UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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October 9, 2017 |
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Date of Report (Date of Earliest Event Reported) |
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Sun BioPharma, Inc. |
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(Exact Name of Registrant as Specified in its Charter) |
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Delaware |
000-55242 |
87-0543922 |
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(State of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
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712 Vista Blvd #305 Waconia, Minnesota |
55387 |
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(Address of Principal Executive Offices) |
(Zip Code) |
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( 952 ) 479 - 1196 |
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(Registrant ’s Telephone Number, Including Area Code) |
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(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 (see General Instruction A.2):
☐ 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))
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 ☑
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 revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☑
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Item 5.0 2 |
Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers . |
On October 9, 2017, Sun BioPharma, Inc. (the “Company”) entered into second amendments (collectively, the “Amendments”) to the previously disclosed employment agreements, as amended (the “Agreements”), with our Executive Chairman, Michael T. Cullen, M.D., M.B.A., our President and Chief Executive Officer, David B. Kaysen, and our Chief Financial Officer, Scott Kellen, each of whom is an executive officer of the Company (collectively, the “Executives”), and our Chief Medical Officer, Suzanne Gagnon, M.D. (together with the Executives, the “Employees”). Dr. Cullen, Mr. Kaysen and Dr. Gagnon are also current members of the Company’s Board of Directors.
For Dr. Cullen, Mr. Kaysen and Dr. Gagnon, the Amendments established new annual base salaries representing a 25% reduction from prior levels, each effective as of October 1, 2017. Mr. Kellen ’s annual base salary remained unchanged. Each Amendment further discontinued the “accrued compensation” provision that was introduced with the prior amendments to the Agreements between the Company and each of the Employees dated as of September 12, 2016 (the “Prior Amendments”).
As a result of the Amendments, each of the Employees continues to be eligible to receive a cash payment in an amount equal to the amount that previously accumulated under the “accrued compensation” provision through September 30, 2017. The cash payment would become due upon a change of control (as defined in the Agreements) or the Company’s issuance of equity securities (including any securities that are convertible into or exercisable for equity securities) resulting in gross cash proceeds of $10,000,000 or more (a “Qualified Offering”). If neither a change of control nor a Qualified Offering occurs on or before June 30, 2018, then the right to cash payment will be forfeited. The potential cash payments for Dr. Cullen, Mr. Kaysen, Mr. Kellen, and Dr. Gagnon are $410,136; $201,599; $97,208; and $385,036, respectively.
If, on or before June 30, 2018, the Company closes an underwritten public offering of its securities that include shares of common stock (whether or not such offering is a Qualified Offering), then each of the Employees will, in lieu of cash payment, instead receive one or more equity awards under the Company’s 2016 Omnibus Equity Incentive plan (the “Plan”). The equity awards would be in the form of an option to purchase shares of common stock and a potential additional award of shares of common stock. Pursuant to the Amendments, each Employee has agreed to automatically waive their rights to the cash payment discussed above in exchange for the equity awards. The number of shares underlying the potential stock option will be determined at the time the Company closes an underwritten public offering and is to be based on the amount of each Employee’s potential cash payment amount (identified above) divided by the value of an option to purchase a single share of common stock determined using a Black-Scholes option valuation model. The exercise price for each option award will equal “fair market value” as of the grant date determined in accordance with the Plan. If the number of shares underlying the option award is limited by the Plan, then the remainder will be issued in the form of a stock award.
The descriptions in this report of the material terms and conditions of the foregoing compensatory arrangements with the Employees are qualified by the text of the Amendments, copies of which are filed as Exhibits 10.1, 10.2, 10.3 and 10.4, and each of which is incorporated herein by reference.
