Item
5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
Thomas
Healy
On
December 2, 2020, Hyliion Holdings Corp. (the “Company,” “its,” “we,” “our,” or
“us”) entered into an employment agreement with Thomas Healy, its Chief Executive Officer, which was retroactively
effective to October 1, 2020, the date the Company closed the initial business combination with Hyliion Inc. Mr. Healy’s
employment agreement provides for an initial three-year term ending on October 1, 2023, and automatically renews for
successive 12-month terms thereafter unless at least 180 days prior to the expiration of any then-existing term either party
notifies the other of non-renewal. Pursuant to the terms of his employment agreement, Mr. Healy receives an annual base salary
of $650,000 and is eligible for discretionary cash bonuses.
In
addition, pursuant to the terms of his employment agreement, and subject to the approval of the compensation committee of our
Board of Directors (the “Board”), Mr. Healy is eligible to receive (i) annual time-based restricted stock
unit (“RSU”) awards, in each case covering a number of shares of our common stock determined by the Board’s
compensation committee in its sole discretion, and (ii) a one-time performance-based RSU award covering 1,500,000 shares
of our common stock. Each time-based award (if any) will vest over a four-year period, with 25% vesting on the one-year anniversary
of the first quarterly vesting date (as defined in Mr. Healy’s employment agreement) following the grant date, and 6.25%
vesting on each quarterly vesting date thereafter, subject to Mr. Healy’s continuous service through each applicable
vesting date. The performance-based award will vest based upon the achievement of objective performance criteria, as determined
by the Board’s compensation committee prior to the grant date, during the period from October 1, 2020 through December 31,
2025, subject to Mr. Healy’s continuous service through each applicable vesting date. We currently expect the performance-based award
will be granted to Mr. Healy in December 2020.
Pursuant
to the terms of Mr. Healy’s employment agreement, if Mr. Healy’s employment with us is terminated (i) due to our non-renewal,
(ii) by us without “cause”, or (iii) by Mr. Healy for “good reason” (such terms as defined in Mr. Healy’s
employment agreement), then, provided Mr. Healy timely executes and does not revoke a release of claims in our favor and complies
with the confidentiality, non-competition, non-solicitation, and intellectual property provisions set forth in his employment
agreement, he will receive the following severance benefits: (a) continuing payments of his then-current annual base salary for
36 months; (b) 100% accelerated vesting and, if applicable, exercisability of the then-unvested portion of each of his outstanding
equity awards (other than any equity awards subject to performance-based or other similar vesting criteria) that was granted to
him more than one year prior to the termination date; (c) each of his then-outstanding and unexercised stock options (to the extent
vested) will remain exercisable for up to 36 months following the termination date; and (d) reimbursement on a monthly basis for
the difference between the amount he pays to continue coverage for himself and his eligible dependents under our group health
plans pursuant to COBRA and the employee contribution amount that our similarly situated employees pay for the same or similar
coverage, for up to 18 months.
In
addition, Mr. Healy’s employment agreement provides that if Mr. Healy’s employment with us is terminated due to his
death, all of his then-outstanding and unvested equity awards (other than any equity awards subject to performance-based or other
similar vesting criteria) will immediately vest in full and, if applicable, become fully exercisable.
Mr.
Healy’s employment agreement also provides that in the event of a change in control (as defined in the 2020 Plan), and provided
Mr. Healy remains in continuous service through immediately prior to such change in control, the performance-based RSU award described
above will vest immediately prior to such change in control based upon the actual achievement of the applicable performance vesting
criteria to which such award is subject. In addition, if any annual time-based RSU award that Mr. Healy receives pursuant to his
employment agreement is not assumed, substituted for, or continued by the successor corporation (or a parent or subsidiary thereof)
in the event of a change in control, or if Mr. Healy’s employment agreement is not assumed or replaced with a substantially
similar (or more beneficial) employment agreement (excluding performance-based equity awards) by the successor corporation (or
a parent or subsidiary thereof), such award will fully vest and will be settled immediately prior to the consummation of such
change in control, subject to Mr. Healy’s continued service through immediately prior to such change in control.
