5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers, Compensatory Arrangements
of Certain Officers.
of Chris Bechtel as Chief Executive Officer, President and Director
November 26, 2018, Chris Bechtel notified the Board of Directors (the “Board”) of Surna Inc. (the “Company”)
of his resignation as the Company’s Chief Executive Officer and President and as a member of the Board effective November
26, 2018. Mr. Bechtel’s resignation was a personal decision and was not the result of any disagreement with the Company
on any matters relating to the Company’s operations, policies or practices.
of Anthony K. McDonald as Chief Executive Officer and President
November 28, 2018, Mr. McDonald was appointed by the Board to serve as the Company’s Chief Executive Officer and President
until his resignation or earlier termination or other removal therefrom. Mr. McDonald will continue to serve as a director of
the Company but, since he will longer be an “independent director” as such term is defined in Rule 5605(a)(2) of the
NASDAQ Stock Market, Mr. McDonald will no longer receive compensation under the Company’s independent director compensation
were no arrangements or understandings between Mr. McDonald and the Company or any other persons to which Mr. McDonald was appointed
as the Company’s Chief Executive Officer and President.
November 28, 2018, the Board approved an employment agreement between the Company and Mr. McDonald (the “Employment Agreement”)
and the grant of certain non-qualified stock options to Mr. McDonald. A copy of the Employment Agreement is attached as Exhibit
initial term of the Employment Agreement commenced on November 28, 2018, the date Mr. McDonald was appointed as Chief Executive
Officer and President, and will continue until December 31, 2020. However, the Company and Mr. McDonald may terminate the Employment
Agreement, at any time, with or without cause, by providing the other party with 30-days’ prior written notice. In the event
Mr. McDonald’s employment is terminated by the Company during the initial term without cause, Mr. McDonald will be entitled
to receive his base salary for an additional 30 days. Following the initial term, the Company and Mr. McDonald may extend the
Employment Agreement for additional one-year terms by mutual written agreement.
McDonald will receive an annualized base salary of $180,000.
November 28, 2018, the Board also granted Mr. McDonald non-qualified stock options to purchase 5,000,000 shares of the Company’s
common stock, which vest as follows: (i) 1,000,000 options vest and become exercisable on the grant date, (ii) 2,000,000 options
vest and become exercisable on December 31, 2019, if Mr. McDonald continues to be employed by the Company on that date, and (iii)
2,000,000 options vest and become exercisable on December 31, 2020, if Mr. McDonald continues to be employed by the Company on
that date. The exercise price of these options is $0.089, based on the closing of the Company’s common stock on November
consideration of the grant of the non-qualified stock options, Mr. McDonald agreed with the Board to surrender to the Company
for cancellation the 197,368 restricted stock units, which were granted to him as an equity retention award in connection with
Mr. McDonald’s appointment to the Board on September 12, 2018 and which have not vested.
the event of a change of control involving the Company, any non-qualified stock options not already vested will become vested,
provided Mr. McDonald continues to provide services to the Company on the date immediately preceding the date of the change of
November 28, 2018, Mr. McDonald will no longer serve on the Audit Committee of the Board since he no longer qualifies as an “independent
director” as such term is defined in Rule 5605(a)(2) of the NASDAQ Stock Market. The Board also approved that the Company’s
Audit Committee may be comprised of two or more directors, each of whom must meet the qualifications as an “independent
director” of the Company.
and other information for Mr. McDonald has been included in the Company’s Current Report on Form 8-K filed with the SEC
on September 13, 2018, which is incorporated herein by reference.
in Size of the Board of Directors
result of Mr. Bechtel’s resignation as a member of the Board, the Board currently has two vacancies. In lieu of filling
these vacancies, the Board has approved a reduction in the size of the Board. As of November 28, 2018, the size of the Board shall
be three members.