UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
Not Applicable | ||
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: +
Not Applicable
(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 Instructions A.2. below):
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)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading |
Name of each exchange | ||
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 or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(a) Appointment of New Chief Financial Officer
Appointment of Brendan Smith as Senior Vice President and Chief Financial Officer
On October 14, 2021, CRISPR Therapeutics AG (the “Company”) announced the hiring and appointment of Brendan Smith as its Senior Vice President and Chief Financial Officer, effective immediately. Mr. Smith will also serve as the Company’s principal financial officer and principal accounting officer.
Prior to joining the Company, Mr. Smith, aged 46, served as Chief Financial Officer and Corporate Strategy of Translate Bio, Inc., or Translate Bio, from April 2021 to September 2021. Translate Bio is a publicly-traded company where he oversaw accounting, procurement, financial planning and analysis, investor relations, IT and corporate strategy functions. Mr. Smith previously held various roles at Boston Consulting Group, or BCG, a management consulting firm, serving most recently as a partner and associate director from July 2018 to March 2021, and as principal healthcare expert from September 2016 to June 2018. At BCG, Mr. Smith led integrated biopharmaceutical client engagements that included planning and executing on research and development strategy, operations, business development and deal diligence. Mr. Smith served as vice president, head of business operations for worldwide research and development at Pfizer Inc., or Pfizer, a pharmaceutical company, from September 2014 to September 2016 and as executive director, head of business strategy and operations at Pfizer from November 2012 to September 2014, where he led financial and headcount planning across discovery and development operations. Mr. Smith received a B.S. in biochemistry from Worcester Polytechnic Institute and an M.B.A. from Harvard Business School.
Employment Agreement with Mr. Smith
In connection with Mr. Smith’s appointment to the position of Senior Vice President and Chief Financial Officer, the Company’s wholly owned subsidiary, CRISPR Therapeutics, Inc (“CRISPR Inc.”), entered into a Employment Agreement (the “Employment Agreement”) with Mr. Smith dated October 14, 2021.
Under the Employment Agreement, Mr. Smith will receive an annual salary of $435,000 and he will be eligible to participate in the Company’s annual bonus program, with a target bonus of 40% of his base salary. Mr. Smith’s bonus for 2021 will be pro-rated to reflect his start date with the Company. Mr. Smith will also be eligible to participate in the Company’s 2018 Stock Option and Incentive Plan, and will receive (i) an inaugural, one-time grant of options to purchase 90,000 of the Company’s common shares (the “Option Award”) and (ii) an inaugural, one-time grant of 15,000 restricted stock units corresponding to an equivalent number of the Company’s common shares (the “RSU Award”). Twenty-five percent of the Option Award will vest on October 14, 2022, and the remaining seventy-five percent of the Option Award will vest ratably on a monthly basis over the following three years. Twenty-five percent of the RSU Award will vest on first, second, third and fourth anniversary of the grant date of such award, subject, in each case, to Mr. Smith’s continued employment with CRISPR Inc., the Company or any other subsidiary of the Company. Mr. Smith will also receive a one-time payment of $75,000, which is subject to forfeiture in the event Mr. Smith’s employment with the Company is terminated for any reason prior to November 14, 2022. Mr. Smith will be eligible to participate in the Company’s 401(k) plan, health plans and other benefits on the same terms as all other Company employees.
Under the Employment Agreement, in the event we terminate his employment without Cause, or Mr. Smith resigns for Good Reason (both as defined in the Employment Agreement), the terminating party will be required to give six months’ notice (the “Notice Period”). During the Notice Period, Mr. Smith shall continue to be entitled to all compensation under the Employment Agreement, and all stock options and stock based awards shall continue to vest from the date notice of termination is given until the last day of the Notice Period. In addition, Mr. Smith will be entitled to receive a pro-rated bonus for the duration of the Notice Period.
No later than fifteen days following the delivery of notice by us to Mr. Smith of a termination without Cause or the delivery of a notice of resignation by Mr. Smith for Good Reason, Mr. Smith will be placed on “administrative leave.” During this period of administrative leave, Mr. Smith may enter into consulting arrangements and accept board positions with other companies and will be allowed to engage in other employment, so long as that employment doesn’t interfere with his obligations under the Employment Agreement. However, Mr. Smith will continue to be entitled to all compensation under the Employment Agreement through the administrative leave period, which terminates at the end of the Notice Period.
If Mr. Smith’s employment is terminated by us without Cause or by Mr. Smith for Good Reason, in each case, within 12 months following a Change in Control (as defined in the Employment Agreement), the Notice Period will become 12 months and all equity awards held by Mr. Smith on such date that the notice of termination or resignation is delivered will vest, or similar other restrictions will expire, and such awards become exercisable or nonforfeitable, subject to his execution of a release of any claims in favor of us. However, in the event we determine at the time of the Change in Control, based upon an opinion of counsel, that the acceleration described in the preceding sentence is not permissible under applicable law, all stock options and stock-based awards held by Mr. Smith as of the date of the Change in Control, shall vest and become exercisable or nonforfeitable as of the date of the Change in Control.
