotiations concerning proposals for alternative transactions prior to the Effective Time. Parent has also agreed to certain covenants and agreements, including that it will nominate an independent member of BioMimetic's board of directors for election to Parent's board of directors at Parent's 2013 annual meeting.

The completion of the Transaction is subject to various closing conditions, including obtaining the approval of BioMimetic's stockholders, registering the shares of Parent Common Stock and CVRs to be issued in connection with the Transaction, and receipt of regulatory clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

The Merger Agreement contains certain termination rights for both BioMimetic and Parent, including, subject to certain conditions, for BioMimetic to enter into an agreement with respect to a superior proposal if a failure to do so would be inconsistent with the fiduciary duties of BioMimetic's board of directors. Upon termination under certain circumstances, BioMimetic would be required to pay Parent a termination fee of $8,255,000. The Merger Agreement also provides that, upon termination under certain circumstances, Parent would be required to pay BioMimetic a termination fee of $30 million.


Concurrently with the execution of the Merger Agreement, the directors and certain officers of BioMimetic, as well as their stockholder affiliates, who together beneficially own approximately 30% of BioMimetic's outstanding common stock, have entered into voting agreements whereby they agreed, among other things, to vote all shares of BioMimetic common stock held by them in favor of adopting the Merger Agreement. A copy of the form of voting agreement is attached to this report as Exhibit 10.2 and is incorporated herein by reference.

CVR Agreement

In connection with the Merger Agreement, Parent and a trustee mutually agreeable to Parent and BioMimetic will enter into a Contingent Value Rights Agreement ("CVR Agreement") governing the terms of the CVRs. A holder of a CVR will be entitled to receive the following cash payments, conditioned upon the achievement of certain milestones as follows:

• Approval Milestone: Parent would be obligated to pay $3.50 per CVR upon United States Food and Drug Administration ("FDA") approval of Augment® Bone Graft on or before the sixth anniversary of the closing of the Merger.

• Product Sales Milestone #1: Parent would be obligated to pay $1.50 per CVR the first time sales of specified products exceed $40 million during a consecutive 12 month period. If such milestone is achieved prior to the second anniversary of the closing of the Merger, the payment related to such milestone will be payable on the later of the second anniversary of the closing of the Merger or 20 business days following notice of achievement of the milestone.

• Product Sales Milestone #2: Parent would be obligated to pay $1.50 per CVR the first time sales of specified products exceed $70 million during a consecutive 12 month period. If such milestone is achieved prior to the second anniversary of the closing of the Merger, the payment related to such milestone will be payable on the later of the second anniversary of the closing of the Merger or 20 business days following notice of achievement of the milestone.

Parent has agreed to use certain diligent efforts to achieve the milestones, which efforts generally require Parent to use those efforts normally used by persons in the medical devices business similar in size and resources to Parent. In addition, Parent has agreed to use its commercially reasonable efforts to maintain a listing for trading on the Nasdaq Global Market or another national securities exchange for so long as any CVRs remain outstanding.

On or after the third anniversary of closing of the Merger, on any date on which both: (i) FDA approval of Augment has not been achieved and (ii) the volume weighted average price paid per CVR for all CVRs traded over the 45 trading days prior to such date is less than $0.10, Parent may provide notice (a "Failure Purchase Notice") to holders of CVRs that it will purchase all (but not less than all) of the outstanding CVRs (a "Failure Purchase"). The price at which the CVRs are to be purchased in a Failure Purchase is 115% of the volume weighted average price paid per CVR for all CVRs traded over the 45 trading days prior to the 5th trading day before the date of the Failure Purchase Notice.


. . .


Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On November 13, 2012, BioMimetic entered into new employment agreements with certain senior executives, including Larry Bullock, BioMimetic's Chief Financial Officer and Dr. Russell Pagano, BioMimetic's Vice President, Clinical and Regulatory Affairs, and on November 18, 2012, entered into an amendment to its employment agreement with Dr. Samuel E. Lynch, BioMimetic's President and Chief Executive Officer. Below are brief summaries of the terms and conditions of the new employment agreements and the amendment (which are qualified in their entirety by reference to the contracts filed herewith as Exhibits 10.3 through 10.5 and incorporated herein by reference).

