Item 3.02 – Unregistered Sales of Equity
Securities.
Item 5.02 – Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
Appointments and Formation of Executive Search
Committee
On September 13, 2019, the board of directors (the
“Board”) of Exactus, Inc. (the “Company”)
appointed Vladislav “Bobby” Yampolsky to serve as its
Interim Executive Chairman. Prior to his appointment, Mr. Yampolsky
served as a member of the Board. In addition, the Board also
appointed the Company’s current President, Emiliano Aloi, to
serve as the Company’s Interim Chief Executive Officer. The
appointments were made following the departure of the
Company’s Chairman and CEO in August 2019, as reported with
the Securities and Exchange Commission on August 21,
2019.
Also on September 13, 2019, the Company established an Executive
Search Committee (the “Search Committee”) for the
purposes of undertaking an executive search for a permanent CEO.
The Search Committee consists of three members of the Board, Bobby
Yampolsky, Steven Schwartz, and John Price, and is authorized to
engage search, recruitment, and/or compensation consulting firms
and to pay all fees and expenses associated therewith, and to
perform background checks on any potential candidate, including on
any current director or officer who is deemed to possess the
requisite skills and experience. Unless extended, the Search
Committee shall terminate upon the appointment of a
CEO.
In addition, on September 13, 2019, Steven Schwartz, a director,
was appointed to the Audit, Compensation and Nominating Committees.
Mr. Schwartz is considered by the Company to be an independent
director.
Delegation of Authority Under the 2019 Equity Incentive Plan and
Issuances Thereunder
On September 13, 2019, the Board delegated authority to the
Chairman of the Board and/or the CEO to issue restricted stock and
options under the 2019 Equity Incentive Plan (the “2019
Plan”) to non-executive employees and consultants. The
aggregate number of shares of common stock of the Company, par
value $0.0001 (“Common Stock”), issuable under
delegated authority may not exceed 500,000 shares, and no
individual award may exceed 100,000 shares, provided, further, that
the minimum exercise price of awards made shall be the fair market
value of the Common Stock determined in accordance with the 2019
Plan.
On September 13, 2019, the Board approved additional awards to
officers and directors under the 2019 Plan as follows:
|
Name
|
Amount of Grant
|
Vesting Period
|
Vesting Commencement Date
|
|
Bobby Yampolsky
|
1,000,000 shares of restricted Common Stock.
|
1/48th per month.
|
Vests October 1, 2019.
|
|
Emiliano Aloi
|
1,000,000 shares of restricted Common Stock.
|
1/48th per month.
|
Vests
on the first day of calendar month following: (A) the date that the
2019 Exactus One World agriculture total yield is at least 400,000
pounds of total biomass for production and held for sale or
processing (including top flower harvest) and (B) the date that the
Company has reported at least $5 million of revenue on a
consolidated basis.
|
Since July 31, 2019, the Company has accepted subscriptions in the
total amount of $951,900 and issued 5,311,640 shares of Common
Stock, which includes issuances relating to the automatic
conversion of all outstanding shares of Series D convertible
preferred stock (the “Series D Preferred”) into
1,025,000 shares of Common Stock, at a conversion price of $0.40
per share, on July 31, 2019. The Series D Preferred was originally
issued in March 2018. Under the terms of the Series D Preferred,
all shares were required to be automatically converted in the event
the Company completed an equity offering in which the Company
raised a minimum of $5 million. Following these issuances, the
Company had 33,874,765 shares of Common Stock outstanding as of the
date of this Current Report.
The shares of Common Stock sold and issued as stated in the
paragraph above were issued to “accredited investors”
as such term is defined in the Securities Act of 1933, as amended
(the “Securities Act”) and were offered and sold in
reliance on the exemption from registration afforded by Section
4(a)(2) and Regulation D (Rule 506) under the Securities Act and
corresponding provisions of state securities laws.
Approval of Director Compensation Plan
On September 13, 2019, the Board established a new Director
Compensation Plan (the “Director Plan”) to be
administered under the 2019 Plan applicable to each
non-employee/non-executive director, which Director Plan replaces
the prior compensation arrangements previously applicable to
non-employee/non-executive directors. The material terms of the
Director Plan are set forth below:
|
Timing
|
Amount
|
Vesting
|
|
Initial appointment
(non-employee/non-executive directors)
|
$100,000 of the Company’s Common Stock issued on and priced
at fair market value of the Common Stock on the last calendar date
prior to appointment.
|
1/24th vests upon date of grant and
1/24th vests on the first calendar date of each calendar month
following appointment until fully vested as long as continuing as a
director.
|
|
Directors continuing after initial appointment
(non-employee/non-executive directors)
|
$25,000 of Common Stock issued annually on the first day of
September and priced at fair market value of the Common Stock as of
the calendar date prior to the issuance for each continuing
director that has served a minimum of 9 consecutive months as of
the first day of September each year.
|
1/24th vests upon date of grant and 1/24th vests on the first calendar date
of each calendar month following appointment until fully vested as
long as continuing as a director.
|