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Item 5.02
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.
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Appointment of Chief Operating Officer
On September 9, 2021, the Company announced the
appointment of Marc Katz as its Chief Operating Officer. Since May 18, 2021, Mr. Katz has served as a consultant to the Company and in
such capacity as Interim Chief Financial Officer. Effective September 14, 2021, Mr. Katz will cease to serve as Interim Chief Financial
Officer.
Mr. Katz worked at Burlington Stores Inc. from
2008 through 2019 with his last position being Chief Financial Officer/Principal. During his tenure at Burlington, he oversaw finance,
information technology, supply chain, asset protection and legal. Prior to his eleven years at Burlington, Mr. Katz served as Chief Financial
Officer and Executive Vice President of A.C. Moore Arts & Crafts and Chief Information Officer and Senior Vice President at Foot
Locker, Inc.
Mr. Katz received his MBA from St. Louis University
and an undergraduate degree from the University of Missouri – St. Louis.
The Company is not aware of any related transactions
or relationships between Mr. Katz and the Company that would require disclosure under Item 404(a) of Regulation S-K.
Mr. Katz does not have any family relationships
with any director, executive officer or person nominated or chosen by the Company to become a director or executive officer of the Company.
There are no arrangements or understandings between Mr. Katz and any other person pursuant to which Mr. Katz was selected as an officer
of the Company.
In connection with his appointment as Chief
Operating Officer, Mr. Katz and the Company have entered into an Employment Agreement, dated September 8, 2021 (the
“Employment Agreement”). The Employment Agreement provides for an initial three year term and will automatically renew
for additional one year periods unless either party gives at least 60 days’ prior written notice of nonrenewal.
The Employment Agreement provides for an
annual base salary of not less than $700,000 and an annual target bonus opportunity of not less than 70% of Mr. Katz’s base
salary, with the amount actually earned based on performance. The Employment Agreement also provides for a $100,000 signing bonus,
to be paid within 30 days of the effective date of the Employment Agreement. In the event Mr. Katz’s employment is terminated
by the Company for “cause” or by him without “good reason” (each as defined in the Employment Agreement)
prior to the first anniversary of the effective date of the Employment Agreement, he will be required to repay the full amount of
the signing bonus, and if his employment is terminated by the Company for cause or by him without good reason following the first
anniversary but prior to the second anniversary of the effective date, he will be required to repay 50% of the signing bonus. Under
the Employment Agreement, Mr. Katz is eligible to participate in the Company’s applicable equity incentive plan, and, each
year during the term of the Employment Agreement, he is entitled to receive equity incentive awards having a value of at least
$700,000. Mr. Katz will also be eligible to participate in the Company’s benefit plans generally and is entitled to the
payment of certain relocation and/or long-distance commuting expenses and legal fees in connection with the negotiation and drafting
of the Employment Agreement.
The Employment Agreement also provides for the
grant of inducement equity awards, including (i) an award of time-based restricted stock units having a grant date fair market value
of $1,500,000 (the “Inducement RSUs”) and (ii) an award of performance-based restricted stock units having a grant date fair
market value of $1,500,000 (the “Inducement PRSUs”), in each case, to be granted within 35 days of the effective date of
the Employment Agreement. The Inducement RSUs will vest in equal installments on each of the first three anniversaries of the date of
grant, so long as Mr. Katz remains employed through each vesting date. The Inducement PRSUs will vest over a period of five years from
the date of grant (subject to Mr. Katz’s continuous employment through each vesting date) based on the attainment of specified
Company stock price metrics.
Under the terms of the Employment Agreement, if
Mr. Katz’s employment is terminated by the Company without cause or he resigns with good reason, he will be entitled to receive
severance benefits as follows: (a) any earned but unpaid bonus for the fiscal year preceding the year in which the termination of employment
occurs, (b) a pro rata portion of the annual bonus for the fiscal year in which the termination of employment occurs, (c) cash severance
in an amount equal to 1.5 times his then current base salary, payable in equal installments over an 18-month period following the date
of termination of his employment, and (d) continued health coverage for Mr. Katz and his eligible dependents through the end of the fiscal
year in which the termination of employment occurs. However, if Mr. Katz’s employment is terminated by the Company without cause
or if he resigns with good reason, in each case, within one year following a “change in control” (as defined in the Employment
Agreement), the cash severance payable to Mr. Katz will equal two times his then current base salary, and will be paid in equal installments
over a period of 24 months.
Mr. Katz’s receipt of the severance benefits
described in the previous paragraph is subject to Mr. Katz’s execution (and non-revocation) of a release of claims in favor of
the Company and his continued compliance with restrictive covenants, which include customary nonsolicitation and noncompetition covenants
that apply for the duration of Mr. Katz’s employment and for a period of 18 months thereafter and confidentiality, nondisclosure
and nondisparagement covenants.
The foregoing summary is qualified in its entirety
by reference to the full text of the Employment Agreement, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Appointment of Chief Financial Officer
On September 9, 2021, the Company announced the
appointment of Jennifer Robinson as Executive Vice President and Chief Financial Officer, effective as of September 14, 2021.
Ms. Robinson is joining the Company from The Michaels
Companies Inc., where she most recently served as Senior Vice President of Finance and Treasurer. With over 20 years of experience, Ms.
Robinson has held numerous finance leadership positions including Chief Accounting Officer and Controller. Prior to joining Michaels
in 2007, Ms. Robinson began her career with the accounting firm of Deloitte. Ms. Robinson is a Certified Public Accountant and has a
Master’s of Business Administration from the University of Arkansas.
The Company is not aware of any related transactions
or relationships between Ms. Robinson and the Company that would require disclosure under Item 404(a) of Regulation S-K.
Ms. Robinson does not have any family relationships
with any director, executive officer or person nominated or chosen by the Company to become a director or executive officer of the Company.
There are no arrangements or understandings between Ms. Robinson and any other person pursuant to which Ms. Robinson was selected as
an officer of the Company.
In connection with her appointment as Executive
Vice President and Chief Financial Officer, Ms. Robinson and the Company entered into an offer letter dated as of July 29, 2021 (the
“Offer Letter”). The Offer Letter provides for an annual base salary of $450,000 and an annual target bonus opportunity of
60% of Ms. Robinson’s base salary, with the amount actually earned based on performance. The Offer Letter also provides for a $300,000
signing bonus. In the event Ms. Robinson terminates her employment with the Company prior to the first anniversary of her employment,
she will be required to repay the full amount of the signing bonus, and if she terminates her employment with the Company following the
first anniversary but prior to the second anniversary of her employment, she will be required to repay 50% of the signing bonus. The
Offer Letter also provides that Ms. Robinson will receive a grant of restricted stock units having a value of $350,000, with 50% of the
restricted stock units vesting ratably over three years and with vesting of the remaining 50% of the restricted stock units being subject
to meeting certain performance metrics. Ms. Robinson will also be eligible to participate in the Company’s benefit plans generally.
The foregoing summary is qualified in its entirety
by reference to the full text of the Offer Letter, which is attached hereto as Exhibit 10.2 and incorporated herein by reference.