UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): March 1, 2023

  

PROSOMNUS, INC.

(Exact name of registrant as specified in its charter)

  

Delaware		001-41567		88-2978216
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

5675 Gibraltar Avenue

Pleasanton, CA 94588

(Address of principal executive offices, including zip code)

 

Registrant’s telephone number, including area code: (844) 537-5337

 

5860 West Las Positas Blvd., Suite 25

Pleasanton, CA 94588

 (Former name or former address, if changed since last report)

 

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:

 

¨  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 x

 

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 $0.0001 per share		OSA		The Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable for one share of Common Stock for $11.50 per share		OSAAW		The Nasdaq Stock Market LLC

 

 

 

 

Item 5.02.

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

On March 1, 2023, ProSomnus, Inc. (the “Company”), announced that it has appointed Brian Dow as Chief Financial Officer and its principal accounting officer, effective immediately.

 

In connection with his appointment as Chief Financial Officer, the Company and Mr. Dow entered into an Employment Agreement effective as of March 1, 2023 (the “Agreement”). Under the terms of the Agreement, Mr. Dow will receive an annual salary of $385,000 and will be eligible for an annual performance-based bonus of up to fifty percent (50%) of his base salary, payable in cash or stock at the discretion of the board of directors. Mr. Dow will be eligible to receive an initial grant of options to purchase shares representing approximately 0.9% of the Company’s outstanding stock at the grant date, and an annual equity grant, both subject to approval by the Company’s board of directors and the terms and conditions of the Company’s 2022 Equity Incentive Plan. The Agreement also contains customary termination provisions and payment of accrued bonuses and benefits in the event of certain termination conditions, and a severance payment of six months’ base salary and one year’s annual performance bonus in the event of termination without cause or by good reason by the executive. The foregoing description of the Agreement is qualified in its entirety by reference to the full text of the Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K.

 

There are no other arrangements or understandings between Mr. Dow, on the one hand, and the Company or any other persons, on the other hand, pursuant to which Mr. Dow was appointed as Chief Financial Officer of the Company. There have been no transactions since the beginning of the Company’s last fiscal year, or currently proposed, regarding Mr. Dow that are required to be disclosed under Item 404(a) of Regulation S-K.

 

A copy of the press release announcing the transition described herein is attached to this report as Exhibit 99.1 and is hereby incorporated by reference.

 

Item 9.01.

Financial Statement and Exhibits.

  

(d) Exhibits

 

Exhibit No.		Description
10.1*		Employment Agreement between ProSomnus Sleep Technologies, Inc. and Brian Dow, dated February 2, 2023
99.1*		Press Release dated March 1, 2023.

 

*	Filed herewith

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	ProSomnus, Inc.
Dated: March 1, 2023	By:	/s/ Len Liptak
		Len Liptak
		Chief Executive Officer

 

 

 

 

 

 

 

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”) is entered as of February 2, 2023, by and between ProSomnus Sleep Technologies, Inc., a Delaware corporation (the “Company”), and Brian B. Dow (“Executive”). The Company and Executive are hereinafter collectively referred to as the “Parties,” and individually a “Party.”

 

AGREEMENT

1. At-Will Employment. Executive shall be employed commencing on the Effective Date on an “at-will” basis, subject to the conditions of termination consistent with this Agreement.

 

2. Position, Duties, Responsibilities.

 

(a)               Position and Location. Executive shall render services to the Company in the position of Chief Financial Officer (the “CFO”) reporting to the Chief Executive Officer (the “CEO”) of the Company, and shall perform all services appropriate to that position for an organization the size of the Company that is engaged in the type of business engaged by the Company, as well as such other services of a nature customary to the position of CFO, as may be assigned by the CEO. Executive shall devote the Executive’s best efforts to the performance of the Executive’s duties and must at all times act in good faith towards the Company. Executive’s office will be in Pleasanton, California but Executive shall travel, from time to time, as Company business dictates without additional remuneration but subject to the reimbursement of business expenses, as set forth in Section 3(e) below.

 

(b)               Other Activities. Except upon the prior written consent of the Board, Executive will not (i) accept any other full-time or part-time employment or engagement, (ii) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that is or may be in conflict with, or that might place Executive in a conflicting position to that of the Company, or prevent Executive from devoting such time as necessary to fulfill the Executive’s responsibilities under this Agreement, (iii) sell, market or represent any product or service other than the Company’s products or services, or (iv) serve on any other board of directors for any other company (other than the Company) except with the prior written consent of the Board, which consent will not be unreasonably withheld.

