Item 1.01 Entry into a Material Definitive Agreement.
As previously disclosed in a Current Report on Form 8-K filed with the
Securities and Exchange Commission on December 30, 2019, which is incorporated
herein by reference, AzurRx BioPharma, Inc. (the "Company") commenced an
offering on December 20, 2019 of (i) Senior Convertible Promissory Notes (each a
"Note," and together, the "Notes") in the principal amount of up to $8.0 million
to certain accredited investors (the "Investors"), and (ii) warrants
("Warrants") to purchase shares of the Company's common stock, par value $0.001
per share ("Common Stock"), each pursuant to Note Purchase Agreements entered
into by and between the Company and each of the Investors (the "NPAs") (the
"Note Offering").
Between December 30, 2019 and January 2, 2020, the Company issued Notes to
additional Investors in the aggregate principal amount of $943,200 and Warrants
to purchase an aggregate of up to 486,185 shares of Common Stock. Each Note has
a maturity date that is nine months from the date of issuance, accrues interest
at a rate of 9% per annum, and is convertible, at the option of the holder, into
shares of the Company's Common Stock at a price of $0.97 per share (the
"Conversion Shares") and the Warrants have an exercise price of $1.07 per share
and expire five years from the date of issuance. In addition, Alexander Capital
L.P. ("Alexander Capital") received additional consideration for their role as
Placement Agent at the same rate as was disclosed in the Company's Current
Report on Form 8-K filed on December 30, 2019.
The Company intends to use the proceeds from the Note Offering for general
working capital purposes, and to repay certain amounts due and payable to ADEC
Private Equity Investments, LLC ("ADEC"), as previously disclosed in the
Company's Current Report on Form 8-K filed on December 30, 2019.
The issuance of the Notes, Warrants and the Placement Agent Warrants issued to
Alexander Capital was exempt from the registration requirements of the
Securities Act of 1933, as amended, in accordance with Section 4(a)(2) and/or
Regulation 506 promulgated thereunder, as a transaction by an issuer not
involving a public offering.
The foregoing description of the NPA, the Notes and the Warrants do not purport
to be complete, and are qualified in their entirety by reference to the same,
which documents were attached as exhibits to the Company's Current Report on
Form 8-K filed on December 30, 2019.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Effective January 2, 2020, Daniel Schneiderman was appointed to serve as the
Chief Financial Officer of the Company. A copy of the press release issued by
the Company on January 3, 2019 regarding Mr. Schneiderman's appointment is
attached hereto as Exhibit 99.1.
Mr. Schneiderman, age 41, is seasoned finance executive with over 18 years of
experience in the areas of capital markets and finance operations. Prior to
joining the Company, from November 2018 through December 2019 Mr. Schneiderman
served as Chief Financial Officer of Biophytis SA, and its U.S. subsidiary,
Biophytis, Inc., a European-based, clinical-stage biotechnology company focused
on the development of drug candidates for age-related diseases, with a primary
focus on neuromuscular diseases. From February 2012 through August 2018, Mr.
Schneiderman served as Vice President of Finance, Controller and Secretary of
MetaStat, Inc. (OTC: MTST), a publicly traded biotechnology company with a focus
on Rx/Dx precision medicine solutions to treat patients with aggressive
(metastatic) cancer. Mr. Schneiderman began his career at Burnham Hill Partners
LLC, a division of Pali Capital, Inc., a boutique investment bank providing
capital raising, advisory and merchant banking services in February 2004, where
he served in various roles and increasing responsibilities, including as Vice
President of Investment Banking until January 2012. Mr. Schneiderman holds a
bachelor's degree in economics from Tulane University.
In connection with Mr. Schneiderman's appointment, the Company and Mr.
Schneiderman entered into an employment agreement (the "Agreement"), a copy of
which is attached to this Current Report on Form 8-K as Exhibit 10.1. Pursuant
to the Agreement, Mr. Schneiderman shall (i) serve as the Company's Chief
Financial Officer for a term of three years commencing on January 2, 2020 (the
"Effective Date"), subject to further renewal upon agreement of the parties;
(ii) be subject to a non-competition requirement for twelve months after his
termination; (iii) be subject to a non-solicitation requirement for twelve
months after his termination; and (iv) be entitled to receive the following
compensation for his services: (a) a base salary of $285,000 per year, (b) is
eligible to receive an annual milestone cash bonus based on certain milestones
that will be established by the Company's Board or the Compensation Committee,
(c) a grant of stock options to purchase such number of shares of the Company's
Common Stock equal to one and a quarter percent (1.25%) of the issued and
outstanding Common Stock on January 2, 2020 with a strike price of $1.03 per
share, which shall vest in three equal portions on each anniversary date of the
Effective Date commencing on the first anniversary date of the Agreement, (d) 20
days of paid vacation, (e) participate in full employee health benefits, and (f)
reimbursement for all reasonable expenses incurred in connection with his
services to the Company.
In the event of Mr. Schneiderman's termination by the Company for Cause, as
defined in the Agreement, or by Mr. Schneiderman voluntarily, he will not be
entitled to receive any payments beyond amounts already earned, and any
un-vested equity awards will terminate. In the event of Mr. Schneiderman's
termination as a result of an Involuntary Termination Other than for Cause, as
defined in the Agreement, he will be entitled to receive the following
compensation: (i) severance in the form of continuation of his salary (at the
Base Salary rate in effect at the time of termination, but prior to any
reduction triggering Good Reason) for a period of twelve (12) months following
the termination date; (ii) payment of Executive's premiums to cover COBRA for a
period of twelve (12) months following the termination date; and (iii) a
prorated annual bonus.
Mr. Schneidermanand the Company have not engaged in any related party
transaction and he has no family relationships with any director or executive
officer of the Company, or persons nominated or chosen by the Company to become
directors or executive officers. There are no other arrangements or
understandings with Mr. Schneidermanwith respect to his appointment as Chief
Financial Officer.
The foregoing description of the Agreement does not purport to be complete, and
is qualified in its entirety by reference to the same, attached to this Current
Report on Form 8-K as Exhibits 10.1, and incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number Description
10.1 Employment Agreement by and between AzurRx BioPharma, Inc. and Mr.
Schneiderman, dated January 1, 2020.
99.1 Press release issued by AzurRx BioPharma, Inc., dated January 3,
2020.
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