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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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Appointment of New Chairman, President and Chief Executive Officer
and Entry into Letter Agreement
On September 21, 2016, the Board of Directors (the “Board”)
of Enumeral Biomedical Holdings, Inc. (the “Company”) appointed Wael Fayad, age 49, to serve as President and Chief
Executive Officer of the Company, effective as of September 21, 2016, and, in connection therewith, appointed Mr. Fayad as a director
of the Company and Chairman of the Board.
Prior to joining the Company, from January 2015
until September 2016, Mr. Fayad was engaged in a number of entrepreneurial ventures, including helping to launch Valentine
& Cautreels, Inc., a start-up company focusing on improving healthcare outcomes and reducing the total cost of care, in
October 2015. Mr. Fayad continues to serve on Valentine & Cautreels’ advisory board. From January 2001 until January
2015, Mr. Fayad served in roles of increasing responsibilities at Forest Laboratories, Inc., culminating in his service as
Corporate Vice President, Global Business Development. In that role, Mr. Fayad was responsible for business development and
alliance management, including the identification, assessment and negotiation of multiple business opportunities. Prior to
Forest, Mr. Fayad served in positions of increasing responsibility at Schering-Plough and Novartis in the fields of sales,
marketing, and new product development. Mr. Fayad holds a B.S. in biology from the American University of Beirut, and an
M.B.A. from Concordia University.
In connection with Mr. Fayad’s appointment, the Board designated
Mr. Fayad as the Company’s “Principal Executive Officer” for U.S. Securities and Exchange Commission (the “SEC”)
reporting purposes, effective as of September 21, 2016.
In addition, the Company entered into an offer letter with Mr. Fayad,
dated September 21, 2016 (the “Letter Agreement”), which sets forth the terms pursuant to which Mr. Fayad shall serve
as the Company’s Chairman of the Board, President and Chief Executive Officer. The Letter Agreement provides that Mr. Fayad
will receive a base salary at the rate of $325,000 per annum. Mr. Fayad will also be eligible to earn a target bonus of up to 50%
of the base salary, payable in cash, based upon achievement of corporate objectives, individual objectives, and the Company’s
finances, all as determined and at the discretion of the independent members of the Board or the Board’s Compensation Committee.
Pursuant to the terms of the Letter Agreement, on September 21,
2016, the Board approved the following grants to Mr. Fayad:
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I.
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options under the Company’s 2014 Equity Incentive Plan, as amended (the “2014 Plan”), to purchase 100,000
shares of the Company’s common stock, $0.001 par value per share (the “Common Stock”), at an exercise price of
$0.19 per share, such option award to be evidenced by the Company’s form of option agreement under the 2014 Plan and shall,
to the maximum extent permitted by applicable federal tax laws, be granted as incentive stock options, and which shall vest and
become exercisable in full upon grant;
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II.
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options under the 2014 Plan to purchase 750,000 shares of Common Stock at an exercise price of $0.19 per share, such option
award to be evidenced by the Company’s form of option agreement under the 2014 Plan and shall, to the maximum extent permitted
by applicable federal tax laws, be granted as incentive stock options (the “Tranche A Agreement”), and which shall
vest and become exercisable upon the Company entering into a collaboration and/or licensing agreement with a corporate partner
on terms acceptable to the Board that provides the Company will receive at least a specified amount in upfront fees upon signing
(the “Tranche A Options”); and
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III.
