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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In order to promote business continuity as well as provide an incentive to the management team and to certain employees of ADMA Biologics, Inc. (the
“Company”), the Board of Directors (the “Board”), upon recommendation of the Compensation Committee, in consultation with an independent compensation consultant, determined it to be appropriate and in the best interests of the Company to grant
retention awards, consisting of cash and restricted stock units (“RSUs”) as further described below, to (i) Mr. Adam Grossman, the Company’s President and Chief Executive Officer, (ii) Mr. Brian Lenz, the Company’s Executive Vice President and Chief
Financial Officer, and (iii) certain other employees of the Company. The Board views employee retention as a key component in the Company’s ability to execute on its business continuity strategies and to achieve near-term publicly communicated
operating and financial targets, particularly in light of the unprecedented operational challenges presented by the ongoing COVID-19 pandemic and the competitive work environment the Company operates in, being a pharmaceutical manufacturer of
specialized biologic therapies. In particular, the retention awards have been granted against the backdrop of nationwide labor shortages and the Company, its peers and other companies outside of the Company’s industry are seeing the beginnings of
increased employee turnover rates. The Company believes that the Board-approved retention program will not materially impact the 2021 Board-approved budget or the Company’s projections as a result of the Company’s year-to-date management of
operating and capital expenditures, and management and the Board believe the retention program will facilitate the achievement of several milestones that will deliver stockholder value.
Retention Award Agreements
In connection with the retention awards, each of Mr. Grossman and Mr. Lenz entered into a Retention Award Agreement with the Company (collectively, the
“Retention Award Agreements”).
Pursuant to the Retention Award Agreements, the retention award will be earned and become due and payable to the applicable executive upon the
executive’s continued employment with the Company through March 31, 2023, or, if earlier, termination of the executive by the Company without Cause (as defined in the applicable executive’s employment agreement) or resignation by the executive for
Good Reason (as defined in the applicable executive’s employment agreement) (the earliest of such dates, the “Retention Date”). The cash bonuses are subject to clawback and any unvested RSUs will be forfeited and cancelled if the applicable executive
is terminated for Cause or resigns without Good Reason prior to the Retention Date. If the applicable executive is terminated by the Company without Cause or resigns for Good Reason prior to March 31, 2023, then on such date as the applicable
executive ceases to be employed by the Company, any unpaid amounts of the cash bonus award not previously paid shall become immediately due and payable to the executive, any unvested Time-Based RSUs (as defined below) shall become fully vested and
any unvested Milestone-Based RSUs (as defined below) shall be forfeited and cancelled.
The Retention Award Agreements also provide that if the Company announces a Change of Control (as defined in the applicable executive’s employment
agreement) prior to March 31, 2023, (i) any unpaid amounts of the cash bonus award not previously paid shall be paid to the applicable executive in a lump sum at the closing of such Change of Control transaction (for purposes of clarity, whether the
executive is terminated or not in connection with such Change of Control) and (ii) the Time-Based RSUs and the Milestone-Based RSUs shall become fully vested immediately prior to the closing of such Change of Control transaction.
The foregoing summaries of the retention awards for Mr. Grossman and Mr. Lenz and the Retention Award Agreements do not purport to be complete and are
qualified in entirety by reference to the form of Retention Award Agreement for Mr. Grossman and Mr. Lenz, a copy of which is filed hereto as Exhibit 10.1 and incorporated herein by reference.
The following table sets forth the terms of the retention award for Mr. Grossman and Mr. Lenz:
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Recipient
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Cash Bonus (1)
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Time-Based RSUs (2) (3)
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Milestone-Based RSUs (2) (4)
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Adam S. Grossman
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$450,000
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907,500
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742,500
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Brian Lenz
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$350,000
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495,000
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405,000
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(1) The cash bonus for each executive is payable in two equal installments on September 30, 2021 and June 15, 2022, respectively.
