Item 10. Directors, Executive Officers, and Corporate Governance
MANAGEMENT
The following table sets forth, as of the date
of this Form 10-K/A, certain information regarding our executive officers and directors who are responsible for overseeing the management
of our business.
Name |
|
Age |
|
Position |
Executive Officers and Directors: |
|
|
|
|
|
|
|
|
|
Stephen H. Willard |
|
62 |
|
Chief Executive Officer, Director |
|
|
|
|
|
Robert Besthof1 |
|
57 |
|
Head of Operations and Chief Commercial
Officer |
|
|
|
|
|
Riccardo Panicucci |
|
62 |
|
CMC and Technical Operations Advisor |
|
|
|
|
|
Seth Van Voorhees |
|
62 |
|
Chief Financial Officer |
|
|
|
|
|
Patrick J. Flynn |
|
74 |
|
Director |
|
|
|
|
|
Sharon A. Glied, Ph.D. |
|
62 |
|
Director |
|
|
|
|
|
Aaron Gorovitz |
|
64 |
|
Director |
|
|
|
|
|
Chaim Hurvitz |
|
62 |
|
Director |
|
|
|
|
|
Jonathan Javitt, M.D., M.P.H.
|
|
66 |
|
Director, Chief Scientist |
Executive Officer and Director Biographies
Stephen
H. Willard. Mr. Willard has served as our Chief Executive Officer and as a member of the Board since July 2022. From 2012
to March 2021, Mr. Willard served, and since July 2022 has served, as a Director of Nozin, Inc., an infection prevention company and
pioneer in nasal decolonization. From March 2021 to July 2022, Mr. Willard served as Executive Director of Nozin, Inc. From November
2013 to March 2021, Mr. Willard served as CEO of Cellphire Inc., (“Cellphire”) a leading company in platelet and cell stabilization,
between, during which period he aided in the expansion of Cellphire, managed all aspects of its dynamic growth and oversaw all its operations.
Prior to joining Cellphire, from 2000 to 2013, Mr. Willard served in executive roles at Flamel Technologies S.A (FLML), a drug delivery
company. From 2000 to 2005, Mr. Willard served as CFO of Flamel and, from 2006 to 2013, Mr. Willard served as CEO of Flamel. From 2000
to 2014, Mr. Willard was also a member of the board of directors for E*TRADE Financial, a subsidiary of Morgan Stanley, which offers
an electronic trading platform to trade financial assets. Mr. Willard has more than 20 years of experience as the CEO of pharma and biotech
companies. He also has additional experience covering all aspects of building and running public and private companies, including acquisition
and divestment, development, staffing, manufacturing, licensing and supply. Since 2018, Mr. Willard has served as a member of the National
Science Board, which governs the National Science Foundation. Mr. Willard received a B.A. from Williams College in 1982 and a J.D. from
Yale Law School in 1985.
| 1 | Robert
Besthof has resigned from the company and his last day with the Company is May 1, 2023. |
Robert
Besthof MIM. Mr. Besthof has been our Head of Operations and Chief Commercial Officer since May 2021, except from
March 2022 to July 2022 where he served as our Interim Chief Executive Officer. Mr. Besthof also served as the Chief Commercial Officer
of NeuroRx, Inc., the predecessor to our company, from March 2016 to May 2021. Mr. Besthof is a seasoned professional with more than
25 years of experience in biopharma marketing and operations, including at Pfizer, Wyeth, and Eli Lilly. Mr. Besthof has held various
positions at Pfizer since 2004, including his most recent role as Vice President of Global Commercial Development for Neuroscience and
Pain products at Pfizer. He has a track record of leadership in positions of increasing responsibility, including: profit and loss for
marketing and sales and has enabled the rapid growth of pharmaceutical pipelines and led product launches across multiple therapeutic
areas. Prior to joining the pharmaceutical industry, Mr. Besthof worked for Deutsche Bank and in consulting. He holds a B.A. in Economics
from Case Western Reserve University, and a Masters of International Management from The Thunderbird School of Global Management
Riccardo Panicucci. Mr. Panicucci has served
as our CMC and Technical Operations Advisor since January 2021. Rick is currently the SVP of CMC at BridgeBio Pharma and has served in
this role since March 2018. Prior to joining BridgeBio, Mr. Panicucci served as VP of Pharmaceutical Development Services at WuXi STA
from February 2015 to March 2018, where he provided scientific leadership in formulation development and GMP manufacturing. From 2004
to 2015, Mr. Panicucci served as Global Head of Chemical and Pharmaceutical Profiling (CPP) at Novartis. Mr. Panicucci has also led R&D
groups at Vertex Pharmaceuticals, Symbollon Pharmaceuticals, Biogen, and Bausch & Lomb. Mr. Panicucci earned a Ph.D. in Chemistry
from the University of Toronto and did a Post-Doctoral Fellowship at the University of California, Santa Barbara.
Seth
Van Voorhees, Ph.D. Dr. Van Voorhees has served as our Chief Financial Officer since June 2022. Dr. Van Voorhees most
recently served as CFO of PDS Biotechnology Corporation (“PDS Biotechnology”) during which he completed several financing
transactions in 2021. Prior to joining PDS Biotechnology, he spent 10 years as the CFO and Vice President of Business Development for
Research Frontiers Inc. from January 2010 to December 2020. Prior to this role, Dr. Van Voorhees served as CFO for American Pacific Corp.
Earlier in his career, Dr. Van Voorhees was an investment banking officer responsible for chemical and pharmaceutical clients at Merrill
Lynch, UBS Warburg, and Wasserstein Perella. Dr. Van Voorhees received a Ph.D. in chemistry from the University of Pennsylvania and an
MBA from Columbia University.
Patrick J. Flynn. Mr. Flynn has served as a member of our Board
since May 2021. Mr. Flynn is an entrepreneur with more than 35 years of senior executive experience. He has provided leadership to numerous
successful organizations including start-ups and growth-stage companies and has served in a variety of roles, including Executive Chairman,
board member, CEO, COO, CFO and advisor. Mr. Flynn served as a member of the NeuroRx, Inc., the predecessor of the Company, board of directors
from 2017. Since 2012, Mr. Flynn has been serving as a member of the board of directors for Common Sensing Inc., a data-driven hardware
and software solutions company. Additionally, Mr. Flynn currently serves as the COO of Good Measures where he is responsible for the day-to-day
operations of the company’s innovative approach to healthcare and nutrition services. Prior to joining Good Measures, Mr. Flynn
was the co-founder of Predilytics, Inc. and served as Executive Chairman. Before joining Predilytics, Mr. Flynn contributed his expertise
as COO and then as CEO to Health Dialog, where he helped build the business from an early-stage healthcare services organization to one
of the world’s leading providers of healthcare analytics, healthcare services and decision support. Prior to this role, Flynn was
a co-founder of Symmetrix, a management consulting firm specializing in healthcare and financial services. Mr. Flynn began his career
with Bank of America where he held several positions over the course of 15 years, including Vice President of World Banking and Vice President
of Risk Management. Mr. Flynn earned his B.S. in Finance from the Wharton School at the University of Pennsylvania.
Sharon
A. Glied, Ph.D. Dr. Glied has served as a member of our Board since May 2021. Dr. Glied served as a member of NeuroRx, Inc.,
the predecessor to our company’s board of directors from December 2015. Dr. Glied has served as the Dean of New York University’s
Robert F. Wagner Graduate School of Public Service since August 2013. From 1989 to August 2013, Dr. Glied was the Professor of Health
Policy and Management at Columbia University’s Mailman School of Public Health, where she served as the Chair of the Department
of Health Policy and Management from 1998 to 2009. In June 2010, Dr. Glied was confirmed by the U.S. Senate as Assistant Secretary for
Planning and Evaluation at the Department of Health and Human Services, serving in that capacity from July 2010 through August 2012.
She has previously also served as Assistant Secretary of Health under President Obama and as a member of the President’s Council
of Economic Advisors under President Bush. She is one of the world’s leading experts on mental health policy. She has been elected
to the Institute of Medicine of the National Academy of Sciences, the National Academy of Social Insurance, and the Board of Academy
Health, and has been a member of the Congressional Budget Office’s Panel of Health Advisers and a research associate of the National
Bureau of Economic Research. She is co-editor, with Peter C. Smith, of The Oxford Handbook of Health Economics, which was published by
the Oxford University Press in 2011. Dr. Glied holds a B.A. in Economics from Yale University, a Master’s degree in Economics from
the University of Toronto and a Ph.D. in Economics from Harvard University.
