RTI SURGICAL, INC (NASDAQ:RTIX) Files An 8-K Unregistered Sales of Equity Securities
Item3.02. Unregistered Sale of Equity Securities.
On January26, 2017, RTI Surgical, Inc. (the Company) issued an
inducement grant in the form of two restricted stock awards and
an option to purchase shares (this grant is discussed in more
detail in Item5.02 of this Current Report on Form 8-K) of the
Companys common stock, par value $0.001 per share (the Common
Stock), to Camille Farhat, in connection with his employment as
President and Chief Executive Officer of the Company (as
discussed in more detail in Item5.02 of this Current Report on
Form 8-K). The inducement grant is exempt from registration
requirements of the Securities Act of 1933, as amended, (the
Securities Act) by virtue of Section4(a)(2) of the Securities Act
and/or Regulation D promulgated under the Securities Act. The
Company will file a registration statement with the Securities
and Exchange Commission for the shares subject to the inducement
grant within 180 days of January26, 2017.
The disclosure contained in Item5.02 on this Current Report on
Form 8-K regarding the issuance of the inducement grant to
Mr.Farhat is incorporated by reference into this Item3.02.
Item5.02. Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers
On January26, 2017, the Company appointed Mr.Farhat as President
and Chief Executive Officer, effective March15, 2017. The
Companys Board of Directors (the Board) has agreed to appoint
Mr.Farhat to the Board, effective March15, 2017.
Mr.Farhat, 47, is a currently a member of the board of directors
for Cardiac Science. He previously served as president and chief
executive officer of American Medical Systems, Inc. from 2012 to
2015. Prior to joining American Medical Systems, Inc. in 2012,
Mr.Farhat served as a general manager for two divisions of Baxter
International, Inc. (Baxter). From 2006 to 2008 he headed Baxters
Global Infusion Systems, and from 2008 to 2011 he headed Baxters
largest division, Pharmaceuticals and Therapies. Mr.Farhat served
from 2003 to 2006 at Medtronic, Inc., as vice president of
business development and as vice president and general manager of
Gastroenterology and Urology. Mr.Farhat served in several
executive roles at General Electric from 1992 to 1996 and again
from 1998 to 2002. At General Electric, Mr.Farhat worked in
multiple businesses, geographies and functional areas, leading to
his last role as general manager of General Electric Healthcares
global Computed Tomography business. In between Mr.Farhats two
stints at General Electric, he served as a consultant for Bain
Company, Inc. Mr.Farhat served at Northeastern University from
1991 to 1992 as a corporate governance researcher. Mr.Farhat
began his career in 1989 as an assistant controller for the Bank
of Boston Corporation. Mr.Farhat earned an M.B.A. from Harvard
University, a degree in European Union studies from Institut
National dEtudes Politiques de Paris and a B.S.B.A. in finance
and accounting from Northeastern University.
The Company entered into an Employment Agreement with Mr.Farhat,
dated January26, 2017 (the Employment Agreement), which sets
forth the terms of Mr.Farhats service as the Companys President
and Chief Executive Officer. The Company also agreed to appoint
Mr.Farhat to the Board, beginning the first day of his
employment, and to include Mr.Farhat as a nominee for election to
the Board at each annual stockholders meeting during the term of
his employment. The Employment Agreement has an initial term of
two years, which automatically renews annually at the expiration
of the initial term. to the Employment Agreement, the Company
will pay Mr.Farhat a base salary of at least $635,000 annually
(subject to annual review by the Board (or a committee thereof)).
Mr.Farhat will be eligible to receive an annual discretionary
incentive payment under the Companys annual bonus plan based on a
target bonus of at least 110% of his base salary, based on the
attainment of one or more pre-established performance goals to be
determined by the Board or the Companys compensation committee in
its sole discretion. In addition, the Employment Agreement
contains customary covenants on confidentiality, non-competition,
non-solicitation, and non-interference, as well as provisions on
the termination of the Employment Agreement and the consequences
thereof.
As a material condition to entering into the Employment
Agreement, on January26, 2017 (the Grant Date), the Company and
Mr.Farhat entered into: (1)a restricted stock award agreement
(the Restricted Stock Agreement #1); (2)another restricted stock
award agreement (the Restricted Stock Agreement #2); and (3)a
stock option agreement (the Option Agreement).
Under the Restricted Stock Agreement #1, the Company granted
Mr.Farhat 850,000 shares of restricted Common Stock. On the first
anniversary of the Grant Date, 170,000 shares will vest. The
remaining shares will vest on the last day of each calendar
quarter at a rate of 42,500 shares per calendar quarter
commencing after the first anniversary of the Grant Date and
continuing for four years after. Vesting of these shares may
accelerate upon the occurrence of either of two conditions, which
are confidential and subject to a confidential treatment request
to be filed with the Securities and Exchange Commission.
