Item
5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers
Appointment
of Chief Financial Officer
On
February 23, 2021, COMSovereign Holding Corp. (the “Company”) announced the appointment of Martin R. Wade III
as the Company’s Chief Financial Officer, effective February 20, 2021.
Mr. Wade, age 71, has spent 40 years advising
senior management and boards of directors on more than 200 business strategy, acquisition, divestiture and restructuring projects.
Since 2007, Mr. Wade has been a Partner in Residence with Catalyst Acquisition Group, an investment firm focusing on the
acquisition and restructuring of distressed companies in the United States and internationally. Since 2007, Mr. Wade also has been
Chairman and Chief Executive Officer of Broadcaster, Inc., a company engaged in the internet service provider and applications
businesses; since July 2019, Mr. Wade has been Chairman and Chief Executive Officer of VITA Mobile Systems, Inc. (OTC:VMSI), a
technology company focusing on digital imaging in mobile devices, collection of big data and development of artificial intelligence;
since September 2019, Mr. Wade has been Chairman and Chief Executive Officer of Madice.com., an ecommerce distributor of hemp-based
CBD products; since October 2020, Mr. Wade has been Chairman and Chief Executive Officer of FOX Automotive USA, Inc., an electric
vehicle manufacturer; and from August 2017 to January 2019, Mr. Wade was interim Chief Executive Officer of Payless Shoesource,
Inc., a discount footwear retailer. Payless Shoesource, Inc. filed for Chapter 11 bankruptcy protection in February 2019. Since
2010, Mr. Wade has also been a director of MNG Enterprises, Inc., a company that owns media properties such as The Denver Post,
San Jose Mercury News, Orange County Register and the Boston Herald. In addition, since October 2020, Mr. Wade has been a director
of Oyster Enterprises Acquisition Corp. (NASDAQ: OSTRU), a special purpose acquisition company. From 2001 to August 2020,
Mr. Wade was a director of Pyxus International, Inc., formerly known as Alliance One International, LLC. (OTC: PYYX), an international
leaf tobacco storage, sales and distribution company that filed for Chapter 11 bankruptcy protection in June 2020. Mr. Wade’s
career includes holding senior-level positions with investment banking firms, including Lehman Brothers and Salomon Brothers, and
serving as National Head of Investment Banking at Price Waterhouse LLP. Mr. Wade graduated from West Virginia University in 1971
with a B.S. in Business Administration and was commissioned as a 2nd Lt. in the U.S. Air Force. In 1975, Mr. Wade was honorably
discharged from the USAF holding the rank of Captain. Mr. Wade also received an MBA degree from the University of Wyoming in 1975.
Pursuant
to the terms of an Employment Agreement, dated as of February 19, 2021 (the “Employment Agreement”), between
the Company and Mr. Wade, Mr. Wade will receive (i) an annual base salary of $225,000; (ii) an initial option grant of ten-year
options to purchase 150,000 shares of the Company’s common stock for a purchase price of $4.70 per share, which options
will vest on February 20, 2022; and (iii) the right to participate in all benefit plans offered to the Company’s senior
executive officers.
The
Employment Agreement also provides for certain severance benefits upon a termination by the Company without “cause”
or by Mr. Wade for “good reason.” In the event of a termination by the Company without “cause” or by Mr.
Wade for “good reason”, Mr. Wade would be entitled to (i) continued payment of his base salary for the lesser of six
(6) months or the remaining term of the Employment Agreement, subject to Mr. Wade signing a timely and effective separation agreement
containing a release of all claims against the Company and other customary terms.
The
foregoing description of the Employment Agreement does not purport to be complete and is qualified in its entirety by reference
to the Employment Agreement, a copy of which is attached to this Current Report as Exhibit 10.1 and incorporated herein by reference.
There
are no family relationships between Mr. Wade and any director or other executive officer of the Company, nor are there any transactions
to which the Company was or is a participant and in which Mr. Wade has a material interest subject to disclosure under Item 404(a)
of Regulation S-K. There are no arrangements or understandings between Mr. Wade and any other person pursuant to which he was
selected as an officer of the Company.
Departure
of Brian Mihelich
On
February 23, 2021, the Company announced the departure of Brian T. Mihelich, the Company’s Chief Financial Officer, to pursue
other interests, including spending more time with his family. Mr. Mihelich and the Company mutually decided that, while Mr. Mihelich
will step down as Chief Financial Officer effective upon Mr. Wade joining the Company, Mr. Mihelich would remain as an employee
of the Company through March 5, 2021, at which time he will become a consultant to the Company through March 19, 2021 to assist
with the transition of his former duties as Chief Financial Officer to Mr. Wade and assist with the Company’s 2020 year-end
audit.
On
February 19, 2021, the Company and Mr. Mihelich entered into a separation agreement and general release pursuant to which Mr.
Mihelich (i) will be paid his current base salary through March 5, 2021, and (ii) will be entitled to a lump sum severance payment
in the amount of $50,000, which will be grossed up for federal and state income taxes. In addition, Mr. Mihelich will be entitled
to a lump sum consulting payment in the amount of $50,000. As additional consideration for
the covenants and agreements set forth in the separation agreement and general release, Mr. Mihelich will be entitled to retain
all 216,667 shares of common stock that Mr. Mihelich was granted during his employment, including 33,333 unvested shares that
do not vest until December 2, 2021.
Mr.
Mihelich’s decision to resign as Chief Financial Officer was not related to any disagreements with the Company on any matter
relating to its operations, policies or practices or any issues regarding financial disclosures, accounting or legal matters.