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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
Amendment No. 1 to
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended December 31, 1999 Commission file number 0-19373
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BIOMATRIX, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware (201) 945-9550 13-3058261
(State of other jurisdiction of (Registrant's telephone number, (IRS Employer
incorporation or organization) including area code) Identification No.)
</TABLE>
65 Railroad Avenue
Ridgefield, N.J. 07657
(Address of principal executive offices) (Zip Code)
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Securities registered pursuant to Section 12(b) of the Act:
Common Stock. $.0001 Par Value
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act:
None
Name of exchange on which registered shares are traded: New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item-405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ].
The aggregate market value of the voting stock held by non-affiliates
of the registrant as of April 1, 2000, was approximately $351.2 million, based
upon the last reported sales price of the registrant's Common Stock on the New
York Stock Exchange.
At April 1, 2000 there were 23,308,771 shares of the registrant's
Common Stock outstanding.
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DOCUMENTS INCORPORATED BY REFERENCE
Other documents incorporated by reference are listed in the Exhibit
Index.
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The following items are amended:
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
Item 10. Directors and Executive Officers of the Registrant
Background of Directors
Endre A. Balazs, M.D., a co-founder of the Company, became Chief
Executive Officer and Chief Scientific Officer of the Company in February 1987,
having served as President from inception of the Company until that time. He
also served as a Director of the Company since its inception to the present. He
is the Malcolm P. Aldrich Research Professor Emeritus at the College of
Physicians and Surgeons, Columbia University. Prior to joining Columbia in 1975,
he taught at Harvard Medical School for 25 years, during which time he was also
co-founder, research director and President of the Retina Foundation and the
Boston Biomedical Research Institute. From 1968 to 1978, Dr. Balazs was
President and owner of Biotrics, Inc., which developed and manufactured the
first hyaluronan therapeutic products used in medicine. He is the author of more
than 300 scientific articles and patents. Dr. Balazs received a M.D. from the
University of Budapest, Hungary. He is married to Dr. Denlinger.
H. Stuart Campbell has been Chairman of the Board of the Company since
1983. For 22 years prior to his association with the Company he held various
marketing and executive positions at Johnson & Johnson, having retired in 1982
as Company Group Chairman of the Ethicon business of that corporation.
Currently, Mr. Campbell is the owner of Highland Packaging Labs, Inc. and also a
director of Atrix Laboratories, Inc. and Mesa Laboratories, Inc. He is a
graduate of Cornell University and the Advanced Management Program of the
Harvard University Graduate School of Business Administration.
Janet L. Denlinger, Ph.D., a co-founder of the Company, has been
Executive Vice President of the Company since 1989 and a Vice President and
Director of the Company since its inception. She was a research associate of Dr.
Balazs for 20 years at the Boston Biomedical Research Institute and then at the
Department of Ophthalmology, College of Physicians and Surgeons, Columbia
University. She is the author of numerous publications in physiology,
biochemistry, biological activity and metabolism of hyaluronan. Dr. Denlinger
received a Ph.D. in biochemistry from the University of Lille, France. She is
married to Dr. Balazs.
Kurt Mark has been a Director of the Company since June 1987 and has
served as an advisor to the Company since 1985. He served on the Board of
Directors of Pharmacia AB from 1974 to 1984, and was Chairman from 1978 to 1984.
Mr. Mark was a senior partner of the law firm Vinge, with principal offices in
Goteborg, Stockholm, Paris, London, Brussells and Hong Kong, until 1999. Mr.
Mark was also Chairman of the Boards of Elof Hansson AB and Elof Hansson, Inc.
(New York), the Lundberg Research Foundation and the Elof Hansson Foundation. He
received a law degree from the University of Uppsala, Sweden.
Justin P. Morreale, Esq., has been a Director of the Company since May
1997. Mr. Morreale has been a partner of Bingham Dana LLP, a law firm based in
Boston, Massachusetts, since 1975. Mr. Morreale has acted as counsel to the
Company since its formation and served as Secretary of the Company from that
time until July 1998. Mr. Morreale is a graduate of Syracuse University and
Harvard Law School.
