AVCT American Virtual Cloud Technologies Inc

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

As previously reported, on August 25, 2022, American Virtual Cloud Technologies, Inc. (the “Company”) announced that it had retained Northland Capital Markets to advise the Company in connection with a comprehensive strategic review process that could lead to the sale of the Company or selected assets. Northland Capital Markets is the trade name for certain capital markets and investment banking services of Northland Securities, Inc., Member FINRA/SIPC. On September 7, 2022, the Compensation Committee (the “Committee”) of the Board of Directors of American Virtual Cloud Technologies, Inc. (the “Company”) approved the American Virtual Cloud Technologies, Inc. Key Executive Incentive Plan (the “KEIP”), a performance-based cash bonus plan for certain of the Company’s senior executives, including its Chief Executive Officer, Kevin Keough, Chief Financial Officer, Adrian Foltz, and Chief Accounting Officer, Onex Evans.

The KEIP establishes an aggregate bonus pool of between 3.5% and 4.5% of the “Realizable Value” (as defined in the KEIP) to the Company following any or all of the following types of transactions completed by the Company after September 1, 2022: (i) one or more of sales of the Company’s business units, (ii) a sale of the Company’s assets as a going-concern or (iii) a transaction or series of transactions resulting in a change in control of the Company. The aggregate bonus pool would be 3.5% of Realizable Value if Realizable Value is an amount up to and including $35 million, 4.0% of Realizable Value if Realizable Value is more than $35 million but no more than $50 million, and 4.5% if Realizable Value exceeds $40 million. Each participant’s share of the aggregate bonus pool is expressed as a pro rata share of the total pool amount, subject to vesting based on the participant’s continued employment with the Company and the achievement of certain benchmarks, as set forth in the Plan. The pro rata share awards to Mr. Keough,Mr. Foltz, and Ms. Evans, as approved by the Committee on September 7, 2022 and set forth in their respective award letters under the KEIP, are 30%, 12%, and 12%, respectively. Any portion of a KEIP payment that is forfeited by a participant will be allocated among the remaining participants in accordance with their respective pro rata shares.

The foregoing summary of the KEIP and the form of award letter under the KEIP is qualified in its entirety by reference to the full text of the KEIP and form of award letter thereunder, copies of which are attached as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K and incorporated by reference herein.