RFIL RF Industries Ltd

Item 5.02         Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

On July 16, 2021, RF Industries, Ltd. (the “Company”) entered into a new employment agreement (the “New Agreement”) with Robert D. Dawson, the Company’s current President and Chief Executive Officer. The New Agreement became effective on July 17, 2021 and replaced Mr. Dawson’s prior employment agreement that expired on July 17, 2021. The initial term of the New Agreement ends on January 31, 2023, after which the New Agreement shall automatically renew for additional one (1) year periods, unless either Mr. Dawson or the Company provides the other party with written notice of non-renewal at least ninety (90) days prior to the date of automatic renewal.

 

Under the New Agreement, the Corporation agreed to pay Mr. Dawson an annual base salary of $425,000. Mr. Dawson will also be eligible to participate in the Company’s annual bonus plan, pursuant to which he will have the opportunity to earn a year-end bonus equal to fifty percent (50%) of his annual base salary (the “Annual Bonus”). The actual bonus paid may be higher or lower than 50% based on the over- or under-achievement of Company and Mr. Dawson’s individual objectives as determined by the Company’s Board of Directors or its Compensation Committee. Under the New Agreement, if Mr. Dawson’s employment is terminated by the Company for any reason other than for “cause,” the Company is obligated to pay Mr. Dawson (x) an amount equal to one year’s base salary as in effect at such time, and (y) the estimated pro rata portion of his target bonus that was earned through the date of termination. In addition, the vesting period of all of Mr. Dawson’s unvested stock options and all unvested time-based restricted stock grants will automatically be fully accelerated as of the termination date. The foregoing provisions will not apply if Mr. Dawson voluntarily terminates his employment with the Company or is terminated for cause.

 

Mr. Dawson received a fully vested, ten-year immediately exercisable stock option to purchase 50,000 shares of the Company’s common stock. The exercise price of this option is $8.69, the closing price on July 16, 2021. The New Agreement also provided that the vesting schedule of the remaining portion of Mr. Dawson’s 2017 grant of an option to purchase 100,000 shares was revised. As of the date of the New Agreement, 50,000 shares of the 2017 option grant were still unvested. Under the revised vesting schedule, provided that Mr. Dawson is still employed by the Company, 25,000 shares of those unvested options will vest on the July 17, 2022, and the remaining 25,000 shares will vest on July 17, 2023.

 

Upon a Change of Control Transaction (as defined in the New Agreement), all of Mr. Dawson’s time-based stock options and shares of restricted stock shall immediately vest, whether or not his employment is terminated. If, at the time of a Change of Control Transaction, Mr. Dawson’s employment is terminated by the Company for any reason other than cause (as defined in the New Agreement), Mr. Dawson will be entitled to receive a change of control cash payment in an amount equal to 12 months of his base salary.

 

There are no arrangements or understandings between Mr. Dawson and any other persons pursuant to which he was chosen as an officer of the Company. There are no family relationships between Mr. Dawson and any of the Company’s directors, executive officers, or persons nominated or chosen by the Company to become a director or executive officer. Mr. Dawson is not a party to any current or proposed transaction with the Company for which disclosure is required under Item 404(a) of Regulation S-K.