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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Director Resignation
On May 3, 2017,
Jeffrey Horn notified the Company that he was resigning from the Board, effective immediately, for personal reasons related to
his other professional commitments. Mr. Horn’s resignation was not due to any matter related to the Company’s operations,
policies or practices, Mr. Horn’s experience while serving on the Board or any disagreement with the Board or management
team.
Director Appointment; Offer Letter
Effective as
of May 3, 2017, the Board appointed James Reiman to fill a vacancy on the Board. Mr. Reiman has not yet been appointed as a member
of any committee of the Board. Mr. Reiman is an “independent director” for purposes of the Company’s Corporate
Governance Guidelines, with reference to the relevant rules of the national securities exchanges in the United States, although
such definitions do not currently apply to the Company because its securities are not listed on a national securities exchange.
Mr. Reiman accepted
the foregoing appointment pursuant to an Offer Letter from the Company, which became effective as of May 3, 2017 (the “Effective
Date”), which provides for the grant of an option (the “Option”) under the Company’s 2015 Omnibus Incentive
Plan (the “2015 Plan”), granted as of the Effective Date, to purchase 25,000 shares of the Company’s common stock,
par value $0.0001 per share (the “Common Stock”), at an exercise price per share of $2.50, which price is at or above
the fair market value per share of Common Stock on such date. In addition, Mr. Reiman will be entitled to reimbursement for reasonable
travel expenses incurred to attend meetings of the Board, in accordance with the Company’s expense reimbursement policy as
in effect from time to time, as well as to indemnification in his capacity as a director. Mr. Reiman is also entitled to an annual
director’s fee of $40,000.
In connection
with the above-described Option, the Company and Mr. Reiman entered into a stock option agreement (the “Option Agreement”),
in the form provided by the 2015 Plan. The Option Agreement provides for 1/4 of the total number of shares underlying the Option
to vest after twelve months and 1/48 of the total number of shares underlying the Option to vest each month commencing each month
thereafter. The Option will expire on May 3, 2027 and will become fully exercisable immediately prior to, and contingent upon,
a “Change in Control” (as defined in the 2015 Plan).
The Offer Letter
and the Option Agreement are attached as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K and are incorporated herein
by reference. The foregoing descriptions do not purport to be complete and are qualified in their entirety by reference to such
exhibits.
Mr. Reiman brings
more than 30 years of management, financial and legal experience with international and domestic public and private companies.
He was the founder, CEO and Managing Member of Aerofficient LLC, which designed and manufactured aerodynamic fairings for heavy-duty
truck trailers. During his time at Aerofficient LLC, Mr. Reiman codeveloped and co-invented technologies that have been awarded
19 patents. Mr. Reiman also previously served as CEO and Chairman of EBT Digital Communications Retail Group, a large retailer
of mobile phones based in Shanghai, China that was listed on the London Stock Exchange’s AIM market. As CEO and then Chairman
of EBT, Mr. Reiman successfully implemented a turnaround strategy and managed EBT’s growth from 33 to over 225 stores in
five years and into one of China’s largest and most respected retailers of mobile phones. Prior to EBT, Mr. Reiman practiced
law as a commercial transactions attorney with U.S. law firms.
Mr. Reiman currently
serves as a lecturer and negotiation coach at elite business schools in the U.S. and abroad, and serves as a mediator and arbitrator
of domestic and international commercial disputes. He is a negotiation coach for the Oxford Programme on Negotiation (OPN) at the
University of Oxford, Saïd Business School, and lectures at other universities on topics related to negotiation, corporate
governance, international arbitration, conducting business in China, strategic decision making and risk management. He is a graduate
of Columbia University (BA) and the Northwestern University School of Law (JD), and holds a certificate from the Advanced Executive
Program at the Kellogg School of Management at Northwestern University. He is also a Board Leadership Fellow of the National Association
of Corporate Directors.
The Board concluded
that Mr. Reiman’s extensive experience as a business executive in high growth technology companies and his legal background,
including experience with arbitration and negotiation, made his appointment to the Board appropriate. There is no family relationship
between Mr. Reiman and any of the registrant’s current directors, executive officers or persons nominated or charged to become
directors or executive officers, or those of the Company’s subsidiary. There are no transactions between the registrant and
Mr. Reiman that would require disclosure under Item 404(a) of Regulation S-K.
In connection
with Mr. Reiman’s appointment to the Board, the Company also entered into an indemnification agreement with Mr. Reiman, substantially
in the form previously filed with the Securities and Exchange Commission by the Company.