There are no transactions between Mr. Smith and the Company subject to disclosure pursuant to Item 404(a) of Regulation S-K, and there is no arrangement or understanding between Mr. Smith and any other persons or entities pursuant to which Mr. Smith was appointed as officer of the Company. There are no family relationships between Mr. Smith and any of our directors or executive officers.
The foregoing description of the material terms of Mr. Smith’s employment arrangement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Employment Agreement, a copy of which is attached hereto as Exhibit 10.1 and is incorporated by reference herein.
The full text of the press release announcing Mr. Smith’s appointment is furnished as Exhibit 99.1 to this Current Report on Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section.
(b) Retirement of Chief Financial Officer
On October 14, 2021, Michael Tomsicek retired from his position as Senior Vice President and Chief Financial Officer of the Company. Mr. Tomsicek’s decision to retire is not the result of any disagreement regarding the Company’s financial reporting or accounting policies, procedures, estimates, or judgments. Mr. Tomsicek is expected to remain employed as an employee of CRISPR Therapeutics, Inc. until a date on or before December 31, 2021, during which time Mr. Tomsicek’s outstanding options to purchase common shares of the Company that are not vested will continue to vest.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. | Description | |
10.1 | Employment Agreement, dated October 14, 2021, by and between CRISPR Therapeutics, Inc. and Brendan Smith. | |
99.1 | Press Release by CRISPR Therapeutics AG, dated October 14, 2021. | |
104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CRISPR THERAPEUTICS AG | ||||||
Date: October 14, 2021 | By: | /s/ Samarth Kulkarni | ||||
Samarth Kulkarni, Ph.D. | ||||||
Chief Executive Officer |
Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (Agreement) is made as of the 14th day of October, 2021 between CRISPR Therapeutics, Inc., a Delaware corporation (the Company), and Brendan Smith (the Executive and, together with the Company, the Parties or each individually, a Party).
WHEREAS, this Employment Agreement shall become effective upon the later of the (i) full execution by both Parties; or (ii) ten (10) business days after the Company provided Executive with notice of this Agreement and the Exhibits (the Effective Date).
WHEREAS, the Company is a wholly owned subsidiary of CRISPR Therapeutics AG (Parent or CRISPR AG);
WHEREAS, Parent and the Company are each subject to the Swiss Ordinance act against excessive compensation in listed companies as a result of the of listing of the common shares of Parent on the NASDAQ Global Market; and
WHEREAS, the Company and the Executive are parties to that certain offer letter dated on or about October 12, 2021 (the Prior Agreement).
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Position and Duties. The employment of the Executive by the Company will commence on the date hereof. The Executive will serve as the Senior Vice President, Chief Financial Officer of the Company. The Executive shall have responsibilities and duties consistent with such position and such other responsibilities and duties as may from time to time be prescribed by the Chief Executive Officer of the Company (the CEO) which are not inconsistent with the Executives skills and experience or his ability to discharge his responsibilities in the positions noted above. The Executive shall devote the Executives full working time and efforts to the business and affairs of the Company except as otherwise permitted under Section 3(b)(i). Notwithstanding the foregoing, the Executive may engage in charitable or other community activities, as long as such services and activities are disclosed to the Board of Directors of Parent (the Board) and do not materially interfere with the Executives performance of the Executives duties to the Company as provided in this Agreement. During the period which the Executive is employed pursuant to this Agreement (the Employment Period), the Executives principal place of employment will be in the Greater Boston, Massachusetts area; however, the Company may require the Executive to travel temporarily to other locations in connection with the Companys business.
2. Compensation and Related Matters.
(a) Base Salary. During the Employment Period, the Company shall pay the Executive, as compensation for the performance of the Executives duties and obligations under this Agreement, an annual base salary of $435,000, payable in a manner that is consistent with the Companys usual payroll practices for senior executives. The Executives base salary shall be reviewed annually by each of the Compensation Committee of the Board or any successor to such committee (the Committee) and the Board or for adjustment. Such adjustment, if any, shall be within the sole discretion of the Board. The annual base salary in effect at any given time is referred to herein as Base Salary.
(b) Annual Bonus. During the Employment Period, the Executive shall be eligible to receive an annual target bonus (a Bonus) if, as reasonably determined by the Board or, to the extent delegated by the Board, the Committee one or more of the performance targets annually determined by the Board or the Committee (Performance Targets) is achieved. If all of the Performance Targets are achieved, the Bonus will equal not less than 40 percent of the Executives Base Salary (the Target Bonus). In the event that less than all of the Performance Targets are met by Executive, the Bonus paid in respect of this paragraph may be less than the Target Bonus. Except as set forth in Section 5(a) hereof, the Executive must be employed by the Company on the day any such earned Bonus is paid which shall be not later than 21⁄2 months after the end of each calendar year. The Executives target bonus opportunity as a percentage of Base Salary may be reviewed periodically and adjusted in the sole discretion of the Board. After any such adjustment, the term Target Bonus shall refer to the increased amount.
(c) Equity Compensation. The Executive shall be eligible to participate in Parents equity incentive plan according to its terms and conditions, as defined by Parent from time to time in its sole discretion. Both entitlement to any equity awards and the amount shall be determined by Parent in its sole discretion.
