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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
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Appointment of Jeffery D. Johnson as Chief
Executive Office
On August 25, 2021, Jeffery
D. Johnson was appointed as the chief executive officer of the Company, beginning on August 25, 2021.
Prior to joining the Company,
from April 2020 through August 2021, Mr. Johnson was a private consultant. From February 2017 through June 2020, Mr. Johnson was Senior
Vice President for Commercial Prepaid at the Netspend Corporation, a Global Payments company. While at Netspend, Mr. Johnson was responsible
for corporate strategy, market planning, sales execution, and operations for a $100M+ division of Netspend, among other things. From 2012
to January 2017, Mr. Johnson was the Chief Sales and Marketing Officer, and the Chief Revenue Officer at Card Compliant, LLC, which is
a SaaS-based regulatory compliance solutions company serving the prepaid and stored value card industry. At Card Compliant, Mr. Johnson
was the senior executive accountable for all aspects of direct and indirect sales, marketing strategy, and partner development. From 2006
through 2012, Mr. Johnson worked at the First Data Corporation (now FISERV), where he assumed the role of Senior Vice President and Division
Manager of Prepaid Services from 2009 through 2012. Prior to that, Mr. Johnson was the Vice President of Sales from 2004 through 2006
for the Stored Value Solutions, a Fleetcor Company.
Mr. Johnson was a Board Member
of the Innovative Payments Association from 2012 through 2020, and is currently a Board Member of DataSeers. Mr. Johnson holds a Bachelor
of Business Administration degree from the Thomas More College.
On August 25, 2021, Cuentas,
Inc. (the “Company”) and Jeffery D. Johnson entered into an employment agreement (the “Employment Agreement”),
pursuant to which Mr. Johnson agreed to serve as the Company’s new Chief Executive Officer. The Employment Agreement commenced
and became effective as of August 25, 2021, and shall continue for an initial term of three (3) years, ending on August 24, 2024. The
initial term would be automatically extended for additional one (1) year periods on the same terms and conditions as set out in the Employment
Agreement; however, the Employment Agreement will not renew automatically if either the Company or Mr. Johnson provide a written notice
to the other of a decision not to renew, which notice must be given at least ninety (90) days prior to the end of the initial term or
any subsequently renewed one (1) year term.
Pursuant to the terms of the
Employment Agreement, Mr. Johnson will receive an annual base salary of three hundred thousand dollars ($300,000) per year, and will be
eligible for an annual incentive payment of up to one hundred percent (100%) of his base salary, which annual incentive payment shall
be based on the Company’s performance as compared to the goals established by the Company’s Board of Directors in consultation
with Mr. Johnson. This annual incentive shall have a twelve (12) month performance period and will be based on a January 1 through December
31 calendar year, with Mr. Johnson’s entitlement to the annual incentive and the amount of such award, if any, remaining subject
to the good faith discretion of the Board of Directors. Pursuant to the terms of the Employment Agreement, Mr. Johnson has the option
to have any such earned annual incentive be paid in fully vested shares of the Company’s Common Stock, but must elect such option
by the end of the first quarter following the relevant performance calendar year period.
In consideration of Mr. Johnson’s
agreement to enter into the Employment Agreement and remain with the Company, Mr. Johnson will receive a one-time signing bonus in the
amount of two hundred thousand dollars ($200,000), which is to be paid in two (2) installments: the first installment of one hundred thousand
dollars ($100,000) to be paid on the Company’s next regular payday following the hire date of August 25, 2021, and the second installment
of one hundred thousand dollars ($100,000) to be paid on Company’s next regular payday following the first (1st) anniversary
of the hire date of August 25, 2021, provided that Mr. Johnson is employed by the Company on such relevant payment date.
Pursuant to the terms of the
Employment Agreement, subject to the shareholder approval of the Company’s 2021 Share Incentive Plan, the Company shall issue to
Mr. Johnson an option to purchase up to an aggregate of five hundred thousand (500,000) shares of Common Stock; furthermore, if the Company’s
shareholders do not approve the Company’s 2021 Share Incentive Plan, Mr. Johnson will have the right to immediately terminate the
Employment Agreement. These options shall vest on the following schedule: (1) options to purchase one hundred twenty-five thousand (125,000)
shares of Common Stock shall vest on the date of the grant; and, (2) one hundred twenty-five thousand (125,000) shares of Common Stock
shall vest on each of the first, second and third year anniversary of the date of grant, provided that Mr. Johnson remains continuously
employed with the Company through such vesting date. In case of a change in control event, as defined under the terms of the Employment
Agreement, any outstanding unvested portion of the options shall become fully vested and exercisable, as long as Mr. Johnson remained
continuously employed with the Company through such date. Additionally, Mr. Johnson shall be entitled to a bonus payment in connection
with a change in control of the Company, which bonus shall be based upon a percentage of the cash consideration received by shareholders
of the Company in the change in control transaction, as determined in the sole discretion of the Board of Directors of the Company.
