Item 1.01 Entry into a Material Definitive Agreement.
On June 2, 2022, our company and its subsidiary entered into a Separation Agreement and Release of All Claims (the "Separation Agreement") with Richard Wright ("Wright"), a former director and executive officer of our company.
The Separation Agreement provides, among other things, the following:
1. The parties agreed that Wright voluntarily resigned from his employment with our company effective as of June 2, 2022 (the "Separation Date") and resigned from any and all director and officer positions that he held with our company and its subsidiaries;
2. We agreed with Wright that Wright's employment with our company ended effective as of the Separation Date and the employment agreement dated April 25, 2022 with Wright is of no further force and effect as of the Separation Date except for certain sections of the employment agreement, including the extension of the non-competition provision of the employment agreement by one year to a total of two years so long as Wright is receiving, or has received in the event of a "Change of Control" (as defined below), the severance benefits described in paragraph 3 below;
3. Provided that Wright does not revoke the Separation Agreement as provided in the Separation Agreement, we agreed to pay Wright the total severance sum of US$550,000.08 payable as follows: (1) a single payment of US$275,000.04 (the "Lump Sum Payment") payable within three days after the conclusion of the revocation period described the Separation Agreement; and (2) 24 full months of severance (the "Severance Period") at the rate of US$11,458.33 per month (each, a "Monthly Separation Payment"). The Lump Sum Payment and Monthly Separation Payments will be less all applicable deductions and withholdings. The Monthly Separation Payments for the Severance Period will begin in the first pay period following the expiration of the revocation period provided in the Separation Agreement. The Monthly Separation Payments will be paid ratably pursuant to our current and normal payroll cycle. Notwithstanding the foregoing, in the event our company is sold or undergoes a Change of Control prior to the end of the Severance Period, we agreed that the balance of the unpaid amounts will be paid in a lump sum within five days of the Change of Control. A "Change of Control" means a sale of substantially all of our assets or a sale of 50% or more of stock;
4. We agreed to reimburse Wright for his legal expenses in connection with the preparation and negotiation of the Separation Agreement up to a maximum of US$25,000;
5. We agreed to maintain or provide Wright and family (to the extent currently covered) his current health insurance plan or the equivalent thereto at no cost to Wright from the Separation Date until May 31, 2024. We agreed that such health insurance will be coverage under our group health insurance plan, as amended from time to time, or comparable coverage. In the event our company is sold or undergoes a Change of Control prior to May 31, 2024 (as applicable, the "Trigger Date"), we agreed to pay Wright a lump sum amount equal to the monthly COBRA premium for continuation coverage under our group health plan multiplied by the number of months remaining from the Change of Control date until May 31, 2024 and Wright will be terminated from our group health insurance plan as of the Trigger Date;
6. With respect to (a) 250,000 stock options granted to Wright under that certain Stock Option Agreement dated March 31, 2021 and (b) 250,000 stock options granted to Wright under that certain Stock Option Agreement dated April 3, 2020 (collectively, the "Wright Options"), notwithstanding the provisions of the agreements governing the Wright Options, including his termination of Continuous Service as defined in the 2020 Equity Incentive Plan, and as compensation to Wright under the Separation Agreement, we agreed that Wright is entitled to exercise part or all of the Wright Options at any time after the Separation Date until May 31, 2024 and the Wright Options will expire on May 31, 2024;
7. In the event we reprice any employee stock options during the two year period after the termination date, we agreed that Wright's stock options will receive the same repricing treatment; and
8. We agreed to issue Wright 100,000 restricted stock units upon the effective date of the Separation Agreement (upon the conclusion of the revocation period described in the Separation Agreement) with such units being fully vested upon grant.