UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 29, 2019
Aceto Corporation
(Exact Name of Registrant as Specified in its Charter)
| New York | 001-38733 | 11-1720520 | ||
|
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
4 Tri Harbor Court, Port Washington, NY 11050
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (516) 627-6000
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):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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. ¨
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock, par value $0.01 per share | ACETQ | OTC Pink Market |
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
As previously disclosed, on February 21, 2019, Aceto Corporation, a New York Corporation (the “Company”), received a notification from the Nasdaq Stock Market (“Nasdaq”) informing the Company that, as a result of the Company and certain of its U.S. subsidiaries’ Chapter 11 Bankruptcy filing, and in accordance with Nasdaq Listing Rules 5101, 5110(b) and IM-5101-1, Nasdaq had determined to delist the Company’s common stock from Nasdaq. The suspension of trading became effective at the open of business on April 3, 2019.
On May 29, 2019, the Company was notified by Nasdaq that Nasdaq plans to file a Form 25 with the SEC to effect the formal delisting of the Company’s common stock from Nasdaq and will issue a press release to that effect on May 31, 2019. The delisting of the Company’s common stock will become effective ten days after the Form 25 is filed with the Securities and Exchange Commission. The filing of the Form 25 by Nasdaq will formally complete the delisting process.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
As a result of the Company’s disposition of its operating assets in April, 2019, the Company no longer requires the services of William C. Kennally, III, the Company’s President and Chief Executive Officer. Accordingly, Mr. Kennally’s employment with the Company was terminated on May 31, 2019, effective immediately. Mr. Kennally will continue to serve as a director on the Company’s board of directors. Mr. Kennally’s termination constitutes a termination without cause and was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Pursuant to the Change in Control Agreement entered into between the Company and Mr. Kennally on October 2, 2017, as amended on April 29, 2019 (the “Change in Control Amendment”), upon his termination without cause, Mr. Kennally became eligible to receive approximately $768,000 in severance benefits. As described in the Change in Control Amendment, the amount of severance benefits Mr. Kennally is eligible to receive has been reduced to the extent necessary to prevent any amount payable to Mr. Kennally becoming non-deductible to the Company under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), or subjecting Mr. Kennally to an excise tax under Section 4999 of the Code. Receipt of any severance amounts under the Change in Control Agreement is conditioned upon Mr. Kennally’s execution of a general release of claims of the Company.
The above summary of the Change in Control Agreement is qualified in its entirety by reference to such agreement, which is filed as Exhibit 10.2 to the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on October 17, 2017 and incorporated herein by reference. The above summary of the Change in Control Amendment is qualified in its entirety by reference to such agreement, a copy of which is attached as Exhibit 10.1 hereto and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
| Exhibit No. | Description | ||
| 10.1 | Amendment to Change in Control Agreement between Aceto Corporation and William C. Kennally, dated as of April 29, 2019. | ||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
| ACETO CORPORATION | ||
| Date: June 3, 2019 | By: | /s/ Steven S. Rogers |
| Steven S. Rogers | ||
| Senior Vice President, Chief Legal Officer and Secretary | ||
Exhibit 10.1
Execution Version
AMENDMENT TO CHANGE IN CONTROL AGREEMENT
This First Amendment to the CIC Agreement (the “Amendment”) is entered into as of April 29, 2019 between Aceto Corporation, a New York corporation (the “Company”) and William C. Kennally (the “Executive”).
WHEREAS, the Company and the Executive previously entered into a Change in Control Agreement, dated as of October 2, 2017 (the “CIC Agreement”);
WHEREAS, pursuant to and subject to the terms and conditions set forth in the Amended and Restated Asset Purchase Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”), dated as of April 14, 2019, by and among Aceto Holdings, L.P. (f/k/a NMC Atlas, L.P.), a Delaware limited partnership (“Buyer”), the Company, and certain other parties thereto, Buyer has agreed to acquire certain assets and subsidiaries of the Company (the “Transaction”);
WHEREAS, pursuant to the terms of the Purchase Agreement, the Company has agreed to take certain actions in respect of the CIC Agreement, including the amendment contemplated hereby; and
WHEREAS, the Company and the Executive desire to amend the CIC Agreement as set forth below.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises contained in this document, and other good and valuable consideration, the receipt of which is hereby acknowledged, the Company and the Executive agree as follows:
1. Section 5 of the CIC Agreement (Golden Parachute Limitation) is deleted in its entirety and replaced with the following:
“5. GOLDEN PARACHUTE LIMITATIONS. Notwithstanding anything herein to the contrary, to the extent any amount to be paid or benefit to be provided to the Executive pursuant to this Agreement or otherwise (collectively, the “Payments”) would be treated as an “excess parachute payment,” as the phrase is defined in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and would, absent the application of this Section 5, be subject to the excise tax (the “Excise Tax”) imposed by Section 4999 of the Code, then the Executive will receive the “Reduced Amount.” The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate value of all Payments without causing any Payments to be nondeductible to the Company or the Buyer because of Section 280G of the Code or subjecting the Executive to the Excise Tax. The Company may elect which and how much of the Payments shall be eliminated or reduces (as long as after such election the aggregate present value of the Payments equals the Reduced Amount) and shall notify the Executive promptly of such election. Unless the Company and the Executive otherwise agree in writing, any determination required under this Section 5 will be made in writing by Grant Thornton LLP immediately prior to the Change in Control or such other person or entity to which the parties mutually agree (the “Firm”), whose determination will be conclusive and binding upon the Executive and the Company. For purposes of making the calculations required by this Section 5, the Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and the Executive will furnish to the Firm such information and documents as the Firm may reasonably request in order to make a determination under this Section 5. The Company will bear all costs the Firm may incur in connection with any calculations contemplated by this Section 5. The Company and the Executive hereby acknowledge and agree that: (i) the Firm had determined that the Reduced Amount is $768,002 pursuant to the report dated April 22, 2019, and (ii) the amount otherwise payable pursuant to Section 3(b)(i) of the CIC Agreement shall be reduced by the Reduced Amount.”
2. Sections 9 € and (f) of the CIC Agreement (Covenants) are hereby deleted in their entirety and the Company hereby irrevocable waives and releases the Executive from any other non-competition and non-solicitation covenants between the Executive and the Company or any of its subsidiaries. Executive hereby acknowledges and agrees that he is subject to Section 3 of the Enhanced Restricted Covenant Agreement by and between Buyer and the Executive dated as of April [29], 2019 in lieu thereof.
3. If, for any reason, the Transaction is not consummated, this Amendment shall be void ab initio and the CIC Agreement shall continue to apply in accordance with its original terms and conditions.
4. This Amendment may be executed in counterparts, each of which shall be deemed to be an original, and all of which shall constitute one and the same document.
IN WITNESS WHEREOF, this Amendment has been executed as a sealed instrument by the Company, by its duly authorized representative, and by the Executive, as of the date first above written.
[Signatures on following pages]
| -2- |
IN WITNESS WHEREOF, this Amendment has been executed as a sealed instrument by the Company, by its duly authorized representative, and by the Executive, as of the date first above written.
| EXECUTIVE | ACETO CORPORATION | ||||
| By: | /s/ William C. Kennally | By: | /s/ Steven S. Rogers | ||
| William C. Kennally | Name: | Steven S. Rogers | |||
| Title: | SVP and Chief Legal Officer | ||||
| Date: | April 29, 2019 | Date: | April 29, 2019 | ||