Item 5.02.
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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On March 30, 2016,
the Board of Directors (the “Board”) of Rock Creek Pharmaceuticals, Inc. (the “Company”) adopted the Rock
Creek Pharmaceuticals, Inc. 2016 Omnibus Incentive Plan (the “2016 Plan”). A brief description of the terms and conditions
of the 2016 Plan are set forth below.
2016 Omnibus Incentive Plan
The 2016 Plan authorizes
the issuance of stock options, stock appreciation rights, performance shares, performance units, restricted stock, restricted stock
units, shares of the Company’s common stock, dividend equivalent units, incentive cash awards or other awards based on the
Company’s common stock. Awards may be granted alone or in addition to, in tandem with, or in substitution for any other award
(or any other award granted under another incentive plan of the Company or of any of the Company’s affiliates).
Purpose
. The
two complementary purposes of the 2016 Plan are to help the Company attract, retain, focus and motivate the Company’s executives
and other key employees, directors, consultants and advisors and to increase stockholder value. The 2016 Plan will accomplish these
purposes by offering participants the opportunity to acquire shares of the Company’s common stock, receive monetary payments
based on the value of such common stock or receive other incentive compensation on the potentially favorable terms that the 2016
Plan provides.
Administration
.
The Company’s 2016 Plan will be administered by the Board’s compensation committee, the Board, or another committee
(the applicable committee or the Company’s Board, as the case may be, is hereinafter referred to as the “Administrator”).
The Administrator may designate any of the following as a participant under the 2016 Plan to the extent consistent with its authority:
any officer or other employee of the Company or its affiliates; any individual whom the Company or an affiliate have engaged to
become an officer or employee; any consultant or advisor who provides services to the Company or its affiliates; or any director,
including a non-employee director.
The Administrator
has full discretionary authority to administer the 2016 Plan, including but not limited to the authority to: (i) interpret the
provisions of the 2016 Plan; (ii) prescribe, amend and rescind rules and regulations relating to the 2016 Plan; (iii) correct any
defect, supply any omission, or reconcile any inconsistency in the 2016 Plan, any award or any award agreement in the manner and
to the extent it deems desirable to carry the 2016 Plan or such award into effect; and (iv) make all other determinations necessary
or advisable for the administration of the 2016 Plan. All Administrator determinations will be made in the sole discretion of the
Administrator and are final and binding on all interested parties.
The Board may delegate
some or all of its authority under the 2016 Plan to a committee of the Board, and the compensation committee may delegate some
or all of its authority under the 2016 Plan to a sub-committee or one or more of the Company’s officers, subject in each
case to limitations specified in the 2016 Plan.
Number and sources
of shares
. An aggregate of six million (6,000,000) shares of the Company’s common stock have been reserved for issuance
under the 2016 Plan, all of which may be issued upon the exercise of incentive stock options. The shares reserved for issuance
may be either authorized and unissued shares or shares held as treasury stock. The number of shares reserved for issuance under
the 2016 Plan is reduced by the maximum number of shares, if any, that may be payable under an award as determined on the date
of the grant of the award.
If (i) an award granted
under the 2016 Plan lapses, expires, terminates or is cancelled without the issuance of shares under the award (whether due currently
or on a deferred basis); (ii) it is determined during or at the conclusion of the term of an award granted under the 2016 Plan
that all or some portion of the shares with respect to which the award was granted will not be issuable, or that other compensation
with respect to shares covered by the award will not be payable on the basis that the conditions for such issuance will not be
satisfied; (iii) shares are forfeited under an award; (iv) shares are issued under any award and the Company reacquires them pursuant
to rights the Company reserved upon the issuance of the shares; or (v) shares are tendered to satisfy the exercise price of an
award or federal, state or local tax withholding obligations, then such shares will be recredited to the 2016 Plan’s reserve
and may again be used for new awards under the 2016 Plan. However, shares recredited to the 2016 Plan’s reserve under clause
(iv) or (v) may not be issued pursuant to incentive stock options.
Eligibility
.
Incentive stock options may only be granted to the Company and the Company’s subsidiaries’ employees. All other awards
may be granted to the Company and the Company’s subsidiaries’ employees, officers, directors and key persons (including
consultants and prospective employees).
