Item 5.02
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Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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Appointment
of Danny Cuzick as Director
In
connection with the closing of the Exchange Agreement, on February 1, 2017, the Company’s board of directors increased the
size of the board of directors from four directors to five directors and appointed Danny Cuzick as a director. As described in
Item 2.01, the Company issued the Senior Promissory Note in the principal amount of $3.8 million, a Convertible Promissory Note
in the principal amount of $6.65 million and a Working Capital Note in the principal amount of $125,000 to Danny Cuzick in connection
with closing the Exchange Agreement. As described in Item 2.01, Danny Cuzick’s Convertible Promissory Note is secured by
all of the assets of EAF and the EAF Interests. The Company also guaranteed a loan from Danny Cuzick to EAF in the principal amount
of $4 million. There are no other related party transactions involving Danny Cuzick that are reportable under Item 404(a) of Regulation
S-K.
Appointment
of Damon Cuzick as Chief Operating Officer
In connection with
the closing of the Exchange Agreement, on February 1, 2017, the Company appointed Damon Cuzick as chief operating officer of the
Company. Damon Cuzick, 36, has been an active businessman and company owner since 2004. In 2004, Damon co-founded both March Development
Company, a commercial real estate development company focused on retail shopping centers and office buildings in Phoenix, Arizona,
and Cuzick Van Pelt Commercial Group, a related brokerage company. The companies combined for over $40 million in annual sales,
and in 2007 merged into Don Bennett Partners, another real estate development company. Damon continued working at Don Bennett
Partners until he sold his interest in that company in 2008. From 2008 to 2015, Damon worked with his father, Danny Cuzick, at
Freightliner of Arizona, a class 8 truck dealership. Damon’s responsibilities at Freightliner of Arizona included the design,
development and construction of a new state-of-the-art corporate headquarters in Tolleson, Arizona and the acquisition of a competing
dealership in Tucson, Arizona. In 2012, Damon, his father and two additional partners formed EVO CNG, LLC, a company dedicated
to building compressed natural gas fueling stations for the class 8 trucking industry. Damon has acted as the Chief Operating
Officer of EVO CNG since its inception, overseeing the development of six CNG stations in Texas, Arizona, California and Wisconsin,
as well as customer service, sales and day-to-day operations.
As described in
Item 2.01, the Company issued a Convertible Promissory Note in the principal amount of $1.14 million and a Working Capital Note
in the principal amount of $50,000 to Damon Cuzick in connection with closing the Exchange Agreement. As described in Item 2.01,
Damon Cuzick’s Convertible Promissory Note is secured by all of the assets of EAF and the EAF Interests. In connection with
Damon Cuzick’s appointment as chief operating officer, the Company and Damon Cuzick entered into the Damon Cuzick Employment
Agreement described in Item 2.01. Damon Cuzick is the son of Danny Cuzick, a member of the Company’s board of directors.
Effectiveness
of Executive Employment Agreements
Upon
closing the transactions contemplated by the Exchange Agreement, the employment agreements with each of John Yeros, the Company’s
chief executive officer, Kirk Honour, the Company’s president, and Randy Gilbert, the Company’s chief financial officer
(the “J. Yeros Employment Agreement,” “K. Honour Employment Agreement” and “R. Gilbert Employment
Agreement,” respectively, and collectively, the “Executive Employment Agreements”), became effective.
The
J. Yeros Employment Agreement provides for an initial term of four years, with automatic extensions (absent notice to the contrary)
of one year upon the expiration of the initial term or any renewal term. Under the J. Yeros Employment Agreement, Mr. Yeros
is entitled to base compensation of $240,000 per year, incentive compensation based on Mr. Yeros’ performance
as determined by the Company’s board of directors and awards of stock options pursuant to any plans or arrangements the
Company may have in effect from time to time.
If
Mr. Yeros is terminated without cause or he resigns with good reason, he will be entitled to receive severance, subject to
his execution and non-revocation of a release of claims in favor of the Company and its officers, directors and affiliates, equal
to: (A) any unpaid base salary, reimbursement for unpaid expenses and all other accrued payments or benefits through his termination
date,
plus
(B) his monthly base salary at the level in effect immediately prior to his termination date, multiplied
by the longer of (1) the period between his last day of employment and the one year anniversary of his employment if his
employment is terminated prior to such one year anniversary or (2) six months.
The
K. Honour Employment Agreement provides for an initial term of four years, with automatic extensions (absent notice to the contrary)
of one year upon the expiration of the initial term or any renewal term. Under the K. Honour Employment Agreement, Mr. Honour
is entitled to base compensation of $180,000 per year, incentive compensation based on Mr. Honour’s performance
as determined by the Company’s board of directors and awards of stock options pursuant to any plans or arrangements the
Company may have in effect from time to time.
If
Mr. Honour is terminated without cause or he resigns with good reason, he will be entitled to receive severance, subject
to his execution and non-revocation of a release of claims in favor of the Company and its officers, directors and affiliates,
equal to: (A) any unpaid base salary, reimbursement for unpaid expenses and all other accrued payments or benefits through his
termination date,
plus
(B) his monthly base salary at the level in effect immediately prior to his termination
date, multiplied by the longer of (1) the period between his last day of employment and the one year anniversary of his employment
if his employment is terminated prior to such one year anniversary or (2) six months.
The
R. Gilbert Employment Agreement provides for an initial term of four years, with automatic extensions (absent notice to the contrary)
of one year upon the expiration of the initial term or any renewal term. Under the R. Gilbert Employment Agreement, Mr. Gilbert
is entitled to base compensation of $150,000 per year, incentive compensation based on Mr. Gilbert’s performance
as determined by the Company’s board of directors and awards of stock options pursuant to any plans or arrangements the
Company may have in effect from time to time.
If
Mr. Gilbert is terminated without cause or he resigns with good reason, he will be entitled to receive severance, subject
to his execution and non-revocation of a release of claims in favor of the Company and its officers, directors and affiliates,
equal to: (A) any unpaid base salary, reimbursement for unpaid expenses and all other accrued payments or benefits through his
termination date,
plus
(B) his monthly base salary at the level in effect immediately prior to his termination
date, multiplied by the longer of (1) the period between his last day of employment and the one year anniversary of his employment
if his employment is terminated prior to such one year anniversary or (2) six months.
The
Executive Employment Agreements also include customary confidentiality covenants and two-year post-termination nonsolicitation
and non-interference covenants.