Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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(b) In accordance with the Amended Merger Agreement, on January 24, 2019, immediately prior to the effective time of the Merger,
Kleanthis G. Xanthopoulos, Ph.D., Russell Ray, Paul V. Maier, Wendell Wierenga, Ph.D. and Sandford D. Smith resigned from the Board and any respective committee of the Board to which they belonged, which resignations were not the result of any
disagreements with the Company relating to the Company’s operations, policies or practices.
Termination of Richard W. Pascoe as Chief Executive Officer & Secretary
On January 24, 2019, in connection with the Merger, the Company terminated Richard W. Pascoe, Chief Executive Officer & Secretary.
His termination is not due to a dispute or disagreement with the Company.
Pursuant to his employment agreement, following his termination of employment and subject to his execution of a general release of
claims, Mr. Pascoe will be entitled to receive certain severance benefits, including:
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A lump sum payment in an amount equal to 18 months’ base salary, plus 100% of his target bonus for the year in which the date of his involuntary termination occurs.
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Full acceleration of the vesting of all equity awards held by Mr. Pascoe at the time of the termination, including any options, restricted stock, restricted stock units or
other awards.
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Reimbursement for the cost of continuation of health insurance benefits provided to him immediately prior to the termination pursuant to the terms of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), or other applicable law for a period continuing until the earlier of 18 months following the termination or the date upon which he is no longer eligible for such COBRA or
other benefits under applicable law.
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The foregoing description of the terms of Mr. Pascoe’s severance does not purport to be complete and is qualified in its entirety by
reference to the complete text of the Second Amended and Restated Employment Agreement, by and between the Company and Mr. Pascoe, dated August 30, 2018, which is incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed with the SEC on August 31, 2018.
Termination of Neil Morton as Senior Vice President, Chief Business Officer
On January 24, 2019, in connection with the Merger, the Company terminated Neil Morton, Senior Vice President, Chief Business Officer.
His termination is not due to a dispute or disagreement with the Company.
Pursuant to his employment agreement, following his termination of employment and subject to his execution of a general release of
claims, Mr. Morton will be entitled to receive certain severance benefits, including:
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A lump sum payment in an amount equal to 18 months’ base salary, plus 100% of his target bonus for the year in which the date of his involuntary termination occurs.
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Full acceleration of the vesting of all equity awards held by Mr. Morton at the time of the termination, including any options, restricted stock, restricted stock units or
other awards.
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Reimbursement for the cost of continuation of health insurance benefits provided to him immediately prior to the termination pursuant to the terms of COBRA or other
applicable law for a period continuing until the earlier of 18 months following the termination or the date upon which he is no longer eligible for such COBRA or other benefits under applicable law.
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The foregoing description of the terms of Mr. Morton’s severance does not purport to be complete and is qualified in its entirety by
reference to the complete text of the Amended and Restated Employment Agreement, by and between the Company and Mr. Morton, dated December 20, 2016, which is incorporated herein by reference to Exhibit 10.22 to the Company’s Annual Report on Form
10-K filed with the SEC on March 13, 2017.
Appointment of Officer
(c) On January 24, 2019, effective as of the effective time of the Merger, the Board appointed Raj Mehra, Ph.D. as Chairman of the Board
and the Company’s Chief Executive Officer, President and Interim Chief Financial Officer to serve at the discretion of the Board. There are no family relationships among any of the Company’s directors and executive officers.
Dr. Raj Mehra is the Chief Executive Officer, Director and Founder of Seelos. Prior to founding Seelos, Dr. Mehra spent nine years at
Auriga USA, LLC as a Managing Director focused on private and public equity investments in global healthcare companies. Prior to Auriga, Dr. Mehra was the sector head for healthcare equity investments at Bennett Lawrence Management, LLC in New
York. He also founded and managed a long-short equity hedge fund at Weiss, Peck & Greer LLC. Dr. Mehra started his career as an investment professional at Cowen Asset Management, LLC. Dr. Mehra holds M.S., M.Phil., Ph.D., JD and MBA degrees
from Columbia University in New York. He is also a graduate of Indian Institute of Technology, Kanpur, where he was ranked first in his class.
