ABAX Abaxis, Inc. (delisted)

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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):

April 28, 2015

 

ABAXIS, Inc.

(Exact name of registrant as specified in its charter)

 

3240 Whipple Road, Union City, CA 94587

(Address of principal executive offices)

 

Registrant’s telephone number, including area code:

(510) 675-6500

 

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))

 

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ITEM 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Retirement of Alberto Santa Ines and Promotion of Ross Taylor

 

On April 28, 2015, Abaxis, Inc. (the “Company”) and Alberto R. Santa Ines entered into a transition agreement providing for Mr. Santa Ines’ retirement, effective as of July 31, 2015.  Pursuant to this agreement, Mr. Santa Ines will remain with the Company after his retirement as a part-time, non-executive employee on an hourly basis until May 15, 2016 and, subject to Mr. Santa Ines’ service through such date and the effectiveness of a release of claims, the time-based vesting of the performance restricted stock units granted to Mr. Santa Ines in April 2014 (which have already vested in full as to the Company’s performance) will be accelerated in full.  A copy of this agreement is filed as Exhibit 99.1 hereto and incorporated herein by reference.

Appointment of Ross Taylor as Chief Financial Officer

On April 28, 2015, the Board of Directors (the “Board”) of the Company appointed Ross Taylor as the Company’s Chief Financial Officer and Secretary, effective as of August 1, 2015, to succeed Mr. Santa Ines upon his retirement.  Mr. Taylor has served as the Company’s Vice President of Business Development and Investor Relations since October 2014.  Prior to joining Abaxis, Mr. Taylor served as Senior Vice President, Equity Research Analyst at CL King & Associates, an investment bank, from 2005 to 2014, covering healthcare equipment and supplies companies with a focus on the animal health and dental sectors.  Mr. Taylor holds an A.B. degree in Economics from Duke University and an M.B.A. from Columbia Business School.

In connection with his appointment as Chief Financial Officer, the Company and Mr. Taylor entered into an offer letter agreement that replaces the prior offer letter between Mr. Taylor and the Company, effective as of August 1, 2015.  The key provisions of the offer letter agreement are as follows: (i) Mr. Taylor’s annual base salary will be $250,000 per year; (ii) Mr. Taylor will be eligible to participate in the Company’s annual executive management bonus plan, with a fiscal year 2016 target bonus of $425,000; and (iii) Mr. Taylor’s existing equity interests will continue to be governed by the terms and conditions currently in effect.

The offer letter agreement also provides that Mr. Taylor will be a participant in the Company’s Executive Change of Control Severance Plan, except (i) he will not be entitled to the change of control-related tax payment provisions in such plan, and instead will be entitled to the “better after tax” provision in his offer letter agreement, and (ii) he will not be entitled to any single trigger acceleration of vesting benefits provided by the plan, and instead will be entitled to double trigger acceleration benefits as provided in his offer letter.  Specifically, if Mr. Taylor’s employment is terminated by the Company (or any successor of the Company) for any reason other than cause, death or disability within 18 months following a change of control and such termination constitutes a separation in service, and subject to the effectiveness of a release of claims, Mr. Taylor’s equity awards would vest in full.  A copy of the offer letter agreement is filed as Exhibit 99.2 hereto and incorporated herein by reference.

Promotion of Donald Wood to President and Chief Operating Officer

On April 28, 2015, the Board appointed Donald Wood as the Company’s President and Chief Operating Officer.  Mr. Wood has served as the Company’s Chief Operating Officer since April 2014.  Mr. Wood joined the Company in October 2007 as Vice President of Operations and served as Chief Operations Officer from April 2009 to April 2014.  Mr. Wood’s cash compensation arrangements for the fiscal year ending March 31, 2016 are set forth below.  Mr. Wood is entitled to participate in the Company’s Executive Change of Control Severance Plan.

