Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of Chief Commercial Officer
On March 9, 2022, the Board of Directors (the “Board”) of the Company appointed Craig Snyder as the Company’s Chief Commercial Officer, effective March 28, 2022.
Mr. Snyder is an experienced leader with over 20 years of success in driving growth and development of high tech and emerging technology organizations. He has significant experience leading disruptive strategies in new markets and building corporate reputation on a national scale. Mr. Snyder has held senior leadership positions at two Fortune 100 companies (Pepsi Cola & Citibank) with executive leadership experience in two successful startup to Nasdaq IPO success stories (Go2Net & Marchex), as well as significant experience with large scale M&A integration and restructuring. He is a graduate of the United States Naval Academy and a former Naval Officer. There are no transactions between Mr. Snyder and the Company that would be reportable under Item 404(a) of Regulation S-K.
Departure of Adam Schoenfeld
On March 10, 2022, Adam Schoenfeld, the Chief Marketing Officer and co-founder of the Company and a member of the Board, entered into a Separation and General Release Agreement (the “Separation Agreement”) with Warehouse Goods LLC, a wholly owned subsidiary of the Company, whereby Mr. Schoenfeld’s employment with the Company will be terminated effective March 31, 2022 (the “Separation Date”). Mr. Schoenfeld’s decision to step down as Chief Marketing Officer of the Company is due to his desire to pursue other interests and is not the result of any disagreement with the Company or any matter relating to the Company’s operations, policies or practices. Mr. Schoenfeld will continue to serve as a member of the Board after the Separation Date.
Pursuant to the Separation Agreement, Mr. Schoenfeld will (i) receive a cash severance payment totaling $401,385.68, representing twelve months’ salary and COBRA payments, each payable in accordance with the Company’s ordinary payroll practices, and (ii) be entitled to compensation for serving as a member of the Board in accordance with the Company’s existing director compensation program starting April 1, 2022. As consideration for entering into the Separation Agreement, Mr. Schoenfeld agreed to a full and complete release of any and all waivable claims and rights against the Company, its parents, subsidiaries and affiliates, and each of their officers, directors, members, shareholders, employees, agents, representatives, consultants, fiduciaries, attorneys, insurers, benefit plans, plan administrators, joint venture partners, subsidiaries and affiliates, and all of their predecessors, successors, and assigns, up to and through the Separation Date.
Pursuant to the Separation Agreement, Mr. Schoenfeld is subject to certain continuing obligations and restrictions, including with respect to confidentiality and non-disparagement.
The foregoing description of the Separation Agreement is qualified in its entirety by reference to the full text of the Separation Agreement, which is attached hereto as Exhibit 10.1.
Entry into Employment Agreement with Nicholas Kovacevich and Amended and Restated Employment Agreement with William Mote
On March 9, 2022, the Company entered into an employment agreement (the “Initial Employment Agreement”) with Nicholas Kovacevich, the Company’s Chief Executive Officer, and entered into an amended and restated employment agreement (the “Amended Employment Agreement” and together with the Initial Employment Agreement, the “Employment Agreements”) with William Mote, the Company’s Chief Financial Officer (Mr. Mote together with Mr. Kovacevich, the “Executive Officers”).
In connection with his entry into the Amended Employment Agreement, Mr. Mote’s prior employment agreement with the Company was terminated.
The Employment Agreements provide for terms of two (2) years commencing on March 9, 2022 (the “Initial Employment Period”), during which time Mr. Kovacevich will serve as Chief Executive Officer and Mr. Mote will serve as Chief Financial Officer. If an Executive Officers’ employment continues following the expiration of the two-year term of their Employment Agreement, the term of the applicable Employment Agreement shall automatically be extended for successive one-year periods (the “Extended Employment Period” and together with the Initial Employment Period, the “Employment Term”) unless either party gives written notice of termination not less than 60 days prior to the termination of the then-current term. Pursuant to the Employment Agreements, Mr. Kovacevich will be paid a base salary of $400,000 and Mr. Mote will be paid a base salary of $340,000, subject to annual review by the Compensation Committee. The Executive Officers will also be eligible to receive an annual bonus based upon the attainment of one or more pre-established performance goals or other established criteria set by the Board or the Compensation Committee. Mr. Kovacevich is eligible to receive an annual bonus in an amount up to 90% of his base salary and Mr. Mote is eligible to receive an annual bonus in an amount up to 60% of his base salary. The Executive Officers will also continue to be eligible to receive equity and other long-term incentive awards under any applicable plan adopted by the Company during the term of their employment. In the sole discretion of the Compensation Committee, each Executive Officers’ bonus may be paid in cash or in equity awards.
