Item 5.02 Departure of Directors or Certain
Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Resignations of Certain Directors
The information set forth in Item 5.01 of this
Current Report on Form 8-K with respect to director resignations is incorporated by reference into this Item 5.02.
Appointment of Certain Officers
In accordance with the Amended Merger Agreement,
on March 30, 2021, the Board appointed the following officers of the Company, effective at the Effective Time: Yung-Ping Yeh as
Chief Innovation Officer and Andrew D.C. LaFrence, CPA as Chief Financial Officer. These officers join John A. Roberts, the Company’s
President and Chief Executive Officer, and Ralf Brandt, Ph.D, the Company’s President of Discovery & Early Development
Services, as the Company’s executive officers.
Yung-Ping Yeh, MS, MBA, PgMP, PMP co-founded
StemoniX in April 2014 and, since then, has served as its Chief Executive Officer and a Board Member. Prior to co-founding StemoniX,
Mr. Yeh commercialized multiple technologies to the tech industry. Highlights include serving as team lead for the first solid
state drive product for Seagate Technology, leading the global partnership between Samsung and Seagate to create new flash technology
and program managing the operating system software development for Dell enterprise storage systems. Mr. Yeh has successfully led
through a multi-disciplinary approach for the last two decades of his career. Mr. Yeh holds a bachelor of science and master’s
degree in mechanical engineering (nanotechnology) from University of California, San Diego, and a master’s degree in business
administration from University of Minnesota’s Carlson School of Management. He has attained professional certifications in
program and project management from the Project Management Institute and Mergers and Acquisitions from Northwestern’s Kellogg
School of Management. Mr. Yeh serves on the UC San Diego Alumni Board of Directors and Board of Directors for the Medical Alley,
the leading association in the healthcare industry.
Andrew D.C. LaFrence joined StemoniX as its
Chief Financial Officer in August 2019 and, since March 2020, he has also served as its Chief Operating Officer. Mr. LaFrence has
36 years of accounting and finance experience, including executive management positions at public and private life sciences companies.
Previously, he was Senior Vice President and Chief Financial Officer of Biothera Pharmaceuticals, Inc. from May 2018 to August
2019, as well as Vice President Finance, Information Systems and Chief Financial officer at Surmodics, Inc. (NASDAQ: SRDX) for
five years. Prior to Surmodics, Mr. LaFrence served as Chief Financial Officer for CNS Therapeutics, a venture-backed intrathecal
drug company. He was an audit partner at KPMG LLP where he focused on supporting venture-backed, high-growth medical technology,
pharmaceutical, biotech and clean tech private and public companies. Mr. LaFrence is a certified public accountant and has a bachelor’s
degree in accounting and a minor in business administration from Illinois State University.
Appointment of Directors
In accordance with the Amended Merger Agreement,
on March 30, 2021, effective at the effective time of the Merger, the following individuals were appointed to the Board as directors,
along with Mr. Roberts and Mr. Yeh.
John Fletcher (board chair) brings to the board
more than 30 years of strategy and financing experience across the pharmaceutical and healthcare industry. In 1983, Mr. Fletcher
founded Fletcher Spaght, Inc., a consulting firm that provides growth-focused strategy assistance to client companies, and since
its founding has served as its Chief Executive Officer. Since 2001, Mr. Fletcher has also served as the Managing Partner of Fletcher
Spaght Ventures, a venture capital fund. Mr. Fletcher’s current and past board experience includes both public and private
companies. Mr. Fletcher currently serves on the boards of Repro Med Systems, Inc. (aka Koru Medical), Clearpoint Neuro, Inc., and
Axcelis Technologies, Inc., all of which are public companies. Mr. Fletcher previously served on the boards of The Spectranetics
Corporation, Autoimmune, Inc., Fischer Imaging Corp., Panacos Pharmaceuticals Inc., NMT Medical Inc., and Quick Study Radiology
Inc., all of which are public companies, and on the board of GlycoFi, Inc., a private company. In addition, Mr. Fletcher has served
on the boards of many academic and non-profit institutions. Mr. Fletcher worked on the $2 billion acquisition of Spectranetics
by Koninklijke Philips N.V. (Royal Philips) and the $400 million acquisition of GlycoFi by Merck & Co., Inc., and received
the National Association of Corporate Directors (NACD) Director of the Year Award in 2018 specifically for his work at Spectranetics.