 

(c)               Devotion of Time and Energies. Except as set forth in Section 2(b), Executive will devote all of the Executive’s working time and attention to the performance of the Executive’s duties under this Agreement.

 

(d)               Duties and Authority. Executive shall have responsibility for managing the financial operations of the Company as directed by the CEO from time to time, consistent with the Executive’s position as CFO.

 

 

3. Compensation. In consideration of the services to be rendered under this Agreement, Executive shall be entitled to the following:

 

(a)               Base Salary. The Company shall pay to Executive an annual salary of Three Hundred and Eighty-Five Thousand Dollars ($385,000), less all applicable withholdings, which shall be payable in accordance with the Company’s payroll practices (the “Base Salary”). The Base Salary may be increased in the discretion of the Board or a subcommittee thereof, but not reduced, and the term “Base Salary” as utilized in this Agreement shall refer to the Base Salary as so increased; provided, however, that the Base Salary may be reduced up to 10% as part of an across-the-board reduction applicable to the Company’s senior executives, as determined by the Board (or a subcommittee thereof) in its sole discretion.

 

(b)               Annual Performance Bonus. Executive shall be eligible to receive an annual bonus of fifty percent (50%) of the Executive’s Base Salary (the “Annual Performance Bonus”). Executive shall be eligible to receive a pro rata bonus in 2023. The Company shall pay the Annual Performance Bonus, if any, no later than the thirtieth day following the date the Company’s auditors confirm the Company’s financial statements for the applicable fiscal year, but in no event shall such Annual Performance Bonus be paid later than June 30th of the year following the year to which the Annual Performance Bonus relates. In order to be eligible to receive the Annual Performance Bonus, Executive must not have resigned his position or have been terminated for Cause between the date of the measurement period and the date the Company pays the Annual Performance Bonus. The Annual Performance Bonus shall be based on and subject to the additional terms and conditions as set forth in a separate writing between the Company and the Executive (“the CFO Bonus Plan”), which separate writing shall be provided to Executive no later than March 30^th annually. The Annual Performance Bonus shall be subject to annual review and adjustment subject to the Board’s discretion. At the discretion of the Board, the Annual Performance Bonus may be paid out in either cash or Company stock.

 

(c)               Equity. As soon as reasonably practicable following the Effective Date, the Company will recommend to the Board of Directors of Parent the issuance to Executive of an initial grant of an option to purchase a number of shares of its common stock to be determined by the Company’s Compensation Committee, which number of shares shall represent 0.9% of the Company’s outstanding common stock as of the grant date (the “Initial Grant”). Additionally, on the first annual anniversary of the Effective Date of this Agreement, the Company shall recommend that the Board of Directors of Parent approve the issuance to Executive of an additional grant of an option to purchase a number of shares of its common stock to be determined by the Company’s Compensation Committee (the “Annual Grant”). Both the Initial Grant and Annual Grant are subject to the approval of the Board of Directors of Parent (including without limitation the vesting provisions of the award) and the terms and conditions of the ProSomnus, Inc. 2022 Equity Incentive Plan and forms of award agreement.

 

(d)               Employee Benefits and Vacation. While Executive is employed by the Company hereunder, Executive shall be entitled to participate in all employee benefit plans to the extent that Executive meets the eligibility requirements for each individual plan or program, including but not limited to participation in the Company’s health, dental, and vision insurance plans for Executives. Executive shall be entitled to be paid for state and federal holidays recognized by the Company, and shall accrue paid time off (“PTO”) in accordance with Company policy. Executive shall accrue 25 days of PTO every calendar year.

 

(e)               Reimbursement of Expenses. Executive shall be reimbursed for such reasonable and necessary business expenses incurred by Executive while the Executive is employed by the Company, which are directly related to the furtherance of the Company’s business, upon presentation of sufficient documentation regarding such expenses. If a business expense reimbursement is not exempt from Section 409A of the Internal Revenue Code (“Section 409A”), any reimbursement in one calendar year shall not affect the amount that may be reimbursed in any other calendar year and a reimbursement (or right thereto) may not be exchanged or liquidated for another benefit or payment. Any business expense reimbursements subject to Section 409A of the Code shall be made no later than the end of the calendar year following the calendar year in which Executive incurs such business expense.

