Item 1.01 Entry into a Material Definitive Agreement
On May 17, 2020, Neurotrope, Inc., a Nevada corporation ("Neurotrope"), Petros
Pharmaceuticals, Inc., a Delaware corporation formed for the purposes of
effecting transactions contemplated by the Merger Agreement ("Petros"), PM
Merger Sub 1, LLC, a Delaware limited liability company and a wholly-owned
subsidiary of Petros ("Merger Sub 1"), PN Merger Sub 2, Inc., a Nevada
corporation and a wholly-owned subsidiary of Petros ("Merger Sub 2"), and
Metuchen Pharmaceuticals LLC, a Delaware limited liability company ("Metuchen"),
entered into an Agreement and Plan of Merger (the "Merger Agreement").
The Merger Agreement provides for (1) the merger of Merger Sub 1, with and into
Metuchen, with Metuchen surviving as a wholly-owned subsidiary of Petros (the
"Metuchen Merger") and (2) the merger of Merger Sub 2 with and into Neurotrope,
with Neurotrope surviving as a wholly-owned subsidiary of Petros (the
"Neurotrope Merger" and together with the Metuchen Merger, the "Mergers"). The
Mergers are intended to qualify for federal income tax purposes as a tax-free
reorganization under the provisions of Section 351 of the Internal Revenue Code
of 1986, as amended.
As a result of the Metuchen Merger, each outstanding common unit or preferred
unit of Metuchen will be exchanged for a number of shares of Petros common stock
equal to the quotient resulting from the formula of (i) 95,908,502 divided by
(ii) the number of fully-diluted units of the Company outstanding immediately
prior to the effective time of the Mergers. As a result of the Neurotrope
Merger, each outstanding share of Neurotrope common stock will be exchanged for
one (1) share of Petros common stock and each outstanding share of Neurotrope
preferred stock will be exchanged for one (1) share of Petros preferred stock.
Following the Mergers, the Petros Preferred Stock will have substantially the
same conversion rights (proportionally adjusted to give effect to the Mergers),
powers, rights and privileges as the Neurotrope preferred stock prior to the
Mergers. In addition, each outstanding option to purchase Neurotrope common
stock or outstanding warrant to purchase common stock that has not previously
been exercised prior to the closing of the Mergers (the "Closing") will be
converted into equivalent options and warrants to purchase shares of Petros
common stock and will be adjusted to give effect to the exchange ratios set
forth in the Merger Agreement.
Upon the Closing, on a pro forma basis, current Neurotrope shareholders will own
approximately 20.0% of the combined company and current Metuchen investors will
own approximately 80.0% of the combined company.
In connection with the Mergers, Neurotrope plans to spin-off (the "Spin-Off")
its wholly-owned subsidiary, Neurotrope Biosciences, Inc. Substantially all of
the consolidated operations of Neurotrope were conducted through such subsidiary
and substantially all of the consolidated operating assets and liabilities of
Neurotrope reside in such subsidiary. The Spin-Off is planned to be made as a
distribution to Neurotrope's stakeholders as of a record date prior to the
Mergers, but the distribution is currently contemplated to occur after the
Closing. The spun-off entity will be capitalized with all cash in excess of the
$20 million to be retained by Metuchen, subject to adjustment for the proceeds
from any exercise of Neurotrope's warrants between the date of execution of the
Merger Agreement and closing of the Mergers. The proceeds of any such warrant
exercises will be split 80% to Metuchen and 20% to the spun-off entity. The
record date for the Spin-Off, the ratio of the Spin-Off shares distributed to
the Neurotrope shares held as of the record date and the extent to which other
stakeholders of Neurotrope may be entitled to participate in the Spin-Off have
not yet been determined.
Consummation of the Mergers is subject to certain closing conditions, including,
among other things, approval by the securityholders of Neurotrope and Metuchen
and the listing of the Petros common stock on the Nasdaq Stock Market after the
Mergers. In accordance with the terms of the Merger Agreement, (i) certain
executive officers, directors and unitholders of Metuchen (solely in their
respective capacities as Metuchen unitholders) holding approximately 84% of the
outstanding Metuchen capital units have entered into voting agreements with
Neurotrope to vote all of their Metuchen capital units in favor of adoption of
the Merger Agreement (the "Metuchen Voting Agreements") and (ii) certain
executive officers, directors and stockholders of Neurotrope (solely in their
respective capacities as Neurotrope stockholders) holding less than 1% of the
outstanding Neurotrope common stock have entered into voting agreements with
Metuchen to vote all of their shares of Neurotrope common stock in favor of
approval of the Merger Agreement (the "Neurotrope Voting Agreements", and
together with the Metuchen Voting Agreements, the "Voting Agreements"). The
Voting Agreements include covenants with respect to the voting of such shares or
units in favor of approving the transactions contemplated by the Merger
Agreement and against any competing acquisition proposals. In addition,
concurrently with the execution of the Merger Agreement, (i) certain executive
officers, directors and unitholders of Metuchen and (ii) certain executive
officers, directors and stockholders of Neurotrope have entered into lock-up
agreements (the "Lock-Up Agreements") pursuant to which they accepted certain
restrictions on transfers of shares of Petros common stock for the nine-month
period following the Closing.