Amendment or termination
of the 2016 Plan
. The 2016 Plan terminates when all shares reserved for issuance under the 2016 Plan have been issued, subject
to the Board’s right to terminate the 2016 Plan at any time. In addition, the Board or the Administrator may amend plan at
any time, except:
(i) the Board must
approve any amendment to the 2016 Plan if the Company determines such approval is required by prior action of the Board, applicable
corporate law or any other applicable law; and
(ii) stockholders
must approve any amendment to the 2016 Plan if the Company determines that such approval is required by Section 16 of the Exchange
Act, the listing requirements of any principal securities exchange or market on which the Company’s common stock is then
traded, or any other applicable law.
The Administrator
generally may modify, amend or cancel any award or waive any restrictions or conditions applicable to any award or the exercise
of the award. Any modification or amendment that materially diminishes the rights of the participant or any other person who may
have an interest in the award, or that cancels any award, will be effective only if agreed to by that participant or other person.
The Administrator does not need to obtain participant or other interested party consent, however, for the adjustment or cancellation
of an award pursuant to the adjustment provisions of the 2016 Plan or the modification of an award to the extent deemed necessary
to comply with any applicable law or the listing requirements of any principal securities exchange or market on which the Company’s
common stock is then traded, to the extent the Administrator deems necessary to preserve favorable accounting or tax treatment
of any award for the Company, or to the extent the Administrator determines that the action does not materially and adversely affect
the value of an award or that such action is in the best interest of the affected participant or any other person(s) with an interest
in the award.
The authority of the
Administrator to terminate or modify the 2016 Plan or awards will extend beyond the termination date of the 2016 Plan. In addition,
termination of the 2016 Plan will not affect the rights of participants with respect to awards previously granted to them, and
all unexpired awards will continue in force after termination of the 2016 Plan except as they may lapse or be terminated by their
own terms and conditions.
Options and stock
appreciation rights
. Under the 2016 Plan, the Administrator has the authority to grant stock options and to determine all terms
and conditions of each stock option including but not limited to whether the option is an “incentive stock option”
which meets the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or a “nonqualified
stock option” which does not meet the requirements of Code Section 422. A stock option gives the participant the right to
purchase shares of the Company’s common stock at a fixed price, called the “option price,” after the vesting
conditions of the option are met and prior to the date the option expires or terminates. The Administrator fixes the option price
per share of common stock, which may not be less than the fair market value of the common stock on the date of grant. The Administrator
determines the expiration date of each option, but the expiration date cannot be later than ten (10) years after the grant date.
Options are exercisable at such times and are subject to such restrictions and conditions as the Administrator deems necessary
or advisable. The stock option exercise price is payable to the Company in full upon exercise.
Pursuant to the 2016
Plan, the Administrator has the authority to grant stock appreciation rights. A stock appreciation right is the right of a participant
to receive cash in an amount, and/or common stock with a fair market value, equal to the appreciation of the fair market value
of a share of the Company’s common stock during a specified period of time. The 2016 Plan provides that the Administrator
determine all terms and conditions of each stock appreciation right, including, among other things: whether the stock appreciation
right is granted independently of a stock option or relates to a stock option; a grant price that is not less than the fair market
value of the common stock subject to the stock appreciation right on the date of grant; a term that must be no later than ten (10)
years after the date of grant; and whether the stock appreciation right will settle in cash, common stock or a combination of the
two.
The specific terms
and conditions of a participant’s option will be set forth in an award agreement delivered to the participant in the form
of 2016 Omnibus Incentive Plan Stock Option Award Agreement (together with any other award agreement granting awards pursuant to
the 2016 Plan, the “Award Agreement”), a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K
and is incorporated herein by reference.
Backdating prohibited
.
The Administrator may not grant a stock option or stock appreciation right with a grant date that is effective prior to the date
the Administrator takes action to approve such award.