 

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Fiscal 2016 Cash Compensation for Executive Officers

 

The Compensation Committee (the “Committee”) of the Board has approved the following fiscal 2016 base salaries and fiscal 2016 target bonus amounts (each, a “Target Bonus”) for its named executive officers as set forth below:

 

 

Bonus payouts for the persons named above will be based on the Company’s achievement of consolidated quarterly revenues from continuing operations (“net sales”), income from continuing operations before income tax provision (“pre-tax earnings”) and reagent disc failure limits.  A bonus will be earned only if the Company achieves 90% or more of its pre-established quarterly goal for either net sales or pre-tax earnings.  Payment of each quarterly bonus is equally weighted at 50% for achievement of the Company’s quarterly net sales performance goal and 50% for achievement of the Company’s quarterly pre-tax earnings performance goal, in both cases subject to the Company not exceeding the applicable reagent disc failures limit.

 

If the Company were to achieve 90% or more, but less than 100%, of only one performance goal, the payout would be limited to 25% of the Target Bonus.  The Target Bonus will be earned by named executive officers if at least 100% of both net sales and pre-tax earnings performance goals are achieved.  The maximum bonus payout is capped at 200% of the Target Bonus, provided the Company achieves greater than 133% of at least one of its two performance goals.  If earned, a bonus will be paid quarterly at a rate of 15% for first quarter, 25% the second and third quarters, and 35% for the fourth quarter.  In all cases, bonuses are subject to the Company not exceeding the applicable reagent disc failures limit.

 

Fiscal Year 2015 Bonuses

 

On April 28, 2015, the Compensation Committee approved bonuses in respect of the Company’s performance for the fiscal year ended March 31, 2015 under the Company’s previously-disclosed executive management bonus plan.  In addition, as a result of the Company’s improvement in performance in such fiscal year as compared to the prior fiscal year, including (a) a 25% increase in revenue from continuing operations, (b) the successful sale of the Company’s Abaxis Veterinary Reference Laboratories assets and (c) obtaining regulatory approvals of rapid tests, the Compensation Committee approved additional discretionary bonuses to the named executive officers.  These bonuses were as follows:

 

 

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Item 9.01

Financial Statements and Exhibits.

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SIGNATURES

 

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.

 

Date:  May 4, 2015

 

 

 

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Re:	Transition/Separation Agreement

 

Dear Al:

 

Abaxis, Inc. (the “Company”) recognizes and appreciates your valuable service to the Company, and wishes you the very best as you head into retirement.  In order to provide the Company with a smooth transition of your responsibilities to other personnel, we are offering you the terms set forth below:

 

 

 

 

 

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If this Agreement is acceptable to you, please sign and date below and send me the fully signed Agreement on the date of this letter.  The Company’s offer contained in this Agreement will automatically expire if we do not receive the fully signed Agreement from you within this timeframe.

 

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Congratulations on your well-deserved retirement.

 

Sincerely,

 

 

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Exhibit A

RELEASE

(To be signed on the Transition Date.)

 

In consideration for the benefits provided to me by Abaxis, Inc. (the “Company”) pursuant to my letter agreement with the Company dated May 1, 2015 (the “Agreement”), I agree to the terms below.

 

I hereby release the Company, its current and past parents, subsidiaries, successors, predecessors, and affiliates, and each of such entities’ current and past officers, directors, agents, servants, employees, partners, members, managers, attorneys, shareholders, successors, and assigns, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, arising out of or in any way related to agreements, events, acts or conduct at any time prior to and including the date I sign this Release (the “Release”).

 

This release of claims includes, but is not limited to, a release of:  (a) all claims directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment; (b) all claims or demands related to salary, bonuses, fees, retirement contributions, profit-sharing rights, commissions, stock, stock options, or any other ownership or equity interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation or benefit; (c) claims for breach of contract, wrongful termination, or breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including claims for negligence, fraud, defamation, intentional and negligent infliction of emotional distress, and/or physical injuries; and (e) all federal, state, and local statutory claims or causes of action in any jurisdiction, including but not limited to, claims for discrimination, harassment, retaliation, attorneys’ fees, or claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967 (as amended) (the “ADEA”), the California Fair Employment and Housing Act (as amended), and/or the California Labor Code.

