Item
5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
(b),
(c) On April 1, 2017, Shai Lustgarten, was appointed as the President and Chief Executive Officer of Quest Solution, Inc. (the
“Company”), effective immediately. Mr. Lustgarten will be located at the Company headquarters in Eugene, Oregon.
Mr.
Lustgarten, 46, was previously Chief Executive Officer at Micronet Limited Inc., a developer and manufacturer of mobile computing
platforms for integration into fleet management and mobile workforce solutions listed on the Tel Aviv Stock Exchange, from 2014
to 2017. In 2013 and 2014, Mr. Lustgarten served as EVP Business Development and Head of the Aerospace and defense Division of
Micronet Enertec.Technologies, a technology company listed on the NASDAQ Capital Market. Mr. Lustgarten was VP of Sales, Marketing
and CMO of TAT Technologies, a world leading supplier of electronic systems to the commercial and defense markets, from 2009 to
2013. His prior experience also includes serving as CEO of T.C.E. Aviation Ltd. in Belgium and serving as the assistant to the
Military Attache at the Embassy of Israel in Washington, DC from 1993 to 1997. He received his Bachelor of Science degree in Business
Management & Computer Science from the University of Maryland.
In
connection with Mr. Lustgarten’s appointment as President and Chief Executive Officer of the Company, the Company
and Mr. Lustgarten entered into an Employment Agreement, dated February 17, 2017 (the “Employment Agreement”)
and Modification Agreement dated April 1, 2017 collectively (the “Lustgarten Employment Agreements”). The
Employment Agreements has an initial term of two years (the “Term”), which Term shall be extended or termnated
with mutual consent. Mr. Lustgarten’s initial base salary shall be $240,000 per year. Mr. Lustgarten shall be eligible
to receive (i) a one-time sign-on bonus of $48,000 worth of shares of the Company’s restricted common stock which
represents 640,000 restricted common stock, which will vest upon approval on the 2017 Financial Plan submitted to the Board of
Directors (ii) a performance bonus at the end of the Company’s fiscal year 2017 based on measurable objectives, to be
approved by the Compensation Committee of the Board of Directors, and (iii) a stock option grant of 2,281,000 stock options.
The options are exercisable as follows: options to purchase 760,333 are immediately vested at an exercise price of $0.075 per
share; options to purchase 760,333 vest on February 19, 2018 at an exercise price of $0.09 per share, and options to purchase
760,334 shares vest on February 17, 2019 at an exercise price of $0.09 per share, subject to any change in
control acceleration provisions..
During
the employment period, Mr. Lustgarten’s employment with the Company is at-will and may be terminated by either the Company
or Mr. Lustgarten at any time, and for any reason. In the event Mr. Lustgarten voluntarily resigns for Good Reason (as defined
in the Lustgarten Employment Agreements) or the Company terminates Mr. Lustgarten’s employment for any reason other than
for Cause (as defined in the Lustgarten Employment Agreements), then the Company shall pay to Mr. Lustgarten the Termination Benefits
(as defined in the Employment Agreement), which includes a severance payment equal to the greater of the remaining term of the
Employment Agreement or one year..
The
Employment Agreement also contains customary confidentiality and nondisparagement provisions.
Mr.
Lustgarten does not have a family relationship with any of the current officers or directors of the Company. Other than the Lustgarten
Employment Agreements, there are no arrangements or understandings between Mr. Lustgarten and any other person pursuant to which
Mr. Lustgarten was appointed to serve as the President and Chief Executive Officer. There is no currently proposed transaction,
and since the beginning of fiscal year 2017 there has not been any transaction, involving the Company and Mr. Lustgarten which
was a related person transaction within the meaning of Item 404(a) of Regulation S-K.
On
April 1, 2017, Thomas O Miller stepped down as the President and Interim Chief Executive Officer of the Company, effective immediately.
Mr. Miller will continue with the Company as the Chairman of the Board.
The
above description of the terms of the Lustgarten Employment Agreements are not complete and are qualified by reference to the
complete documents, which are attached hereto as Exhibits 10.1 and 10.2 incorporated herein by reference.