Item
5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
Appointment
of Chief Executive Officer
On
November 6, 2020, the Board of Directors (the “Board”) of the Company appointed the Interim Chief Executive Officer
of the Company, Larry G. Swets Jr., to serve as the Company’s Chief Executive Officer (“CEO”), effective November
10, 2020. A copy of the public announcement regarding such appointment is included in the press release furnished hereto as
Exhibit 99.1 and issued on the date hereof.
Mr.
Swets, who has served as a director on the Board since November 2013, had been appointed to serve as the Company’s Interim
Chief Executive Officer on June 17, 2020. Biographical information regarding Mr. Swets is set forth in the Company’s Form
8-K filed with the Securities and Exchange Commission (the “SEC”) on June 23, 2020 and in our proxy statement filed
with the SEC on October 30, 2020.
Executive
Employment Agreement with Mr. Swets
In
connection with Mr. Swets’ appointment as CEO, the Company entered into an executive employment agreement with Mr. Swets,
dated and effective as of November 10, 2020 (the “Swets Agreement”). The Swets Agreement has a three-year term and
is subject to automatic three-year renewals, unless either party provides 60 days’ prior written notice of his or its intention,
as applicable, not to renew such term.
Under
the Swets Agreement, Mr. Swets is entitled to an annual base salary of $550,000 until such time as the Board determines future
compensation based on Swets’ performance or other merit-based criteria. Mr. Swets is also entitled to receive, subject to
availability under the Company’s 2018 Equity Incentive Plan, up to 250,000 shares of Company restricted common stock or
restricted stock units and Company stock options, subject to vesting criteria (including performance conditions) to be mutually
agreed between Mr. Swets and the Company prior to December 31, 2020. To the extent the terms of such Company restricted common
stock or restricted stock units or Company stock options are not mutually agreed between the parties by such date, Mr. Swets may
elect to resign as CEO and would be entitled to severance consisting of six months’ pay of his annual base salary, to be
paid by the Company prior to March 15, 2021.
In
the event that the Company terminates Mr. Swets without cause, subject to Mr. Swets execution of a general release of waiver and
claims in favor of the Company and such general release becoming fully irrevocable, Mr. Swets will be entitled to severance consisting
of two years of annual base salary continuation and benefits continuation to the extent permitted by, and in accordance with,
the Company’s applicable health and welfare plans. In the event that the parties mutually agree to terminate Mr. Swets’
employment regardless of the reason, subject to Mr. Swets’ execution of a general release and such general release becoming
fully irrevocable, Mr. Swets will be entitled to severance consisting of one year of annual base salary continuation and benefits
continuation to the extent permitted by, and in accordance with, the Company’s applicable health and welfare plans. The
Company has agreed to purchase a disability insurance policy and life insurance policy as soon as practicable following the execution
of the Swets Agreement on such terms as are appropriate for a chief executive officer of a publicly traded company registered
with the SEC and listed for trading on a national securities exchange.
The
Swets Agreement provides that Mr. Swets is subject to post-termination confidentiality covenants.
As
a result of the Swets Agreement, the consulting agreement previously entered into on June 18, 2020, as described in the Form 8-K
filed by the Company with the SEC on June 23, 2020, has been terminated in accordance Section 2.4 of the Swets Agreement.
The
foregoing description is not complete and is qualified in its entirety by reference to the full text of the Swets Agreement, filed
herewith as Exhibit 10.1, which is incorporated herein by reference.