Item
5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
Appointment
of New Directors
On
April 15, 2020, the Board of Directors (the “Board”) of Abeona Therapeutics Inc. (the “Company”) appointed
Brian J.G. Pereira, M.D. and Shawn Tomasello to serve on the Board effective immediately. Dr. Pereira will serve as a Class 3
director whose term will expire at the Company’s annual meeting of stockholders to be held in 2022, and Ms. Tomasello will
serve as a Class 2 director whose term will expire at the Company’s annual meeting of stockholders to be held in 2021. Effective
upon the appointment of Dr. Pereira and Ms. Tomasello to the Board, Mark J. Alvino and Richard Van Duyne resigned from the Board,
consistent with their previously-disclosed resignation letters. In addition, the Board has appointed Dr. Pereira as Executive
Chairman.
Dr.
Pereira is not expected to serve on any committees of the Board. Ms. Tomasello is expected to be appointed to the Nominating and
Governance Committee and Audit Committee of the Board.
Dr.
Pereira and Ms. Tomasello were each nominated pursuant to a letter agreement dated as of December 20, 2019 (the “Letter
Agreement”), between the Company and affiliates of Great Point Partners, LLC (“Great Point”), an existing stockholder.
The Letter Agreement granted Great Point the right to nominate two members to the Company’s Board.
The
Company’s former Executive Chairman, Steven H. Rouhandeh, resigned from that position effective upon Dr. Pereira’s
appointment, consistent with Mr. Rouhandeh’s separation agreement entered into on January 2, 2020. As previously disclosed,
Mr. Rouhandeh will continue to serve as a member of the Board.
As
a non-employee director, Ms. Tomasello will receive the same compensation as the other non-employee directors of the Company under
the standard arrangements and agreements described in the Company’s 2020 Annual Meeting Proxy Statement, including cash
compensation, prorated from Ms. Tomasello’s appointment, and equity awards.
The
Board has determined that Ms. Tomasello qualifies as an “independent director” as defined under Nasdaq Listing Rule
5605(a)(2). The Company is not aware of any transaction or relationship involving Dr. Pereira or Ms. Tomasello requiring disclosure
under Item 404(a) of Regulation S-K.
Brian
Pereira’s Offer Letter
Pursuant
to the offer letter dated April 15, 2020 (the “Offer Letter”), by and between Dr. Pereira and the Company, for his
services as Executive Chairman, Dr. Pereira will receive an annual retainer of $375,000, payable in accordance with regular payroll
practices of the Company. Dr. Pereira will also be entitled to an annual bonus opportunity, with a target range equal to 50% of
his annual retainer and prorated for any partial year of service. Any such bonus will be contingent on Dr. Pereira’s satisfaction
of objective and subjective performance goals established by the Board. Additionally, Dr. Pereira was granted options to purchase
930,000 shares of common stock of the Company. Such options were granted as an inducement grant under Nasdaq Listing Rule 5635(c)(4)
and outside of the Company’s 2015 Equity Incentive Plan, but will generally have terms and conditions consistent with those
set forth in that plan. The options have an exercise price of $2.50 per share, which is equal to the closing price of Abeona’s
common stock on the date of grant. The options have a 10-year term and will vest 25% on the one-year anniversary of the grant
date and in equal monthly installments over the following three years. Additionally, 100% of the options will be accelerated in
the event of certain qualifying terminations of Dr. Pereira’s relationship following a change of control of the Company.
As Executive Chairman, Dr. Pereira also will be eligible for a grant of annual stock options. Such grants shall be in the sole
discretion of the Board, but is anticipated to be approximately equal to 75% of the stock options granted to the Company’s
Chief Executive Officer.
Dr.
Pereira and the Company may each terminate the relationship for any reason upon written notice to the other party. If the relationship
is terminated for any reason, Dr. Pereira will be entitled to (i) payment of any retainer earned but unpaid through the Termination
Date (as such term is defined in the Offer Letter); (ii) payment of additional vested benefits, if any, in accordance with the
applicable terms of applicable Company arrangements; (iii) any unreimbursed expenses in accordance with the Company’s business
expense reimbursement policies; and (iv) if Dr. Pereira’s relationship is terminated by the Company without cause, Dr. Pereira
is entitled to receive as severance an amount equal to the retainer, payable over the one-year period following his termination.
The Company’s obligations in the preceding sentence are conditioned upon, among other things, Dr. Pereira’s execution
of a release of claims in favor of the Company and its affiliates. The foregoing summary of the Offer Letter does not purport
to be complete and is subject to, and qualified in its entirety by, the full text of the Offer Letter filed as Exhibit 10.1 herewith.
Appointment
of Principal Financial Officer
Also
on April 15, 2020, the Board appointed Edward Carr, the Company’s Vice President and Chief Accounting Officer, as Principal
Financial Officer. The Company is not aware of any transaction or relationship involving Mr. Carr requiring disclosure under Item
404(a) of Regulation S-K. No material contract, plan, or arrangement was entered into in connection with this appointment. Mr.
Carr’s compensation has not changed as a result of this appointment.