Item 5.02– Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers
On September 1, 2017, Ms. Bobbi Jo Brockmann gave notice of her resignation from her position on the Company’s Board of Directors effective immediately, while maintaining her commitment to full-time employment by the Company without change.
On September 1, 2017, Dr. Joseph H. Crabb gave notice of his resignation from his position on the Company’s Board of Directors effective immediately, while maintaining his commitment to part-time employment by the Company without change.
These resignations reduce the number
of non-independent members of the Company’s Board of Directors.
The resignation on August 10, 2017 of Dr. Linda Rhodes
from the Board of Directors to avoid any perception of a conflict of interest (given her recent appointment to the Board of Directors
of Zoetis, Inc.) reduced the number of independent directors by one. This temporarily reduced the number of members on the Company’s
Compensation and Stock Option Committee from two to one. On August 30, 2017, in response to the Company’s receipt of a notification
from Nasdaq concerning the Company’s ceasing to have at least two independent directors on this committee, Mr. David S.
Cunningham was appointed to this committee. By letter dated August 31, 2017, Nasdaq confirmed that this committee composition
deficiency was cured.
The Company has determined that an incumbent director, Dr. David S. Tomsche (a member of the Nominating
Committee), is in fact not “independent” under Nasdaq guidelines due to the fact that two companies he controls have
purchased (in each of the last three years) products from the Company (on terms no more favorable than those made available to
customers generally) for aggregate amounts in between 5% to 6% of the Company’s total revenues for such periods. Dr.
Tomsche has resigned from the Nominating Committee and has been replaced in that position by independent director Mr. Paul R.
Wainman.
In order to restore the Company’s board to compliance with the Nasdaq requirement that a majority
of directors are independent, on September 1, 2017, Ms. Brockmann and Dr. Crabb, both Company employees, resigned their positions
on the board, as discussed above, resulting in there now being a majority of directors who are independent under Nasdaq guidelines.
The Company has notified Nasdaq of these developments and does not believe that further action is required or that further
consequences will follow.
It is the Company’s intent to add one or more independent directors to the board
before the next annual shareholders meeting, to enable Ms. Brockmann to be reappointed to the board consistent with Nasdaq guidelines.
Both Ms. Brockmann and Dr. Crabb are expected to continue to perform their full-time and part-time employment responsibilities,
respectively, without change.