Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Simon R. Kay Transition Services Agreement
On January 20, 2022, Basanite, Inc. (the "Company") entered into a Transition
Services Agreement (the "TSA") with Simon R. Kay, the Acting Interim Chief
Executive Officer and Chief Financial Officer of the Company ("Mr. Kay"). Mr.
Kay has been serving as the Company's Acting Interim Chief Executive Officer,
President and Chief Financial Officer in a consultant capacity since January 13,
2020 pursuant to a Consulting Agreement between the Company and Mr. Kay (the
"Consulting Agreement"). Mr. Kay and the Company have agreed to terminate the
Consulting Agreement as of the effective date of the TSA, except for those
provisions of the Consulting Agreement which survive termination or are
incorporated into the TSA.
The Board of Directors of the Company has commenced a search for a permanent
principal executive officer for the Company (the "New PEO") as the Company moves
forward seeking to capitalize on its recently announced strategic supply and
distribution agreements. The Company and Mr. Kay have mutually agreed to this
transition and entered into the TSA to provide for terms under which Mr. Kay
will continue to provide executive services to the Company as the Company
searches for the New PEO.
Pursuant to the TSA, for the period beginning immediately and ending fourteen
(14) days following the Company's hiring of a New PEO (provided that such period
such end no earlier than February 28, 2022 and no later than June 30, 2022) (the
"Transition Period"), Mr. Kay shall: (i) provide services to the Company as a
consultant in the capacity as Acting Interim Chief Executive Officer and
President, consistent with past practice, with Mr. Kay reporting regularly on
his duties to, and taking direction from, the Chairman of the Board of Directors
of the Company (the "Board") or any member of the Board designated by the
Chairman of the Board; (ii) shall faithfully, honestly and diligently serve the
Company, and shall devote substantially all of his business time and attention
to the business of the Company, using his best efforts to promote the interests
of the Company and following the reasonable and lawful instructions of the Board
of Directors of the Company; (iii) not be required to provide services as Acting
Interim Chief Financial Officer of the Company (as such duties may be assumed by
other Company personnel); (iv) upon the hiring of the New PEO, assist in the
transition of the New PEO to such position by providing the New PEO with all
applicable background information regarding the business and affairs of the
Company and related assistance; and (v) carry out his duties in a manner
consistent with and in compliance with all present and future requirements of
the Board and the requirements of all applicable federal and state laws and
regulations.
During the Transition Period, Mr. Kay shall receive a cash fee, payable in
accordance with the Company's current payroll practices, based on an annual fee
amount of Three Hundred Fifty Thousand Dollars ($350,000) per year (the "Fee").
Mr. Kay should also be entitled to (i) expense reimbursement and (ii) use of his
Company computer and (iii) access to Company health/dental/vision insurance for
him and his family (the costs thereof to be paid by Mr. Kay), in each case
consistent with past practice under the Consulting Agreement.
Either the Company or Mr. Kay may terminate the TSA at any time during the
Transition Period (i) by their mutual written agreement, whereupon all fees due
or accrued to Mr. Kay hereunder shall be promptly paid by the Company
(including, for the avoidance of doubt, the Transition Payment Warrant, as
defined below) or (ii) upon material breach of this Agreement by the Company or
Mr. Kay, provided the non-breaching Party has provided with written notice of
the material breach to the breaching Party and an opportunity to cure such
material breach within ten (10) days after receipt such written notice. In the
event of termination by Mr. Kay for the Company's material breach of the TSA,
Mr. Kay shall be entitled to prompt issuance of the Transition Payment Warrant.
In the event of termination by the Company for Mr. Kay's material breach of the
TSA or by the Company in the event of Mr. Kay's breach of certain sections of
the TSA, Mr. Kay shall forfeit his right to receive the Transition Payment
Warrant.
The TSA also contains customary confidentiality, non-solicitation and
non-competition provisions.
Transition Payment Warrant
At the conclusion of the Transition Period, and predicated on Mr. Kay's
compliance with the terms of the TSA, the Company will issue to Mr. Kay a
five-year warrant to purchase one million (1,000,000) shares of Company common
stock, which warrant shall (i) have an exercise price per share of $0.33
(subject to customary stock-based, but not priced-based, anti-dilution
protections and (ii) contain a customary "cashless exercise" provision (such
warrant, the "Transition Payment Warrant"). Following the issuance of the
Transition Payment Warrant, Mr. Kay shall not be entitled to any further
payments or consideration of any kind from the Company. The issuance of the
Transition Payment Warrant is subject to Mr. Kay executing a release in favor of
the Company at the conclusion of the Transition Period.
The foregoing description of the Transition Payment Warrant and the TSA are a
summary only and does not purport to be complete and, is qualified in its
entirety by reference to the full text of such documents, the forms of which is
attached hereto as Exhibit 4.1 and 10.1, respectively, and incorporated herein
by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Description
4.1 Form of Transition Payment Warrant by the Company in favor of Simon R.
Kay
10.1 Transition Services Agreement, dated January 20, 2022, between the
Company and Simon R. Kay
104 Cover Page Interactive Data File (the cover page XBRL tags are embedded
within the inline XBRL document)
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