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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): March 31, 2022

 

Biofrontera Inc.

(Exact name of registrant as specified in its charter)

 

Delaware   001-40943   47-3765675
(State or other jurisdiction
of incorporation)
  (Commission
File Number)
  (IRS Employer
Identification No.)

 

120 Presidential Way, Suite 330

Woburn, Massachusetts

  01801
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (781) 245-1325

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

Title of each class   Trading
Symbol(s)
  Name of each exchange
on which registered
Common stock, par value $0.001 per share   BFRI   The Nasdaq Stock Market LLC
Warrants, each warrant exercisable for one share of common stock, each at an exercise price of $5.00 per share   BFRIW   The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”) (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 

 
 

 

Item 1.01 Entry into a Material Definitive Agreement

 

On March 31, 2022, Biofrontera Inc. (the “Company”) entered into an Amended Settlement Allocation Agreement (the “Allocation Agreement”) between the Company and Biofrontera AG in connection with the previously disclosed settlement on November 29, 2021 of the lawsuit brought against Biofrontera AG and its subsidiaries, including the Company, in March 2018 by DUSA Pharmaceuticals, Inc. (“DUSA”) and certain of its affiliates. Under the settlement agreement with DUSA, the Company and Biofrontera AG are jointly and severally liable for an aggregate payment of $22.5 million to DUSA, payable in three installments, to settle the claims of the lawsuit. The Company and Biofrontera AG had agreed at the time they entered into the settlement agreement that they would each be responsible for $11.25 million of the aggregate settlement amount. Biofrontera AG is a significant shareholder of the Company, its former parent and the licensor of the Company’s principal licensed product, Ameluz®.

 

Under the terms of the Allocation Agreement, the Company and Biofrontera AG agreed that the Company will pay the full amount of each installment under the settlement agreement to DUSA when such installment is due. Biofrontera AG agrees to reimburse the Company for half of each such installment no later than January 31st of the year following such installment. The Company paid the full amount of first installment under the settlement agreement in December 2021 and, thus, the first reimbursement was due on January 31st, 2022. As of the date of this report, Biofrontera AG has not paid the first reimbursement amount to the Company.

 

The Allocation Agreement provides certain remedies to the Company, if Biofrontera AG fails to make timely reimbursements, which the Company may implement in its sole discretion, including the ability to charge interest at a rate of 6.0% per annum for each day that any reimbursement is past due and the ability to offset any overdue reimbursement amounts against payments owed to Biofrontera AG by the Company (including amounts owed under the Company’s license and supply agreement for Ameluz®).

 

This description of the Allocation Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Allocation Agreement, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

 

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

 

On April 1, 2022, Erica Monaco and the Company entered into an amendment (the “Amendment”) to her employment agreement. The Amendment is effective as of April 1, 2022 and amends her compensation as follows:

 

Base Salary: Ms. Monaco’s annual base salary will be increased to $450,000 from $300,000.

 

Cash Bonus: Ms. Monaco will now be eligible to receive a cash bonus of up to 60% of her base salary upon the attainment of performance goals set in advance by the Board; whereas she had been previously eligible to receive a cash bonus of up to 30% of her base salary. The actual amount of any bonus shall depend upon the level of achievement of set targets, however no bonus shall be paid if the level of target achievement is below 70%.

 

The remainder of Ms. Monaco’s Employment Agreement, which was previously filed with the Securities and Exchange Commission, remains in full force and effect.

 

The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the copy of the Amendment filed as Exhibit 10.2 to this report and incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

 

10.1   Amended Settlement Allocation Agreement dated as of March 31, 2022 between the Company and Biofrontera AG
10.2   Amendment to Employment Agreement effective as of April 1, 2022 — Erica Monaco
104   Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document)

 

 
 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

April 5, 2022

(Date)

 

Biofrontera Inc.

(Registrant)

   
   

/s/ Erica L. Monaco

   

Erica L. Monaco

Chief Executive Officer

 

 

 

Exhibit 10.1

 

AMENDED SETTLEMENT ALLOCATION AGREEMENT

 

THIS AMENDED SETTLEMENT ALLOCATION AGREEMENT (the “Agreement”) is made this 31st day of March, 2022, between Biofrontera Inc., a Delaware Corporation (“Inc”), and Biofrontera Bioscience GmbH, Biofrontera Pharma GmbH, Biofrontera Development GmbH, Biofrontera Neuroscience GmbH, each a limited liability company organized under the laws of Germany, and Biofrontera AG (collectively, “AG”), a corporation organized and existing under the laws of Germany. Inc and AG may be individually referred to as a “Party” or collectively as the “Parties.”

