Item 2.01 Completion of Acquisition or Disposition of Assets.
On
At the closing of the E&S Sale Transaction, Lantronix paid CSI approximately
Under the securities purchase agreement, Lantronix has also agreed to pay CSI,
if earned, earnout payments of up to
Item 2.05 Costs Associated with Exit or Disposal Activities.
In contemplation of the closing of the E&S Sale Transaction, the employment of
approximately 75 employees of CSI or the TN Companies was terminated. Lantronix
hired 63 former employees effective as of the closing of the E&S Sale
Transaction as described in the securities purchase agreement. As provided in
the securities purchase agreement, CSI is responsible for any severance
obligations arising out of such termination. The Company will record a charge in
the third quarter of 2021 relating to employee severance payments, including the
arrangement with
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Changes in Officers and Directors
In connection with the closing of the E&S Sale Transaction, the Company entered
into a separation and severance agreement dated
1
In connection with
In connection with
Actions under the 2011 Executive Incentive Compensation Plan
All of CSI's outstanding equity incentive awards, consisting of stock options and restricted stock units (RSUs), have been granted under its 2011 Executive Incentive Compensation Plan (the "2011 Plan"), which is administered by the Compensation Committee of the CSI Board of Directors.
The closing of the E&S Sale Transaction constituted a "Change in Control" as
defined in the 2011 Plan on
In accordance with the determinations and approvals of the Compensation
Committee, effective on
· All then-outstanding RSUs were settled by exchanging them for the equivalent
number of shares of the Company's common stock specified in the respective RSU award agreements, with the shares of the Company's common stock issued on settlement of the RSUs being issued and outstanding as of the closing date.
· All then-outstanding stock options having an exercise price less than the Fair
Market Value (as defined in the 2011 Plan) on the closing date were settled by exchanging the options for a "net" number of shares of the Company's common stock as if exercised on a net or cashless basis as provided in the 2011 Plan (for administrative convenience, rounded up to the next whole share), with the net shares of the Company's common stock issued on settlement of these stock options being issued and outstanding as of the closing date.
· Following the disposition of the outstanding RSUs and stock options as
described above, these Incentive Awards were terminated and cancelled as of the
closing date.
· All then-outstanding stock options having an exercise price equal to or greater
than the Fair Market Value on the closing date were terminated and cancelled as
of the closing date without any payment therefor.
· Any required tax withholding not otherwise satisfied in cash on the closing
date is being satisfied by the Company reducing the shares otherwise issuable to the holder of the Incentive Award by that number of whole shares (rounded up to the nearest whole share) having a Fair Market Value (as defined in the 2011 Plan) equal to the amount of any tax withholding required.
Immediately prior to the closing date, there were outstanding under the 2011 Plan stock options to purchase 1,067,112 shares of CSI common stock and RSUs for 98,705 shares of CSI common stock. Immediately following the closing date, there were no equity incentive awards outstanding under the 2011 Plan or otherwise.
2
Payments and Actions under the Long Term Incentive Plan
The Compensation Committee is also authorized to administer the Company's Long Term Incentive Plan (the "LTI Plan"), which is a subplan of the 2011 Plan. There were outstanding Incentive Awards under the LTI Plan that had been granted to certain officers and key employees ("Participants") for the three-year performance period of 2019 to 2021 and the three-year performance period of 2020 to 2022 (collectively, the "LTI Awards"). The closing of the E&S Sale Transaction also constituted as Change in Control under the LTI Plan.
The Compensation Committee determined that all Participants with outstanding LTI Awards would receive the benefit of these LTI Awards even though, as a condition of the E&S Sale Transaction, the Company was required to terminate the employment of certain of these Participants immediately prior to the Closing Date and immediately prior to the Change in Control that occurred by virtue of the consummation of the E&S Sale Transaction.
In accordance with the authority granted to the Compensation Committee by the LTI Plan, the Compensation Committee determined that each Participant with an LTI Award outstanding as of the day immediately prior to the closing date of the E&S Sale Transaction will receive an amount equal to the LTI Award amount pro-rated based upon the number of days elapsed from the commencement of the three-year performance period in respect of such LTI Award and the closing date.
The following table shows the aggregate amounts that will be paid to the Company's named executive officers in respect of their respective LTI Awards:
Aggregate Amount of Named Executive Officer Payment for LTI AwardsRoger H. D. Lacey $48,911 Anita Kumar $14,479 Mark Fandrich $44,876 Scott Fluegge $30,792
Item 7.01 Regulation FD Disclosure.
On
In accordance with General Instruction B.2 of Form 8-K, the information furnished under this Item 7.01, including Exhibit 99.1, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(b) Pro Forma Financial Information.
As permitted by Form 8-K, the pro forma financial statements required by Item 9.01(b) of Form 8-K will be filed by amendment to this Current Report on Form 8-K not later than 4 business days from the closing date of the E&S Sale Transaction.
(d) Exhibits
The following are filed as Exhibits to this Report:
Exhibit No. Description of Exhibit 10.1 Separation and Severance Agreement betweenCommunications Systems, Inc. andAnita Kumar entered into and effective as ofAugust 1, 2021 . 99.1Communications Systems, Inc. press release datedAugust 2, 2021 . 3
© Edgar Online, source