Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On November 14, 2022, we announced
the appointment of Joel Fruendt to replace Kenneth Siegel as our Chief Executive Officer. Mr. Siegel’s retirement as our Chief Executive
Officer will be effective November 15, 2022. Mr. Siegel has agreed to continue as an Executive Director of our company, in a consultative
role, and is expected to retire as a director on December 31, 2022. For the avoidance of doubt, Mr. Siegel’s role as Executive Director
shall not constitute an officer of our company.
On
November 14, 2022, Joel Fruendt was appointed as Chief Executive Officer of our company, effective as of November 15, 2022 (the
“Commencement Date”). Mr. Fruendt was also appointed as a member of our Board of Directors, effective as of
the Commencement Date.
Mr. Fruendt, age 61, previously
served as the President and Chief Executive Officer of Safe Reflections, Inc., a provider of colorfast, durable, reflective solutions
to the occupational safety and military training apparel markets, from 2020 to 2022. Mr. Fruendt held various management roles at Clarke
Environmental Inc., a pest control product and services company, from 2005 to 2020, including Vice President and General Manager and Vice
President and General Manager – Sales. From 2000 to 2005, Mr. Fruendt served as the Vice President – Sales at Moore Diversified
Products, a plastic conduit products and custom metal enclosures manufacturing company. From 1992 to 2000, Mr. Fruendt served as the Vice
President, GM – NSC Division with Waste Management Inc., a thermoplastic liner, geotextile, and geosynthetic construction products
manufacturing and installation company.
Mr. Fruendt has no family
relationship with any of the executive officers or directors of our company. There are no arrangements or understandings between Mr. Fruendt
and any other person pursuant to which he was elected as an officer or director of our company. Mr. Fruendt holds nine shares of our common
stock.
On
November 9, 2022, we entered into an employment letter agreement with Mr. Fruendt (the “Employment Agreement”)
to serve as our Chief Executive Officer, effective as of the Commencement Date. Under the terms of the Employment Agreement, Mr. Fruendt
will receive an annual base salary of $340,000 and will receive a stock option to purchase 3.5% of the outstanding shares of our common
stock (the “Option”), which will vest on a quarterly basis over a three-year period, and will be subject to
the terms and conditions of the Company’s 2018 Equity Incentive Plan, as amended (the “Plan”) and standard
form of option agreement. Mr. Fruendt will be eligible to receive an annual incentive bonus with a target value equal to 60% of his annual
base salary, subject to his achievement of performance objectives to be mutually agreed upon by Mr. Fruendt and our board of directors.
In addition, after each full year of employment with our company, subject to board approval, Mr. Fruendt will be eligible to receive additional
equity incentive grants consistent with timing for our other employees. Mr. Fruendt will also receive a one-time cash bonus of $20,000
and a one-time grant of restricted stock units (the “RSUs”) with an aggregate value of $50,000. The RSUs will
vest quarterly over a 12-month period. Mr. Fruendt will also be eligible to participate in the standard benefits, vacation, and expense
reimbursement plans offered to similarly situated employees, and will enter into our standard form of indemnification agreement applicable
to our directors and officers.
In the event Mr. Fruendt’s
termination by us without Cause or Mr. Fruendt resigns for Good Reason (as such terms are defined in his employment letter agreement),
Mr. Fruendt will be entitled to severance benefits equal to 12 months’ continuation of his then base salary. In addition, we will
reimburse Mr. Fruendt for COBRA premiums in effect on the date of termination for coverage in effect for him and, if applicable, his spouse
and dependent children on such date under our group health plan(s). Finally, the vesting of Mr. Fruendt’s Option will be accelerated
such that he will be deemed vested in those shares subject to the Option.
The description of the Employment
Agreement set forth above does not purport to be complete and is qualified in its entirety by the full text of the Employment Agreement,
a copy of which is attached hereto as Exhibit 10.24 and is incorporated herein by reference.