Rory B. Riggs was elected President of the Company on April 1, 1996 and
served as the acting Chief Financial Officer from September 1996 to January
1998. He has been a Director of the Company since October 1990. Since 1991, he
has been affiliated with ITIM Corp. and Pharmaceutical Partners LLC, investment
advisory and venture capital firms specializing in pharmaceutical and
biotechnology investments. From 1991 to 1994, he was acting President and Chief
Executive Officer of RF&P Corporation, a company wholly owned by the Virginia
2
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Retirement System. Until 1990, Mr. Riggs was a Managing Director in the Mergers
and Acquisitions Department at PaineWebber Incorporated, where he was employed
for more than nine years. He is a graduate of Middlebury College and Columbia
University's Graduate School of Business. Mr. Riggs is a member of the Board of
Directors of Spartan, Inc. and FibroGen, Inc.
Julius A. Vida, Ph.D., has been a Director since April 1993. He is
President of Vida International Pharmaceutical Consultants and is a consultant
to several pharmaceutical and biotechnology companies. He was formerly the Vice
President, Business Development, Licensing and Strategic Planning for
Bristol-Myers Squibb Co. His background includes establishment of international
businesses in new pharmaceutical therapeutic areas, modernizing portfolios by
in-licensing innovative new products and developing contacts with the private
sector as well as academia and international government agencies. Dr. Vida
received his Ph.D. from Carnegie Mellon University, his M.B.A. from Columbia
University in New York and was a post-doctoral research fellow at Harvard
University. He has held R & D positions at Merck and Kendall/Colgate Company,
and is the holder of over 30 U.S. patents, author of 35 scientific publications
and 20 books or chapters. Dr. Vida is a member of the Board of Directors of
Medarex, Inc., FibroGen, Inc., SuperGen, Inc. and Orphan Medical.
Background of Executive Officers
The information with respect to executive officers required by this
item is set forth in Part I of the Report.
Item 11. Executive Compensation
Summary Compensation Table. The following table sets forth certain
compensation information for each of the Company's last three fiscal years with
respect to (i) the Company's Chief Executive Officer and (ii) each of the
Company's four other most highly compensated executive officers based on salary
and bonus earned during fiscal 1999. The Company maintains a 401(k) retirement
savings plan for all of its employees, including its executive officers.
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Long Term
Annual Compensation Compensation
Securities Underlying All Other
Name and Principal Position Year Salary($) Bonus ($) (1) Options (#) Compensation ($)(2)
- --------------------------- ---- --------- ------------- ----------- -------------------
<S> <C> <C> <C> <C> <C>
Endre A. Balazs, M.D., 1999 213,308 21,331 - 250
CEO and CSO 1998 204,514 - - 250
1997 194,775 - - 250
Rory B. Riggs, 1999 181,268 18,127 - 250
President 1998 172,144 17,214 - 250
1997 148,400 29,680 20,000 (3) -
Janet L. Denlinger, Ph.D., 1999 189,114 18,911 - 250
Executive Vice President 1998 179,595 17,960 - 250
1997 156,170 31,254 20,000 (3) 250
Donald Woodhouse, 1999 168,480 16,848 7,500 250
Vice President, Manufacturing 1998 160,000 16,000 - 250
1997 140,418 14,042 30,000 250
Maxine Seifert, (4) 1999 168,549 42,137 9,000 250
Chief Financial Officer 1998 160,000 16,000 80,000 -
</TABLE>
(1) Represents bonus earned during the fiscal year. In some instances all or a
portion of the bonus was paid during the next fiscal year.
(2) Amounts presented represent the Company's matching contributions under the
Company's 401(k) Plan.
(3) Such option grants were cancelled on March 31, 1998.
(4) Ms. Seifert became Chief Financial Officer on January 5, 1998.
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Option Grants and Exercises in Fiscal Year 1999. The following tables
summarize option grants and exercises during fiscal 1999 to or by the executive
officers named in the Summary Compensation Table. In accordance with Securities
and Exchange Commission rules, also shown are the hypothetical gains or "option
spreads", on a pre-tax basis, that would exist for the respective options. These
gains are based on assumed rates of annual compound stock appreciation of 5% and
10% from the date the options were granted over the full option term.
