UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 7, 2018

(Exact Name of Registrant as Specified in its Charter)

(Addresses, including zip code, and telephone numbers, including area code, of principal executive offices)

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

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Item 5.02.    Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On August 8, 2018, Innoviva, Inc., a Delaware corporation (the “Company”) announced the appointment of Marianne Zhen, previously the Company’s Corporate Controller, as its new Chief Accounting Officer and principal accounting officer.  In connection with her appointment, the Company and Ms. Zhen entered into an offer letter on September 7, 2018 (the “Offer Letter”).  The Offer Letter provides for an initial base salary of $275,000 per year and annual bonus eligibility with an annual target payout of 45% of Ms. Zhen’s base salary.  The Offer Letter also provides for a retention bonus (“Retention Bonus”) earned upon the following Company filings with the Securities and Exchange Commission: (i) $5,000 upon the Company’s filing of the Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 and (ii) $7,500 upon the Company’s filing of the Annual Report on Form 10-K for the year ended December 31, 2018 (each such filing, a “Retention Date”), subject to Ms. Zhen’s continuous employment with the Company through the applicable Retention Date.

Pursuant to the Offer Letter, subject to the approval of the Company’s Compensation Committee, Ms. Zhen has been granted a restricted stock award (the “Restricted Stock Award”) for 1,779 shares of the Company’s Common Stock.  The Restricted Stock Award will be subject to the terms and conditions applicable to shares awarded under the Company’s 2012 Equity Incentive Plan (the “Plan”), as described in the Plan and the applicable Restricted Stock Agreement.  The shares underlying the Restricted Stock Award will vest in a series of installments as follows: 25% of the shares will vest on February 20, 2019 and the balance of the shares will vest in twelve (12) equal installments on each Company Vesting Date thereafter, provided that Ms. Zhen remains in continuous service through each such vesting date, and as described in the applicable Restricted Stock Agreement.  A “Company Vesting Date” means February 20, May 20, August 20 or November 20.

The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Agreement, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference in its entirety.

Prior to her promotion, Ms. Zhen, age 49, has served as the Company’s Corporate Controller since February 2016, prior to which she served as the Company’s Assistant Controller since joining the Company in October 2014.  Ms. Zhen’s prior experience includes serving as the Corporate Controller of Steelwedge Software, Inc. from May 2012 to October 2014, the Corporate Controller at Intelmate from June 2011 to April 2012 and the Corporate Controller of Model N, Inc. from October 2007 to June 2011.

There are no family relationships between Ms. Zhen and any of the Company’s directors or executive officers, and there is no arrangement or understanding between Ms. Zhen or any other person and the Company or any of its subsidiaries pursuant to which she was appointed as an officer of the Company.  There are no transactions between Ms. Zhen or any of her immediate family members and the Company or any of its subsidiaries that would be required to be reported under Item 404(a) of Regulation S-K.

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The Indemnification Agreement requires the Company to indemnify each Indemnitee who becomes party to the Indemnification Agreement against certain liabilities that may arise by reason of the Indemnitee’s status as a director or officer of the Company, to advance expenses incurred as a result of a proceeding as to which the Indemnitee may be indemnified and to insure the Indemnitee under any directors’ and officers’ liability insurance policy the Company maintains, in all cases, subject to certain exceptions and limitations specified in the Indemnification Agreement.  The Indemnification Agreement is intended to provide indemnification rights to each Indemnitee to the fullest extent permitted by the General Corporation Law of the State of Delaware and shall be in addition to any other rights the directors and officers may have under the Company’s certificate of incorporation and by-laws. 

The foregoing summary and description of the Indemnification Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Indemnification 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.

Item 9.01.             Financial Statements and Exhibits.

 

(d) Exhibits

 

 

 

 

INNOVIVA, INC.
Date: September 11, 2018	By:	/s/ Geoffrey L. Hulme
		Geoffrey L. Hulme
		Interim Principal Executive Officer

 

 

 

 

Innoviva, Inc.

