salary that he was receiving immediately prior to the change of control; (ii) the Company shall pay to Mr. Pascoe in one lump sum (A) any unpaid bonus for the calendar year preceding his termination, to the extent that all criteria for such bonus had been met (with the exception of the requirement that he be employed on the date the bonus was to be paid), plus (B) 100% of his target bonus for the year in which the date of his involuntary termination occurred; (iii) full acceleration of the vesting of all equity awards held by Mr. Pascoe at the time of the termination, including any options, restricted stock, RSUs or other awards, and (iv) reimbursement for the cost of continuation of health insurance benefits provided to him immediately prior to the termination pursuant to the terms of COBRA or other applicable law for a period continuing until the earlier of 18 months following the termination or the date upon which he is no longer eligible for such COBRA or other benefits under applicable law. In addition, Mr. Pascoes outstanding performance-based stock options as well as the unvested portion of restricted stock units granted in March 2016, April 2016, January 2017, and June 2017 would have vested in the event of a covered transaction (as defined in the 2012 Plan).
If he was terminated for cause at any time or resigned under circumstances that did not constitute an involuntary termination, then Mr. Pascoe would not have been entitled to receive payment of any severance benefit or any continuation or acceleration of stock option vesting. He would have received payment for all salary accrued as of the date of termination of employment.
In connection with the Merger, our board of directors approved, and we entered into, an amended and restated employment agreement with Mr. Pascoe dated August 30, 2018 (the 2018 Employment Agreement). Under the 2018 Employment Agreement, we and Mr. Pascoe agreed as follows:
| ||•||Mr. Pascoe’s employment will be involuntarily terminated by us effective at the closing of the merger and Mr. Pascoe will be entitled to receive the severance payments described above for an involuntary termination within 12 months following a change of control as a result of such termination.|
| ||•||In the event the payment of the cash severance to Mr. Pascoe consisting of 18 months of his base salary and his target annual bonus (the Base and Bonus Severance Obligation) in cash (and assuming that all other of our employees are terminated at the closing of the Merger and become entitled to severance pursuant to their employment arrangements) would cause the Apricus Net Cash (as defined in the Merger Agreement) to be less than $0, then Mr. Pascoe’s severance shall be paid as follows:|
| ||•||Such portion of the Base and Bonus Severance Obligation payable to Mr. Pascoe under his employment agreement as would cause the Apricus Net Cash to be less than $0 (but in no event more than 40% of the Base and Bonus Severance Obligation) (the Equity-Settled Severance Portion) would be paid as follows:|
| ||•||At the closing of the Merger, Mr. Pascoe will be granted a restricted stock unit under the Company’s equity incentive plan, denominated with a dollar value equal to 120% of the Equity-Settled Severance Portion (the Pascoe Closing RSU).|
| ||•||The Pascoe Closing RSU will vest in two equal installments on each of March 1, 2019 and March 1, 2020, subject to Mr. Pascoe’s continued service to us as director on the applicable vesting date, subject to accelerated vesting in the event of (1) a change of control (following the closing of the Merger), (2) the failure of our board of directors to nominate Mr. Pascoe for reelection to our board of directors or Mr. Pascoe’s failure to be reelected to our board of directors at any meeting of our stockholders or any other involuntary termination of Mr. Pascoe’s service as a member of our board of directors, or (3) Mr. Pascoe’s death or disability.|
| ||•||The Pascoe Closing RSU will provide for settlement within 10 days of vesting in either (1) shares of our common stock with an aggregate value equal to the denominated dollar value vesting on the applicable vesting date (which value shall be converted into our shares based on the average closing price of our common stock over the 20 trading days preceding the settlement date) or (2) in the event any shares cannot be issued under the terms of the Company’s equity incentive plan for any reason, including as a result of there being insufficient shares available for issuance thereunder or the issuance of shares causing any individual award limit under the plan to be exceeded, in cash with respect to such shares. In |