Item
5.02 |
Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers, Compensatory Arrangements of Certain Officers. |
On
March 11, 2022, Ian K. Patel was appointed by CEA Industries Inc. (the “Company”) as the Company’s Chief Financial
Officer, Treasurer and Secretary. In connection with this appointment, the Company and Mr. Patel entered into an employment agreement,
which was approved by the Compensation Committee and the Board of Directors (“Board”) on March 11, 2022 (the “Employment
Agreement”). A copy of the Employment Agreement is attached hereto as Exhibit 10.1.
There
were no arrangements or understandings between Mr. Patel and the Company or with any other persons as the reason Mr. Patel was appointed
as the Company’s Chief Financial Officer, Treasurer and Secretary.
Mr.
Patel is employed on an at will basis, provided that either the Company or Mr. Patel may terminate the Employment Agreement, at any time,
with or without cause, by providing the other party with 30-days’ prior written notice. In the event Mr. Patel’s employment
is terminated by the Company without cause, Mr. Patel will be entitled to receive his base salary for an additional 30 days.
Mr.
Patel will receive an annualized base salary of $275,000. Mr. Patel is also eligible to receive an annual incentive bonus as described
in the Company’s Annual Incentive Compensation Plan and Policy. Mr. Patel is entitled to participate in those various employee
benefits that the Company generally offers to its employees from time to time. The Employment Agreement also provides for typical activity
restrictions such as non-competition and assignment of invention provisions.
On
March 11, 2022, as required by the Employment Agreement, the Board granted Mr. Patel non-qualified stock options to purchase up to 15,000
shares of the Company’s common stock, which vest as follows: (i) 2,000 options vested and became exercisable on the grant date,
(ii) 3,000 options vest and become exercisable on March 11, 2023, if Mr. Patel continues to be employed by the Company on that date,
(iii) 5,000 options vest and become exercisable on March 11, 2024, if Mr. Patel continues to be employed by the Company on that date,
and (iv) 5,000 options vest and become exercisable on March 11, 2025, if Mr. Patel continues to be employed by the Company on that date.
The exercise price of these options was based on the closing price of the Company’s common stock on March 10, 2022. In the event
of a change of control involving the Company, any unvested stock options will become vested on the date of the change of control, provided
Mr. Patel is employed on the date of the change of control.
Beginning
with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, Mr. Patel will be designated as the Company’s
Principal Financial and Accounting Officer and will sign the Company’s periodic reports to be filed with the Securities and Exchange
Commission.
Biographical
and other information for Mr. Patel is set forth below:
Mr.
Patel served as an advisor to Maxwell Financial Labs, LLC, from October 2021 to March 2022. From July 2018 through September 2021, he
served as Vice President of Finance and Investor Relations for FourPoint Energy LLC, where he was responsible for finance, treasury,
corporate development and strategy. Prior to FourPoint, Mr. Patel served as Chief Financial Officer of S&A Resources, LLC, a private
equity backed oil and gas company. Mr. Patel began his career as an investment banker with Citigroup and Goldman Sachs. During
his investment banking career, Mr. Patel executed over $30 billion of M&A/advisory assignments and led capital market transactions
of over $15 billion for clients.
He
holds an MBA from the Wharton School at the University of Pennsylvania, a JD from Harvard Law School, and a BS from the University of
California at Riverside.