2000 Sierra Point Parkway, Suite 500

Brisbane, CA 94005

Marianne Zhen

[Address Intentionally Omitted]

September 7, 2018

Dear Marianne,

The purpose of this letter is to set forth the terms of the mutual understanding between Innoviva, Inc. (“Innoviva” or the “Company”) and you regarding the details of your promotion to the position of Chief Accounting Officer, reporting to Geoffrey Hulme.  Your salary on an annualized basis will be $275,000 effective as of July 27, 2018.  You will be eligible to receive an annual discretionary bonus of up to 45% of your annual salary, based on the Company’s performance against its annual goals and a review of your individual performance, and determined at the sole discretion of the Company’s Board of Directors (the “Board”) or its Compensation Committee (the “Committee”).  You must be an active employee in good standing at the time the bonus is paid in order to receive the bonus.  The Company’s bonus percentage targets may change from time to time at the sole discretion of the Board or the Committee.

In addition, you will have the opportunity to earn an aggregate of $12,500 in cash retention bonuses (together, the “Retention Bonus”).  The Retention Bonus will be earned upon the following Company filings with the Securities and Exchange Commission: (i) $5,000.00 upon the Company’s filing of the Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 and (ii) $7,500.00 upon the Company’s filing of the Annual Report on Form 10-K for the year ended December 31, 2018 (each such filing, a “Retention Date”), subject to your continuous employment with the Company through the applicable Retention Date.  To the extent earned, each bonus will be paid in a lump sum with the Company’s next regularly scheduled payroll following the applicable Retention Date.  This Retention Bonus opportunity will cease upon the earlier of your termination of employment (except as provided for below) or upon payment of the portion of the Retention Bonus for the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

Subject to the approval of the appropriate committee of the Board and in consideration of services to be rendered by you, you will also be granted a restricted stock award (the “Restricted Stock Award”) for that number of shares of Innoviva’s Common Stock equal to $25,000 divided by the average closing price of Innoviva’s Common Stock for the fifteen (15) trading days ending August 28, 2018.  The Restricted Stock Award will be subject to the terms and conditions applicable to shares awarded under the Company’s 2012 Equity Incentive Plan (the “Plan”), as described in the Plan and the applicable Restricted Stock Agreement.  The shares underlying the Restricted Stock Award will vest in a series of installments as follows: 25% of the shares will vest on February 20, 2019 and the balance of the shares will vest in twelve (12) equal installments on each Company Vesting Date thereafter, provided you remain in continuous service through each such vesting date, and as described in the applicable Restricted Stock Agreement.  A “Company Vesting Date” means February 20, May 20, August 20 or November 20.

 

 

You will continue to be subject to the Company’s Proprietary Information and Inventions Agreement, which you previously signed, as well as the terms of the Company’s Employee Handbook.

While we hope that your employment with the Company will continue to be mutually satisfactory, your employment status will remain “at-will.”  As a result, both you and the Company are free to terminate the employment relationship at any time for any reason, with or without cause.  This is the full and complete agreement between us with respect to the nature of your employment status.  Although your job duties, title, compensation and benefits, as well as the Company’s personnel policies and procedures to which you will be subject, may change from time to time, the “at-will” nature of your employment may only be changed in an express writing signed by you and a Director of the Company.  Notwithstanding the foregoing, in the event that you undergo an Involuntary Termination (as defined below) within three (3) months before or twenty-four (24) months after a Change in Control (as defined in the Plan), you will be eligible to receive: (i) 100% of your combined annual salary and target bonus; (ii) a pro-rata portion of your current target bonus based on the number of full months of employment completed in the applicable period on the date of termination in such year of termination; (iii) payment by the Company of your monthly premium under COBRA until the earlier of twelve (12) months following the month of termination, expiration of the COBRA continuation coverage or the date when you obtain new employment offering comparable health insurance coverage; (iv) full vesting of all of your unvested restricted stock and stock option awards; and (v) a lump sum payment of any then unpaid Retention Bonus (collectively, the “CIC Severance”).