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Item 9 .0 1 |
Financial Statements and Exhibits . |
(d) Exhibits
Cautionary Note Regarding Forward-Looking Statements
Statements pertaining to future events, including a potential offering of company securities and future equity awards, constitute “forward-looking statements” for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements that are not historical fact (including, but not limited to statements that contain words such as “future,” “may,” “potential” or “will”) should also be considered to be forward-looking statements. Forward-looking statements involve risks and uncertainties, including, without limitation, our need to obtain additional capital to support our business plan, which may not be available on acceptable terms or at all, risks inherent in the development and/or commercialization of potential products, uncertainty in the results or timing of clinical trials or regulatory approvals and maintenance of intellectual property rights. Actual results may differ materially from the results anticipated in these forward-looking statements and as such should be evaluated together with the many uncertainties that affect the Company and its business, particularly those disclosed from time to time in its filings with the Securities and Exchange Commission. Stockholders and other readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. The Company disclaims any intent or obligation to update these forward-looking statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.
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SUN BIOPHARMA, INC. |
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Date: October 13, 2017 |
By: |
/s/ Scott Kellen |
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Scott Kellen |
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Chief Financial Officer |
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Exhibit 10.1
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
This SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (this “ Second Amendment ”) is entered into as of October 1, 2017 by and among Sun BioPharma, Inc., a Delaware corporation (the “ Co mpany ”), and Michael T. Cullen (“ Employee ”).
WHEREAS, the Company and Employee are parties to that certain Employment Agreement dated December 2, 2015, as amended September 12, 2016 (the “ Employment A greement ”); and
WHEREAS, the Company and Employee have agreed to amend certain provisions of the Employment Agreement to, among other things, provide for an opportunity to receive equity awards in lieu of a cash payment under certain circumstances, as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
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1. |
Capitalized terms used in this Second Amendment, to the extent not otherwise defined herein, shall have the same meaning as in the Employment Agreement. |
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2. |
Section 3(a)(i) of the Employment Agreement shall be superseded and replaced with the following: |
(i) Primary Cash Compensation . Effective as of October 1, 2017, Employee’s monthly salary is $24,000 per month, representing an annual rate of $288,000 (the “Base Salary”). Employee’s Base Salary shall be reviewed annually by the Board or its Compensation Committee and the Base Salary for each fiscal year during the Employment Period shall be determined by the Board or its Compensation Committee, which may authorize an increase in Employee’s Base Salary for such year. In no event may Employee’s Base Salary be reduced below its then-current level at any time during the Employment Period other than with Employee’s consent or pursuant to a general wage reduction in respect of substantially all of the Company’s executive officers, in which event Employee’s Base Salary may only be reduced to the same extent and up to the same percentage amount as the base salaries of other executive officers are reduced. Employee’s Base Salary shall be paid in accordance with the Company’s normal periodic payroll practices. Employee will also be entitled to receive a one-time payment equal to $410,136 (the “ Reference Amount ”) upon the first occurrence of a Payment Triggering Event (defined below). If a Payment-Triggering Event occurs, then the Reference Amount will be paid to the Employee in a lump sum no later than in the first payroll after the Payment-Triggering Event has been completed or is effective. If an equity award is granted pursuant to Section 3(a)(iv) or if no Payment-Triggering Event occurs prior to June 30, 2018, then in either event Employee’s right to cash payment of the Reference Amount will be automatically forfeited and waived. “ Payment-Triggering Event ” means the first to occur of (1) a Qualified Financing that does not result in the issuance of any equity awards pursuant to Section 3(a)(iv), and (2) the date of a Change of Control pursuant to Section 6(d) of this Agreement. “ Qualified Financing ” means any transaction or series of related transactions involving the issuance of equity securities (including any securities that are convertible into or exercisable for equity securities) resulting in gross cash proceeds of $10,000,000 or more.
