PATRIOT SCIENTIFIC CORPORATION (OTCMKTS:PTSC) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02 of Form 8-K. Other than providing the additional information in Item 5.02 below, no other disclosure in Original Form 8-K is amended by this Amendment.
On November 13, 2020, the Company entered into offer letters (the “Offer Letters”) with Mr. Steven King, President and Chief Executive Officer and Mr. Paul Lytle, Executive Vice President, Chief Financial Officer of the Company. The Company plans to enter into separate employment agreements with each Corporate Officer to cover other aspects of employment not covered in the Offer Letters, including but not limited to, change of control benefits, severance benefits, and other executive benefits.
The following summarizes the material terms of each of the Offer Letters:
Steven King, President and Chief Executive Officer
Mr. King will receive annual cash compensation of $250,000 and annual equity compensation of $150,000 in the form of restricted stock units (“RSU’s). In an effort to conserve capital resources of the Company, Mr. King has agreed to defer 85% of his annual cash compensation until the Company is able to raise at least $4 million in funding in exchange for RSU’s equal to 20% of all deferred cash compensation. In addition to his cash compensation, Mr. King will be granted RSU’s equal to $150,000, which will vest 100% on his first anniversary date of employment or August 31, 2021. In addition, Mr. King will receive a separate long-term incentive grant of RSU’s equal to 25% of his annual base salary that will vest 100% on his second anniversary date of employment or August 31, 2022. All RSU’s will be granted on the tenth (10th) business day following the effective date of the shareholder approved 500-for-1 reverse stock split and the number of RSU’s to be granted will be calculated based on the lowest closing price of the Company’s common stock during the ten (10) trading days following the effective date of the reverse stock split. All RSU’s will be granted to the Company’s 2020 Omnibus Incentive Plan (the “2020 Plan”) and evidenced by an agreement to be entered into thereunder. In addition, Mr. King has a bonus target equal to 45% of his annual base salary and actual payout of his bonus can range from 0% to 200% of his bonus target based on a combination of Company and individual performance goals as determined by the compensation committee of the Board. Mr. King is also eligible to participate in all benefits plans or arrangements which are currently, or may in the future be, offered by the Company from time to time to its executive management employees, including accrued paid-time-off covering vacation and sick time benefits and Company paid group insurance benefits.
Paul Lytle, Executive Vice President, Chief Financial Officer
Mr. Lytle will receive an annual base salary of $347,500, comprised of a combination of cash compensation of $250,000 and equity compensation of $97,500 in the form of RSU’s. In an effort to conserve capital resources of the Company, Mr. Lytle has agreed to defer 85% of his annual cash compensation until the Company is able to raise at least $4 million in funding in exchange for RSU’s equal to 20% of all deferred cash compensation. As part of Mr. Lytle’s annual base salary, he will be granted RSU’s equal to $97,500, which will vest 100% on his first anniversary date of employment or August 31, 2021. In addition, Mr. Lytle will receive a separate long-term incentive grant of RSU’s equal to 25% of his annual base salary that will vest 100% on his second anniversary date of employment or August 31, 2022. All RSU’s will be granted on the tenth (10th) business day following the effective date of the shareholder-approved 500-for-1 reverse stock split and the number of RSU’s to be granted will be calculated based on the lowest closing price of the Company’s common stock during the ten (10) trading days following the effective date of the reverse stock split. All RSU’s will be granted to the Company’s 2020 Plan and evidenced by an agreement to be entered into thereunder. In addition, Mr. Lytle has a bonus target equal to 40% of his annual base salary and actual payout of his bonus can range from 0% to 200% of his bonus target based on a combination of Company and individual performance goals as determined by the compensation committee of the Board. Mr. Lytle is also eligible to participate in all benefits plans or arrangements which are currently, or may in the future be, offered by the Company from time to time to its executive management employees, including accrued paid-time-off covering vacation and sick time benefits and Company paid group insurance benefits.
The foregoing summary of the material terms of the Offer Letters is qualified in its entirety by reference to the Offer Letters, which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the three months ended November 30, 2020 and is incorporated by reference herein.
About PATRIOT SCIENTIFIC CORPORATION (OTCMKTS:PTSC)
Patriot Scientific Corporation (PTSC) is an intellectual-property licensing company. The Company holds a range of patents covering the design of microprocessor chips. Chips with PTSC’s technology are used across the world in products ranging from computers and cameras to printers, automobiles and industrial devices. PTSC’s technology is also used in cell phones and entertainment systems. The Company’s patents, collectively known as the Moore Microprocessor Patent (MMP) Portfolio, are licensed through its joint-venture, Phoenix Digital Solutions. The Company, through Phoenix Digital Solutions, is also engaged in pursuing the commercialization of its microprocessor technologies through broad and open licensing, and by litigating against those who may be infringing on its patents.
