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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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As part of the leadership re-alignment described in Item
2.05 of this report, Robert Ward, Chief Executive Officer, and David Snow, Chief Business Officer, will each separate from the
Company effective February 29, 2020, and Gregory Weaver, Chief Financial Officer, will separate from the Company effective March
15, 2020. The Board of Directors has promoted Gregory C. Williams to Chief Executive Officer and member of the Board of Directors,
Neil S. Belloff to Chief Operating Officer, in addition to his role as General Counsel, and Stephen MacDonald to Vice President,
Finance and Accounting, and Treasurer (principal accounting officer). Mr. Tomer Kariv was also elected as Chairman of the Board
of Directors.
Amounts payable to Messrs. Ward, Weaver and Snow in connection
with their separations will be governed by their employment agreements, which provide for severance payments, the payment of premiums
for COBRA coverage, if such coverage is elected by the executive, accelerated vesting of 25% of the total shares subject to existing
equity awards, and extension of the exercise period of stock options for a period equal to the lesser of nine months following
separation or the remaining term of the option. However, severance payments will not include any amount with respect to an executive’s
2020 bonus opportunity.
Effective as of March 1, 2020, Dr. Williams’ annual base salary will be $475,000 and target annual bonus opportunity will
be set at 50% of his base salary. Additionally, Dr. Williams was granted stock options to purchase 400,000 shares of the Company’s
common stock at an exercise price of $3.81 per share (the closing price on February 24, 2020) and restricted stock units for 200,000
shares of the Company’s common stock. The stock options and restricted stock units will vest over four years: one-fourth
on the first anniversary of the date of grant and one-twelfth at the end of each succeeding quarter.
Also, effective as of March 1, 2020, Mr. Belloff’s
annual base salary will be $420,000 and target annual bonus opportunity will be set at 40% of his base salary. Additionally, Mr.
Belloff was granted stock options to purchase 200,000 shares of the Company’s common stock at an exercise price of $3.81
per share and restricted stock units for 100,000 shares of the Company’s common stock. The stock options and restricted units
will vest over four years: one-fourth on the first anniversary of the date of grant and one-twelfth at the end of each succeeding
quarter. Mr. Belloff also received a housing allowance and will report to the Chief Executive Officer.
Stephen MacDonald, 49, who started with the Company on
October 14, 2019 as Corporate Controller, was promoted to Vice President, Finance and Accounting, and Treasurer of the Company
effective immediately. Mr. MacDonald will take over principal accounting officer responsibilities on March 15, 2020. Mr. MacDonald
receives a base annual salary of $255,000, a target bonus of 28% and was granted 15,000 options to purchase common stock of the
Company at an exercise price of $3.93 on his initial hire date. Prior to joining the Company, Mr. MacDonald worked at Tesaro,
Inc. for more than five years prior to its acquisition by GSK, where he held several positions of increasing responsibility, including
senior finance director Mr. MacDonald will report to the Chief Executive Officer.
Dr, Williams’ and Mr. Belloff’s
employment agreements are terminable at will by the Company after 18 months from the effective date. Additionally, upon a
termination by the Company without cause or a resignation for good reason, the executive would be entitled to (1) lump
sum payment of an amount equal to 12 months of base salary, (2) payment of premiums for COBRA coverage at applicable
rates for 12 months, if such coverage is elected by the executive, (3) any Annual Bonus (as defined in the employment
agreement) earned but unpaid for the year immediately prior to the date employment terminated,
(4) a pro-rata portion of the Target Bonus (as defined in the employment agreement) for the year in which
termination occurs based on the number of days that the executive was employed during such performance year or achievement of
performance goals as determined by the Board in good faith, depending on whether performance goals were established as of the
date of termination, (5) accelerated vesting of 25% of the total shares subject to all equity awards, and (6) a
post-termination stock option exercise period for the shorter of nine months or for the remaining term of the award.
If Dr. Williams’ or Mr. Belloff’s employment
is terminated by the Company without cause or for good reason within 24 months following a Change in Control (as defined in the
Company’s 2018 Equity Incentive Plan), he will be entitled to (1) continued payments of base salary for 18 months, (2) payment
of premiums for COBRA coverage at applicable rates for 18 months if such coverage is elected by the executive, (3) any Annual
Bonus earned but unpaid for the year immediately prior to the date his employment terminated, (4) the full Target Bonus for
the performance year in which his employment terminated, (5) accelerated vesting of all of the unvested shares subject to
all equity awards, and (6) a post-termination stock option exercise period for the shorter of 12 months or the remaining term
of the option.
The foregoing description of the terms of the employment
agreements is not complete and is qualified in its entirety by reference to the full text thereof, which will be filed as an exhibit
to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
A copy of the press release is attached hereto as Exhibit
99.1 and is incorporated herein by reference.