Under Restricted Stock Agreement #2, the Company granted
Mr.Farhat 150,000 shares of Common Stock. These 150,000
restricted shares subject to Restricted Stock Award #2 will
become fully vested on the latest date (the Purchase Date) on
which the fair market value of the cumulative amount of shares
that Mr.Farhat purchases on the open market equals $500,000, so
long as the Purchase Date is on or before March15, 2018. After
vesting, the shares will be non-transferable for a period of one
year following the Purchase Date.
Under the Option Agreement, the Company granted Mr.Farhat the
option to purchase 1,950,000 shares of Common Stock (the Stock
Options), as of the Grant Date. The exercise price for the Stock
Options is $3.20. The Stock Options will expire on January26,
2022, at 5 p.m. eastern time. The Stock Options will vest based
the Companys attainment of three average stock price benchmarks.
The first 650,000 shares will vest if the Companys average
publicly traded stock price is over $6.00 for a sixty-consecutive
calendar day period. The next 650,000 shares will vest if the
Companys average publicly traded stock price is over $7.00 for a
sixty-consecutive calendar day period. The final 650,000 shares
will vest if the Companys average publicly traded stock price is
over $8.00 for a sixty-consecutive calendar day period. The
vesting of the Stock Options is cumulative.
The descriptions of the Employment Agreement, the Restricted
Stock Agreement #1, the Restricted Stock Agreement #2, and the
Option Agreement are qualified in their entirety by the complete
terms and conditions of the documents, each of which will be
filed as an exhibit to the Quarterly Report on Form 10-Q for the
quarter ending March31, 2017.
Consistent with previous disclosure in the Companys Current
Report on Form 8-K filed with the Securities and Exchange
Commission on December19, 2016, Robert P. Jordheim will step down
as the Companys interim President and Chief Executive Officer,
effective March15, 2017. On that date, he will resume his role as
Chief Financial Officer for the Company. Also consistent with
previous disclosure in the Companys Current Report on Form 8-K
filed with the Securities and Exchange Commission on December19,
2016, Johannes W. Louw will step down as the Companys interim
Chief Financial Officer, effective March15, 2017. On that date,
he will resume his role as Vice President of Finance and
Corporate Controller.
The business experience and background for Mr.Jordheim, 52, is
disclosed in the Companys Current Report on Form 8-K filed with
the Securities and Exchange Commission on December19, 2016.
At this time, no determination has been made as to whether
Mr.Jordheim and Mr.Louw will receive any grant or additional
compensation in connection with their interim services as Chief
Executive Officer and Chief Financial Officer, respectively.
None of Messrs. Farhat, Jordheim, and Louw is a party to any
transaction required to be disclosed to Item404(a) of Regulation
S-K or has any family relationships with any of the Companys
directors or executive officers, or other persons nominated or
chosen to become a director or executive officer.
Item7.01. Regulation FD Disclosure
On January26, 2017, the Company issued a press release announcing
the appointment of Mr.Farhat as President and Chief Executive
Officer, the return of Mr.Jordheim to his role as Chief Financial
Officer, and the return of Mr.Louw to his role as Vice President
of Finance and Corporate Controller. A copy of the press release
is furnished as Exhibit 99.1 to this Current Report and is
incorporated in this Current Report by reference.
The information furnished to Item7.01 of this Current Report on
Form 8-K, including Exhibit 99.1, shall not be deemed to be filed
for purposes of Section18 of the Securities Exchange Act of 1934,
as amended (the Exchange Act), or otherwise subject to the
liabilities of that section. The information furnished to
Item7.01 of this Current Report shall not be incorporated by
reference into any filing under the Securities Act, or the
Exchange Act, whether made before or after the date of this
Current Report on Form 8-K, regardless of any general
incorporation language in the filing.
Item9.01. Financial Statements and Exhibits.
| (d) | Exhibits. | |
| 99.1 | Press Release, dated January26, 2017. |
About RTI SURGICAL, INC (NASDAQ:RTIX)
RTI Surgical, Inc. is engaged in producing orthopedic and other surgical implants that repair and promote the natural healing of human bone and other human tissues. The Company uses natural tissues, metals and synthetics process to produce its products. The Company’s business primarily consists of six categories, such as spine, sports medicine, ortho fixation, bone graft substitutes and general orthopedic (BGS and general orthopedic), dental and surgical specialties. It processes donated human musculoskeletal and other tissue, including bone, cartilage, tendon, ligament, fascia lata, pericardium, sclera and dermal tissue, and bovine and porcine animal tissue in producing allograft and xenograft implants utilizing BIOCLEANSE, TUTOPLAST and CANCELLE SP sterilization processes, and manufactures metal and synthetic implants for distribution to hospitals and surgeons. The Company distributes its implants and services in approximately 50 states and in over 45 countries across the world. RTI SURGICAL, INC (NASDAQ:RTIX) Recent Trading Information
RTI SURGICAL, INC (NASDAQ:RTIX) closed its last trading session 00.00 at 3.25 with 70,597 shares trading hands.