Item 5.02
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Departure of Director or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
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As we previously disclosed, on November
19, 2018, Lifeway announced that it had appointed Eric Hanson, 44, its Chief Accounting Officer, to the additional position of
Chief Financial Officer. In connection with Mr. Hanson’s appointment as Chief Financial and Accounting Officer, on January
18, 2019, Lifeway entered into an Executive Employment Agreement with Mr. Hanson (the “Hanson Employment Agreement”).
Employment Agreement
On January 18, 2019, Lifeway entered into
an employment agreement with Mr. Hanson for his employment as our Chief Financial and Accounting Officer (the “Hanson Employment
Agreement”), the term of which is effective as of November 19, 2018 and expires on December 31, 2019. The Hanson Employment
Agreement automatically renews on January 1 of each year, and renews automatically for successive terms of one year, unless pursuant
to the Agreement it is terminated earlier or the Board gives timely notice of non-renewal.
Mr. Hanson’s initial base salary
is $250,000, which is subject to annual review by the Board. Pursuant to the Agreement, Mr. Hanson is also eligible for a cash
bonus of up to 30% of his base salary, as well as equity and other incentive awards, in the sole discretion of the Board, based
on the satisfaction of certain pre-established performance goals established by the Board. For 2019, the Board will set bonus targets
in compliance with its Omnibus Plan and in consultation with the Board’s independent compensation consultant and management.
Mr. Hanson is subject to covenants not
to compete and not to solicit Lifeway customers, contractors, suppliers, or employees during her employment and for a period of
18 months following his termination for any reason. Lifeway will not unreasonably withhold its consent to competitive employment
during the 18-month period if Mr. Hanson satisfies certain obligations regarding his future employment. Lifeway may terminate Mr.
Hanson’s employment for any lawful reason, with or without Cause, and Mr. Hanson may resign for or without Good Reason (each
as defined in the Hanson Employment Agreement).
Employment Agreement summary of payments and benefits
due after termination of employment
Pursuant to the Hanson Employment Agreement,
Mr. Hanson, upon Non-Renewal, termination without Cause, or by his resignation with Good Reason (as defined in the Hanson Employment
Agreement), will be entitled to certain payments and benefits shown in the tables below. Receipt of any severance amounts under
the Hanson Employment Agreement is conditioned on execution of an enforceable general release of claims in a form satisfactory
to Lifeway.
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Non-Renewal
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Termination without Cause or Resignation for Good Reason
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Termination for Cause or Resignation Without Good Reason
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Base Salary
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3 months after termination date
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The remainder of the term or 6 months, whichever is greater
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Through termination date
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Bonus Payments
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Greater of (i) bonus for fiscal year of termination date (ii) bonus paid for fiscal year prior to termination date
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Greater of (i) bonus for fiscal year of termination date (ii) bonus paid for fiscal year prior to termination date
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None
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Outstanding Equity Awards
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Vested but unsettled outstanding equity awards
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Accelerated vesting of all outstanding equity awards
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Vested but unsettled outstanding equity awards
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Health Insurance
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Contributions toward COBRA premiums through the earliest of (i) three calendar months after termination date, (ii) the date executive becomes eligible for group health insurance through another employer, or (iii) the date executive ceases to be eligible for COBRA coverage
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Company-paid COBRA premiums through the earliest of (i) six calendar months after termination date, (ii) the date executive becomes eligible for group health insurance through another employer, or (iii) the date executive ceases to be eligible for COBRA coverage
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None
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Financial Services or Transition-Related
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None
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$10,000
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None
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The foregoing references to and descriptions
of the Hanson Employment Agreement in this Current Report do not purport to be complete are qualified in their entirety by reference
to the full text of the Hanson Employment Agreement, which is attached hereto as Exhibit 10.1, and incorporated herein by reference.