 

WHEREAS, on November 29, 2021, Inc and AG entered into that certain Settlement Agreement (“Settlement Agreement”), wherein the Parties resolved various claims (the “Claims”) brought by DUSA Pharmaceuticals, Inc., Sun Pharmaceutical Industries, Inc., and Sun Pharmaceutical Industries Ltd. (collectively “DUSA”);

 

WHEREAS, pursuant to the terms and conditions of said Settlement Agreement, Inc and AG agreed to pay to certain amounts (as defined in Section 2(a), collectively the “Settlement Payments”) to DUSA to settle the Claims;

 

WHEREAS, pursuant to the terms and conditions of said Settlement Agreement, Inc and AG agreed to retain the services of a forensic expert at its own cost to assist in the destruction of certain electronically stored information to DUSA to settle the Claims;

 

WHEREAS, pursuant to the terms and conditions of said Settlement Agreement, payment responsibility for the Settlement Payments shall be split equally between AG and Inc; and

 

WHEREAS, the particular breakdown of how the Settlement Payments will be made and other costs will be allocated among the Parties has been mutually determined and agreed upon by the Parties hereto.

 

NOW, THEREFORE, for the consideration herein, and in light of the terms contained in this Agreement, the receipt and sufficiency of which is hereby acknowledged by the Parties, the Parties agree as follows:

 

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AGREEMENT

 

1. Definitions.

 

a.All capitalized terms used in this Agreement shall have the same meaning as defined in the Settlement Agreement unless otherwise specifically defined herein.

 

2. Allocation of Settlement Payments.

 

a.Pursuant to the terms and conditions of the Settlement Agreement, the Parties agreed to pay to DUSA a lump sum settlement payment of US $22,500,000 (twenty-two million five hundred thousand dollars), net of any taxes, duties, or other withholdings required by law. Such Settlement Payments will be made to DUSA in three installments according to the following schedule:

 

i.By no later than 11:59pm EST on the 25th calendar day after the Effective Date: 50% of the Settlement Payment (the “First Installment”).

 

ii.By no later than 11:59pm EST on the 365th calendar day after the Effective Date: 25% of the Settlement Payment, in addition to accrued interest as defined below (the “Second Installment”).

 

iii.By no later than 11:59pm EST on the 730th calendar day after the Effective Date: 25% of the Settlement Payment, in addition to accrued interest as defined below (the “Third Installment”).

 

Pursuant to the terms and conditions of said Settlement Agreement, payment responsibility for the Settlement Payments referenced in this section shall be split equally between AG and Inc.

 

b.The Parties agree that each of the Settlement Payments shall be made, in the first instance, by Inc.

 

c.Following each Settlement Payment to DUSA by Inc, AG shall reimburse Inc for AG’s half of the Settlement Payment in accordance with the schedule set forth below:

 

i.AG shall make payment of its 50% share of the First Installment, inclusive of any taxes, duties, or other withholdings required by law, no later than January 31, 2022.

 

ii.AG shall make payment of its 50% share of the Second Installment, inclusive of any taxes, duties, or other withholdings required by law, no later than January 31, 2023.

 

iii.AG shall make payment of its 50% share of the Third Installment, inclusive of any taxes, duties, or other withholdings required by law, no later than January 31, 2024.

 

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3. Allocation of Other Settlement Costs.

 

a.Pursuant to the terms and conditions of said Settlement Agreement, Inc and AG agreed to retain the services of a forensic expert at its own cost to assist in the destruction of certain electronically stored information.

 

b.The Parties agree that all costs associated with retaining the forensic expert and conducting the destruction of electronically stored information shall be incurred, in the first instance, by Inc.

 

c.Following the completion of the destruction of electronically stored information, Inc shall issue an invoice to AG to recoup AG’s 50% contribution to this settlement cost. AG shall make payment to Inc within 30 days of receipt of the invoice.

 

4. Remedies

 

a.If AG fails to make timely reimbursements to Inc as described in Sections 2(c) and 3(c) of this Agreement, Inc may, in its sole discretion:

 

i.Charge interest to AG on the amounts owed and payable under this Agreement at the rate of 6% per annum for (a) in the case of the reimbursement of the First Installment pursuant to Section 2(c)(i), each day from and including January 31, 2022 until the day on which Inc has received payment in full of the amount owed, and (b) in the case of reimbursement due under Sections 2(c)(ii), 2(c)(iii) and 3(c), each day from and including the day after the due date of such payment (each an “Interest Amount”);