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3. |
A new Section 3(a)(iv) shall be added to the Employment Agreement as follows: |
( iv) Equity . If a Payment-Triggering Event has not previously occurred and, on or before June 30, 2018, the Company closes an underwritten public offering of any combination of Company securities that includes shares of common stock and Employee has been continuously employed through the Grant Date (defined below), then Employee will receive as soon as practicable after closing of the underwritten public offering (such date, the “ Grant Date ”) the following equity awards:
(1) Common Stock Option. Employee will receive an option (the “ Supplemental Option ”) under any then-effective Company equity incentive plan (such plan, the “ Applicable Plan ”) representing the right to purchase a number of shares of the Company’s common stock equal to the lesser of (x) the Reference Amount divided by the Option Reference Price (defined below) and rounded to the next whole share, and (y) the maximum number of shares that are then available for option awards to the Employee pursuant to the Applicable Plan. The Supplemental Option will be immediately exercisable at a per share price equal to Fair Market Value (determined in accordance with the terms of the Applicable Plan) of a shares of the Company’s common stock as of the Grant Date. The “ Option Reference Price ” will equal the value of an option to purchase a single share of the Company’s common stock determined using the Black-Scholes model with assumptions determined in a manner consistent with those used by the Company in preparing the annual or interim financial statements filed with the SEC by the Company in its most recent periodic report on Form 10-Q or Form 10-K.
(2) Optional Stock Award. If the number of shares underlying the Supplemental Option is determined pursuant to Section 3(a)(iv)(1)(y) above, then Employee will receive an additional award of shares of common stock (the “ Supplemental Stock Award ”) under the Applicable Plan consisting of a number of shares of the Company’s common stock equal to the quotient of (x) the remainder of the Reference Amount after deducting the Option Value, divided by (y) the Fair Market Value (determined in accordance with the terms of the Applicable Plan) of the Company’s common stock as of the Grant Date, rounded up to the next whole share. The Supplemental Stock Award may be, but shall not be required to be, subject to vesting terms and conditions established in the sole discretion of the Board or its Compensation Committee in accordance with the terms of the Applicable Plan, after reasonable consultation with Employee. For purposes of this paragraph only, “ Option Value ” will equal the product of (x) the Option Reference Price, multiplied by (y) the number of shares of common stock underlying the Supplemental Option.
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4. |
The Employment Agreement, as amended by this Second Amendment evidences the entire agreement of the parties hereto with respect to the subject matter thereof and hereof, and all prior oral discussions and writings have been taken into account in preparing this Second Amendment. |
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5. |
Except as specifically set forth herein, the Employment Agreement remains in full force and effect. |
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6. |
This Second Amendment may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party hereto and delivered to the other party, it being understood that both parties hereto need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof. |
[ Remainder of page intentionally left blank; signature page follows ]
IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the date first written above.
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The Company:
SUN BIOPHARMA , INC. |
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By: /s/ David B. Kaysen |
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Name: David B. Kaysen |
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Title: President and Chief Executive Officer |
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Date : October 9, 2017 |
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Employee: |
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/s/ Michael T. Cullen |
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Michael T. Cullen |
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Date : October 11, 2017 |
[ Signature Page to Second Amendment to Employment Agreement ]
Exhibit 10.2
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
This SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (this “ Second Amendment ”) is entered into as of October 1, 2017 by and among Sun BioPharma, Inc., a Delaware corporation (the “ Co mpany ”), and David B. Kaysen (“ Employee ”).