Mr. Fletcher is a graduate of Southern Illinois University (MBA), Central Michigan University (Master’s Degree in International
Finance), and George Washington University (BA) and has served as an instructor in International Business at the Wharton School
of Business, and as a Captain and jet pilot in the United States Air Force.
Marcus Boehm has led research and development
programs in biotechnology for 29 years. He is co-founder of Escient Pharmaceuticals, Inc. where he has served as Chief Scientific
Officer since 2018. Escient Pharmaceuticals, Inc. is a San Diego-based pre-clinical stage company focused on finding novel solutions
to auto-reactive clinical conditions with high unmet medical need. Previously, he was co-founder and Chief Technology Officer at
Receptos, Inc. from 2009 to 2015, when it was acquired by Celgene Corporation. At Receptos, Inc., Dr. Boehm collaborated to develop
treatments for multiple sclerosis, ulcerative colitis, and eosinophilic esophagitis and also led early discovery research and development
programs, chemical manufacturing and controls, and supported corporate financing and partnering activities. In 2001, Dr. Boehm
served as Vice President, Chemistry at Conforma Therapeutics Corp, where he led a team that discovered and developed a treatment
for solid tumors. Dr. Boehm started his industry career with Ligand Pharmaceuticals in 1991 where he held various positions with
progressing responsibility. He led chemistry efforts on programs resulting in the discovery and development of treatment of patients
with AIDS-related complications. He is a co-author and inventor of over 100 patents and publications in the area of oncology, autoimmune
and metabolic diseases. He has served on Board of Directors for StemoniX and is currently a member of its Scientific Advisory Board.
Dr. Boehm received a B.A. in Chemistry from the University of California, San Diego, a Ph.D. in Chemistry from the State University
of New York Stony Brook and completed a National Institutes of Health Postdoctoral Fellowship at Columbia University.
Paul Hansen has been a member of the Board
of Directors of StemoniX since 2015. Since 2014, Mr. Hansen has served as a Senior Fellow with the University of Minnesota’s
Technological Leadership Institute. Mr. Hansen is a founder and, since 2016, has been President of Minnepura Technologies, SBC.
From 1999 to 2014, Mr. Hansen held senior executive positions at 3M Company, including President and CEO of 3M Mexico. Mr. Hansen
holds a BA in Chemistry and Economics from St. Olaf College and an MBA in Marketing Management from the Carlson School of Management
at the University of Minnesota.
Dr. Joanna Horobin is an accomplished drug
developer and biotech leader with over 35 years of experience in the pharmaceutical and biotech sector. Dr. Horobin serves as a
Non-Executive Director on the boards of Kymera Therapeutics Inc. (NASDAQ, KYMR), Nordic Nanovector ASA (Oslo, NANO), Liquidia Corporation
(NASDAQ, LQDA) and as Chair of privately held iOnctura SA. Dr. Horobin has held multiple C-suite roles in biotech companies, most
recently as the Chief Medical Officer at Idera Pharmaceuticals Inc. (NASDAQ, IDRA) and was also the CEO of Syndax Pharmaceuticals
(NASDAQ, SNDX). She worked initially in clinical development roles resulting in the development and launch of 8 products in the
anti-infective, cardiovascular, and anti-inflammatory categories. Moving to general management roles of increasing responsibility
in the UK, France, and US, she shifted to cancer drug development, which has been her major career focus. She led a joint venture
between Rhone Poulenc and Chugai to develop and launch Chugai’s gCSF product Granocyte in Europe and, as VP Oncology, launched
Rhone Poulenc Rorer (now Sanofi) as a major player in oncology with the global launch of Taxotere. After gaining her medical qualifications
from the University of Manchester Medical School in the United Kingdom Dr. Horobin gained membership of the Royal College of General
Practitioners and practiced as a general practitioner in London, England.
