Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On June 3, 2022, the Company reported in the Original 8-K that its Board of
Directors (the "Board") had appointed Wendy DiCicco as the Company's Chief
Financial Officer and principal financial officer and Joseph Carroll as the
Company's Chief Accounting Officer, Corporate Secretary and principal accounting
officer. At the time of the Original 8-K, the Company had not yet determined the
compensation arrangements for those positions, and in the Original 8-K, the
Company stated that it would report on those compensation arrangements when
established.
On June 17, 2022, the Company entered into a CFO Services Agreement with Ms.
DiCicco (the "CFO Agreement") and an Employment Agreement with Mr. Carroll (the
"CAO Employment Agreement") setting forth the compensation arrangements for
those positions. The following is a summary of the material terms of those
agreements:
CFO Agreement
Under the CFO Agreement, Ms. DiCicco will provide services to the Company as its
Chief Financial Officer in a non-employee capacity, effective as of June 17,
2022 (the "Effective Date"). The CFO Agreement provides Ms. DiCicco with the
following compensation for those services: (i) a base annual service fee of
$405,000 (the "Base Fee") starting as of the Effective Date, (ii) an annual
incentive fee targeted at 40% of such Base Fee, and (iii) an initial equity
award consisting of options to purchase 155,325 shares of the Company's common
stock, par value $0.0001 per share ("Common Stock") under the Company's 2021
Omnibus Incentive Plan (the "2021 Plan"). The stock options were granted on the
Effective Date, with an exercise price equal to the closing price per share of
the Company's Common Stock on the NYSE American (the "NYSE American") on the
grant date, a 4-year vesting schedule, and other terms consistent with the
standard terms applicable to Company awards of stock options.
Under the CFO Agreement, in the event of termination of Ms. DiCicco's services
with the Company for any or no reason, Ms. DiCicco is entitled to any Base Fee
earned but unpaid through the date her services terminate and any reimbursement
for business expenses incurred by, but not yet paid to, Ms. DiCicco as of the
date her services terminate.
The CFO Agreement does not provide for severance payments unless Ms. DiCicco's
services are terminated either by the Company without "Cause" or by Ms. DiCicco
for "Good Reason" (as those terms as defined in the CFO Agreement) during the
24-month period following a "Change in Control" (also as defined in the CFO
Agreement), in which situations Ms. DiCicco will receive a lump sum severance
payment equal to six months' of Base Fees.
Any obligation of the Company to provide Ms. DiCicco her severance payment is
subject to her execution and non-revocation of a release of claims in the
Company's favor and her continued compliance with certain restrictive covenants.
CAO Employment Agreement
The CAO Employment Agreement provides Mr. Carroll with the following
compensation for serving as a Senior Vice President and the Company's Chief
Accounting Officer: (i) a base annual salary of $325,000 (the "Base Salary") as
of the effective date of the CAO Employment Agreement, (ii) an annual bonus
targeted at 35% of such Base Salary, and (iii) an initial equity award
consisting of options to purchase 29,000 shares of Common Stock under the 2021
Plan. The stock options were granted on the Effective Date, with an exercise
price equal to the closing price per share of Common Stock on the NYSE American
on the grant date, a 4-year vesting schedule, and other terms consistent with
the standard terms applicable to Company awards of stock options.
Under the CAO Employment Agreement, in the event of termination of Mr. Carroll's
employment with the Company for any or no reason, Mr. Carroll is entitled to the
Base Salary for the final payroll period of his employment, through the date his
employment terminates, including any accrued but unused vacation time, and any
reimbursement for business expenses incurred by but not yet paid to Mr. Carroll
as of the date his employment terminates (collectively, the "Final
Compensation").
In the event Mr. Carroll's employment is terminated either by the Company
without "Cause" (as defined in the CAO Employment Agreement) outside of a
24-month period following a "Change in Control" (as defined in the CAO
Employment Agreement) (such 24-month period, the "Protected Period"), in
addition to the Final Compensation, Mr. Carroll is entitled to (i) the Base
Salary for a period of 9 months following the date of termination (the
"Severance Payments"); (ii) a cash bonus for the year of termination equal to
the target bonus for the year, prorated based on the number of days in the year
through the termination date (the "Pro-Rated Bonus"); and
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(iii) a cash lump-sum payment equal to 9 times the amount of one month of COBRA
premiums based on the terms of Company's group health plan and Mr. Carroll's
coverage under such plan as of the termination date (the "COBRA Payment").
In the event Mr. Carroll's employment is terminated either by the Company
without Cause or by him for "Good Reason" (as defined in the CAO Employment
Agreement) during the Protected Period, in addition to the Final Compensation,
Mr. Carroll is entitled to the amounts provided in the immediately preceding
paragraph, except that the Severance Payments shall be payable in a single cash
payment.
Any obligation of the Company to provide Mr. Carroll the Severance Payments and
the COBRA Payment is subject to his execution and non-revocation of a release of
claims in the Company's favor and his continued compliance with certain
restrictive covenants.
Both the CFO Agreement and CAO Employment Agreement include certain covenants
regarding protection of confidential information, non-competition, and
non-solicitation of employees and customers, consistent with agreements with
other executives.
The foregoing descriptions of the CFO Agreement and the CAO Employment Agreement
do not purport to be complete and are qualified in their entirety by reference
to the complete text of such agreements, which are attached as Exhibits 10.1 and
10.2, respectively, to this Amendment No. 1 and are incorporated herein by
reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
10.1 CFO Services Agreement, by and between the Company and Wendy
DiCicco, dated as of June 17, 2022.
10.2 Employment Agreement, by and between the Company and Joseph Carroll,
dated as of June 17, 2022.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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