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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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Resignation of Prior Directors
On May 3, 2019, in accordance with the Merger Agreement, immediately prior to the Effective Time, the Prior Directors resigned from our board of directors and he respective committees of the board of directors on which they served, which resignations were not the result of any disagreements with us relating to our operations, policies or practices.
Resignation of
Executive Officer
On May 3, 2019, immediately prior to the Effective Time, David Johnson, our Chief Executive Officer, resigned as an executive officer.
Appointment of Executive Officers
On May 3, 2019, following the Effective Time of the Merger, our board of directors appointed Rick Orr as our Chief Executive Officer (principal executive and financial officer), Donald Manning, M.D., Ph.D., as our Chief Medical Officer, and Julien Mamet, Ph.D. as our Chief Scientific Officer. There are no family relationships among any of our directors and executive officers. Biographical information regarding each of Mr. Orr, Dr. Manning and Dr. Mamet is included in our Definitive Proxy Statement on Schedule 14A, filed with the SEC on January 24, 2019, or the Proxy Statement, and is incorporated herein by reference.
Indemnity Agreements
Each of appointed executive officer and member of the board of directors intends to enter into our standard form of indemnity agreement following the Merger, which form is filed as
Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-36278), filed with the SEC on January 5, 2011 and is incorporated herein by reference herein
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Appointment of Board of Directors
and Committee Assignments
The information set forth in Item 5.01 of this Current Report on Form 8-K with respect to the appointment of directors to our board of directors pursuant to and in accordance with the Merger Agreement is incorporated by reference into this Item 5.02. Biographical information regarding each of the newly appointed directors is included in our Proxy Statement and is incorporated herein by reference.
There is no arrangement or understanding among Messrs. Abel, Johnson, Legault, Ruth, Podlesak or Weber and any other person pursuant to which such person was selected as a director. We expect to review our non-employee director cash and equity compensation policies and such policies are subject to change.
Audit Committee
On May 3, 2019, Messrs. Abel, Podlesak and Legault were appointed to the audit committee of our board of directors, and Mr. Abel was appointed as the chairman of the audit committee.
Compensation Committee
On May 3, 2019, Messrs. Podlesak and Mr. Weber were appointed to the compensation committee of our board of directors, and Mr. Podlesak was appointed as the chairman of the compensation committee.
Nominating and Corporate Governance Committee
On May 3, 2019, Messrs. Abel, Johnson and Podlesak were appointed to the nominating and corporate governance committee of our board of directors, and Mr. Podlesak was appointed as the chairman of the nominating and corporate governance committee.
(e)
Offer Letters
Rick Orr
In October 2010, we entered into an offer letter with Mr. Orr, our Chief Executive Officer. For 2019, Mr. Orr will receive an annual base salary of $443,913 with an annual target bonus of 40% of such base salary, payable based on the achievement of certain corporate and individual performance goals to be established by our Compensation Committee. Upon an involuntary termination without cause or termination due to constructive termination, Mr. Orr will be entitled to receive a lump sum cash payment equal to 12 months of his annual base salary and an amount equal to 100% of his most recently paid bonus. In addition, Mr. Orr will be eligible for 12 months of continued company paid health insurance benefits (assuming he timely elects continued coverage under COBRA). All such severance benefits are subject to Mr. Orr signing a general release in our favor of all known and unknown claims in substantially the form provided in his offer letter.
Donald Manning
, M.D.
