Item
5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
Appointment
of Douglas Larson as Chief Financial Officer
On
August 20, 2021, the Board of Directors (the “Board”) of Beyond Air, Inc. (the “Company”) appointed Douglas Larson,
age 51, as the Company’s Chief Financial Officer, principal financial officer and principal accounting officer, effective September
1, 2021 (the “Start Date”).
Mr.
Larson joins the Company with over 20 years of international and operational financial leadership experience. Most recently, he served
as an independent consultant providing operational and financial consulting services from February 2021 to August 2021. Prior to that,
he served as Vice President, Finance and Head of Global Controlling at DBV Technologies, Inc. (NASDAQ: DBVT) (“DBV”), a global
clinical stage biopharmaceutical company headquartered in France, from June 2017 to September 2020. Prior to DBV, Mr. Larson served as
the Chief Financial Officer of The Scotts Miracle-Gro Company’s (NYSE: SMG) International division, based in Lyon, France from
January 2001 to May 2015. Mr. Larson graduated from the Certified General Accountant’s Association of Canada in 2001 and HEC Paris’s
Executive MBA program in 2015.
In
connection with Mr. Larson’s appointment, the Company entered into an employment agreement
(the “Employment Agreement”) with Mr. Larson, which provides that his employment
will continue until either the Company or Mr. Larson provides notice of termination in accordance
with the terms of the Employment Agreement. Pursuant to the Employment Agreement, Mr. Larson
is entitled to receive an annual base salary of $275,000, which will be reviewed annually
and will be subject to increase from time to time, as determined by the Board. In addition,
pursuant to the Employment Agreement, Mr. Larson is eligible to receive an annual cash bonus,
which is based on the achievement of performance objectives, which will be determined by
the Board or its Compensation Committee.
In
addition, the Company will grant to Mr. Larson as of the Start Date a stock option award (the “Inducement Option”) as an
inducement material to Mr. Larson’s entering into employment with the
Company in accordance with Nasdaq Stock Market Listing Rule 5635(c)(4). The Inducement Option will
be exercisable for the purchase of 75,000 shares of the Company’s common stock, at an exercise price equal to the last reported
sale price on Nasdaq on the Start Date. The Inducement Option grant was approved by the independent compensation committee of the Board
in accordance with Nasdaq Stock Market Listing Rule 5635(c)(4). The Inducement Option will have a ten-year term and will vest over a
four-year period, with 25% of the shares underlying the stock option award vesting on the first anniversary of the date of grant and
annually thereafter in three equal installments, subject to Mr. Larson’s continued service with the Company through the applicable
vesting dates. The Inducement Option will be subject to the terms and conditions of the Company’s 2013 Equity Incentive Plan.
Under
the Employment Agreement, termination of Mr. Larson’s employment by the Company without “Cause,” or by Mr. Larson with
“Good Reason” (as such terms are defined in the Employment Agreement), will require the Company to pay severance to Mr. Larson.
Upon any such termination, Mr. Larson will be entitled to receive: (i)
any portion of his base salary for the period up to the date of termination that has been earned but remains unpaid; (ii) any benefits
that have accrued to him under the terms of any employee benefit plans of the Company, which benefits shall be paid in accordance with
the terms of those plans; and (iii) subject to Mr. Larson’s execution of a release and compliance with all terms and provisions
of the Employment Agreement that survive the termination of the his employment by the Company, (A) his base salary for a period of six
months, less applicable taxes and withholdings, payable in accordance with the Company’s regular payroll practices, with an accelerated
payment of any balance upon the occurrence of a “Change in Control” (as such term is defined in the Employment Agreement);
provided, however, that if such termination of employment occurs within three months before or within 12 months after the occurrence
of a Change in Control (the “Change in Control Period”), the severance payable to Mr. Larson will be increased to an amount
equal to Mr. Larson’s base salary for a period of 18 months and be payable in a single lump sum payment, less applicable taxes
and withholdings; and (B) payment or reimbursement (upon presentation of proof of payment) of Mr. Larson’s medical insurance premiums
at the same level as was in effect on the termination date for a period of six months, which period shall increase to 18 months if such
termination of employment shall occur within the Change in Control Period.
The
Employment Agreement also contains customary non-solicitation and non-competition covenants, which covenants remain in effect for 12
months following any cessation of employment with respect to Mr. Larson.
In
connection with his appointment, the Company will also enter into the Company’s standard indemnification agreement (the “Indemnification
Agreement”) with Mr. Larson. Pursuant to the terms of the Indemnification Agreement, the Company may be required, among other things,
to indemnify Mr. Larson for some expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by him in
any action or proceeding arising out of his services as an executive officer of the Company.
Other
than with respect to the Employment Agreement, the Inducement Option and the Indemnification Agreement, there are no arrangements or
understandings between Mr. Larson and any other persons pursuant to which Mr. Larson was appointed as Chief Financial Officer, principal
financial officer or principal accounting officer of the Company. There are also no family relationships between Mr. Larson and any director
or executive officer of the Company and Mr. Larson has no direct or indirect interest in any transaction or proposed transaction required
to be disclosed pursuant to Item 404(a) of Regulation S-K.
The
description of the Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the complete
text of the Employment Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K.
Departure
of Douglas Beck as Chief Financial Officer
On
August 24, 2021, the Company entered into a Consulting and Severance Agreement (the “Consulting and Severance Agreement”)
with Douglas Beck, the Company’s Chief Financial Officer, in connection with Mr. Beck’s separation from the Company. Mr.
Beck’s last day of employment is on or about September 1, 2021. The Consulting and Severance Agreement sets
forth Mr. Beck’s separation benefits and the terms pursuant to which Mr. Beck will assist the Company in the transition of his
roles and continue in a consulting capacity for a six-month period beginning as of his date of termination (the “Consulting Period”).
During
the Consulting Period, Mr. Beck will continue to provide services to the Company on a non-exclusive basis, unless earlier terminated
by either party in accordance with the terms of the Consulting and Severance Agreement. In exchange for his services, the Company will
pay Mr. Beck a fee of $10,416.67 per month during the Consulting Period.
In
addition, the Consulting and Severance Agreement provides for the following separation benefits, subject to Mr. Beck agreeing to a release
of claims and complying with certain other continuing obligations contained therein:
|
|
●
|
For
a period of six months, the Company will pay Mr. Beck salary continuation, at the rate of Mr. Beck’s salary in effect as of
the termination of employment in accordance with the Company’s customary payroll practices and subject to applicable federal
and local taxes;
|
|
|
|
|
|
|
●
|
the
Company will continue to contribute to Mr. Beck’s health and dental benefits for six months in the same proportion as the month
preceding his date of termination; and
|
|
|
|
|
|
|
●
|
Mr.
Beck will continue to receive all equity awards that vest through December 31, 2021, and Mr. Beck will have 12 months from the end
of the Consulting Period to exercise all vested equity awards.
|
The
description of the Consulting and Severance Agreement does not purport to be complete and is qualified in its entirety by reference to
the complete text of the Consulting and Severance Agreement, which is filed as Exhibit 10.2 to this Current Report on Form 8-K.