Item 5.02. Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On the
Closing Date all of the members of the board of directors of Cynapsus, consisting of Anthony Giovinazzo, Frederick Driscoll,
Tomer Gold, Ronald Hosking, Tamar Howson, Nan Hutchinson, Perry Molinoff, Ilan Oren, and Rochelle Stenzler, resigned as
directors and committee members, as applicable, of Cynapsus, effective as of 12:01 AM. Immediately thereafter, Gregory Bokar,
Stephen Freeman, and Douglas Reynolds were elected as the members of the board of directors of Cynapsus. Gregory Bokar and
Stephen Freeman also serve as the directors of the Acquiror and will serve as the directors of Amalco (as defined below)
following the amalgamation described in Item 5.03 below.
On October 20, 2016,
the named executive officers of Cynapsus immediately prior to the Effective Time, consisting of Anthony Giovinazzo (President and
Chief Executive Officer), Andrew Williams (Chief Financial Officer and Chief Operating Officer), Albert Agro (Chief Marketing Officer)
and Thierry Bilbault (Chief Security Officer and Executive Vice President of Chemistry, Manufacturing, and Controls) (collectively,
the “Executives”) entered into employment agreements (each an “Employment Agreement” and, collectively,
the “Employment Agreements”) with Cynapsus and Acquiror with respect to their services as executive officers of Amalco.
The terms and conditions of the Employment Agreements were conditioned on the closing of the Arrangement and were deemed effective
on the
Closing Date. Pursuant to the terms of the Employment Agreements and in connection with the closing of the Arrangement,
each Executive’s prior employment agreement with Cynapsus was terminated on the
Closing Date and such persons ceased serving
as executive officers of Cynapsus.
Effective on the
Closing Date Mr. Giovinazzo became President and Chief Executive Officer of Amalco. Pursuant to the terms of his
Employment Agreement, Mr. Giovinazzo will receive an annual base salary of CAD$575,027 and a 2016 bonus of CAD$358,047. Mr. Giovinazzo
will also be eligible to receive a 2017 target bonus of 75% of base salary (less deductions required by law), subject to the terms
of any bonus plan, successful achievement by Mr. Giovinazzo and Amalco of any applicable targets, and various bonus eligibility
conditions. Mr. Giovinazzo will also receive a special bonus of CAD$431,270 upon filing and acceptance by the U.S. Food and Drug
Administration (“FDA”) of a New Drug Application (“NDA”) for APL-130277 (the “NDA Acceptance”).
The term of Mr. Giovinazzo’s employment under the Employment Agreement will expire on the later of October 21, 2017 or NDA
Acceptance. If Mr. Giovinazzo’s employment is terminated pursuant to a change in control or without just cause, or if Mr.
Giovinazzo resigns for good reason, Mr. Giovinazzo will receive a lump sum severance payment equivalent to 18 months base salary
and an amount equal to 18 months of the applicable annual bonus. Mr. Giovinazzo will also receive a monthly car allowance of CAD$2,250.
Mr. Giovinazzo will be subject to an 18 month non-competition restriction following a termination of employment with Amalco.
Effective on the
Closing Date Mr. Williams became Head of Finance and Administration, Sublingual Apomorphine of Amalco. Pursuant to the terms of his
Employment Agreement, Mr. Williams will receive an annual base salary of CAD$366,013 and a 2016 bonus of CAD$133,940. Mr. Williams
will also be eligible to receive a 2017 target bonus of 40% of base salary (less deductions required by law), subject to the terms
of any bonus plan, successful achievement by Mr. Williams and Amalco of any applicable targets, and various bonus eligibility conditions.
Mr. Williams will also receive a special bonus of CAD$91,503 if he remains actively employed by Amalco through February 28, 2017.
The term of Mr. William’s employment under his Employment Agreement will continue for
an indefinite term, subject to earlier termination as provided therein. If Mr. Williams’s employment is terminated pursuant
to a change in control or without just cause, or if Mr. Williams resigns for good reason, Mr. Williams will receive a lump sum
severance payment equivalent to 14 months base salary and an amount equal to 14 months of the applicable annual bonus. Mr. Williams
will be subject to a 14 month non-competition restriction following a termination of employment with Amalco.