 

ii.Offset the amounts owed and payable under this Agreement, including any applicable Interest Amount, against payments owed to AG by Inc under separate agreements duly executed between the parties, including but not limited to amounts owed under a certain License and Supply Agreement, made effective June 16, 2021 and as amended thereafter (collectively, the “LSA”) such that any amounts owed to AG by Inc are reduced by amounts owed and payable, at the time of such payment that is being offset, to Inc by AG under this Agreement and the amount by which such payment is offset will be deemed to have been paid by AG to Inc in satisfaction (full or partial, as applicable) of its reimbursement obligations under this Agreement; provided that, Inc may elect to offset a payment to AG by less than the total amount owed and payable under this Agreement at the time of such payment and, further provided that, if Inc’s payment is reduced by less than the total amount owed and payable under this Agreement at the time of such payment, the difference between (i) the total amount owed and payable at the time of such payment and (ii) the amount by which Inc’s payment has been reduced, will remain owed and payable to Inc by AG and may be used to offset subsequent payments by Inc to AG; and/or

 

iii.Exercise all other rights and remedies available to Inc under applicable law and pursue any and all available remedies for collection of such amounts owed and payable under this Agreement and any applicable Interest Amounts.

 

b.If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to collect from the other party all reasonable attorneys’ fees, costs and necessary disbursements incurred in such action (in addition to any other relief to which the prevailing party may be entitled).

 

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5. Miscellaneous

 

a.Entire Agreement; Consistency with LSA. This Agreement contains the entire understanding between and among the parties and supersedes any prior understandings and agreements among them respecting the subject matter of this Agreement. Except as amended by this Agreement, the Settlement Agreement shall continue to be unchanged and the Settlement Agreement as amended by this Agreement sets forth the entire agreement between Inc and AG with respect to the subject matter contemplated therein. No amendment to the Settlement Agreement or this Agreement shall be effective unless in writing and signed by the Parties. The Parties expressly agree that this Agreement shall be construed as being consistent with the terms of the LSA and shall not impact the rights and responsibilities of the parties to the LSA in any way other than as described in Section 4(b) with regard to Inc’s ability to offset amounts owed to it by AG under the LSA.

 

b.Notices. Except as otherwise provided herein, all notices, requests, demands, consents, instructions or other communications to or upon Lender or Borrower under this Agreement or the other Loan Documents shall be in writing and telecopied, mailed or delivered to each party at its telecopier number or address set forth below (or to such other telecopier number or address for any party as indicated in any notice given by that party to the other party). All such notices and communications shall be effective (i) when sent by Federal Express or other overnight service of recognized standing, on the Business Day following the deposit with such service; (ii) when mailed by registered or certified mail, first class postage prepaid and addressed as aforesaid through the United States or German Postal Service, upon receipt; (iii) when delivered by hand, upon delivery; and (iv) when telecopied, upon confirmation of receipt; provided, however, that any notice delivered to Lender under Section 2 shall not be effective until received by Lender.

 

  AG: Biofrontera AG
    Hemmelrather Weg 201
    51377 Leverkusen Germany
    Attention: Ludwig Lutter
     
  INC: Biofrontera Inc.
    120 Presidential Way, Suite 330
    Woburn, MA 01801
    Attention: Erica Monaco

 

c.Waivers; Amendments. Any term, covenant, agreement or condition of this Loan Agreement or any other Loan Document may be amended or waived if such amendment or waiver is in writing and is signed by Borrower and Lender. No failure or delay by Lender in exercising any right hereunder shall operate as a waiver thereof or of any other right nor shall any single or partial exercise of any such right preclude any other further exercise thereof or of any other right. A waiver or consent given hereunder shall be effective only if in writing and in the specific instance and for the specific purpose for which given.

 

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d.Successors and Assigns. This Loan Agreement and the other Loan Documents shall be binding upon and inure to the benefit of Borrower, Lender and their respective successors and permitted assigns, except that Borrower may not assign or transfer (and any such attempted assignment or transfer shall be void) any of its rights or obligations under any Loan Document without the prior written consent of Lender.

 

e.Term and Termination. This Agreement shall remain in full force unless terminated by mutual written consent of the Parties. Neither Party may terminate this agreement without written consent of the other.

 

f.Counterparts. This Agreement may be executed by facsimile signature and in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.

 

g.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Massachusetts, USA. The parties hereto hereby agree that any suits brought hereunder shall be brought in a State or Federal Court of competent jurisdiction located in Boston, Massachusetts, which will have sole and exclusive jurisdiction for claims arising from this Agreement.

 

[Remainder of page intentionally left blank; Signature page follows]

 

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IN WITNESS WHEREOF, the parties have executed this Amended Settlement Allocation Agreement, effective as of the date first set forth above.

 

Biofrontera AG    
Biofrontera Bioscience GmbH    
Biofrontera Pharma GmbH    
Biofrontera Development GmbH    
Biofrontera Neuroscience GmbH   Biofrontera Inc.
     