(d) Expenses. During the Employment Period, the Executive shall be entitled to receive reimbursement for all reasonable expenses incurred by him in performing services hereunder, in accordance with the policies and procedures then in effect and established by the Company for its senior executive officers.
(e) Other Benefits. During the Employment Period, the Executive shall be entitled to participate in or receive benefits under any employee benefit plan or arrangement currently maintained or which may, in the future, be made available by the Company generally to its executives and key management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plan or arrangement. Any payments or benefits payable to the Executive under a plan or arrangement referred to in this Section 2(e) in respect of any calendar year during which the Executive is employed by the Company for less than the whole of such year shall, unless otherwise provided in the applicable plan or arrangement, be prorated in accordance with the number of days in such calendar year during which the Executive is so employed. Should any such payments or benefits accrue on a fiscal (rather than calendar) year, then the proration in the preceding sentence shall be on the basis of a fiscal year rather than calendar year.
2
(f) Vacations. The Executive shall be entitled to accrue up to 20 paid vacation days in each year, which shall be accrued ratably. In other respects, the Companys vacation policy as the same may then be in effect shall apply to vacations.
(g) Approval by Shareholders Meeting and Mandatory Law. Any compensation (including bonus, equity awards and fringe benefits) to be paid under this Agreement, is, to the extent required by Swiss laws and the Parents Article of Association, subject to approval by the general meeting of shareholders of Parent. In the event of a conflict between this Agreement and applicable mandatory Swiss law, the Company shall have the right to unilaterally modify the Agreement to the extent necessary to comply with mandatory law with immediate effect.
(h) Lost Opportunity Compensation. To offset losses the Executive incurred in connection with the transitioning of his employment to the Company, the Company will make a one-time payment to the Executive in the amount of $75,000 in the first payroll following 30 days of employment with the Company (usually within the first 60 days of employment). This payment is subject to the usual required withholdings. The Executive understands and agrees that, in the event his employment with the Company is terminated for any reason prior to November 14, 2022, he will reimburse the Company, within one (1) month after such employment termination, for this full amount ($75,000). The Executive further agrees that amount may be collected by the Company, either directly or indirectly, from (i) payment of any kind due to the Executive from the Company or any affiliate thereof including, without limitation, accrued wages, vacation, final wages, and expense reimbursements to the fullest extent permitted by applicable law; and/or (ii) the forfeiture or cancellation of any equity interest owned by you in CRISPR AG, the Company or any subsidiary or affiliate thereof, whether now existing or hereafter formed, and regardless of the form such equity interest (e.g., common shares, options to acquire common shares or otherwise).
3. Termination.
(a) General. The Executives employment shall continue until it is terminated in accordance with this Agreement. Upon service of a Notice of Termination (as defined below), the Executive shall resign from all offices and functions assumed in relation to this Agreement effective upon first request of the Company.
(b) Termination by the Company without Cause or by Executive for Good Reason; Notice Period. In the event that the Company elects to terminate the Executives employment without Cause (as defined below) or the Executive elects to resign from Executives employment with Good Reason (as defined below) (in either case an Involuntary Departure), the Party electing to end the employment relationship shall provide the other Party with a Notice of Termination (as defined below) of the Involuntary Departure specifying a notice period (the Notice Period) of six (6) months, effective as per the end of a calendar month; provided that, in the case that the Notice of Termination of an Involuntary Departure is provided within the 12 month period following a Change in Control (the Change in Control Period or CIC Period), then the Notice Period shall be 12 months.
(i) During the Notice Period following a Notice of Termination of an Involuntary Departure, the Executive shall continue to be available to provide services to
3
the extent requested by the Company or the Board, provided at any time during the Notice Period the Company may replace the Executives position and/or direct the Executive to perform other or reduced work; provided further that, upon the 15th day following such Notice of Termination (or such earlier date as the Company shall determine in its sole discretion), the Company shall release the Executive from his working obligations pursuant to Section 3(b)(i) (except to the extent the parties otherwise agree) and place the Executive on administrative leave for the remainder of the Notice Period (Administrative Leave). During such Administrative Leave, the Executive (A) may enter into consulting arrangements and accept board positions provided such outside business activities do not interfere with Executives obligations under this Agreement including without limitation, pursuant to Section 7 and (B) shall be free to engage in other employment provided that such employment does not interfere with Executives obligations under this Agreement including without limitation, pursuant to Section 7. The Company shall be prohibited during the Administrative Leave from reducing any compensation to which the Executive is entitled to receive during the remainder of the Notice Period pursuant to Section 3(b)(ii).
(ii) With respect to compensation during the Notice Period following a Notice of Termination of an Involuntary Departure, and subject to (i) the Executive signing, within 30 days following the date that the Notice of Termination is given, a Release of Claims in a form reasonably required by the Company containing, among other provisions, a general release of claims in favor of the Company and related persons and entities, confidentiality, return of property and non-disparagement, a reaffirmation of all of the Executives Continuing Obligations and, in the Companys sole discretion, a one-year post-employment noncompetition agreement, and shall provide that if the Executive breaches any of the Executives Continuing Obligations, all payments of the Severance Amount shall immediately cease (the Release) and (ii) Section 6, the Executive: (A) shall continue to receive the Base Salary and employee benefits consistent with the Companys then existing benefits plans and programs; (B) shall be entitled to receive an amount equal to the Target Bonus with respect to the Notice Period (i.e., a prorated Target Bonus based upon the number of days in the applicable Notice Period), which amount shall be payable no more than 60 days after the Notice of Termination (provided that if the 60-day period begins in one calendar year and ends in a second calendar year, such Target Bonus shall be paid in the second calendar year); (C) shall continue to vest through the last day of the Notice Period in any [time based] equity awards outstanding as of the date the Notice of Termination is given; provided, and notwithstanding the foregoing, Section 5(a) may apply if the Notice of Termination of an Involuntary Departure occurs during a CIC Period, and (D) shall not continue to accrue vacation under Section 2(f).
