Item
5.02
Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
Retirement of CEO
On July
13, 2021, Anthony A. DiTonno will retire as the Chief Executive
Officer of the Company and as a member of the Company’s Board
of Directors (the “Board”) effective as of July 13,
2021 (the “Effective Separation Date”). In connection
with his retirement, Mr. DiTonno entered into a Separation and
General Release Agreement with the Company (the “Separation
Agreement”), dated July 6, 2021. The terms of the Separation
Agreement provide that Mr. DiTonno has the right to revoke the
Separation Agreement until July 22, 2021.
Under
the Separation Agreement, Mr. DiTonno is entitled to receive
severance in an amount equal to one year of his current base annual
salary, and a pro-rated amount of his annual bonus that would have
been received had 100% of his annual goals been achieved (less
applicable taxes and withholdings), payable in a lump sum on the
60th day following the Effective Separation Date. The Company will
also reimburse COBRA premiums for coverage of Mr. DiTonno and his
eligible dependents for up to 18 months if Mr. DiTonno timely and
properly elects continuation coverage. The foregoing payments are
contingent on Mr. DiTonno’s standard release of employment
claims. In connection with his retirement and in order to ensure a
smooth transition to the new CEO, Mr. DiTonno has received a stock
option grant for 50,000 shares of common stock. All of Mr.
DiTonno’s outstanding stock options for common stock of the
Company will accelerate upon the Effective Separation Date,
becoming fully vested, and shall be exercisable until the earlier
of: (i) the original expiration date of each option under such
option’s respective option agreement; or (ii) July 13, 2026.
The Company is additionally reimbursing Mr. DiTonno for up to
$5,000 in legal expenses related to the Separation Agreement. The
Separation Agreement also contains such non-competition,
non-solicitation, and confidentiality provisions and other terms
and conditions as are usual and customary for agreements of this
type. All of Mr. DiTonno’s obligations under his Employee
Non-Disclosure, Inventions Assignment, and Competitive Business
Activities Agreement, dated June 1, 2018, regarding confidentiality
and proprietary information will continue.
The
foregoing description of the Separation Agreement does not purport
to be complete and is qualified in its entirety by reference to the
full text of the Separation Agreement, a copy of which is filed as
Exhibit 10.3 to this Current Report on Form 8-K and is incorporated
herein by reference.
Appointment of CEO and Member of the Board
On July
6, 2021, the Board appointed
Christopher T. Giordano as the Company’s Chief Executive
Officer and a member of its Board of Directors, effective July 14,
2021. From July 6, 2021
through July 14, 2021, Mr. Giordano will serve as an employee of
the Company to assist with the smooth transition of Mr.
DiTonno’s duties as CEO to Mr. Giordano.
Mr.
Giordano, age 47, brings more than 20 years of experience in the
clinical research industry. He most recently served as President of
IQVIA Biotech and IQVIA MedTech (formerly Novella Clinical), where
he led an executive team that executed a clinical trial portfolio
that grew from 250 to 400 active projects during his three years of
leadership commencing March 2018 through his departure in April
2021 and saw double-digit annual growth in sales each year of his
tenure. Mr. Giordano has been involved in the pharmaceutical
development industry since 1998. In January 2001, he joined PPD,
another global clinical research organization, in a sales role.
Over the next seven years, he grew into increasing operational
responsibility, and in August 2008 transitioned to Quintiles as a
Vice President, where he oversaw all consulting, regulatory,
commercial, and clinical development services (including
early-phase pharmacology through phase IV registry and safety
studies) offered to his clients in the oncology, auto-immune, CNS,
cardiovascular, and renal disease areas. He served in roles of
increasing responsibility at Quintiles, being appointed Global Vice
President of the cardiovascular, renal, and metabolic group in
February 2016, a position he held until his appointment as
President of IQVIA Biotech and IQVIA MedTech.
