Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Appointment of Chief Financial Officer
On August 22, 2022, the Board appointed David E. Hollingsworth as Chief
Financial Officer of the Company, effective as of August 22, 2022, to serve
until a successor is chosen and qualified, or until his earlier resignation or
removal. Mr. Hollingsworth will also serve as the Company's principal accounting
officer and principal financial officer. Mr. Hollingsworth had previously served
as the Company's Interim Chief Financial Officer since January 14, 2022.
Mr. Hollingsworth, age 42, is a senior level accounting professional with
extensive experience in financial reporting, analysis, regulation, and
supervision. From March 2021 until his appointment as the Company's Interim
Chief Financial Officer in January 2022, Mr. Hollingsworth served as a
consultant with Bridgepoint Consulting, a provider of financial, technology, and
management consulting services, and served as the Company's Controller under a
consulting agreement between the Company and Bridgepoint Consulting. From
January 2020 until March 2021, he served as Controller at Wondercide LLC, a pest
control manufacturer. Before that, he worked as a Controller Consultant at
Bridgepoint Consulting from October to December 2019. From September 2018 to
September 2019, Mr. Hollingsworth served as Financial Controller of CPI
Products, a manufacturer of plastic products, where he oversaw accounting and
financial functions, directed human resources for corporate staff at three
manufacturing locations, and designed and implemented department performance
criteria and tracking. From May 2015 until August 2018, Mr. Hollingsworth served
as Corporate Controller of Sunworks Inc, a provider of solar power systems. Mr.
Hollingsworth holds a Master of Business Administration from Weber State
University and a Bachelor of Science degree in Accounting from Brigham Young
University - Idaho.
There is no family relationship between Mr. Hollingsworth and any director or
executive officer of the Company. There are no transactions between Mr.
Hollingsworth and the Company that would be required to be reported under Item
404(a) of Regulation S-K of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
Executive Employment Agreement
In connection with Mr. Hollingsworth's appointment, on August 23, 2022, the
Company entered into an executive employment agreement (the "Employment
Agreement") with Mr. Hollingsworth setting forth the terms and conditions of Mr.
Hollingsworth's employment as the Company's Chief Financial Officer, effective
August 23, 2022. Pursuant to the Employment Agreement, Mr. Hollingsworth will
serve as the Chief Financial Officer of the Company for a two-year initial term
commencing on August 23, 2022, which term may be renewed for up to two
successive one-year terms, unless earlier terminated by either party in
accordance with the terms of the Employment Agreement.
The Employment Agreement provides that Mr. Hollingsworth will be entitled to
receive an annual base salary of two hundred-thirty thousand dollars ($230,000),
payable in equal installments semi-monthly pursuant to the Company's normal
payroll practices. For each fiscal year during the employment period, Mr.
Hollingsworth is eligible to receive periodic bonuses of up to 40% of his annual
base salary upon achievement of target objectives and performance criteria,
payable on or before March 15 of the fiscal year following the fiscal year to
which the bonus relates. Targets and performance criteria shall be established
by the Board after consultation with Mr. Hollingsworth and the Company's Chief
Executive Officer, but the evaluation of Mr. Hollingsworth's performance shall
be at the Board's sole discretion. The Employment Agreement also entitles Mr.
Hollingsworth to receive customary benefits and reimbursement for ordinary
business expenses.
In connection with Hollingsworth's appointment and as an inducement to enter
into the Employment Agreement, the Company granted Mr. Hollingsworth 100,000
shares of the Company's restricted common stock, which shares shall vest in
tranches of 25,000 shares upon the achievement of certain stock price, market
capitalization and business milestones.
The Company may terminate Mr. Hollingsworth's employment due to death or
disability, for cause (as defined in the Employment Agreement) at any time after
providing written notice to Mr. Hollingsworth, and without cause at any time
upon thirty days' written notice. Mr. Hollingsworth may terminate his employment
without good reason (as defined in the Employment Agreement) at any time upon
thirty days' written notice or with good reason, which requires delivery of a
notice of termination within ninety days after Mr. Hollingsworth first learns of
the existence of the circumstances giving rise to good reason, and failure of
the Company to cure the circumstances giving rise to the good reason within
thirty days following delivery of such notice.
If Mr. Hollingsworth's employment is terminated by the Company for cause, as a
result of Mr. Hollingsworth's resignation or as a result of the expiration of
the term of the Employment Agreement, Mr. Hollingsworth shall receive, within
thirty days of such termination, any accrued but unpaid base salary and expenses
required to be reimbursed pursuant to the Employment Agreement. If Mr.
Hollingsworth's employment is terminated due to his death or disability, Mr.
Hollingsworth or his estate will receive the accrued obligations Mr.
Hollingsworth would have received upon termination by the Company for cause or
by Mr. Hollingsworth by resignation, and any earned, but unpaid, bonus for
services rendered during the year preceding the date of termination.
If Mr. Hollingsworth's employment is terminated by the Company without cause (as
defined in the Employment Agreement) or by Mr. Hollingsworth for good reason,
Mr. Hollingsworth is entitled to receive the accrued obligations he would have
received upon termination by the Company for cause or by Mr. Hollingsworth by
resignation, and any earned, but unpaid, bonus for services rendered during the
year preceding the date of termination. In addition, subject to compliance with
the restrictive covenants set forth in the Employment Agreement and the
execution of a release of claims in favor of the Company, the Company will pay
the following severance payments and benefits: (i) an amount equal to twelve
months' base salary, payable in equal monthly installments over a twelve-month
severance period; (ii) an amount equal to the greater of (x) the most recent
annual bonus earned by Mr. Hollingsworth, (y) the average of the immediately
preceding two year's annual bonuses earned by Mr. Hollingsworth, or (z) if Mr.
Hollingsworth's termination of employment occurs during the first calendar year
of the initial employment term before any annual bonus for a full twelve-month
period of service has been paid, then the target bonus Mr. Hollingsworth is
eligible for under the Employment Agreement; provided that no bonus amount shall
be payable if the bonuses for the year of termination are subject to achievement
of performance goals and such performance goals are not achieved by the Company
for such year; and (iii) an amount intended to assist Mr. Hollingsworth with his
post-termination health coverage, provided however, he is under no obligation to
use such amounts to pay for continuation of coverage under the Company's group
health plan pursuant to COBRA.
The Employment Agreement also contains customary provisions relating to, among
other things, confidentiality, non-competition, non-solicitation,
non-disparagement, and assignment of inventions requirements.
The description of the Employment Agreement contained in this Item 5.02 is
qualified in its entirety by reference to the full text of the Employment
Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated
herein by reference.
Item 7.01. Regulation FD Disclosure.
On August 24, 2022, the Company issued a press release announcing the
appointment of Mr. Hollingsworth as the Company's Chief Financial Officer. A
copy of the press release is furnished as Exhibit 99.1 and is incorporated by
reference herein.
The information included under Item 7.01 (including Exhibit 99.1) is furnished
pursuant to Item 7.01 and shall not be deemed "filed" for purposes of Section 18
of the Exchange Act, or otherwise be subject to the liabilities of that section,
nor shall it be deemed to be incorporated by reference in any filing under the
Securities Act of 1933, as amended, or the Exchange Act, whether made before or
after the date hereof and regardless of any general incorporation language in
such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 Employment Agreement, by and between the Company and David E.
Hollingsworth, effective as of August 23, 2022
99.1 Press Release, dated August 24, 2022 (furnished pursuant to Item
7.01)
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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