(iii) If during the Notice Period following a Notice of Termination of an Involuntary Departure, the Company terminates the Executives employment for Cause, then the Company shall provide a restated Notice of Termination and the Notice Period shall end on the earlier date set forth in the restated Notice of Termination.
(c) Death. The Executives employment hereunder shall terminate upon his death.
4
(d) Disability. The Company may terminate the Executives employment if the Executive is disabled and unable to perform the essential functions of the Executives then existing position or positions with or without reasonable accommodation for a period of 180 days (which need not be consecutive) in any 12-month period. If any question shall arise as to whether during any period the Executive is disabled so as to be unable to perform the essential functions of the Executives then existing position or positions with or without reasonable accommodation, the Executive may, and at the request of the Company shall, submit to the Company a certification in reasonable detail by a physician selected by the Company to whom the Executive or the Executives guardian shall have no reasonable objection as to whether the Executive is so disabled or how long such disability is expected to continue, and such certification shall for the purposes of this Agreement be conclusive of the issue. The Executive shall cooperate with any reasonable request of the physician in connection with such certification. If such question shall arise and the Executive shall fail to submit such certification, the Companys determination of such issue shall be binding on the Executive. Nothing in this Section 3(d) shall be construed to waive the Executives rights, if any, under existing law including, without limitation, the Family and Medical Leave Act of 1993, 29 U.S.C. §2601 et seq. and the Americans with Disabilities Act, 42 U.S.C. §12101 et seq.
(e) Termination by Company for Cause. The Company may terminate the Executives employment hereunder for Cause.
(f) Termination by the Executive Without Good Reason. The Executive may terminate his employment hereunder at any time without Good Reason.
(g) Definitions:
(i) Cause. For purposes of this Agreement, Cause shall mean: (i) the Executives commission of any felony or commission of any crime involving fraud, dishonesty or moral turpitude; (ii) the Executives commission or attempted commission of or participation in a fraud or act of dishonesty against the Company; (iii) the Executives material breach of any contract or agreement between the Executive and the Company or the Executives material breach of any legal duty he owes to the Company; (iv) conduct by the Executive that constitutes insubordination, incompetence or neglect of duties; (v) the Executives failure to perform the duties, functions and responsibilities of the Executives position; or (vi) the Executives failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by the Company to cooperate, or the willful destruction or failure to preserve documents or other materials known to be relevant to such investigation or the inducement of others to fail to cooperate or to produce documents or other materials in connection with such investigation; provided, however, the actions or conduct described in clauses (iv) and (v) above shall only constitute Cause if the Company provides the Executive with written notice thereof and the Executive has not, within 30 days of receipt such written notice, discontinued the cited conduct or remedied the failure to perform and further provided that lawful actions taken by the Executive in the exercise of his rights under the United States Constitution shall not constitute a breach of subsection (vi) above.
5
(ii) Good Reason. For purposes of this Agreement, Good Reason shall mean that the Executive has complied with the Good Reason Process (hereinafter defined) following the occurrence of any of the following events: (i) a material diminution in the Executives responsibilities, authority and function, an adverse change to Executives job title, or a change in Executives reporting relationship that results in the Executive no longer reporting directly to the CEO; (ii) a material reduction in Base Salary except pursuant to a salary reduction program affecting substantially all of the employees of the Company, provided that it does not adversely affect the Executive to a greater extent than other similarly situated employees; (iii) a material change in the principal geographic location at which the Executive provides services to the Company outside of the Greater Boston, Massachusetts area; or (iv) the material breach of this Agreement by the Company (each a Good Reason Condition). Good Reason Process shall mean that (i) the Executive reasonably determines in good faith that a Good Reason Condition has occurred; (ii) the Executive notifies the Company in writing of the first occurrence of the Good Reason Condition within 60 days of the occurrence of such condition; (iii) the Executive cooperates in good faith with the Companys efforts, for a period not less than 30 days following such notice (the Cure Period), to remedy the Good Reason Condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist; and (v) the Executive terminates employment within 60 days after the end of the Cure Period. If the Company cures the Good Reason Condition during the Cure Period, Good Reason shall be deemed not to have occurred.
(iii) Notice of Termination. Except for termination as specified in Section 3(c), any termination of the Executives employment by either the Company or the Executive shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a Notice of Termination shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon.