 

 

4.       Termination.

 

(a)       Termination By the Company. The Company may terminate Executive’s employment with the Company under the following conditions:

 

(1)               Death or Disability. The Executive’s employment with the Company shall terminate effective upon the date of the Executive’s death or Complete Disability (as defined below).

 

(2)               For Cause. The Company may terminate the Executive’s employment under this Agreement for Cause by delivery of written notice to the Executive specifying the Cause or Causes (as defined below) relied upon for such termination. Any notice of termination given pursuant to this Section 4(a)(2) shall effect termination as of the date specified in such notice or, in the event no such date is specified, on the date on which such notice is delivered or deemed delivered as provided below.

 

(3)               Without Cause. The Company may terminate the Executive’s employment under this Agreement at any time and for any reason by delivery of written notice of such termination to the Executive. Any notice of termination given pursuant to this Section 4(a)(3) shall effect termination as of the date specified in such notice or, in the event no such date is specified, on the last day of the month in which such notice is delivered or deemed delivered as provided below.

 

(b)       Termination by the Executive. Executive may terminate Executive’s employment with the Company under the following conditions:

 

(1)               Termination by Executive without Good Reason. The Executive may terminate his employment hereunder without Good Reason (as defined below) upon thirty (30) days written notice to the Company.

 

(2)               Termination by Executive for Good Reason. The Executive may terminate his employment for Good Reason. For purposes of this Agreement, “Good Reason” means the existence of any one or more of the following conditions without the Executive’s consent, provided Executive submits written notice to the Company within 45 days of when such condition(s) first arose specifying the condition(s): (i) a material adverse change in his title or reporting relationships; (ii) a material diminution in his authority, duties or responsibilities, or the assignment to the Executive of duties materially inconsistent with the Executive’s position with the Company; (iii) a material reduction (10% or more) in the Executive’s then current Base Salary or a reduction that doesn’t impact all similarly situated executive team members; (iv) a relocation of Executive’s place of employment by more than 20 miles from Pleasanton, California, unless the new place of employment is closer to Executive’s primary residence; and (v) a material breach by the Company of this Agreement; provided that the Company fails to correct the act or omission within 30 days after receiving the Executive’s written notice and the Executive actually terminates his employment within 60 days after the date the Company receives the Executive’s notice.

 

 

(c)               Termination by Mutual Agreement of the Parties. The Executive’s employment pursuant to this Agreement may be terminated at any time upon a mutual agreement and provided terms can be agreed upon between Executive and the Company.

 

(d)               Compensation Upon Termination.

 

(1)               Death or Complete Disability. If the Executive’s employment is terminated by death or Complete Disability as provided in Section 4(e)(1), the Company shall pay the Executive’s accrued Base Salary and accrued and unused vacation benefits earned through the date of termination at the rate in effect at the time of termination (the “Accrued Obligations”) to Executive and/or Executive’s heirs, as applicable, and the Company shall thereafter have no further obligations to the Executive and/or Executive’s heirs under this Agreement.

 

(2)               Cause, Resignation, Mutual Agreement. If the Executive’s employment is terminated by the Company for Cause, by Executive’s termination without Good Reason or by mutual agreement of the Parties, the Company shall pay the Accrued Obligations at the time Executive or the Company provides in the notice of termination, or at the time of termination of Executive’s employment, as applicable, and the Company shall thereafter have no further obligations to Executive under this Agreement.

 

(3)               Without Cause or by Executive for Good Reason. If the Company terminates the Executive’s employment without Cause or if the Executive terminates employment for Good Reason, then upon the Executive’s furnishing to the Company and not revoking a waiver of claims in a form satisfactory to the Company (the “Release”) within 30 days following the date of termination, (provided, that if the 30^th day falls in the calendar year following the year during which the termination or separation from service occurred, then the payments will commence in such subsequent calendar year; provided further that if such payments commence in such subsequent year, the first such payment shall be a lump sum in an amount equal to the payments that would have come due since Executive’s separation from service) the Executive shall be entitled to the following:

 

(i)                 the Accrued Obligations;

 

(ii)              payment of the Executive’s then-existing Base Salary over a period of six (6) months following the termination date, subject to ordinary tax withholdings in accordance with the Company’s standard payroll practices;

 

 

