374Water Inc 8-K, filed Apr 24, 2024
374Water Inc. (SCWO)
About this 8-K
374Water Inc filed this 8-K on April 24, 2024, reporting on events of April 19, 2024.
Items reported
- Item 1.01: Entered into a material agreement
- Item 3.02: Unregistered sale of equity
- Item 5.02: Director or officer change, or executive pay
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported):
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(Address of Principal Executive Offices)(Zip Code)
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(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01 Entry Into a Material Definitive Agreement.
The information set forth in Item 5.02 below is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 5.02 below is incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Employment Agreement
On April 19 2024, 374Water Inc. (the “Company”) entered into an employment agreement with Christian Gannon (the “Employment Agreement”), for Mr. Gannon to serve as President and Chief Executive Officer of the Company effective April 22, 2024 (the “Start Date”). The Employment Agreement provides for an initial annual salary for Mr. Gannon of $450,000. Mr. Gannon is also eligible to earn an annual fiscal year performance bonus for each whole or partial fiscal year of his employment period with the Company; for the initial year under the Employment Agreement in accordance with certain milestones set forth by the Company, and thereafter as determined by the Compensation Committee of the Company and the Board of Directors of the Company. Mr. Gannon's “target” performance bonus shall be 125% of Mr. Gannon's then-current base salary (the “Annual Bonus”).
Under the Employment Agreement and subject to the terms of the Company's 2021 Equity Incentive Plan (the “Plan”), Mr. Gannon was granted up to 2,250,000 Restricted Stock Units (as defined in the Plan) under the Plan, vesting as follows: (a) 250,000, on the first annual anniversary of the Start Date; (b) 750,000, in equal increments on the last day of every month thereafter over the following 36 months, subject to Mr. Gannon's continued employment with the Company on each vesting date; and (c) 1,250,000, pursuant to certain milestones set forth by the Company (collectively, the “Gannon Restricted Stock Units”). Additionally, pursuant to the Employment Agreement and the terms of the Plan, Mr. Gannon was granted 5,250,000 Options (as defined in the Plan) under the Plan vesting as follows: (a) 625,000, on the first annual anniversary of the Start Date; (b) 1,875,000, in equal installments on the last day of every month thereafter over the following 36 months subject to Mr. Gannon's continued employment with the Company on each vesting date; and (c) 2,750,000, pursuant to certain milestones set forth by the Company (collectively, the “Gannon Options”, and together with the Gannon Restricted Stock Units, the “Gannon Equity Awards”).
If the Employment Agreement is terminated by the Company without “Cause” or by Mr. Gannon for “Good Reason” (each as defined in the Employment Agreement, subject to the Company’s right to cure), he will be entitled to termination benefits, pursuant to which the Company will be obligated to (i) pay Mr. Gannon 100% of his then-current annual base salary in 12 equal installments; (ii) any earned but unpaid Annual Bonus; (iii) coverage to Mr. Gannon and his dependents under the Company’s then current medical, health, and vision insurance plans for 12 months; and (iv) if such separation occurs on the day of Mr. Gannon’s first year anniversary of employment or after the first anniversary of the Start Date, (x) a pro-rated Annual Bonus for the fiscal year in which the employment is terminated equal to the pro-rated Annual Bonus that Mr. Gannon would have received based on actual performance for such fiscal year if Mr. Gannon was employed by the Company, and (y) accelerated vesting with respect to the Gannon Equity Awards as if Mr. Gannon had remained employed by the Company through the first anniversary of the date of such separation.
The Employment Agreement contains covenants for the benefit of the Company relating to protection of the Company’s confidential information and standard Company indemnification obligations.
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The foregoing description of the Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K (this “Current Report”) and is incorporated herein by reference.
The shares of the Company’s common stock and the Company’s common stock underlying the Gannon Equity Awards may be issued, if any, in a private placement transaction that will rely upon an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and/or Regulation D promulgated thereunder, or pursuant to the Company’s Registration Statement on Form S-8, if and when such is filed by the Company with the U.S. Securities and Exchange Commission.