(iv) Date of Termination. For purposes of this Agreement, Date of Termination shall mean: (i) if the Executives employment is terminated by death, the date of death; (ii) if the Executives employment is terminated on account of disability under Section 3(d) or by the Company for Cause under Section 3(e), the date on which Notice of Termination is given; (iii) if the Executives employment terminates as a result of an Involuntary Departure under Section 3(b), the last day of the Notice Period; (iv) if the Executives employment is terminated by the Executive under Section 3(f) without Good Reason, 30 days after the date on which a Notice of Termination is given (unless the Company waives all or part of the thirty (30) day period).
4. Compensation Upon Termination. If the Executives employment with the Company is terminated for any reason, the Company shall pay or provide to the Executive (or to the Executives authorized representative or estate) (i) any Base Salary earned through the Date of Termination; (ii) unpaid expense reimbursements (subject to, and in accordance with Section 2(d) of this Agreement); (iii) subject to Section 3(b)(ii)(D), unused vacation that accrued through the Date of Termination; and (iv) any vested benefits the Executive may have under any employee benefit plan of the Company through the Date of Termination, which vested benefits shall be paid and/or provided in accordance with the terms of such employee benefit plans (together, the Accrued Benefit) on or before the time required by law but in no event more than 30 days after the Executives Date of Termination.
6
5. Change in Control.
(a) Acceleration of Vesting. In the event a Notice of Termination of an Involuntary Termination occurs during the CIC Period, and subject to the Executive signing, within 60 days following the Notice of Termination, a Release and the Release becoming effective and non-revocable within such 60-day period, all time based stock options and time based stock-based awards held by the Executive as of the date of the Notice of Termination, shall vest and become exercisable or nonforfeitable. Notwithstanding the foregoing, if, at the time of a Change in Control, the Company determines in its sole discretion, in reliance upon an opinion of counsel in form and substance satisfactory to the Company, that the acceleration in the prior sentence would not be permissible under applicable law, then in lieu of the acceleration in the prior sentence, all time based stock options and time based stock-based awards held by the Executive as of the date of such Change in Control, shall vest and become exercisable or nonforfeitable as of the date of such Change in Control.
(b) Excise Tax.
(i) Anything in this Agreement to the contrary notwithstanding, in the event that any compensation, payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the Parachute Payments), would be subject to the excise tax imposed by Section 4999 of the Code (the Excise Tax), the following provisions shall apply:
(A) If the Parachute Payments, reduced by the sum of (1) the Excise Tax and (2) the total of the Federal, state, and local income and employment taxes payable by the Executive on the amount of the Parachute Payments which are in excess of the Threshold Amount, are greater than or equal to the Threshold Amount, the Executive shall be entitled to the full benefits payable under this Agreement.
(B) If the Threshold Amount is less than (x) the Parachute Payments, but greater than (y) the Parachute Payments reduced by the sum of (1) the Excise Tax and (2) the total of the Federal, state, and local income and employment taxes on the amount of the Parachute Payments which are in excess of the Threshold Amount, then the Parachute Payments shall be reduced (but not below zero) to the extent necessary so that the sum of all Parachute Payments shall not exceed the Threshold Amount. In such event, the Parachute Payments shall be reduced in the following order: (1) cash payments not subject to Section 409A of the Code; (2) cash payments subject to Section 409A of the Code; (3) equity-based payments and acceleration; and (4) non-cash forms of benefits. To the extent any payment is to be made over time (e.g., in installments, etc.), then the payments shall be reduced in reverse chronological order.
7
(ii) For the purposes of this Section 5(c), Threshold Amount shall mean three times the Executives base amount within the meaning of Section 280G(b)(3) of the Code and the regulations promulgated thereunder less one dollar ($1.00); and Excise Tax shall mean the excise tax imposed by Section 4999 of the Code, and any interest or penalties incurred by the Executive with respect to such excise tax.
(iii) All calculations and determinations under Sections 5(c)(i) and 5(c)(ii) shall be made by an independent accounting firm or independent tax counsel appointed by the Company (the Tax Counsel) whose determinations shall be conclusive and binding on the Company and the Executive for all purposes. For purposes of making the calculations and determinations required by Sections 5(c)(i) and 5(c)(ii), the Tax Counsel may rely on reasonable, good faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code. The Company and the Executive shall furnish the Tax Counsel with such information and documents as the Tax Counsel may reasonably request in order to make its determinations under Sections 5(c)(i) and 5(c)(ii). The Company shall bear all costs the Tax Counsel may reasonably incur in connection with its services.
(c) Definitions. For purposes of this Section 5, Change in Control shall mean any of the following:
(i) any person, as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the Act) (other than Parent, any of its subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of Parent or any of its subsidiaries), together with all affiliates and associates (as such terms are defined in Rule 12b-2 under the Act) of such person, shall become the beneficial owner (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, of securities of Parent representing 50 percent or more of the combined voting power of the Companys then outstanding securities having the right to vote in an election of the Board (Voting Securities) (in such case other than as a result of an acquisition of securities directly from Parent); or
(ii) the date a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or
(iii) the consummation of (A) any consolidation or merger of Parent where the stockholders of Parent, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate more than 50 percent of the voting shares of the company issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any), or (B) any sale or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of Parent.
