Item 5.02 Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Resignation of Certain Directors and Officers
Effective upon the consummation of the Transaction, and
pursuant to the terms of the Implementation Agreement, (a) Evan Jones resigned from his positions as the Company’s
Chief Executive Officer (“CEO”) and Chairman of the Board of Directors of the Company (the “Board”),
and (b) Tina Nova, Ph.D. and Misti Ushio, Ph.D. resigned from their position as members of the Board. Mr. Jones remains as a
director of the Company, as does Don Elsey, the chair of the Audit Committee of the Board.
Mr. Jones’ resignation as CEO of
the Company, effective April 1, 2020, was a resignation for “Good Reason” as defined in his Executive Change in Control
and Severance Benefits Agreement, dated September 24, 2018 (the “Severance Agreement”). The Severance Agreement is
incorporated by reference as Exhibit 10.3 to this Current Report on Form 8-K. Under the Severance Agreement, Mr. Jones will receive,
as severance, an amount equal to one-twelfth of his annual base salary for six months. In addition, the Company and Mr. Jones entered
into a Transition Agreement and General Release (the “Transition Agreement”), pursuant to which Mr. Jones will provide
transition and integration assistance services to the Company. Mr. Jones will receive a consulting fee of approximately $23,000
per month in exchange for the services being provided under the Transition Agreement. Finally, if Mr. Jones continues to provide
services to the Company until October 1, 2020 he will be paid his accrued but unpaid 2018 incentive bonus of $75,000. Mr. Jones
has provided a general release of claims against the Company in the Transition Agreement as required by the Severance Agreement.
The foregoing summary of the Transition Agreement is
not complete and is qualified in its entirety by reference to the Transition Agreement, a copy of which is attached to
this Current Report on Form 8-K as Exhibit 10.4 and incorporated herein by reference.
Board of Directors
In connection with the closing of the Transaction and
pursuant to the Implementation Agreement, effective as of April 1, 2020, Mario Crovetto, Prabhavathi Fernandes, Ph.D.,
William E. Rhodes, III, and Oliver Schacht, Ph.D. were appointed to the Board, in addition to Mr. Jones and R. Donald Elsey,
who are remaining on the Board. Mr. Rhodes will serve as the non-executive Chairman of the Board. None of Mr. Crovetto, Dr.
Fernandes, or Mr. Rhodes are a party to any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
The Board has determined that each of Mr. Rhodes, Dr. Fernandes, Mr. Crovetto and Mr. Elsey are independent under the
applicable standards of the Securities and Exchange Commission (“SEC”) and Nasdaq. Neither of Mr. Jones or Mr. Schacht is an
independent member of the Board.
The Company will enter into its standard form of Indemnification
Agreement with each of Mr. Schacht, Mr. Crovetto, Dr. Fernandes and Mr. Rhodes, which provides for indemnification of the indemnitee
to the fullest extent allowed by Delaware law. The form of Indemnification Agreement is incorporated by reference as Exhibit 10.5
to this Current Report on Form 8-K.
The biographies of the newly appointed independent directors
are set forth below. See below for the biography of Mr. Schacht.
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Mr. Crovetto served as the chairman of the Audit Committee of Curetis N.V. since its initial public offering
(“IPO”) in 2015 until April 1, 2020. Mr. Crovetto has been working as an independent advisor on M&A and
corporate projects, notably integrations, divestments and financings since 2011. From 1999 to 2011, he was the Chief
Financial Officer (“CFO”) of Eurand NV (Specialty Pharmaceuticals), which he took public to Nasdaq in 2007. From 1990 to 1999, he
held various senior business positions at Recordati (Pharmaceuticals), including VP of Corporate Development, Division
Manager of Diagnostics and Chief Financial Officer. Prior to that, he held various positions at Montedison (Specialty
Chemicals), Digital Equipment Corporation, Mobil and SIAR (Management Consulting). Mr. Crovetto holds a BSc in Economics from
the Università Cattolica del Sacro Cuore, Milan and a Master’s degree in Business Economics from Harvard
University, Cambridge, MA.