Executive Employment Agreements

Mr. Bullock's and Dr. Pagano's new employment agreements replace their prior agreements that expired on July 16, 2012. Each new employment agreement (each an "Executive Employment Agreement" and, together, the "Executive Employment Agreements") is made effective as of July 17, 2012. Mr. Bullock's Executive Employment Agreement has a one-year term, continuing through July 16, 2013. Dr. Pagano's Executive Employment Agreement has a two-year term, continuing through July 16, 2014.

Mr. Bullock's Executive Employment Agreement contemplates an annual base salary of $283,600, and Dr. Pagano's Executive Employment Agreement contemplates an annual base salary of $244,800, which were the respective salaries of each executive prior to signing his Executive Employment Agreement. Such salaries are subject to annual review for potential increases. In addition, Mr. Bullock and Dr. Pagano are eligible for discretionary annual incentive bonuses.

Consistent with their prior employment agreements, under the Executive Employment Agreements, if BioMimetic terminates an executive's employment without cause or if the executive resigns his employment for good reason, the executive is entitled to severance payments. Mr. Bullock's Executive Employment Agreement contemplates a severance payment equal to nine months of base salary and continuation of benefits and perquisites for a period of nine months. Dr. Pagano's Executive Employment Agreement contemplates a severance


payment equal to six months of base salary and continuation of benefits and perquisites for six months. The Executive Employment Agreements contemplate that, if the termination follows a change of control, the severance payment amount would be equal to 12 months of base salary and benefits would be continued for a 12-month period. Receipt of severance compensation is conditioned on the terminated executive's execution of a general release of claims and compliance with post-employment obligations, including, for a period of 12 months following termination, not to engage in certain activities that may be competitive with BioMimetic or to participate in the development or commercialization of certain products that may compete with BioMimetic's products.

In addition, Mr. Bullock's Executive Employment Agreement provides that if he is terminated without cause or for good reason, then his outstanding stock options, restricted stock, restricted stock units and other unvested equity incentives would become fully exercisable and vested. Dr. Pagano's Executive Employment Agreement provides that if he is terminated without cause or resigns for good reason within the 12 months following a change of control, then his outstanding stock options, restricted stock, restricted stock units, and any other unvested equity incentives would become fully exercisable and vested. Such provisions are consistent with the respective executive's prior employment agreements.

In addition, in the event the executive might become subject to federal excise taxes under Section 4999 of the Internal Revenue Code, the aggregate amount of severance payments owed to the executive would be reduced to the maximum amount that would not trigger the excise tax, so long as the payments actually received by the executive would be equal to or greater than severance payments net of the excise taxes on such payments.

Amendment to Samuel Lynch Employment Agreement

Dr. Lynch's employment agreement was amended to make a conforming change such that, if Dr. Lynch might be subject to federal excise taxes under Section 4999 of the Internal Revenue Code, the aggregate amount of severance payments owed to Dr. Lynch would be reduced to the maximum amount that would not trigger an excise tax, so long as the payments actually received by Dr. Lynch would be equal to or greater than severance payments net of the excise taxes on such payments. All other terms of Dr. Lynch's employment agreement remain unchanged.

The Executive Employment Agreements and the amendment to the employment agreement with Dr. Lynch were approved by BioMimetic's Board of Directors.



Item 8.01 Other Events.

BioMimetic and Parent issued a joint press release dated November 19, 2012 announcing the Transaction. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.




Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 2.1    Agreement and Plan of Merger, dated as of November 19, 2012, among Wright
        Medical Group, Inc., Achilles Merger Subsidiary, Inc., Achilles
        Acquisition Subsidiary, LLC and BioMimetic Therapeutics, Inc.

10.1    Form of Contingent Value Rights Agreement, to be entered into among Wright
        Medical Group, Inc. and Trustee.

10.2    Form of Voting Agreement, by and among Wright Medical Group, Inc. and the
        directors and certain officers of BioMimetic Therapeutics, Inc. and their
        stockholder affiliates.

10.3    Employment Agreement, dated November 13, 2012, between BioMimetic
        Therapeutics, Inc. and Larry Bullock.

10.4    Employment Agreement, dated November 13, 2012, between BioMimetic
        Therapeutics, Inc. and Dr. Russell Pagano.

10.5    Amendment to Employment Agreement, dated November 18, 2012, to the
        Employment Agreement, dated July 17, 2009, between BioMimetic
        Therapeutics, Inc. and Dr. Samuel E. Lynch.

99.1    Joint Press Release of BioMimetic Therapeutics, Inc. and Wright Medical
        Group, Inc., dated November 19, 2012 announcing the Merger Agreement.


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