Item
5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
Adhera
Therapeutics, Inc. (the “Company”) has entered into an employment agreement with Rhonda Stanley (the “Employment
Agreement”) pursuant to which Ms. Stanley shall serve as the Senior Vice President of Finance and Accounting of the Company
beginning on November 1, 2019 (the “Commencement Date”).
Ms.
Stanley, CPA, is an accomplished financial professional with over a decade of financial leadership experience. She has broad finance
and accounting experience including initial public offerings, mergers and acquisitions, reverse mergers, operations and management
for life science and biotechnology companies. Ms. Stanley has served in a consulting role as the Senior Vice President of Finance
& Accounting of the Company since May 2019. Prior to that, she served as Chief Financial Officer of Asklepios Biopharmaceuticals,
Inc. from May 2017 to 2018, as Chief Financial Officer of Bamboo Therapeutics Inc. (a privately held gene therapy company that
was sold to Pfizer in 2016) from January 2016 to May 2017, as Vice President of Finance and Corporate Controller
of Nephrogenix Inc. (NASDAQ: NRX) from 2014 to 2015, and as Corporate Controller and Chief Accounting Officer of Ocera Therapeutics
Inc. from 2010 to 2014. Ms. Stanley earned an M.B.A. from Embry Riddle University, an Associate of Applied Science degree in Nursing
from Sandhills Community College, and a B.S. in Accounting from Bradley University. Ms. Stanley, age 59, is a Certified Public
Accountant who also served as a Captain in the U.S. Army Finance Corp.
Ms.
Stanley has no familial relationships with any executive officer or director of the Company. There have been no transactions in
which the Company has participated and in which Ms. Stanley had a direct or indirect material interest that would be required
to be disclosed under Item 404(a) of Regulation S-K.
Ms.
Stanley’s base salary under the Employment Agreement, which provides for a three year term, is initially $285,000 per year,
subject to review and adjustment by the Company from time to time.
Ms.
Stanley is eligible for an annual discretionary cash bonus with a target of 35% of her base salary, subject to her achievement
of any applicable performance targets and goals. If the Company determines that is has achieved the Revenue Target (as described
below), then the Company shall pay to Ms. Stanley an amount equal to $15,000 (pro rated for partial fiscal years) in 2020 within
30 days of the Company’s public reporting of its 2019 final results. If the Company determines that it has achieved the
Stock Price Target (as described below), then the Company shall pay to Ms. Stanley an amount equal to $15,000 (pro rated for partial
fiscal years) in 2020.
Pursuant
to the Employment Agreement, the Company granted to Ms. Stanley options to purchase up to 350,000 shares of the common stock of
the Company, which options shall vest as follows: (i) options to purchase up to 75,000 shares of common stock shall vest on the
grant date of the options; (ii) options to purchase up to 75,000 shares of common stock (for an aggregate of 225,000 shares of
common stock) shall vest on each of the first, second and third anniversary of the grant date; (iii) options to purchase up to
25,000 shares of common stock shall vest on the date, if any, that the Company determines that the “Revenue Target”
(as described below) is achieved; and (iv) options to purchase up to 25,000 shares of common stock shall vest on the date, if
any, that the Company determines that the “Stock Price Target” (as described below) is achieved.
The
Revenue Target requires that the Company’s gross revenue (i.e., the total amount of sales recognized by Company from October
1, 2019 through December 31, 2019 (such period, the “Prorated 2019 Fiscal Year”), less the sum of any returns, rebates,
chargebacks and distribution discounts) for the Prorated 2019 Fiscal Year equals or exceeds $0.4 million, as determined by the
Company’s auditors. The Stock Price Target requires that the daily volume weighted average price of the Company’s
common stock is not less than $2.00 per share for a 60 consecutive day period beginning on any day within the Prorated 2019 Fiscal
Year.
Ms.
Stanley is eligible to participate in the Company’s other employee benefit plans as in effect from time to time on the same
basis as are generally made available to other executives of the Company.
In
the event that Ms. Stanley’s employment is terminated by the Company without “Cause” (as defined in the Employment
Agreement) or by Ms. Stanley with “Good Reason” (as defined in the Employment Agreement), subject to Ms. Stanley entering
into and not revoking a separation agreement in a form acceptable to the Company, Ms. Stanley will be eligible to receive: (A)
accrued benefits under the Employment Agreement through the termination date, including base salary and unreimbursed business
expenses (the “Accrued Amounts”); and (B) severance payments equal to her then-current base salary for a period of
one (1) year following the termination date payable in accordance with the Company’s normal payroll practices.
In
addition to the Accrued Amounts, and subject to Ms. Stanley entering into and not revoking a separation agreement in a form acceptable
to the Company, if Ms. Stanley’s employment terminates at any time during the one (1) year period following the occurrence
of a “Change of Control” (as defined in the Employment Agreement): (A) other than as a result of a termination by
the Company (whether with or without Cause) or a termination by Ms. Stanley with Good Reason, Ms. Stanley shall be entitled to
continue to receive her then-current base salary during the period beginning on the effective date of the termination of Ms. Stanley’s
employment and ending on the one (1) year anniversary of the consummation of the Change of Control, payable in accordance with
the Company’s normal payroll practices; and (B) other than as a result of a termination by the Company for Cause, Ms. Stanley
shall immediately vest in all of the unvested options granted to Ms. Stanley under the Employment Agreement that would have vested
prior to the one (1) year anniversary of the consummation of the Change of Control.
Ms.
Stanley shall also be entitled to continue to receive her then-current base salary for a period of up to twelve (12) months following
the expiration of the term of the Agreement if the Company notifies Ms. Stanley, prior to the expiration of the term of the Agreement,
of its intention to not renew the term of the Agreement.
Subject
to any termination, Ms. Stanley will be subject to a confidentiality covenant, a six month non-competition covenant and a 24-month
non-solicitation covenant.
The
foregoing summary of the material terms of Ms. Stanley’s employment agreement is qualified in its entirety by reference
to the complete text of the employment agreement, a copy of which is filed as Exhibit 10.1 hereto and is incorporated herein by
reference.