(2) The RSUs were granted on September 29, 2021 and are subject to the applicable executive’s continued employment by the Company on the applicable
vesting date.
(3) 55% of the RSUs are subject to time-based vesting conditions (the “Time-Based RSUs”), of which (x) 50% of the
Time-Based RSUs shall vest on December 31, 2022 (“Initial Vesting Date”) and (y) 50% of the Time-Based RSUs shall vest in eight (8) equal quarterly installments over a period of two years following the Initial Vesting Date, becoming fully vested on
December 31, 2024; and
(4) 45% of the RSUs are subject to milestone-based vesting conditions (the “Milestone-Based RSUs”) of which (x) 22.2% of
the Milestone-Based RSUs shall become vested upon the completion of a debt refinancing which adds non-dilutive capital to the Company’s balance sheet before or during the calendar year ending December 31, 2022, (y) 33.3% of the Milestone-Based RSUs
shall become vested upon the achievement of a 15% gross margin on BIVIGAM® without intermediates by the end of the fourth quarter of 2022, and (z) 44.5% of the Milestone-Based RSUs shall become vested upon the achievement of $35 million in quarterly
revenues in or before the fourth quarter of 2022.
The retention awards to other employees consist of (i) cash bonuses equal to $1,650,000 in the aggregate, payable to each eligible employee in equal
installments on September 30, 2021 and June 15, 2022, respectively, and (ii) 1,230,000 RSUs in the aggregate. All of the RSUs awarded to the non-executive employees are Time-Based RSUs.
Amendments to Employment Agreements
On September 29, 2021, the Company entered into an amendment (the “Grossman Amendment”) to that certain Amended and Restated Employment Agreement, dated
January 29, 2019, by and between the Company and Mr. Grossman, for the purposes of: (i) extending the periods of benefits eligibility and for the payment of severance upon termination by the Company without Cause or following a resignation for Good
Reason (increasing to 18 months from 12 months) or upon a Change of Control (increasing to 24 months from 18 months); (ii) increasing the bonus target component to such severance payable upon termination by the Company without Cause or following a
resignation for Good Reason or upon a Change of Control; and (iii) providing for the accelerated vesting of Mr. Grossman’s RSUs upon the occurrence of certain termination events, as contemplated in his employment agreement. The foregoing description
of the Grossman Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Grossman Amendment, a copy of which is filed hereto as Exhibit 10.2 and incorporated herein by reference.
On September 29, 2021, the Company entered into an amendment (the “Lenz Amendment”) to that certain Amended and Restated Employment Agreement, dated
January 29, 2019, by and between the Company and Mr. Lenz, for the purposes of: (i) extending the periods of benefits eligibility and for the payment of severance upon termination by the Company without Cause or following a resignation for Good
Reason (increasing to 12 months from 9 months) or upon a Change of Control (increasing to 18 months from 12 months); (ii) increasing the bonus target component to such severance payable upon termination following a Change of Control; (iii) providing
for the accelerated vesting of Mr. Lenz’s RSUs upon the occurrence of certain termination events, as contemplated in his employment agreement; and (iv) incorporating a title change for Mr. Lenz, such that in addition to his current role as the
Company’s Executive Vice President and Chief Financial Officer, Mr. Lenz shall also serve as General Manager, ADMA BioCenters business (ADMA BioCenters Georgia Inc.). The title change for Mr. Lenz was approved by the Board in recognition of his
direct managerial oversight of the ADMA BioCenters business. The foregoing description of the Lenz Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Lenz Amendment, a copy of which is
filed hereto as Exhibit 10.3 and incorporated herein by reference.
(d) Exhibits
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Form of Retention Bonus Agreement
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Amendment to Employment Agreement, dated as of September 29, 2021, by and between the Company and Adam Grossman.
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Amendment to Employment Agreement, dated as of September 29, 2021, by and between the Company and Brian Lenz.
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104
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Cover Page Interactive Data File (embedded with the Inline XBRL document)
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