Item 1.01 Entry Into a Material Definitive
Agreement.
On March 31, 2020, as part of PEDEVCO
Corp.’s (the “Company”,
“PEDEVCO”,
“we”
and “us”) efforts to reduce operating and corporate costs,
the independent Compensation Committee of the Company’s Board
of Directors approved a 20% reduction in salary for all of the
Company’s salaried employees, effective April 1,
2020.
In connection with the 20% salary reduction, on
March 31, 2020, the Company and each of Mr. Douglas J. Schick, the
Company’s President, and Mr. Clark R. Moore, the
Company’s Executive Vice President, General Counsel, and
Secretary, entered into amendments to their respective employment
agreements (the “Amendments”)
to effect the salary reductions on a temporary basis, until such
time as the Company determines, in its reasonable discretion, that
oil markets have recovered to acceptable levels (the
“Salary
Reduction Period”). The
Amendments to Messrs. Schick’s and Moore’s employment
agreements do not, however, reduce the amount of severance
compensation that such executive would receive under their
respective employment agreements in the event of an applicable
termination of their respective employment, subject to the terms of
such employment agreements.
In addition, the amendment entered into with Mr.
Schick includes a provision whereby, in the event Mr.
Schick’s employment with the Company is voluntarily
terminated by him due to the Company failing to pay his base salary
(as currently reduced as disclosed above) without his written
consent, the Company will (a) continue to pay Mr. Schick an
amount equal to his base salary as in effect immediately before his
termination of employment on the same bi-monthly schedule and
amounts (less required withholdings) as he received such salary
payments prior to his date of termination (the “Cash Payments”), which
Cash Payments shall be reported by the Company on IRS Form 1099 as
income to Mr. Schick and will continue until the earlier to occur
of (x) the date that is twelve (12) months after the termination of
his employment or (y) the date that he commences employment with
another employer that pays him a base salary equal to, or greater
than, his base salary as in effect immediately before his
termination of employment, provided that, if his new employer pays
him less than his Company base salary, he shall only be entitled to
Cash Payment amounts going forward through the remainder of the
twelve (12) month term equal to (i) his Company base salary at the
time of his termination minus the salary he receives from his new
employer; and (b) continue to vest his outstanding Company
restricted stock and options exercisable for Company capital stock
issued to him by the Company which are then held by him on his date
of termination on their then-current vesting schedules during the
period of up to twelve (12) months that he continues to receive the
Cash Payments, in exchange for a full and complete release of
claims against the Company, its affiliates, officers and directors
in a form reasonably acceptable to the Company. Upon the date that
his Cash Payments discontinue, he shall no longer continue to vest
into any outstanding Company restricted stock or options. The Cash
Payments payable to Mr. Schick and the other amounts, based on his
salary, which may be due to him upon termination of his offer
letter upon certain events, and subject to the terms thereof,
during the Salary Reduction Period will continue to be based on Mr.
Schick’s non-reduced salary.
As
previously disclosed, Dr. Simon Kukes, our Chief Executive Officer
and director, has agreed to receive an annual salary of $1 as his
compensation for serving as Chief Executive Officer of the Company
and as a member of the Board of Directors and to not charge the
Company for any personal business expenses he incurs in connection
with such positions. We do not currently have a formal written
agreement in place with Dr. Kukes. To date, Dr. Kukes has not
accepted any salary from the Company (including his $1 annual
compensation).
The foregoing descriptions of the Amendments do
not purport to be complete and are qualified in their entirety by
reference to the Amendments, copies of which are attached
as Exhibit
10.3 and Exhibit
10.5, respectively, to this
Current Report on Form 8-K and incorporated herein by
reference.