(iii)            payment to the Executive, in a single lump sum cash payment on the 30th day following the date of termination an amount equal to the earned and unpaid portion of the Executive’s prior year Annual Performance Bonus plus the pro rata portion, paid at 100% attainment, of the Executive’s Annual Performance Bonus for the partial calendar year in which the date of termination occurs (prorated based on the number of days in the calendar year in which the date of termination occurs, through the date of termination); provided, however that if the date of termination occurs on or within 12 months following a Change in Control Event, the Company instead shall pay the Executive, in a single lump sum cash payment on the 30th day following the Date of Termination, an amount equal to the earned and unpaid portion of the Executive’s prior year Target Bonus, at 100% attainment, plus the Executive’s Target Bonus for the calendar year in which the Date of Termination occurs, also paid at 100% attainment;

 

(iv)             Equity Acceleration; Termination Without Cause or Termination by the Executive for Good Reason not in connection with a Change in Control. The unvested portion of all of Executive’s then Board approved equity grants that would vest on a straight-line basis from the date of grant to a date twelve (12) months from the date of Executive’s termination will immediately vest prior to Executive’s termination and become immediately exercisable. The options will remain exercisable, to the extent applicable, following the date of termination for a period of eighteen (18) months. If the price of any option has not been set as of the date of acceleration, the price will be set equal to the fair value at the grant date as determined in the documented good faith discretion of the Board;

 

(v)               Equity Acceleration, Change in Control; In the event of a Change in Control Event, then all unvested and outstanding Company equity-based awards shall become fully vested and exercisable immediately prior to the consummation of the Change in Control Event; and

 

(vi)             until the earliest to occur of (x) the expiration of twelve (12) months following the Termination Date; or (y) the date Executive receives similar or better health, dental and vision coverage through another employer’s policy of insurance, and subject to Executive’s valid COBRA election, the Company shall make payment of the portion of the Executive’s premiums on the same terms that existed prior to Executive’s termination; provided that if such payment of premiums would otherwise violate the nondiscrimination rules or cause the coverage to be taxable under the Patient Protection and Affordable Care Act of 2010, together with the Health Care and Education Reconciliation Act of 2010 (collectively, the “Act”) or Section 105(h) of the Internal Revenue Code of 1986, as amended (the “Code”), these payments shall be treated as taxable payments and be subject to imputed income tax treatment to the extent necessary to eliminate any discriminatory treatment or taxation under the Act or Section 105(h). Notwithstanding the foregoing, the benefits described in subsections (ii) and (iii) shall commence on the first payroll period following the date the Release becomes effective and irrevocable; provided, however, that if the 60th day following the date of termination occurs in the calendar year following the year of termination, then such payments shall commence no earlier than January 1 of such subsequent calendar year. The first payment shall be in an amount equal to the total amount to which Executive would otherwise have been entitled during the period following the Executive’s last day of employment if such deferral had not been required.

 

 

(4)       Condition on Obligations. Notwithstanding any provisions in this Agreement to the contrary, including any provisions contained in this Section 4(d)(4), the Company’s obligations, and the Executive’s rights, pursuant to Section 4(d)(3) shall cease and be rendered a nullity immediately should the Executive violate the terms and conditions of the Executive’s previously executed Proprietary Information and Inventions Agreement, which shall continue to apply to Executive’s employment. Further, Executive covenants and agrees to notify the Company within five (5) business days of Executive’s acceptance of employment or consulting or receipt of benefits as set forth above respectively in Section 4(d)(3)(iii).

 

(5)        No Duty to Mitigate. The Company and the Executive acknowledge and agree that there is no duty of the Executive to mitigate damages under this Agreement. All amounts paid to the Executive pursuant to Section 4(b) shall be paid without regard to whether the Executive has taken or takes actions to mitigate damages.

 

(e)       Definitions. For purposes of this Agreement, the following terms shall have the following meanings:

 

(1)       Complete Disability. “Complete Disability” shall mean the inability of the Executive to perform the Executive’s duties under this Agreement because the Executive has become permanently disabled within the meaning of any group policy of disability income insurance covering employees of the Company then in force. In the event the Company has no group policy of disability income insurance covering employees of the Company in force when the Executive becomes disabled, the term Complete Disability shall mean the inability of the Executive to perform the Executive’s duties under this Agreement by reason of any incapacity, physical or mental, which the Board, based upon medical advice or an opinion provided by a licensed physician acceptable to the Board, determines to have incapacitated the Executive from satisfactorily performing all of the Executive’s usual services for the Company for a period of at least one hundred twenty (120) consecutive days during any twelve (12) month period. Based upon such medical advice or opinion, the determination of the Board shall be final and binding and the date such determination is made shall be the date of such Complete Disability for purposes of this Agreement.

