Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
As previously disclosed, on June 25, 2019, Organovo Holdings, Inc. (the
"Company") received a letter from the Listing Qualifications Staff of the Nasdaq
Stock Market, Inc. ("Nasdaq") indicating that it did not comply with the minimum
$1.00 per share bid price requirement for continued listing over the previous
consecutive 30 days, as set forth in Nasdaq's continued listing requirements
(the "Minimum Bid Price Requirement"). On December 26, 2019, the Company
obtained an additional compliance period of 180 calendar days by electing to
transfer to The Nasdaq Capital Market to take advantage of the additional
compliance period offered on that market. On April 17, 2020 the Company received
an additional notice letter from Nasdaq indicating that in response to the
COVID-19 pandemic and related extraordinary market conditions, Nasdaq has
determined to toll the compliance periods for bid price and market value of
publicly held shares requirements through June 30, 2020. Accordingly, since the
Company had 66 calendar days remaining in the compliance period as of April 16,
2020, the Company had 66 calendar days from July 1, 2020, or until September 4,
2020, to regain compliance with the Minimum Bid Price Requirement.
On September 2, 2020, the Company received notification from Nasdaq that the
closing bid price of its Common Stock had been at $1.00 per share or greater for
ten (10) consecutive business days. Accordingly, Nasdaq confirmed that the
Company had regained compliance with the Minimum Bid Price Requirement and that
it had closed the matter.
In connection with receipt of this notice, the Company issued a press release on
September 3, 2020, a copy of which is attached hereto as Exhibit 99.1.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Cooperation Agreement and 2020 Annual Meeting
As previously announced, on July 14, 2020, the Company entered into a
Cooperation Agreement with Keith Murphy, the founder and former chief executive
officer of the Company. Pursuant to the Cooperation Agreement, the Company's
Board of Directors (the "Board") appointed Mr. Murphy and Adam Stern as
directors on the Board, with terms expiring at the Company's 2020 Annual Meeting
of Stockholders to be held on September 15, 2020 (the "2020 Annual
Meeting"). The Board also agreed, in connection with the 2020 Annual Meeting, to
recommend, support and solicit proxies for (i) the re-election of Messrs. Murphy
and Stern and (ii) an advisory stockholder vote (the "Advisory Nominees
Proposal") to appoint three individuals, Douglas Jay Cohen, David Gobel and
Alison Tjosvold Milhous (collectively, the "Advisory Nominees"), to the
Board. Mr. Murphy identified each of the Advisory Nominees.
In accordance with the Cooperation Agreement, the Company filed a definitive
proxy statement for the 2020 Annual Meeting of Stockholders with the Securities
and Exchange Commission on August 6, 2020 (the "Proxy Statement"), in which the
Board is recommending, supporting and soliciting proxies for the re-election of
Messrs. Murphy and Stern and in favor of the Advisory Nominees Proposal. If the
final vote tabulation for the Advisory Nominees Proposal receives more votes
cast "FOR" than "AGAINST" its approval, the Board has approved the appointment
of the Advisory Nominees, to be automatically effective immediately following
the final adjournment of the 2020 Annual Meeting. In addition, immediately
following the appointment of the Advisory Nominees, each of our existing
directors (other than Messrs. Murphy and Stern) will resign from the Board,
which will result in Messrs. Murphy and Stern and the Advisory Nominees
constituting the full membership of the Board (collectively, the "New Director
Slate").
As discussed in the Proxy Statement, the New Director Slate has advised the
Board that if the Advisory Nominees Proposal is approved at the Annual Meeting,
the New Director Slate intends to recommence the Company's operations and focus
its efforts on developing highly customized human tissues as living, dynamic
models of human biology and disease for use in drug discovery and development.
Conditional Director Agreements
To enable the potential transition to the New Director Slate, the Company's
continuing directors, including Carolyn Beaver, Taylor Crouch, Mark Kessel and
Kirk Malloy, submitted irrevocable resignation letters, which provide for their
resignations from the Board contingent upon and effective immediately following
the final adjournment of the
--------------------------------------------------------------------------------
2020 Annual Meeting if the Advisory Nominees Proposal receives more votes cast
"FOR" than "AGAINST" its approval.
On September 2, 2020, in accordance with the terms of the Cooperation Agreement,
the Company entered into Separation and Mutual Release Agreements (collectively,
the "Director Agreements") with Ms. Beaver and Messrs. Crouch, Kessel and
Malloy. The effectiveness of the Director Agreements is contingent upon the
resignations of such directors following the final adjournment of the 2020
Annual Meeting if the Advisory Nominees Proposal receives more votes cast "FOR"
than "AGAINST" its approval. Under the Director Agreements, the Company will
release each resigning director, and each resigning director will release the
Company, from any and all claims that such party may have against the other for
acts or omissions that occurred on or before the date of the respective Director
Agreement. The resigning directors also agreed to certain standstill provisions
and cooperation services. In the Director Agreements, the Company agreed to
purchase a six-year director and officer liability insurance tail policy and
clarified that any existing director resignations as contemplated by the
Director Agreements would constitute a "change in control" pursuant to the terms
of the respective equity award agreements and the Company's 2012 Equity
Incentive Plan, as amended, which results in the acceleration of any unvested
equity awards held by the resigning directors.
