Emerging growth company    ☐    

On May 9, 2022 (the “Closing Date”), OPKO Health, Inc., a Delaware corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Orca Acquisition Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), ModeX Therapeutics, Inc., a Delaware corporation (“ModeX”), and Gary J. Nabel, solely in his capacity as sellers’ representative.

Pursuant to the Merger Agreement, on the Closing Date, Merger Sub merged with and into ModeX (the “Merger”), with ModeX surviving the Merger as a wholly owned subsidiary of the Company. On the Closing Date, the Company paid consideration for ModeX of $300.0 million, subject to a customary purchase price adjustment mechanism, including that ModeX be free of debt, as well as deduction for certain equity awards issued on the Closing Date, as described below. The Company paid the entirety of the purchase price pursuant to the issuance of an aggregate of 89,907,310 shares (the “Consideration Shares”) of the Company’s common stock, par value $0.01 per share (“Common Stock”), to the former stockholders of ModeX (the “Selling Stockholders”), of which 10% of such shares were deposited in a twelve-month escrow for purposes of satisfying the potential indemnity obligations of the Selling Stockholders under the Merger Agreement. Additionally, the Company issued equity awards to ModeX employees in an aggregate amount equal to $12.4 million, which was deducted from the consideration payable on the Closing Date. If any of such awards are forfeited or otherwise remain unvested on the four-year anniversary of the Closing Date, up to $2.6 million of shares of Common Stock (valued at the same price used for determining the number of Consideration Shares issuable upon consummation of the Merger) may be distributed pro rata to ModeX’s former stockholders in respect of such forfeited or unvested awards. Shares of Common Stock with respect to such potential distribution have been escrowed and will remain escrowed for such four-year period.

In accordance with the Merger Agreement, Dr. Phillip Frost, the Company’s Chief Executive Officer and Chairman of the Board of Directors (the “Board”), Dr. Jane Hsiao, the Company’s Chief Technical Officer and a Director, and Frost Gamma Investments Trust (“FGIT”), a trust controlled by Dr. Frost, entered into a lockup and voting agreement, together with the Company (the “Lockup and Voting Agreement”), pursuant to which: (i) FGIT has agreed that, for a period of four years immediately following the Closing Date, it will not sell or otherwise transfer its shares of Common Stock, subject to certain customary exceptions; and (ii) Drs. Frost and Hsiao agreed that, for as long either Dr. Elias A. Zerhouni or Dr. Gary J. Nabel remains an employee of the Company or ModeX, Drs. Frost and Hsiao will vote, or cause to be voted, all of their respective shares of Common Stock in favor of such person’s election to the Board.

On the Closing Date, the Company issued the Consideration Shares in consideration for its acquisition of ModeX in accordance the Merger Agreement, as described in Item 1.01 of this Current Report on Form 8-K, which description is incorporated by reference in this Item 3.02. The Consideration Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and the Company offered the Consideration Shares in reliance upon the exemption from registration contained in Section 4(a)(2) of the Securities Act. Each recipient of Consideration Shares must represent to the Company that such recipient is an “accredited investor” as defined in Rule 501(a) under the Securities Act and was acquiring the Consideration Shares for investment and not with a view to distribution thereof in violation of the Securities Act.

In connection with his appointment as President, the Company and Dr. Zerhouni entered into an employment letter agreement (the “Zerhouni Employment Agreement”), providing for an annual base salary of $900,000, as well as annual cash incentives based upon the achievement of annual performance goals and criteria established from time to time by the Company. The Zerhouni Employment Agreement provides that Dr. Zerhouni’s target cash bonus will be no less than 50% of his base salary. Additionally, the Zerhouni Employment Agreement provides that, if the Company terminates Dr. Zerhouni’s employment without “cause” or Dr. Zerhouni terminates his employment for “good reason” (each as defined in the Zerhouni Employment Agreement), then the Company will pay Dr. Zerhouni all amounts accrued but unpaid as of the effective date of such termination, as well as continuation of his salary and benefits for a twelve-month period post termination (the “Severance Period”). Additionally, any outstanding equity awards granted to Dr. Zerhouni which would have vested during the Severance Period would vest automatically upon such termination, and all vested equity awards would be exercisable in accordance with the terms of the applicable equity plan and as determined by the Compensation Committee of the Board (the “Compensation Committee”). The Zerhouni Employment Agreement otherwise contains customary covenants of the parties, including non-competition and non-solicitation provisions in favor of the Company.

In connection with his appointment as Chief Innovation Officer and his continued role as Chief Executive Officer of ModeX, the Company and Dr. Nabel entered into an employment letter agreement (the “Nabel Employment Agreement”), providing for an annual base salary of $750,000, as well as annual cash incentives based upon the achievement of annual performance goals and criteria established from time to time by the Company. The Nabel Employment Agreement provides that Dr. Nabel’s target cash bonus will be no less than 50% of his base salary. Additionally, the Nabel Employment Agreement provides that, if the Company terminates Dr. Nabel’s employment without “cause” or Dr. Nabel terminates his employment for “good reason” (each as defined in the Nabel Employment Agreement), then the Company will pay Dr. Nabel all amounts accrued but unpaid as of the effective date of such termination, as well as continuation of his salary and benefits for the Severance Period. Additionally, any outstanding equity awards granted to Dr. Nabel which would have vested during the Severance Period would vest automatically upon such termination, and all vested equity awards would be exercisable in accordance with the terms of the applicable equity plan and as determined by the Compensation Committee. The Nabel Employment Agreement otherwise contains customary covenants of the parties, including non-competition and non-solicitation provisions in favor of the Company.

*    Pursuant to Item 601(a)(5) of Regulation S-K, schedules and similar attachments to this exhibit have been omitted because they do not contain information material to an investment or voting decision and such information is not otherwise disclosed in such exhibit. The Company will supplementally provide a copy of any omitted schedule or similar attachment to the U.S. Securities and Exchange Commission or its staff upon request.

**    Management contract or compensation plan or arrangement.

*    Pursuant to Item 601(a)(5) of Regulation S-K, schedules and similar attachments to this exhibit have been omitted because they do not contain information material to an investment or voting decision and such information is not otherwise disclosed in such exhibit. The Company will supplementally provide a copy of any omitted schedule or similar attachment to the U.S. Securities and Exchange Commission or its staff upon request.

**    Management contract or compensation plan or arrangement.