Item 7.01 Regulation FD Disclosures.
On April 23, 2024, the Company issued a press release regarding Mr. Gannon's appointment. A copy of the press release is attached Exhibit 99.1 and it incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number |
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| Employment Agreement, dated April 19, 2024, between the Company and Christian Gannon | |
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104 |
| Cover Page Interactive Data File (embedded within the Inline XBRL document) |
† | Indicates a management contract or compensatory plan. |
* | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: April 24, 2024 |
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/s/ Adrienne Anderson |
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Adrienne Anderson |
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Chief Financial Officer |
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EXHIBIT 10.1
Certain information in this exhibit marked [*] has been excluded from the exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of April 19, 2024 (the “Effective Date”), between 374WATER INC., a Delaware corporation (the “Company”), and CHRISTIAN GANNON, an individual (the “Executive”).
BACKGROUND
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| A. | The Executive possesses knowledge and skills which the Company believes will be of substantial benefit to its operations and success, and the Company desires to employ the Executive on the terms and conditions set forth below. |
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| B. | The Executive is willing to make the Executive’s services available to the Company on the terms and conditions set forth below. |
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, the parties agree as follows:
1. Employment. The Company hereby agrees to employ the Executive and the Executive hereby agrees to serve the Company on the terms and conditions set forth herein. Subject to any pre-employment requirements, the Executive’s employment will commence on April 22, 2024, or such other date as the Executive and the Company may agree (the “Start Date”).
2. Duties of Executive; Place of Performance.
(a) Title and Duties. During the Employment Period (as defined in Section 3, below), the Executive shall serve as President and Chief Executive Officer (“CEO”) of the Company. The Executive shall diligently perform all services reasonably required of the Executive in the Executive’s capacity as President and CEO of the Company. Executive will have all of the duties, responsibilities and authority commensurate with the position of President and CEO of a comparable company, consistent with applicable law and the authorizations and instructions given from time to time by the Company’s Board of Directors (the “Board”). In addition, the Board will use its good faith efforts to elect or appoint the Executive to the Board as soon as practicable following the Start Date.
(b) Outside Activities. During the Employment Period, the Executive will be expected to devote Executive’s full working time and attention to the business of the Company, and Executive will not render services to any other business without the prior approval of the Board. Notwithstanding the foregoing, Executive may manage personal investments, participate in civic, charitable, and academic activities (if in a limited, non-leadership capacity unless a larger role is approved by the Board), and, subject to prior approval by the Board, serve on the board of directors (and any committees) and/or as an advisor of other for-profit companies, provided that such activities do not at the time the activity or activities commence or thereafter (a) create an actual or potential business or fiduciary conflict of interest or (b) individually or in the aggregate, interfere materially with the performance of Executive’s duties to the Company.
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(c) Additional Conditions. In addition, the Executive shall act in accordance with (i) standing instructions for the position which may be issued by the Board from time to time; (ii) all reasonable and lawful requests, directions and/or restrictions imposed by the Board; and (iii) all policies of the Company as prescribed from time to time. Upon termination of employment, the Executive shall return all Company equipment and other Company property in the Executive’s possession, custody or control.
(d) Executive’s Location. During the Employment Period, the Executive’s location of employment will be Executive’s home office in California unless otherwise agreed by the Executive and the Company. The Executive acknowledges that the position of President and CEO requires domestic and international travel.
3. Employment Period. The Executive shall be employed by the Company commencing on the Start Date. The Executive’s employment by the Company shall continue until this Agreement and the Executive’s employment are terminated pursuant to Section 7 below (the “Employment Period”). For all purposes of the Agreement, no termination of the Executive’s employment shall be deemed to have occurred if the Executive is transferred during the Employment Period to any business entity which is an Affiliate of the Company. As used in this Agreement, the term “Affiliate” means, with respect to any specified person or entity (“Person”), any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.