Conditional Executive Officer Resignations and Officer Agreements
To enable the New Director Slate to hire a new management team to implement its
proposed business plan for the Company following the 2020 Annual Meeting, each
of the Company's existing executive officers, including Mr. Crouch, the
Company's Chief Executive and President, Craig Kussman, the Company's Chief
Financial Officer, and Jennifer Kinsbruner Bush, the Company's General Counsel,
Corporate Secretary and Compliance Officer, submitted contingent resignation
letters on September 2, 2020 (collectively, the "Contingent Resignation
Letters"). The Contingent Resignation Letters provide for the resignation of
each of these executive officers from their employment and officer positions
with the Company, contingent upon and automatically effective immediately
following the final adjournment of the 2020 Annual Meeting if the Advisory
Nominees Proposal receives more votes cast "FOR" than "AGAINST" its approval.
In accordance with the terms of the Cooperation Agreement, the Company entered
into a Separation Agreement and Mutual Release (collectively, the "Officer
Agreements") with each of Messrs. Crouch and Kussman and Ms. Bush on September
2, 2020. The effectiveness of the Officer Agreements is contingent upon the
resignations of the executive officers following the final adjournment of the
2020 Annual Meeting if the Advisory Nominees Proposal receives more votes cast
"FOR" than "AGAINST" its approval. Pursuant to the Officer Agreements, the
Company will release each resigning officer, and each resigning officer will
release the Company, from any and all claims that such party may have against
the other for acts or omissions that occurred on or before the date of the
respective Officer Agreement. It also clarifies that the appointment of the
Advisory Nominees to the Board will constitute a "change in control" under the
Company's Severance and Change in Control Plan, as amended (the "Plan"), which
will entitle each resigning officer to the severance benefits set forth in the
Plan. Pursuant to the terms of the Plan, each of the executive officers is
entitled to receive a cash severance payment equal to two times such executive
officer's base salary, paid in a lump sum, plus a pro-rated target bonus for
2021 fiscal year, health benefit continuation for up to 18 months, and
outplacement assistance for 18 months. Each executive officer will also receive
full accelerated vesting of all outstanding equity awards and a one-year time
period to exercise any stock options. The Officer Agreements requires each of
the resigning officers to comply with certain standstill provisions.
The Company also entered into Consulting Agreements with each of Messrs. Crouch
and Kussman and Ms. Bush on September 2, 2020 (collectively, the "Consulting
Agreements"), in which each of these executives agreed to provide management
transition services to the Company, contingent upon their resignations becoming
effective following the 2020 Annual Meeting. The Consulting Agreements provide
for a per hour fee to be paid by the Company for any consulting services agreed
to by the Company and the former executive. The Company is not obligated to use
any consulting services, or make any minimum payments under the Consulting
Agreements.
Contingent Officer Appointment
To help prepare for the potential transition to the New Director Slate following
the 2020 Annual Meeting, the Company has entered into a consulting agreement
with Danforth Advisors, LLC for Chris Heberlig, CPA, MBA, to provide management
transition services to the New Director Slate. Contingent upon the 2020 Annual
Meeting Advisory Nominees Proposal receiving more votes cast "FOR" than
"AGAINST" its approval, the New Director Slate has advised the Company that it
intends to appoint Mr. Heberlig as Chief Financial Officer of the Company.
--------------------------------------------------------------------------------
Mr. Heberlig is a seasoned executive with significant experience in managing and
leading teams as well as overseeing the financial and operational
responsibilities of private and publicly traded bio-technology companies. He has
over twenty years of experience primarily focused on the life sciences industry.
His experience includes senior management roles including previously serving as
Executive Vice President and Chief Financial Officer of publicly held Kiniksa
Pharmaceuticals Ltd. and Senior Vice President, Finance and Business Operations
and Chief Accounting Officer of publicly held Synageva Biopharma Corp. Earlier
in his career, he held senior financial management positions at Panacos
Pharmaceuticals Inc. and EPIX Pharmaceuticals Inc., both publicly traded
biotechnology companies. Mr. Heberlig began his career at PwC, a national audit,
tax, and advisory services firm. He received an MBA degree from Boston
University and a BA in economics from St. Lawrence University. He is also a
Certified Public Accountant.
The New Director Slate plans to take an active role in assisting Mr. Heberlig to
manage and restart the Company's operations. Mr. Heberlig will also be assisted
in his responsibilities by the Company's continuing financial and administrative
staff, and will be able to draw on the support of the Company's former executive
officers, each of whom have entered into the Consulting Agreements discussed
above to support transition activities as necessary.