Effective on the
Closing Date Mr. Bilbault became the Head of Chemistry, Manufacturing, and Controls, Sublingual Apomorphine of Amalco. Pursuant to
the terms of the Employment Agreement, Mr. Bilbault will receive an annual salary of CAD$489,103 and a 2016 bonus of CAD$160,728.
Mr. Bilbault will also be eligible to receive a 2017 target bonus of 40% of base salary (less deductions required by law), subject
to the terms of any bonus plan, successful achievement by Mr. Bilbault and Amalco of any applicable targets, and various bonus
eligibility conditions. Mr. Bilbault will also receive special bonuses of CAD$122,276, CAD$244,552, and CAD$366,827 upon the NDA
Acceptance, the approval of the NDA by the FDA (the “NDA Approval”) and 180 days post NDA Approval, respectively, if
he remains actively employed through such dates. The term of Mr. Bilbault’s employment under his Employment Agreement will
expire on the later of October 21, 2017 or NDA Acceptance. If Mr. Bilbault’s employment is terminated pursuant to a change
in control or without just cause, or if Mr. Bilbault resigns for good reason, Mr. Bilbault will receive a lump sum severance payment
equivalent to 12 months base salary and an amount equal to 12 months of the applicable annual bonus. Mr. Bilbault will
be subject to a 12 month non-competition restriction following a termination of employment with Amalco.
Effective on the
Closing Date Mr. Agro became Head of Clinical Research, Sublingual Apomorphine of Amalco. Pursuant to the terms of the Employment
Agreement, Mr. Agro will receive an annual base salary of CAD$489,103 and a 2016 bonus of CAD$168,764. Mr. Agro will also be eligible
to receive a 2017 target bonus of 40% of base salary (less deductions required by law), subject to the terms of any bonus plan,
successful achievement by Mr. Agro and Amalco of any applicable targets, and various bonus eligibility conditions. Mr. Agro will
also receive special bonuses of CAD$244,522 and CAD$244,552 upon the NDA Acceptance and the NDA Approval, respectively, if he remains
actively employed through such dates. The term of Mr. Agro’s employment under the Employment Agreement will expire on the
later of December 31, 2018 or NDA Approval. If Mr. Agro’s employment is terminated pursuant to a change in control or without
just cause, or if Mr. Agro resigns for good reason, Mr. Agro will receive a lump sum severance payment equivalent to 12 months
base salary and an amount equal to 12 months of the applicable annual bonus. Mr. Agro will be subject to a 12 month non-competition
restriction following a termination of employment with Amalco.
Pursuant to the Employment
Agreements, the Executives will be provided with benefits, including the ability to participate in employee health plans.
The information
set forth in Item 5.03 of this Current Report on Form 8-K is incorporated by reference in this Item 5.01
Item 5.03. Amendments to Articles of Incorporation or Bylaws;
Change in Fiscal Year.
On October 20, 2016,
in connection with the consummation of the Arrangement, Cynapsus received a Certificate of Arrangement from Industry Canada, which
certified that the Arrangement has been effected under section 192 of the
Canada Business Corporations Act
. The
Certificate of Arrangement is filed as Exhibit 3.1 hereto and is incorporated herein by reference.
On the Closing Date,
Cynapsus changed its jurisdiction of incorporation to the Province of British Columbia, Canada under the
Business Corporations
Act (British Columbia)
by way of a continuation. On such date, Cynapsus completed the filing of a continuation application
with the Corporate Registry for the Province of British Columbia (the “Registry”) and received a Certificate of Continuation
from the Registry. A copy of the Certificate of Continuation is attached hereto as Exhibit 3.2 and incorporated herein by reference.
A copy of the notice of articles and articles of Cynapsus governed by the laws of the Province of British Columbia are attached
hereto as Exhibits 3.3 and 3.4, respectively, and incorporated herein by reference.
As a final step, Cynapsus,
the Company Sub and Acquiror will be amalgamated effective as of 5:30 p.m. on October 21, 2016. The amalgamated company will be
named Sunovion CNS Development Canada ULC (“Amalco”). The Articles of Sunovion CNS Development Canada ULC are attached
as Exhibit 3.5 and incorporated herein by reference.