In the event that Mr. Dorsey suffered an involuntary termination within the 12-month period following the effective date of a change of control, then in addition to all salary accrued as of the date of his termination he will also be entitled to severance benefits. These include (i) the Company would pay to Mr. Dorsey in one lump sum an amount equal to the greater of (A) 18 months of the salary that he was receiving immediately prior to the termination or (B) 18 months of the salary that he was receiving immediately prior to the change of control; (ii) the Company shall pay to Mr. Dorsey in one lump sum (A) any accrued but unpaid bonus for the calendar year preceding his termination, to the extent that all criteria for such bonus have been met (with the exception of the requirement that he be employed on the date the bonus is 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. Dorsey 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. Dorseys outstanding performance-based stock options as well as the unvested portion of restricted stock units granted in March 2016, May 2016, January 2017, and June 2017 will vest in the event of a covered transaction (as defined in the 2012 Plan).
If he was terminated for cause at any time or if he voluntarily resigned under circumstances that did not constitute an involuntary termination, then Mr. Dorsey would not be entitled to receive payment of any severance benefit or any continuation or acceleration of stock option vesting and all of his restricted stock awards shall remain subject to all applicable forfeiture provisions and transfer restrictions. He would receive payment for all salary accrued as of the date of termination of employment.
Consulting Agreement and Release Agreement with Mr. Dorsey
On August 30, 2018, Mr. Dorseys employment with us terminated and we entered into a consulting agreement with Mr. Dorsey pursuant to which he will consult with us on an as-needed basis through March 31, 2019, and assist with any transition of the Vitaros assets to an interested third party in conjunction with its sale or license. In connection with his termination of employment, our board of directors approved, and we entered into, a release agreement with Mr. Dorsey dated August 30, 2018. Under the release agreement, we and Mr. Dorsey agreed as follows:
| ||•||Mr. Dorsey will receive a cash payment in the amount of $447,020, representing 12 months of his annual base salary in effect on the date of his termination plus his target bonus for 2018, payable in a lump sum within five days following the effective date of the release agreement.|
| ||•||All of Mr. Dorsey’s outstanding equity awards vested in full effective as of the date of his termination of employment.|
| ||•||Mr. Dorsey will be reimbursed for the cost of continuation of health insurance benefits provided to him immediately prior to the termination (as provided under COBRA or other applicable law) until the earliest of 12 months following the date of his termination of employment, the date Mr. Dorsey becomes eligible for coverage under health and/or dental plans of another employer or the date upon which he is no longer eligible for such COBRA or other benefits under applicable law.|
| ||•||In addition, in the event the Merger closes on or before March 5, 2019, Mr. Dorsey will be eligible to receive, at the closing of the Merger, a restricted stock unit under the Company’s equity incentive plan, denominated with a dollar value equal to $159,650 (the Dorsey Closing RSU).|
| ||•||The Dorsey Closing RSU will vest on March 5, 2019, subject to Mr. Dorsey’s continued service to us as a consultant on such date, subject to accelerated vesting in the event of (1) a change of control (following the closing of the Merger), or (2) the termination of Mr. Dorsey’s consulting services with us for any reason other than his voluntary termination of such services, or (3) Mr. Dorsey’s death or disability.|
| ||•||The Dorsey 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 |