SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 22, 2020
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
|(Commission File Number)||(IRS Employer Identification No.)|
|84 October Hill Road, Suite 11, Holliston, MA||01746|
|(Address of principal executive offices)||(Zip Code)|
Registrant's telephone number, including area code: (774) 233-7300
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
|¨||Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)|
|¨||Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)|
|¨||Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))|
|¨||Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))|
Securities registered pursuant to Section 12(b) of the Act: None
|Title of each class||Trading Symbol(s)||Name of each exchange on which registered|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x
|Item 5.02.||Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.|
On March 24, 2020, Biostage, Inc. (the “Company”) entered into an Offer Letter (the “Offer Letter”) with Peter Chakoutis, 54, pursuant to which Mr. Chakoutis was appointed as the Vice President of Finance of the Company, and in such role Mr. Chakoutis will act as Company’s principal financial officer and principal accounting officer, effective as of February 24, 2020 (the “Effective Date”).
As previously disclosed, Mr. Chakoutis previously served as the Company’s Vice President of Finance and resigned from such role on January 17, 2020. Prior to becoming our Vice President of Finance in August 2019, Mr. Chakoutis served as our Director of Finance starting in February 2018. From 2012 to 2017, Mr. Chakoutis was employed at HeartWare, Inc., a medical device leader in developing and manufacturing miniaturized implantable heart pumps; ventricular assist devices for the treatment of advanced heart failure, serving as HeartWare’s Director of Sales Operations from 2015 to 2017 and Director of Financial Planning & Analysis from 2012 to 2015. Prior to 2000, he served in various managerial positions in the areas of financial reporting and accounting. Mr. Chakoutis has been a Certified Public Accountant in the State of Massachusetts since 1996, holds a B.S. in business administration - accounting from Norwich University, and a masters in finance from Bentley Graduate School.
Pursuant to the Offer Letter, during the term of his employment, which is anticipated to be through June 30, 2020 and may be extended by mutual agreement, Mr. Chakoutis will receive a weekly salary of $5,500 through May 15, 2020, and $5,000 thereafter, and will be eligible to participate in the Company’s benefits plans. In the event that Mr. Chakoutis is terminated for any reason other than for Cause, as such term is defined in the Offer Letter, prior to June 30, 2020, Mr. Chakoutis will receive his base salary through such date. Mr. Chakoutis will also be eligible to receive equity awards, including (I) stock awards based on performance goals, including (i) 15,000 shares of the Company’s common stock upon timely filing of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, (ii) 10,000 shares of the Company’s common stock upon timely filing of the definitive proxy statement for the Company’s 2020 Annual Meeting of Stockholders (or Form 10-K amendment, if applicable), and (iii) 10,000 shares of the Company’s common stock upon timely filing of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ending March 31, 2020, and (II) an option to purchase 40,000 shares of the Company’s common stock, one quarter of which shall vest upon timely filing of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ending March 31, 2020, and the remainder to vest in twelve (12) equal quarterly increments on the first day of each calendar quarter starting with the first calendar quarter following the timely filing of such Form 10-Q.
The foregoing description of the Offer Letter is a summary and does not purport to be complete. Such description is qualified in its entirety by reference to the text of the Offer Letter, which is filed as Exhibit 10.1 to this Current Report on Form 8-K, and is incorporated herein by reference.
There are no transactions between the Company and Mr. Chakoutis that are required to be disclosed under Item 404(a) of Regulation S-K, and Mr. Chakoutis is neither related to, nor does he have any relationship with, any existing member of the Board of Directors of the Company or any executive officer of the Company.
In addition, on March 22, 2020, the Company’s Board of Directors authorized Hong Yu, 47, the Company’s President, to act as Company’s principal executive officer with respect to performing the necessary actions pertaining to the review and execution of periodic reports filed with the SEC, including Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K, related financial statements and disclosures, and related certifications. Mr. Yu has been President of the Company since May 2018. Biographical and other required disclosures are included in the Form 8-K filed by the Company on May 31, 2018 which is incorporated herein by reference.
