OvaScience,Inc. (NASDAQ:OVAS) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement.
Sublease Agreement
On December5, 2018, the Company entered into a sublease agreement (the “Sublease Agreement”) with Axial Biotherapeutics,Inc. (“Axial”), to which the Company will sublet the building located at 9 Fourth Avenue, Waltham, Massachusetts containing approximately 25,200 rentable square feet, which the Company currently leases. The term of the Sublease Agreement is set to commence on the later to occur of January15, 2019 or the date on which the overlandlord consents to the Sublease Agreement, and is set to expire at the end of the overlease term on November30, 2020.
Initially, Axial will pay the Company (which will be Millendo, once the Merger closes) annual base rent under the Sublease Agreement in the amount of $339,530.04 per year payable in equal monthly installments of $28,294.17. Rent payments under the Sublease Agreement are set to increase on December1, 2019 to $349,610.04 per year payable in equal monthly installments of $29,134.17. In addition to the base rent, Axial will pay for 50% of all other so-called “triple-net” expenses (i.e., operating expenses, taxes and the landlord’s insurance premiums). There is no security deposit payable by Axial under the Sublease Agreement.
The Company has agreed to assign to Axial one-half of all of its rights, title and interests in the letter of credit that was given by the Company to the overlandlord under the overlease. In the event and at such time as such letter of credit is returned to the Company (which will be Millendo, if the Merger closes as anticipated) at the end of the overlease term, the Company will pay over one-half of the proceeds of such letter of credit to Axial, less any deductions from the letter of credit made by the overlandlord as a result of any acts or omissions of Axial.
Within 60 days following the date of the Sublease Agreement, the Company will fund an escrow of the difference in the annual base rent payable under the Sublease Agreement and the annual base rent payable under the overlease for the then remaining term of the Sublease Agreement, and the Company and Axial will negotiate an escrow agreement to govern when such escrowed amount may be drawn upon by either the Company or Axial to pay overlease rent payments as and when they become due and payable.
A copy of the Sublease Agreement is attached hereto as Exhibit10.1, and this description is qualified in its entirety by reference to the text of the Sublease Agreement.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Following the Special Meeting, Christopher A. Kroeger, M.D., M.B.A., the Company’s President and Chief Executive Officer, Jonathan Gillis, C.P.A., the Company’s Chief Financial Officer, and James Lillie, Ph.D., the Company’s Chief Scientific Officer, submitted their resignations as directors and/or officers of the Company effective upon the closing of the Merger. In connection with their respective resignations, each of Dr.Kroeger, Mr.Gillis and Dr.Lillie entered into a Separation Agreement, dated as of December5, 2018 (the “Kroeger Agreement,” the “Gillis Agreement,” and the “Lillie Agreement,” respectively, and collectively, the “Separation Agreements”), with the Company. Each of the Kroeger Agreement, the Gillis Agreement and the Lillie Agreement implements the terms of their previously disclosed employment agreements and retention arrangements, provides for a customary release of certain claims against the Company by Dr.Kroeger, Mr.Gillis and Dr.Lillie, respectively, and includes an indemnification agreement with the Company.
to the Kroeger Agreement, Dr.Kroeger will cease serving as an employee and director of the Company effective as of the Effective Time of the Merger (as defined in the Merger Agreement) (the “Separation Date”). Dr.Kroeger will be entitled to (i)a severance payment equal to $880,000, which represents the sum of twelve months of his current annual base salary and his full annual discretionary bonus opportunity, which is 60% of his annual base salary, (ii)an amount in cash equal to 1% of the Transaction Value (as defined below) determined to the Retention Agreement between Dr.Kroeger and the Company dated as of May3, 2018, (iii)50% vesting acceleration of his outstanding equity awards as of the Separation Date, and a three-year period following the Separation Date to exercise his outstanding options, and (iv)payment of his COBRA premiums for up to twelve months following the effectiveness of his Separation Agreement. The “Transaction Value” shall be the product of the number of shares of the Company outstanding immediately prior to the closing of a change in control event multiplied by the closing price of the Company’s common stock on the closing date of a change in control event.
to the Gillis Agreement, Mr.Gillis will cease serving as an employee of the Company effective as of the Effective Time of the Merger. Mr.Gillis will be entitled to (i)a severance payment equal to $229,500, which represents the sum of six months of his current annual base salary and his full annual discretionary bonus opportunity, which is 35% of his annual base salary, (ii)an amount in cash equal to 0.25% of the Transaction Value determined to the Retention Agreement between Mr.Gillis and the Company dated as of May3, 2018 and as amended as of August8, 2018, (iii)a retention bonus in the amount of $100,000, (iv)50% vesting acceleration of his outstanding equity awards as of the Separation Date, and a one-year period following the Separation Date to exercise his outstanding options, and (v)payment of his COBRA premiums for up to six months following the effectiveness of his Separation Agreement.
to the Lillie Agreement, Dr.Lillie will cease serving as an employee of the Company effective as of the Effective Time of the Merger. Dr.Lillie will be entitled to (i)a severance payment equal to $324,000, which represents the sum of six months of his annual base salary and his full annual discretionary bonus opportunity, which is 40% of his annual base salary, (ii)an amount in cash equal to 0.40% of the Transaction Value determined to the Retention Agreement between Dr.Lillie and the Company dated as of May3, 2018, (iii)50% vesting acceleration of his outstanding equity awards as of the Separation Date, and a one-year period following the Separation Date to exercise his outstanding options, and (iv)payment of his COBRA premiums for up to six months following the effectiveness of his Separation Agreement.
The foregoing description of the material terms of the Separation Agreements is not complete and is subject to and qualified in its entirety by reference to the full text of the Separation Agreements, copies of which are attached hereto as Exhibit10.2, 10.3 and 10.4 and are incorporated herein by reference.