Pursuant to the Employment Agreements, the Executive Officers are each terminable by the Company at any time (i) without cause (as defined in the Employment Agreements and summarized below), (ii) for cause, (ii) in the event of their death, or (ii) in the event of their disability that cannot be accommodated under the requirements of law. Each Executive Officer may terminate their Employment Agreement for any reason.
If an Executive Officer’s Employment Agreement is terminated by the Company without cause, the Executive Officer is entitled to receive their base salary to the date of termination, any bonus that has accrued but is unpaid as of the date of termination and any reimbursable expenses not yet reimbursed as of such date, in addition to the receipt of outplacement services at the Company’s expense, provided that the cost of such services shall not exceed $20,000 or continue for longer than 3 months. If terminated without cause, Mr. Kovacevich is also entitled to severance equal to 12 months of his base salary in effect on the date of termination and Mr. Mote is also entitled to severance equal to 6 months of his base salary in effect on the date of termination. In addition, if terminated without cause, each Executive Officer is entitled to a cash payment equal to the applicable COBRA premium payments that would be payable by the Executive Officer to continue his Company-provided healthcare services for himself and any dependents (the “Company Healthcare Plan”) covered at the time of termination (collectively, the “COBRA Payment”). If terminated without cause, Mr. Kovacevich is entitled a COBRA Payment equal to 12 months of coverage under the Company Healthcare Plan and Mr. Mote is entitled to a COBRA Payment equal to 6 months of coverage under the Company Healthcare Plan. In addition to the benefits described above, in the case of his termination without cause, Mr. Kovacevich is also entitled to certain additional severance benefits provided for in the Kim International Corporation Executive Severance Plan, dated January 15, 2021.
If an Executive Officer’s Employment Agreement is terminated by Company (i) for cause, (ii) in the event of the Executive Officer’s death, or (iii) in the event of their disability that cannot be accommodated under the requirements of law, or if the Executive Officer terminates their Employment Agreement for any reason, the Executive Officer is entitled to receive their base salary to the date of termination, any bonus that has accrued but is unpaid as of the date of termination and any reimbursable expenses not yet reimbursed as of such date.
Pursuant to the terms of the Employment Agreements, “cause” means: (i) the conviction of the Executive Officer of the commission of a felony or other crime involving moral turpitude (including pleading guilty or no contest to such crime), whether or not such felony or other crime was committed in connection with the business of the Company Group (as defined in the Employment Agreements); (ii) the commission of any act or omission involving willful misconduct, moral turpitude, misappropriation, embezzlement, dishonesty, or fraud in connection with the performance of the Executive Officer’s duties and responsibilities hereunder; (iii) reporting to work under the influence of alcohol or illegal drugs, or other conduct causing the Company Group public disgrace or disrepute, whether in conjunction with the performance of the Executive Officer’s duties on behalf of the Company Group or otherwise; (iv) willful failure or refusal to perform material duties and responsibilities as reasonably directed by the Chief Executive Officer or Board; (v) any act or omission deliberately aiding or abetting a competitor of the Company Group to the disadvantage or detriment of the Company Group; (vi) breach of any applicable fiduciary duty to the Company Group; or (vii) any other material breach of the Employment Agreement.
The Executive Officers have agreed that during the Employment Term the Executive Officers will not engage, directly or indirectly, as a partner, officer, director, stockholder (other than as the passive holder of less than 2% of the outstanding stock of a publicly-traded corporation), member, manager, consultant, advisor, investor, creditor or employee with a company that engages in a similar business as the Company, except on behalf of the Company or with the prior written approval of the Chief Executive Officer or Board.
The foregoing description of the Employment Agreements does not purport to be complete and is qualified in its entirety to the full text of the Employment Agreements, which are filed as Exhibits 10.2 and 10.3 to this Current Report on Form 8-K and are incorporated herein by reference.