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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Planned Resignation of Dr. Kaye
On
April 24, 2017, Edward M. Kaye, M.D., President, Chief Executive Officer and a director on the Board of Directors (the Board) of Sarepta Therapeutics, Inc. (the Company), informed the Board of the Company of his
intention to resign as President and Chief Executive Officer upon the conclusion of his current employment term on September 20, 2017 or some other future date. Dr. Kaye will continue to serve as a director following his resignation as
President and Chief Executive Officer.
Dr. Kress Not Standing For Re-election
Also on April 24, 2017, Jean-Paul Kress, M.D., a director of the Company, informed the Board that, in anticipation of time commitments and
a possible conflict of interest associated with his future endeavors, he has elected to not stand for re-election and will complete his term on the Board at the conclusion of the Companys 2017 annual meeting of stockholders.
Dr. Kresss decision to not stand for re-election was not because of a disagreement with the Company on any matter relating to the Companys operations, policies or practices. The Company thanks Dr. Kress for his full term of
service as a director and wishes him well in his future endeavors.
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Severance Letter Agreements with Named Executive Officers, other than Dr. Kaye
In connection with Dr. Kayes announcement of his intention to resign as the Companys President and Chief Executive Officer, on
April 27, 2017, the Company entered into a severance letter agreement with each of the Companys named executive officers, as identified in the Companys proxy statement filed on April 27, 2017, other than Dr. Kaye
(collectively, the Severance Letters). The named executive officers are (i) Sandesh Mahatme, the Companys Executive Vice President, Chief Financial Officer and Chief Business Officer, (ii) Alexander Bo Cumbo,
the Companys Senior Vice President, Global Commercial Development, (iii) David Tyronne Howton, Jr., the Companys Senior Vice President, General Counsel and Corporate Secretary and (iv) Shamim Ruff, the Companys Senior
Vice President, Regulatory Affairs and Quality.
Under the Severance Letters, if, during the Termination Period, the named
executive officer is terminated without Cause or resigns for Good Reason (as each term is defined below) on or following the Companys hiring of a new Chief Executive Officer who is not currently employed by the Company
(or in connection with, or otherwise relating to such hire), then in addition to any accrued benefits (as set forth in the Severance Letters), the Company will provide the named executive officer with the following, subject to his or her execution,
delivery, and non-revocation of a release of claims in favor of the Company and its affiliates:
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Severance equal to (i) in the case of such termination between August 1, 2017 and May 31, 2018, 1.5 times the sum of the named executive officers annual base salary and his or her target bonus for
the year of termination, paid in equal installments over the eighteen-month period following his or her date of termination with respect to the salary component and paid in a lump sum with respect to the bonus component; or (ii) in the case of
such termination between June 1, 2018 and January 31, 2019, 1.0 times the sum of the named executive officers annual base salary and his or her target bonus for the year of termination, paid in equal installments over a twelve-month
period following his or her date of termination with respect to the salary component and paid in a lump sum with respect to the bonus component (such eighteen-month or twelve month period, the severance period).
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A monthly amount of the COBRA continuation coverage premium under the Companys group health plans, subject to the named executive officers co-payment of the applicable active employee rate, paid until the
end of the applicable severance period or, if earlier, the date the named executive officer becomes eligible for group health insurance coverage through a new employer.
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Vesting of each outstanding equity award granted to the named executive officer, as follows: (i) continued vesting during the applicable severance period for his or her unvested equity awards which, as of the date
of the named executive officers termination, have no performance requirements or have performance requirements and/or milestones that have been satisfied; (ii) accelerated vesting of the portion of his or her unvested restricted stock
awards that would have otherwise vested during the applicable severance period; (iii) except for the September 2016 performance-based restricted stock award subject to a revenue milestone target through June 30, 2018 (the September
2016 RSA), accelerated vesting of equity awards with performance requirements and/or milestones that were not satisfied as of the date of the named executive officers termination, if such performance requirements and/or milestones are
actually achieved during the first six months following the named executive officers termination, without regard to any further time-based vesting requirement; and (iv) accelerated vesting of the named executive officers September
2016 RSA on the date of the actual achievement of the performance milestone by June 30, 2018, without regard to any further time-based besting requirement. Equity awards that are not vested by the dates set forth above are forfeited and
cancelled in their entirety.
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The Severance Letters also provide the named executive officers with the right to exercise
their options for a period of no less than 90 days from the end of the applicable severance period (but not beyond the option term) and the right to payment of other equity awards that vest during the applicable severance period, payable within 30
days following the end of the last vesting date.
The Severance Letters also require the named executive officers not to compete, directly
or indirectly, with us while employed by us and for a period of one year thereafter plus any additional period during which the named executive officer receives severance payments, continuation coverage payments or continued vesting. In addition,
the Severance Letters require the named executive officers not to solicit our employees to leave their employment and not to solicit any of our customers to purchase goods or services sold by the Company from another person or entity.
Terms as used and defined in the Severance Letters:
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Termination Period means the period starting August 1, 2017 and ending on January 31, 2019.
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Cause generally means, with respect to the named executive officer, subject to certain notice and
cure provisions: (i) his or her substantial and repeated failure to attempt in good faith to perform his or her duties or follow the reasonable and legal written direction of the Chief Executive Officer or the Board; (ii) his or her
willful material misconduct with respect to any material aspect of the business of the Company; (iii) the indictment for, conviction of, or pleading of guilty or nolo contendere to, a felony or any crime involving moral turpitude; (iv) his
or her performance of any material act of theft,
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fraud or malfeasance in connection with the performance of duties; (v) the triggering of disclosures under the federal securities law arising out of certain acts or omissions of the named
executive officer; or (vi) a material breach of the Severance Letter or a material violation of the Companys code of conduct or other written material policy.
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Good Reason generally means, with respect to the named executive officer, subject to certain notice and cure provisions: (i) material diminution in his or her base salary at the rate or his or her bonus
target at the percentage, in each case, in effect immediately prior to the reduction or the failure to pay him or her any salary or any earned and due bonus or incentive payments; (ii) material diminution in his or her duties, authorities or
responsibilities; or (iii) a relocation of his or her work location by more than 50 miles.
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