Item 5.02 Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Simon R. Kay Transition Services
Agreement
On
January 20, 2022, Basanite, Inc. (the “Company”) entered into a Transition Services Agreement (the “TSA”)
with Simon R. Kay, the Acting Interim Chief Executive Officer and Chief Financial Officer of the Company (“Mr. Kay”).
Mr. Kay has been serving as the Company’s Acting Interim Chief Executive Officer, President and Chief Financial Officer in
a consultant capacity since January 13, 2020 pursuant to a Consulting Agreement between the Company and Mr. Kay (the “Consulting
Agreement”). Mr. Kay and the Company have agreed to terminate the Consulting Agreement as of the effective date of the TSA,
except for those provisions of the Consulting Agreement which survive termination or are incorporated into the TSA.
The Board of Directors of the
Company has commenced a search for a permanent principal executive officer for the Company (the “New PEO”) as the Company
moves forward seeking to capitalize on its recently announced strategic supply and distribution agreements. The Company and Mr. Kay have mutually agreed to this transition and entered into the TSA to provide for terms under which
Mr. Kay will continue to provide executive services to the Company as the Company searches for the New PEO.
Pursuant to the TSA, for the
period beginning immediately and ending fourteen (14) days following the Company’s hiring of a New PEO (provided that such period
such end no earlier than February 28, 2022 and no later than June 30, 2022) (the “Transition Period”), Mr. Kay shall:
(i) provide services to the Company as a consultant in the capacity as Acting Interim Chief Executive Officer and President, consistent
with past practice, with Mr. Kay reporting regularly on his duties to, and taking direction from, the Chairman of the Board of Directors
of the Company (the “Board”) or any member of the Board designated by the Chairman of the Board; (ii) shall faithfully,
honestly and diligently serve the Company, and shall devote substantially all of his business time and attention to the business of the
Company, using his best efforts to promote the interests of the Company and following the reasonable and lawful instructions of the Board
of Directors of the Company; (iii) not be required to provide services as Acting Interim Chief Financial Officer of the Company (as such
duties may be assumed by other Company personnel); (iv) upon the hiring of the New PEO, assist in the transition of the New PEO to such
position by providing the New PEO with all applicable background information regarding the business and affairs of the Company and related
assistance; and (v) carry out his duties in a manner consistent with and in compliance with all present and future requirements of the
Board and the requirements of all applicable federal and state laws and regulations.
During the Transition Period,
Mr. Kay shall receive a cash fee, payable in accordance with the Company’s current payroll practices, based on an annual fee amount
of Three Hundred Fifty Thousand Dollars ($350,000) per year (the “Fee”). Mr. Kay should also be entitled to (i) expense
reimbursement and (ii) use of his Company computer and (iii) access to Company health/dental/vision insurance for him and his family (the
costs thereof to be paid by Mr. Kay), in each case consistent with past practice under the Consulting Agreement.
Either the Company or Mr. Kay
may terminate the TSA at any time during the Transition Period (i) by their mutual written agreement, whereupon all fees due or accrued
to Mr. Kay hereunder shall be promptly paid by the Company (including, for the avoidance of doubt, the Transition Payment Warrant, as
defined below) or (ii) upon material breach of this Agreement by the Company or Mr. Kay, provided the non-breaching Party has provided
with written notice of the material breach to the breaching Party and an opportunity to cure such material breach within ten (10) days
after receipt such written notice. In the event of termination by Mr. Kay for the Company’s material breach of the TSA, Mr. Kay
shall be entitled to prompt issuance of the Transition Payment Warrant. In the event of termination by the Company for Mr. Kay’s
material breach of the TSA or by the Company in the event of Mr. Kay’s breach of certain sections of the TSA, Mr. Kay shall forfeit
his right to receive the Transition Payment Warrant.
The TSA also contains customary
confidentiality, non-solicitation and non-competition provisions.
Transition Payment Warrant
At the conclusion of the Transition
Period, and predicated on Mr. Kay’s compliance with the terms of the TSA, the Company will issue to Mr. Kay a five-year warrant
to purchase one million (1,000,000) shares of Company common stock, which warrant shall (i) have an exercise price per share of $0.33
(subject to customary stock-based, but not priced-based, anti-dilution protections and (ii) contain a customary “cashless exercise”
provision (such warrant, the “Transition Payment Warrant”). Following the issuance of the Transition Payment Warrant,
Mr. Kay shall not be entitled to any further payments or consideration of any kind from the Company. The issuance of the Transition Payment
Warrant is subject to Mr. Kay executing a release in favor of the Company at the conclusion of the Transition Period.
The foregoing description of
the Transition Payment Warrant and the TSA are a summary only and does not purport to be complete and, is qualified in its entirety by
reference to the full text of such documents, the forms of which is attached hereto as Exhibit 4.1 and 10.1, respectively, and incorporated
herein by reference.