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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Granting of SAR Award to the Chief Executive
Officer
Grant. On August
4, 2020, the Board of Directors (the “Board”) of Wheeler Real Estate Investment Trust, Inc. (the “Company”) granted
a stock appreciation right (the “SAR”) to Daniel Khoshaba, the Company’s Chief Executive Officer, with respect
to 5,000,000 shares of common stock of the Company, par value $0.01 per share (“Common Stock”), at a strike price of
$1.85 per share, pursuant to a Stock Appreciation Rights Agreement (the “SAR Agreement”).
Performance Condition.
The SAR will vest if (A) the average closing price of the Common Stock over all trading days in a consecutive 20-business
day period is equal to or greater than $20.00 (the “Price Target”) and (B) Mr. Khoshaba is employed with the Company
at such time.
Exercise and Settlement.
Once the performance condition has been satisfied, the SAR will vest and be automatically exercised. Upon exercise, Mr. Khoshaba
will be entitled to receive a total amount equal to the product of (x) 5,000,000, and (y) the excess of the fair market value of
a share of Common Stock on the exercise date over the strike price. Such amount will be paid to Mr. Khoshaba in cash, shares of
Common Stock, or a combination thereof in the discretion of the Compensation Committee of the Board (but in no event will the Company
issue shares with respect to the SAR if such issuance would cause the Company to be “closely held” within the meaning
of Section 856(h) of the Internal Revenue Code of 1986, as amended).
Adjustments to Price
Target. If the Company pays cash dividends on the Common Stock, the Price Target shall be correspondingly reduced by the amount
of any such cash dividend. Stock issuances by the Company for consideration (outside of a “change of control”) or stock
offerings by the Company shall not require an adjustment.
Temporary Lock-Up.
Two-thirds of any shares of Common Stock issued to Mr. Khoshaba upon exercise of the SAR will be subject to a temporary lockup,
during which Mr. Khoshaba cannot sell, exchange, transfer, assign, pledge, hedge, or otherwise dispose of such shares. The lockup
will be released with respect to 50% of those locked-up shares on the first anniversary of achievement of the Price Target, and
the remaining 50% of those locked-up shares will be released on the second anniversary of achievement of the Price Target. Notwithstanding
the foregoing, Mr. Khoshaba can sell shares to satisfy any withholding taxes due upon exercise of the SAR without violating the
lockup, as long as any such withholding taxes are first satisfied to the maximum extent possible by reducing any cash paid to Mr.
Khoshaba upon exercise of the SAR.
Change of Control.
If there is a “change of control” of the Company during the 10-year term of the SAR, and Mr. Khoshaba remains employed
with the Company through the date of such “change of control” transaction, then a portion of the SAR will be eligible
to vest upon the consummation of such “change of control” transaction as follows: (i) if the price per share of Common
Stock received by the holders of Common Stock (the “COC Price”) equals or exceeds $10, but is less than $15, then 1/3
of the SAR will vest, (ii) if the COC Price equals or exceeds $15, but is less than $20, then 2/3 of the SAR will vest, and (iii)
if the COC Price equals or exceeds $20, then all of the SAR will vest.
Shareholder Approval
Required. The SAR was granted expressly subject to and conditioned upon (and may not be exercised, in whole or in part, until)
approval by the Company’s stockholders at the Company’s 2021 Annual Meeting of Stockholders (the “2021 Annual
Meeting”). If such stockholder approval is not obtained at the 2021 Annual Meeting, then the SARs, whether vested or unvested,
shall be immediately forfeited for no consideration immediately following such 2021 Annual Meeting.
The foregoing summary of
the SAR Agreement does not purport to be complete and is qualified in its entirety by the full text of the SAR Agreement, which
is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.