WHEREAS, the Company and Employee are parties to that certain Employment Agreement dated December 2, 2015, as amended September 12, 2016 (the “ Employment A greement ”); and
WHEREAS, the Company and Employee have agreed to amend certain provisions of the Employment Agreement to, among other things, provide for an opportunity to receive equity awards in lieu of a cash payment under certain circumstances, as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
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1. |
Capitalized terms used in this Second Amendment, to the extent not otherwise defined herein, shall have the same meaning as in the Employment Agreement. |
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2. |
Section 3(a)(i) of the Employment Agreement shall be superseded and replaced with the following: |
(i) Primary Cash Compensation . Effective as of October 1, 2017, Employee’s monthly salary is $26,250 per month, representing an annual rate of $315,000 (the “ Base Salary ”). Employee’s Base Salary shall be reviewed annually by the Board or its Compensation Committee and the Base Salary for each fiscal year during the Employment Period shall be determined by the Board or its Compensation Committee, which may authorize an increase in Employee’s Base Salary for such year. In no event may Employee’s Base Salary be reduced below its then-current level at any time during the Employment Period other than with Employee’s consent or pursuant to a general wage reduction in respect of substantially all of the Company’s executive officers, in which event Employee’s Base Salary may only be reduced to the same extent and up to the same percentage amount as the base salaries of other executive officers are reduced. Employee’s Base Salary shall be paid in accordance with the Company’s normal periodic payroll practices. Employee will also be entitled to receive a one-time payment equal to $201,599 (the “ Reference Amount ”) upon the first occurrence of a Payment Triggering Event (defined below). If a Payment-Triggering Event occurs, then the Reference Amount will be paid to the Employee in a lump sum no later than in the first payroll after the Payment-Triggering Event has been completed or is effective. If an equity award is granted pursuant to Section 3(a)(iii) or if no Payment-Triggering Event occurs prior to June 30, 2018, then in either event Employee’s right to cash payment of the Reference Amount will be automatically forfeited and waived. “ Payment-Triggering Event ” means the first to occur of (1) a Qualified Financing that does not result in the issuance of any equity awards pursuant to Section 3(a)(iii), and (2) the date of a Change of Control pursuant to Section 6(d) of this Agreement. “ Qualified Financing ” means any transaction or series of related transactions involving the issuance of equity securities (including any securities that are convertible into or exercisable for equity securities) resulting in gross cash proceeds of $10,000,000 or more.
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3. |
Section 3(a)( iii) of the Employment Agreement shall be superseded and replaced with the following: |
(iii) Equity . If a Payment-Triggering Event has not previously occurred and, on or before June 30, 2018, the Company closes an underwritten public offering of any combination of Company securities that includes shares of common stock and Employee has been continuously employed through the Grant Date (defined below), then Employee will receive as soon as practicable after closing of the underwritten public offering (such date, the “ Grant Date ”) the following equity awards:
(1) Common Stock Option. Employee will receive an option (the “ Supplemental Option ”) under any then-effective Company equity incentive plan (such plan, the “ Applicable Plan ”) representing the right to purchase a number of shares of the Company’s common stock equal to the lesser of (x) Reference Amount divided by the Option Reference Price (defined below) and rounded to the next whole share, and (y) the maximum number of shares that are then available for option awards to the Employee pursuant to the Applicable Plan. The Supplemental Option will be immediately exercisable at a per share price equal to Fair Market Value (determined in accordance with the terms of the Applicable Plan) of a shares of the Company’s common stock as of the Grant Date. The “ Option Reference Price ” will equal the value of an option to purchase a single share of the Company’s common stock determined using the Black-Scholes model with assumptions determined in a manner consistent with those used by the Company in preparing the annual or interim financial statements filed with the SEC by the Company in its most recent periodic report on Form 10-Q or Form 10-K.
(2) Optional Stock Award. If the number of shares underlying the Supplemental Option is determined pursuant to Section 3(a)(iii)(1)(y) above, then Employee will receive an additional award of shares of common stock (the “ Supplemental Stock Award ”) under the Applicable Plan consisting of a number of shares of the Company’s common stock equal to the quotient of (x) the remainder of the Reference Amount after deducting the Option Value, divided by (y) the Fair Market Value (determined in accordance with the terms of the Applicable Plan) of the Company’s common stock as of the Grant Date, rounded up to the next whole share. The Supplemental Stock Award may be, but shall not be required to be, subject to vesting terms and conditions established in the sole discretion of the Board or its Compensation Committee in accordance with the terms of the Applicable Plan, after reasonable consultation with Employee. For purposes of this paragraph only, “ Option Value ” will equal the product of (x) the Option Reference Price, multiplied by (y) the number of shares of common stock underlying the Supplemental Option.
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4. |
The Employment Agreement, as amended by this Second Amendment evidences the entire agreement of the parties hereto with respect to the subject matter thereof and hereof, and all prior oral discussions and writings have been taken into account in preparing this Second Amendment. |
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5. |
Except as specifically set forth herein, the Employment Agreement remains in full force and effect. |
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6. |
This Second Amendment may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party hereto and delivered to the other party, it being understood that both parties hereto need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof. |
[ Remainder of page intentionally left blank; signature page follows ]
IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the date first written above.