Board Committees
Effective as of the Effective Time, the Board’s
committees were composed as follows: Audit: Geoffrey Harris (Chair), John Fletcher and Paul Hansen; Compensation: Joanna Horobin
(Chair), Geoffrey Harris and Marcus Boehm; and Nominating and Governance: Howard McLeod (Chair), Joanna Horobin and John Fletcher.
Director Compensation
Following consummation of the Merger, the Board
approved a new director compensation policy for its non-employee directors. All non-employee members of the Board are eligible
to participate in the Board of Directors Compensation Plan (the “Compensation Plan”). The effective date of the Compensation
Plan is March 30, 2021.
Annual Cash Retainer
Annual cash retainers are payable in four
equal quarterly installments.
Member of Board:
|
|
$
|
30,000
|
|
Member of Committees (excluding board chair):
|
|
$
|
2,500 per committee (excluding the initial committee, participation in at least one committee if requested is expected and assumed in base retainer)
|
|
Chair of the Audit Committee:
|
|
$
|
10,000
|
|
Chair of the Compensation Committee:
|
|
$
|
7,500
|
|
Chair of the Governance Committee:
|
|
$
|
5,000
|
|
The board members will not receive any additional
compensation for attendance at board or committee meetings.
Each Board Member may elect each year to receive
all or any part of the cash retainer fees above for the next 12 months in restricted stock units vesting on the same dates as the
annual grants provided for below.
Equity Compensation
Upon initial election to Board: A stock
option to acquire the equivalent of $60,000 of common stock of the Company valued on the date of grant, exercisable at fair market
value, and vesting in full on the date of grant.
Annual grants: Restricted stock units
equivalent to $70,000 on the date of grant (or greater if an election to receive restricted stock units in lieu of cash is
made as provided above), with grants on the first trading day of each year, and vesting on the annual anniversary of
grant.
Executive Chair): Restricted stock units
equivalent to $40,000 on the date of grant vesting on the annual anniversary of grant.
All restricted stock units shall be issued
pursuant to the terms of the Company’s equity plan. Annual grants shall be awarded on the first trading day each calendar
year commencing in 2022. Annual grants of restricted stock units shall vest in full on the first annual anniversary of date of
grant.
Employment Agreements
The Company has entered into an Employment
Agreement with Mr. Yeh (the “Yeh Agreement”) on March 30, 2021 setting forth his employment as Chief Innovation Officer.
Pursuant to the Yeh Agreement, Mr. Yeh is entitled to: (i) an annual base salary of $325,000, or such greater amount as may be
determined by the board of directors of the post-merger company from time to time; (ii) eligibility for an annual cash bonus of
up to 40% of base salary; and (iii) the following post-termination benefits: (a) payment of all base compensation and bonuses earned
and unpaid through the date of termination, (b) payment for all accrued but unused paid time off, (c) payment for any performance
bonus plan, then in effect, pro rata for his period of actual employment during the year, payable at a commensurate time as other
employees are paid their bonus amounts, (d) in the event of Mr. Yeh’s employment is terminated due to his death, monthly
payments to his estate equal to his base salary immediately prior to such termination for a period of 90 days, (e) in the event
Mr. Yeh’s employment is terminated due to illness, injury or disability, monthly payments equal to his base salary immediately
prior to such termination for a period of six months, (f) monthly payments equal to his base salary immediately prior to termination
for a period of nine months in the event his employment is terminated without “cause” or Mr. Yeh resigns for “good
reason” not in connection with a “change of control”, plus the greater of the actual prior-year and current-year
target bonus times the number of days from the beginning of the current fiscal year through the termination date divided by 365
days, (g) a lump sum payment equal to twelve months of his then base salary plus an amount equal to the prior year bonus, and all
unvested stock options held by Mr. Yeh shall vest in full, in the event his employment is terminated for any reason within twelve
months following a change of control, and (h) continuation of medical/dental, disability and life benefits for a period of 12 months
following termination of employment pursuant to certain events, subject to Mr. Yeh’s execution of a release of claims, and
except to the extent Mr. Yeh receives comparable benefits from a new employer within 12 months following termination of employment
in which case such benefits shall end upon his enrollment in the new employers plans). The Yeh Agreement provides that Mr. Yeh
is subject to customary non-competition and non-solicitation of employees and customers covenants for twelve months following termination
of employment.