Appointment of Directors
(d) The information set forth in Item 5.01 of this Current Report on Form 8-K with respect to the appointment of directors to the Board
in accordance with the Amended Merger Agreement is incorporated by reference into this Item 5.02(d).
On January 24, 2019, Mr. Pascoe, Dr. Lian and Mr. O’Connor were appointed to the audit committee of the Board and Mr. Pascoe was
appointed as the chairman of the audit committee of the Board. On January 24, 2019, Dr. Lian and Dr. Smith were appointed to the Compensation Committee, and Dr. Lian was appointed as the chairman of the Compensation Committee. On January 24, 2019,
Dr. Smith and Mr. O’Connor were appointed to the nominating and corporate governance committee of the Board, and Dr. Smith was appointed as the chairman of the nominating and corporate governance committee of the Board.
Richard W. Pascoe has been a director since March 2013 and served as the Company’s Chief Executive Officer from March 2013 to December
2018, the Company’s Secretary from February 2015 to December 2018, and the Company’s Principal Financial Officer and Principal Accounting Officer from December 2016 to December 2018. He joined the Company following the merger of Somaxon
Pharmaceuticals, Inc. with Pernix Therapeutics Holdings, Inc. Mr. Pascoe was the Chief Executive Officer of Somaxon from August 2008 until joining the Company and was responsible for the FDA approval of Somaxon’s lead drug Silenor®. Prior to
Somaxon, Mr. Pascoe was with ARIAD Pharmaceuticals, Inc., a specialty pharmaceutical company where he was most recently Senior Vice President and Chief Operating Officer. Prior to joining ARIAD in 2005, Mr. Pascoe held a series of senior management
roles at King Pharmaceuticals, Inc. (acquired by Pfizer Inc.), including Senior Vice President positions in both marketing and sales, as well as Vice President positions in both international sales and marketing and hospital sales. Prior to King,
Mr. Pascoe was in the commercial groups at Medco Research, Inc. (acquired by King), COR Therapeutics, Inc. (acquired by Millennium Pharmaceuticals Inc., the Takeda Oncology Company), B. Braun Interventional and The BOC Group. Mr. Pascoe is a member
of the board of directors of KemPharm, Inc., as well as a member of the company’s audit and compensation committees and its lead independent director. He serves as a member of the board of directors of the Johnny Mac Soldiers Fund, a charity for
military veterans. Mr. Pascoe is also a member of the board of directors of BIOCOM, as well as its Vice-President of Industry. Mr. Pascoe served as a Commissioned Officer with the U.S. Army 24th Infantry Division and continues to serve as a
Civilian Aid to the Secretary of the Army. He is a graduate of the United States Military Academy at West Point where he received a B.S. degree in Leadership.
Dr. Robin L. Smith is a global thought leader in the regenerative medicine industry, one of the fastest growing segments of modern-day
medicine. She received her M.D. from Yale University and an M.B.A. from the Wharton School of Business. She served as CEO of Caladrius Biosciences, Inc. (formerly NeoStem Inc.) (Nasdaq: CLBS), from 2006 to 2015. In 2007, Dr. Smith founded The Stem
for Life Foundation (SFLF), a nonpartisan, 501(c)(3) educational organization devoted to fostering global awareness of the potential for regenerative medicine to treat and cure a range of deadly diseases and debilitating medical conditions, as
opposed to merely treating their symptoms, and has served as Chairman of the Board and President of the Stem for Life Foundation since its inception and now the expanded Cura Foundation. Dr. Smith was appointed as Clinical Associate Professor,
Department of Medicine at the Rutgers, New Jersey Medical School in 2017. In addition, Dr. Smith has extensive experience serving in executive and board level capacities for various medical enterprises and healthcare-based entities. She has served
on the Board of Directors of Rockwell Medical (Nasdaq: RMTI) since June 2016 and ProLung Inc. since February 2017, and has been Chairman of the Board of Mynd Analytics (Nasdaq: MYND) since August 2015. She has also served on the advisory board of
Hooper Holmes Inc. (OTCQX: HPHW) since March 2017 and has been co-chairman of the Life Sci advisory board on gender diversity since April 2016. She has been Vice President and a member of the Board of Directors of the Science and Faith STOQ
Foundation in Rome since 2015 and has served on Sanford Health’s International Board since 2016 and the Board of Overseers at the NYU Langone Medical Center in New York since 2014. She served on the Board of Trustees of the NYU Langone Medical
Center from 2006 to 2014, was Chairman of the Board of Directors for the New York University Hospital for Joint Diseases from 2004 to 2010 and was on the board of directors of Signal Genetics, Inc. (Nasdaq: SGNL) from July 2014 to February 2016 and
BioXcel Corporation from August 2015 to June 2017.