8
Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as the result of an acquisition of securities by Parent which, by reducing the number of shares of Voting Securities outstanding, increases the proportionate number of Voting Securities beneficially owned by any person to 50 percent or more of the combined voting power of all of the then outstanding Voting Securities; provided, however, that if any person referred to in this sentence shall thereafter become the beneficial owner of any additional shares of Voting Securities (other than pursuant to a stock split, stock dividend, or similar transaction or as a result of an acquisition of securities directly from Parent) and immediately thereafter beneficially owns 50 percent or more of the combined voting power of all of the then outstanding Voting Securities, then a Change in Control shall be deemed to have occurred for purposes of the foregoing clause (i). For the avoidance of doubt, a migratory merger of Parent for the principal purpose of redomiciling Parent shall not constitute a Change in Control.
6. Section 409A.
(a) Anything in this Agreement to the contrary notwithstanding, if at the time of the Executives separation from service within the meaning of Section 409A of the Code, the Company determines that the Executive is a specified employee within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that the Executive becomes entitled to under this Agreement on account of the Executives separation from service would be considered deferred compensation subject to the 20 percent additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A) six months and one day after the Executives separation from service, or (B) the Executives death. If any such delayed cash payment is otherwise payable on an installment basis, the first payment shall include a catch-up payment covering amounts that would otherwise have been paid during the six-month period but for the application of this provision, and the balance of the installments shall be payable in accordance with their original schedule. Solely for purposes of Section 409A of the Code, each installment payment under this Agreement is considered a separate payment.
(b) All in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Company or incurred by the Executive during the time periods set forth in this Agreement. All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year. Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.
(c) To the extent that any payment or benefit described in this Agreement constitutes non-qualified deferred compensation under Section 409A of the Code, and to the extent that such payment or benefit is payable upon the Executives termination of employment, then such payments or benefits shall be payable only upon the Executives separation from service. The determination of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury Regulation Section 1.409A-1(h).
9
(d) The parties intend that this Agreement will be administered in accordance with Section 409A of the Code. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A of the Code. The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.
(e) The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, such Section.
7. Proprietary Information, Noncompetition and Cooperation.
(a) Confidentiality and Assignment Agreement. The Executive has entered into the Proprietary Information and Inventions Agreement (the Confidentiality and Assignment Agreement), attached hereto as Exhibit A, the terms of which are incorporated by reference as material terms of this Agreement. For purposes of this Agreement, the obligations in this Section 7 and those that arise in the Confidentiality and Assignment Agreement, and any other agreement relating to confidentiality, assignment of inventions, or other restrictive covenants shall collectively be referred to as the Continuing Obligations.
(b) Non-Solicitation. In order to protect the Companys proprietary information and good will, during the Executives employment with the Company and for a period of twelve (12) months following the (i) the delivery of a Notice of Termination, in the case of an Involuntary Departure or (ii) the termination of the Executives employment for any other reason (the Restricted Period,) the Executive will not, directly or indirectly, in any manner, other than for the benefit of the Company (i) divert or take away customers of the Company or any of its suppliers; and/or (ii) solicit, entice, attempt to persuade any other employee or consultant of the Company to leave the Company for any reason (other than the termination of subordinate employees undertaken in the course of the Executives employment with the Company). The Executive acknowledges and agrees that if the Executive violates any of the provisions of this paragraph 7(b), the running of the Restricted Period will be extended by the time during which the Executive engages in such violation(s).
(c) Noncompetition. The Executive acknowledges and agrees that in consideration and as a condition of the Executives promotion by the Company and in exchange for, among other things, the benefits contained in this Agreement, including without limitation the opportunity to receive enhanced post-employment severance benefits, which the Executive acknowledges and agrees is fair and reasonable consideration that is independent from the continuation of the Executives employment, during the Restricted Period the Executive will not directly or indirectly, whether as owner, partner, shareholder, director, manager, consultant,
10
agent, employee, co-venturer or otherwise, engage, participate or invest in any Competing Business anywhere in the world. For purposes hereof, the term Competing Business shall mean any entity engaged in the discovery, development or commercialization of gene editing technology for human therapeutics. Notwithstanding the foregoing, nothing contained hereinabove or hereinbelow shall be deemed to prohibit the Executive from (i) acquiring, solely as an investment, shares of capital stock (or other interests) of any corporation (or other entity) not exceeding 2% of such corporations (or other entitys) then outstanding shares of capital stock (or equity interest), or (ii) working for a line of business, division or unit of a larger entity that competes with the Company as long as the Executives activities for such line of business, division or unit do not involve work by the Executive on matters that are directly competitive with the Companys business. Notwithstanding the foregoing, this Section 7(c) shall not be enforceable during the post-employment portion of the Restricted Period if the Executive is terminated by the Company without Cause, is laid off from employment or if the Company elects to waive the restrictions set forth in this Section 7(c). If Section 7(c) is enforced during the post-employment portion of the Restricted Period, the Company shall pay the Executive at the rate of 50% of the highest annualized base salary paid to the Executive within the two year period preceding the last day of Executives employment (the Garden Leave Pay) during the post-employment portion of the Restricted Period. During the Restricted Period Executive will promptly (and immediately upon request) notify the Company of any change in address and each subsequent employer or business activity including the name and address of employer or other post-Company plans and the nature of Executives activities. The Companys election not to provide post-employment Garden Leave Pay shall be deemed a waiver of Executives post-employment noncompetition obligations under this Section 7(c). In no event will Garden Leave Pay be duplicative of other pay and the Executive agrees that any Garden Leave Pay received pursuant to this Section 7(c) shall reduce (and shall not be in addition to) any other pay that the Executive may be entitled to receive during the post-employment portion of the Restricted Period. The Executive acknowledges that he has been advised by the Company that he has the right to consult with counsel regarding the noncompetition restrictions contained in this Section 7(c) prior to executing this Agreement.