While Mr. Yu has assisted the Company’s lead investor, DST Capital, with respect to board, management and governance matters pertaining to the Company, there are no related party transactions between the Company and Mr. Yu. Mr. Yu is neither related to, nor does he have any other family relationship with, any existing member of the Board of Directors of the Company or any executive officer of the Company.
|Item 9.01||Financial Statements and Exhibits.|
|10.1||Offer Letter by and between Biostage, Inc. and Peter Chakoutis, dated as of March 24, 2020|
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|March 24, 2020||/s/ Hong Yu|
|Peter Chakoutis||March 24, 2020|
|7 Heron Lane|
|Hopedale, MA 01747|
I am pleased to make you an offer of employment for the position of Vice President of Finance at Biostage, Inc. (the “Company”). This position will report directly to the Chairman of the Board of Directors (the “Board”) as well as its Audit Committee, and to the extent determined by the Chairman of the Board or any chief executive officer or chief financial officer that the Company may hire during your employment. Until otherwise determined by the Board, you will be the principal accounting and principal financial officer of the company and assist with the financial reporting activities of the Company and other customary duties as may be requested by the Chairman of the Board or its Audit Committee. Your start date will be deemed to have been February 24, 2020. Your weekly salary will be $5,500 through May 15th, and thereafter $5,000, and you will be paid every two weeks as earned (the $5,000 amount represents yearly equivalent of $260,000). Please note that all Company employees are required to have their bi-weekly pays direct-deposited. This position will also be benefits eligible, if elected.
While it is anticipated that your employment will continue through June 30, 2020, which such period may be extended for up to an additional six months if mutually agreed upon by you and the Company, your employment is considered “at will”; both you and the Company have the right to terminate your employment at any time and for any reason. This letter does not constitute, and shall not be construed as, creating a contract or promise of employment for any set period of time. If your employment in accordance herewith is terminated for anything other than for Cause (as defined below) or death, you will be entitled to receive the compensation described above paid on a monthly basis through June 30, 2020.
For purposes of this offer letter, “Cause” shall mean: (A) conduct by you constituting a material act of willful misconduct in connection with the performance of your duties, including, without limitation, misappropriation of funds or property of the Company or any of its affiliates other than the occasional, customary and de minimis use of Company property for personal purposes; (B) criminal or civil conviction of you, a plea of nolo contendere by you or conduct by you that would reasonably be expected to result in material injury to the reputation of the Company if you were retained in your position with the Company, including, without limitation, conviction of a felony involving moral turpitude; (C) continued, willful and deliberate non-performance by you of your duties hereunder (other than by reason of your physical or mental illness, incapacity or disability) which has continued for more than five (5) days following written notice of such non-performance from the Board; (D) a breach by you of any of the provisions contained in your Non-Competition, Non-Solicitation and Proprietary Rights Agreement; or (E) a material violation by you of the Company’s employment policies which has continued for more than five (5) days following written notice of such violation from the Board.
Upon the complete execution of this offer letter by both parties, the Company agrees that so long as you are in compliance herewith and the Company’s policies, plans and practices governing the terms and conditions of your employment, and you are not terminated for Cause and do not voluntarily leave prior to completion of all of the filings described in clauses a-c below in relation to stock awards, the Company will not challenge any application you may make with respect to unemployment benefits following termination hereof.
By signing below, you acknowledge that the Non-Competition, Non-Solicitation and Proprietary Rights Agreement you had previously executed with respect to your recent employment remains in full force and effect.
I am also pleased to inform you that you will be eligible to receive equity award grants under the Company’s Equity Incentive Plan as follows:
|a.||15,000 shares of common stock upon filing of the requisite Annual Report on Form 10-K and related certifications on or before the deadline of March 30, 2020;|
|b.||10,000 shares of common stock upon filing of the requisite Definitive Proxy Statement for the Company’s 2020 annual meeting of stockholders (or applicable Form 10-K/A) containing the required Form 10-K Part III disclosures prior to the deadline of April 29, 2020; and|
|c.||10,000 shares of common stock upon filing of the requisite Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 on or before the deadline of May 15, 2020.|
Stock Options: Subject to the execution of the customary option grant agreement and continued employment at the time of vesting as provided in such agreement, a non-qualified option to acquire 40,000 shares of common stock, with exercise price set in accordance with the Equity Incentive Plan being the market price as of the date of grant and a term of 10 years, and which such option shall vest as follows:
|a.||Twenty-five percent (25%) (10,000) upon filing of the requisite Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 on or before the deadline of May 15, 2020; and|
|b.||The remaining seventy-five percent (75%) to vest in twelve (12) equal quarterly increments (2,500 each) on the first day of each calendar quarter starting with the first calendar quarter following the timely filing of the Form 10-Q referenced above.|
Please note that all compensation, including the cash payments and any stock grants described above, will be subject to applicable withholding requirements. Please refer to the Company’s policies, plans and practices for more details on the terms and conditions of your employment.
Please note this offer is contingent on a review of the results of a background check and a drug screen.
Please acknowledge your acceptance of this offer of employment by signing and returning a copy of this letter to me.
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|By:||/s/ Hong Yu|
|Receipt Acknowledged and Terms Agreed to:|
|/s/ Peter Chakoutis|
|Name: Peter Chakoutis|