Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On November 13, 2020, the Company entered into offer letters (the "Offer
Letters") with Mr. Steven King, President and Chief Executive Officer and Mr.
Paul Lytle, Executive Vice President, Chief Financial Officer of the Company.
The Company plans to enter into separate employment agreements with each
Corporate Officer to cover other aspects of employment not covered in the Offer
Letters, including but not limited to, change of control benefits, severance
benefits, and other executive benefits.
The following summarizes the material terms of each of the Offer Letters:
Steven King, President and Chief Executive Officer
Mr. King will receive annual cash compensation of $250,000 and annual equity
compensation of $150,000 in the form of restricted stock units ("RSU's). In an
effort to conserve capital resources of the Company, Mr. King has agreed to
defer 85% of his annual cash compensation until the Company is able to raise at
least $4 million in funding in exchange for RSU's equal to 20% of all deferred
cash compensation. In addition to his cash compensation, Mr. King will be
granted RSU's equal to $150,000, which will vest 100% on his first anniversary
date of employment or August 31, 2021. In addition, Mr. King will receive a
separate long-term incentive grant of RSU's equal to 25% of his annual base
salary that will vest 100% on his second anniversary date of employment or
August 31, 2022. All RSU's will be granted on the tenth (10th) business day
following the effective date of the shareholder approved 500-for-1 reverse stock
split and the number of RSU's to be granted will be calculated based on the
lowest closing price of the Company's common stock during the ten (10) trading
days following the effective date of the reverse stock split. All RSU's will be
granted pursuant to the Company's 2020 Omnibus Incentive Plan (the "2020 Plan")
and evidenced by an agreement to be entered into thereunder. In addition, Mr.
King has a bonus target equal to 45% of his annual base salary and actual payout
of his bonus can range from 0% to 200% of his bonus target based on a
combination of Company and individual performance goals as determined by the
compensation committee of the Board. Mr. King is also eligible to participate in
all benefits plans or arrangements which are currently, or may in the future be,
offered by the Company from time to time to its executive management employees,
including accrued paid-time-off covering vacation and sick time benefits and
Company paid group insurance benefits.
Paul Lytle, Executive Vice President, Chief Financial Officer
Mr. Lytle will receive an annual base salary of $347,500, comprised of a
combination of cash compensation of $250,000 and equity compensation of $97,500
in the form of RSU's. In an effort to conserve capital resources of the Company,
Mr. Lytle has agreed to defer 85% of his annual cash compensation until the
Company is able to raise at least $4 million in funding in exchange for RSU's
equal to 20% of all deferred cash compensation. As part of Mr. Lytle's annual
base salary, he will be granted RSU's equal to $97,500, which will vest 100% on
his first anniversary date of employment or August 31, 2021. In addition, Mr.
Lytle will receive a separate long-term incentive grant of RSU's equal to 25% of
his annual base salary that will vest 100% on his second anniversary date of
employment or August 31, 2022. All RSU's will be granted on the tenth (10th)
business day following the effective date of the shareholder-approved 500-for-1
reverse stock split and the number of RSU's to be granted will be calculated
based on the lowest closing price of the Company's common stock during the ten
(10) trading days following the effective date of the reverse stock split. All
RSU's will be granted pursuant to the Company's 2020 Plan and evidenced by an
agreement to be entered into thereunder. In addition, Mr. Lytle has a bonus
target equal to 40% of his annual base salary and actual payout of his bonus can
range from 0% to 200% of his bonus target based on a combination of Company and
individual performance goals as determined by the compensation committee of the
Board. Mr. Lytle is also eligible to participate in all benefits plans or
arrangements which are currently, or may in the future be, offered by the
Company from time to time to its executive management employees, including
accrued paid-time-off covering vacation and sick time benefits and Company paid
group insurance benefits.
The foregoing summary of the material terms of the Offer Letters is qualified in
its entirety by reference to the Offer Letters, which will be filed as an
exhibit to the Company's Quarterly Report on Form 10-Q for the three months
ended November 30, 2020 and is incorporated by reference herein.
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