Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On March 9, 2022, Berkeley Lights, Inc. (the "Company") announced that
Siddhartha Kadia, Ph.D. has been appointed to succeed Eric Hobbs, Ph.D. as the
Company's Chief Executive Officer effective immediately. Dr. Kadia will remain a
member of the Company's Board of Directors (the "Board").
In connection with his appointment as Chief Executive Officer, the Company
entered into an employment agreement with Dr. Kadia (the "Employment Agreement")
approved by the Board on March 7, 2022 and effective as of March 9, 2022 (the
"Appointment Date"). The Employment Agreement provides Dr. Kadia with an annual
base salary of $700,000 and an annual target bonus of 100% of his base salary
upon achievement of performance objectives to be established by the Board, which
bonus will be guaranteed and paid on a pro-rata basis at target level for fiscal
year 2022, subject to his continued employment through December 31, 2022.
Dr. Kadia will also be eligible for an additional $10,000 on a monthly basis
(for up to twelve months after the Appointment Date) for temporary lodging and
travel expenses associated with travel to the Company's headquarters. The
Company will also pay for any legal fees incurred in connection with the
Employment Agreement and related agreements, up to a maximum of $25,000.
Within fifteen (15) days of the Appointment Date and provided that Dr. Kadia is
employed by the Company at the date of grant, Dr. Kadia shall be granted under
the Company's 2020 Incentive Award Plan ("Plan") three equity awards. These
equity awards consist of: (1) the number of restricted stock units underlying
the Company's common stock (the "RSUs"), which represents 1.5% of the number of
outstanding shares of common stock of the Company, as of the Appointment Date
rounded down to the nearest whole share (the "Outstanding Common Shares"), with
1/12th of the total number of RSUs vesting on each quarterly anniversary of the
Appointment Date, subject to Dr. Kadia's continued service through the
applicable vesting date; and (2) an option to purchase that number of shares of
the Company's common stock (the "Initial Option"), which represents 0.5% of the
Outstanding Common Shares as of the Appointment Date rounded down to the nearest
whole share, with an exercise price per share equal to the fair market value of
a share of the Company's common stock on the date of grant, with 1/12th of the
total number of shares subject to the Initial Option vesting on the each
quarterly anniversary of the Appointment Date, subject to Dr. Kadia's continued
service through the applicable vesting date. In addition, Dr. Kadia will be
granted under the Plan an option to purchase that number of shares of the
Company's common stock (the "Performance Option"), which represents 1.0% of the
Outstanding Common Shares as of the Appointment Date, with an exercise price per
share equal to the fair market value of a share of the Company's common stock on
the date of grant, with vesting and exercisability subject to both a
performance-based requirement based upon increases in stock price of the Company
and a continued service-based requirement. The service-based requirement for the
Performance Option will be satisfied with respect to 20% of the total number of
Performance Option shares on each anniversary of the Appointment Date, subject
to Dr. Kadia's continued service through the applicable date. This service-based
requirement will be fully satisfied in the event Dr. Kadia experiences a
"covered termination" (as defined in the Severance Agreement). The
performance-based requirement will be satisfied in respect of that percentage of
the total number of shares subject to the Performance Option determined based on
the Stock Value (as defined below) being at least equal to the applicable stock
price goal set forth in the table below, whereby any such stock price goal must
be achieved by the seventh anniversary of the Appointment Date. The closing
trading price of a Company common share on March 8, 2022 was $5.93 which was set
as the base price for determining the stock price goals. For purposes of the
Performance Option, "Stock Value" will mean (i) in a Company change in control
(as defined in the Plan), the per common share dollar amount of cash and the
value of any securities or other property paid to the holders of shares of
Company common stock (or the Company, as applicable) as consideration; and
(ii) upon any date between the 90th day after the Appointment Date and the day
before a Change in Control, the average of the closing trading price per share
of the Company's common stock over the immediately trailing 90 day period.
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Number of Performance-Based Shares that incrementally
vest upon
Stock Price Goal Achievement of a Stock Price Goal
200% of $5.93 20% of the total Performance Option shares
400% of $5.93 20% of the total Performance Option shares
800% of $5.93 20% of the total Performance Option shares
1500% of $5.93 20% of the total Performance Option shares
2000% of $5.93 20% of the total Performance Option shares
If a change in control of the Company occurs, the percentage of shares that will
vest in the table above will be determined using linear interpolation.
Notwithstanding the foregoing, even if the stock price goals are not achieved as
a result of a change in control, at a minimum the vesting of that number of
shares subject to the Performance Option will be accelerated such that the Stock
Value Dr. Kadia is eligible to receive with respect to the shares subject to the
RSUs, Initial Option and Performance Option in the change in control is equal to
at least $8,000,000. In the event such Stock Value (after giving effect to full
acceleration of the shares subject to the Performance Option) is less than
$8,000,000 in the aggregate, then upon the change in control the Company will
pay to Dr. Kadia a one-time cash bonus equal to the difference between (i)
$8,000,000 and (ii) the Stock Value in the change in control with respect to the
shares subject to the RSUs, Initial Option and Performance Option.