Aaron
Gorovitz. Mr. Gorovitz has served as a member of our Board since May 2021. Mr. Gorovitz served as a member of the NeuroRx,
Inc., the predecessor to our company, board of directors from 2016. He is a partner of the AHG Group. In addition to his 25 years of
legal experience in complex commercial transactions, he has considerable involvement in early-stage biotechnology and health information
technology companies. Mr. Gorovitz holds a B.A. from Muhlenberg College and a J.D. from George Washington University Law School.
Chaim
Hurvitz. Mr. Hurvitz has served as a member of our Board since May 2021. He served as a member of the NeuroRx, Inc., the predecessor
to our company, board of directors from May 2015. Mr. Hurvitz has served as the Chief Executive Officer of CH Health, a private venture
capital firm, since May 2011. Mr. Hurvitz previously served as a member of the board of directors of Teva Pharmaceuticals Industries
Ltd. from October 2010 to July 2014. Previously, he was a member of the senior management of Teva Pharmaceuticals Industries Ltd., serving
as the President of Teva International Group from 2002 until 2010, as President and Chief Executive Officer of Teva Pharmaceuticals Europe
from 1992 to 1999 and as Vice President - Israeli Pharmaceutical Sales from 1999 until 2002. Mr. Hurvitz is a founding investor and a
director of Galmed Pharmaceuticals Ltd. Mr. Hurvitz presently serves as a member of the management of the Manufacturers Association of
Israel and head of its pharmaceutical branch. Mr. Hurvitz holds a B.A. from Tel Aviv University.
Jonathan
Javitt, M.D., M.P.H. Dr. Javitt served as our Chief Executive Officer and Chairman of our Board from May 2021 until March
2022, and since March 2022, has served as Chief Scientist and as a member of our Board. He served as Chairman of the Board and the
Chief Executive Officer of NeuroRx, Inc., the predecessor to our company, from its founding in 2015. Prior to starting NeuroRx, Inc., he participated in leading drug and medical device development and commercialization projects for Allergan,
Alcon, Eyetech, Merck, Novartis, Pfizer, and Pharmacia. He has played leadership roles in seven successful healthcare IT and biopharma
start-up companies. He was appointed to healthcare leadership roles under President Ronald Reagan, George H.W. Bush, Clinton and George
W. Bush. During the Reagan and Bush ‘41 administrations, he was designated as an Expert Consultant to the Department of Health
and Human Services. President Clinton designated him as a Special Government Employee of the White House Executive Office of the President
to serve on the 1993 Health Reform Task Force. Under President George W. Bush, he was commissioned to lead the Healthcare Committee of
the President’s Information Technology Advisory Committee and to serve as a Special Employee of the Undersecretary of Defense.
Dr. Javitt has published more than 200 scientific works in the areas of health outcomes and pharmacoeconomics that have been cited more
than 31,000 times. Dr. Javitt holds an A.B. with Honors from Princeton University, an M.D. from Cornell University and a Masters of Public
Health from the Harvard Chan School of Public Health. In 2015, he was designated an Alumnus of Merit, the highest honor bestowed by Harvard
University to graduates of the School of Public Health. He continues to serve as an adjunct Professor of Ophthalmology at Johns Hopkins
School of Medicine and as a Senior Fellow of the Potomac Institute for Policy Studies.
Board Composition and Election of Directors
Director Independence
Our Board has determined that Sharon A. Glied,
Patrick J. Flynn, Aaron Gorovitz, and Chaim Hurvitz are “independent directors” as defined in the Nasdaq listing standards
and applicable SEC rules.
Classified Board of Directors
In accordance with our Charter, our Board is divided
into three classes with staggered, three year terms. At each annual meeting of stockholders, the successors to directors whose terms
then expire are elected to serve from the time of election and qualification until the third annual meeting following election. Our directors
are divided among the three classes as follows:
| · | the
Class I director is Chaim Hurvitz, and his term expires at our 2025 annual meeting of stockholders; |
| · | the
Class II directors are Sharon Glied and Aaron Gorovitz, and their terms will expire at our
2023 annual meeting of stockholders; and |
| · | the
Class III directors are Stephen Willard, Patrick Flynn and Jonathan Javitt, and their terms
will expire at the 2024 annual meeting of stockholders. |
Our Charter provides that the authorized number
of directors may be changed only by resolution of the Board. Any additional directorships resulting from an increase in the number of
directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors.
The division of our Board into three classes with staggered three-year terms may delay or prevent a change of our management or a change
in control of our company. Subject to the special rights of the holders of one or more outstanding series of preferred stock to elect
directors, our directors may be removed only for cause by the affirmative vote of the holders of at least 75% of our outstanding voting
stock entitled to vote in the election of directors. The Board currently has one vacancy that we are currently looking to fill.
Board Committees
Our Board directs the management of our business
and affairs, as provided by Delaware law, and conducts its business through meetings of the Board and standing committees. We have a
standing audit committee, nominating and corporate governance committee and compensation committee. In addition, from time to time, special
committees may be established under the direction of the Board when necessary to address specific issues.
Audit Committee
Our audit committee is responsible for, among
other things:
| · | appointing,
compensating, retaining, evaluating, terminating and overseeing our independent registered
public accounting firm; |
| · | discussing
with our independent registered public accounting firm their independence from management; |
| · | reviewing,
with our independent registered public accounting firm, the scope and results of their audit; |
| · | approving
all audit and permissible non-audit services to be performed by our independent registered
public accounting firm; |
| · | overseeing
the financial reporting process and discussing with management and our independent registered
public accounting firm the quarterly and annual financial statements that we file with the
SEC; |
| · | overseeing
our financial and accounting controls and compliance with legal and regulatory requirements; |
| · | reviewing
our policies on risk assessment and risk management; |
| · | reviewing
related person transactions; and |
| · | establishing
procedures for the confidential anonymous submission of concerns regarding questionable accounting,
internal controls or auditing matters. |
Our audit committee consists of Messrs. Flynn,
Mr. Gorovitz and Mr. Hurvitz, with Mr. Flynn serving as chair. Rule 10A-3 of the Exchange Act and the Nasdaq rules require that our audit
committee be composed entirely of independent members. Our Board has affirmatively determined that Messrs. Flynn, Mr. Gorovitz, and Mr.
Hurvitz each meet the definition of “independent director” for purposes of serving on the audit committee under Rule 10A-3
of the Exchange Act and the Nasdaq rules. Each member of our audit committee also meets the financial literacy requirements of Nasdaq
listing standards. In addition, our Board has determined that Messrs. Flynn and Gorovitz each qualify as an “audit committee financial
expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. Our Board has adopted a written charter for the audit committee.
Compensation Committee
Our compensation committee is responsible for,
among other things:
| · | reviewing
and approving the corporate goals and objectives, evaluating the performance of and reviewing
and approving, (either alone or, if directed by our Board, in conjunction with a majority
of the independent members of the Board) the compensation of our Chief Executive Officer; |
| · | overseeing
an evaluation of the performance of and reviewing and setting or making recommendations to
our Board regarding the compensation of our other executive officers; |
| · | reviewing
and approving or making recommendations to our Board regarding our incentive compensation
and equity-based plans, policies and programs; |
| · | reviewing
and approving all employment agreement and severance arrangements for our executive officers; |
| · | making
recommendations to our Board regarding the compensation of our directors; and |
| · | retaining
and overseeing any compensation consultants. |
Our compensation committee consists of Messrs.
Flynn, Mr. Gorovitz, and Mr. Hurvitz with Mr. Flynn serving as chair. Mr. Hurvitz was appointed to the compensation committee on March
30, 2023 and Mr. Troy served on this committee until July 18, 2022 when his term on the board of directors terminated. Our Board has
affirmatively determined that Messrs. Flynn and Gorovitz each meet the definition of “independent director” for purposes
of serving on the compensation committee under the Nasdaq rules, including the heightened independence standards for members of a compensation
committee, and are “non-employee directors” as defined in Rule 16b-3 of the Exchange Act. Our Board has adopted a written
charter for the compensation committee.
