Item 1.01 Entry into a Material Definitive Agreement.
Amended Employment Agreement with Gregory J. Divis
.
On June 3, 2019, Avadel Management Corporation, a Delaware corporation (the “Employer”) and a wholly-owned subsidiary
of Avadel Pharmaceuticals plc, an Irish public limited company (“Avadel plc” or the “Company”), entered into an Amended Employment Agreement (the “Amended Divis Employment Agreement”) with Gregory J. Divis in connection with the appointment of Mr.
Divis as the Chief Executive Officer of Avadel plc and as the Chief Executive Officer of the Employer. The Amended Divis Employment Agreement replaces the employment agreement dated as of September 5, 2017 between Mr. Divis and the Employer.
The Amended Divis Employment Agreement has a one-year term, subject to automatic one-year extensions unless either the Employer or Mr.
Divis gives notice of non-renewal before the end of the applicable term. Pursuant to the Amended Divis Employment Agreement, Mr. Divis will receive an annual base salary of $500,000, subject to annual review and increase in the sole discretion of
the Employer, and will be eligible to receive an annual bonus with a target payout of no less than 60% of his base salary based on achievement by Mr. Divis of certain business and individual performance objectives as well as the performance of the
Company against its objectives. In connection with Mr. Divis’ oral assent to become the Chief Executive Officer of Avadel plc, on May 30, 2019 the Board of Directors of Avadel plc granted Mr. Divis options to purchase 400,000 of Avadel plc’s
American Depositary Receipts (ADSs) with each such ADS representing one ordinary share of Avadel plc; such options become exercisable in four equal amounts on each of the first four anniversaries of the date of grant at an exercise price equal to the
fair market value of the ADSs on the date of grant. In addition, Mr. Divis may be granted additional equity-based awards under the Company’s equity incentive plans or similar programs maintained by the Company in effect from time to time in the
discretion of the Company.
The Amended Divis Employment Agreement provides that Mr. Divis will receive an automobile allowance of $1,000 per month. Mr. Divis will
also be subject to certain customary covenants relating to confidentiality and non-disparagement as well as non-solicitation of employees, contractors, customers and suppliers.
Under the Amended Divis Employment Agreement, if Mr. Divis’ employment is terminated, other than within six months before or 18 months
after a change in control of either the Employer or the Company, by Mr. Divis for good reason (as defined in the Amended Divis Employment Agreement) or by the Company other than for Cause (as defined in the Amended Divis Employment Agreement), he
will be entitled to a severance payment equal to the sum of (i) 1.5 times his then-current annual base salary paid in equal monthly installments over an 18-month period; (ii) all accrued but unpaid bonuses for any completed fiscal year and vacation
pay, expense reimbursement and other benefits due under Company benefit plans, policies and arrangements; and (iii) if Mr. Divis elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the
Company will pay the premiums for such coverage (at coverage levels in effect immediately prior to termination) until the earlier of: (A) the expiration of 18 months after the termination of employment or (B) the date he becomes covered under similar
plans of any subsequent employer or is otherwise ineligible for COBRA.
If Mr. Divis’ employment is terminated, within six months before or 18 months after a change in control of either the Employer or the
Company, by Mr. Divis for good reason or by the Company other than for Cause (including non-renewal by the Company), he will be entitled to severance benefits as follows: (i) the Employer will pay Mr. Divis the amounts provided in items (i) and (iii)
in the prior paragraph plus (x) his target bonus for the fiscal year in which the change of control occurs, or (y) his target bonus for the fiscal year in which the termination of employment occurs; or (z) his actual bonus during the calendar year
prior to the calendar year during which the termination of employment occurs, whichever of (x), (y) or (z) is highest; (ii) the Employer will pay Mr. Divis the payments described in item (ii) of the prior paragraph; and (iii) upon the later of the
change in control or the termination of Mr. Divis’ employment, he shall become immediately vested in full in all outstanding unvested rights under equity awards, including without limitation stock option awards, restricted share awards and similar
rights, to the extent such rights and awards would have vested based solely on his continued employment and the vesting of such rights and awards does not cause any violation of Section 409A of the Internal Revenue Code.
