XTI Aerospace, Inc. appointed Mr. Scott Pomeroy as new CEO

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers


The information contained in Item 1.01 of this Current Report on Form 8-K relating to arrangements with Mr. Ali and Ms. Loundermon is incorporated by reference herein to the extent required to be disclosed under this Item 5.02.


Director and Officer Appointments; Board Composition


In connection with the consummation of the Merger and as contemplated by the Merger Agreement, as of the Effective Time, Mr. Nadir Ali and Ms. Wendy Loundermon resigned as Chief Executive Officer and Chief Financial Officer of the Company, respectively. Following their resignations, the board of directors of the Company (the "Board") appointed Mr. Scott Pomeroy as Chief Executive Officer of the Company and Ms. Brooke Martellaro as Chief Financial Officer of the Company.


Also at the Effective Time, Messrs. Nadir Ali and Tanveer Khader and Ms. Wendy Loundermon resigned as directors of the Company. These resignations were not because of a disagreement with the Company on any matter relating to the Company's operations, policies or practices. Following the foregoing resignations, the Board appointed Messrs. Scott Pomeroy, Soumya Das and David Brody as directors to the Board. Messrs. Kareem Irfan and Leonard Oppenheim continue to serve on the Board following the Closing.


Mr. Brody has also been appointed to the Company's Audit Committee, its Compensation Committee and its Nominating and Corporate Governance Committee, effective as of the Effective Time. The Board determined that Mr. Brody is independent within the meaning of Nasdaq Listing Rule 5605(a)(2). Messrs. Oppenheim and Irfan will continue to serve on the Company's Audit Committee and Mr. Irfan will continue to serve on the Company's Compensation Committee.


Information about the business experience of Messrs. Pomeroy, Das and Brody and Ms. Martellaro are described in the proxy statement/prospectus filed by the Company with the SEC on November 14, 2023 (the "Proxy Statement/Prospectus") in the section entitled "Management of the Combined Company Following the Merger" beginning on page 196 thereof and that information is incorporated herein by reference.


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There is no arrangement or understanding between Messrs. Pomeroy, Das or Brody and any other person pursuant to which each was appointed as a director, other than pursuant to the Merger Agreement. There are no transactions in which Messrs. Pomeroy, Brody and Das and Ms. Martellaro have an interest requiring disclosure under Item 404(a) of Regulation S-K, except for (i) the transactions with Mr. Brody described in the Proxy Statement/Prospectus in the section entitled "Related Party Transactions of Directors and Executive Officers of the Combined Company" beginning on page 223 and that information is incorporation herein by reference, and (ii) such transactions as described below:


In connection with the Closing, Mr. Pomeroy received 4,000,000 shares of XTI common stock pursuant to the Consulting Agreement dated July 1, 2022. Upon the closing of the Merger, these XTI shares were exchanged for 357,040 shares of common stock of XTIA in accordance with the exchange ratio pursuant to the Merger Agreement.


In addition, during the year ended December 31, 2023 and 2022, XTI paid Mr. Brody compensation of $60,000 and 100,000, respectively, and owed Mr. Brody accrued compensation of $320,000 and $260,000, respectively, under Mr. Brody's consulting agreement with XTI. Pursuant to an amendment to the consulting agreement, these accrued amounts were waived by Mr. Brody and the consulting agreement terminated in connection with the closing of the Merger.


On March 12, 2024, XTI and Mr. Brody entered into an Amendment No. 1 (the "Brody Note Amendment") to the Unsecured Convertible Promissory Note, dated as of October 1, 2023, issued by XTI to Mr. Brody (the "Brody Note"), pursuant to which Mr. Brody converted $922,957 principal amount of the Brody Note and accrued and unpaid interest thereon, into shares of XTI common stock at a rate of $0.3094 in principal amount per share, and XTI agreed to pay Mr. Brody the remaining $175,000 in principal amount upon the consummation of the Merger. The shares issued as consideration under the Brody Note Amendment converted into 266,273 shares of XTIA common stock in accordance with the exchange ratio pursuant to the Merger Agreement.


In connection with the Merger, the Company assumed a Promissory Note issued by XTI to Mr. Brody on January 5, 2023, with an outstanding principal balance of $125,000 along with an interest balance of $7,406 as of February 29, 2024, accruing interest at a rate of 5% and set to mature on March 31, 2024.


As disclosed under Item 1.01, the Company entered into a customary form of indemnification agreement with its existing directors and executive officers prior to the Effective Time, including Mr. Ali and Ms. Loudermon, as well as with the new directors and officers whose appointments became effective at the Effective Time, including Messrs. Pomeroy, Brody and Das and Ms. Martellaro.


In connection with the Closing, and as disclosed in Item 5.03 of this current report on Form 8-K, the board of directors of the Company amended the Bylaws of the Company to establish three classes of directors with staggered election terms: Mr. Scott Pomeroy and Mr. Soumya Das are the Class I directors, eligible for re-election at the Company's annual meeting of stockholders to be held in 2024; Mr. Kareem Irfan and Mr. Leonard Oppenheim are the Class II directors, eligible for re-election at the Company's annual meeting of stockholders to be held in 2025; and Mr. David Brody is the Class III director, eligible for re-election at the Company's annual meeting of stockholders to be held in 2026.