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Dr. Fernandes served as a member of the Curetis N.V. Supervisory Board from 2016 until April 1, 2020. Until her
retirement in December 2016, she was President and CEO and a member of the board of directors of Cempra Pharmaceuticals, a
company she founded. In 2012, she led the IPO and listing on Nasdaq for Cempra. Her career of more than four decades has
focused on anti-infectives, first on clinical microbiology and infectious diseases and subsequently on pharmaceutical
discovery and development. Prior to Cempra, Dr. Fernandes held executive leadership positions at pharmaceutical corporations
including Bristol-Myers Squibb Pharmaceutical Research Institute, Abbott Laboratories and The Squibb Institute for Medical
Research. She serves on the editorial board of several journals and she has authored numerous publications and numerous
reviews and book chapters and serves as an advisor to three U.S. based biotechnology companies. In 2017, she was appointed to
the National Biodefense Science Board (NBSB) in the Health and Human Services department of the U.S. government and in 2018
she was appointed its Chairperson. In 2018, she was appointed to the Scientific Advisory Board of Global Antibiotic Research
& Development Partnership (GARDP), a joint initiative of DNDi and the WHO, which aims to develop and deliver new
treatments for bacterial infections, and made Chair of it in November 2019. Finally, Dr. Fernandes joined the Aelin
Therapeutics Board in Leven, Belgium, a company founded on protein aggregation technology that discovers and develops
oncology and antibiotic products. Dr. Fernandes obtained her MSc in India, and did a Ph.D. and post-doctoral fellowship in
bacterial cell membranes and clinical and public health microbiology.
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Mr. Rhodes served as the chairman of the Supervisory Board of Curetis N.V. since its IPO in 2015 until April 1, 2020. Mr. Rhodes
is a healthcare executive with more than 30 years of experience in the healthcare industry. During his 14-year career at Becton,
Dickinson and Company (BD, 1998-2012), Mr. Rhodes held several senior leadership positions, including roles as Worldwide President
of BD Biosciences (2009-2011), a greater than $1 billion revenue segment of BD. He was also an Executive Officer of BD, and was
responsible for corporate strategy and merger and acquisition functions for all of BD’s businesses. Furthermore, he founded
BD Ventures, the venture capital arm of Becton, Dickinson and Co. Prior to Becton Dickinson, he served in senior business development
positions at Johnson & Johnson and Pfizer Inc. Mr. Rhodes also served as president at The William-James Co. and has a track
record of over 20 successful acquisitions and divestitures. He was director of Andor Technologies plc (2013-2014), and has served
on the boards of Novocell Inc., Conticare Medical, Vitagen Inc., Cellector Inc. and the California Healthcare Institute, BIO, the
San Jose State University Research Foundation and Silicon Valley Leadership Group. He currently serves as director of Third Day
Advisors LLC (since 2013), Omega Group plc (since 2013), Paramit Corporation LLC (since 2014), and as a member of the Advisory
Board of Cayuga Venture Fund (since 2013). Mr. Rhodes has a number of advisory roles with Cornell University, including serving
on the Advisory Councils of the McGovern Family Center for Life Sciences (since 2013) and Entrepreneurship at Cornell (since 2015).
He also was appointed to the Cornell College of Agriculture and Life Sciences Dean’s Council (2016) and served as a Venture
Consultant for Cornell’s Blackstone Launchpad (2016). Moreover, he is on the Editorial Board of the journal Clinical and
Translational Medicine. Mr. Rhodes holds a Master’s degree in International Business from Seton Hall University and a BSc
degree from Cornell University. He originated eleven U.S. patents for novel topical drugs and has been a lecturer on entrepreneurship
in life sciences, innovation technology and M&A at Cornell University, Seton Hall University and San Jose State University.
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Committees of the Board of Directors
Effective as of April 1, 2020, the Committees of the Board of Directors
will consist of:
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Committee:
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Members
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Audit Committee
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R. Donald Elsey, Chair
Mario Crovetto
Prabhavathi Fernandes
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Compensation Committee
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William E. Rhodes, III, Chair
Mario Crovetto
Prabhavathi Fernandes
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Compliance Committee
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Evan Jones, Chair
R. Donald Elsey
Prabhavathi Fernandes
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Appointment of Certain Officers
Effective upon the consummation of the Transaction, and
pursuant to the terms of the Implementation Agreement, Oliver Schacht, Ph.D., the former CEO of Seller, was
appointed as the CEO of the Company, and Johannes Bacher was appointed as the Chief Operating
Officer (“COO”) of the Company.
