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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Adoption
of Amendment to Equity Incentive Plan
On
October 8, 2020, the board of directors of the Company (the “Board”) approved an amendment to the Company’s
2020 Equity Incentive Plan (the “Plan”) to increase the maximum aggregate number of shares available for issuance
under the Plan by 19,000,000 shares (the “Pool Increase”). The Pool Increase is conditional upon shareholder
approval of the Pool Increase at the next annual meeting of shareholders (the “Annual Meeting”). If the Pool
Increase is not approved by shareholders at the Annual Meeting, the Pool Increase shall not be effective.
David
Gandler Employment Agreement
On
October 8, 2020, the Company entered into a new executive employment agreement (the “New Employment Agreement”)
with David Gandler to supersede his existing employment agreement, originally dated April 1, 2020 (the “Prior Employment
Agreement”). The Prior Employment Agreement was otherwise set to expire upon the uplist of the Company’s common
stock on either NASDAQ or the New York Stock Exchange (the “Uplist”). Mr. Gandler is the Company’s Chief
Executive Officer and a member of the Board. The key terms of the New Employment Agreement are summarized below:
Base
Salary. Mr. Gandler will receive an annual base salary of $500,000.
Annual
Bonus. Beginning with the 2021 fiscal year, Mr. Gandler will be eligible for an annual bonus of $500,000 subject to the achievement
of certain performance objectives. For the 2020 fiscal year, Mr. Gandler will earn a bonus of $100,000 upon the Uplist, and be
eligible to earn a pro-rata portion of the $500,000 annual bonus for the remainder of the year, subject to the achievement of
certain performance objectives.
Severance
Provision. If Mr. Gandler’s employment is terminated by the Company outside of the Change in Control Period (as defined
in the New Employment Agreement) other than for Cause (as defined in the New Employment Agreement), death or disability, he will
be eligible to receive severance payments equal to 12 months of base salary and benefits continuation coverage. If during the
Change in Control Period, (i) the Company terminates his employment with the Company other than for Cause (as defined in the New
Employment Agreement), death or disability, or (ii) Mr. Gandler resigns for Good Reason (as defined in the New Employment Agreement),
in addition to the severance amounts previously described, Mr. Gandler shall be entitled to full acceleration of time-based equity
awards and payment of his annual bonus. All severance is subject to Mr. Gandler’s execution of a release of claims and continued
compliance with restrictive covenants.
Equity
Awards. Mr. Gandler was granted a stock option to cover 4,100,000 shares under the Plan, effective October 8, 2020 at an exercise
price of $10.00 per share. The stock option forfeits if the Pool Increase is not approved by stockholders at the Annual Meeting.
The grant vesting will be reviewed following the end of each year from 2021 through 2025. Applicable performance targets for stock
price, revenue, gross margin, subscribers, new markets launched and new revenue streams have been set. Each year the Board will
review performance against targets in a wholistic manner to determine in its discretion if any vesting is warranted. As a condition
to receiving this grant, Mr. Gandler and his affiliates and transferees agree that his existing founder shares will not be sold
over the five year performance period, except that 50% of his founder shares may be sold from 2021 to 2023, with no more than
25% sold in 2021, and no more than 20% in each of 2022 and 2023 (the “Selling Restrictions”). The Selling Restrictions
will lapse if the Pool Increase is not passed by shareholders at the Annual Meeting.
On
October 8, 2020, the Company also entered into an amendment to the At-Will Employment, Confidential Information, and Invention
Assignment Agreement with David Gandler (the “Amendment”). Pursuant to the Amendment, Mr. Gandler is now subject
to a one-year post-termination non-compete.
The
foregoing description of the New Employment Agreement does not purport to be complete and is qualified entirely by reference to
the full text of the New Employment Agreement, which is attached hereto as Exhibit 10.1 and is incorporated by reference herein.