In January 2012, we entered into an offer letter with Dr. Manning, our Chief Medical Officer. For 2019, Dr. Manning will receive an annual base salary of $368,399 with an annual target bonus of 35% of such base salary, payable based on the achievement of certain corporate and individual performance goals to be established by our Compensation Committee. Upon an involuntary termination without cause or termination due to constructive termination, within one month prior to or 13 months following a change in control, Dr. Manning will be entitled to receive a lump sum cash payment equal to 12 months of his annual base salary. In addition, Dr. Manning will be eligible for 12 months of continued company paid health insurance benefits (assuming he timely elects continued coverage under COBRA) and all unvested stock options or restricted shares of common stock held by Dr. Manning will immediately vest in full. Upon an involuntary termination without cause or termination due to constructive termination, not within one month prior to or 13 months following a change in control, Dr. Manning will be entitled to receive a lump sum cash payment equal to 9 months of his annual base salary. In addition, Dr. Manning will be eligible for 9 months of company paid continued health insurance benefits (assuming he timely elects continued coverage under COBRA). All such severance benefits are subject to Dr. Manning signing a general release in our favor of all known and unknown claims in substantially the form provided in his offer letter.
Julien Mamet
, Ph.D.
In September 2011, we entered into an offer letter with Dr. Mamet, our Chief Scientific Officer. For 2019, Dr. Mamet will receive an annual base salary of $348,790 with an annual target bonus of 35% of such base salary, payable based on the achievement of certain corporate and individual performance goals to be established by our Compensation Committee. Upon an involuntary termination without cause or termination due to constructive termination, Dr. Mamet will be entitled to receive a lump sum cash payment equal to 12 months of his annual base salary. In addition, Dr. Mamet will be eligible for 12 months of continued company paid health insurance benefits (assuming he timely elects continued coverage under COBRA). All such severance benefits are subject to Dr. Mamet signing a general release in our favor of all known and unknown claims in substantially the form provided in his offer letter.
The descriptions of the offer letters included herein are not complete and are subject to and qualified in their entirety by reference to the offer letters, copies of which are attached as Exhibits 10.3, 10.4 and 10.5 hereto and are incorporated herein by reference.
Assumption of Private Adynxx Plan
and Outstanding Stock Options
On May 3, 2019, pursuant to the Merger Agreement, we assumed the Private Adynxx Plan and all outstanding stock options. The Private Adynxx Plan was adopted by the board of directors of Private Adynxx in December 2010 and approved by Private Adynxx’s stockholders in December 2010. The Private Adynxx Plan provides for the granting of stock options to employees and consultants of Private Adynxx. Options granted under the Private Adynxx Plan may be either incentive stock options, or ISOs, or nonqualified stock options, or NSOs. ISOs may be granted only to Adynxx employees (including officers and directors who are also employees). NSOs may be granted to Private Adynxx employees and consultants. Options under the Private Adynxx Plan may be granted for periods of up to 10 years and at prices no less than 100% of the estimated fair value of the underlying shares of common stock on the date of grant as determined by the Private Adynxx board of directors; provided, however, that the exercise price of an ISO and NSO granted to a 10% shareholder shall not be less than 110% of the estimated fair value of the shares on the date of grant. The Private Adynxx Plan requires that options be exercised no later than 10 years after the grant.
The disclosure set forth above under Item 2.01 regarding our assumption of outstanding stock options issued by Private Adynxx as of the Effective Time, as well as assumption of the Private Adynxx Plan, is incorporated by reference into this Item 5.02.
The description of the Private Adynxx Plan included herein is not complete and are subject to and qualified in its entirety by reference to Private Adynxx Plan and form of stock option grant notice and notice of exercise which are attached as Exhibits 10.7 and 10.8 hereto, respectively and are incorporated herein by reference.
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Item 5.03
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Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
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Certificate of Amendment to Certificate of Incorporation
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Reverse Stock Split
At the special meeting of our stockholders held on March 8, 2019, or the Special Meeting, our stockholders approved the amendment to our certificate of incorporation to effect a reverse stock split of our common stock within a range of 1-for-2 to 1-for-20, or the Reverse Stock Split Proposal. Following the approval of the Reverse Stock Split Proposal at the Special Meeting, we filed on May 3, 2019 a certificate of amendment to our certificate of incorporation to effect the 1-for-6 Reverse Stock Split of our common stock to be effective as of May 3, 2019.