(d) Litigation and Regulatory Cooperation. During and after the Executives employment, the Executive shall use reasonable efforts to cooperate with the Company in the defense or prosecution of any claims or actions now in existence or that may be brought in the future against or on behalf of the Company that relate to events or occurrences that transpired while the Executive was employed by the Company. The Executives cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient times. During and after the Executives employment, the Executive shall use reasonable efforts to cooperate with the Company in connection with any investigation or review of any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired while the Executive was employed by the Company. The Company shall reimburse the Executive for any reasonable out-of-pocket expenses incurred in connection with the Executives performance of obligations pursuant to this Section 7(c).
(e) Injunction. The Executive agrees that it would be difficult to measure any damages caused to the Company that might result from any breach by the Executive of the
11
promises set forth in this Section 7 and the Confidentiality and Assignment Agreement, and that in any event money damages would be an inadequate remedy for any such breach. Accordingly, subject to Section 8 of this Agreement, the Executive agrees that if the Executive breaches, or proposes to breach, any portion of this Agreement and the Confidentiality and Assignment Agreement, the Company shall be entitled, in addition to all other remedies that it may have, to an injunction or other appropriate equitable relief to restrain any such breach without showing or proving any actual damage to the Company.
(f) Protected Reporting; Defend Trade Secrets Act Immunity. Nothing in this Agreement or the Confidentiality and Assignment Agreement, and nothing in any policy or procedure, in any other confidentiality, employment, separation agreement or in any other document or communication from the Company limits the Executives ability to file a charge or complaint with any government agency concerning any acts or omissions that the Executive may believe constitute a possible violation of federal or state law or making other disclosures that are protected under the whistleblower provisions of applicable federal or state law regulation or affects the Executives ability to communicate with any government agency or otherwise participate in any investigation or proceeding that may be conducted by a government agency, including by providing documents or other information, without notice to the Company. In addition, for the avoidance of doubt, pursuant to the federal Defend Trade Secrets Act of 2016, the Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
8. Arbitration of Disputes. Any controversy or claim arising out of or relating to this Agreement or the breach thereof or otherwise arising out of the Executives employment or the termination of that employment (including, without limitation, any claims of unlawful employment discrimination whether based on age or otherwise) shall, to the fullest extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties or, in the absence of such an agreement, under the auspices of the American Arbitration Association (AAA) in Boston, Massachusetts in accordance with the Employment Arbitration Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators. In the event that any person or entity other than the Executive or the Company may be a party with regard to any such controversy or claim, such controversy or claim shall be submitted to arbitration subject to such other person or entitys agreement. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. This Section 8 shall be specifically enforceable. Notwithstanding the foregoing, this Section 8 shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate; provided that any other relief shall be pursued through an arbitration proceeding pursuant to this Section 8.
9. Consent to Jurisdiction. To the extent that any court action is permitted consistent with or to enforce Section 8 of this Agreement, the parties hereby agree that the Middlesex County Superior Court of The Commonwealth of Massachusetts shall have exclusive jurisdiction of such dispute, provided that the Company and the Executive agree that all civil actions related
12
to Section 7(c) of this Agreement shall be brought in the country of Suffolk and that the superior court or the business litigation session of the superior court shall have exclusive jurisdiction. Accordingly, with respect to any such court action, the Executive submits to the personal jurisdiction of such courts.
10. Integration. This Agreement and the Confidentiality and Assignment Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, including the Prior Agreement, between the Parties concerning such subject matter.
11. Withholding. All payments made by the Company to the Executive under this Agreement shall be net of any tax or other amounts required to be withheld by the Company under applicable law.
12. Successor to the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executives personal representatives, executors, administrators, heirs, distributees, devisees and legatees. In the event of the Executives death after her termination of employment but prior to the completion by the Company of all payments due him under this Agreement, the Company shall continue such payments to the Executives beneficiary designated in writing to the Company prior to her death (or to her estate, if the Executive fails to make such designation).
13. Enforceability. If any portion or provision of this Agreement (including, without limitation, any portion or provision of any section of this Agreement) shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
14. Survival. The provisions of this Agreement and the Confidentiality and Assignment Agreement shall survive the termination of this Agreement and/or the termination of the Executives employment to the extent necessary to effectuate the terms contained herein.
15. Waiver. Except as otherwise provided in Section 7(c), no waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.
16. Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by a nationally recognized overnight courier service or by registered or certified mail, postage prepaid, return receipt requested, to the Executive at the last address the Executive has filed in writing with the Company or, in the case of the Company, at its main offices, attention of the CEO and a copy of such notice shall be sent to Crispr AG, Attention: General Counsel, at the main offices of Crispr AG.
