Item 2.05 Costs Associated with Exit or Disposal Activities.
On August 12, 2022, in light of Clarus' current financial position, Clarus'
board of directors approved a reduction in its current workforce by
approximately 40%, which includes staff reductions at all levels, including
field sales personnel, coupled with significant reductions in promotional and
other operational spend. Clarus expects to recognize up to approximately
$1.1 million in total for severance and related expenses for employees laid off
under the reduction in force. These charges are primarily one-time termination
expenses and are all cash charges. Clarus may also incur other charges or cash
expenditures not currently contemplated due to events that may occur as a result
of, or associated with, the workforce reduction. Clarus will also postpone any
non-essential research and development activities as it revises its operating
plans to preserve cash.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers' Compensatory Arrangements of Certain
Officers.
On August 12, 2022, as part of the reduction in force, Clarus' board of
directors approved the consolidation of its accounting and finance function and
eliminated the position of Chief Financial Officer. Accordingly, Richard
Peterson, will step down as the Chief Financial Officer of Clarus effective
August 31, 2022 and be replaced by Steven Bourne, who has been serving as
Clarus' Chief Administrative Officer (and was former Chief Financial Officer of
Clarus Therapeutics, Inc.). Mr. Bourne will be appointed Chief Financial Officer
and principal financial officer and principal accounting officer effective
August 31, 2021. In connection with his separation from Clarus, Mr. Peterson
will be entitled to payment of his severance benefits pursuant to his employment
agreement filed as (filed as Exhibit 10.5 to Clarus' current report on Form 8-K
filed on September 15, 2021).
Mr. Bourne, 60, has served as Clarus' Chief Administrative Officer and Secretary
since the closing of Clarus' business combination in September 2021. Prior
thereto, he served as the Chief Administrative Officer of Clarus Therapeutics,
Inc., or Legacy Clarus, beginning February 2021 and as its Secretary and
Treasurer from February 2004, in each case through the closing of the business
combination. He previously served as Legacy Clarus' Chief Financial Officer from
February 2004 to February 2021. Prior to that, from 2002 to 2003, Mr. Bourne
served as Chief Financial Officer, Secretary and Treasurer at Anagen
Therapeutics, Inc., a private biopharmaceutical company. Further, Mr. Bourne
served as Controller, Secretary and Treasurer of Aksys, Ltd., a public medical
device company, from 1996 to 2001. Mr. Bourne received a B.S. in Accounting from
Miami University and is a Certified Public Accountant.
There are no family relationships between Mr. Bourne and any other director or
executive officer.
Mr. Bourne will be compensated under his existing employment agreement dated
September 9, 2021, and is not expected to receive any additional compensation in
connection with this appointment.
Mr. Bourne's employment agreement, which was entered into in connection with the
closing of the business compensation, provides for an indefinite employment term
that may be terminated in accordance with the terms and conditions of the
employment agreement, and provides for an annual base salary of $348,000 and
annual cash performance-based bonus with a 35% target of a certain percentage of
base salary based on the achievement of certain performance objectives as
determined by the compensation committee of the board of directors of Clarus. In
addition, his employment agreement provides for severance benefits upon a
termination of employment due to death or "disability" (as defined in the
employment agreements), including (i) any unpaid annual bonus for the fiscal
year ended prior to the date of termination, paid at the same time as annual
bonuses are paid to the senior executives, (ii) pro-rata annual bonus for the
year of termination, paid within 30 days of the executive's termination date,
and (iii) payment of the employer-portion of COBRA premiums for 12 months.
Mr. Bourne's employment agreement also provides for severance benefits upon a
termination of employment without "cause" or by Mr. Bourne for "good reason"
(each as defined in the employment agreement), subject to the execution of a
release, including (i) any unpaid annual bonus for the fiscal year ended prior
to the date of termination, paid at the same time as annual bonuses are paid to
the senior executives, (ii) a pro-rata annual bonus for the year of termination
(based on actual performance), paid at the same time as annual bonuses are paid
to the senior executives, (iii) 12 months of base salary, payable in
installments over the applicable severance period (or in the event such
termination occurs on or following a change in control" (as defined in the
employment agreements), payable in a lump sum following such
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termination), (iv) payment of the employer-portion of COBRA premiums during the
applicable severance period (or until Mr. Bourne becomes eligible to receive
health benefits as a result of subsequent employment or service during the
severance period, if earlier), and (v) outplacement services up to a maximum
cost of $25,000. Mr. Bourne's employment agreement provides a Section 280G
partial clawback, in which he is entitled to receive the greater of (a) the best
net after-tax amount of any payments that are "parachute payments" under
Section 280G of the Code and (b) the amount of parachute payments he would be
entitled to receive if they were reduced to an amount equal to 2.99 times his
"base amount" (as defined in the employment agreement). Mr. Bourne's employment
agreement also contains certain restrictive covenants, including a 12-month
non-competition, a 12-month non-solicitation, and confidentiality covenants.
Mr. Bourne is also eligible to receive equity awards under Clarus' equity
compensation plans.
Mr. Bourne has also previously entered into Clarus' standard form of officer
indemnification agreement (filed as Exhibit 10.3 to Clarus' current report on
Form 8-K filed on September 15, 2021), which requires Clarus to indemnify its
officers for certain expenses incurred by an officer in any action or proceeding
arising out of his or her services as one of Clarus' officers or any other
company or enterprise to which the person provides services at Clarus' request.
The foregoing description of Mr. Bourne's employment agreement is not complete
and is qualified in its entirety by reference to the full text of such agreement
a copy of which is filed herewith as Exhibit 10.1, and is incorporated by
reference herein.
Forward-Looking Statements
This current report on Form 8-K contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 that involve
substantial risks and uncertainties. All statements, other than statements of
historical facts, contained in this report are forward-looking statements,
including statements regarding Clarus' reduction in force plan and the estimated
charges resulting therefrom, the postponement of any non-essential research and
development activities, and Clarus' executive officer transitions, among others.
The words "anticipate," "believe," "continue," "could," "estimate," "expect,"
"intend," "may," "plan," "potential," "predict," "project," "should," "target,"
"will," "would" and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain these
identifying words. Any forward-looking statements are based on management's
current expectations of future events and are subject to a number of risks and
uncertainties that could cause actual results to differ materially and adversely
from those set forth in, or implied by, such forward-looking statements. These
risks and uncertainties include, but are not limited to, risks associated with
Clarus' ability to realize the cost savings from the strategic realignment,
risks associated with pharmaceutical development and Clarus' financial position,
and those factors described under the heading "Risk Factors" in Clarus' annual
report on Form 10-K for the year ended December 31, 2021, filed with the
Securities and Exchange Commission, or the SEC, on March 31, 2022, and those
that are included in any of Clarus' future filings with the SEC. Some of these
risks and uncertainties may in the future be amplified by the ongoing COVID-19
pandemic and there may be additional risks that Clarus considers immaterial, or
which are unknown. It is not possible to predict or identify all such risks.
Clarus' forward-looking statements only speak as of the date they are made, and
Clarus does not undertake any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as may be required under applicable securities laws.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
10.1 Employment Agreement, dated September 9, 2021, by and between Clarus
Therapeutics, Inc. and Steven A. Bourne (incorporated by reference to
Exhibit 10.6 to the Current Report on Form 8-K filed by Clarus on
September 15, 2021).
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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