Daniel J. O’Connor, J.D. is Chief Executive Officer and a director of OncoSec Medical Incorporated. Prior to that, Mr. O’Connor served
as President, Chief Executive Officer, Director and in other senior roles at Advaxis, Inc., a cancer immunotherapy company, from January 2013 until his resignation in July 2017. Prior to that, Mr. O’Connor was Senior Vice President and General
Counsel for BRACCO Diagnostics Inc., a diagnostic imaging company, from 2008 until 2012; Senior Vice President, General Counsel and Secretary for ImClone Systems Incorporated, a biopharmaceutical company, from 2002 until 2008; and General Counsel
at PharmaNet (now inVentiv Health Clinical), a clinical research company, from 1998 until 2001. Mr. O’Connor is a 1995 graduate of the Pennsylvania State University’s Dickinson School of Law in Carlisle, Pennsylvania and currently serves as an
Entrepreneur Trusted Advisor to its Dean. He graduated from the United States Marines Corps Officer Candidate School in 1988 and was commissioned as an officer in the U.S. Marines, attaining the rank of Captain while serving in Saudi Arabia during
Operation Desert Shield. Mr. O’Connor is currently the Vice Chairman of the Board of the Trustees of BioNJ. In October 2017, Mr. O’Connor was appointed to the New Jersey Biotechnology Task Force by its Governor, and he was formerly a New Jersey
criminal prosecutor.
Brian Lian, Ph.D. is currently President and Chief Executive Officer and a Director of Viking Therapeutics, Inc. (Nasdaq: VKTX), a
biopharmaceutical company. Dr. Lian has over 15 years of experience in the biotechnology and financial services industries. Prior to joining Viking, he was a Managing Director and Senior Research Analyst at SunTrust Robinson Humphrey, an investment
bank, from 2012 to 2013. At SunTrust Robinson Humphrey, he was responsible for coverage of small and mid-cap biotechnology companies with an emphasis on companies in the diabetes, oncology, infectious disease and neurology spaces. Prior to SunTrust
Robinson Humphrey, he was Managing Director and Senior Research Analyst at Global Hunter Securities, an investment bank, from 2011 to 2012. Prior to Global Hunter Securities, he was Senior Healthcare Analyst at The Agave Group, LLC, a registered
investment advisor, from 2008 to 2011. Prior to The Agave Group, he was an Executive Director and Senior Biotechnology Analyst at CIBC World Markets, an investment bank, from 2006 to 2008. Prior to CIBC, he was a research scientist in small
molecule drug discovery at Amgen, a biotechnology company. Prior to Amgen, he was a research scientist at Microcide Pharmaceuticals, a biotechnology company. Dr. Lian holds an MBA in accounting and finance from Indiana University, an MS and Ph.D.
in organic chemistry from The University of Michigan, and a BA in chemistry from Whitman College.