Performance and
stock awards
. Pursuant to the 2016 Plan, the Administrator has the authority to grant awards of restricted stock, restricted
stock units, performance shares or performance units. Restricted stock means shares of common stock the Company that are subject
to a risk of forfeiture, restrictions on transfer or both a risk of forfeiture and restrictions on transfer. Restricted stock unit
means the right to receive a payment equal to the fair market value of one share of the Company’s common stock. Performance
shares means the right to receive shares of the Company’s common stock to the extent performance goals are achieved. Performance
unit means the right to receive a payment valued in relation to a unit that has a designated dollar value or the value of which
is equal to the fair market value of one or more shares of the Company’s common stock, to the extent performance goals are
achieved.
The Administrator
determines all terms and conditions of these types of awards, including, among other things: whether performance goals need to
be achieved for the participant to realize any portion of the benefit provided under the award; whether the restrictions imposed
on restricted stock or restricted stock units will lapse, and any portion of the performance goals subject to an award will be
deemed achieved, upon a participant’s death, disability or retirement; the length of the vesting and/or performance period
and, if different, the date on which payment of the benefit provided under the award is made; with respect to performance units,
whether to measure the value of each unit in relation to a designated dollar value or the fair market value of one or more shares
of the Company’s common stock; and, with respect to restricted stock units and performance units, whether the awards settle
in cash, in shares of the Company’s common stock, or in a combination of the two.
The specific terms
and conditions of a participant’s award of restricted stock, restricted stock units, performance shares or performance units
will be set forth in an Award Agreement delivered to the participant.
Dividend equivalent
rights
. Pursuant to the 2016 Plan, the Administrator has the authority to grant dividend equivalent units in connection with
awards other than options, stock appreciation rights or other stock rights within the meaning of Code Section 409A. A dividend
equivalent unit is the right to receive a payment, in cash or shares of the Company’s common stock, equal to the cash dividends
or other distributions that the Company pays with respect to a share of the Company’s common stock. No dividend equivalent
unit granted in tandem with another award may include vesting provisions more favorable to the participant than the vesting provisions,
if any, to which the tandem award is subject.
The specific terms
and conditions of a participant’s dividend equivalent units will be set forth in an Award Agreement delivered to the participant.
Incentive awards
.
The Administrator has the authority to grant annual and long-term incentive awards. An incentive award is the right to receive
a cash payment to the extent performance goals are achieved. The Administrator will determine all of the terms and conditions of
each incentive award, including the performance goals, the performance period, the potential amount payable and the timing of payment,
provided that the Administrator must require that payment of all or any portion of the amount subject to the award is contingent
on the achievement of one or more performance goals during the period the Administrator specifies, although the Administrator may
specify that all or a portion of the goals are deemed achieved upon a participant’s death, disability or (for awards not
intended to qualify as performance-based compensation within the meaning of Code Section 162(m)) retirement, or such other circumstances
as the Administrator may specify. For long-term incentive awards, the performance period must relate to a period of more than one
fiscal year.
The specific terms
and conditions of a participant’s incentive award will be set forth in an Award Agreement or another document delivered to
the participant.
Other stock-based
awards
. The Administrator has the authority to grant other types of awards, which may be denominated or payable in, valued
in whole or in part by reference to, or otherwise based on, shares of the Company’s common stock, either alone or in addition
to or in conjunction with other awards, and payable in shares of the Company’s common stock or cash. Such awards may include
shares of unrestricted common stock, which may be awarded, without limitation (except as provided in the 2016 Plan), as a bonus,
in payment of director fees, in lieu of cash compensation, in exchange for cancellation of a compensation right, or upon the attainment
of performance goals or otherwise, or rights to acquire shares of the Company’s common stock from us. The Administrator determines
all terms and conditions of the award, including the time or times at which such award is made and the number of shares of common
stock to be granted pursuant to such award or to which such award relates. Any award that provides for purchase rights must be
priced at 100% of the fair market value of the Company’s common stock on the date of the award.
The specific terms
and conditions of a participant’s award will be set forth in an Award Agreement or another document delivered to the participant.
Performance goals
.