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The Company:
SUN BIOPHARMA , INC. |
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By: /s/ Michael T. Cullen |
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Name: Michael T. Cullen |
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Title: Executive Chairman |
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Date : October 11, 2017 |
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Employee: |
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/s/ David B. Kaysen |
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David B. Kaysen |
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Date : October 9, 2017 |
[ Signature Page to Second Amendment to Employment Agreement ]
Exhibit 10.3
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
This SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (this “ Second Amendment ”) is entered into as of October 1, 2017 by and among Sun BioPharma, Inc., a Delaware corporation (the “ Co mpany ”), and Scott Kellen (“ Employee ”).
WHEREAS, the Company and Employee are parties to that certain Employment Agreement dated December 2, 2015, as amended September 12, 2016 (the “ Employment A greement ”); and
WHEREAS, the Company and Employee have agreed to amend certain provisions of the Employment Agreement to, among other things, provide for an opportunity to receive equity awards in lieu of a cash payment under certain circumstances, as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
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1. |
Capitalized terms used in this Second Amendment, to the extent not otherwise defined herein, shall have the same meaning as in the Employment Agreement. |
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2. |
Section 3(a)(i) of the Employment Agreement shall be superseded and replaced with the following: |
(i) Primary Cash Compensation . Effective as of October 1, 2017, Employee’s monthly salary is $20,000 per month, representing an annual rate of $240,000 (the “Base Salary”). Employee’s Base Salary shall be reviewed annually by the Board or its Compensation Committee and the Base Salary for each fiscal year during the Employment Period shall be determined by the Board or its Compensation Committee, which may authorize an increase in Employee’s Base Salary for such year. In no event may Employee’s Base Salary be reduced below its then-current level at any time during the Employment Period other than with Employee’s consent or pursuant to a general wage reduction in respect of substantially all of the Company’s executive officers, in which event Employee’s Base Salary may only be reduced to the same extent and up to the same percentage amount as the base salaries of other executive officers are reduced. Employee’s Base Salary shall be paid in accordance with the Company’s normal periodic payroll practices. Employee will also be entitled to receive a one-time payment equal to $97,208 (the “ Reference Amount ”) upon the first occurrence of a Payment Triggering Event (defined below). If a Payment-Triggering Event occurs, then the Reference Amount will be paid to the Employee in a lump sum no later than in the first payroll after the Payment-Triggering Event has been completed or is effective. If an equity award is granted pursuant to Section 3(a)(iii) or if no Payment-Triggering Event occurs prior to June 30, 2018, then in either event Employee’s right to cash payment of the Reference Amount will be automatically forfeited and waived. “ Payment-Triggering Event ” means the first to occur of (1) a Qualified Financing that does not result in the issuance of any equity awards pursuant to Section 3(a)(iii), and (2) the date of a Change of Control pursuant to Section 6(d) of this Agreement. “ Qualified Financing ” means any transaction or series of related transactions involving the issuance of equity securities (including any securities that are convertible into or exercisable for equity securities) resulting in gross cash proceeds of $10,000,000 or more.
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3. |
Section 3(a)( iii) of the Employment Agreement shall be superseded and replaced with the following: |
( iii) Equity . If a Payment-Triggering Event has not previously occurred and, on or before June 30, 2018, the Company closes an underwritten public offering of any combination of Company securities that includes shares of common stock and Employee has been continuously employed through the Grant Date (defined below), then Employee will receive as soon as practicable after closing of the underwritten public offering (such date, the “ Grant Date ”) the following equity awards:
(1) Common Stock Option. Employee will receive an option (the “ Supplemental Option ”) under any then-effective Company equity incentive plan (such plan, the “ Applicable Plan ”) representing the right to purchase a number of shares of the Company’s common stock equal to the lesser of (x) the Reference Amount divided by the Option Reference Price (defined below) and rounded to the next whole share, and (y) the maximum number of shares that are then available for option awards to the Employee pursuant to the Applicable Plan. The Supplemental Option will be immediately exercisable at a per share price equal to Fair Market Value (determined in accordance with the terms of the Applicable Plan) of a shares of the Company’s common stock as of the Grant Date. The “ Option Reference Price ” will equal the value of an option to purchase a single share of the Company’s common stock determined using the Black-Scholes model with assumptions determined in a manner consistent with those used by the Company in preparing the annual or interim financial statements filed with the SEC by the Company in its most recent periodic report on Form 10-Q or Form 10-K.
