TPTX » Topics » Summary of Benefits of Executive Officers

This excerpt taken from the TPTX DEF 14A filed Jun 19, 2009.

Summary of Benefits of Executive Officers

The liquidation and dissolution of the Company would be considered a change of control as defined in the Executive Officers’ employment agreements. As such, approval of the Plan of Dissolution and the termination of the Executive Officers in connection therewith would trigger payments under the employment agreements. Due to the financial status of the Company and the limited cash available, it is currently anticipated that the Company would only be able to provide a portion of the benefits payable under the Executive Officers’ employment agreements. Under the employment agreements, the following amounts would be due to the Executive Officers upon their termination as a result of the approval of the Plan of Dissolution:

 

Name and Principal Position

   Severance Period    Total Severance Payments   

Other Benefits

Evelyn Graham
Chief Executive Officer

   12 months    $507,500    Full acceleration of all outstanding options

Craig Johnson
Vice President, Finance and Chief Financial Officer

   12 months    $351,200    Full acceleration of all outstanding options

Paul Schneider
Vice President and General Counsel

   12 months    $272,125    Full acceleration of all outstanding options

 

 

If we receive cash upon the sale of our assets in an amount sufficient to pay the Executive Officers’ severance obligations in full, the Plan of Dissolution anticipates that we would pay the full amounts due the Executive Officers under their employment agreements.

 

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In addition, the Executive Officers hold an aggregate of options to purchase 1,678,075 shares of our common stock of which the lowest exercise price is $0.23 per share. As of May 26, 2009, the closing price of a share of our common stock on the Nasdaq Stock Market was $0.33. Unless and until any such options are exercised and payment of the applicable exercise price is made, the option holders are not entitled to any cash distributions with respect to their options under the Plan of Dissolution.

In addition to the above, the Executive Officers, certain members of our Board of Directors, including Dr. Deleage who resigned from our Board of Directors effective May 27, 2009, Mr. Van Beneden who resigned from our Board of Directors effective May 29, 2009 and Dr. Fisherman who resigned from our board of Directors effective June 12, 2009 and entities affiliated with certain members of our Board of Directors, including Alta Partners where Dr. Deleage is a managing director, GIMV N.V. where Mr. Van Beneden is Executive Vice President Life Sciences and Advent Healthcare Ventures where Dr. Fisherman is a managing director own an aggregate of 5,916,946 shares of the Company’s common stock. It is currently expected that distributions to stockholders would only occur upon the consummation of the sale of some or all of our assets. The amount of such distributions is not readily determinable as it is dependent upon the amount of consideration received for such assets. In the event of a distribution, Ms. Graham, Mr. Johnson and certain directors would be entitled to cash distributions based on their ownership of shares of the Company’s common stock, which is detailed in the following table:

 

Name and Title

   Number of Shares
Owned(1)
 

Jean Deleage
Former Director

   2,229,706 (2)

Patrick Van Beneden
Former Director

   2,215,883 (3)

Jason Fisherman
Former Director

   1,320,317 (4)

Steven Ratoff
Director

   81,208  

Evelyn Graham
Chief Executive Officer

   32,480  

Craig Johnson
Vice President, Finance and Chief Financial Officer

   32,480  

Peter Davis
Director

   4,872  

 

