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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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On April 27, 2020, we announced that Cheryl R. Blanchard, Ph.D.,
had been appointed as our President and Chief Executive Officer, effective April 26, 2020. Dr. Blanchard had served as our interim
Chief Executive Officer since February 12, 2020 and as a member of the Board of Directors since August 2018.
Employment Agreement with Cheryl Blanchard
On April 23, 2020, we entered into an employment
agreement with Cheryl R. Blanchard with respect to the terms of her employment as our President and Chief Executive Officer effective
April 26, 2020. Dr. Blanchard had been serving as our interim Chief Executive Officer since February 12, 2020. The terms of the
employment agreement were approved by our Compensation Committee, which consists of four disinterested members of the Board of
Directors, and the compensation terms were established in part based upon advice of Radford, an Aon Hewitt Company, the Compensation
Committee’s independent compensation consultant.
The employment agreement provides for our
at-will employment of Dr. Blanchard as our President and Chief Executive Officer for an initial term commencing April 26, 2020
and expiring December 31, 2021. The term will extend automatically for additional one-year periods, unless either party delivers,
by no later than the immediately preceding September 30, a written notice to the other party that the term will not be extended.
Under the terms of the employment agreement,
we will pay Dr. Blanchard an annual base salary of $625,000 and a target annual bonus opportunity equal to 85% of annual base salary,
which terms are subject to annual review by the Compensation Committee.
In accordance with the terms of the employment
agreement, we granted to Dr. Blanchard, effective as of April 26, 2020, equity awards consisting of: (a) a time-based restricted
stock unit grant covering 73,726 shares, eligible to vest over three years; (b) a performance-based restricted stock unit grant
covering 80,620 shares at target, eligible to vest as to 150% of the target shares on February 25, 2023 pursuant to our 2020 performance
measures for performance-based restricted stock units; (c) a time-based stock option grant covering 104,638 shares, eligible to
vest over three years; and (d) a performance-based stock option grant covering 104,638 shares at target, eligible to vest as to
150% of the target shares based on our total shareholder return relative to an identified comparison group of companies through
December 31, 2022. In each case, vesting generally requires Dr. Blanchard’s continued employment through the relevant vesting
date.
Under the employment agreement, if Dr.
Blanchard’s employment is terminated due to death, disability (as defined in the employment agreement), by us without “cause”
(as defined in the employment agreement and including our nonrenewal of the term of the employment agreement), or by Dr. Blanchard
for “good reason” (as defined in the employment agreement), Dr. Blanchard would become entitled to (i) 18 months of
base salary, (ii) continued payment of company premiums under our benefit plans for 18 months and (iii) if such termination
is not due to disability and occurs prior to December 31, 2021, vesting of the time-based restricted stock unit grant and the time-based
option grant described above would accelerate in part such that at least 56.1% of the total shares initially covered by each of
such awards shall have vested. Notwithstanding the foregoing, if such a termination without cause or for good reason occurs within
3 months prior to or 12 months after a change in control (as defined in our 2017 Omnibus Incentive Plan), Dr. Blanchard would
become entitled to (i) twice the sum of her base salary and her target annual bonus, (ii) continued payment of company premiums
under our benefit plans for 18 months and (iii) vesting in full of her equity awards based on assumptions set forth in the employment
agreement. Any such severance benefits under the employment agreement are contingent on Dr. Blanchard entering into and not revoking
a general release of claims in favor of our company, affiliates and service providers.
The employment agreement provides for (i)
reimbursement of reasonable business expenses, (ii) reimbursement of up to $10,000 in legal fees incurred by Dr. Blanchard in connection
with the employment agreement, (iii) participation in our benefit plans and (iv) thirty paid vacation days per year.
Finally, the employment agreement contains
customary covenants related to non-competition and non-solicitation for twelve months following termination of employment, as well
as customary covenants related to confidentiality, inventions and intellectual property rights.
The foregoing description of our employment
agreement with Dr. Blanchard does not purport to be complete and is subject to, and qualified in its entirety by, the full text
of the agreement, which is included as Exhibit 10.1 to this report and is incorporated into this Item 5.02 by reference.
Background of Cheryl Blanchard
Cheryl R. Blanchard has been one of our directors since August 2018
and served as interim Chief Executive Officer from February 12, 2020 through April 25, 2020. Before assuming the role of interim
Chief Executive Officer, she was serving as a member of the Compensation Committee and the Governance and Nominating Committee
of the Board of Directors.
Dr. Blanchard was Principal at Blanchard Consulting, LLC, a provider
of scientific, regulatory, and business strategy consulting services to medical device companies and private equity clients, from
2012 until April 2020. She was President and Chief Executive Officer of Microchips Biotech, Inc., a venture-backed biotechnology
company developing regenerative medicine and drug delivery products, from 2014 until its sale to Daré Bioscience, Inc. in
November 2019. She held various offices, including Senior Vice President, Chief Scientific Officer, and general manager of Zimmer
Biologics, of Zimmer, Inc., a medical device company focused on musculoskeletal products, from 2000 to 2012.
Dr. Blanchard has served as a director of Neuronetics (NASDAQ: STIM),
a commercial stage medical technology company focused on products for psychiatric disorders, since February 2019 and a director
of Daré Bioscience, Inc. (NASDAQ: DARE), a clinical-stage biopharmaceutical company committed to the advancement of innovative
products for women's health, since November 2019. She received a Ph.D. and M.S. in Materials Science and Engineering from the University
of Texas at Austin and a B.S. in Ceramic Engineering from Alfred University. She is 55 years old.