As a result of the Reverse Stock Split, the number of shares of our common stock issued and outstanding immediately prior to the Reverse Stock Split was reduced into a smaller number of shares, such that every six shares of our common stock held by a stockholder immediately prior to the Reverse Stock Split was combined and reclassified into one share of our common stock. Immediately following the Reverse Stock Split, and giving effect to the shares issued in the Merger, there are approximately 5.8 million shares of our common stock issued and outstanding. Also as a result of the Reverse Stock Split, the number of shares underlying outstanding options (as further described below), warrants and any securities issuable upon conversion of any convertible notes issued by us prior to the Effective Time will be subject to similar ratable adjustments, along with the applicable exercise price (if any).
No fractional shares were issued in connection with the Reverse Stock Split. In accordance with the amendment to our certificate of incorporation, any fractional shares resulting from the Reverse Stock Split was rounded down to the nearest whole number and each stockholder who would otherwise be entitled to a fraction of a share of common stock upon the Reverse Stock Split (after aggregating all fractions of a share to which such stockholder would otherwise be entitled) shall, in lieu thereof, be entitled to receive a cash payment, rounded to the nearest whole cent, in an amount equal to the fraction to which the stockholder would otherwise be entitled multiplied by the average last reported sales price of our common stock on The Nasdaq Capital Market during the 10 consecutive trading days ending on the last trading day prior to the Effective Time.
At the Effective Time, each outstanding option, whether or not vested, to purchase shares of Private Adynxx’s common stock that remained unexercised prior to the Effective Time was converted into and became an option to purchase our common stock, and we assumed the Private Adynxx Plan as identified in the Merger Agreement, or the 2010 Plan, and each such option in accordance with its terms. We reserved for issuance under the Private Adynxx Plan a number of shares of common stock equal to the number of our shares of common stock so reserved by Private Adynxx (adjusted for the exchange ratio set forth in the Merger Agreement and the Reverse Stock Split ratio) immediately prior to the Effective Time. All rights with respect to each Private Adynxx option were assumed in accordance with its terms. Accordingly, from and after the Effective Time of the Merger, each Private Adynxx option we assumed may be exercised solely for our shares of common stock.
The number of shares of our common stock subject to each outstanding Private Adynxx option we assumed was determined by multiplying (A) the number of shares of Private Adynxx common stock that were subject to such option, as in effect immediately prior to the Effective Time, by (B) the exchange rate of 0.0359, rounding the resulting number down to the nearest whole number of shares of our common stock.
The per share exercise price for the common stock issuable upon exercise of each Private Adynxx option we assumed was determined by dividing (A) the per share exercise price of Adynxx common stock subject to such option, as in effect immediately prior to the Effective Time, by (B) the exchange rate of 0.0359, rounding the resulting exercise price up to the nearest whole cent.
Any restriction (e.g., vesting condition) on the exercise of any Private Adynxx option we assumed will continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Private Adynxx option shall, subject to certain exceptions set forth in the Merger Agreement, otherwise remain unchanged.
Certificate of Amendment to Certificate of Incorporation
– Name Change
On May 3, 2019, in connection with, and immediately following the Merger, we filed an amendment to the certificate of incorporation with the Secretary of State of the State of Delaware to change our name from “Alliqua BioMedical, Inc.” to “Adynxx, Inc.” which became effective on May 3, 2019.
The foregoing descriptions of the certificate of incorporation and the amendments to the certificate of incorporation are not complete and are subject to and qualified in their entirety by reference to the certificates of amendment, copies of which are attached as Exhibits 3.1 and 3.2 hereto and incorporated herein by reference.
Form of Stock Certificate
On May 3, 2019, we adopted a new form of stock certificate representing our common stock on and after the Effective Time to reflect the name change and updated signatories. The form of stock certificate is attached hereto as Exhibit 4.1 and is incorporated herein by reference.