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee
is responsible for, among other things:
| · | identifying
individuals qualified to become members of our Board, consistent with criteria approved by
our Board; |
| · | overseeing
succession planning for our Chief Executive Officer and other executive officers; |
| · | periodically
reviewing our Board’s leadership structure and recommending any proposed changes to
our Board; |
| · | overseeing
an annual evaluation of the effectiveness of our Board and its committees; and |
| · | developing
and recommending to our Board a set of corporate governance guidelines. |
Our nominating and corporate governance committee
consists of Dr. Glied, Mr. Hurvitz, and Dr. Javitt, with Dr. Glied serving as chair. Mr. Hurvitz was appointed to the compensation committee
on March 30, 2023 and Mr. Troy served on this committee until July 18, 2022 when his term on the board of directors terminated. Our Board
has affirmatively determined that Dr. Glied and Mr. Hurvitz each meet the definition of “independent director” under the
Nasdaq rules. The Board has determined that the appointment of Dr. Javitt, the founder of the Company, to the Nominating and Corporate
Governance Committee is required by the best interests of the Company and its shareholders. The Board believes Dr. Javitt’s unique
experience, qualifications and contributions to the Company create an exceptional and limited set of circumstances that will be useful
in the identification and nomination of potential new Board members. Dr. Javitt’s term on the Nominating and Corporate Governance
Committee will expire on May 24, 2023.
Risk Oversight
Our Board is responsible for overseeing our risk
management process. Our Board focuses on our general risk management strategy, the most significant risks facing us, and oversees the
implementation of risk mitigation strategies by management. Our audit committee is also responsible for discussing our policies with
respect to risk assessment and risk management. Our Board believes its administration of its risk oversight function has not negatively
affected our Board’s leadership structure.
Compensation Committee Interlocks and Insider Participation
None of our executive officers serves as a member
of the Board or compensation committee (or other committee performing equivalent functions) of any entity that has one or more executive
officers serving on our Board or compensation committee.
Code of Business Conduct and Ethics
We adopted a written code of business conduct
and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar functions. A copy of the code is posted on our corporate website
at www.nrxpharma.com. In addition, we intend to post on our website all disclosures that are required by law or the Nasdaq listing
standards concerning any amendments to, or waivers from, any provision of the code. The information contained in, or accessible through,
our website does not constitute a part of this Form 10-K/A. We have included our website address in this Form 10-K/A solely as an inactive
textual reference.
Item 11. Executive Compensation
EXECUTIVE COMPENSATION
Our “Named Executive Officers” for
the year ended December 31, 2022 include (i) Stephen Willard, our Chief Executive Officer, (ii) Jonathan Javitt, our Chief Scientist
and former Chief Executive Officer, (iii) Robert Besthof, our former Chief Commercial Officer and former Interim Chief Executive Officer,
(iv) Seth Van Voorhees, our Chief Financial Officer and Treasurer, (v) Rick Panicucci, our Chief Technology Officer, (vi) Ira Strassberg,
our former Chief Financial Officer, and (vii) Alessandra Daigneault, former Chief Corporate Officer, General Counsel and Secretary.
2022 Summary Compensation Table
The following table presents information regarding
the total compensation of our Named Executive Officers for the years ended December 31, 2022 and December 31, 2021.
Name
and Principal Position |
|
Year |
|
Salary ($) |
|
|
Bonus
($)(1) |
|
|
Stock Awards
($)(2) |
|
|
Option
Awards ($)(3) |
|
|
All Other
Compensation ($)(4) |
|
|
Total ($) |
|
Stephen
Willard(5) Chief Executive Officer |
|
2022 |
|
|
233,871 |
|
|
|
— |
|
|
|
566,000 |
|
|
|
— |
|
|
|
— |
|
|
|
799,871 |
|
Jonathan
Javitt(6) Chief Scientist and former Chief Executive Officer |
|
2022 |
|
|
919,758 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
6,250 |
|
|
|
926,008 |
|
|
|
2021 |
|
|
275,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
102,287 |
|
|
|
377,287 |
|
Robert
Besthof(7) Former Chief Commercial and former Interim Chief Executive Officer |
|
2022 |
|
|
436,559 |
|
|
|
— |
|
|
|
— |
|
|
|
195,000 |
|
|
|
— |
|
|
|
631,559 |
|
|
|
2021 |
|
|
264,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
264,000 |
|
Seth
Van Voorhees(8) Chief Financial Officer and Treasurer |
|
2022 |
|
|
220,000 |
|
|
|
— |
|
|
|
— |
|
|
|
134,875 |
|
|
|
— |
|
|
|
354,875 |
|
Rick
Panicucci Chief Technology Officer |
|
2022 |
|
|
220,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
220,000 |
|
Ira
Strassberg(9) Former Chief Financial Officer and Treasurer |
|
2022 |
|
|
216,375 |
|
|
|
— |
|
|
|
— |
|
|
|
1,000,875 |
(11) |
|
|
— |
|
|
|
1,217,250 |
|
Alessandra
Daigneault(10) Former Chief Corporate Officer, General Counsel and Secretary |
|
2022 |
|
|
162,844 |
|
|
|
290,000 |
|
|
|
— |
|
|
|
— |
|
|
|
132,000 |
|
|
|
584,844 |
|
|
|
2021 |
|
|
228,000 |
|
|
|
290,000 |
|
|
|
— |
|
|
|
1,754,611 |
|
|
|
2,961 |
|
|
|
2,275,572 |
|
| (1) | Amount reported for Ms. Daigneault in 2022 reflects (i) $60,000 awarded
as a discretionary bonus; (ii) $100,000 awarded as a transaction bonus; and (iii) $130,000
in reimbursement for Ms. Daigneault’s exercise of stock options. |
| (2) | Amount reflects the grant date fair value of restricted stock granted as an employment inducement award during fiscal year 2022 as
calculated in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. See Note 10 to the consolidated financial
statements contained in the Form 10-K for information regarding the assumptions used in calculating this amount. |
| (3) | Amount reflects the grant date fair value of stock options granted during fiscal year 2022 or fiscal year 2021 as calculated in accordance
with ASC Topic 718, excluding the effect of estimated forfeitures. See Note 10 to the consolidated financial statements contained in the
Form 10-K for information regarding the assumptions used in calculating these amounts. |
| (4) | For 2022, the All Other Compensation column reflects: (i) for Mr. Javitt, $6,250 for his service as chairman of the Board during the
first quarter of 2022; and (ii) for Ms. Daigneault, $132,000 in severance payments. |
| (5) | Mr. Willard was appointed Chief Executive Officer on July 12, 2022. |
| (6) | Mr. Javitt retired from his role as Chief Executive Officer on March 8, 2022. As of March 8, 2022, Mr. Javitt assumed the role of
Chief Scientist and remained on the Company’s board of directors. |
| (7) | Mr. Besthof was appointed Interim Chief Executive Officer on March 8, 2022. Prior to such date, Mr. Besthof served as Chief Commercial
Officer. Following Mr. Willard’s appointment as Chief Executive Officer on July 12, 2022, Mr. Besthof resumed his role as Chief
Commercial Officer. Mr. Besthof’s employment terminated on April 30, 2023. |
| (8) | Dr. Van Voorhees was appointed Chief Financial Officer and Treasurer on June 6, 2022, effective June 13, 2022. |
| (9) | Mr. Strassberg’s employment terminated on July 7, 2022. |
| (10 | Ms. Daigneault’s employment terminated on July 22, 2022. |
| (11) | Mr. Strassberg’s option grant was forfeited in its entirety in connection with his termination. |
| (8) | Dr. Van Voorhees was appointed Chief Financial Officer and Treasurer on
June 6, 2022, effective June 13, 2022. |
| (9) | Mr. Strassberg’s employment terminated on July 7, 2022. |
| (10 | Ms. Daigneault’s employment terminated on July 22, 2022. |
| (11) | Mr. Strassberg’s option grant was forfeited in its entirety in
connection with his termination. |
Narrative to Summary Compensation Table
Base Salaries and Compensation
NRx’s Named Executive Officers receive an
annual base salary or annual rate of compensation to compensate them for services rendered to NRx. The base salary or annual rate of
compensation payable to each Named Executive Officer is intended to provide a fixed component of compensation reflecting the executive’s
skill set, experience, role and responsibilities. For 2022, (i) Mr. Willard’s annual base salary was set at $500,000; (ii) Dr.
