Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements with Certain
Officers.
In response to the current business environment as impacted by COVID-19, Zyla
Life Sciences (the "Company") is taking several precautionary measures and
adjusting its operational needs, including a significant reduction of expense.
As part of these measures, effective April 13, 2020, the base salaries of its
management team, including the base salaries of its principal executive officer
and other named executive officers, will be temporarily reduced. Effective April
13, 2020, each of Todd N. Smith, President and Chief Executive Officer, and Mark
Strobeck, Executive Vice President and Chief Operating Officer, will take a
temporary reduction in their respective base salaries of 50%. Megan Timmins,
Senior Vice President, General Counsel and Secretary, and each of the other
members of the management team, will take a temporary reduction in their base
salaries of 30%.
Item 8.01 Other Events.
On April 13, 2020, the Company announced the taking of certain additional
proactive steps designed to mitigate the potential financial and operational
impacts of the COVID-19 pandemic. The Company is implementing a reduction in
force for its territory managers and will temporarily reduce the salaries of its
remaining territory managers by 30%. In addition, the Company's home office
employees and sales managers, other than the President and Chief Executive
Officer and the Executive Vice President and Chief Operating Officer, will
receive a temporary reduction in their base salaries of 30%. As stated above,
the President and Chief Executive Officer and the Executive Vice President and
Chief Operating Officer will receive a temporary reduction in their base
salaries of 50%. The employees on reduced salary will continue to receive
employee benefits, including medical, dental and vision benefits.
These changes will be reviewed based on future operating conditions and the
Company will continue to take appropriate measures to address its changing
needs. Although it is difficult to reasonably determine the current impacts of
the COVID-19 pandemic at this time, the Company expects the ongoing, global
economic impact from the COVID-19 pandemic to have an adverse impact on its
financial condition and results of operations. Accordingly, we will continue to
take reasonable steps, including cost reduction measures, to attempt to mitigate
the impact of the COVID-19 pandemic.
Assertio Therapeutics, Inc. ("Assertio") granted a waiver in connection with
these actions under the Agreement and Plan of Merger by and among the Company,
Assertio, Assertio Holdings, Inc. ("Assertio Holdings") and the other parties
thereto, dated as of March 16, 2020.
SPECIAL NOTE ABOUT FORWARD LOOKING STATEMENTS:
Statements included in this filing that are not historical in nature and contain
the words "anticipate," "believe," "estimate," "expect," "intend," "may,"
"plan," "predict," "project," "suggest," "target," "potential," "will," "would,"
"could," "should," "continue," "look forward to" and other similar expressions
are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are based on
management's current expectations and are subject to known and unknown
uncertainties and risks. Actual results could differ materially from those
discussed due to a number of factors, including, but not limited to: the
continued effects of the COVID-19 outbreak on our ability to operate and our
business; our ability to continue as a going concern; the impact of our
bankruptcy on our business going forward, including with regard to relationships
with vendors and customers, employee attrition, and the costs and expenses
resulting from our bankruptcy; the impact of our acquisition of five products
from Iroko Pharmaceuticals, Inc., including our assumption of related
liabilities, potential exposure to successor liability and credit risk of Iroko
and its affiliates; our estimates regarding expenses, future revenues, capital
requirements and needs for additional financing; our current and future
indebtedness; our ability to maintain compliance with the covenants in our debt
documents; the level of commercial success of our products; coverage of our
products by payors and pharmacy benefit managers; our ability to execute on our
sales and marketing strategy, including developing relationships with customers,
physicians, payors and other constituencies; the rate and degree of market
acceptance of any of our products; the success of competing products that are or
become available; the entry of any generic products for any of our products, or
any delay in or inability to reformulate SPRIX; recently enacted and future
legislation and regulations regarding the healthcare system; the accuracy of our
estimates of the size and characteristics of the potential markets for our
products and our ability to serve those markets; our failure to recruit or
retain key personnel, including our executive officers; obtaining and
maintaining intellectual property protection for our products; our ability to
operate our business without infringing the intellectual property rights of
others; our ability to integrate and grow any businesses or products that we may
acquire; the outcome of any litigation in which we are or may be involved; the
risk that the conditions to the closing of the proposed merger with Assertio
(the "Merger") are not satisfied, including the risk that required stockholder
approvals for the proposed Merger are not obtained; the occurrence of any event,
change or other circumstances that either could give rise to the right to
terminate the Agreement; the risk of litigation relating to the proposed Merger;
uncertainties as to the timing of the consummation of the proposed transaction
and the ability of each party to consummate the proposed Merger; risks related
to disruption of management time from ongoing business operations due to the
proposed Merger; unexpected costs, charges or expenses resulting from the
proposed Merger; competitive responses to the proposed Merger and the impact of
competitive services; certain restrictions during the pendency of the Merger
that may impact our ability to pursue certain business opportunities or
strategic transaction; potential adverse changes to business relationships
resulting from the announcement or completion of the Merger; the combined
company's ability to achieve the growth prospects and synergies expected from
the Merger, as well as delays, challenges and expenses associated with
integrating the combined company's existing businesses; negative effects of this
announcement or the consummation of the proposed Merger on the market price our
common stock, credit ratings and operating results; legislative, regulatory and
economic developments, including changing business conditions in the industries
in which we operate; the impact of disasters, acts of terrorism or global
pandemics, including, for example, the COVID-19 outbreak; general market
conditions; and other risk factors set forth in the Company's Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q filed with the United States
Securities and Exchange Commission (SEC) and in other filings the Company makes
with the SEC from time to time. While the Company may elect to update these
forward-looking statements at some point in the future, it specifically
disclaims any obligation to update or revise any forward-looking-statements
contained in this press release whether as a result of new information or future
events, except as may be required by law.
