Upon a qualifying termination as described above, Mr. Jacobson’s entitlements in respect of equity-based awards will be determined in accordance with the terms and conditions of the applicable plan and award agreement.
For purposes of the Jacobson Agreement, actions constituting “Just Cause” include (i) any act or omission constituting “just cause” for dismissal without notice under applicable law; (ii) Ms. Shlimak’sMr. Jacobson’s repeated failure or refusal to perform herhis principal duties and responsibilities after notice from the Board, the CEO or other officer of the Company, as applicable; (iii) misappropriation of the funds or property of the Company; (iv) use of alcohol or drugs in violation of the Company’s policies on such use or that interferes with Ms. Shlimak’sMr. Jacobson’s obligations under the applicable agreement, continuing after a single warning; (v) the indictment, arrest or conviction in a court of law for, or the entering of a plea of guilty to, a summary or indictable offense or any crime involving moral turpitude, fraud, dishonesty or theft; (vi) the misuse of Company computers or computer network systems for non-Company business; (vii) engaging in any act (including, without restriction, an act of sexual harassment as determined by the Company) which is a violation of any law, regulation or Company policy; or (viii) any willful or intentional act which injures or could reasonably be expected to injure the reputation, business or business relationships of the Company.
the Jacobson Agreement, “Good Reason” generally means the occurrence of any of the following events without Mr. Jacobson’s consent: (i) the assignment to Mr. Jacobson of duties materially different than the duties under the Jacobson Agreement; (ii) a material diminution in title, status, seniority, reporting relationship, responsibilities or authority; (iii) a material reduction in base salary; or (iv) relocation of Mr. Jacobson’s primary work location except as otherwise permitted under the Jacobson Agreement. For purposes of the Shlimak Agreement, “Good Reason” has a substantially similar meaning as the term used in the Schmidt Agreement, although the definitions vary in some respects among the other NEO employment agreements and are described in greater detail in such agreements.
For purposes of the ShlimakJacobson Agreement, “Disability” generally has a substantially similar meaning as the term used in the Schmidt Agreement, except the determination is made by the Company instead of the Board or a committee thereof.
Buggy Agreement
Pursuant to the employment agreement with Ms. Buggy, upon a termination by the Company of Ms. Buggy’s employment without Just Cause at any time or a resignation by Ms. Buggy for Good Reason, subject to Ms. Buggy’s execution of a release in favor of the Company, the Company would be required to:
(i)in lieu of notice, pay Ms. Buggy the greater of (a) six months of base salary in effect at the time of termination, and (b) the minimum termination pay and severance pay entitlements of Ms. Buggy pursuant to applicable employment standards legislation;
(ii)continue Ms. Buggy’s group insured benefits, if any, until the end of the period noted under (i) above or the date on which Ms. Buggy obtains alternate benefit coverage, whichever occurs first, subject to the minimum requirements of applicable employment standards legislation; and
(iii)subject the terms and conditions of the Company’s annual cash bonus plan in effect at such time, provide Ms. Buggy with an annual performance bonus in respect of the fiscal year in which her employment terminates, prorated based on the number of complete months during which Ms. Buggy was actively employed up to the date of her termination of employment, as specified in the Company’s written notice of termination.
Upon a qualifying termination as described above, Ms. Buggy’s entitlements in respect of equity-based awards will be determined in accordance with the terms and conditions of the applicable plan and award agreement.
For purposes of the Buggy Agreement, actions constituting “Just Cause” include (i) any act or omission constituting “just cause” for dismissal without notice under applicable law; (ii) Ms. Buggy’s repeated failure or refusal to perform her principal duties and responsibilities after notice from the Board, the CEO or other officer of the Company, as applicable; (iii) misappropriation of the funds or property of the Company; (iv) use of alcohol or drugs in violation of the Company’s policies on such use or that interferes with Ms. Buggy’s obligations under the applicable agreement, continuing after a single warning; (v) the conviction in a court of law for, or the entering of a plea of guilty to, a summary or indictable offense or any crime involving moral turpitude, fraud, dishonesty or theft; (vi) engaging in any act (including, without restriction, an act of sexual harassment) which is a violation of any law, regulation or Company policy; or (viii) any willful or intentional act which injures or could reasonably be expected to injure the reputation, business or business relationships of the Company.
For purposes of the Buggy Agreement, “Disability” generally has a substantially similar meaning as the term used in the Schmidt Agreement, except the determination is made by the Company instead of the Board or a committee thereof.
For purposes of the Buggy Agreement, “Good Reason” has a substantially similar meaning as the term used in the Schmidt Agreement, although the definition varies in some immaterial respects.Gorenstein Agreement.
Gorelik Agreement
Pursuant to the employment agreement with Mr. Gorelik (the “Gorelik Agreement”), upon a termination of employment, Mr. Gorelik would be entitled to receive the greater of (i) one monthone-month full base salary for each completed year of service with the Company, subject to a maximum of 12 months and (ii) six monthsmonths’ full base salary.
NEO Agreement Restrictive Covenants
Each of the NEOs is subject to indefinite confidentiality provisions, as well as non-competition and customer non-solicitation requirements for a period of one year immediately following termination of employment for any reason and employee non-solicitation requirements for a period of two years immediately following termination of employment for any reason for Messrs. Schmidt and Madore and Ms. Shlimak and one year for Ms. BuggyMessrs. Gorenstein, Holm, Jacobson and Gorelik.