The Company has entered into an Employment
Agreement with Mr. LaFrence (the “LaFrence Agreement”) on March 30, 2021 setting forth his employment as Chief Financial
Officer. Pursuant to the LaFrence Agreement Mr. LaFrence is entitled to: (i) an annual base salary of $325,000, or such greater
amount as may be determined by the board of directors of the post-merger company from time to time; (ii) eligibility for an annual
cash bonus of up to 40% of base salary; and (iii) the following post-termination benefits: (a) payment of all base compensation
and bonuses earned and unpaid through the date of termination, (b) payment for all accrued but unused paid time off, (c) payment
for any performance bonus plan, then in effect, pro rata for his period of actual employment during the year, payable at a commensurate
time as other employees are paid their bonus amounts, (d) in the event of Mr. LaFrence’s employment is terminated due to
his death, monthly payments to his estate equal to his base salary immediately prior to such termination for a period of 90 days,
(e) in the event Mr. LaFrence’s employment is terminated due to illness, injury or disability, monthly payments equal to
his base salary immediately prior to such termination for a period of six months, (f) monthly payments equal to his base salary
immediately prior to termination for a period of nine months in the event his employment is terminated without “cause”
or Mr. LaFrence resigns for “good reason” not in connection with a “change of control”, plus the greater
of the actual prior-year and current-year target bonus times the number of days from the beginning of the current fiscal year through
the termination date divided by 365 days, (g) a lump sum payment equal to twelve months of his then base salary plus an amount
equal to the prior year bonus, and all unvested stock options held by Mr. LaFrence shall vest in full, in the event his employment
is terminated for any reason within twelve months following a change of control, and (h) continuation of medical/dental, disability
and life benefits for a period of 12 months following termination of employment pursuant to certain events, subject to Mr. LaFrence’s
execution of a release of claims, and except to the extent Mr. LaFrence receives comparable benefits from a new employer within
12 months following termination of employment in which case such benefits shall end upon his enrollment in the new employers plans).
The LaFrence Agreement provides that Mr. LaFrence is subject to customary non-competition and non-solicitation of employees and
customers covenants for twelve months following termination of employment.
On March 30, 2021, the Company entered into
an amendment (the “Roberts Amendment”) with John A. Roberts to the employment agreement between the Company and Mr.
Roberts dated June 27, 2016 (the “Roberts Agreement”). Pursuant to the Roberts Amendment, (a) Mr. Roberts’ salary
was increased to $450,000 from the current $350,000; (b) he became eligible for an annual cash bonus of up to 50% of base salary
(increased from 35%); (c) he became entitled to a lump sum payment equal to twelve months of his then base salary plus an amount
equal to the prior year bonus, and all unvested stock options held by Mr. Roberts vesting in full, in the event his employment
is terminated for any reason within twelve months following a change of control; and (d) he became entitled to monthly payments
equal to his base salary immediately prior to such termination for a period of twelve months (increased from 6 months) in the event
his employment is terminated without “cause” or Mr. Roberts resigns for “good reason” not in connection
with a “change of control” (each as defined in the Roberts Agreement).
Option Grants
In connection with the Merger, on March 30,
2021, the Company granted awards of options to purchase shares of Common Stock, with an exercise price of $4.61, pursuant to the
Company’s 2021 Equity Incentive Plan (the “2021 Plan”) to its executive officers as follows:
|
●
|
John A. Roberts: 250,000
|
|
●
|
Yung-Ping Yeh: 150,000
|
|
●
|
Andrew D.C. LaFrence: 100,000
|
|
●
|
Ralf Brandt: 100,000
|
These options vest over 4 years, such that
25% shall first vest on the one-year anniversary of the date of grant (March 30, 2022), with the 75% balance vesting in
36 equal monthly installments, so long as the employee remains an employee of the Company on each vesting date, so that it may
become 100% vested on March 30, 2025.