13
17. Amendment. This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Company.
18. Governing Law. This is a Massachusetts contract and shall be construed under and be governed in all respects by the laws of the Commonwealth of Massachusetts, without giving effect to the conflict of laws principles of such Commonwealth. With respect to any disputes concerning federal law, such disputes shall be determined in accordance with the law as it would be interpreted and applied by the United States Court of Appeals for the First Circuit.
19. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.
20. Assignment and Transfer by the Company. The Company will have the right to assign and/or transfer this Agreement to its affiliates, successors and assigns. The Executive expressly consents to be bound by the provisions of this Agreement for the benefit of the Company or any parent, subsidiary or affiliate to whose employ the Executive may be transferred without the necessity that this Agreement be re-signed at the time of such transfer.
[Remainder of page intentionally left blank. Signature page follows.]
14
IN WITNESS WHEREOF, the parties have executed this Agreement effective on the date and year first above written.
CRISPR THERAPEUTICS, INC. | ||
/s/ Samarth Kulkarni | ||
By: | Samarth Kulkarni | |
Its: | Chief Executive Officer | |
EXECUTIVE | ||
/s/ Brendan Smith |
Brendan Smith |
15
EXHIBIT A
Proprietary Information and Inventions Agreement
16
Exhibit 99.1
CRISPR Therapeutics Announces Transition of Chief Financial Officer
ZUG, Switzerland and CAMBRIDGE, Mass. October 14, 2021 (GLOBE NEWSWIRE) CRISPR Therapeutics (Nasdaq: CRSP), a biopharmaceutical company focused on creating transformative gene-based medicines for serious diseases, today announced the appointment of Brendan Smith as Chief Financial Officer, effective today. Mr. Smith brings more than 20 years of financial, operational and strategic leadership experience, including as CFO of Translate Bio. He succeeds Michael Tomsicek, who is retiring after four years of service to the Company. It is expected that Mr. Tomsicek will remain with the Company in an advisory role through the end of 2021 to help ensure a smooth transition.
Im excited to welcome Brendan to our leadership team. His appointment comes at a time of significant opportunity and growth for CRISPR Therapeutics, said Samarth Kulkarni, Ph.D., Chief Executive Officer of CRISPR Therapeutics. Brendans business and financial expertise will be important in helping us continue to evolve the Company and realize our mission of transforming the lives of patients with serious diseases.
Dr. Kulkarni added: On behalf of the Board of Directors, shareholders, and our employees, I want to thank Mike for his contributions as CFO and for his dedicated service since joining CRISPR Therapeutics. Mike has been a valuable part of the continued development of the Company, and we wish him all the best in his retirement and look forward to working with him on a smooth transition.
Prior to CRISPR Therapeutics, Mr. Smith was the Chief Financial Officer & Corporate Strategy of Translate Bio, a leading mRNA company that was recently acquired by Sanofi for $3.2B. Mr. Smith is an accomplished executive with more than two decades of experience within high-growth biopharma environments where he made significant contributions in various operations and strategy positions. In these positions, Mr. Smith provided strategic financial leadership relating to long-term growth planning focused on operational efficiencies, building manufacturing and supply capabilities, and evaluation of business development opportunities and commercial planning assessments. Previously, as a Partner at Boston Consulting Group, Mr. Smith led integrated biopharma client engagements that included planning and executing on R&D strategy, operations, business development and deal diligence. Prior to that, Mr. Smith was VP, Head of Business Operations for Worldwide R&D at Pfizer, where he led financial and headcount planning across discovery and development operations. Prior, in his role as Executive Director, Head of Business Strategy and Operations for Biologics Pharmaceutical Sciences at Pfizer, Mr. Smith led manufacturing and financial operations for the companys global biologics process development organization. Mr. Smith received a B.S. in Biochemistry from Worcester Polytechnic Institute and an M.B.A. from Harvard Business School.
About CRISPR Therapeutics
CRISPR Therapeutics is a leading gene editing company focused on developing transformative gene-based medicines for serious diseases using its proprietary CRISPR/Cas9 platform. CRISPR/Cas9 is a revolutionary gene editing technology that allows for precise, directed changes to genomic DNA. CRISPR Therapeutics has established a portfolio of therapeutic programs across a broad range of disease areas including hemoglobinopathies, oncology, regenerative medicine and rare diseases. To accelerate and expand its efforts, CRISPR Therapeutics has established strategic collaborations with leading companies including Bayer, Vertex Pharmaceuticals and ViaCyte, Inc. CRISPR Therapeutics AG is headquartered in Zug, Switzerland, with its wholly-owned U.S. subsidiary, CRISPR Therapeutics, Inc., and R&D operations based in Cambridge, Massachusetts, and business offices in San Francisco, California and London, United Kingdom. For more information, please visit www.crisprtx.com.
CRISPR THERAPEUTICS® word mark and design logo are trademarks and registered trademarks of CRISPR Therapeutics AG. All other trademarks and registered trademarks are the property of their respective owners.
Investor Contact:
Susan Kim
+1-617-307-7503
susan.kim@crisprtx.com
Media Contact:
Rachel Eides
+1-617-315-4493
rachel.eides@crisprtx.com
###