Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On July 31, 2017, Chris Martin resigned from his position as Chief Financial Officer of Kush Bottles, Inc. (the Company). In connection with Mr. Martins resignation, pursuant to his employment agreement with the Company, dated July 28, 2014, Mr. Martin executed and delivered to the Company a release in order to be entitled to the severance amounts described in such employment agreement. The foregoing description of such employment agreement is qualified in its entirety by reference to the full text of the employment agreement, which is filed as Exhibit 10.2 to the Companys Form 10-12G/A filed on May 29, 2015 and is incorporated herein by reference.
On August 1, 2017, Jim McCormick, age 50, was appointed as the Companys Chief Financial Officer. Prior to his appointment, from 2016 through 2017, Mr. McCormick served as a management consultant in the consumer goods sector including companies operating within the cannabis industry. From 2014 through 2016, Mr. McCormick served as the Chief Financial Officer of Electronic Cigarettes Group International, a Grand Rapids, Michigan based electronic cigarette marketing and distribution company. Prior to this Mr. McCormick served as the Chief Financial Officer of the corporate services division of Sodexo North America, a global provider of food and facilities management services. In addition, Mr. McCormick held multiple international Chief Financial Officer roles as a member of British American Tobacco, the second largest international tobacco company, where he was employed from 1992 through 2008.
In connection with his appointment, the Company and Mr. McCormick entered into an Offer Letter dated as of July 3, 2017 (the Offer Letter). Pursuant to the Offer Letter, Mr. McCormick will receive an initial annual base salary of $150,000. In addition, Mr. McCormick will have the opportunity to earn an annual bonus of up to $50,000, based on achievement of annual target performance goals, as established by the Companys board of directors or Chief Executive Officer, in their sole and absolute discretion. Mr. McCormick will also be entitled to receive up to $18,000 of reimbursements for relocation expenses, which will be subject to repayment if, before August 1, 2018, Mr. McCormick voluntarily terminates his employment or is terminated for cause (as defined in the Offer Letter). In addition, subject to approval of the Companys board of directors, Mr. McCormick will be granted options to purchase 600,000 shares of the Companys common stock, which will vest over three years commencing August 1, 2017, with 1/3 vesting on August 1, 2018, and the remaining 2/3 vesting ratably in equal monthly installments over the remaining two years. The options will be governed by the terms and conditions of a stock option agreement which Mr. McCormick will be required to sign, which terms and conditions will reflect the foregoing and will provide for vesting upon a change of control of the Company, to be specified more fully in such stock option agreement.
The foregoing description of the Offer Letter is qualified in its entirety by reference to the full text of the Offer Letter, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Mr. McCormick has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K, has no arrangement or understanding between him and any other person required to be disclosed pursuant to Item 401(b) of Regulation S-K and has no family relationships required to be disclosed pursuant to Item 401(d) of Regulation S-K.