Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Resignation of Chief Financial Officer and General Release and Severance
Agreement
Effective as of January 14, 2022 (the "Smith Resignation Date"), Curtis Smith,
who served as the Chief Financial Officer of AYRO, Inc. (the "Company") resigned
from his role as an officer and employee of the Company.
On January 14, 2022, in connection with Mr. Smith's resignation, the Company and
Mr. Smith entered into a General Release and Severance Agreement (the "Smith
Severance Agreement"). Pursuant to the Smith Severance Agreement, Mr. Smith will
be entitled to receive a cash separation payment in the amount of $237,500.00,
less applicable tax deductions and withholdings, payable in a lump sum within 8
days of January 21, 2022.
The Smith Severance Agreement provides Mr. Smith the opportunity to revoke his
acceptance of the Smith Severance Agreement within eight calendar days of the
Smith Resignation Date, in which case the Smith Severance Agreement shall not be
effective and shall be deemed void.
In exchange for the consideration provided to Mr. Smith in the Smith Severance
Agreement, Mr. Smith and the Company have agreed to mutually waive and release
any claims in connection with Mr. Smith's hiring, compensation, benefits,
employment, or separation from employment with the Company.
In connection with the execution of the Smith Severance Agreement, Mr. Smith's
existing executive employment agreement, as amended (the "Smith Employment
Agreement"), was terminated; provided, however, that certain surviving customary
confidentiality provisions and related covenants remain in full force and
effect. The Smith Severance Agreement also provides for certain customary mutual
covenants regarding confidentiality, indemnification and non-disparagement.
Under the Smith Severance Agreement, the treatment of any outstanding equity
awards to Mr. Smith shall be determined in accordance with the terms of the
Company's 2017 Long Term Incentive Plan and the applicable award agreement.
Termination of Engagement of Chief of Business Development and General Release
Agreement
Effective as of January 14, 2022 (the "Groh Termination Date"), Brian Groh, who
served as the Company's Chief of Business Development, terminated his engagement
with the Company. As such, the independent contractor agreement between the
Company and 2196005 Ontario, Inc., an Ontario corporation owned and controlled
by Mr. Groh, dated September 16, 2019 (along with any statements of work and
addenda thereto, the "Groh Independent Contractor Agreement") was terminated.
On January 14, 2022, in connection with the termination of the Groh Independent
Contractor Agreement, the Company and Mr. Groh entered into a General Release
Agreement (the "Groh Release Agreement"). Pursuant to the Groh Release
Agreement, Mr. Groh will be entitled to receive a cash separation payment in the
amount of $237,500.00, payable in a lump sum following the expiration of 8 days
following January 14, 2022.
In exchange for the consideration provided to Mr. Groh in the Groh Release
Agreement, Mr. Groh and the Company have agreed to mutually waive and release
any claims in connection with Mr. Groh's compensation, engagement, or cessation
from engagement with the Company.
In connection with the execution of the Groh Release Agreement, the Groh
Independent Contractor Agreement was terminated; provided, however, that certain
surviving customary confidentiality provisions and related covenants remain in
full force and effect. The Groh Release Agreement also provides for certain
customary mutual covenants regarding confidentiality, indemnification and
non-disparagement.
Under the Groh Release Agreement, the treatment of any outstanding equity awards
to Mr. Groh shall be determined in accordance with the terms of the Company's
2017 Long Term Incentive Plan and the applicable award agreement.
Termination of Engagement of Chief Marketing Officer and General Release
Agreement
Effective as of January 14, 2022 (the "Perley Termination Date"), Richard
Perley, who served as the Company's Chief Marketing Officer, terminated his
engagement with the Company. As such, the independent contractor agreement
between the Company and PerlTek, a corporation owned and controlled by Mr.
Perley, dated August 27, 2018 (along with any statements of work and addenda
thereto, the "Perley Independent Contractor Agreement") was terminated.
On January 14, 2022, in connection with the termination of the Perley
Independent Contractor Agreement, the Company and Mr. Perley entered into a
General Release Agreement (the "Perley Release Agreement"). Pursuant to the
Perley Release Agreement, Mr. Perley will be entitled to receive a cash
separation payment in the amount of $237,500.00, payable in a lump sum following
the expiration of 8 days following January 14, 2022.
In exchange for the consideration provided to Mr. Perley in the Perley Release
Agreement, Mr. Perley and the Company have agreed to mutually waive and release
any claims in connection with Mr. Perley's compensation, engagement, or
cessation from engagement with the Company.
In connection with the execution of the Perley Release Agreement, the Perley
Independent Contractor Agreement was terminated; provided, however, that certain
surviving customary confidentiality provisions and related covenants remain in
full force and effect. The Perley Release Agreement also provides for certain
customary mutual covenants regarding confidentiality, indemnification and
non-disparagement.
Under the Perley Release Agreement, the treatment of any outstanding equity
awards to Mr. Perley shall be determined in accordance with the terms of the
Company's 2017 Long Term Incentive Plan and the applicable award agreement.
The descriptions of the terms of the Smith Severance Agreement, the Groh Release
Agreement, and the Perley Release Agreement contained in this Item 5.02 are
qualified in their entirety by reference to the full text of each agreement,
copies of which are attached hereto as Exhibits 10.1, 10.2, and 10.3,
respectively, and incorporated herein by reference.
Appointment of Interim Chief Financial Officer
On January 14, 2022, the Board appointed David E. Hollingsworth as Interim Chief
Financial Officer of the Company, effective as of January 14, 2022, to serve
until a successor is chosen and qualified, or until his earlier resignation or
removal. Mr. Hollingsworth will also serve as the Company's principal accounting
officer and principal financial officer.
Mr. Hollingsworth, age 41, is a senior level accounting professional with
extensive experience in financial reporting, analysis, regulation, and
supervision. Since March 2021, Mr. Hollingsworth has served as a consultant with
Bridgepoint Consulting, a provider of financial, technology, and management
consulting services, and has served as the Company's Controller under a
consulting agreement between the Company and Bridgepoint Consulting. From
January 2020 until March 2021, he served as Controller at Wondercide LLC, a pest
control manufacturer, during which time he oversaw Wondercide's financial team
through growth of $8.9 million to $18.8 million. Before that, he worked as a
Controller Consultant at Bridgepoint Consulting from October to December 2019.
From September 2018 to September 2019, Mr. Hollingsworth served as Financial
Controller of CPI Products, a manufacturer of plastic products, where he oversaw
accounting and financial functions, directed human resources for corporate staff
at three manufacturing locations, and designed and implemented department
performance criteria and tracking. From May 2015 until August 2018, Mr.
Hollingsworth served as Corporate Controller of Sunworks Inc, a provider of
solar power systems. Mr. Hollingsworth holds a Master of Business Administration
from Weber State University and a Bachelor of Science degree in Accounting from
Brigham Young University - Idaho.
There is no family relationship between Mr. Hollingsworth and any director or
executive officer of the Company. There are no transactions between Mr.
Hollingsworth and the Company that would be required to be reported under
Item 404(a) of Regulation S-K of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 General Release and Severance Agreement, by and between the
Company and Curtis Smith, dated as of January 14, 2022
10.2 General Release Agreement, by and between the Company and Brian
Groh, dated as of January 14, 2022
10.3 General Release Agreement, by and between the Company and Richard
Perley, dated as of January 14, 2022
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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