Under the Employment Agreement,
Mr. Johnson is subject to certain obligations and restrictive covenants, including, but not limited to: confidentiality, non-competition,
non-solicitation, and non-disparagement, among others. The Employment Agreement is governed by the laws of the State of Florida. The Employment
Agreement may be terminated by the Company for cause or without cause, and by Mr. Johnson for good reason or without good reason, as such
terms are defined under the Employment Agreement.
The description of Mr. Johnson’s
Employment Agreement set forth above is qualified in its entirety by reference to the full text of the Employment Agreement, a copy of
which is attached as Exhibit 10.1 to this Current Report on Form 8-K, and is incorporated herein by reference.
On August 30, 2021, the Company issued a press release announcing the
appointment of Mr. Johnson. A copy the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
Founder/Executive Chairman Compensation
Agreement with Arik Maimon, and Founder/Executive Vice-Chairman Compensation Agreement with Michael De Prado
On August 26, 2021, the Company
and Arik Maimon entered into a Founder/Executive Chairman Compensation Agreement (the “Chairman Compensation Agreement”).
Additionally, on August 26, 2021, the Company and Michael De Prado entered into a Founder/Executive Vice-Chairman Compensation Agreement
(the “Vice-Chairman Compensation Agreement” and collectively with the Chairman Compensation Agreement, the “Chairman
Compensation Agreements”). The term of each of these Chairman Compensation Agreements became effective as of August 26, 2021
and replaces any prior arrangements or employment agreements between the Company and each of Mr. Maimon and Mr. De Prado (each such individual,
an “Executive” and together, the “Executives”).
Under the terms of the Chairman
Compensation Agreements, the Executives agreed to be employed by the Company for an initial continuous twelve-month term beginning on
the effective date of August 26, 2021, and ending on August 25, 2022. The initial term would be automatically extended for additional
one (1) year periods on the same terms and conditions as set out in the Chairman Compensation Agreements; however, the Chairman Compensation
Agreements, respectively, will not renew automatically if either the Company or the respective Executive provide a written notice to the
other of a decision not to renew, which notice must be given at least ninety (90) days prior to the end of the initial term or any subsequently
renewed one (1) year term.
Pursuant to the terms of the
Chairman Compensation Agreement, Mr. Maimon will receive an annual base salary of two hundred ninety-five thousand dollars ($295,000)
per year, and pursuant to the terms of the Vice-Chairman Compensation Agreement, Mr. De Prado will receive an annual base salary of two
hundred seventy-five thousand dollars ($275,000) per year, and each will be eligible for an annual incentive payment of up to one hundred
percent (100%) of their respective base salary, which annual incentive payment shall be based on the Company’s performance as compared
to the goals established by the Company’s Board of Directors in consultation with each Executive, respectively. This annual incentive
shall have a twelve (12) month performance period and will be based on a January 1 through December 31 calendar year, with the Executives’
entitlement to the annual incentive and the amount of such award, if any, remaining subject to the good faith discretion of the Board
of Directors. Any such annual incentive shall be paid by the end of the second quarter following the calendar year to which each respective
Executive’s performance relates. Pursuant to the terms of the Chairman Compensation Agreements, each Executive has the option to
have any such earned annual incentive be paid in fully vested shares of the Company’s Common Stock, but must elect such option by
the end of the first quarter following the relevant performance calendar year period.
In the event of a change in control of the Company, as defined under
the terms of the Chairman Compensation Agreements, that takes place (i) during the term of the Chairman Compensation Agreement or (ii)
prior to the date which is twenty-four (24) months from the effective date of the Chairman Compensation Agreements, if the Executive’s
employment otherwise terminates prior to such date (other than if the Executive’s employment was terminated for cause or the Executive
resigned his employment without good reason, as such terms are defined under the Chairman Compensation Agreements), each respective Executive
shall be entitled to a bonus payment equal to two and one-half percent (2.5%) of the cash consideration received by the shareholders of
the Company in the change in control transaction.
Under the Chairman Compensation
Agreements, each Executive is subject to certain obligations and restrictive covenants, including, but not limited to: confidentiality,
non-competition, non-solicitation, and non-disparagement, among others. The Chairman Compensation Agreements are each governed by the
laws of the State of Florida. The Chairman Compensation Agreements may be terminated by the Company for cause or without cause, and by
each respective Executive for good reason or without good reason, as such terms are defined under the Chairman Compensation Agreements.
The description of the Chairman
Compensation Agreements set forth above is qualified in its entirety by reference to the full text of the respective Chairman Compensation
Agreements, copies of which are attached as Exhibit 10.2 (for Mr. Maimon) and Exhibit 10.3 (for Mr. De Prado) to this Current Report on
Form 8-K, and are incorporated herein by reference.