Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On November 8, 2022, Veritone, Inc. (the "Company") announced that Chad
Steelberg intended to resign as Chief Executive Officer of the Company and that
the Company intended to appoint Ryan Steelberg as President and Chief Executive
Officer of the Company, effective as of January 1, 2023. Chad Steelberg resigned
as Chief Executive Officer of the Company effective as of December 31, 2022,
and, on January 1, 2023, the Company appointed Ryan Steelberg as President and
Chief Executive Officer. In connection with such transition, the Company entered
into a consulting agreement with Steel Holdings, LLC, an affiliate of Chad
Steelberg.
Consulting Agreement with Former Chief Executive Officer
On January 4, 2023, the Company entered into a consulting agreement (the
"Consulting Agreement") with Steel Holdings, LLC, effective as of January 1,
2023. Steel Holdings, LLC is an entity affiliated with Chad Steelberg, the
Company's former Chief Executive Officer and current Chairman of the Board of
Directors of the Company. Pursuant to the Consulting Agreement, the Company
retained Mr. Steelberg's services as a consultant to the Company after his
resignation as the Company's Chief Executive Officer on December 31, 2022. Prior
to his resignation, Mr. Steelberg was employed by the Company pursuant to an
employment agreement that expired by its terms with his resignation on December
31, 2022.
The Consulting Agreement is effective for one year and will automatically renew
for an additional year if two Performance Goals (as described below) are met in
the first year, and automatically renew for a third year if six Performance
Goals (in the aggregate) are met in the second year. If the requisite
Performance Goals are not met, the Consulting Agreement will terminate at the
end of the first or second year, as applicable.
Pursuant to the Consulting Agreement, the Company will pay Steel Holdings, LLC
$41,666 per month (the "Monthly Service Fee") to provide consulting services,
which include Mr. Steelberg performing various tasks aligned with the Company's
development, operation and advancement of aiWARE production systems and
commercialization.
In addition, pursuant to the Consulting Agreement, Steel Holdings, LLC will be
eligible to receive performance bonuses, split equally between cash and
restricted stock unit ("RSU") awards, each vesting upon achievement of specific
"Performance Goals" to be achieved for an applicable quarter or year in the
following categories: Product Achievements (five goals), Customer Validation
(two goals), Analyst Validation (four goals) and Transition and Succession
Planning (one goal). Achievement of each Performance Goal will result in a bonus
value of $250,000, with the exception of two annual Analyst Validation
Performance Goals, which will result in a bonus value of $500,000 each. If all
Performance Goals are achieved over the potential three-year term of the
Consulting Agreement, the Company would pay combined cash and RSU bonus payments
equal to $3,500,000 to Steel Holdings, LLC, in addition to the Monthly Service
Fee.
The performance-based RSU awards will be granted during the first fifteen days
of the first quarter of each year of the Consulting Agreement with a dollar
value equal to 50% of the total bonus payment available for the Performance
Goals applicable to that year, calculated by taking the associated dollar value
and dividing it by the average closing price of a share of the Company's common
stock over the 90-day period before the grant. Upon completion of a Performance
Goal, and the Chief Executive Officer of the Company or the Board of Directors
of the Company certifying achievement, the value of the performance-based RSU
award allotted to that achievement will vest, and the cash portion of the bonus
payment will become payable. Performance Goals may be achieved at any time
during the term of the Consulting Agreement or for six months thereafter.
The Consulting Agreement may be terminated by either party with 90 days' notice.
If the Company terminates the Consulting Agreement for any reason other than
Steel Holdings, LLC's material breach, then (i) any remaining potential
compensation payments will become payable as if Steel Holdings, LLC had
otherwise provided services to the Company through the maximum three-year term,
and (ii) all of the performance bonus payments will accelerate and the cash
portions thereof will become payable as of the date on which the termination
becomes effective and the Performance Goals will be deemed achieved and will
vest in accordance with their terms or be paid in cash, subject to Steel
Holdings LLC executing a general release of claims in favor of the Company and
allowing it to become effective. In the event of a Change in Control (as defined
in the Company's 2017 Equity Incentive Plan), the Consulting Agreement will
terminate as of the effective date of the Change in Control and (i) any
remaining potential compensation payments will become payable as if Steel
Holdings, LLC had otherwise provided services to the Company through the maximum
three-year term and (ii) all of the performance bonus payments will accelerate
and the cash portions thereof will become payable as of the date on which the
Change in Control becomes effective and the Performance Goals will be deemed
achieved and will vest in accordance with their terms, or be paid in cash,
subject to Steel Holdings, LLC signing a general release of claims in favor of
the Company and allowing the release to become effective.
The foregoing description of the Consulting Agreement is qualified in its
entirety by reference to the full text of the Consulting Agreement, which is
filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated
herein by reference.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
EXHIBIT DESCRIPTION
NO.
10.1† Consulting Agreement, dated January 3, 2023, between Veritone,
Inc. and Steel Holdings, LLC
104 Cover Page Interactive Data File (formatted in Inline XBRL)
† The Company has omitted portions of the referenced exhibit pursuant to Item
601(b) of Regulation S-K because it (a) is not material and (b) is the type of
information that the Company both customarily and actually treats as private and
confidential.
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