Volcon, Inc. appointed new CEO

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


John Kim Employment Agreement


On January 30, 2024, the Company entered into an employment agreement with John Kim pursuant to which Mr. Kim agreed to serve as the Company's chief executive officer and president, effective February 3, 2024. Mr. Kim's agreement provides for an initial annual base salary of $800,000, an annual bonus of $250,000, and an annual option grant. For 2024, the annual option grant shall (i) be issued after the date of the Company's 2024 annual meeting and on or prior to the date the Company issues equity compensation to any other executive officers or members of the Board; (ii) be for a number of shares equal to 10% of the fully diluted number of shares of Company common stock outstanding on the date of grant and shall vest on the earlier of one year after issuance or on the date when at least 90% of the Company's convertible promissory notes outstanding on the date hereof are no longer outstanding; (iii) have an exercise price equal to the closing price of the Common Stock on the date of issuance; and (iv) shall be subject to the approval by the Company's shareholders to increase the number of shares of common stock available for issuance under the Company stock plan.


Mr. Kim's agreement provides for an initial term of one year, which is automatically renewed for additional one-year terms unless either party chooses not to renew the agreement. If Mr. Kim's employment is terminated at the Company's election without "cause" (as defined in the agreement), which requires 90 days advance notice, or by Mr. Kim for "good reason" (as defined in the agreement), Mr. Kim shall be entitled to receive severance payments equal to six months of Mr. Kim's base salary and 100% of the target annual bonus for the year in which such termination occurs. In addition, if Mr. Kim's employment is terminated prior to the end of the term of the agreement by the Company without "cause" or by Mr. Kim for "good reason," and such termination occurs within six months prior to a change in control or within twelve months after a change in control, Mr. Kim shall be entitled to receive, in addition to the severance discussed above, an additional six months of his base salary. In addition, if the Company completes a change in control transaction during the term of Mr. Kim's agreement or within six months thereafter, Mr. Kim will be entitled to a transaction bonus equal to 5% of the gross proceeds from such transaction.


2


Greg Endo Employment Agreement


On January 30, 2024, the Company entered into a new employment agreement with Greg Endo pursuant to which Mr. Endo agreed to continue to serve as the Company's chief financial officer and executive vice-president. Mr. Endo's agreement provides for an initial annual base salary of $300,000, provided that Mr. Endo agreed to voluntarily reduce his base salary to $238,500 until December 31, 2024. Mr. Endo's agreement provides for an annual bonus of up to 50% of his annual base salary, provided that the final determination on the amount of the annual bonus, if any, will be made by the Compensation Committee, based on criteria established by the Compensation Committee. Mr. Endo's agreement provides for an annual option grant. For 2024, the annual option grant shall (i) be issued after the date of the Company's 2024 annual meeting and on or prior to the date the Company issues equity compensation to any other executive officers or members of the Board; (ii) be for a number of shares equal to 4% of the fully diluted number of shares of Company common stock outstanding on the date of grant and shall vest on the earlier of one year after issuance or on the date when at least 90% of the Company's convertible promissory notes outstanding on the date hereof are no longer outstanding; (iii) have an exercise price equal to the closing price of the Common Stock on the date of issuance; and (iv) shall be subject to the approval by the Company's shareholders to increase the number of shares of common stock available for issuance under the Company stock plan.


Mr. Endo's agreement provides for an initial term of one year, which is automatically renewed for additional one-year terms unless either party chooses not to renew the agreement. If Mr. Endo's employment is terminated at the Company's election without "cause" (as defined in the agreement), which requires 90 days advance notice, or by Mr. Endo for "good reason" (as defined in the agreement), Mr. Endo shall be entitled to receive severance payments equal to six months of Mr. Endo's base salary and 100% of the target annual bonus for the year in which such termination occurs. In addition, if Mr. Endo's employment is terminated prior to the end of the term of the agreement by the Company without "cause" or by Mr. Endo for "good reason," and such termination occurs within six months prior to a change in control or within twelve months after a change in control, Mr. Endo shall be entitled to receive, in addition to the severance discussed above, an additional six months of his base salary. In addition, if the Company completes a change in control transaction during the term of Mr. Endo's agreement or within six months thereafter, Mr. Endo will be entitled to a transaction bonus equal to 5% of the gross proceeds from such transaction.


Jordan Davis Consulting Agreement


On January 14, 2024, the Company announced that Jordan Davis resigned as chief executive officer effective February 2, 2024. On February 1, 2024, the Company entered into a one-month consulting agreement to assist in the chief executive officer transition for a fee of $12,500.


The foregoing descriptions of the employment agreements and consulting agreement are subject to and qualified in their entirety by reference to the full text of the employment agreements and consulting agreement, copies of which is included as Exhibits 10.1, 10.2 and 10.3 hereto, respectively, the terms of which are incorporated herein by reference.