 

 

(2)       For Cause. “Cause” for the Company to terminate Executive’s employment hereunder shall mean the occurrence of any of the following events:

 

(i)                 The Executive’s willful failure to perform the job duties under this Agreement, provided, however, Executive has received written notice from the Company specifically identifying such performance failure(s) and has failed to cure the same within 30 days of the Executive’s receipt of such notice;

 

(ii)              The willful failure by the Executive to comply with applicable laws in performing the Executive’s job duties or in directing the conduct of the Company’s business;

 

(iii)            The willful failure by the Executive to follow the Company’s material policies and procedures, including, but not limited to, those contained in the Company’s Code of Conduct;

 

(iv)             The commission by the Executive of any felony or intentionally fraudulent or other act against the Company, or its affiliates, subsidiaries, employees, agents, representatives or clients which demonstrates the Executive’s untrustworthiness or lack of integrity;

 

(v)               The Executive’s engaging in any willful misconduct, gross negligence, violence or threat of violence, in each case, that result in a material injury to the reputation, business or business relationships of the Company or its affiliates;

 

(vi)             the Executive’s engaging or in any manner participating in any activity which is competitive with or intentionally injurious to the Company or its Parents, or any of their affiliates or subsidiaries; or

 

(vii)          the Executive’s commission of any fraud against the Company, or any of its affiliates or subsidiaries, or use or intentional appropriation for Executive’s personal use or benefit of any funds or properties of the Company not authorized by the Board or the Company’s Chairman, as applicable, to be so used or appropriated.

 

(3)       Termination Date. The “Termination Date” is the date on which Executive is no longer employed with the Company.

 

(4)       Change in Control. For purposes of this Agreement, “Change in Control” means the occurrence of any of the following events: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing more than 50% of the total voting power represented by the Company’s then outstanding voting securities, other than the acquisition of 50% of the total voting power represented by the outstanding voting securities when sold by the Company in a capital raising transaction; or (ii) the date of the consummation of a merger or consolidation of the Company with any other corporation that has been approved by the stockholders of the Company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation; or (iii) the date of the consummation of the sale or disposition by the Company of all or substantially all the Company’s assets in a transaction that has been approved by the stockholders of the Company. Notwithstanding the foregoing provisions of this definition, a transaction will not be deemed a Change of Control unless the transaction qualifies as a “change in control event” within the meaning of Section 409A.

 

 

5.       Miscellaneous.

 

(a)       Arbitration. Executive shall execute and deliver a Mutual Arbitration Agreement with the Company, a form of which is attached hereto as Exhibit A.

 

(b)       Clawback. Any amounts paid pursuant to this Agreement will, to the extent allowed by law, be subject to recoupment in accordance with any claw back policy that the Company has adopted or is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law.

 

(c)            Entire Agreement. This Agreement and Exhibits attached hereto, are intended to be the final, complete, and exclusive statement of the terms of Executive’s employment by the Company. This Agreement supersedes all other prior and contemporaneous agreements and statements pertaining in any manner to the employment of Executive and it may not be contradicted by evidence of any prior or contemporaneous statements or agreements. Executive acknowledges that he does not rely upon any representations, oral or written, concerning the terms of his employment by the Company. To the extent that the practices, policies, or procedures of the Company, now or in the future, apply to Executive and are inconsistent with the terms of this Agreement, the provisions of this Agreement shall control.

 

(d)            Amendments, Waivers. This Agreement may only be modified by an instrument in writing, signed by Executive and by a duly authorized representative of the Company other than Executive. No failure to exercise and no delay in exercising any right, remedy, or power under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, or power under this Agreement preclude any other or further exercise thereof, or the exercise of any other right, remedy, or power provided herein or by law or in equity.

 

(e)            Assignment; Successors and Assigns. Executive agrees that the Executive will not assign, sell, transfer, delegate or otherwise dispose of, whether voluntarily or involuntarily, or by operation of law, any rights, or obligations under this Agreement, nor shall Executive’s rights be subject to encumbrance or the claims of creditors. Any purported assignment, transfer, or delegation by Executive shall be null and void. Nothing in this Agreement shall prevent the consolidation of the Company with, or its merger into, any other corporation or entity, or the sale by the Company of all or substantially all of its properties or assets, or the assignment by the Company of this Agreement and the performance of its obligations hereunder to any successor in interest, provided specifically that the Company may at any time (upon written notice to Executive) assign all of its rights and obligations hereunder (including but not limited to the right to receive Executive’s services as provided hereunder) to a third party purchaser. Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the parties and their respective heirs, legal representatives, successors, and permitted assigns, and shall not benefit any person or entity other than those enumerated above.