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non-qualified stock options granted outside of the 2014 Plan to purchase an aggregate of 1,750,000 shares of Common Stock at
an exercise price of $0.19 per share, such option awards to be evidenced by a non-qualified stock option agreement from the Company
(the “Tranche B and C Agreement” and, with the Tranche A Agreement, the “Option Agreements”) which such
options shall vest and become exercisable on the following schedule:
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(i)
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750,000 shares of Common Stock underlying the options shall vest and become exercisable upon the Company entering into a second
(i.e., in addition to the transaction described above) collaboration and/or licensing agreement with a corporate partner on terms
acceptable to the Board that provides the Company will receive at least a specified amount in upfront fees upon signing (the “Tranche
B Options”); provided that, in the event that the Company enters into collaboration and/or licensing agreement(s) with one
or more corporate partners on terms acceptable to the Board that collectively provide the Company will receive at least an aggregate
of a specified amount in upfront fees upon signing, all of the Tranche A Options and Tranche B shall vest and become exercisable;
and
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(ii)
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the remaining 1,000,000 shares of Common Stock underlying the options shall vest and become exercisable upon the closing of
an equity financing transaction on terms acceptable to the Board with gross proceeds to the Company of at least a specified amount,
which may include proceeds from the exercise of some or all of the warrants issued in connection with the Company’s July
2014 private placement offering (the “Tranche C Options”); provided that, in the event the Company raises at least
a certain specified amount in one or more transactions (including proceeds from the exercise of some or all of the warrants issued
in connection with the Company’s July 2014 private placement offering), with at least a certain specified portion raised
through non-dilutive collaboration and/or licensing agreements, all of the Tranche A Options, Tranche B Options, and Tranche C
Options shall vest and become exercisable.
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The Letter Agreement provides that if, while Mr. Fayad is
employed as Chairman, President and Chief Executive Officer, the Company achieves the milestones listed in both (II.) and
(III.)(i) in the paragraph above, or, if earlier, upon the achievement of the milestone listed in (III.)(ii) in the paragraph
above, and following such funding achievement Mr. Fayad’s employment with the Company is subsequently
involuntarily terminated without Cause (as defined in the Letter Agreement), then the Company will pay Mr. Fayad his base
salary for a period of twelve (12) months following the date of the notice of termination (the “Severance
Benefits”), provided that Mr. Fayad continues to comply with and not breach the terms set forth in the Letter Agreement
and enters into a termination and release agreement in a form acceptable to the Company.
Pursuant to the terms of the Letter Agreement, in the event a Change
of Control (as defined in the Letter Agreement) occurs within the first six (6) months following the effective date of the Letter
Agreement, and Mr. Fayad’s employment with the Company is terminated in connection with such Change of Control (and provided
that Mr. Fayad is not at that time entitled to the Severance Benefits set forth above), then the Company will pay Mr. Fayad his
base salary for a period of six (6) months following the date of the notice of termination, provided that Mr. Fayad continues to
comply with and not breach the terms set forth in the Letter Agreement and enters into a termination and release agreement in a
form acceptable to the Company.
The Letter Agreement also includes an Obligations Agreement which
contains, among other provisions, non-competition and non-solicitation provisions applicable to Mr. Fayad in certain circumstances
specified therein.
Except as described above, (i) there are no arrangements or
understandings between the new director and any other person pursuant to which Mr. Fayad was selected as a director, and (ii) there
is no transaction since the beginning of the Company’s last fiscal year, or any currently proposed transaction, between the
Company and Mr. Fayad in which the amount involved exceeds the lesser of $120,000 or one percent (1%) of the average of the
Company’s total assets as of the end of last two completed fiscal years.
The foregoing summaries of the Letter Agreement and the Option Agreements
do not purport to be complete and are qualified in their entirety by reference to the Letter Agreement and the Option Agreements,
copies of which will be subsequently filed as exhibits to the Company’s Quarterly Report on Form 10-Q for the period ending
September 30, 2016. The Company intends to seek confidential treatment for certain portions of the Letter Agreement and the Option
Agreements.
Indemnification Agreement
In connection with Mr. Fayad’s appointment as Chairman, President
and Chief Executive Officer, the Company entered into its standard indemnification agreement for directors and officers (the “Indemnification
Agreement”) with Mr. Fayad. The Indemnification Agreement provides for the indemnification of Mr. Fayad for certain expenses
and liabilities (including liabilities arising under the Securities Act of 1933, as amended) incurred in connection with any action,
suit, proceeding or alternative dispute resolution mechanism, or hearing, inquiry or investigation that may lead to the foregoing,
to which he is a party, or is threatened to be made a party, by reason of the fact that he is or was a director, officer, employee,
agent or fiduciary of the Company, or any of the Company’s subsidiaries, by reason of any action or inaction by him while
serving as an officer, director, agent or fiduciary, or by reason of the fact that he was serving at the Company’s request
as a director, officer, employee, agent or fiduciary of another entity. In the case of an action or proceeding by or in the right
of the Company or any of its subsidiaries, no indemnification will be provided for any claim where a court determines that the
indemnified party is prohibited from receiving indemnification.