Mr. Divis’ receipt of the payments upon termination of employment as described in the preceding two paragraphs will be subject to his
execution and delivery of a separation and release agreement acceptable to the Company pursuant to which, among other things, he will release all claims against the Company and its affiliates.
The foregoing summary of certain terms of the Amended Divis Employment Agreement is qualified in its entirety by the terms of the
definitive copy thereof which is filed as Exhibit 10.1 to this current report on Form 8-K and is incorporated herein by reference.
Employment Agreement with Dr. Jordan Dubow
On June 5, 2019, Avadel Management Corporation, a Delaware corporation (the “Employer”) and a wholly-owned subsidiary
of Avadel Pharmaceuticals plc, an Irish public limited company (“Avadel plc” or the “Company”), entered into an Employment Agreement (the “Dubow Employment Agreement”) with Dr. Jordan Dubow in connection with the appointment of Dr. Dubow as the Chief
Medical Officer of Avadel plc and as the Chief Medical Officer of the Employer.
The Dubow Employment Agreement has a one-year term, subject to automatic one-year extensions unless either the Employer or Dr. Dubow gives
notice of non-renewal before the end of the applicable term. Pursuant to the Dubow Employment Agreement, Dr. Dubow will receive an annual base salary of $435,000, subject to annual review and increase in the sole discretion of the Employer, and will
be eligible to receive an annual bonus
with a target payout of no less than
45% of his base
salary based on achievement by Dr. Dubow of certain business and individual performance objectives as well as the performance of the Company against its objectives. In connection with the execution of the Dubow Employment Agreement, the Board of
Directors of Avadel plc granted Dr. Dubow options to purchase 340,000 of Avadel plc’s American Depositary Receipts (ADSs) with each such ADS representing one ordinary share of Avadel plc; such options become exercisable in four equal amounts on each
of the first four anniversaries of the date of grant at an exercise price equal to the fair market value of the ADSs on the date of grant. In addition, Dr. Dubow may be granted additional equity-based awards under the Company’s equity incentive
plans or similar programs maintained by the Company in effect from time to time in the discretion of the Company.
Dr. Dubow will also be subject to certain customary covenants relating to confidentiality and non-disparagement as well as
non-solicitation of employees, contractors, customers and suppliers.
Under the Dubow Employment Agreement, if Dr. Dubow’s employment is terminated, other than within six months before or 18 months after a
change in control of either the Employer or the Company, by Dr. Dubow for good reason (as defined in the Dubow Employment Agreement) or by the Company other than for Cause (as defined in the Dubow Employment Agreement), he will be entitled to a
severance payment equal to the sum of (i) 1.0 times his then-current annual base salary; and (ii) if Dr. Dubow elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company will pay the
premiums for such coverage (at coverage levels in effect immediately prior to termination) until the earlier of: (A) the expiration of 12 months after the termination of employment or (B) the date he becomes covered under similar plans of any
subsequent employer or is otherwise ineligible for COBRA.
If Dr. Dubow’s employment is terminated, within six months before or 18 months after a change in control of either the Employer or the
Company, by Dr. Dubow for good reason or by the Company other than for Cause (including non-renewal by the Company), he will be entitled to the severance benefits provided in items (i) and (ii) in the prior paragraph.
Dr. Dubow’s receipt of the payments upon termination of employment as described in the preceding two paragraphs will be subject to his
execution and delivery of a separation and release agreement acceptable to the Company pursuant to which, among other things, he will release all claims against the Company and its affiliates.
The foregoing summary of certain terms of the Dubow Employment Agreement is qualified in its entirety by the terms of the definitive copy
thereof which is filed as Exhibit 10.2 to this current report on Form 8-K and is incorporated herein by reference.