EXPLANATORY NOTE
On June 2, 2022, Power Solutions International, Inc. (the “Company”) filed with the Securities and Exchange Commission (the “SEC”) its original Current Report on Form 8-K (the “Original Form 8-K”) to report, among other things, the resignation of Lance Arnett as Chief Executive Officer of the Company. As contemplated in the Original Form 8-K, this Form 8-K/A amends the Original Form 8-K to provide the details of Mr. Arnett’s separation agreement with the Company which was not determined at the time of the filing of the Original Form 8-K.
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On June 26, 2022, the Company entered into a Separation Agreement and Release with Lance Arnett, effective the Effective Date (the “Separation Agreement”). Pursuant to the Separation Agreement and of the resignation of Mr. Arnett, he is entitled to receive (a) cash severance payments of $425,000, payable in twelve monthly installments of $35,416.67 payable on the last day of each month beginning on June 30, 2022, (b) cash payment of $17,708.33 under the 2019 Long Term Incentive (“LTI”) plan, once approved by the Compensation Committee, at the same time other LTI participants are paid, as full and complete payment under the LTI plan, (c) the payment of any Key Performance Indicator (KPI) bonus on a pro rata basis through May 31, 2022, once determined by the Company, if any, at the same time as other KPI participants are paid out, (d) subject to his election to receive COBRA health insurance, the Company payment of a proportional share of the premiums owed by Mr. Arnett as if he were still employed by the Company for a period of twelve months following the Effective Date.
The Separation Agreement contains a release of the Company by Mr. Arnett and mutual non-disparagement provisions. Mr. Arnett also agreed that the confidentiality, non-competition and non-solicitation provisions in his current employment agreement with the Company will remain in effect. Finally, Mr. Arnett agreed to cooperate with, and make himself reasonably available, to assist in any transition related duties as requested by the Company at a rate of $250 per hour plus expenses for a period of twelve months following the Effective Date.
The foregoing description of the Separation Agreement is qualified in its entirety by the full text of the Separation Agreement, which is attached hereto as Exhibit 10.1 and incorporated by reference herein.
Caution Regarding Forward-Looking Statements
This Form 8-K contains forward-looking statements regarding the current expectations of the Company about its prospects and opportunities. These forward-looking statements are entitled to the safe-harbor provisions of Section 21E of the Securities Exchange Act of 1934. The Company has tried to identify these forward-looking statements by using words such as “anticipate,” “believe,” “budgeted,” “contemplate,” “estimate,” “expect,” “forecast,” “guidance,” “may,” “outlook,” “plan,” “projection,” “should,” “target,” “will,” “would,” or similar expressions, but these words are not the exclusive means for identifying such statements. These statements are subject to a number of risks, uncertainties, and assumptions that may cause actual results, performance or achievements to be materially different from those expressed in, or implied by, such statements.
The Company cautions that the risks, uncertainties and other factors that could cause its actual results to differ materially from those expressed in, or implied by, the forward-looking statements, include, without limitation: the impact of the ongoing COVID-19 pandemic could have on the Company’s business and financial results; the Company’s ability to continue as a going concern; the Company’s ability to raise additional capital when needed and its liquidity; uncertainties around the Company’s ability to meet funding conditions under its financing arrangements and access to capital thereunder; the potential acceleration of the maturity at any time of the loans under the Company’s uncommitted senior secured revolving credit facility through the exercise by Standard Chartered Bank of its demand right; the timing of completion of steps to address, and the inability to address and remedy, material weaknesses; the identification of additional material weaknesses or significant deficiencies; risks related to complying with the terms and conditions of the settlements with the SEC and the United States Attorney’s Office for the Northern District of Illinois (the “USAO”); variances in non-recurring expenses; risks relating to the substantial costs and diversion of personnel’s attention and resources deployed to address the internal control matters; the Company’s obligations to indemnify past and present directors and officers and certain current and former employees with respect to the investigations conducted by the SEC, which will be funded by the Company with its existing cash resources due to the exhaustion of its historical primary directors’ and officers’ insurance coverage; the ability of the Company to accurately forecast sales, and the extent to which sales result in recorded revenues; changes in customer demand for the Company’s products; volatility in oil and gas prices; the impact of U.S. tariffs on imports from China on the Company’s supply chain; impact on the global economy of the war in Ukraine; the impact of supply chain interruptions and raw material shortages; the potential impact of higher warranty costs and the Company’s ability to mitigate such costs; any delays and challenges in recruiting and retaining key employees consistent with the Company’s plans; any negative impacts from delisting of the