Javitt’s annual base salary was set at $275,000 until March 8, 2022; following March 8, 2022, Dr. Javitt’s annual consulting
fee was set at $1,000,000; (iii) Mr. Besthof’s annual consulting fee was set at $264,000 until March 8, 2022; following March 8,
2022, Mr. Besthof’s annual consulting fee was approximately $500,000; (iv) Dr. Van Voorhees’s annual base salary was set
at $400,000; (v) Mr. Panicucci’s annual base salary was set at $220,000; (vi) Mr. Strassberg’s annual base salary was set
at $400,000; and (vii) Ms. Daigneault’s annual base salary was set at $264,000.
Cash Bonus Compensation
Pursuant to their employment agreements, Mr.
Willard, Dr. Van Voorhees, and Mr. Strassberg are eligible to receive a discretionary annual performance-based cash bonus with a
target equal to 50% of base salary. Pursuant to his employment agreement, Dr. Javitt was eligible to receive a discretionary annual
performance-based cash bonus with a target equal to $275,000. Pursuant to her employment agreement, Ms. Daigneault was eligible to
receive a discretionary annual performance-based cash bonus with a target equal to 20% of base salary plus an additional $100,000
for each successful financing transaction. Pursuant to his consulting agreement, Mr. Panicucci is eligible to receive a
discretionary annual cash bonus of $50,000 upon achievement of certain performance objectives. Pursuant to Mr. Besthof’s
letter agreement, he was eligible to receive a special payment for calendar year 2022 equal to $250,000 at target based on
achievement of performance metrics determined by the Board.
Equity Compensation
We typically grant stock options pursuant to the
NRX Pharmaceuticals, Inc. 2021 Omnibus Incentive Plan (the “Omnibus Plan”) as the long-term incentive component of our compensation
program. Stock options allow employees, including our Named Executive Officers, to purchase shares of our Common Stock at a price equal
to the fair market value of our Common Stock on the date of grant. Our stock options have vesting schedules that are designed to encourage
continued employment and typically vest in substantially equal installments on each of the first three anniversaries of the applicable
vesting commencement date, subject to the recipient’s continued service through each applicable vesting date. From time to time,
our Board may also construct alternate vesting schedules as it determines appropriate to motivate particular employees, as further described
below.
Option Awards
Dr. Van Voorhees, Mr. Besthof, and Mr. Strassberg
were granted options to purchase 325,000, 100,000 and 425,000 shares of Common Stock in 2022, respectively. Mr. Strassberg’s options
were forfeited for no consideration in connection with his termination.
Mr.
Besthof received a grant of 100,000 options in March 2022 (the “Besthof 2022 Options”) that vested on the one year
anniversary of the grant date. The Besthof 2022 Options are described below under “Potential Payments
upon Termination or Change in Control – Besthof Agreement”.
Refer to the “Outstanding Equity Awards
at 2022 Fiscal Year End” table below for additional information regarding these options.
Willard Restricted Stock Award
As an inducement to join the Company, Mr. Willard
received a grant of 1,000,000 shares of restricted stock. Such grant of restricted stock was designed to comply with the NASDAQ inducement
exemption and was granted outside of the Company’s existing equity compensation plans. However, the restricted stock award is governed
in all respects as if issued under the Omnibus Plan. The shares of restricted stock will vest in substantially equal installments on
each of the first three anniversaries of the date of grant, subject to Mr. Willard’s continued employment with, appointment as
a director of, or engagement to provide services to, the Company through the applicable vesting date.
Mr. Willard’s shares of restricted stock
are subject to clawback if Mr. Willard engages in conduct that is in conflict with or adverse to the Company’s interests while
employed by the Company, including violating non-competition, non-solicitation, and non-disparagement covenants.
Refer to the “Outstanding Equity Awards
at 2022 Fiscal Year End” table below for additional information regarding these shares of restricted stock.
Executive Employment Arrangements
Willard Employment Agreement
In
connection with his commencement of employment with us in July 2022, we entered into an employment agreement with Mr. Willard (the “Willard
Employment Agreement”) pursuant to which he serves as our Chief Executive Officer and on our Board. The Willard Employment Agreement
provides for an initial two-year term and extends automatically for additional one-year periods unless either party provides notice of
termination. The Willard Employment Agreement provides for an annual base salary of $500,000, a performance-based bonus with a minimum
target of 50% of base salary (with such bonus for 2022 pro-rated based on the number of days employed), and an inducement grant of 1,000,000
shares of restricted stock that vests over a three-year period.
The
Willard Employment Agreement includes (i) a confidentiality covenant that applies during the term of employment and for three years following
termination, (ii) assignment of intellectual property, (iii) a non-competition covenant that applies during the term of employment and
for 12 months following termination, and (iv) non-solicitation of employees and customers covenants that apply during the term of employment
and for 12 months following termination.
Javitt Employment Agreement
and Javitt Consulting Agreement
In connection with his commencement of employment
with us in May 2015, we entered into an employment agreement with Dr. Javitt (the “Javitt Employment Agreement”) pursuant
to which he served as our Chief Executive Officer and President. The Javitt Employment Agreement provided for an initial five-year term
and extended automatically for additional one-year periods unless either party provided notice of termination. The Javitt Employment
Agreement provided for a base salary of $275,000, subject to periodic increase by the Board. The Javitt Employment Agreement was terminated
on March 8, 2022 when Dr. Javitt retired and became a consultant to the Company. Upon entering into the Javitt Consulting Agreement (as
defined below), Dr. Javitt waived his rights to the bonus, severance and certain other provisions under the Javitt Employment Agreement.
Pursuant to a consulting agreement between the
Company and Dr. Javitt, dated as of March 8, 2022 (the “Javitt Consulting Agreement”), Dr. Javitt will provide consulting
services to the Company for a one-year period, including reviewing and providing scientific and strategic advice to the Company’s
executive officers. The Javitt Consulting Agreement provided for an annual consulting fee of $1,000,000, with $250,000 paid within 10
days of the Javitt Consulting Agreement’s effective date and the remaining $750,000 payable in monthly installments of $75,000,
subject to continued service.
The Javitt Consulting Agreement provides that
the confidentiality, non-competition and non-solicitation covenants from the Javitt Employment Agreement continue to apply during the
term of Dr. Javitt’s service and during the three-year period (with respect to the confidentiality covenant) or 12-month period
(with respect to the non-competition and non-solicitation covenants) thereafter.
The Company may terminate the Javitt Consulting
Agreement without prior notice immediately upon a termination for Cause. Dr. Javitt may terminate the Javitt Consulting Agreement upon
30 days’ notice at any time and for any reason. Upon termination of Javitt Consulting Agreement, the Company will pay Dr. Javitt
any consulting fees and expenses that have been accrued but not yet paid. “Cause” is defined in the Javitt Consulting Agreement
as: (i) Dr. Javitt’s gross negligence or willful misconduct, or willful and continued failure to substantially perform his duties
(other than due to physical or mental illness or incapacity), which, in either case, causes material injury to the reputation or business
of the Company; (ii) Dr. Javitt’s conviction of, or plea of guilty or nolo contendere to, a felony or other crime; (iii) Dr. Javitt’s
fraud or embezzlement or other material misuse of funds or property belonging to the Company; or (iv) any material breach by Dr. Javitt
under the Javitt Consulting Agreement subject to a 10 day notice and cure period (if reasonably capable of cure).
The Javitt Consulting Agreement was amended on
March 29, 2023 (the “Javitt Consulting Agreement Amendment”). The Javitt Consulting Agreement Amendment provides for an initial
period ending on March 8, 2024, subject to successive one-year terms unless either party provides notice of termination. The Javitt Consulting
Agreement Amendment provides for: (i) an annual consulting fee of $575,000, payable in monthly installments; (ii) eligibility for an
annual performance-based bonus with a minimum target of $250,000 (with the annual bonus, if any, for 2023 pro-rated based on the number
of days during the 2023 calendar year following March 8, 2023 that Dr. Javitt is engaged by the Company); and (iii) subject to Board
approval, a grant of 500,000 shares of restricted stock that will vest (x) 50% on the date upon which the Food and Drug Administration
files the Company’s new drug application for the Antidepressant Drug Regimen (as defined therein) and (y) 50% on the date upon
which the Food and Drug Administration has both approved the Company’s Antidepressant Drug Regimen and listed the Company’s
Antidepressant Drug Regiment in the Food and Drug Administration’s “Orange Book.”