Oliver Schacht, Ph.D., 49, is a corporate finance
professional and expert in the molecular diagnostics industry. He has been CEO of Curetis N.V. since April 2011 and prior to that
was a Supervisory Board Member of Curetis AG from mid-2010 until the end of the first quarter of 2011. He was a co-founder and
CFO of Epigenomics AG (Berlin, Germany) and the CEO of Epigenomics Inc. (Seattle, USA). Mr. Schacht has extensive experience in
developing and implementing commercial strategies and financing measures (including two initial public offerings), as well as in
corporate finance, M&A transactions and alliance negotiations. During his time at Epigenomics AG (1999-2011), he headed all
central business functions, including corporate finance, investor relations, PR, marketing and business development at the Berlin
headquarters. Mr. Schacht also serves on the board of BIO Deutschland e.V. as President and previously as treasurer. Mr. Schacht
obtained his Diploma in European Business Administration at the European School of Business in Reutlingen and London in 1994 as
well as a Master’s degree and a Ph.D. at the University of Cambridge (UK). During his time at Mercer Management Consulting
(now Oliver Wyman) from 1995 to 1999, he worked on projects in M&A, growth strategies and re-organization in the pharmaceutical,
biotechnology and other industries. He has co-founded several start-up companies in biotech, IT and education in Europe and the
United States. Mr. Schacht has no family relationship with any director or executive officer of the Company, and has no direct
or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Johannes Bacher, 51, has over 20 years of R&D
and managerial experience along with extensive expertise in research & development, international project management, finance,
human resources and legal affairs. At Curetis, he managed all R&D functions in engineering, software, in vitro diagnostics
development, innovation & technology, intellectual property and clinical trial operations. Since co-founding Curetis in 2007,
he has continuously served as Managing Director / Director Operations (Curetis AG, since 2008) and COO (Curetis
AG, since 2012; Curetis GmbH and publicly listed Curetis N.V. since 2015). Mr. Bacher has a degree in Electrical Engineering from
the University of Stuttgart, Germany, and has previously held positions with Hewlett-Packard, Agilent Technologies and Philips
Medical Systems. Mr. Bacher has no family relationship with any director or executive officer of the Company, and has no direct
or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
In connection with his appointment, on April 2, 2020, the
Company entered into an Amended and Restated Management Services Agreement (the “Management Agreement”) with Mr. Schacht,
pursuant to which he will serve as the CEO of the Company. The Management Agreement provides that Mr. Schacht
will receive a management fee of €240,000 (Euros) per year and will be eligible to receive an annual bonus of up to fifty
percent (50%) of the management fee. The annual bonus opportunity will be based on key performance metrics established by the
Board and the Compensation Committee. Mr. Schacht will also be entitled to participate in the Company’s 2015 Equity Incentive
Plan, under which awards will be made consistent with the timing made to the Company’s other officers.
The Management Agreement will automatically terminate upon
the granting of Mr. Schacht’s L1 visa application and the entry by the Company and Mr. Schacht into an employment agreement
at such time. In connection with Mr. Schacht’s relocation to the United States from Germany, the Company will reimburse Mr.
Schacht for certain expenses up to $60,000, including airfare for Mr. Schacht and his family, moving expenses, incidentals and
the cost of temporary housing for up to five months.
Under the Management Agreement, if Mr. Schacht’s position
as CEO of the Company is terminated by the Company other than for Cause (as defined in the Management Agreement),
or by Mr. Schact for Good Reason (as defined in the Management Agreement), subject to Mr. Schacht’s execution of a general
release of claims in favor of the Company and continued compliance with the restrictive covenants set forth in therein, Mr. Schacht
will receive a payment equal to six (6) months of his management fee under the Management Agreement at the time of termination.
In addition, if the Management Agreement is terminated without cause by the Company or any successor, or by Mr. Schacht for Good
Reason at any time within two years after a change of control of the Company, he shall receive the following additional benefits:
(1) the management fee payment obligation is increased to twelve (12) months; (2) acceleration, vesting and lapse of forfeiture
on any outstanding equity awards granted to Mr. Schacht, and, if applicable, extended time to exercise vested stock options; and
(3) payment by the Company or its successor, for a period of six (6) months, of health benefits for Mr. Schacht and his
family at levels substantially equal to those which would have been provided to him or them in accordance with the plans, programs,
practices and policies in effect as of the date immediately before the change in control consummation date.
Pursuant to the Management Agreement, Mr. Schact is subject
to customary restrictive covenants, including a requirement not to compete with the Company and its affiliates anywhere in the
world for a period of two years after termination of the agreement.
The foregoing summary of certain terms of the Management
Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the agreement,
which is attached to this Current Report on Form 8-K as Exhibit 10.6 and is incorporated herein by reference.
Other Information
The information disclosed under Item 2.01 of this Current
Report on Form 8-K relating to the Amended and Restated Stock Option Plan of the Company is incorporated into this Item 5.02 by
reference.