 

 

(f)             Section 409A Compliance.

 

(1) All in-kind benefits provided and expenses eligible for reimbursement under this Agreement will be provided by the Company or incurred by Executive during the time periods set forth in this Agreement. All reimbursements will be paid as soon as administratively practicable, but in no event will any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year will not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year. Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

 

(2)               To the extent that any of the payments or benefits provided for in Section 4(d) are deemed to constitute non-qualified deferred compensation benefits subject to Section 409A of the United States Internal Revenue Code (the “Code”), the following interpretations apply to Section 4:

 

(3)               Any termination of Executive’s employment triggering payment of benefits under Section 4(d) must constitute a “separation from service” under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) before distribution of such benefits can commence. To the extent that the termination of Executive’s employment does not constitute a separation of service, any benefits payable under Section 4(d) that constitute deferred compensation under Section 409A of the Code will be delayed until after the date of a subsequent event constituting a separation of service.

 

(4)               If Executive is a “specified employee” (as that term is used in Section 409A of the Code and regulations and other guidance issued thereunder) on the date his separation from service becomes effective, any benefits payable under Section 4(d) that constitute non-qualified deferred compensation under Section 409A of the Code will be delayed until the earlier of (A) the first payroll day following the six-month anniversary of the date his separation from service becomes effective, and (B) the first payroll day following the date of Executive’s death, but only to the extent necessary to avoid such penalties under Section 409A of the Code. On the earlier of (A) the first payroll day following the six-month anniversary of the date his separation from service becomes effective, and (B) Executive’s death, the Company will pay Executive in a lump sum the aggregate value of the non-qualified deferred compensation that the Company otherwise would have paid Executive prior to that date under Section 4(d) of this Agreement.

 

 

(5)               It is intended that each installment of the payments and benefits provided under Section 4(d) of this Agreement will be treated as a separate “payment” for purposes of Section 409A of the Code.

 

(6)               The Company does not represent, warrant or guarantee that any payments that may be made pursuant to this Agreement will not result in inclusion in Executive's gross income, or any penalty, pursuant to Section 409A(a)(1) of the Code or any similar state statute or regulation. In no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Executive or any other person on account of non-compliance with Code Section 409A or any similar state statutes.

 

(7)               Neither the Company nor Executive will have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A of the Code.

 

(g)               Notices. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given (i) upon receipt, if delivered personally or via courier, (ii) upon confirmation of receipt, if given by electronic mail, and (iii) on the third business day following mailing, if mailed first class, postage prepaid, registered, or certified mail from a United States address as follows or at such other address as each party hereafter designates:

 

to the Company at:

 

5675 Gibraltar

Pleasanton, CA 94588

 

and to Executive at:

 

5675 Gibraltar

Pleasanton, CA 94588

 

(h)               Severability; Enforcement. If any provision of this Agreement, or its application to any person, place, or circumstance, is held by an arbitrator to be invalid, unenforceable, or void, such provision shall be enforced (by blue penciling or otherwise) to the greatest extent permitted by law, and the remainder of this Agreement and such provision as applied to other persons, places, and circumstances shall remain in full force and effect.

 

(i)                 Governing Law. This agreement and the rights and obligations of the company and executive hereunder shall be determined under, governed by, and construed in accordance with the laws of the state of California as applied to agreements among California residents entered into and to be performed entirely within California.

 

(j)                 Executive Acknowledgment. Executive acknowledges (i) that the Executive has consulted with independent counsel of the Executive’s own choice concerning this Agreement and (ii) that the Executive has read and understands this Agreement, is fully aware of its legal effect, and has entered into it freely based on the Executive’s own judgment.

 

(k)               Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. Delivery of an executed counterpart of the signature page to this Agreement by facsimile shall be as effective as delivery of a manually executed counterpart of this Agreement; provided, however, that any party so delivering an executed counterpart by facsimile shall thereafter promptly deliver a manually executed counterpart of this Agreement to the other parties, but failure to deliver such manually executed counterpart shall not affect the validity, enforceability and binding effect of this Agreement.