Besthof Agreement
Mr. Besthof was engaged by NeuroRx as Chief Commercial
and Patient Officer and Head of Operations pursuant to the terms of a “Work For Hire” Agreement between NeuroRx and REBes
Consulting LLC - Robert Besthof, dated as of March 1, 2016, which was amended as of October 23, 2020 (as amended, the “Besthof
Agreement”).
The Besthof Agreement provides for an initial
one-year term and extends automatically for additional one-month periods unless NeuroRx provides written notice of non-renewal at least
10 days prior to the expiration of the term, or unless Mr. Besthof’s services are terminated. The Besthof Agreement provides for
a consulting fee, which was equal to $22,000 per month in 2022.
The Besthof Agreement includes an (i) assignment
of intellectual property covenant, (ii) confidentiality covenant that applies for the greater of (x) a two-year period after the date
of disclosure or (y) a two-year period from the end of the term of the Besthof Agreement, and (iii) non-contract covenant pursuant to
which Mr. Besthof will not contract with any third party to manufacture or assist in the manufacture of an NMDA-based treatment for bipolar
depression that applies for the term of the Besthof Agreement and for two years following the termination of the Besthof Agreement.
Effective March 8, 2022, Mr. Besthof, on behalf
of his personal services corporation, entered into a letter agreement with the Company (the “Besthof Letter Agreement”).
The Besthof Letter Agreement supplements the Besthof Agreement. The Besthof Letter Agreement provides for an aggregate monthly payment
of $41,667 (of which $19,667 was for services as the Interim Chief Executive Officer) to Mr. Besthof for total annual payments at an
annual rate of approximately $500,000 and a special payment for 2022 of up to $250,000 based on achievement of certain performance metrics
to be determined by the Board. The Besthof Letter Agreement also provided for the grant of the Besthof 2022 Options. Pursuant to the
Besthof Letter Agreement, Mr. Besthof was entitled to the additional payment $19,667 per month as Interim Chief Executive Officer for
at least six months, unless he resigned or was terminated for “cause” (as defined in the Besthof Letter Agreement). The Besthof
Letter Agreement also provides Mr. Besthof with customary indemnification and directors and officers insurance coverage.
Van Voorhees Employment
Agreement
In
connection with his commencement of employment with us in June 2022, we entered into an employment agreement with Dr. Van Voorhees (the
“Van Voorhees Employment Agreement”) pursuant to which he serves as our Chief Financial Officer and Treasurer. The Van Voorhees
Employment Agreement provides for an initial two-year term and extends automatically for additional one-year periods unless either party
provides notice of termination. The Van Voorhees Employment Agreement provides for an annual base salary of $400,000, a performance-based
bonus with a target of 50% of base salary, and a grant of 325,000 stock options that vest over a two-year period, with 162,500 options
vesting on June 5, 2023 and 162,500 options vesting on June 5, 2024.
The
Van Voorhees Employment Agreement includes (i) a confidentiality covenant that applies during the term of employment and for three years
following termination, (ii) assignment of intellectual property, (iii) a non-competition covenant that applies during the term of employment
and for 12 months following termination, and (iv) non-solicitation of employees and customers covenants that apply during the term of
employment and for 12 months following termination.
Panicucci Consulting Agreement
Mr.
Panicucci and NeuroRx entered into a consulting agreement effective as of January 7, 2021 (the “Panicucci Consulting Agreement”).
The Panicucci Consulting Agreement provides for: (i) a consulting fee of $20,000 per month for approximately 20 hours of service per
week; (ii) a grant of 25,000 stock options that vest in substantially equal installments over a three-year period; and (iii) an annual
bonus of $50,000 upon achievement of certain objectives. The Panicucci Consulting Agreement will continue in effect until terminated
by either party.
The
Panicucci Consulting Agreement includes a confidentiality covenant that applies for a period of two years after the date of disclosure
or two years from the end of the consulting term, whichever is greater.
Strassberg Employment
Agreement
In
connection with his commencement of employment with us in March 2022, we entered into an employment agreement with Mr. Strassberg (the
“Strassberg Employment Agreement”) pursuant to which he served as our Chief Financial Officer and Treasurer. The Strassberg
Employment Agreement provided for an initial two-year term and extended automatically for additional one-year periods unless either party
provided notice of termination. The Strassberg Employment Agreement provided for an annual base salary of $400,000, a performance-based
bonus with a minimum target of 50% of base salary, and a grant of 425,000 stock options that vest over a two year period, with 212,500
options vesting on March 15, 2023 and 212,500 options vesting on March 15, 2024. In connection with his termination, Mr. Strassberg’s
options were forfeited for no consideration.
The
Strassberg Employment Agreement includes (i) a confidentiality covenant that applies during the term of employment and for three years
following termination, (ii) assignment of intellectual property, (iii) a non-competition covenant that applies during the term of employment
and for 12 months following termination, and (iv) non-solicitation of employees and customers covenants that apply during the term of
employment and for 12 months following termination.
Daigneault Employment
Agreement
Effective September 1, 2021, we entered into an
employment agreement with Ms. Daigneault (the “Daigneault Employment Agreement”) pursuant to which she served as Chief Corporate
Officer, General Counsel, Corporate Secretary and, prior to March 8, 2022, Acting Treasurer. The Daigneault Employment Agreement provided
for an initial one-year term and extended automatically for additional one-year periods unless either party provides notice of termination
or non-renewal. The Daigneault Employment Agreement provided for a base salary of $264,000, subject to periodic increase by the Board.
Pursuant to the Daigneault Employment Agreement, Ms. Daigneault was also eligible to receive (a) a performance-based bonus with a minimum
target of 20% of base salary and (b) an additional transactional bonus of $100,000 upon consummation of a secondary offering or financing
after September 1, 2021. The Daigneault Employment Agreement also provided Ms. Daigneault with an initial grant of 30,000 options, which
vested monthly over a two-year period. In connection with her termination, the unvested portion of equity awards held by Ms. Daigneault
was forfeited for no consideration.
The Daigneault Employment Agreement includes (i)
a confidentiality covenant that applies during the term of employment and for three years following termination, (ii) assignment of intellectual
property, (iii) a non-competition covenant that applies during the term of employment and for 12 months following termination, and (iv)
non-solicitation of employees and customers covenants that apply during the term of employment and for 12 months following termination.
Under the terms of the Daigneault Employment Agreement,
Ms. Daigneault was entitled to participate in all employee benefit plans, programs and arrangements made available to other U.S.-based
employees generally.
Outstanding Equity Awards at 2022 Fiscal Year End
The following table summarizes the number of shares
of Common Stock underlying outstanding equity incentive plan awards for each Named Executive Officer as of December 31, 2022.