(1)   This table is based upon information supplied by officers, directors and principal Stockholders and Schedules 13D and 13G filed with the SEC. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, the Company believes that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based on 15,974,058 shares outstanding on February 28, 2009 adjusted as required by rules promulgated by the SEC.
(2)   Includes 1,258,044 shares held of record by Alta California Partners II, L.P., 358,414 shares held of record by Alta California Partners II, L.P.—New Pool, 15,893 shares held of record by Alta Embarcadero Partners II, LLC, 547,128 shares held of record by Alta BioPharma Partners III, L.P., 36,744 shares held of record by Alta BioPharma Partners III GmbH & Co. Beteiligungs KG, 13,483 shares held of record by Alta Embarcadero BioPharma Partners III, LLC. Alta Partners LP, as the parent of each of Alta BioPharma Partners III GmbH & Co. Beteiligungs, Alta BioPharma Partners III, L.P., Alta California Partners II, L.P., Alta California Partners II, L.P.—New Pool, Alta Embarcadero BioPharma Partners III, LLC and Alta Embarcadero Partners II, LLC, may be deemed to beneficially own such shares. Dr. Deleage is a managing director of Alta Partners. Dr. Deleage, a former member of our Board, resigned effective May 27, 2009, and a former member of the board of directors of TPTX, Inc. disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein. The address of Alta Partners LP is One Embarcadero Center, Suite 3700, San Francisco, CA 94111.
(3)  

Includes 1,544,403 shares held of record by GIMV N.V., 477,704 shares held of record by Biotech Fonds Vlaanderen, N.V., and 193,776 shares held of record by Adviesbeheer GIMV Life Sciences N.V. GIMV N.V., as the parent of each of Biotech Fonds

 

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Vlaanderen, N.V. and Adviesbeheer GIMV Life Sciences N.V., may be deemed to beneficially own such shares. Patrick Van Beneden is the Executive Vice President Life Sciences of GIMV, N.V. Mr. Van Beneden, a former member of our Board resigned effective May 29, 2009 and a former member of the board of directors of TPTX Inc., disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein. The address of GIMV, N.V. is Karel Oomsstraat 37, B-2018, Antwerp, Belgium.

(4)   Includes 1,197,723 shares held of record by Advent Health Care and Life Sciences II Limited Partnership; 93,350 shares held of record by Advent Health Care and Life Sciences II Beteiligung GmbH & Co. KG; 26,567 shares held of record by Advent HLS II Limited Partnership; 2,677 shares held of record by Advent Partners Limited Partnership and an option to purchase 10,000 shares held by Jason S. Fisherman, M.D. Advent International has engaged Advent Healthcare Ventures to advise it with respect to the operation of certain private equity funds, including the above listed funds. Dr. Fisherman is a managing director of Advent Healthcare Ventures. Dr. Fisherman, a former member of our Board, resigned effective June 12, 2009, and a former member of the board of directors of TPTX, Inc. disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein. Each fund disclaims beneficial ownership of the others’ shares. The address of Advent Healthcare Ventures is 75 State Street, Boston, MA 02109.

Following the filing of the Certificate of Dissolution with the Delaware Secretary of State, we will continue to indemnify each of our current and former directors and officers to the extent required under Delaware law and our Certificate of Incorporation and Bylaws as in effect immediately prior to the filing of the Certificate of Dissolution. In addition, we intend to maintain our current directors’ and officers’ insurance policy through the dissolution of the Company and to obtain runoff coverage for claims against our current officers and directors for up to an additional six years thereafter.

If the dissolution is approved, our Board of Directors may, at any time, turn our management over to a third party to complete the liquidation of our remaining assets and distribute the proceeds from the sale of assets to our stockholders pursuant to the Plan of Dissolution. This third-party management may be in the form of a liquidating trust, which, if adopted, would succeed to all of our assets, liabilities and obligations. Our Board of Directors may appoint one or more of its members or one or more of our officers to act as trustee or trustees of such liquidating trust. In the event a member of the Board of Directors or an officer is appointed to act as a trustee or trustees of the liquidating trust, we expect that the compensation paid to such individual or individuals for their trustee services would not be materially different from the compensation that would be paid to an outside third party, such as a bank, for similar services.

As a result of these benefits, our directors and executive officers generally could be more likely to vote to approve the Plan of Dissolution, including the liquidation and dissolution of the Company contemplated thereby, than our other stockholders.

Other than as set forth above, it is not currently anticipated that our liquidation and dissolution will result in any material benefit to any of our executive officers or to directors who participated in the vote to adopt the Plan of Dissolution.

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