Proposed Merger
On March 16, 2020 Assertio and the Company announced that they have entered into
a definitive merger agreement. The boards of directors of both companies have
approved the Merger and the Agreement. The Merger is currently expected to close
in the second quarter of 2020, subject to approval by Assertio stockholders and
by Company stockholders and the satisfaction of other customary closing
conditions. Additional details can be found in Assertio's and the Company's
respective Current Reports of Form 8-K filed with the Securities and Exchange
Commission on March 17, 2020.
No Offer or Solicitation
This communication relates to a proposed business combination involving Assertio
and the Company. The information in this communication is for informational
purposes only and is neither an offer to purchase, nor a solicitation of an
offer to sell, subscribe for or buy any securities or the solicitation of any
vote in any jurisdiction pursuant to the proposed transactions or otherwise, nor
shall there be any sale, issuance or transfer of securities in any jurisdiction
in contravention of applicable law. No offer of securities shall be made except
by means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in respect of the
proposed Merger. The proposed Merger will be submitted to Assertio's
stockholders and the Company's stockholders for their consideration. In
connection with the proposed Merger, Assertio and the Company intend to file a
joint proxy statement (the "Joint Proxy Statement") in connection with the
solicitation of proxies by Assertio and the Company in connection with the
proposed Merger. Assertio Holdings has filed a registration statement on Form
S-4 (the "Form S-4") with the SEC, which includes a preliminary prospectus of
Assertio Holdings and a preliminary joint proxy statement of Assertio and the
Company (the "Joint Proxy Statement"). Assertio and the Company also intend to
file other relevant documents with the SEC regarding the proposed Merger. The
definitive Joint Proxy Statement will be mailed to Assertio's stockholders and
the Company's stockholders when available. BEFORE MAKING ANY VOTING OR
INVESTMENT DECISION WITH RESPECT TO THE PROPOSED MERGER, INVESTORS AND
STOCKHOLDERS OF ASSERTIO AND INVESTORS AND STOCKHOLDERS OF THE COMPANY ARE URGED
TO READ THE DEFINITIVE REGISTRATION STATEMENT, INCLUDING THE JOINT PROXY
STATEMENT, REGARDING THE PROPOSED MERGER (INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS THERETO) AND OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE
CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED MERGER.
The Joint Proxy Statement, any amendments or supplements thereto and other
relevant materials, and any other documents filed by Assertio or the Company
with the SEC, may be obtained once such documents are filed with the SEC free of
charge at the SEC's website at www.sec.gov or, with respect to documents filed
by Assertio or Assertio Holdings, free of charge from Assertio at
www.assertiotx.com or by directing a request to Assertio's Investor Relations
Department at investor@assertiotx.com or, with respect to documents filed by the
Company, from the Company at www.zyla.com or by directing a request to the
Company's Investor Relations Department at ir@zyla.com.
Participants in the Solicitation
Assertio, the Company and certain of their respective executive officers,
directors, other members of management and employees may, under the rules of the
SEC, be deemed to be "participants" in the solicitation of proxies in connection
with the proposed Merger. Information regarding Assertio's directors and
executive officers is available in its Proxy Statement on Schedule 14A for its
2019 Annual Meeting of Stockholders, that was filed with the SEC on April 8,
2019 and in its Annual Report on Form 10-K for the year ended December 31, 2019,
that was filed with the SEC on March 10, 2020. Information regarding the
Company's directors and executive officers is available in its Proxy Statement
on Schedule 14A for its 2019 Annual Meeting of Stockholders, that was filed with
the SEC on November 6, 2019 and in its Annual Report on Form 10-K for the year
ended December 31, 2019, that was filed with the SEC on March 26, 2020. These
documents may be obtained free of charge from the sources indicated above. Other
information regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security holdings or
otherwise, will be contained in the Joint Proxy Statement and other relevant
materials relating to the proposed Merger when they become available.
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