|
|
Option
Awards |
|
Stock
Awards |
|
Name
|
|
Vesting
Commencement Date |
|
Number
of Securities Underlying Unexercised Options
(#) Exercisable |
|
|
Number
of Securities Underlying Unexercised Options (#) Unexercisable |
|
|
Option
Exercise
Price ($) |
|
|
Option
Expiration Date |
|
Number
of
shares
or units
of stock
that
have
not
vested
(#) |
|
|
Market
value of
shares
or units
of stock
that
have
not
vested
($)(1) |
|
|
Equity
incentive
plan
awards:
number
of
unearned
shares,
units or
other
rights
that have
not
vested (#) |
|
|
Equity
incentive
plan
awards:
market
or payout
value of
unearned
shares,
units or
other
rights
that have
not
vested ($) |
|
Stephen Willard |
|
7/12/2022 |
(2) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
1,000,000 |
|
|
|
1,110,000 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jonathan Javitt |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Besthof |
|
3/1/2016 |
|
|
247,200 |
|
|
|
— |
|
|
|
0.20 |
|
|
2/28/2026 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/24/2021 |
(3) |
|
138,880 |
|
|
|
208,320 |
|
|
|
3.08 |
|
|
10/23/2030 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
| |
| | | |
| |
| |
|
|
|
| | |
| | | |
| | | |
| | | |
|
|
|
| |
3/8/2022 | (4) |
| — | | |
| 100,000 |
| |
2.61 |
|
| 3/8/2032 | |
| — | | |
| — | | |
| — | | |
|
— |
|
|
|
Option
Awards |
|
Stock
Awards |
|
Name
|
|
Vesting
Commencement Date |
|
Number
of Securities Underlying Unexercised Options
(#) Exercisable |
|
|
Number
of Securities Underlying Unexercised Options (#) Unexercisable |
|
|
Option
Exercise
Price ($) |
|
|
Option
Expiration Date |
|
Number
of
shares
or units
of stock
that
have
not
vested
(#) |
|
|
Market
value of
shares
or units
of stock
that
have
not
vested
($)(1) |
|
|
Equity
incentive
plan
awards:
number
of
unearned
shares,
units or
other
rights
that have
not
vested (#) |
|
|
Equity
incentive
plan
awards:
market
or payout
value of
unearned
shares,
units or
other
rights
that have
not
vested ($) |
|
Seth Van Voorhees | |
6/13/2022 | (5) |
| — | | |
| 325,000 |
| |
|
0.51 |
|
| 6/12/2032 | |
| — | | |
| — | | |
| — | | |
|
— |
|
| |
| |
| | | |
| |
| |
|
|
| | |
| | | |
| | | |
| | |
|
|
|
|
Rick Panicucci | |
— | |
| — | | |
| — |
| |
— |
|
| — | |
| — | | |
| — | | |
| — | | |
|
— |
|
| |
| |
| | | |
| |
| |
|
|
| | |
| | | |
| | | |
| | | |
|
|
|
Ira Strassberg | |
— | |
| — | | |
| — |
| |
— |
|
| — | |
| — | | |
| — | | |
| — | | |
|
— |
|
| |
| |
| | | |
| |
| |
|
|
| | |
| | | |
| | | |
| | | |
|
|
|
Alessandra
Daigneault | |
— | |
| — | | |
| — |
| |
— |
|
| — | |
| — | | |
| — | | |
| — | |
|
|
— |
|
| (1) | Market
value is based on the closing sale price of our common stock on December 31, 2022 of $1.11. |
| (2) | These
shares of restricted stock vest in substantially equal installments on each of the first
three anniversaries of the grant date, subject to continued service. |
| (3) | These stock options vest in substantially equal installments on October 23,
2023, October 23, 2024, and October 23, 2025. |
| (4) | These
stock options vested on March 8, 2023. |
| | |
| (5) | These
stock options vest over a two-year period, with 162,500 options vesting on June 13, 2023 and 162,500 options vesting on June 13, 2024,
subject to continued service. |
Health, Welfare and Retirement
Plans
We do not maintain a 401(k) defined contribution
plan or any other employee benefit plans or programs.
Clawback
The Board is reviewing the final rule issued by
the SEC implementing the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act relating to recoupment of incentive-based
compensation and will adopt a compliant clawback policy when the NASDAQ adopts listing standards in accordance with the final rules.
Potential Payments upon Termination or Change in Control
Willard Employment Agreement
In
the event Mr. Willard’s employment is terminated due to his death or disability, by the Company for Cause, or by Mr. Willard without
Good Reason, the Company will pay to Mr. Willard (or his beneficiary or estate, as applicable): (i) base salary earned but not paid through
the date of termination, (ii) pay for any vacation time earned but not used through the date of termination, (iii) any annual bonus earned
for the year preceding the year of termination but unpaid on the date of termination and (iv) any business expenses incurred but not
reimbursed on the date of termination.
In
the event Mr. Willard’s employment is terminated by the Company without Cause, upon a Change of Control (as defined in the Willard
Employment Agreement) or upon Mr. Willard’s resignation for Good Reason, subject to Mr. Willard’s execution and non-revocation
of a general release of claims, the Company will pay Mr. Willard: (i) continued base salary payments for the period beginning on the
termination date and ending on the first anniversary of the termination date; and (ii) all accrued compensation and a prorated target
bonus through the date of termination.
“Cause”
is defined in the Willard Employment Agreement as: (i) Mr. Willard’s failure to perform (other than by reason of disability), or
gross negligence in the performance of, his material duties and responsibilities to the Company (unauthorized absence for a period of
five consecutive business days will be considered failure to perform); (ii) material breach of the confidentiality covenant or assignment
of rights to intellectual property covenant or breach of any fiduciary duty owed to the Company; (iii) fraud or embezzlement or
other dishonesty which is material (monetarily or otherwise) with respect to the Company; (iv) indictment, conviction or plea of
nolo contendere to a felony or other crime involving moral turpitude that is material to the Company; (v) Mr. Willard’s material
breach of the Willard Employment Agreement or of any Company policy; or (vi) disciplinary proceedings or other events that impair
Mr. Willard’s ability to function as Chief Executive Officer of the Company.
“Good
Reason” is defined in the Willard Employment Agreement as: (i) material diminution of Mr. Willard’s compensation or benefits;
(ii) material diminution of Mr. Willard’s title, duties, authority or responsibilities; (iii) the Company’s material
breach of any term of the Willard Employment Agreement; (iv) the failure of the Board to nominate Mr. Willard to fill one of the
vacant seats on the Board; or (v) the required relocation of Mr. Willard’s place of employment to a location that is more
than 25 miles from his home.
Javitt Consulting Agreement
The Company may terminate the Javitt Consulting
Agreement without prior notice immediately upon a termination for Cause. Dr. Javitt may terminate the Javitt Consulting Agreement upon
30 days’ notice at any time and for any reason. Upon termination of Javitt Consulting Agreement, the Company will pay Dr. Javitt
any consulting fees and expenses that have been accrued but not yet paid. “Cause” is defined in the Javitt Consulting Agreement
as: (i) Dr. Javitt’s gross negligence or willful misconduct, or willful and continued failure to substantially perform his duties
(other than due to physical or mental illness or incapacity), which, in either case, causes material injury to the reputation or business
of the Company; (ii) Dr. Javitt’s conviction of, or plea of guilty or nolo contendere to, a felony or other crime; (iii) Dr. Javitt’s
fraud or embezzlement or other material misuse of funds or property belonging to the Company; or (iv) any material breach by Dr. Javitt
under the Javitt Consulting Agreement subject to a 10 day notice and cure period (if reasonably capable of cure).
Besthof Agreement
If, following a change in control, either (a)
Mr. Besthof’s assigned and required place of work is more than 50 miles from his home or (b) there is a substantial and
material diminution in his duties or title, Mr. Besthof will have the right to terminate for good reason and will be entitled to
receive fee payment continuation at his current rate of $22,000 for a period of 12 months and (c) 12 months of health care
coverage under an equivalent to the employer plan at “gold level” or a supplemental payment equivalent to the health
insurance premium payment under any such plan.
If, following a change in control, Mr. Besthof
is terminated without cause (which is not defined in the Besthof Agreement), Mr. Besthof is entitled to receive (i) fee payment continuation at his current rate of $22,000 for a period of 12 months and (ii)
12 months of health care coverage under an equivalent to the employer plan at “gold level” or a supplemental payment equivalent
to the health insurance premium payment under any such plan.
Besthof Letter Agreement
Pursuant to the Besthof Letter Agreement, if Mr.
Besthof was terminated by the Company without “cause” prior to the Company hiring a permanent chief executive officer or,
under limited circumstances, he resigned, he may have received separation payments of up to six months of pay, the special payment, to
the extent not yet paid, and vesting of the Besthof 2022 Options.
Van Voorhees Employment Agreement
In
the event Mr. Van Voorhees’ employment is terminated due to his death or disability, by the Company for Cause, or by Mr. Van Voorhees
without Good Reason, the Company will pay to Mr. Van Voorhees (or his beneficiary or estate, as applicable): (i) base salary earned but
not paid through the date of termination, (ii) pay for any vacation time earned but not used through the date of termination, (iii) any
annual bonus awarded for the year preceding the year of termination but unpaid on the date of termination and (iv) any business expenses
incurred but not reimbursed on the date of termination.
In
the event Mr. Van Voorhees’s employment is terminated by the Company without Cause, upon a Change of Control (as defined in the
Van Voorhees Employment Agreement) or upon Mr. Van Voorhees’ resignation for Good Reason, subject to Mr. Van Voorhees’ execution
and non-revocation of a general release of claims, the Company will pay Mr. Van Voorhees: (i) continued base salary payments for the
period beginning on the termination date and ending on the nine month anniversary of the termination date; (ii) all accrued compensation
and a prorated target bonus through the date of termination; and (iii) all unvested equity compensation held by Mr. Van Voorhees will
vest and become fully exercisable.