 

 

ProSomnus Sleep Technologies, Inc.
/s/ Len Liptak
By: Len Liptak
Its: CEO
Executive
/s/ Brian B. Dow
Brian B. Dow

 

 

 

Exhibit 99.1

 

 

 

ProSomnus® Appoints Brian Dow as Chief Financial Officer

 

PLEASANTON, Calif., Mar. 1, 2023 – ProSomnus, Inc. (“the Company”) (NASDAQ: OSA), a pioneer in precision medical devices for the treatment of Obstructive Sleep Apnea (OSA), today announced the appointment of Brian Dow as Chief Financial Officer, effective March 1, 2023.

 

Mr. Dow brings more than 28 years of experience advancing privately-held and publicly-traded life science companies with expertise executing equity and debt financings, M&A transactions, and financial operations and accounting. Dow has successfully taken three companies public, overseen multiple mergers and acquisitions with a strategic focus on revenue growth, expense management, product development and business development.

 

“We are happy to welcome Brian to ProSomnus’s leadership team during a time of great growth and our transition to life as a public company,” said Len Liptak, Co-Founder and Chief Executive Officer of ProSomnus. “As an expert in the financial management of healthcare companies in the public and private sector, Brian’s experience and vison will provide crucial counsel as ProSomnus seeks to expand the availability and use of our patient-preferred Oral Appliance Therapy devices.”

 

Brian Dow joined ProSomnus in March 2023 as Chief Financial Officer with more than 28 years of financial, accounting and operations experience with a focus on public and emerging life sciences companies. From 2020 to 2023, Brian served as Chief Financial Officer of Agendia, a $60-million global molecular diagnostics company, where he was responsible for developing and leading the company’s global financial operations, including investor relations, and successfully raised over $100 million in equity and debt capital. Prior to that role, from 2015 to 2019, he was Chief Financial Officer & Senior Vice President, Finance and Administration of Pulse Biosciences, a medical technology company developing a novel energy-based tissue treatment platform. In addition, Brian has held a series of financial officer positions, including Vice President and Principal Accounting Officer of Pacific Biosciences of California, a leading provider of next generation genetic sequencing instruments, and Chief Financial Officer of Northstar Neuroscience, Inc., a development stage medical device company. Brian began his career as a manager with Ernst and Young after earning his Bachelor of Science degree in Management from the Georgia Institute of Technology. Brian is also recognized as a licensed Certified Public Accountant by the Washington State Board of Accountancy.

 

“ProSomnus is disrupting the multi-billion-dollar Obstructive Sleep Apnea market by significantly improving patient care with truly revolutionary and clinically validated treatment alternatives. I see incredible potential for our precision Oral Appliance Therapy devices to become the standard of care for patients and providers worldwide,” said Dow. “As evidenced by the Company’s delivery of over 187,500 devices to date, its NASDAQ debut during late 2022, the opening of its new headquarters and expanded manufacturing center, and a growing network of over 4,000 medical providers, ProSomnus is poised for tremendous growth and I look forward to helping the Company achieve its full potential.”

 

1.844.537-5337 | 5860 West Las Positas Blvd., Suite 25, Pleasanton, CA 94588 | ProSomnus.com

 

 

 

 

About ProSomnus

 

ProSomnus (NASDAQ: OSA) precision intraoral medical devices offer effective, economical, and patient preferred treatment for patients suffering from Obstructive Sleep Apnea. ProSomnus is the first manufacturer of mass-customized Precision Oral Appliance Therapy (OAT) devices to treat OSA, which affects over 74 million people in North America and is associated with serious comorbidities, including heart failure, stroke, hypertension, morbid obesity, and type 2 diabetes. ProSomnus’s patented, FDA-cleared devices are a less invasive and more comfortable alternative to Continuous Positive Airway Pressure (CPAP) therapy, and lead to more effective and patient-preferred outcomes. A growing body of research, including studies published by the Journal of Clinical Sleep Medicine and Military Medicine, suggests ProSomnus’s Precision OAT devices are an effective treatment for mild to moderate OSA. Additional clinical research has shown that ProSomnus’s Precision OAT devices mitigate many of the side effects associated with alternative treatments and improve economics for payers and providers. With more than 187,500 devices delivered, ProSomnus’s devices are the most prescribed Precision OAT in the U.S. ProSomnus’s FDA-cleared devices are authorized by the Department of Defense and the U.S. Army, and are often covered by medical insurance, Medicare, and social health programs in key international markets. To learn more, visit www.ProSomnus.com.