Signature: /s/ Ludwig Lutter   Signature: /s/ Erica Monaco
     
Date: 4/1/2022   Date: 3/31/2022
     
Name: Ludwig Lutter   Name: Erica Monaco
     
Title: Chief Financial Officer   Title: Chief Executive Officer

 

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Exhibit 10.2

 

 

AMENDMENT TO EMPLOYMENT AGREEMENT

 

This Amendment to Employment Agreement (the “Amendment”) is made effective as of April 1, 2022 (the “Effective Date of this Amendment”), by and between Biofrontera, Inc, a Delaware corporation (the “Company”) having its registered office at 120 Presidential Way, Suite 330, Woburn, MA 01801 and Erica Monaco (the “Executive”), currently employed as Chief Executive Officer for Biofrontera Inc.

 

Recitals

 

Whereas, the Parties entered into a certain Employment Agreement on August 11, 2021, (the “Agreement”); and

 

Whereas, the Parties with to amend certain terms of the Agreement, as described herein.

 

Now, therefore, in consideration of the foregoing and the agreements contained here, the Parties hereto, intending to be legally bound, hereby agree as follows:

 

Agreement

 

  1. Amendment to Agreement. As of the Effective Date of this Amendment:

 

  a. Section 4 of the Agreement shall be amended to read in its entirety as follows (added language appears in italics, deleted language appears in strikethrough):

 

COMPENSATION

 

For the services to be rendered by the Executive under the Agreement, the Company shall pay her a salary while she is rendering such services and performing her duties hereunder, and the Executive shall accept such salary as full payment for such service. Executive’s annual base salary shall be $300,000.00$450,000.00, reduced by (i) Federal income tax withholding, (ii) FICA; and (iii) such other reductions as may be agreed upon by the parties or required by law, and shall be paid in bi-weekly installments and in accordance with the Company’s customary payroll procedure. For each fiscal year in effect during the active life of this Agreement, the Executive shall be eligible to receive a cash bonus of up to 30 60% of her base salary (the “Target Bonus”) upon the attainment of performance goals set in advance by the Board of Directors. All such bonuses shall be paid after the completion of the Company’s financial statements for the applicable fiscal year as and when bonuses are paid to members of senior management generally. The actual amount of Executive’s bonus shall depend upon the level of achievement of set targets, however no bonus shall be paid if the level of target achievement is below 70%.

 

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Company shall also pay to Executive a one-time signing bonus of $75,000.00 (subject to applicable tax withholdings). This sum shall be paid in two installments: i) $37,500.00 on the first regularly scheduled pay date after the effective date of this Agreement, and ii) $37,500.00 on the final pay date of 2021 (provided that this Agreement has not been terminated by either party in accordance with Section 9 of this Agreement prior to said date).

 

Upon the Executive’s termination of employment, regardless of the reason for such termination and regardless of the party by whom such termination is initiated, the Executive shall be entitled to immediate payment of all accrued but unpaid base salary and expenses owed. In addition, upon the Executive’s termination of employment by the Company other than termination for “Cause” under Section 9(d) of the Agreement, the Executive shall be entitled to a severance payment equal to one twelfth the Executive’s then-current annual base salary for each full year the Executive has been employed by the Company (including Biofrontera AG, as a past affiliate of the Company); provided, however, that such payment shall not exceed two full years of Executive’s then-current base salary.

 

Further, the Executive shall participate in Company’s stock option plan. The number of options rewarded to her shall be at the discretion of the Board of Directors.”

 

  2. Continuing Effect of Original Agreement.

 

  a. This Amendment shall only serve to amend and modify the Employment Agreement to the extent specifically provided herein. All terms, conditions, provisions, exhibits and references of and to the Employment Agreement that are not specifically modified and/or amended herein shall remain in full force and effect and shall not be altered by any provisions herein contained. On and after the date of this Amendment, each reference in the Employment Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of like import, and each reference to the Employment Agreement, including the exhibits relating thereto, in any other agreements, documents or instruments executed and delivered pursuant to the Employment Agreement, shall mean and be a reference to the Employment Agreement as amended by this Amendment.
     
  b. For the avoidance of doubt, the Parties agree that the first payment made to Executive under the Agreement shall include a “catch up” payment to account for all sums owed to Executive that were accrued between the Effective Date and the date on which this Amendment was executed.

 

  3. Capitalized Terms.

 

  a. All capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement. In the event of a conflict between the capitalized terms defined and set forth in this Amendment and the defined terms of the Agreement, the definitions set forth in this Amendment shall control.

 

[Remainder of page intentionally left blank; Signature page follows.]

 

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IN WITNESS WHEREOF, the parties have executed the Agreement,

 

Biofrontera Inc.    
     
/s/ Hermann Luebbert   4/1/2022
Prof. Dr. Hermann Luebbert   Date
Executive Chairman    
Chairman of the Board of Directors    
     
Executive    
     
/s/ Erica Monaco   4/1/2022
Erica Monaco   Date

 

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