“Cause”
is defined in the Van Voorhees Employment Agreement as: (i) Mr. Van Voorhees’ failure to perform (other than by reason of disability),
or gross negligence in the performance of, his material duties and responsibilities to the Company (unauthorized absence for a period
of five consecutive business days will be considered failure to perform); (ii) material breach of the confidentiality covenant or
assignment of rights to intellectual property covenant or breach of any fiduciary duty owed to the Company; (iii) fraud or embezzlement
or other dishonesty which is material (monetarily or otherwise) with respect to the Company; (iv) indictment, conviction or plea
of nolo contendere to a felony or other crime involving moral turpitude that is material to the Company; or (v) loss of CPA licensure,
disciplinary proceedings or other events that impair Mr. Van Voorhees’ ability to function as Chief Financial Officer or Treasurer
of the Company.
“Good
Reason” is defined in the Van Voorhees Employment Agreement as: (i) material diminution of Mr. Van Voorhees’ compensation
or benefits; (ii) material diminution of Mr. Van Voorhees’ title, duties, authority or responsibilities; (iii) the Company’s
material breach of any term of the Van Voorhees Employment Agreement; or (iv) the relocation of Mr. Van Voorhees’ place of
employment to a location that is more than 20 miles from his home.
Panicucci Consulting Agreement
Upon termination of the Panicucci Consulting Agreement,
the Company will pay Mr. Panicucci (or his estate, if applicable) any earned but unpaid consulting fees and reimbursement of business
expenses.
Strassberg Employment Agreement
In
the event Mr. Strassberg’s employment is terminated due to his death or disability, by the Company for Cause, or by Mr. Strassberg
without Good Reason, the Company will pay to Mr. Strassberg (or his beneficiary or estate, as applicable): (i) base salary earned but
not paid through the date of termination, (ii) pay for any vacation time earned but not used through the date of termination, (iii) any
annual bonus awarded for the year preceding the year of termination but unpaid on the date of termination and (iv) any business expenses
incurred but not reimbursed on the date of termination.
In
the event Mr. Strassberg’s employment is terminated by the Company without Cause, upon a Change of Control (as defined in the Strassberg
Employment Agreement) or upon Mr. Strassberg’s resignation for Good Reason, subject to Mr. Strassberg’s execution and non-revocation
of a general release of claims, the Company will pay Mr. Strassberg: (i) continued base salary payments for the period beginning on the
termination date and ending on the one year anniversary of the termination date; (ii) all accrued compensation and a prorated target
bonus through the date of termination; and (iii) all unvested equity compensation held by Mr. Strassberg will vest and become fully exercisable.
“Cause”
is defined in the Strassberg Employment Agreement as: (i) Mr. Strassberg’s failure to perform (other than by reason of disability),
or gross negligence in the performance of, his material duties and responsibilities to the Company (unauthorized absence for a period
of five consecutive business days will be considered failure to perform); (ii) material breach of the confidentiality covenant or
assignment of rights to intellectual property covenant or breach of any fiduciary duty owed to the Company; (iii) fraud or embezzlement
or other dishonesty which is material (monetarily or otherwise) with respect to the Company; (iv) indictment, conviction or plea
of nolo contendere to a felony or other crime involving moral turpitude that is material to the Company; or (v) loss of CPA licensure,
disciplinary proceedings or other events that impair Mr. Strassberg’s ability to function as Chief Financial Officer or Treasurer
of the Company.
“Good
Reason” is defined in the Strassberg Employment Agreement as: (i) material diminution of Mr. Strassberg compensation or benefits;
(ii) material diminution of Mr. Strassberg’s title, duties, authority or responsibilities; (iii) the Company’s material
breach of any term of the Strassberg Employment Agreement; or (iv) the relocation of Mr. Strassberg’s place of employment
to a location that is more than 20 miles from his home.
Daigneault Employment Agreement
In the event Ms. Daigneault was terminated by
us without Cause or upon a Change of Control, subject to her execution of a release of claims, in addition to the Final Compensation
(as defined below), she would have been entitled to receive (i) severance pay equal to the base salary then in effect through the six
month anniversary of the termination date (the “Daigneault Severance Pay”), (ii) accrued compensation not yet paid and (iii)
a prorated bonus through the date of termination. In connection with Ms. Daigneault’s termination with the Company on July 22,
2022, she received severance pay equal to six months of her base salary.
“Cause” is defined in the Daigneault
Employment Agreement as Ms. Daigneault’s (i) failure to perform (other than by reason of disability), or serious negligence in
the performance of, her material duties and responsibilities to the Company (unauthorized absence of Ms. Daigneault for a period of five
business days will be considered failure to perform); (ii) material breach of confidentiality or intellectual property provisions contained
in the employment agreement or breach of any fiduciary duty owed to the Company; (iii) fraud or embezzlement or other dishonesty which
is material (monetarily or otherwise) with respect to the Company; (iv) indictment, conviction or plea of nolo contendere to a felony
or other crime involving moral turpitude that is material to the Company; or (v) loss of legal licensure, legal disciplinary proceedings,
or other events that impair Ms. Daigneault’s ability to function as Corporate Secretary of the Company.
Pursuant to the terms of the Daigneault Employment
Agreement, in the event Ms. Daigneault was terminated due to death or disability, the executive or her beneficiaries, as applicable,
would have been entitled to (i) base salary earned but not paid through the date of termination, (ii) pay for any vacation time earned
but not used through the date of termination, (iii) any annual bonus awarded for the year preceding that in which termination occurs
but unpaid on the date of termination and (iv) any business expenses incurred but not reimbursed on the date of termination (all of the
foregoing, the “Final Compensation”).
Equity Incentive Awards
Pursuant to the Omnibus Plan, in the event of
a Change in Control (as defined in the Omnibus Plan): (i) if the acquirer or successor company in such Change in Control has agreed to
provide for the substitution, assumption, exchange or other continuation of the stock options, then, if the Named Executive Officer’s
employment with or service to the Company is terminated by the Company without Cause (as defined in the Omnibus Plan) (and other than
due to death or disability) on or within 24 months following a Change in Control, then all of the Named Executive Officer’s options
will become immediately exercisable; (ii) if the acquirer or successor company in such Change in Control has not agreed to provide for
the substitution, assumption, exchange or other continuation of the options, all options held by the Named Executive Officer will become
immediately exercisable; and (iii) the Committee (as defined in the Omnibus Plan) may cancel any outstanding options in exchange for
cash, securities or other property equal to the value of such canceled options.
Willard Restricted Stock Award
If Mr. Willard’s employment with the Company
is terminated without Cause (other than for death or disability) or Mr. Willard resigns for Good Reason (each as defined in Mr. Willard’s
employment agreement, and such termination, a “Qualifying Termination”), Mr. Willard will vest in a pro rata portion of the
restricted stock. In the event of a Qualifying Termination on or within 12 months following a Change in Control (as defined in the Omnibus
Plan), all of the shares of restricted stock will vest. If Mr. Willard’s service terminates for any other reason, all unvested
shares of restricted stock will be forfeited for no consideration.
COMPENSATION OF DIRECTORS
Pursuant to our Director Compensation Program,
each member serving on our Board during 2022 was eligible to compensation for his or her service, as follows.
| · | Board
of Directors member: $60,000 annual retainer plus an annual equity grant |
| · | Chairman
of the Board: $25,000 annual retainer |
| · | Board
Committee Chair: $15,000 annual retainer |
| · | Board
Committee Member: $10,000 annual retainer |
2022 Director Compensation
The following table shows for the fiscal year
ended December 31, 2022 certain information with respect to the compensation of our non-employee directors. As Named Executive Officers,
Mr. Willard’s and Dr. Javitt’s compensation is shown in the 2022 Summary Compensation Table. Mr. Willard did not receive
any additional compensation for his service on the Board.
Name | |
Fees Earned
or Paid in
Cash ($) | | |
Option
Awards ($)(1) | | |
Total ($) | |
Patrick Flynn | |
$ | 90,000 | | |
$ | 90,000 | | |
$ | 180,000 | |
Sherry Glied | |
$ | 70,000 | | |
$ | 90,000 | | |
$ | 160,000 | |
Aaron Gorovitz | |
$ | 80,000 | | |
$ | 90,000 | | |
$ | 170,000 | |
Chaim Hurwitz | |
$ | 70,000 | | |
$ | 90,000 | | |
$ | 160,000 | |
Dan Troy | |
$ | 85,000 | | |
$ | — | | |
$ | 85,000 | |
| (1) | Amounts reflect the full grant date fair value of stock options awarded under our Omnibus Plan during 2022, computed in accordance
with the requirements of FASB ASC 718. The stock options vest on May 25, 2023. As of December 31, 2022, (i) Mr. Flynn held 166,505 outstanding
options, (ii) Dr. Glied held 231,942 outstanding options, (iii) Mr. Gorovitz held 166,505 outstanding options, and (iv) Mr. Hurwitz held
166,505 outstanding options. |
EQUITY COMPENSATION PLAN INFORMATION
The following table provides certain aggregate
information with respect to our equity compensation plans in effect as of December 31, 2022.
