Item 3.02. Unregistered Sale of Equity Securities.
The information contained below in Item 5.02 related to the contemplated option
grants is hereby incorporated by reference into this Item 3.02.
To the extent the grant of such options, is deemed a "sale" or "offer to sell"
under the Securities Act of 1933, as amended, such options (including the shares
issuable upon exercise of the options), were and will be sold and issued without
registration under the Securities Act in reliance on the exemptions provided by
Section 4(a)(2) of the Securities Act as transactions not involving a public
offering and Rule 506 promulgated under the Securities Act as sales to an
accredited investor, and in reliance on similar exemptions under applicable
state laws.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Effective as of January 11, 2023, Biostage, Inc. (the Company) entered into an
Amended and Restated Employment Agreement (the Amended Agreement) with David
Green, the Chief Executive Officer of the Company, to remove the Interim
designation from his Chief Executive Officer title effective immediately, and
also amend certain terms of Mr. Green's existing Employment Agreement.
The Amended Agreement has a commencement date of January 11, 2023 (the
Commencement Date) and an initial term of one year, which such term shall
automatically be extended for one additional year on each anniversary of the end
of the term then in effect unless proper notice of non-renewal is timely
provided under the Amended Agreement. Pursuant to the Amended Agreement, Mr.
Green's initial compensation as Chief Executive Officer will include base
salary, incentive compensation and the nonqualified stock option grants
described below. Mr. Green shall also be eligible to participate in such
incentive compensation plans as the Board or a Committee thereof shall determine
from time to time for employees of the same status within the hierarchy of the
Company.
Mr. Green's annual base salary is set at $300,000, and is subject to annual
review, provided that such base salary shall not be decreased without Mr.
Green's consent. In addition and in lieu of additional cash salary, on the
earlier to occur of: (i) the first trading day after the closing of the
Company's first public offering after the Commencement Date or (ii) February 28,
2023 (the Grant Date), Mr. Green will receive a nonqualified stock option to
purchase a share amount determined based on Black-Scholes value of $200,000 as
of the Grant Date, which subject to continued employment, shall vest monthly on
each monthly anniversary of the Grant Date for twelve months following the Grant
Date, with the first vesting to be in an amount equal to 1/4 of the aggregate
share amount and then the remaining amount to vest in eleven substantially equal
amounts thereafter. Thereafter, following each anniversary of the Commencement
Date so long as Mr. Green continues to be employed as Chief Executive Officer,
the Company will grant Mr. Green on the first trading day following such
anniversary an option to purchase shares of Common Stock in a share amount
determined based on Black-Scholes value of $200,000 as of the grant date.
Subject to continued employment, each such additional annual grant shall vest
monthly in twelve substantially equal monthly installments on each monthly
anniversary of the respective grant date. In the event that Mr. Green's base
salary is increased during the term of employment, the grant amount of $200,000
shall be reviewed by the Company's Board of Directors to determine if such
amount shall be adjusted as determined in its discretion.
Mr. Green is also eligible to receive cash incentive compensation on an annual
basis of up to a one hundred percent (100%) of his Base Salary upon meeting
objectives as determined by the Board of Directors of the Company or the
Compensation Committee thereof.
In addition, on the Grant Date, Mr. Green will also receive the following: (I)
as additional compensation in recognition of past performance, a nonqualified
stock option to purchase a share amount determined based on Black-Scholes value
of $200,000 as of the Grant Date, which such option shall be fully vested as of
the Grant Date, and (II) as a long term incentive grant, a nonqualified stock
option to purchase shares of Common Stock (the LTI Grant) in a share amount
equal to six percent (6%) of the then outstanding shares of Common Stock of the
Company as of the Grant Date, which subject to continued employment, the LTI
Grant shall vest monthly in thirty-six substantially equal monthly installments
on each monthly anniversary of the Grant Date.
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Each option described above shall have an exercise price equal to the closing
price of the Company's common stock on the date of grant, and portions of the
option are subject to acceleration of vesting and extended post-termination
exercise period under certain circumstances, including in relation to the
Company terminating Mr. Green without cause.
The Amended Agreement also provides that if the Company terminates Mr. Green's
employment without Cause (as defined in the Amended Agreement), or if Mr. Green
terminates his employment for Good Reason (as defined in the Amended Agreement),
in addition to any accrued and unpaid base salary through the date of his
termination, and to the extent required by law, any accrued and unused vacation
and any bonuses or other compensation actually earned for periods ended prior to
the date of his termination, Mr. Green will be entitled, subject to his
execution of a release of claims in favor of the Company, to his earned annual
bonus in the event that the termination occurs after December 31st but before
payment of such annual bonus, and (I) if the termination was in connection with
the hiring by the Company of a replacement Chief Executive Officer, if the
termination is within twelve (12) months following the initial Grant Date, the
remaining unvested portion of the LTI Grant that would have vested within the
twelve (12) months following the initial Grant Date if Mr. Green had continued
to be employed shall accelerate and become fully vested or non-forfeitable, and
(II) if the termination was not in connection with the hiring by the Company of
a replacement Chief Executive Officer, a severance amount equal to $300,000 and
a non-qualified option to purchase shares of Common Stock in a share amount
determined based on Black-Scholes value of $200,000 as of the grant date, which
such option shall be fully vested as of the grant date and have an exercise
price equal to the closing price of the stock on the grant date.
The foregoing description of the Amended Agreement is qualified in its entirety
by reference to the full text of the Amended Agreement, which is filed as
Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference
into this Item 5.02.
On January 12, 2023, the Company issued a press release regarding the Amended
Agreement with David Green, the Chief Executive Officer of the Company. The full
text of the press release is attached as Exhibit 99.1 hereto and incorporated by
reference into this Item 5.02.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Title
10.1# Amended and Restated Employment Agreement between Biostage,
Inc. and David Green
99.1 Press Release issued by Biostage, Inc. on January 12, 2023
104 Cover Page Interactive Data File, formatted in Inline
Extensible Business Reporting Language (iXBRL)
# Management contract or compensatory plan or arrangement.
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