In addition, on March 30, 2021, the Company
granted awards of options to purchase 13,015 shares of Common Stock, with an exercise price of $4.61, pursuant to the 2021 Plan
to each of its non-employee directors (John Fletcher, Marcus Boehm, Paul Hanson, Geoffrey Harris, Joanna Horobin, and Howard McLeod),
which options were fully vested on the date of grant.
Further, on March 30, 2021, the Company granted
John Fletcher, the board chair, 8,676 restricted stock units. The restricted stock units will be fully vested on the first annual
anniversary of the date of grant (March 30, 2022) so long as Mr. Fletcher remains a director through such date.
Related-Party Transactions
The following is a summary of transactions
since January 1, 2020 and all currently proposed transactions, to which the Company has been a participant, in which:
● the amounts exceeded or will
exceed the lesser of $120,000 or one percent of the average of the company’s total assets at year-end for the last two completed
fiscal years; and
● any of its current directors,
executive officers or holders of more than 5% of the respective capital stock, or any member of the immediate family of the foregoing
persons, had or will have a direct or indirect material interest.
In January 2020, Andrew D. C. LaFrence, advanced
StemoniX $25,000 to fund operating expenses. These advances accrued $512 in interest through August 12, 2020, resulting in a total
indebtedness of $25,512. On August 12, 2020, to repay the debt, StemoniX paid for Mr. LaFrence’s exercise of an existing
StemoniX stock option and issued him 12,693 shares of common stock.
The Company has entered into indemnification
agreements with each of its current directors and executive officers. These agreements will require the Company to indemnify these
individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to
the Company, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.
The Company also intends to enter into indemnification agreements with its future directors and executive officers.
Vyant Bio, Inc. 2021 Equity Incentive Plan
On March 30, 2021, the 2021 Plan became effective.
The Company’s stockholders approved the 2021 Plan at the special meeting that took place to approve the Merger and related
items on March 24, 2021, and reserved a total of 4,500,000 shares of Common Stock for issuance thereunder. The general purpose
of the 2021 Plan is to provide a means whereby eligible employees, officers, non-employee directors, consultants, advisors and
other individual service providers may develop a sense of proprietorship and personal involvement in our development and financial
success, and to encourage them to devote their best efforts to us, thereby advancing our interests and the interests of stockholders.
The 2021 Plan provides for options to purchase shares of common stock, stock appreciation rights, restricted stock units, restricted
or unrestricted shares of common stock, performance shares, performance units, incentive bonus awards, other stock-based awards
and other cash-based awards. Employees, officers, directors, consultants, advisors and other individual service providers of our
Company and our subsidiaries who, in the opinion of the Compensation Committee, are in a position to contribute to our success,
or any person who is determined by the Compensation Committee to be a prospective employee, officer, director, consultant, advisor
or other individual service provider of the Company or any subsidiary will be eligible for granted under the 2021 Plan.
On March 30, 2021, the Company also approved
forms of incentive stock option grant agreement, nonqualified stock option grant agreement and stock unit award agreement, which
are included as Exhibits 10.2, 10.3 and 10.4 to this Current Report on Form 8-K, incorporated by reference into this Item 5.02.
The terms and conditions of the 2021 Plan are
described in the section entitled “CGI Proposal No. 3 (the Plan Proposal): Approval of the Cancer Genetics, Inc. 2021 Equity
Incentive Plan, and Authorization for Issuance 4,500,000 Shares of CGI Common Stock Thereunder” in the Company’s prospectus/definitive
proxy statement/information statement filed with the SEC on February 16, 2021 (the “Proxy Statement/Prospectus”). The
foregoing description of the 2021 Plan and the information incorporated by reference in the preceding sentence does not purport
to be complete and is qualified in its entirety by the terms and conditions of the 2021 Plan, which is incorporated by reference
to this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by reference.