Patrick
Sexton
On
December 2, 2020, we entered into an employment agreement with Mr. Sexton, our Chief Technology Officer, which was retroactively
effective to October 1, 2020, the date we closed the initial business combination with Hyliion Inc. Mr. Sexton’s employment
agreement provides for an initial three-year term ending on October 1, 2023, and automatically renews for successive
12-month terms thereafter unless at least 180 days prior to the expiration of any then-existing term either party notifies
the other of non-renewal. Pursuant to the terms of his employment agreement, Mr. Sexton receives an annual base salary of
$450,000 and is eligible for discretionary cash bonuses.
In
addition, pursuant to the terms of his employment agreement, and subject to the approval of the Board’s compensation committee,
Mr. Sexton is eligible to receive (i) annual time-based RSU awards, with the first annual time-based award covering
125,000 shares of our common stock and each subsequent annual time-based award covering a number of shares of our common stock
with a grant date value equal to $1,250,000 (but for purposes of calculating the grant date value of each subsequent annual time-based
award, our common stock will not be deemed to have a value less than $10.00 per share), and (ii) a one-time performance-based RSU
award covering 500,000 shares of our common stock. Each time-based award will vest over a four-year period, with 25%
vesting on the one-year anniversary of the first quarterly vesting date (as defined in Mr. Sexton’s employment agreement)
following the grant date (or on November 15, 2021 in the case of the initial annual time-based award that Mr. Sexton receives),
and 6.25% vesting on each quarterly vesting date thereafter, subject to Mr. Sexton’s continuous service through each
applicable vesting date. The performance-based award will vest based upon the achievement of objective performance criteria,
as determined by the Board’s compensation committee prior to the grant date, during the period from October 1, 2020 through
December 31, 2025, subject to Mr. Sexton’s continuous service through each applicable vesting date. We currently
expect the time-based award and performance-based award will be granted to Mr. Sexton in December 2020.
Pursuant
to the terms of Mr. Sexton’s employment agreement, if Mr. Sexton’s employment with us is terminated (i) due to our
non-renewal of the term, (ii) by us without “cause”, or (iii) by Mr. Sexton for “good reason” (such terms
as defined in Mr. Sexton’s employment agreement), then, provided Mr. Sexton timely executes and does not revoke a release
of claims in our favor and complies with the confidentiality, non-competition, non-solicitation, and intellectual property provisions
set forth in his employment agreement, he will receive the following severance benefits: (a) continuing payments of his then-current
annual base salary for 12 months; (b) 100% accelerated vesting and, if applicable, exercisability of the then-unvested portion
of each of his outstanding equity awards (other than (1) any equity awards subject to performance-based or other similar vesting
criteria, and (2) any stock options or any other equity awards that were granted to Mr. Sexton under the 2016 Plan) that was granted
to him more than one year prior to the termination date; (c) each of his then-outstanding and unexercised stock options (to the
extent vested) will remain exercisable for up to 36 months following the termination date; and (d) reimbursement on a monthly
basis for the difference between the amount he pays to continue coverage for himself and his eligible dependents under our group
health plans pursuant to COBRA and the employee contribution amount that our similarly situated employees pay for the same or
similar coverage, for up to 12 months.
In
addition, Mr. Sexton’s employment agreement provides that if Mr. Sexton’s employment with us is terminated due to
his death, all of his then-outstanding and unvested equity awards (other than any equity awards subject to performance-based or
other similar vesting criteria) will immediately vest in full and, if applicable, become fully exercisable.
Mr.
Sexton’s employment agreement also provides that in the event of a change in control (as defined in the 2020 Plan), and
provided Mr. Sexton remains in continuous service through immediately prior to such change in control, the performance-based RSU
award provided for in Mr. Sexton’s employment agreement will vest immediately prior to such change in control based upon
the actual achievement of the applicable performance vesting criteria to which such award is subject. In addition, if any annual
time-based RSU award that Mr. Sexton receives pursuant to his employment agreement is not assumed, substituted for, or continued
by the successor corporation (or a parent or subsidiary thereof) in the event of a change in control, or if Mr. Sexton’s
employment agreement is not assumed or replaced with a substantially similar (or more beneficial) employment agreement (excluding
performance-based equity awards) by the successor corporation (or a parent or subsidiary thereof), such award will fully vest
and will be settled immediately prior to the consummation of such change in control, subject to Mr. Sexton’s continued service
through immediately prior to such change in control.
The
foregoing descriptions of Mr. Healy’s and Mr. Sexton’s respective employment agreements are qualified in their entirety
by the full texts of such employment agreements, copies of which are filed as Exhibits 10.1 and 10.2 hereto and incorporated herein
by reference.