The foregoing summary of the Indemnification Agreement is qualified
in its entirety by reference to the form of Indemnification Agreement, which was filed as Exhibit 10.45 to the Company’s
Current Report on Form 8-K/A for the event occurring on July 31, 2014, as filed with the SEC on August 8, 2014, and is incorporated
herein by reference.
Transition of Executive Chairman
On September 21, 2016 (the “Separation Date”), Mr. Rydzewski
resigned as Executive Chairman of the Company, and also resigned from the Board. In connection with Mr. Rydzewski’s resignation,
the Company entered into a separation letter agreement with Mr. Rydzewski, dated September 21, 2016 (the “Separation Agreement”).
The Separation Agreement sets forth the terms of Mr. Rydzewski’s
separation from service from the Company, and makes reference to certain provisions set forth in the Amended and Restated Employment
Agreement, dated as of July 21, 2014, between Mr. Rydzewski and Enumeral Biomedical Corp., which was assumed by the Company on
July 31, 2014.
Pursuant to the terms of the Separation Agreement, the Company will
continue to pay one hundred percent (100%) of the cost for Mr. Rydzewski’s continuing medical, dental, and prescription benefits
to which he was entitled during his employment with the Company until the earlier of (i) eighteen (18) months following the Separation
Date pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended (“COBRA”), or (ii) such time as Mr.
Rydzewski becomes eligible for similar benefits from another employer.
In addition, pursuant to the terms of the Separation Agreement,
all options to purchase shares of Common Stock and restricted stock grants in the Company held by Mr. Rydzewski or in a trust established
by Mr. Rydzewski for the benefit of his spouse, children or heirs that are unvested as of the Separation Date shall vest in full
immediately upon the “Effective Date” of the Separation Agreement (as defined in paragraph 15(e) thereof). In addition,
the Separation Agreement provides that the period for exercising all such options to purchase Common Stock shall be extended to
the date that is five (5) years following the Effective Date of the Separation Agreement.
The Separation Agreement also contains non-solicitation provisions
applicable to Mr. Rydzewski during the twelve (12) month period following the Separation Date, confidentiality and non-disparagement
provisions, and a full release of the Company, subject to certain exceptions.
The foregoing summary of the Separation Agreement does not purport
to be complete and is qualified in its entirety by reference to the Separation Agreement, which is filed as Exhibit 10.1 to this
Current Report on Form 8-K and incorporated by reference herein.
Resignation of Former CEO from the Board
On September 19, 2016 (the “Resignation Date”), Arthur
H. Tinkelenberg, Ph.D., the Company’s former President and Chief Executive Officer, resigned from the Board, effective as
of the Resignation Date.
Buckland Agreement Amendment
On September 21, 2016, the Company entered into Amendment No. 1
to Scientific Advisory Board Agreement (“the Amendment”) with Barry Buckland, Ph.D., a director of the Company. The
Amendment extends the term of that certain Scientific Advisory Board Agreement, dated as of September 14, 2014 (the “SAB
Agreement”), until September 14, 2017. Pursuant to the terms of the SAB Agreement, Dr. Buckland serves as Chairman of the
Company’s Scientific Advisory Board.
The foregoing summary of the Amendment does not purport to be complete
and is qualified in its entirety by reference to the Amendment, which is filed as Exhibit 10.2 to this Current Report on Form 8-K
and incorporated by reference herein.
Cash Retention Award for Principal Financial Officer
On September 21, 2016, the Board approved discretionary cash retention
award in the amount of $50,000 for Kevin G. Sarney, who serves as the Company’s Vice President of Finance, Chief Accounting
Officer and Treasurer and is designated as the Company’s “Principal Financial Officer” for SEC reporting purposes.