Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangement of Certain Officers.
Appointment of Acting Chief Executive Officer
On January 30, 2009, the Board of Directors (the “Board”) appointed William A. Fletcher, 61, as the Company’s
Acting Chief Executive Officer, effective immediately. Mr. Fletcher has served as a director of the Company since
February 2007. Mr. Fletcher has been Chairman, Teva Pharmaceuticals North America since December 2004. Prior to that,
he was President and Chief Executive Officer of Teva’s North American activities from 1985 until the end of 2004.
Mr. Fletcher served as Vice President, Sales and Marketing of the Pennsylvania-based Lemmon Company (1980 to 1983) and
then as President (1983-1985) following the company’s acquisition by Teva and WR Grace. Prior to 1980, Mr. Fletcher was
Business Development Manager and International Marketing Manager of Synthelabo, a pharmaceutical subsidiary of L’Oreal
in Paris. From 1970 to 1977 he served in various international sales and marketing positions for Hoffman-LaRoche. He
serves as a board member for several Teva subsidiary companies in North America and Europe, and is a director of
Sportwall International Inc., a growth company in the interactive fitness industry. Mr. Fletcher graduated in
International Marketing from Woolwich Polytechnic, London (now Greenwich University) in 1969.
The Company had previously announced a search for a new President and Chief Executive Officer following the July
2008 announcement of the planned retirement of Mr. Freiman on December 31, 2008. Following the failure of the Viprinex
program in December 2008 and the termination of the Company’s future development of Viprinex in January 2009, the Board
has suspended this search and now does not expect to appoint a person to occupy this office in a permanent, full-time
role. The Board is considering any additional compensation that Mr. Fletcher will receive for his services as Acting
Chief Executive Officer.
Termination of Officers and Severance / Retention Arrangements
.
Following the Company’s announcement on January 13, 2009 regarding the termination of the Company’s development of
Viprinex and resulting reduction in force, Board approved on January 30, 2009 a severance arrangement for two of the
Company’s executive officers. The severance arrangement calls for the termination of the two executive officers at
times ranging from January 31, 2009 to up to March 31, 2009, and is expected to have a total potential cost of up to
$190,000, providing certain severance benefits to the Company’s executive officers, as described below, in exchange for
a release of claims against of the Company.
David E. Levy, M.D
. Dr. Levy was terminated as the Company’s Vice President, Clinical Development as of January
31, 2009. Following Dr. Levy’s termination, he became entitled to receive three months’ severance pay at his fiscal
2009 base salary.
Warren W. Wasiewski, M.D
. Dr. Wasiewski’s employment as the Company’s Vice President, Chief Medical Officer is
expected to terminate no later than March 31, 2009. Upon the termination of his employment, Dr. Wasiewski will be
entitled to receive four months’ severance pay at his fiscal 2009 base salary.
Each of Drs. Levy and Dr. Wasiewski will also be entitled to have their COBRA costs paid by the Company until the
earlier of (a) six months from the date of termination or (b) coverage of medical benefits by a new employer. All
severance payments are planned to be made in accordance with the Company’s normal payroll schedule and the severance
benefits outlined above are conditioned upon the officer’s execution of the Company’s standard form of release. The
severance benefits for Drs. Levy and Dr. Wasiewski will cost the Company in total up to approximately $74,000 and
$116,000, respectively, including COBRA costs.
Further, on January 30, 2009, the Board amended the employment offer letter of Matthew M. Loar, Vice President and
Chief Financial Officer, dated March 18, 2008, to provide that the severance benefits thereunder are to now include the
payment of COBRA costs by the Company for up to the length of Mr. Loar’s severance period under the offer letter (six
months). Also, in accordance with a retention plan adopted for selected remaining key employees that the Board deems
important to fulfill the Company’s legal and contractual obligations, Mr. Loar will also receive a quarterly retention
bonus equal to 10% of his base salary for every quarter of continued service, commencing as of January 1, 2009.
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