OPTION GRANTS IN FISCAL YEAR 1999
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<CAPTION>
Potential
Realizable
Individual Grants Value at Assumed
-----------------------------------------------------------------
Securities Percent of Annual Rates of
Underlying Total Options Stock Price
Options Granted to Exercise Appreciation
Granted Employees Price Expiration For Option Term
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Name (#) (1) In Fiscal Year (%) ($/Sh) Date 5% ($) 10% ($)
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<S> <C> <C> <C> <C> <C> <C>
Endre A. Balazs - - - - -
-
Rory B. Riggs - - - - -
-
Janet L. Denlinger - - - - -
-
Maxine Seifert 9,000 (2) 1.4% $26.18 2/11/09 148,112 375,450
Donald Woodhouse 7,500 (2) 1.2% $26.18 2/11/09 123,427 312,875
</TABLE>
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(1) All grants are under the Company's 1994 Stock Option Plan, as amended.
Such Options are not transferable, other than by will or by the laws of
descent and distribution.
(2) Options will become exercisable on 8/11/00.
4
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AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999
AND FISCAL YEAR-END OPTION VALUES
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<CAPTION>
Securities Value of Unexercised
Underlying Unexercised In the Money
Shares Options at Options at
Acquired On Value Fiscal Year-End(#) Fiscal Year-End ($)(2)
Name Exercise (#) Realized($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------ -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Endre A. Balazs - - - / - - / -
Rory B. Riggs - - - / - - / -
Janet L. Denlinger - - 27,500 / 2,500 410,718 / 24,406
Maxine Seifert - - 22,000 / 67,000 169,250 / 268,250
Donald Woodhouse - - 29,500 / 28,000 368,938 / 207,313
</TABLE>
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(1) Value is calculated based on the difference between the option price and
the market price of the Common Stock on the date of exercise multiplied by
the number of shares to which the exercise relates.
(2) Value is calculated based on the difference between the option exercise
price and the market price of the Common Stock on December 31, 1999
($19.25) multiplied by the number of shares to which the option relates.
5
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Executive Employment Agreements and Severance Agreements
The Company entered into an employment agreement with Dr.
Balazs, as of December 30, 1988, which as amended on February 29, 2000, provides
for compensation at an annual rate to be determined by the Compensation
Committee. The Compensation Committee set Dr. Balazs' salary for 1999 at
$213,308. Dr. Balazs declined salary increases in 1994 and 1995 and accepted
approximate salary increases of 5%, 6%, 5% and 4% in 1996, 1997, 1998 and 1999,
respectively. The agreement includes a covenant not to compete with the Company
during his employment and for a period up to eighteen months thereafter. This
agreement is terminable at any time by either party.
The Company entered into an employment agreement with Mr. Riggs as of
April 2, 1996, pursuant to which Mr. Riggs is to serve as President of the
Company. This agreement is terminable by either party upon thirty days notice.
Under the employment agreement, Mr. Riggs is to receive an annual base salary of
at least $140,000 and is eligible to receive an annual performance bonus and
salary increase upon the recommendation of the Company's Chief Executive Officer
and at the discretion of the Compensation Committee. Additionally, in connection
with Mr. Riggs' becoming President of the Company, Mr. Riggs purchased 400,000
shares of the Company's Common Stock on April 2, 1996 at a price of $6.13 per
share, such price representing the fair market value. Mr. Riggs paid for such
shares by issuing the Company a four year promissory note in the amount of
$2,450,000 which was payable over a four year period with an annual interest
rate of 6%. In July 1998 Mr. Riggs' repaid the note, plus accrued interest, in
full.
Change of Control Agreements
The Company has entered into change of control agreements with Dr.
Balazs, Dr. Denlinger and Ms. Seifert, each of whom are executive officers of
Biomatrix. Under the change of control agreements, Dr. Denlinger and Ms. Seifert
will be paid severance payments equal to approximately 24 months salary upon
completion of the pending merger with Genzyme Corporation (see Recent
Developments in Part I, Item 1 of this Form 10-K). In addition, Dr. Balazs, Dr.
Denlinger and Ms. Seifert will receive health benefits for a period of 24 months
after completion of the merger. Genzyme has entered into an employment agreement
with Mr. Riggs in which Mr. Riggs agreed to be employed by Genzyme after the
merger at least until December 31, 2000. On that date, or earlier if he is
terminated without cause, pursuant to the employment agreement, Mr. Riggs is
entitled to a severance payment equal to approximately 24 months salary payable
upon termination of his employment with Genzyme.