Plan Type |
|
Number
of securities to be issued upon exercise of outstanding options, warrants and rights |
|
|
Weighted-average
exercise price of outstanding options, warrants and rights |
|
|
Number
of shares of common stock remaining available for future issuance under equity compensation plans |
|
Equity
compensation plans approved by security holders(1) |
|
|
3,452,615 |
(2)(3) |
|
$ |
1.12 |
|
|
|
299,784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans not approved by security holders(4) |
|
|
1,000,000 |
|
|
|
— |
|
|
|
0 |
|
| (1) | Includes
awards granted pursuant to the Omnibus Plan. |
| (2) | As
of December 31, 2022, there were 299,784 shares of common stock authorized for issuance pursuant
to awards under the Omnibus Plan. Pursuant to the terms of the Omnibus Plan, the number of
shares available for issuance thereunder will automatically increase each fiscal year beginning
with fiscal year 2022 and ending with fiscal year 2031 by the lesser of (a) 1% of the total
number of shares outstanding on the last day of the immediately preceding fiscal year on
a fully diluted basis assuming that all shares available for issuance under the Omnibus Plan
are issued and outstanding or (b) such number of shares determined by the Board. |
| (3) | Excludes
rights outstanding under the 2016 Omnibus Incentive Plan. As of December 31, 2022, there
were 1,487,521 securities to be issued upon exercise of outstanding options, warrants and
rights pursuant to our 2016 Omnibus Incentive Plan, with a weighted-average exercise price
of $3.72, which were assumed by Big Rock Partners Acquisition Group and converted into an option to acquire an adjusted
number of shares of common stock at an adjusted exercise price per share in connection with
the May 2021 merger. No further grants or awards will be made under the 2016 Omnibus Incentive Plan. |
| (4) | Reflects
the grant of an “employment inducement grant” under NASDAQ Listing Rule 5635(c)(4)
comprised of restricted stock granted to Mr. Willard. |
Item 13. Certain Relationships and Related Transactions, and
Director Independence
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS
The following includes a summary of transactions
since January 1, 2022 to which we have been a party in which the amount involved exceeded or will exceed $120,000, and in which any of
our directors, executive officers or, to our knowledge, beneficial owners of more than 5% of our capital stock or any member of the immediate
family of any of the foregoing persons had or will have a direct or indirect material interest, other than transactions that are described
under the “Executive and Director Compensation” section of this Form 10-K/A. We also describe below certain other
transactions with our directors, executive officers and stockholders.
Private Placement Lock-Up Agreement
On February 2, 2022, we consummated a private
placement (the “Private Placement”) pursuant to the terms and conditions of that certain Securities Purchase Agreement, dated
as of January 30, 2022 (the “Purchase Agreement”), with certain investors. In connection with the closing of the Private
Placement, we entered into a lock-up agreement with Jonathan Javitt and Daniel Javitt (collectively, the “Javitt Stockholders”),
dated as of January 30, 2022 (the “Private Placement Lock-Up Agreement”), pursuant to which the Javitt Stockholders agreed
not to transfer, directly or indirectly, any Common Stock owned by them for sixty (60) days following the Effective Date (as defined
in the Purchase Agreement) (the “Restriction Period”). Subject to certain conditions, the Javitt Stockholders may transfer
shares of Common Stock provided that: (i) we receive a signed lock-up letter agreement for the balance of the Restriction Period from
each transferee, prior to such transfer, (ii) the transfer does not involve a disposition for value, (iii) the transfer is not required
to be reported with the SEC in accordance with the Exchange Act, as amended, and no report of such transfer is made voluntarily, and
(iv) neither the Javitt Stockholders nor any transferee, as the case may be, otherwise voluntarily effects any public filing or report
regarding such transfer, with respect to certain specified transfers under the Private Placement Lock-Up Agreement. The Restriction Period
has now expired.
Procedures with Respect to Review and Approval of Related
Person Transactions
Our Board recognizes the fact that transactions
with related persons present a heightened risk of conflicts of interests (or the perception of such conflicts of interest). We have adopted
a written policy on transactions with related persons that is in conformity with the requirements for issuers having publicly held common
stock that is listed on the Nasdaq. Under the policy, our legal department is primarily responsible for developing and implementing processes
and procedures to obtain information regarding related persons with respect to potential related person transactions and then determining,
based on the facts and circumstances, whether such potential related person transactions do, in fact, constitute related person transactions
requiring compliance with the policy. If the legal department determines that a transaction or relationship is a related person transaction
requiring compliance with the policy, our general counsel will be required to present to the audit committee all relevant facts and circumstances
relating to the related person transaction. The audit committee will be required to review the relevant facts and circumstances of each
related person transaction, including if the transaction is on terms comparable to those that could be obtained in arm’s length
dealings with an unrelated third party and the extent of the related person’s interest in the transaction, take into account the
conflicts of interest and corporate opportunity provisions of the our code of business conduct and ethics, and either approve or disapprove
the related person transaction. If advance audit committee approval of a related person transaction requiring the audit committee’s
approval is not feasible, then the transaction may be preliminarily entered into by management upon prior approval of the transaction
by the chair of the audit committee, subject to ratification of the transaction by the audit committee at the audit committee’s
next regularly scheduled meeting; provided, that if ratification is not forthcoming, management will make all reasonable efforts to cancel
or annul the transaction. If a transaction was not initially recognized as a related person transaction, then, upon such recognition,
the transaction will be presented to the audit committee for ratification at the audit committee’s next regularly scheduled meeting;
provided, that if ratification is not forthcoming, management will make all reasonable efforts to cancel or annul the transaction. Our
management will update the audit committee as to any material changes to any approved or ratified related person transaction and will
provide a status report at least annually of all then-current related person transactions. No director will be permitted to participate
in approval of a related person transaction for which he or she is a related person.
Support Services
We
license patents owned by Glytech LLC, which is solely owned by Daniel C. Javitt, the brother of Jonathan Javitt, a director and Chief
Scientist of the Company. During 2022 and 2021, the Company in 2022 and NeuroRx, Inc., the predecessor to our company, in 2021
paid Glytech LLC $250,000 and $250,000, respectively, for continuing research and development, technology support services and reimbursed
expenses. These support services are ongoing. Glytech LLC’s support includes both non-clinical and clinical research in support
of the expansion of our intellectual property portfolio.
In
addition, we pay Zachary Javitt, the son Jonathan Javitt, on an hourly basis for services related to website, IT, and marketing support
under the supervision of our Chief Executive Officer, who is responsible for assuring that the services are provided on financial terms
that are at market. We paid Zachary Javitt a total of $133,445 and $106,500 during the years ended December 31, 2022 and 2021,
respectively.
The Company also seeks services for digital health
product development from PillTracker to monitor the use of Aviptadil, a drug, in clinical trials. Zachary Javitt is PillTracker’s
Chief Executive Officer and Jonathan Javitt is the chairman of its board of directors. The Company paid approximately $170,340.00 and
$820,293.88 to PillTracker for its services in 2022 and 2021, respectively.
Controlled Company Status
From the consummation of the business combination
that formed the Company in March 2021 and through October 2021, the Company qualified as a “controlled company” pursuant
to the listing rules of The Nasdaq Stock Market (“Nasdaq”). In accordance with such rules, a company that has ceased to be
a “controlled company” within the meaning of the Nasdaq listing rules shall be permitted to phase-in the requirement to have
a majority independent board and independent nominations and compensation committees on the same schedule as companies listing with their
initial public offering. Accordingly, the Company was required to be fully compliant with the requirement to have a majority independent
board, compensation committee and nominations committee by October 2022.
Director Independence
Our Board has determined that Sharon A. Glied,
Patrick J. Flynn, Aaron Gorovitz, and Chaim Hurvitz are “independent directors” as defined in the Nasdaq listing standards
and applicable SEC rules.