(2) Optional Stock Award. If the number of shares underlying the Supplemental Option is determined pursuant to Section 3(a)(iii)(1)(y) above, then Employee will receive an additional award of shares of common stock (the “ Supplemental Stock Award ”) under the Applicable Plan consisting of a number of shares of the Company’s common stock equal to the quotient of (x) the remainder of the Reference Amount after deducting the Option Value, divided by (y) the Fair Market Value (determined in accordance with the terms of the Applicable Plan) of the Company’s common stock as of the Grant Date, rounded up to the next whole share. The Supplemental Stock Award may be, but shall not be required to be, subject to vesting terms and conditions established in the sole discretion of the Board or its Compensation Committee in accordance with the terms of the Applicable Plan, after reasonable consultation with Employee. For purposes of this paragraph only, “ Option Value ” will equal the product of (x) the Option Reference Price, multiplied by (y) the number of shares of common stock underlying the Supplemental Option.
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4. |
The Employment Agreement, as amended by this Second Amendment evidences the entire agreement of the parties hereto with respect to the subject matter thereof and hereof, and all prior oral discussions and writings have been taken into account in preparing this Second Amendment. |
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5. |
Except as specifically set forth herein, the Employment Agreement remains in full force and effect. |
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6. |
This Second Amendment may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party hereto and delivered to the other party, it being understood that both parties hereto need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof. |
[ Remainder of page intentionally left blank; signature page follows ]
IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the date first written above.
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The Company:
SUN BIOPHARMA , INC. |
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By: /s/ David B. Kaysen |
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Name: David B. Kaysen |
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Title: President and Chief Executive Officer |
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Date : October 9, 2017 |
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Employee: |
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/s/ Scott Kellen |
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Scott Kellen |
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Date : October 9, 2017 |
[ Signature Page to Second Amendment to Employment Agreement ]
Exhibit 10.4
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
This SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (this “ Second Amendment ”) is entered into as of October 1, 2017 by and among Sun BioPharma, Inc., a Delaware corporation (the “ Co mpany ”), and Suzanne Gagnon (“ Employee ”).
WHEREAS, the Company and Employee are parties to that certain Employment Agreement dated December 2, 2015, as amended September 12, 2016 (the “ Employment A greement ”); and
WHEREAS, the Company and Employee have agreed to amend certain provisions of the Employment Agreement to, among other things, provide for an opportunity to receive equity awards in lieu of a cash payment under certain circumstances, as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
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1. |
Capitalized terms used in this Second Amendment, to the extent not otherwise defined herein, shall have the same meaning as in the Employment Agreement. |
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2. |
Section 3(a)(i) of the Employment Agreement shall be superseded and replaced with the following: |
(i) Primary Cash Compensation . Effective as of October 1, 2017, Employee’s monthly salary is $22,500 per month, representing an annual rate of $270,000 (the “ Base Salary ”). Employee’s Base Salary shall be reviewed annually by the Board or its Compensation Committee and the Base Salary for each fiscal year during the Employment Period shall be determined by the Board or its Compensation Committee, which may authorize an increase in Employee’s Base Salary for such year. In no event may Employee’s Base Salary be reduced below its then-current level at any time during the Employment Period other than with Employee’s consent or pursuant to a general wage reduction in respect of substantially all of the Company’s executive officers, in which event Employee’s Base Salary may only be reduced to the same extent and up to the same percentage amount as the base salaries of other executive officers are reduced. Employee’s Base Salary shall be paid in accordance with the Company’s normal periodic payroll practices. Employee will also be entitled to receive a one-time payment equal to $385,036 (the “ Reference Amount ”) upon the first occurrence of a Payment Triggering Event (defined below). If a Payment-Triggering Event occurs, then the Reference Amount will be paid to the Employee in a lump sum no later than in the first payroll after the Payment-Triggering Event has been completed or is effective. If an equity award is granted pursuant to Section 3(a)(v) or if no Payment-Triggering Event occurs prior to June 30, 2018, then in either event Employee’s right to cash payment of the Reference Amount will be automatically forfeited and waived. “ Payment-Triggering Event ” means the first to occur of (1) a Qualified Financing that does not result in the issuance of any equity awards pursuant to Section 3(a)(v), and (2) the date of a Change of Control pursuant to Section 6(d) of this Agreement. “ Qualified Financing ” means any transaction or series of related transactions involving the issuance of equity securities (including any securities that are convertible into or exercisable for equity securities) resulting in gross cash proceeds of $10,000,000 or more.