Alternatively, in the event that your employment is terminated by the Company other than for Misconduct (as defined below) or by you with Good Reason (as defined below) and such termination, in either case, does not entitle you to the CIC Severance (i.e., such termination does not occur within three (3) months before or twenty-four (24) months after a Change in Control), you will be eligible to receive (i) a lump sum payment equal to 100% of your annual salary, payable within sixty (60) days after your employment terminates (or, if such period spans calendar years, then the payment will be made in the second calendar year); (ii) continued eligibility to receive a pro-rata bonus (based on the number of full months of employment completed in the year of termination) for the year of termination, subject to the terms and conditions of the Company’s bonus program in effect at the time of termination (other than continued employment) including the achievement of any performance conditions, payable at the same time as bonuses are paid to active employees; (iii) payment by the Company of your monthly premium under COBRA until the earlier of twelve (12) months following the month of termination, expiration of the COBRA continuation coverage or the date when you obtain new employment offering comparable health insurance coverage; and (iv) a lump sum payment of any then unpaid Retention Bonus (together with the CIC Severance, the “Severance”).

 

 

Your receipt of the Severance will be conditioned upon your execution, delivery to the Company and non-revocation of a general release of claims in a form acceptable to the Company within sixty (60) days following the date of your separation.  If you fail to return the release on or before the deadline set forth in the form of release, or if you revoke the release, then you will not be entitled to any Severance.  For the avoidance of doubt, your entitlement to the Severance, if any, pursuant to this letter is in lieu of, and not in addition to, any other severance that you may be eligible to receive pursuant to any other agreement, plan or policy of the Company or any of its affiliates.

For purposes of the above severance provisions, “separation” means a “separation from service,” as defined in the regulations under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).  To the extent the severance payment described in this letter is deemed to be nonqualified deferred compensation that is subject to Section 409A of the Code and if the Company determines that you are a “specified employee” under Section 409A(a)(2)(B)(i) of the Code at the time of your separation, then the severance payment will be made on the first business day following (i) expiration of the six (6) month period measured from your separation or (ii) the date of your death.

The following definitions will apply for purposes of this letter:

(a)

“Good Reason” shall mean, without your consent, the relocation of your principal place of employment to a location that is more than fifty (50) miles from [address intentionally omitted]; provided, however, that in order to terminate your employment with Good Reason, you must provide the Company thirty (30) days’ written notice, which written notice, to be effective, must be provided to the Company within thirty (30) days of the occurrence of the event that constitutes Good Reason.  During such thirty (30) day notice period, the Company shall have a cure right, and if not cured within such period, your termination will be effective upon the expiration of such cure period.

(b)	“Involuntary Termination” shall mean a termination of your employment which occurs by reason of:

·	your involuntary dismissal or discharge by the Company for reasons other than Misconduct, or

·

your voluntary resignation following, without your consent, (i) a material diminution in your authority, duties or responsibilities, (ii) a material reduction in your base compensation, (iii) relocation of your principal place of employment to a location that is more than fifty (50) miles from [address intentionally omitted] or (iv) any other action or inaction that constitutes a material breach by the Company of this letter agreement; provided, however, that in order to terminate your employment under this clause, you must provide the Company thirty (30) days’ written notice, which written notice, to be effective, must be provided to the Company within thirty (30) days of the occurrence of the event that constitutes one or more of the conditions set forth in subclauses (i) through (iv).  During such thirty (30) day notice period, the Company shall have a cure right, and if not cured within such period, your termination will be effective upon the expiration of such cure period.

 

 

 

 

(c)

“Misconduct” shall mean the commission of any material act of fraud, embezzlement or dishonesty by you, any material unauthorized use or disclosure by you of confidential information or trade secrets of the Company (or any parent or subsidiary of the Company), or any other intentional material misconduct by you adversely affecting the business or affairs of the Company (or any parent or subsidiary of the Company).