Amended and Restated 2012 Stock Long Term Incentive Plan
(e) On January 4, 2019, at the Company’s reconvened Special Meeting of Stockholders (the “Special Meeting”), the Company's shareholders
approved an amendment (the "Stock Plan Amendment") to the Company’s 2012 Stock Long Term Incentive Plan (the “2012 Plan”). The amended and restated 2012 Plan is referred to herein as the “Restated Plan.” The Restated Plan authorizes the issuance of
an aggregate of 373,979 shares of the Company’s common stock, 67,131 of which were previously reserved for issuance under the 2012 Plan. In addition, the Restated Plan contains an “evergreen provision” that allows for an annual increase in the
number of shares available for issuance under the Restated Plan on January 1 of each year during the term of the Restated Plan. The annual increase in the number of shares of common stock will be equal to the lesser of: (a) 4% of the number of
shares of common stock issued and outstanding on a fully-diluted basis as of the close of business on the immediately preceding December 31, or (b) a number of shares of common stock set by the Board. Notwithstanding the foregoing, (a) in no event
may more than 1,333,333 shares of common stock be delivered upon satisfaction of awards under the Restated Plan, and (b) the maximum number of shares of common stock that may be issued or transferred pursuant to incentive stock options (“ISOs”), as
defined under Section 422(b) of the Internal Revenue Code of 1986, as amended (the “Code”), under the Restated Plan shall be 1,333,333 shares. The Restated Plan became effective on January 23, 2019 and the term of the Restated Plan was extended so
that the Restated Plan terminates on August 26, 2028.
Administration.
The Restated Plan is
administered by the compensation committee of the Board (the “Compensation Committee”). Subject to the terms and conditions of the Restated Plan, the Compensation Committee has the authority to select the persons to whom awards are to be made, to
determine the type or types of awards to be granted to each person, the number of awards to grant, the number of shares to be subject to such awards, and the terms and conditions of such awards, and to make all other determinations and decisions
and to take all other actions necessary or advisable for the administration of the Restated Plan. The Compensation Committee is also authorized to establish, adopt, amend or revise rules relating to administration of the Restated Plan. The Board
may at any time revest in itself the authority to administer the Restated Plan.
Awards.
The Restated Plan authorizes the
Compensation Committee to grant stock options, restricted stock, restricted stock units, dividend equivalents, stock payment awards and stock appreciation rights. The Restated Plan also authorizes the Compensation Committee to grant performance
awards payable in the form of the Company’s common stock or cash, including equity awards and incentive cash bonuses that may qualify as “performance-based compensation” under Section 162(m) of the Code. The Restated Plan authorizes the grant of
awards to employees and consultants of the Company and to the Company’s non-employee directors. Under the 2012 Plan, the maximum number of shares of Company common stock that could have been be granted subject to awards under the 2012 Plan to any
person in any calendar year was 47,441 shares, and the maximum amount that could have been paid to any person in cash during any calendar year with respect to one or more cash-based awards under the 2012 Plan was $1,000,000. The Restated Plan
removed these individual award limits in light of the Tax Cuts and Jobs Act of 2017. Awards granted prior to November 2, 2017 may be grandfathered under the old law, subject to certain limited transition relief.
Other Provisions
. The Restated Plan also
contains provisions with respect to payment of exercise or purchase prices, vesting and expiration of awards, adjustments and treatment of awards upon certain corporate transactions, including stock splits, recapitalizations and mergers,
transferability of awards and tax withholding requirements. The Restated Plan may be amended or terminated by the Board at any time, subject to certain limitations requiring stockholder consent or the consent of the participant. The Restated Plan
will terminate on August 26, 2028.
The terms and conditions of the Restated Plan are described in the section entitled “Proposal No. 5 - Approval of Amendment and
Restatement of the Apricus 2012 Stock Long Term Incentive Plan” in the Company’s Prospectus filed with the SEC on November 20, 2018. The Company’s directors and executive officers are eligible to participate in the Restated Plan. The foregoing
description of the Restated Plan does not purport to be complete and is qualified in its entirety by reference to the complete text of the Restated Plan, which is filed herewith as Exhibit 10.1 and incorporated herein by reference.