Effective
July 6, 2021, the Company entered into an executive employment
agreement with Mr. Giordano (the “Employment
Agreement”). Under the Employment Agreement, Mr. Giordano
will receive an annual base salary of $375,000. Mr. Giordano will
also receive participation in medical insurance, dental insurance,
and other benefit plans on the same basis as the Company’s
other officers. Under the Employment Agreement, Mr. Giordano will
also receive an annual cash bonus consisting of 50% of his base
salary, based on 100% achievement of annual goals (with no cap on
the bonus for greater than 100% achievement of goals). The
Employment Agreement also provides for the grant of the following
employment inducement stock options: (i) a one-time stock option
grant of 250,000 shares of common stock with four-year
straight-line vesting; and (ii) a one-time stock option grant of
100,000 shares of common stock with 50% vesting upon the
achievement of certain performance metrics related to the clinical
trials of the Company. These grants are to be made pursuant to the
Company’s newly-adopted Plan for Employee Inducement Grants,
described in further detail below and filed as Exhibit 10.3 to this
Current Report on Form 8-K. The Company is further reimbursing Mr.
Giordano for up to $10,000 of legal expenses related to the
Employment Agreement.
The
Employment Agreement is effective for a one-year term, and
automatically renews for additional one-year terms, unless the
Employment Agreement is terminated in advance of renewal or either
party gives notice at least 90 days prior to the end of the then
current term of an intention not to renew. If Mr. Giordano is
terminated without cause, if he terminates his employment for good
reason, or if the Company elects not to renew the Employment
Agreement, Mr. Giordano would be entitled to receive (i) one-year
of base salary, (ii) a pro-rated amount of the annual bonus that he
would have received had 100% of goals been achieved, and (iii)
one-year of COBRA reimbursements or benefits payments, as
applicable. Mr. Giordano’s entitlement to these payments is
conditioned upon execution of a release of claims.
For
purposes of the Employment Agreement: (i) “cause”
includes (a) a willful material breach of the Agreement by Mr.
Giordano, (b) material misappropriation of Company property, (c)
material failure to comply with Company policies, (d) abuse of
illegal drugs or abuse of alcohol in a manner that interferes with
the performance of Mr. Giordano’s duties, (e) dishonest or
illegal action that is materially detrimental to the Company, (f)
failure to cooperate with internal investigations or law
enforcement and regulatory investigations, and (g) failure to
disclose material conflicts of interest and (ii) “good
reason” includes (a) a material reduction in base salary, (b)
a material reduction of Mr. Giordano’s authority, duties or
responsibility, (c) certain changes in geographic location of Mr.
Giordano’s employment, or (d) a material breach of the
Employment Agreement or other written agreement with Mr. Giordano
by the Company.
In connection with Mr. Giordano’s appointment as CEO, on July
6, 2021, the Compensation Committee of the Board adopted the Plan
for Employee Inducement Stock Option Grants (the
“Plan”). The Plan provides for the grant of
equity-based awards in the form of incentive stock options and
non-qualified stock options. The Plan was adopted by the
Compensation Committee of the Board without stockholder approval
pursuant to Rule 5635(c)(4) of the Nasdaq Listing
Rules.
The Board has reserved up to 350,000 shares of the Company’s
common stock for issuance pursuant to awards granted under the
Plan, and the Plan will be administered by the Compensation
Committee of the Board. In accordance with Rule 5635(c)(4) of the
Nasdaq Listing Rules, awards under the Plan may only be made to an
employee who has not previously been an employee or member of the
Board or any parent or subsidiary, or following a bona fide period
of non-employment by the Company or a parent or
subsidiary, if he or she is granted such award in connection with
his or her commencement of employment with the Company or a
subsidiary and such grant is an inducement material to his or her
entering into employment with the Company or such
subsidiary.
The
foregoing descriptions of the Employment Agreement and the Plan do
not purport to be complete and is qualified in its entirety by
reference to the full text of the Employment Agreement and the Plan
(including the form of stock option agreement to be used under the
Plan), copies of which is filed as Exhibits 10.4 and 10.5,
respectively to this Current Report on Form 8-K and are
incorporated herein by reference.