VITAL THERAPIES, INC. (NASDAQ:VTL) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

VITAL THERAPIES, INC. (NASDAQ:VTL) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
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.

Vital Therapies, Inc. (the “Company”), in an effort to maximize the cash on our balance sheet in the share exchange transaction with Immunic AG, as previously announced, has restructured our severance arrangements with our executive officers, including our chief executive officer (“Executives”). In connection with the restructuring of these agreements, and as described in greater detail below, on January 10, 2019 the compensation committee of our board of directors approved (i) the cancellation of options held by our Executives; (ii) amendments to the existing change of control and severance agreements with each of our Executives; (iii) the adoption of a form of Restricted Stock Unit (“RSU”) award agreement under our 2014 Equity Incentive Plan; and (iv) grants of RSUs to our Executives, contingent upon the Executives agreeing and entering into all agreements necessary to effectuate these transactions. On January 11, 2019, the Company and each of the Executives executed the respective Amendment No. 1 to Change of Control and Severance Agreement for our CEO and other executive officers, executed an option cancellation agreement, and received the following, respective RSU grants:

RSUs Granted

Russell J. Cox

Chief Executive Officer

1,854,376

Duane D. Nash

President

886,316

Michael V. Swanson

Chief Financial Officer

817,826

Robert A. Ashley

Chief Scientific Officer

816,634

John M. Dunn

General Counsel

724,848

The above RSUs shall be settled in cash and/or shares of common stock of the Company, vest 25% on each of the first four anniversaries of January 11, 2019, and accelerate 50% upon termination without cause or resignation for good reason to the amended change of control and severance agreements.

The following description of the amendments to our change of control and severance agreements does not purport to be complete, and such description is qualified in its entirety by reference to the text of the complete amendment which is filed as Exhibit 10.1 to this Current Report on Form 8-K.

Amendments to Change of Control and Severance Agreements

Our compensation committee approved the following modifications to our change of control and severance benefits for our Executives as follows:

Severance Benefits for CEO

The amendment to the change of control and severance agreement for our chief executive officer (“CEO”) provides for (i) a lump sum cash payment in an amount equivalent to twelve months’ salary for termination without “cause” or a termination by him for “good reason” that is not in connection with a change of control, and (ii) a lump sum cash payment in an amount equivalent to eighteen months’ salary for termination without “cause” or a termination by him for “good reason” in connection with a change of control. Furthermore, if the termination is in connection with a change of control, the amendment provides for a decrease in the amount of such cash payment to be paid to our CEO upon termination by us or our successor without “cause” or a termination by him for “good reason,” by an amount equal to the total value, as of January 10, 2019, of the RSUs granted as if such RSUs had been settled in cash as of that date. All RSUs held by our CEO accelerate 50% on termination without cause or resignation with good reason, in each case, as described therein. In addition, the amendment provides that the period in which a change of control could occur after a termination of our CEO not in connection with a change of control, but still trigger the severance payments for a termination in connection with a change in control, was increased from two months to six months.

Severance Benefits for Other Executive Officers

The amendment to the change of control and severance agreement for our other executive officers provides for (i) a lump sum cash payment in an amount equivalent to six months’ salary for termination without “cause” or a termination by such executive officer for “good reason” that is not in connection with a change of control, and (ii) a lump sum cash payment in an amount equivalent to twelve months’ salary for termination without “cause” or a termination by such executive officer for “good reason” in connection with a change of control. Furthermore, if the termination is in connection with a change of control, the amendment provides for a decrease in the amount of such cash payment to be paid to such other executive officers upon a termination by us or our successor without “cause” or a termination by such other executive officers for “good reason,” by an amount equal to the total value, as of January 10, 2018, of all of the RSUs granted as if such RSUs had been settled in cash as of that date. All RSUs held by such other executive officers accelerate 50% on termination without cause or resignation with good reason, in each case, as described therein. In addition, the period in which a change of control could occur after a termination of such other executive officers not in connection with a change of control, but still trigger the severance payments for a termination in connection with a change in control, was increased from two months to six months.

Cancellation of Options

In connection with the restructuring of the change of control and severance agreement as described above, all stock options to purchase shares of the Company’s comment stock to the Company’s 2012 Stock Option Plan, 2014 Equity Incentive Plan and/or its 2017 Inducement Equity Incentive Plan held by the Executives were cancelled by mutual agreement between the Company and the Executives to an option cancellation agreement entered into between the Company each Executive.

Form of RSU Award Agreement

In connection with the above, the compensation committee of our board of directors adopted a Form of RSU Award Agreement under the Company’s 2014 Equity Incentive Plan, which is filed as an exhibit to this Current Report on Form 8-K

EXHIBIT INDEX

VITAL THERAPIES INC Exhibit
EX-10.1 2 vitalformofrsuagreement2.htm EXHIBIT 10.1 vitalformofrsuagreement2 VITAL THERAPIES,…
To view the full exhibit click here

About VITAL THERAPIES, INC. (NASDAQ:VTL)

Vital Therapies, Inc. is a biotherapeutic company. The Company is focused on developing a human hepatic cell-based treatment targeting acute forms of liver failure. Its product candidate, the ELAD System, is an extracorporeal human allogeneic cellular liver therapy designed to allow the patient’s liver to regenerate to a healthy state, or to stabilize the patient until transplant. The ELAD System is a liver support system containing immortal human liver-derived cells, or VTL C3A cells. The Company initiated a Phase III clinical trial in severe acute alcoholic hepatitis (sAAH), referred to as VTL-308. Its VTL-308 is a randomized, open-label, multicenter, controlled, pivotal study, designed to evaluate the ELAD System in subjects with sAAH. It is based on pre-specified and post-hoc analyses of its VTI-208 phase III clinical trial in alcohol-induced liver decompensation (AILD). The Company’s ELAD System consists of approximately four disposable ELAD C3A cell cartridges.

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