 

I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA (the “ADEA Waiver”), and that the consideration given for the ADEA Waiver in this paragraph is in addition to anything of value to which I am already entitled.  I further acknowledge that I have been advised, as required by the ADEA, that:  (i) my ADEA Waiver does not apply to any rights or claims that may arise after the date that I sign this Release; (ii) I should consult with an attorney prior to signing this Release (although I may choose voluntarily not to do so); (iii) I have 21 days to consider this Release (although I may choose voluntarily to sign it earlier); (iv) I have seven days following the date I sign this Release to revoke the ADEA Waiver (by providing written notice of my revocation to the Company’s CEO); and (v) the ADEA Waiver will not be effective until the date upon which the revocation period has expired, which will be the eighth day after the date that this Release is signed by me provided that I do not revoke it.

 

I UNDERSTAND THAT THIS RELEASE INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.  I acknowledge that I have read and understand Section 1542 of the California Civil Code, which reads as follows:  “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” I hereby expressly waive and relinquish all rights and benefits under that section and any law or legal principle of similar effect in any jurisdiction with respect to my release of claims herein, including but not limited to the release of unknown and unsuspected claims.

 

Notwithstanding the foregoing, excluded from this release are: (i) any rights I have under the Agreement; (ii) any rights to indemnification I may have pursuant to any written indemnification agreement to which I am a party or of which I am a third party beneficiary, or under applicable law; or (iii) any rights or claims that cannot be waived as a matter of law.   I am waiving, however, my right to any monetary recovery should any governmental agency or entity pursue any claims on my behalf.

 

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This Release, together with the Agreement (including all exhibits thereto), constitutes the complete, final and exclusive embodiment of the entire agreement between me and the Company with regard to this subject matter.  It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained in the Release or the Agreement, and it entirely supersedes any other such promises, warranties or representations, whether oral or written.

 

 

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Exhibit 99.2

 

 

April 29, 2015 Dean Ross Taylor ### ##### ###### #########, ## #####

Corporate Headquarters 3240 Whipple Road, Union City, CA  94587 Phone: 510.675.6500       Fax: 510.441.6150 www.abaxis.com Abaxis Europe GmbH Otto-Hesse-Strasse 19 T9, 3. OG Ost D-64293 Darmstadt Germany Phone +.49.6151.350790 Fax     +.49.6151.3507911

 

Dear Ross:

 

As we have discussed, the Board of Directors of Abaxis, Inc. (the “Company”) has approved your promotion to Chief Financial Officer and Secretary, effective as of Alberto Santa Ines’ retirement. It is expected that your first day in the new position will be August 1, 2015 (the “effective date”). This letter agreement, which shall supersede and replace your offer letter from the Company dated September 19, 2014 in its entirety, sets forth the revised terms and conditions of your employment with the Company as of August 1, 2015, the effective date of your promotion.

 

As set forth above, your title will be Chief Financial Officer and Secretary.  You will report to me and perform such duties and responsibilities as are assigned to you.

 

Your annual base salary effective June 29, 2015 will be $250,000, subject to applicable payroll withholdings and deductions, paid on a bi-weekly basis in accordance with the Company's customary payroll procedures.  In addition, for so long as you are an executive officer, you will be eligible to participate in the Company’s annual executive management bonus plans, as they may be amended from time to time (the “Bonus Plan”), with a FY2016 target bonus of $425,000.  You continue to be eligible to participate in all benefit plans the Company makes available to employees generally, on the terms and conditions governing those plans.  The Company reserves the right to modify compensation and benefits from time to time, in its sole discretion (subject to any limitations set forth in the Severance Plan (as defined below) or Equity Plan (as defined below)).

 

In connection with your hire, you received a relocation bonus in the amount of $25,000, to be paid when you required it, subject to applicable tax withholdings (the “Relocation Bonus”).  If your employment ends for any reason before October 20, 2018, you will be required to repay up to the full pre-tax amount of the Relocation Bonus to the Company, with the repayment amount to be pro-rated based on the number of days between October 20, 2014 and October 20, 2018 that you were employed by the Company.  You will be relieved from this repayment obligation if there is a Change in Control (as defined in the Equity Incentive Plan) (the “Equity Plan”)) before October 20, 2018 and you remain an employee of the Company through the date of such Change in Control.