Also, as part of the pending merger with Genzyme Corporation, at the
expected time of the merger, options to purchase 45,000 shares of Biomatrix
common stock held by Ms. Seifert, and options to purchase an aggregate of 73,333
shares of Biomatrix common stock held by Mssrs. Mark and Vida, non-employee
directors of Biomatrix, will accelerate and become fully exercisable.
Compensation of Directors
Each Director who is not an employee of the Company is entitled to
receive a Director's fee of $300 per meeting. All Directors are reimbursed for
expenses incurred in attending meetings of the Board.
In accordance with the Company's Non-Employee Director Stock Option
Plan (the "Director Plan"), non-employee Directors are entitled to receive stock
options, at fair market value. Upon initial election or re-election to the Board
of Directors and annually thereafter, a non-employee Director will receive a
grant of 5,000 options which will vest immediately on the date of the Company's
annual meeting, or in lieu thereof, may purchase an equal number of shares of
restricted stock under the Company's Restricted Stock Plan, at a price equal to
the fair market value.
6
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Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of March 31, 2000, the ownership of
the Company's Common Stock held by: (i) each person known by the Company to be
the beneficial owner of more than five percent of the outstanding Common Stock;
(ii) each director, each nominee for election as a director and each named
executive officer of the Company; and (iii) all of the Company's executive
officers and directors as a group. As of such date, the Company had 23,308,771
shares of Common Stock outstanding. The number of shares and the percentage
beneficially owned by the persons named in the table and by all executive
officers and directors as a group are presented in accordance with Rule 13d-3 of
the Securities Exchange Act of 1934 and include, in addition to shares issued
and outstanding, unissued shares which are issuable upon exercise of options
within 60 days of March 31, 2000.
<TABLE>
<CAPTION>
Beneficial Ownership
Number of
Shares(1) Percent
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<S> <C> <C>
Endre A. Balazs, M.D............................................. 4,395,836 (2) 18.9
Janet L. Denlinger, Ph.D......................................... 2,355,670 (3) 10.1
Rory B. Riggs.................................................... 1,746,000 (4) 7.5
H. Stuart Campbell............................................... 201,828 (5) *
Justin P. Morreale............................................... 110,000 (6) *
Maxine Seifert................................................... 112,000 (7) *
Donald Woodhouse................................................. 65,150 (8) *
Julius A. Vida, Ph.D............................................. 77,000 (9) *
Kurt Mark........................................................ 50,667 (10) *
All executive officers and directors as a group (12 persons)..... 9,260,801 (11) 39.7
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* Less than 1%
</TABLE>
(1) Unless otherwise indicated in these footnotes, each Shareholder has sole
voting and investment power with respect to the shares beneficially owned.
(2) Excludes 2,325,670 shares of Common Stock and 30,000 shares of Common
Stock subject to exercisable options held by Dr. Denlinger, as to which
shares Dr. Balazs disclaims beneficial ownership. The address of such
person is 65 Railroad Avenue, Ridgefield, N.J. 07657.
(3) Excludes 4,395,836 shares held by Dr. Balazs, as to which shares Dr.
Denlinger disclaims beneficial ownership. Includes 30,000 shares of Common
Stock subject to issuance upon exercise of options within 60 days of March
31, 2000. The address of such person is 65 Railroad Avenue, Ridgefield,
N.J. 07657.
(4) The address of such person is 65 Railroad Avenue, Ridgefield, NJ 07657.
(5) Includes 54,000 shares of Common Stock subject to issuance upon exercise
of options within 60 days of March 31, 2000. Excludes 19,672 shares of
Common Stock owned by Mr. Campbell's wife, as to which shares Mr. Campbell
disclaims beneficial ownership.
(6) Excludes 2,000 shares of Common Stock owned by Mr. Morreale's wife, as to
which shares Mr. Morreale disclaims beneficial ownership.
(7) Includes 52,000 shares of Common Stock subject to issuance upon exercise
of options within 60 days of March 31, 2000.
(8) Includes 34,000 shares of Common Stock subject to issuance upon exercise
of options within 60 days of March 31, 2000. Excludes 600 shares of Common
Stock owned by Mr. Woodhouse's daughter as to which shares Mr. Woodhouse
disclaims beneficial ownership.