[Remainder of Page Intentionally Blank]

 

 

 

 

 

This letter sets forth the terms of your employment with us and supersedes any prior representations or agreements, whether written or oral.  A duplicate original of this letter is enclosed for your records.  To accept these terms, please sign and return this letter to me.

Sincerely,

Innoviva, Inc.

_/s/ Geoffrey Hulme   __________________

Acknowledged and Agreed as of this 7th day of September, 2018:

Signature: /s/ Marianne Zhen                           
                Marianne Zhen

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is made and entered into as of ______________ between Innoviva, Inc., a Delaware corporation (the “Company”), and ______________ (“Indemnitee”).

WITNESSETH THAT:

WHEREAS, highly competent persons have become more reluctant to serve publicly-held corporations as directors, officers or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities.  Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions.  At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself.  The Bylaws of the Company require indemnification of the officers and directors of the Company.  Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (“DGCL”).  The Bylaws and and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to indemnification;

WHEREAS, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company's stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

WHEREAS, this Agreement is a supplement to and in furtherance of the indemnification provided in the Company’s Bylaws, the Certificate of Incorporation and any resolutions adopted pursuant thereto, as well as any rights of Indemnitee under any directors’ and officers’ liability insurance policy, and this Agreement shall not be deemed a substitute therefor, nor to limit, diminish or abrogate any rights of Indemnitee thereunder; and

 

 

WHEREAS, Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he be indemnified in accordance with the terms of this Agreement; and

NOW, THEREFORE, in consideration of Indemnitee’s agreement to serve as an director from and after the date hereof, the parties hereto agree as follows:

 

 

 

the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 14 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the person so selected shall act as Independent Counsel.  If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit.  If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 7(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 7(b) hereof.  The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 7(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 7(c), regardless of the manner in which such Independent Counsel was selected or appointed.

to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such sixty (60) day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating thereto; and provided further, that the foregoing provisions of this Section 7(f) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 7(b) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination, the Board or the Disinterested Directors, if appropriate, resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat.

otherwise, (iii) any obligation of any other Persons with whom or which Indemnitee may be associated to indemnify Indemnitee or advance Expenses or liabilities to Indemnitee in respect of any Proceeding shall be secondary to the obligations of the Company hereunder, (iv) the Company shall be required to indemnify Indemnitee and advance Expenses or liabilities to Indemnitee hereunder to the fullest extent provided herein without regard to any rights Indemnitee may have against any other Person with whom or which Indemnitee may be associated or insurer of any such Person and (v) the Company irrevocably waives, relinquishes and releases any other Person with whom or which Indemnitee may be associated from any claim of contribution, subrogation or any other recovery of any kind in respect of amounts paid by the Company hereunder. In the event any other Person with whom or which Indemnitee may be associated or their insurers advances or extinguishes any liability or loss which is the subject of any Indemnity Obligation owed by the Company or payable under any Company insurance policy, the payor shall have a right of subrogation against the Company or its insurer or insurers for all amounts so paid which would otherwise be payable by the Company or its insurer or insurers under this Agreement. In no event will payment of an Indemnity Obligation by any other Person with whom or which Indemnitee may be associated or their insurers affect the obligations of the Company hereunder or shift primary liability for any Indemnity Obligation to any other Person with whom or which Indemnitee may be associated. Any indemnification, insurance or advancement provided by any other Person with whom or which Indemnitee may be associated with respect to any liability arising as a result of Indemnitee’s status as director, officer, employee or agent of the Company or capacity as an officer or director of any Person is specifically in excess over any Indemnity Obligation of the Company or valid and any collectible insurance (including but not limited to any malpractice insurance or professional errors and omissions insurance) provided by the Company under this Agreement.

Innoviva, Inc.

2000 Sierra Point Parkway

Suite 500

Brisbane, Califonia 94005

Attention: Principal Executive Officer

__________________

With a copy, which shall not constitute notice to:

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, New York 10019

Attention: Russell Leaf

rleaf@willkie.com

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

SIGNATURE PAGE TO FOLLOW

 

 

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement on and as of the day and year first above written.