The foregoing summary of the Cooperation Agreement, the Director Agreements, the
Officer Agreements, the Consulting Agreements, the 2012 Equity Incentive Plan
and the Severance and Change in Control Plan (as amended) does not purport to be
complete and is qualified in its entirety by reference to the full text of such
agreements. The Company filed the Cooperation Agreement, the form of Director
Agreement and the form of Officer Agreement with the Securities and Exchange
Commission (the "SEC") on July 15, 2020 as Exhibits 10.1, 10.3 and 10.4,
respectively, to the Company's Current Report on Form 8-K and are incorporated
herein by reference. The form Consulting Agreement was filed as Exhibit B to the
Officer Agreement, which was filed as Exhibit 10.4 to the Current Report on Form
8-K filed with the SEC on July 15, 2020. The Company filed its 2012 Equity
Incentive Plan with the SEC on February 13, 2012 as Exhibit 10.15 to the
Company's Current Report on Form 8-K and is incorporated herein by reference.
The Company filed the Severance and Change in Control Plan with the SEC on
November 9, 2015 as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q
and is incorporated herein by reference. The Company's Amendment to the
Severance and Change in Control Plan was filed with the SEC on May 20, 2020 as
Exhibit 10.1 to the Company's Current Report on Form 8-K and is incorporated
herein by reference.
Forward Looking Statements
Any statements contained in this Current Report on Form 8-K that do not describe
historical facts constitute forward-looking statements as that term is defined
in the Private Securities Litigation Reform Act of 1995. Any forward-looking
statements contained herein are based on current expectations, but are subject
to a number of risks and uncertainties. These risks and uncertainties and other
factors are identified and described in more detail in the Company's filings
with the SEC, including its Quarterly Report on Form 10-Q filed with
the Securities and Exchange Commission on August 10, 2020. You should not place
undue reliance on these forward-looking statements, which speak only as of the
date that they were made. These cautionary statements should be considered with
any written or oral forward-looking statements that the Company may issue in the
future. Except as required by applicable law, including the securities laws
of the United States, the Company does not intend to update any of the
forward-looking statements to conform these statements to reflect actual
results, later events or circumstances or to reflect the occurrence of
unanticipated events.
Important Information and Where to Find It
This communication may be deemed to be solicitation material in respect to the
Company's 2020 Annual Meeting of Stockholders to be held virtually on Tuesday,
September 15, 2020 at 9:00 a.m. (Pacific Daylight Time) (the "2020 Annual
Meeting"). On August 6, 2020, the Company filed a definitive proxy statement
with the SEC and mailed a Notice of Internet Availability of Proxy Materials to
its stockholders containing instructions on how to access the proxy materials
for the 2020 Annual Meeting, including the Company's definitive proxy statement
and annual report for the fiscal year ended March 31, 2020, over the internet.
BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS AND STOCKHOLDERS ARE
URGED TO READ THESE MATERIALS CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY
CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY AND THE MATTERS TO BE CONSIDERED
AT THE 2020 ANNUAL MEETING. Investors and stockholders may obtain, free of
charge, copies of the definitive proxy statement and any other documents filed
by the Company with the SEC in connection with the 2020 Annual Meeting at the
SEC's website (http://www.sec.gov) and on the investor relations section of the
. . .
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 Cooperation Agreement, dated July 14, 2020, between the
Company and Keith Murphy. (incorporated by reference from
Exhibit 10.1 to the Company's Current Report on Form 8-K, as
filed with the SEC on July 15, 2020).
10.2 Form of Separation and Mutual Release Agreement with the
Company's directors (incorporated by reference from Exhibit 10.3
to the Company's Current Report on Form 8-K, as filed with the
SEC on July 15, 2020).
10.3 Form of Separation Agreement and Release with the Company's
officers (incorporated by reference from Exhibit 10.4 to the
Company's Current Report on Form 8-K, as filed with the SEC on
July 15, 2020).
10.4 Form of Consulting Agreement with the Company's officers
(incorporated by reference from Exhibit B to Exhibit 10.4 to the
Company's Current Report on Form 8-K, as filed with the SEC on
July 15, 2020)
10.5 Organovo Holdings, Inc. 2012 Equity Incentive Plan
(incorporated by reference from Exhibit 10.15 to the Company's
Current Report on Form 8-K, as filed with the SEC on February
13, 2012).
10.6 Organovo Holdings, Inc. Severance and Change in Control Plan
(incorporated by reference to Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q, as filed with the SEC on November
9, 2015).
10.7 Amendment to the Organovo Holdings, Inc. Severance and Change
in Control Plan (incorporated by reference to Exhibit 10.1 to
the Company's Current Report on Form 8-K, as filed with the SEC
on May 20, 2020).
99.1 Press Release, dated September 3, 2020.
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses