Item
5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
On
June 10, 2021, Sigma Labs, Inc. (“we,” “our,” “us,” or the “Company”) entered into an
amended and restated employment agreement (“Employment Agreement”) with Mark K. Ruport, which is retroactive to January 1,
2021.
Under
the Employment Agreement, Mr. Ruport will continue to serve as the Company’s President and Chief Executive Officer, and is entitled
to, among other things, (i) an annual base salary of $250,000 (such base salary is not subject to decrease, but may be increased in the
discretion of the Company’s Compensation Committee of the Board of Directors (the “Committee”) based on annual or special
case assessments of Mr. Ruport’s performance and other factors), (ii) all benefits that we elect in our sole discretion to provide
from time to time to our other executive officers, and (iii) earn additional equity awards under the Company’s incentive plans
and stock appreciation rights. Additionally, the Company must formulate a set of short-term and long-term metrics to assist in measuring
Mr. Ruport’s performance and set certain bonus compensation awards based on such performance (“Incentives”).
The
Company has the right to terminate Mr. Ruport’s employment at any time, with or without cause and for any reason, provided that,
if his employment is terminated by us without “cause” or as a result of Mr. Ruport’s death or “disability,”
or his employment is terminated within the twelve month period following a “change in control” (as those terms are defined
in the Employment Agreement) then, subject to his execution of a general release of claims, Mr. Ruport will be entitled to (i) payment
of certain accrued obligations, (ii) receive 12 months of his then current annual base salary payable within thirty days of termination,
(iii) accelerated vesting of all of his stock options and stock appreciation rights, and, if applicable, a pro-rata portion of the applicable
Incentives, calculated based on the date of the termination of his employment in relation to the applicable Incentive period.
A
copy of the Employment Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The foregoing description of the Employment Agreement is not complete and is qualified in its entirety by reference to the full text
of the Employment Agreement.
On
June 10, 2021, the Committee adopted an incentive compensation plan for Mr. Ruport under which he is eligible to receive short-term and
long-term cash and/or equity-based payments (at the Committee’s discretion as to the form of payment), after the end of this fiscal
year, as to Incentives tied to the achievement of certain corporate goals and criteria with respect to 2021, and after December 31, 2022,
as to Incentives tied to the achievement of certain corporate goals and criteria through 2022.
2021
Incentives. Under the plan adopted by the Committee,
up to three incentive bonuses, if any, will be paid to Mr. Ruport based upon the Company’s achievement of up to three specified
corporate goals for 2021, including two financial performance targets and an employee retention
target. The maximum bonus payable to Mr.
Ruport upon the full achievement of a specific goal is $125,000, and the maximum bonus payable to Mr. Ruport upon the full achievement
of all three goals is approximately $333,333. The 2021 bonuses will be paid, as to 50% of such bonuses, by January 31, 2022, and
the remaining 50% will be paid promptly after the Company’s Form 10-K for the fiscal year ended December 31, 2021, is filed
with the Securities and Exchange Commission.
2022
Incentives.
Under
the plan adopted by the Committee, up to three incentive bonuses, if any, will be paid to Mr. Ruport based upon the Company’s
achievement of up to three specified
corporate goals through 2022, including an employee retention target, a financial performance
target and a subjective personal performance/contribution
goal for Mr. Ruport. The maximum bonus payable to Mr. Ruport upon the full achievement of a specific goal is approximately $333,333,
and the maximum bonus payable to Mr. Ruport upon the full achievement of all three goals is $750,000. The subjective performance
of Mr. Ruport will be evaluated and determined by the Committee in its sole discretion. The 2022 bonuses will be paid, as to 50%
of such bonuses, by January 31, 2023, and the remaining 50% will be paid promptly after the Company’s Form 10-K for the
fiscal year ended December 31, 2022, is filed with the Securities and Exchange Commission.
The
Committee reserves the right to modify these goals and criteria at any time, and to grant bonuses to Mr. Ruport even if the performance
goals are not met.