Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On July 15, 2021, HireQuest, Inc. (the "Company") entered into an Executive
Employment Agreement by and among the Company, HQ LTS Corporation, a
wholly-owned subsidiary of the Company (the "Subsidiary"), and Cory Smith, the
Company's Chief Financial Officer (the "Employment Agreement").
The Employment Agreement provides for Mr. Smith to continue serving as the
Company's Chief Financial Officer during an initial term through July 15, 2023
(the "Term") and to receive an annual base salary of $190,000, payable at
periodic intervals in accordance with the Subsidiary's normall payroll
practices. Mr. Smith will be eligible for (i) a discretionary bonus with respect
to each fiscal year beginning with the fiscal year ending December 31, 2021 in
the Compensation Committee's sole discretion, and (ii) a performance bonus
beginning with the fiscal year ended December 31, 2021 of up to 50% of his base
salary, subject to approval by the Compensation Committee, upon achieving
various tiered goals for improvement in year over year sales, accounts
receivable turns, workers' compensation loss ratio, and maintenance of core
staff payroll.
Mr. Smith will also be granted 10,000 shares of restricted common stock of the
Company pursuant to the HireQuest, Inc. 2019 Equity Incentive Plan, subject to
the terms and conditions of the plan (the "Restricted Shares"). The Restricted
Shares vest according to the following schedule: 50% on the second anniversary
of the execution of the Employment Agreement, and 6.25% per fiscal quarter for
each of the first eight fiscal quarters occurring thereafter subject to
accelerated vesting upon termination of Mr. Smith's employment under certain
conditions. Mr. Smith is also entitled to vacation and other employee benefits
in accordance with the Subsidiary's policies.
Mr. Smith's employment can be terminated at any time for cause or without cause
subject to 60 days' notice. If the employment is terminated for cause or due to
death or disability, Mr. Smith or his estate will receive any unpaid base salary
plus accrued time off or vacation, accrued and unpaid bonuses, reimbursable
expenses, and continued health care benefits at Mr. Smith's expense. If Mr.
Smith's employment is terminated due to death or disability, Mr. Smith or his
estate is also entitled to an amount equal to the base salary Mr. Smith would
have earned in the sixty day period following his death or permanent disability,
the limited death, disability, and income continuation benefits provided under
any applicable plan, and pro-rata vesting of the Restricted Shares calculated as
if his restricted stock had vested monthly.
If the employment is terminated by the Company without "cause" or Mr. Smith
resigns for "good reason" (as each of those terms is defined in the Employment
Agreement), Mr. Smith is entitled to receive any unpaid base salary plus accrued
paid time off or vacation, pro-rated payment of the performance bonus, an amount
equal to Mr. Smith's base salary for a period equal to one month for every year
of total employment by the Company or its affiliates up to a maximum of six
months, reimbursable expenses, continued health care benefits at Mr. Smith's
expense, and pro-rata vesting of the Restricted Shares calculated as if his
restricted stock had vested monthly. If the employment terminates due to
non-renewal of the agreement, Mr. Smith is entitled to receive any unpaid base
salary plus accrued paid time off or vacation, pro-rated payment of the
performance bonus, and 50% of the Restricted Shares shall immediately vest.
If a "change of control" (generally defined in the Employment Agreement at the
50% level) occurs prior to the end of the Term, the agreement is extended
automatically for a one-year renewal period beginning on the date of the change
of control (a "Post-Change of Control Renewal Period"). If Mr. Smith's
employment is terminated during the Post-Change of Control Renewal Period, he is
entitled to a one-time, lump-sum severance payment equal to 150% of his base
salary then in effect, and all restrictions on outstanding equity awards,
including the Restricted Shares, will lapse such that Mr. Smith will be fully
vested in such awards.
The foregoing description of the Employment Agreement does not purport to be
complete and is qualified in its entirety by reference to the Employment
Agreement, which is attached as Exhibit 10.1 to this Current Report on Form 8-K
and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit Description
10.1 Employment Agreement dated July 15, 2021 by and among HQ LTS Corporation,
HireQuest, Inc., and Cory Smith
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