Awards may be made contingent on the achievement of performance goals. Performance goals include any goals the Administrator establishes
that relate to one or more of the following with respect to the Company or any one or more of the Company’s subsidiaries,
affiliates or other business units: book value; revenue; cash flow; total stockholder return; dividends; debt; net cash provided
by operating activities; net cash provided by operating activities less net cash used in investing activities; ratio of debt to
debt plus equity; profit before tax; gross profit; net profit; net operating profit; net operating profit after taxes; net sales;
earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; fair market value of shares;
basic earnings per share; diluted earnings per share; return on stockholder equity; return on average equity; return on average
total capital employed; return on net assets employed before interest and taxes; economic value added; return on year-end equity;
capital; cost of capital; cost of equity; cost of debt; taxes; market share; operating ratios; customer satisfaction; customer
retention; customer loyalty; strategic business criteria based on meeting specified revenue goals; market penetration goals; regulatory
milestone goals; development milestone goals; investment performance goals; business expansion goals or cost targets; accomplishment
of mergers, acquisitions, dispositions or similar extraordinary business transactions; profit returns and margins; financial return
ratios; market performance and/or capital goals or returns or a combination of the foregoing. In addition, in the case of awards
that the Administrator determines at the date of grant will not be considered “performance-based compensation” under
Code Section 162(m), the Administrator may establish other performance goals.
Effect of a change
of control
. If the Company experiences a “change of control,” as defined in the 2016 Plan, then, unless otherwise
expressly provided in an Award Agreement or another contract, or under the terms of a transaction constituting a change of control,
the Administrator may, in its discretion, provide that:
• Any outstanding
award (or portion thereof) will vest or be earned on an accelerated basis in connection with the change of control or a subsequent
termination; and/or
• Any of the
following will occur: (i) shares or other securities of the surviving corporation or any successor corporation, or a parent or
subsidiary thereof, will be substituted for shares subject to any outstanding award, in which event the aggregate purchase or exercise
price, if any, of such award, or portion thereof, will remain the same, (ii) any outstanding award, or portion thereof, will be
converted into a right to receive cash or other property upon or following the consummation of the change of control in an amount
equal to the value of the consideration to be received by holders of shares of the Company’s common stock in connection with
the transaction for one share, less the per share purchase or exercise price of such award, if any, multiplied by the number of
shares subject to such award, or portion thereof, (iii) the vesting (and, as applicable, the exercisability) of any and/or all
outstanding awards will be accelerated, (iv) any outstanding and unexercised awards upon or following the consummation of the change
of control (without the consent of an award holder or any person with an interest in an award) will be cancelled, (v) all outstanding
options or stock appreciation rights will be cancelled in exchange for a cash payment equal to the excess of the change of control
price per share over the exercise price of the shares subject to such option or stock appreciation right upon the change of control
(or for no cash payment if such excess is zero), and/or (vi) any awards will be cancelled in exchange for a cash payment based
on the value of the award as of the date of the change of control (or for no payment if the award has no value).
In general, if any
payments or benefits paid by the Company under the 2016 Plan would cause payments made to or benefits received by a participant
in connection with a change of control to be subject to the excise tax imposed by Code Section 4999 on excess parachute payments,
then the payments will be delivered either (i) in full or (ii) in an amount such that the value of the aggregate payments is $1.00
less than the maximum amount that the participant may receive without being subject to the excise tax, whichever of (i) or (ii)
results in the participant’s receipt of the greatest benefit on an after-tax basis.
Grants Under the 2016 Plan
Pursuant to the Plan,
on March 30, 2016, the Board of the Company awarded to each non-employee director of the Company an option to purchase 48,000 shares
of Company common stock at an exercise price of $1.12 per share. Such options will expire 10 years from the date of grant unless
they terminate earlier upon a termination of service. The options granted to Lee Canaan and Scott Sensenbrenner are immediately
vested, and the options granted to Sunitha Chundru Samuel and Robert Scannell will vest 50% on the first anniversary of their appointments
to the Board and 50% on the second anniversary of their appointments to the Board. Ms. Chundru’s appointment to the Board
was on April 20, 2015, and Mr. Scannell’s appointment to the Board was on November 17, 2015.
The foregoing description
of the 2016 Plan and the Award Agreement does not purport to be complete and is qualified in its entirety by reference to the 2016
Plan and the Award Agreement, copies of which are filed as Exhibit 10.1 and 10.2 to this Current Report on Form 8-K and are incorporated
herein by reference.