(9) Represents shares of Common Stock subject to issuance upon exercise of
options within 60 days of March 31, 2000. Excludes 1,682 shares of Common
Stock owned by Dr. Vida's wife and children as to which shares Dr. Vida
disclaims beneficial ownership.
(10) Represents shares of Common Stock subject to issuance upon exercise of
options within 60 days of March 31, 2000.
(11) Includes 396,857 shares of Common Stock subject to issuance upon exercise
of options within 60 days of March 31, 2000.
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Item 13. Certain Relationships and Related Transactions
Certain Transactions
Certain of the Company's Executive Officers and Directors have
purchased shares of Common Stock pursuant to the Company's 1997 Restricted Stock
Plan, as administered by the Compensation Committee of the Board of Directors.
All such purchases of Common Stock, with the exception of the 10,000 shares sold
to each of Dr. Denlinger and Mr. Riggs on May 29, 1997 noted below, have been at
fair market value on the date of purchase. In addition, all such purchases have
been made in cash or have been subject to ten year, full recourse, interest
bearing notes. The following purchases have occurred since the inception of the
1997 Restricted Stock Plan:
o On May 29, 1997, the Company sold 12,000 shares of Common Stock to each of
Dr. Janet L. Denlinger, Mr. Rory B. Riggs and Justin P. Morreale, Esq. at a
purchase price of $7.94 per share, such price representing the fair market
value. The Company also sold an additional 10,000 shares of Common Stock to
each of Dr. Denlinger and Mr. Riggs at a purchase price of $5.63 per share.
Both officers recognized a gain on this transaction based on the fair
market value of $7.94 per share as of May 28, 1997. The Company recognized
compensation expense of $46,250 in its consolidated financial statements.
The related promissory notes incur simple interest at an annual rate of
7.18%.
o On June 30, 1997, the Company sold 70,000 shares of Common Stock to each of
Drs. Balazs and Denlinger and Mr. Riggs. Such shares were sold at a
purchase price of $9.00 per share, such price representing the fair market
value. Drs. Balazs and Denlinger and Mr. Riggs purchased the shares with
cash.
o On January 5, 1998, the Company sold 60,000 shares of Common Stock to
Maxine Seifert at a purchase price of $14.81 per share, such price
representing the fair market value. The related promissory note incurs
simple interest at an annual rate of 6.13%.
o On March 31, 1998, the Company sold 20,000 shares of Common Stock to each
of Dr. Denlinger and Mr. Riggs at a purchase price of $14.00 per share,
such price representing the fair market value. The related promissory notes
incur simple interest at an annual rate of 5.91%.
o On April 29, 1998, the Company sold 58,000 and 48,000 shares of Common
Stock to each of Mr. Stuart Campbell and Justin P. Morreale, Esq.,
respectively, at a purchase price of $15.44 per share, such price
representing the fair market value. The related promissory notes incur
simple interest at an annual rate of 5.98%.
o On June 16, 1998, the Company sold 400,000 shares of Common Stock to Mr.
Riggs at a purchase price of $16.75 per share, such price representing the
fair market value. The related promissory note incurs simple interest at an
annual rate of 6.02%.
o On March 17, 1999, the Company sold 24,000 shares of the Company's Common
Stock to each of Drs. Balazs and Denlinger and Mr. Riggs at a purchase
price of $33.94 per share, such price representing the fair market value.
The related promissory notes incur simple interest at an annual rate of
5.30%.
In addition to regularly scheduled non-employee director option grants
to directors, on April 29, 1998, the Company granted options to purchase 64,000
and 96,000 shares of common stock to Mr. Kurt Mark and Dr. Julius A. Vida,
respectively, at a purchase price of $15.44 per share, such price representing
the fair market value.
Mr. Morreale is a partner of the law firm Bingham Dana LLP, which is
general counsel to the Company.
8
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registered has duly caused this amendment report
to be signed on its behalf by the undersigned thereunto duly authorized.
BIOMATRIX, INC.
By: /s/ ENDRE A. BALAZS
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Endre A. Balazs, M.D.
Chief Executive Officer and
Chief Scientific Officer
