Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On July 1, 2021, Regional Health Properties, Inc. (the "Company") entered into
an employment agreement with Brent Morrison, our Chief Executive Officer and
President, pursuant to which, among other things: (i) the Company will pay Mr.
Morrison $220,000 per year, subject to increase by the compensation committee of
the Company's board of directors; (ii) Mr. Morrison will be eligible to earn an
annual bonus based on achievement of performance goals established by the
compensation committee of up to 125% of his base salary; and (iii) the Company
will provide Mr. Morrison with such other benefits as other senior executives of
the Company receive. Pursuant to the employment agreement, the Company will
employ Mr. Morrison for an initial term of three years.
In connection with Mr. Morrison's employment, the Company granted to Mr.
Morrison on July 1, 2021, pursuant to the 2020 Plan (as defined below), 24,000
shares of the Company's common stock, no par value per share (the "Common
Stock"), which vest as to one-third of the shares on each of January 1, 2022,
January 1, 2023 and January 1, 2024. Pursuant to the employment agreement, the
Company will also grant to Mr. Morrison pursuant to the 2020 Plan: (i) on
January 1, 2022, a restricted stock award of 24,000 shares of Common Stock,
which will vest with respect to one-half of such shares on each of January 1,
2023 and January 1, 2024; (ii) on January 1, 2023, an option to purchase 24,000
shares of Common Stock, which will vest immediately on the grant date; and (iii)
on January 1, 2024, an option to purchase 24,000 shares of Common Stock, which
will vest immediately on the grant date. The exercise price per share for the
Common Stock subject to each option shall equal the fair market value of a share
of Common Stock on the date of grant.
Upon termination of Mr. Morrison's employment for any reason, the Company will
pay Mr. Morrison: (i) unpaid salary earned through his termination date; (ii)
any vacation time earned but not used as of his termination date in accordance
with the Company's policies; (iii) reimbursement, in accordance with the
Company's policies and procedures, for business expenses incurred but not yet
paid as of his termination date; (iv) except in the case of termination for
cause, any annual bonus for any completed fiscal year to the extent not yet paid
and earned (all of the foregoing clauses (i) through (v), the "Accrued
Obligations"); and (v) all other payments, benefits or fringe benefits under
applicable law. If Mr. Morrison is terminated for cause, then the awards that
were granted to but not yet vested or exercisable as of his termination date
will be automatically forfeited.
If Mr. Morrison is terminated without cause, then (i) Mr. Morrison will be
entitled to (a) the Accrued Obligations and (b) a severance payment equal to six
months salary plus 100% bonus for any completed fiscal year to the extent earned
but not paid, (ii) to the extent Mr. Morrison participates in Company health
programs, the Company will pay an amount in cash, on a monthly basis, equal to
the Company's portion of the premiums for Mr. Morrison's health plan benefits
for a period of 12 months from his termination date, and (ii) the awards shall
automatically accelerate so as to be fully vested as of his termination date. If
Mr. Morrison is terminated without cause within one year of a change in control,
the severance will be increased from six months salary to twelve months salary.
On July 1, 2021, pursuant to the 2020 Plan, the Company granted to Mr. Waites,
our Chief Financial Officer, a restricted stock award of 24,000 shares of Common
Stock, which vest as to one-third of the shares on each of January 1, 2022,
January 1, 2023 and January 1, 2024. The Company will also grant to Mr. Waites
pursuant to the 2020 Plan on January 1, 2022, an option to purchase 24,000
shares of Common Stock, which will vest with respect to one-half of such shares
on each of January 1, 2023 and January 1, 2024. The exercise price per share
for the Common Stock subject to each option shall equal the fair market value of
a share of Common Stock on the date of grant.
Item 9.01Financial Statements and Exhibits.
(d)Exhibits.
10.1 Employment Agreement, dated July 1, 2021, by and among Regional Health
Properties, Inc. and Brent Morrison (incorporated by reference to Exhibit
10.229 of the Registrant's Amendment No. 1 to the Registration Statement on
Form S-4 filed by Regional Health Properties, Inc. on July 2, 2021 (File
No. 333-256667)).
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