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3. |
A new Section 3(a)(v) shall be added to the Employment Agreement as follows: |
( v) Equity . If a Payment-Triggering Event has not previously occurred and, on or before June 30, 2018, the Company closes an underwritten public offering of any combination of Company securities that includes shares of common stock and Employee has been continuously employed through the Grant Date (defined below), then Employee will receive as soon as practicable after closing of the underwritten public offering (such date, the “ Grant Date ”) the following equity awards:
(1) Common Stock Option. Employee will receive an option (the “ Supplemental Option ”) under any then-effective Company equity incentive plan (such plan, the “ Applicable Plan ”) representing the right to purchase a number of shares of the Company’s common stock equal to the lesser of (x) the Reference Amount divided by the Option Reference Price (defined below) and rounded to the next whole share, and (y) the maximum number of shares that are then available for option awards to the Employee pursuant to the Applicable Plan. The Supplemental Option will be immediately exercisable at a per share price equal to Fair Market Value (determined in accordance with the terms of the Applicable Plan) of a shares of the Company’s common stock as of the Grant Date. The “ Option Reference Price ” will equal the value of an option to purchase a single share of the Company’s common stock determined using the Black-Scholes model with assumptions determined in a manner consistent with those used by the Company in preparing the annual or interim financial statements filed with the SEC by the Company in its most recent periodic report on Form 10-Q or Form 10-K.
(2) Optional Stock Award. If the number of shares underlying the Supplemental Option is determined pursuant to Section 3(a)(v)(1)(y) above, then Employee will receive an additional award of shares of common stock (the “ Supplemental Stock Award ”) under the Applicable Plan consisting of a number of shares of the Company’s common stock equal to the quotient of (x) the remainder of the Reference Amount after deducting the Option Value, divided by (y) the Fair Market Value (determined in accordance with the terms of the Applicable Plan) of the Company’s common stock as of the Grant Date, rounded up to the next whole share. The Supplemental Stock Award may be, but shall not be required to be, subject to vesting terms and conditions established in the sole discretion of the Board or its Compensation Committee in accordance with the terms of the Applicable Plan, after reasonable consultation with Employee. For purposes of this paragraph only, “ Option Value ” will equal the product of (x) the Option Reference Price, multiplied by (y) the number of shares of common stock underlying the Supplemental Option.
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4. |
The Employment Agreement, as amended by this Second Amendment evidences the entire agreement of the parties hereto with respect to the subject matter thereof and hereof, and all prior oral discussions and writings have been taken into account in preparing this Second Amendment. |
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5. |
Except as specifically set forth herein, the Employment Agreement remains in full force and effect. |
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6. |
This Second Amendment may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party hereto and delivered to the other party, it being understood that both parties hereto need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof. |
[ Remainder of page intentionally left blank; signature page follows ]
IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the date first written above.
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The Company:
SUN BIOPHARMA , INC. |
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By: /s/ David B. Kaysen |
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Name: David B. Kaysen |
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Title: President and Chief Executive Officer |
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Date : October 9, 2017 |
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Employee:
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/s/ Suzanne Gagnon |
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Suzanne Gagnon |
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Date : October 11, 2017 |
[ Signature Page to Second Amendment to Employment Agreement ]