Item 1.01. Entry into a Material Definitive Agreement.
On April 1, 2022, David King ("Mr. King"), the sole member and Chairman of the
Board of Directors (the "Board") and Chief Executive Officer of Water Now, Inc.
(the "Company") entered into an executive transition agreement (the "Executive
Transition Agreement") with Gary Westerlage ("Mr. Westerlage"). Pursuant to the
Executive Transition Agreement, among other matters, Mr. King agreed to resign
from the Board and from his position as Chief Executive Officer of the Company.
Other terms of the Executive Transition Agreement are described below. Pursuant
to the Executive Transition Agreement, the Company entered into a separation and
release agreement (the "Separation Agreement", attached to the Executive
Transition Agreement as Exhibit 3) with Mr. King. Pursuant to the Separation
Agreement and pursuant to written resignation delivered to Mr. Westerlage on
April 1, 2022, Mr. King resigned from his position as Chairman of the Board, his
position as a member of the Board, and his position as Chief Executive Officer
of the Company, effective April 1, 2022.
The material terms of the Executive Transition Agreement which includes the
Separation Agreement and General Release Agreement (defined hereinafter) are
summarized below, and these summaries are qualified in their entirety by the
text of the Executive Transition Agreement, a copy of which is filed herewith as
Exhibit 99.1 and is incorporated by reference herein.
The Executive Transition Agreement
The following is a summary of the material terms of the Executive Transition
Agreement as well as certain actions taken by the Board in connection with the
parties' entry into the Executive Transition Agreement.
Irrevocable Proxy
Pursuant to the Executive Transition Agreement, Mr. King entered into an
irrevocable proxy agreement (the "Irrevocable Proxy", attached to the Executive
Transition Agreement as Exhibit 2) with Steve Grider ("Mr. Grider"), whereby Mr.
King granted Mr. Grider an irrevocable proxy to vote all of Mr. King's shares
with respect to any and all matters concerning a shareholder vote.
Increase in Size of the Board of Directors
Pursuant to the Executive Transition Agreement, on April 1, 2022, Mr. King,
acting on behalf of the Board, executed a unanimous written consent in lieu of a
special meeting of the Board of Directors (the "Written Consent Appointing
Westerlage", attached to the Executive Transition Agreement as Exhibit 1).
Pursuant to the Written Consent Appointing Westerlage, the Board increased the
size of the Board to two (2) members and appointed Mr. Westerlage to the Board.
Mr. King, acting on behalf of the Board, then appointed Mr. Westerlage as Chief
Executive Officer. Pursuant to the Separation Agreement, Mr. King then tendered
his resignation from his position as Chairman of the Board, his position as a
member of the Board, and his position as Chief Executive Officer.
The Separation Agreement
On April 1, 2022 (the "Separation Date"), and pursuant to the Separation
Agreement, Mr. King resigned from his position as Chairman of the Board, his
position as a member of the Board, and his position as Chief Executive Officer,
effectively immediately. The Company shall pay Mr. King for any earned
compensation through the Separation Date. Within eighteen (18) months after the
Separation Date, the Company will reimburse Mr. King up to $500,000 for
outstanding loans he personally made to the Company. Mr. King also agreed to
release any claims to reimbursement of principal and interest on any personal
loans to the Company in excess of $500,000. Within one hundred twenty (120) days
following the Separation Date, the Company will transfer title to three (3) work
trucks to Mr. King. In addition, Mr. King executed a general release agreement
(the "General Release Agreement", attached as Exhibit A to the Separation
Agreement), whereby Mr. King unconditionally released the Company from all
claims and that Mr. King has or had against the Company, including claims
related to Mr. King's employment with the Company or separation from employment
with the Company, excluding any rights granted under the Separation Agreement.
Pursuant to the General Release Agreement, Mr. King further covenanted not to
sue the Company in the future, and Mr. King will indemnify, and reimburse the
expenses of, the Company on the terms set forth in the General Release
Agreement.
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Section 5 - Registrant's Business and Operations
Item 5.01 Changes in Control.
The information contained in Item 1.01(a) above is incorporated by reference
herein in its entirety. Pursuant to the Irrevocable Proxy and as part of the
consideration for Mr. Westerlage's agreement to assume control of the Company,
Mr. King granted Mr. Grider an irrevocable proxy to vote all of Mr. King's
shares with respect to any and all matters concerning a shareholder vote.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
(b) The information contained in Item 1.01(a) above is incorporated by reference
herein in its entirety. Pursuant to the Separation Agreement, Mr. King has
resigned from his position as Chairman of the Board, his position as a member of
the Board, and his position as Chief Executive Officer as of April 1, 2022. Mr.
King has agreed to customary general releases and waivers in favor of the
Company and customary post-employment covenants with respect to confidential
information of the Company.
(c) The information contained in Item 1.01(a) above is incorporated by reference
herein in its entirety. Pursuant to the Written Consent Appointing Westerlage,
Mr. King, acting on behalf of the Board, appointed Mr. Westerlage, age 59, to
the Board and to serve as Chief Executive Officer. Pursuant to the unanimous
written consent in lieu of a special meeting of the Board of Directors dated
April 8, 2022 and attached hereto as Exhibit 99.2 (the "Written Consent
Appointing Grider"), Mr. Westerlage appointed Mr. Grider, age 65, to the Board
and to serve as Chief Operating Officer.
Prior to his appointment to the Board and to the position of Chief Executive
Officer of the Company, Mr. Westerlage worked as a Consultant and General
Manager at ACE Aerostructures DFW since June of 2019. Prior to his time at ACE
Aerostructures DFW, Mr. Westerlage worked as a General Manager of Production
Engineering at Bell Textron Inc. from July of 2015 to June 2018. Neither of Mr.
Westerlage's former places of employment during the previous five (5) years are
a parent of, a subsidiary of, or affiliated with the Company. Mr. Westerlage has
over 30 years of leadership experience and increasing responsibility in leading
large, diverse organizations in the field of aerospace manufacturing and
operations. His skillset includes strategic planning, forecasting, critical
thinking, process management and operations execution.
Prior to his appointment to the Board and to the position of Chief Operating
Officer of the Company, Mr. Grider worked as a custom home builder with Steve
Grider Custom Homes LLC and as a real estate developer with SWG Development LLC.
Neither of Mr. Grider's places of employment during the previous five (5) years
are a parent of, a subsidiary of, or affiliated with the Company. Mr. Grider has
a wide array of professional experience that can be utilized with the Company,
including banking, accounting, financial planning, and heavy equipment company
management.
(d) The information contained in Item 1.01(a) above is incorporated by reference
herein in its entirety. In addition, Mr. Westerlage, acting in his capacity as
the sole member of the Board, has appointed Mr. Grider to fill the open spot on
the Board pursuant to the Written Consent Appointing Grider. Furthermore, Mr.
Westerlage, acting in his capacity as a member of the Board, appointed Mr.
Grider to serve as Chief Operating Officer pursuant to the Written Consent
Appointing Grider. As a result of these changes, the Company's Board currently
has two (2) directors.
Item 8.01 Other Events.
On July 11, 2022, the Company moved its headquarters to 2000 East Lamar
Boulevard, Suite 600, Arlington, Texas 76006.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number Description of Exhibit
99.1 Executive Transition Agreement, effective as of April 1,
2022.
99.2 Written Consent Appointing Grider, effective as of April 8,
2022.
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