The Merger Agreement contains certain termination rights for both Neurotrope and
Metuchen, and further provides that, upon termination of the Merger Agreement
under specified circumstances, either party may be required to pay the other
party a termination fee of $1,000,000 plus third party expenses incurred by the
terminating party.
At the effective time of the Mergers, the Board of Directors of Petros is
expected to consist of nine members, five of whom will be designated by Metuchen
and four of whom will be designated by Neurotrope.
In connection with the entry into the Merger Agreement, Neurotrope and an
affiliated entity of Juggernaut Capital Partners (the "Investor") entered into a
Backstop Agreement pursuant to which the Investor agreed to contribute to
Metuchen at the Closing an amount equal to the Working Capital Shortfall Amount
(as defined in the Merger Agreement), if any, as determined in accordance with
Section 1.8 of the Merger Agreement, up to an aggregate amount not to exceed
$6,000,000 (the "Commitment Cap"). Following the Closing and until the one-year
anniversary of the Closing (the "Anniversary Date"), the Investor agreed to
contribute, or cause an affiliate to contribute, to Petros an amount equal to
the Commitment Cap less the Working Capital Shortfall Amount (the "Post-Closing
Commitment") on the Anniversary Date; provided, however, that, (a) in the event
that, at any time between the Closing and the Anniversary Date, the closing
price per share of Petros' common stock on the Nasdaq Capital Market or any
other securities exchanges on which the Petros common stock is then traded
equals or exceeds $2.175 for a period of ten (10) consecutive trading days, then
the Post-Closing Commitment shall be reduced by fifty percent (50%) and (b) in
the event that, at any time between the Closing and the Anniversary Date, the
closing price per share of Petros' common stock on the Nasdaq Capital Market or
any other securities exchanges on which the Petros common stock is then traded
equals or exceeds $2.5375 for a period of ten (10) consecutive trading days,
then the Post-Closing Commitment shall be $0.
In addition, in connection with the entry into the Merger Agreement, the
Investor, Neurotrope and Metuchen entered into a Note Conversion and Loan
Repayment Agreement pursuant to which the Investor agreed to fund up to $1.5
million to Metuchen from time to time no later than the Closing to permit
Metuchen to make certain monthly payments pursuant to its outstanding credit
facility. Further, pursuant to the terms of the Note Conversion and Loan
Repayment Agreement, the Investor agreed to convert all outstanding promissory
notes of Metuchen held by the Investor into shares of Petros common stock in
connection with the Closing. As of the date of this Current Report on Form 8-K,
the Investor has funded promissory notes of Metuchen equal to an aggregate of
$8.5 million.
The preceding summary does not purport to be complete and is qualified in its
entirety by reference to the Merger Agreement, the form of Metuchen Voting
Agreements, the form of Neurotrope Voting Agreements, the form of Lock-Up
Agreements and the form of Juggernaut Backstop Agreement, which are filed as
Exhibits 2.1, 2.2, 2.3, 2.4 and 99.9, respectively, to this Form 8-K and which
are incorporated herein by reference. The Merger Agreement has been attached as
an exhibit to this Current Report on Form 8-K to provide investors and
securityholders with information regarding its terms. It is not intended to
provide any other factual information about Metuchen or Neurotrope or to modify
or supplement any factual disclosures about Neurotrope in its public reports
filed with the SEC. The Merger Agreement includes representations, warranties
and covenants of Metuchen and Neurotrope made solely for the purpose of the
Merger Agreement and solely for the benefit of the parties thereto in connection
with the negotiated terms of the Merger Agreement. Investors should not rely on
. . .
Item 8.01 Other Events.
Attached as Exhibit 99.1 is a copy of the joint press release issued by
Neurotrope and Metuchen on May 18, 2020 announcing the execution of the Merger
Agreement.
For the general information of investors, Neurotrope is filing herewith
information relating to the Merger. Specifically, filed herewith as Exhibits
99.2, 99.3, 99.4 and 99.5, respectively, are excerpts of the "Metuchen
Business," "Metuchen Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Risk Factors" and "Fairness Opinion of Gemini
Partners LLC" sections or annexes expected to be disclosed as part of the
prospectus contained in the Form S-4 registration statement to be filed by
Petros in connection with the Mergers, which exhibits are incorporated by
reference herein. Such information is as of May 18, 2020 (unless an earlier date
is indicated).
Item 9.01 Financial Statements and Exhibits
(a) Financial statements of business acquired.
The audited financial statements of Metuchen as of and for the year ended
December 31, 2019 (Successor), the period December 10, 2018 through December 31,
2018 (Successor) and the period January 1, 2018 through December 9, 2018
(Predecessor), are filed herewith as Exhibit 99.7. The consent of EisnerAmper
LLP, independent registered public accounting firm, is attached hereto as
Exhibit 23.1
(b) Pro forma financial information.
The unaudited pro forma condensed combined financial information of Neurotrope
and Metuchen as of and for the year ended December 31, 2019 is filed herewith as
Exhibit 99.7.
(d) Exhibits.
Reference is made to the Exhibit Index included with this Current Report on
Form 8-K.
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