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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On May 10, 2021, Leanne M. Kelly was appointed
to serve as the Chief Financial Officer and principal financial and accounting officer of the Company. In connection with Ms. Kelly’s
appointment as principal financial and accounting officer, David Baker, who previously served as principal executive, financial and accounting
officer, resigned as principal financial and accounting officer, but will continue to serve as the principal executive officer of the
Company.
Prior to joining the Company, Ms. Kelly served
as the Controller and Executive Director, Global Financial Reporting at OptiNose, Inc. (NASDAQ: OPTN), a $50M revenue specialty pharmaceutical
company, from September 2016 to May 2021. From February 2016 to September 2016, she served as a senior manager at Genova Group, a financial
advisory and support consulting firm. From September 2013 to January 2016, she served as Senior Vice President of Finance of Flower Orthopedics
Corporation, a private medical device company. She has also served as controller of Iroko Pharmaceuticals, LLC, and Senior Vice President,
Chief Financial Officer and Secretary of Genaera Corporation. Ms. Kelly began her career as an auditor with KPMG LLP. While serving in
those roles, Ms. Kelly's work included multi-million dollar financings, M&A diligence and support. She also has experience in financial
oversight, internal and external financial reporting, forecasting, and financial analysis, as well as investor and public relations.
In connection with Ms. Kelly’s appointment,
the Company entered into an employment agreement with Ms. Kelly (the “Kelly Agreement”). The Kelly Agreement provides
for an initial base annual salary of $275,000 and a target bonus opportunity equal to 35% of her base salary.
The Kelly Agreement also provides for a stock
option grant covering 100,000 common shares of the Company (the “Stock Option”). The Stock Option shall have an exercise
price per share equal to the fair market value of a share of the Company’s common stock on the date of grant and shall vest in installments
and become exercisable as follows: (i) 70% of the shares underlying the Stock Option shall vest as follows: (x) 17,500 option shares on
the first anniversary of her start date, and (y) the remaining 52,500 option shares in equal installments on a quarterly basis for the
next three years, in each case subject to continued employment, and (ii) 30% of the shares underlying the Stock Option shall vest as follows:
(x) 15,000 option shares on the date the Company submits a New Drug Application (“NDA”) filing for ADAIR with the U.S. Food
& Drug Administration, and (y) 15,000 option shares on the date when the U.S. Food & Drug Administration approves the NDA, provided
that she is employed by the Company at the time the applicable performance objective is achieved.
The Kelly Agreement provides that if she is terminated
by the Company other than for cause, or she resigns for good reason, in either case not in connection with a change in control, she will
receive:
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continued base salary for a period of 9 months, plus a pro-rated bonus for
the year of termination, based on actual performance results for the entire year, and provided she was employed for at least six months
during that year; and
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if she elects to continue receiving group health insurance
coverage pursuant to COBRA, subsidized premiums for COBRA continuation coverage for a period of 9 months (or such earlier date that she
obtains alternative coverage), such that she will continue to pay the premium cost for active employees who receive the same type of coverage
during that period.
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If she is terminated by the Company other than
for cause, or she resigns for good reason, in either case within the one-year period commencing on a change in control, she will receive:
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continued base salary for a period of 12 months,
plus a lump sum payment equal to 100% of her target bonus, without proration, for the fiscal year of termination;
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if she elects to continue receiving group health
insurance coverage pursuant to COBRA, subsidized premiums for COBRA continuation coverage for a period of 12 months (or such earlier date
that she obtains alternative coverage), such that she will continue to pay the premium cost for active employees who receive the same
type of coverage during that period; and
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accelerated vesting of all outstanding stock-based
awards held by the executive as of the date of termination, with any performance awards deemed satisfied at the “target” performance
level, and any stock options remaining outstanding for their full term.
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In exchange for the severance benefits described
above, Ms. Kelly must comply with certain confidentiality, non-competition and non-solicitation provisions, return all company property,
and sign a release of claims in favor of the Company.
The Company expects to include the Kelly Agreement
as an exhibit to a future periodic report, to be filed with the U.S. Securities and Exchange Commission. The foregoing description does
not constitute a complete summary of the terms of the Kelly Agreement and is qualified in its entirety by reference to the full text of
the Kelly Agreement. All capitalized terms used but not defined herein have the meanings set forth in the Kelly Agreement.
On May 11, 2021, the Company issued a press release
announcing Ms. Kelly’s appointment as Chief Financial Officer, a copy of which is attached to this Current Report on Form 8-K as
Exhibit 99.2.