 

Important Notice Regarding Forward-Looking Statements

 

This Press Release contains certain “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended. Statements that are not historical facts, including statements about the parties’ perspectives and expectations, are forward-looking statements. The words “expect,” “believe,” “estimate,” “intend,” “plan” and similar expressions indicate forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to various risks and uncertainties, assumptions (including assumptions about general economic, market, industry and operational factors), known or unknown, which could cause the actual results to vary materially from those indicated or anticipated.

 

1.844.537-5337 | 5860 West Las Positas Blvd., Suite 25, Pleasanton, CA 94588 | ProSomnus.com

 

 

 

 

Such risks and uncertainties include, but are not limited to: (i) the effect of the announcement or the business combination on ProSomnus’s business relationships, operating results and business generally; (ii) risks that the business combination disrupts current plans and operations of ProSomnus; (iii) the outcome of any legal proceedings that may be instituted against ProSomnus or Purchaser related to the business combination; (iv) changes in the competitive industries in which ProSomnus operates, variations in operating performance across competitors, changes in laws and regulations affecting ProSomnus’s business and changes in the combined capital structure; (v) the ability to implement business plans, forecasts and other expectations after the completion of the business combination, and identify and realize additional opportunities; (vi) the risk of downturns in the market and ProSomnus’s industry including, but not limited to, as a result of the COVID-19 pandemic; (vii) costs related to the transaction and the failure to realize anticipated benefits of the transaction or to realize estimated pro forma results and underlying assumptions, including with respect to estimated stockholder redemptions; (viii) the risk of potential future significant dilution to stockholders resulting from lender conversions under the convertible debt financing; and (ix) risks and uncertainties related to ProSomnus’s business, including, but not limited to, risks relating to the uncertainty of the projected financial information with respect to ProSomnus; risks related to ProSomnus’s limited operating history, the roll-out of ProSomnus’s business and the timing of expected business milestones; ProSomnus’s ability to implement its business plan and scale its business, which includes the recruitment of healthcare professionals to prescribe and dentists to deliver ProSomnus oral devices; the understanding and adoption by dentists and other healthcare professionals of ProSomnus oral devices for mild-to-moderate OSA; expectations concerning the effectiveness of OSA treatment using ProSomnus oral devices and the potential for patient relapse after completion of treatment; the potential financial benefits to dentists and other healthcare professionals from treating patients with ProSomnus oral devices and using ProSomnus’s monitoring tools; ProSomnus’s potential profit margin from sales of ProSomnus oral devices; ProSomnus’s ability to properly train dentists in the use of the ProSomnus oral devices and other services it offers in their dental practices; ProSomnus’s ability to formulate, implement and modify as necessary effective sales, marketing, and strategic initiatives to drive revenue growth; ProSomnus’s ability to expand internationally; the viability of ProSomnus’s intellectual property and intellectual property created in the future; acceptance by the marketplace of the products and services that ProSomnus markets; government regulations and ProSomnus’s ability to obtain applicable regulatory approvals and comply with government regulations, including under healthcare laws and the rules and regulations of the U.S. Food and Drug Administration; and the extent of patient reimbursement by medical insurance in the United States and internationally. A further list and description of risks and uncertainties can be found in Lakeshore’s initial public offering prospectus dated June 10, 2021 and in the Company’s quarterly reports on Form 10-Q and annual reports on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) subsequent thereto and in the Registration Statement on Form S-4 and proxy statement that has been filed with the SEC by Lakeshore in connection with the business combination, and other documents that the parties may file or furnish with the SEC, which you are encouraged to read. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements relate only to the date they were made, and the Company and its subsidiaries undertake no obligation to update forward-looking statements to reflect events or circumstances after the date they were made except as required by law or applicable regulation.

 

Investor Contact
Mike Cavanaugh
ICR Westwicke
Phone: +1.617.877.9641
Email: Mike.Cavanaugh@westwicke.com

 

Media Contact
Kyle Evans
ICR Westwicke
Phone: +1.646.277.1295
Email: Kyle.Evans@westwicke.com

 

1.844.537-5337 | 5860 West Las Positas Blvd., Suite 25, Pleasanton, CA 94588 | ProSomnus.com