 

Your existing equity interests in the Company will continue to be governed by the terms and conditions currently in effect.  As you know, you have recently been granted 9,000 restricted stock units (“RSUs”) under the Company’s 2014 equity incentive plan (the “Equity Plan”) subject to time-based vesting, and 16,000 RSUs under the Equity Plan subject to performance-based vesting. Both RSU grants shall be subject to the terms and conditions of the Equity Plan and restricted stock unit grant notices and agreements to be issued to you.  Notwithstanding your future status as an executive officer and the terms of the Company’s equity incentive plans, none of your equity interests in the Company shall be subject to accelerated vesting upon a Change of Control (as such term is defined in the Severance Plan).

 

Effective as of your promotion, you will be deemed a participant in the Company’s Executive Change in Control Severance Plan (the “Severance Plan”), provided, however, that: (a) you will not be entitled to accelerated vesting set forth in Article IV of the Severance Plan; (b) in the event you become eligible for separation benefits under Article V of the Severance Plan, in addition to the separation benefits set forth in Section 5.2(a) through (c) of the Severance Plan, 100% of any unvested RSUs or other equity-based instruments granted to you by the Company will be deemed vested and exercisable as of your last day of employment, subject to your compliance with the terms of the Severance Plan; (c) you will not be entitled to the payment set forth in Section 5.4 of the Severance Plan; and (d) in lieu of the payment set forth in Section 5.4 of the Severance Plan, the provisions set forth in Attachment One to this letter shall apply.

 

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Exhibit 99.2

 

You are expected to continue abiding by all Company policies and procedures in effect from time to time, as well as your existing Proprietary Information Agreement.

 

Your employment with the Company is for no specified period.  This means that you are free to resign at any time, for any reason or for no reason.  Similarly, the Company is free to conclude its employment relationship with you at any time, with or without cause or advance notice.

 

This letter, along with your Proprietary Information Agreement, sets forth all of the terms of your employment with the Company, and supersedes any prior representations or agreements, whether written or oral. Changes in your employment terms, other than those changes expressly reserved to the Company’s discretion in this letter, require a written modification signed by duly authorized Company officer and you to be effective.

 

To indicate your acceptance of these terms, please sign and date this letter (in the space provided below) and return the fully executed document to me.

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Attachment One

Substitute for Payment Described in Section 5.4 of Severance Plan

(Best After Tax)

If any payment or benefit you would receive from the Company or otherwise in connection with a Change in Control (as defined in the Severance Plan) or other similar transaction (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code (the “Code”), and (ii) but for this agreement, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment will be equal to the Reduced Amount.

The “Reduced Amount” will be either (a) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax, or (b) the largest portion, up to and including the total, of the Payment, whichever amount ((a) or (b)), after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in your receipt of the greater economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax.

If a Reduced Amount will give rise to the greater after tax benefit, the reduction in the Payments will occur in the following order: reduction of cash payments; cancellation of accelerated vesting of equity awards other than stock options; cancellation of accelerated vesting of stock options; and reduction of other benefits paid to you.  Within any such category of payments and benefits, a reduction will occur first with respect to amounts that are not “deferred compensation” within the meaning of Section 409A and then with respect to amounts that are.  In the event that acceleration of compensation from your equity awards is to be reduced, such acceleration of vesting will be canceled, subject to the immediately preceding sentence, in the reverse order of the date of grant.

The registered public accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the event described in Section 280G(b)(2)(A)(i) of the Code will perform the foregoing calculations.  If the registered public accounting firm so engaged by the Company is serving as accountant or auditor for the acquirer or is otherwise unable or unwilling to perform the calculations, the Company will appoint a nationally recognized firm that has expertise in these calculations to make the determinations required hereunder.  The Company will bear all expenses with respect to the determinations by such independent registered public accounting firm required to be made hereunder.  The firm engaged to make the determinations hereunder will provide its calculations, together with detailed supporting documentation, to the Company and you within thirty (30) calendar days after the date on which your right to a Payment is triggered (if requested at that time by the Company or you) or such other time as reasonably requested by the Company or you.  Any good faith determinations of the independent registered public accounting firm made hereunder will be final, binding and conclusive upon the Company and you.

 

 

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