|PERNIX THERAPEUTICS HOLDINGS, INC. filed this Form 8-K on 02/19/2019|
The Debt Instruments provide that as a result of the filing of the Bankruptcy Petitions, the principal and accrued interest due thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Debt Instruments are automatically stayed as a result of the filing of the Bankruptcy Petitions, and the creditors’ rights of enforcement in respect of the Debt Instruments are subject to the applicable provisions of the Bankruptcy Code.
To rationalize its workforce based on the needs of the business, on February 15, 2019, Pernix committed to and commenced a reduction in force of approximately eighty-nine (89) employees, consisting of seventy-four (74) geographically dispersed employees, principally sales force personnel, and fifteen (15) employees at its corporate headquarters (the “Reduction in Force”). The Company completed the Reduction in Force on February 15, 2019. Pernix has not taken any action which would constitute a “plant closing” or “mass layoff” within the meaning of the Worker Adjustment and Retraining Notification Act, as amended (the “WARN Act”) or similar state or local law, issued any notification of a plant closing or mass layoff required by the WARN Act or similar state or local law, or incurred any liability or obligation under the WARN Act or any similar state or local law that remains unsatisfied. No terminations of employees of the Company prior to the Reduction in Force would trigger any notice or other obligations under the WARN Act or similar state or local law.
The Company currently anticipates incurring total one-time costs associated with the realignment of approximately $300,000 to $400,000 related primarily to employee-related costs. A significant majority of such costs are expected to be paid during the first quarter of 2019, with the remainder to be paid during the remainder of the 2019 fiscal year. The charges that the Company expects to incur in connection with the Reduction in Force are subject to a number of assumptions, and actual results may differ materially. The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the Reduction in Force. If the Company subsequently determines that it will incur additional significant costs and realignment charges, it will amend this Current Report on Form 8-K to disclose such information.
On February 12, 2019, the Compensation Committee of the Company’s Board of Directors (the “Committee”) approved the adoption of a key employee retention program for the benefit of the Company’s principal executive officer (John Sedor), principal financial officer (Glenn Whaley) and a named executive officer (Kenneth R. Piña), whose continued dedication and performance is critical to the Company’s success (the “KERP”). In approving the KERP, the Committee relied upon the market analysis and advice of the Company’s independent compensation consultant.
On February 13, 2019, each of Messrs. Sedor, Piña and Whaley received one-time special bonus payments under the KERP, which are subject to recoupment in full if the executive’s employment is terminated by the Company for “cause”, or if the executive resigns without “good reason”, prior to December 31, 2019. The special bonuses paid (subject to recoupment) to Messrs. Sedor, Piña and Whaley were $500,000, $250,000 and $170,000, respectively. These amounts will offset any potential bonus payments that the executives would otherwise receive for the 2018 fiscal year.
The foregoing description of the one-time special bonus payments payable to each of Messrs. Sedor, Piña and Whaley does not purport to be complete and is qualified in its entirety by reference to the letter agreements entered into with each of Messrs. Sedor, Piña and Whaley, which are attached hereto as Exhibits 10.1, 10.2 and 10.3, respectively, and incorporated herein by reference.