Notwithstanding the foregoing, in the event Dr. Kadia experiences a covered
termination during a "change in control period" (as defined in the Severance
Agreement), then Dr. Kadia shall remain eligible to receive such cash bonus,
payable at the closing of the change in control.
In addition, Dr. Kadia entered into a Change in Control and Severance Agreement
(the "Severance Agreement"). Under the Severance Agreement, if Dr. Kadia
experiences a covered termination (which includes a termination by the Company
without "cause" or a resignation by Dr. Kadia for "good reason", each as defined
in the Severance Agreement), Dr. Kadia will be entitled to receive: (i) 12
months of continued base salary, (ii) an amount equal to Dr. Kadia's annual
bonus for the year of termination assuming 100% of target performance, paid in a
lump sum and (iii) payment or reimbursement of the cost of continued healthcare
coverage for 12 months. In lieu of the foregoing benefits, if Dr. Kadia
experiences a covered termination during the 90 day period prior to, or the
12-month period following a change in control of the Company, he will be
entitled to receive: (i) 18 months of continued base salary, (ii) payment or
reimbursement of the cost of continued healthcare coverage for 18 months,
(iii) an amount equal to 18 months of Dr. Kadia's annual bonus for the year of
termination assuming 100% of target performance, paid in a lump sum and
(iv) full accelerated vesting of service-based vesting conditions for any of his
unvested equity awards. The foregoing severance benefits are subject to
Dr. Kadia's delivery of an executed release of claims against us and continued
compliance with his confidentiality agreement with us.
The foregoing descriptions of the material terms of the Employment Agreement and
the Change in Control and Severance Agreement are subject to, and qualified in
its entirety by reference to, the complete terms of such agreements, copies of
which will be filed as exhibits in the Company's Quarterly Report on Form 10-Q
for the period ended March 31, 2022.
Dr. Kadia does not have any family relationship with any director or other
executive officer of the Company, or person nominated or chosen by the Company
to become a director or executive officer. In addition, there are no
transactions in which Dr. Kadia had or will have a direct or indirect material
interest that would be required to be reported under Item 404(a) of Regulation
S-K.
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As previously announced, effective March 9, 2022, Dr. Hobbs has resigned as a
member of the Board and will transition to the position of President of the
Antibody Therapeutics business of the Company in connection with the appointment
of the Company's new Chief Executive Officer.
Further, in connection with Dr. Kadia's appointment as Chief Executive Officer
and his related departure from certain Board committees for corporate governance
purposes, the Board reconstituted these committees effective March 9, 2022, to
provide that John Chiminski shall serve on the Audit Committee of the Board and
Greg Lucier will serve on the Compensation Committee of the Board.
On March 7, 2022, Kurt Wood, the Company's Chief Financial Officer, provided
notice that he will be leaving the Company effective April 1, 2022, to pursue
another opportunity outside of the biotech industry. Mr. Wood's departure is not
the result from any disagreement with the Company or the Board. In connection
with his departure, the Company entered into a Transition and Separation
Agreement with Mr. Wood on March 8, 2022, which provides that Mr. Wood shall
remain as a consultant to the Company through April 30, 2022 in exchange for a
retainer of $50,000.
Effective as of March 9, 2022, the Company promoted James Paul McClaskey to the
position of Senior Vice President and Chief Accounting Officer. Mr. McClaskey,
age 44, previously served as the Company's Vice President, Accounting from July
2021 until March 2022. Prior to Berkeley Lights, from June 2014 to July 2021,
Mr. McClaskey held roles of increasing responsibility at DISH Network
Corporation, including as Vice President of Accounting. Mr. McClaskey also held
roles of increasing responsibility at URS Corporation, from January 2012 to June
2014, including Director of Technical and International Accounting. In addition,
Mr. McClaskey held roles in both the audit and advisory practices of KPMG, LLP
from January 2003 to January 2012. Mr. McClaskey received his Bachelor of Arts
in Economics from University of Puget Sound and his Masters of Science in
Accounting from the University of Arizona. Mr. McClaskey is a licensed CPA in
the State of Colorado and is a CFA charterholder.
In connection with his promotion to Senior Vice President and Chief Accounting
Officer, the Company's Board of Directors granted Mr. McClaskey 50,000
restricted stock units ("RSUs") pursuant to the Company's 2020 Incentive Award
Plan (the "RSU Award"), such that the shares of common stock underlying the
McClaskey RSU Award shall vest in sixteen (16) equal quarterly installments on
the 20th day of the second month of each calendar quarter, subject to
Mr. McClaskey's continued service to the Company through each vesting date.
Mr. McClaskey has not been involved in any transactions that would require
disclosure under Item 404(a) of Regulation S-K.
A copy of the press release announcing the foregoing is attached hereto as
Exhibit 99.1 and incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No. Description
99.1 Press Release dated March 9, 2022
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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