Barbato Separation Agreement
On August 6, 2021, Hortican and the Company entered into a separation agreement with Mr. Barbato (the “Barbato Separation Agreement”), pursuant to which his employment with Hortican terminated effective September 9, 2021 (the “Separation Date”). Pursuant to the terms of the Barbato Separation Agreement and subject to Mr. Barbato’s entering into a release of claims in favor of the Company and its affiliates and related entities, following the Separation Date, Mr. Barbato was entitled to a lump-sum payment equal to six months’ base salary and benefit continuation for six months. Mr. Barbato also was reimbursed for expenses incurred for annual tax return services for the 2019, 2020 and 2021 tax years in an amount not to exceed $15,000 per tax year and relocation expenses in an amount not to exceed $20,000.
Mr. Barbato will remain eligible to receive (a) annual bonuses of $155,762 for the Company’s 2019 fiscal year, $201,411 for the Company’s 2020 fiscal year and $130,585 for the Company’s 2021 fiscal year (based on target performance and prorated based on the number of complete months of such fiscal year of employment prior to the Separation Date) and (b) annual grants of Restricted Share Units equal to $298,480 for the Company’s 2020 fiscal year and $298,480 for the Company’s 2021 fiscal year. The foregoing annual bonuses and equity awards Mr. Barbato is eligible to receive under the Barbato Separation Agreement are contingent on the conclusion of the currently pending investigations by the SEC and OSC into the Company, and such investigations not resulting in a penalty being levied by the SEC and/or the OSC against Mr. Barbato personally or against the Company on account of any misconduct, mismanagement or failure to supervise by Mr. Barbato (the “Barbato Payment Condition”). The
above-referenced Restricted Share Unit grants will vest according to their original vesting schedules, based on the vesting dates applicable to grants in respect of the 2020 and 2021 fiscal years made to other Company NEOs (and that any portion of the awards that would have vested prior to the date of grant in accordance with such vesting schedules will be deemed to vest on the date of grant). Any outstanding equity-based awards that were held by Mr. Barbato as of the Separation Date remained outstanding and will vest and be settled on the times set forth in the applicable award agreements, subject to the Barbato Payment Condition and Mr. Barbato’s compliance with his post-employment obligations. Subject to the Barbato Payment Condition, any unvested or unpaid amounts of the above- referenced Restricted Share Unit grants will vest and be settled immediately upon a Change of Control of the Company (as defined in the 2018 Stock Option Plan).
Shum Separation Agreement
On November 26, 2021, Hortican and the Company entered into a separation agreement with Ms. Shum (the “Shum Separation Agreement”), pursuant to which her employment with Hortican terminated effective November 30, 2021 (the “Shum Resignation Date”). Following the Resignation Date, pursuant to the terms of the Shum Separation Agreement and subject to Ms. Shum’s entering into a release of claims in favor of the Company and its affiliates and related entities, Ms. Shum will be entitled to (1) an annual bonus of C$343,750 for Cronos’ 2021 fiscal year (or $274,141 based on the Bloomberg average exchange rate of C$1.00 to $0.7975 for the 12-month period ended December 31, 2021), based on target performance and prorated based on the number of complete months of the fiscal year up to the Shum Resignation Date, and (2) continued vesting and exercisability of any outstanding and unvested equity awards.
Long-Term Incentive Awards under the 2020 Omnibus Plan
Mr. SchmidtGorenstein
Terms of awards granted to Mr. SchmidtGorenstein under the 2020 Omnibus Plan wereare set forth in his award agreements. Pursuant to the terms of his award agreements, in the event of the termination of Mr. Schmidt’sGorenstein’s employment due to death, unvested outstanding Stock Options and Restricted Share Units would vest immediately, and Stock Options would be exercisable by his estate within six months from the date of such termination.immediately. In the event that his employment is terminated due to Disability, the Stock Options and the Restricted Share Units would remain outstanding and continue to vest in accordance with their applicable vesting schedule, and all vested Stock Options may be exercised by Mr. Schmidt within 12 months from the date of such termination.schedule. In the event that Mr. Schmidt’sGorenstein’s employment terminates without Just Cause or he resigns for Good Reason, the Stock Options and Restricted Share Units would vest and the Stock Options would be exercisable at any time within 12 months from the date of such termination (subject to the Stock Options’ expiration date).immediately.
Although the Company does not typically provide for single-trigger acceleration of equity awards upon a change of control, in order to attract the type of executive talent required to support the Company’s growth and expansion plans, the Company determined, in this particular instanceconnection with Mr. Gorenstein’s appointment as CEO and President in March 2022, to grant a one-time equity awardsaward that vest in partvests upon a change of control. In the event of a Change of Control involving the purchase of the Company’s securities described in Rule 13e-3 to the Exchange Act, 4/5all of the Stock Options and3,000,000 Restricted Share Units would vest
immediately, and the remaining 1/5 of the Stock Options and Restricted Share Unitsgranted to Mr. Gorenstein on March 21, 2022 would vest on the earlier of the 12-month anniversary of such Change of Control and the final vesting date of such Stock Options or Restricted Share Units, as applicable (the “Final Vesting Date”); provided that, if the Company ceases to be publicly-traded following the Change of Control, then (i) 4/5 of the Stock Options would immediately become fully vested and converted in the right to receive an amount equal to the spread value based on the per share merger consideration, and (ii) the remaining 1/5 of the Stock Options would become vested and converted into the right to receive an amount equal to the spread value based on the per share merger consideration, payable on the earlier of the 12-month anniversary of the Change of Control and the Final Vesting Date; provided further that if Mr. Schmidt’s employment terminates without Just Cause or for Good Reason, or due to death or Disability, prior to the Final Vesting Date, then the remaining 1/5 of the Stock Options and Restricted Share Units would vest on the date of such termination.immediately.
If Mr. Schmidt’sGorenstein’s employment would haveis terminated for any other reason, unvested Stock Options and Restricted Share Units would have beenwill be forfeited.