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ITEM 5.02
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DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS;
COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS
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(c) On
September 9, 2017, the Boards of Directors of Peregrine Pharmaceuticals, Inc. (the “Company”), and its wholly-owned
subsidiary Avid Bioservices, Inc. (“Avid”), appointed Roger J. Lias, Ph.D., age 57, as President of Avid. In conjunction
with this appointment, Steven W. King will step down from his role as president of Avid on September 25, 2017 and remain as president
and chief executive officer of Peregrine.
Prior to joining Avid,
Dr. Lias was an independent consultant from January 2017 to the present, providing strategic and business development support to
global biopharmaceutical companies. From 2010 to December 2016, Dr. Lias was Executive Director and Head of Global Biologics Business
Development for Allergan plc (formerly Watson Pharmaceuticals) where he was responsible for developing and executing strategies
designed to support the business development activities related to innovative biologics, biosimilars and complex injectable products.
Prior to Allergan, from 2007 to 2010, Dr. Lias was president and group commercial director for Eden Biodesign (acquired by Watson
Pharmaceuticals), an established biopharmaceutical contract manufacturer and consultancy and wholly-owned subsidiary of Eden Biopharma
Group. Earlier in his career, Dr. Lias held senior management positions at several leading contract development and manufacturing
organizations (CDMO) including Cytovance Biologics, KBI BioPharma, Diosynth RTP (formerly Covance Biotechnology Services) and Lonza
Biologics.
There are no family
relationships between Mr. Lias and any director or executive officer of the Company. Mr. Lias has not has engaged in any related
person transaction (as defined in Item 404(a) of Regulation S-K) with the Company.
Pursuant to his offer
letter, Dr. Lias’ initial base salary is $440,000 per annum. Dr. Lias is also eligible to participate in the annual discretionary
bonus plan for executive officers, with a target bonus percentage of up to fifty percent (50%) of his annual base salary (prorated
for the current fiscal year ending April 30, 2018). In addition, effective on his start date of September 25, 2017, Dr. Lias will
be granted stock options from the Company’s existing stock incentive plans to purchase up to an aggregate of 200,000 shares
of the Company’s common stock at an exercise price equal to the closing price of the Company’s common stock on September
25, 2017. The stock options will vest in equal annual installments over a four (4) year period.
Dr. Lias is eligible
to participate in all benefits plans or arrangements which are currently, or may in the future be, offered by the Company from
time to time to its executive management employees, including accrued paid-time-off covering vacation and sick time benefits.
The Company has agreed
to provide Dr. Lias with a monthly housing stipend of up to $3,200 per month for a period of up to thirty-six (36) months, or his
earlier permanent relocation to Orange County, California. The foregoing amounts will be grossed up to offset federal and California
income taxes. In the event that Dr. Lias relocates to Orange County, California within the foregoing thirty-six (36) month period,
the Company will pay to Dr. Lias a relocation bonus of $50,000 to cover the costs associated with the relocation. The relocation
bonus will not be grossed up for federal or California income tax purposes. In the event that Dr. Lias terminates his employment
(i) within six months following such relocation, he will be required to return to the Company one hundred percent (100%) of the
relocation bonus, or (ii) during months seven (7) through twenty-four (24) following such relocation, he will be required to return
a pro-rata portion of the relocation bonus.
In the event that Dr.
Lias’s employment is terminated by the Company without cause (as cause is customarily defined in the Company’s employment
agreements with its executive officers) during the first two years of employment, Dr. Lias shall be entitled to receive a severance
payment equal to twelve months’ base salary, and reimbursement of full COBRA premium payments made by him for a period of
twelve (12) months following such termination.
The Company and Dr.
Lias intend to enter into a formal employment agreement providing for the above, as well as terms and conditions as are customary
for other executive officers of the Company.
(d) Also
on September 9, 2017, the Company’s Board of Directors, acting pursuant to its Amended and Restated Bylaws, adopted a resolution
to increase the number of authorized directors of the Company from four to five directors and, following the recommendation of
the Nominating Committee of the Board of Directors, adopted a resolution appointing Roger J. Lias, Ph.D. to fill the vacancy created
thereby.
The information contained
in Item 5.02(c) of this Current Report regarding Dr. Lias’s business experience is hereby incorporated by reference into
this Item 5.02(d).
The Nominating Committee
determined that Dr. Lias is qualified to serve on the Board of Directors due to his extensive biologics experience and expertise
in the contract development and manufacturing sector.
There was no arrangement
or understanding pursuant to which Dr. Lias was elected director.