4. Compensation; Benefits.
(a) Base Salary. The Executive shall receive a base salary (the “Base Salary”) at the initial rate of $450,000 per year, subject to applicable deductions, withholding and other taxes as shall be required by applicable law. The Base Salary shall be payable biweekly in accordance with the Company’s standard payroll schedule and procedures, and will be pro-rated for the current year, as well as any other partial year of employment. Thereafter, Executive’s Base Salary shall be periodically reviewed as a part of the Company’s regular review of compensation, and will be determined by the Compensation Committee of the Board (the “Compensation Committee”). Any increased base salary shall thereafter constitute the Base Salary for purposes hereof.
(b) Target Bonus. Executive will be eligible for an annual bonus (the “Annual Bonus”) with a target amount equal to 125% of Executive’s then-current annual Base Salary (the “Target Bonus”). For the initial year of Executive’s employment, the Target Bonus shall be determined as set forth on Exhibit A attached hereto. Subsequent to the first year of Executive’s employment, the Compensation Committee and Executive shall mutually agree to annual Target Bonus objectives.
(c) Benefits & Vacation. Executive will be entitled to participate in all employee retirement (401(k)), insurance, benefit and paid time off programs of the Company as are in effect from time to time and in which other executive officers of the Company are eligible to participate, on terms no less favorable than any other executive officer.
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5. Equity. Pursuant to the terms of the Company’s 2021 Equity Incentive Plan (the “Equity Plan”) and subject to the vesting schedules set forth herein, and subject further to the approval of the Board or the Compensation Committee, Executive will receive the following Awards (as defined in the Equity Plan): (a) Restricted Stock Units (as defined in the Equity Plan) for up to 2,250,000 shares of Common Stock (as defined in the Equity Plan) and (b) Options (as defined in the Equity Plan) to purchase up to 5,250,000 shares of the Company’s Common Stock (collectively, the “Executive Awards”).
The Executive Awards will be subject to Award Agreements (as defined in the Equity Plan) and vest as follows: (i) Restricted Stock Units for up to 1,000,000 shares of Common Stock and Options for up to 2,500,000 shares of Common Stock will vest (a) 25% vesting on the first annual anniversary of Executive’s Start Date of employment and (b) the balance vesting equally on the last day of every month thereafter over the following 36 months (collectively, the “Initial Equity Award”) and (ii) Restricted Stock Units for up to 1,250,000 shares of Common Stock and Options for up to 2,750,000 shares of Common Stock will vest in accordance with the terms set forth on Exhibit B attached hereto (the “Supplemental Equity Award”). The per share exercise price of the Options will be the Fair Market Value (as defined in the Equity Plan) of the Common Stock determined as of the Start Date. The Executive and Company shall cooperate, following the Executive’s Start Date, on the establishment of a revised long-term incentive compensation program for eligible employees of the Company.
As of the Effective Date, the Company currently has 5,898,000 shares of Common Stock available for issuance under the Equity Plan. The Board intends to increase the number of shares of Common Stock under the Equity Plan in a sufficient amount to satisfy the Executive Awards. The Board will recommend the stockholders of the Company that the stockholders approve such increase at the Company’s 2024 annual meeting of the stockholders. The Executive acknowledges that there is no guarantee that the stockholders will approve such recommendation.
6. Expense Reimbursement. Subject to such reasonable rules and guidelines as the Company may from time to time adopt for its executives generally, the Company will, in accordance with applicable Company policies and guidelines, reimburse Executive for all reasonable and necessary expenses incurred by Executive in connection with Executive’s performance of services on behalf of the Company during Executive’s employment with the Company, on terms no less favorable than for any other executive officer of the Company. Subject to the preceding, the reimbursement for all such expenses shall be paid pursuant to the Company’s policies and practices, following Executive’s submission of proper documentation for such expenses.
7. Termination. Executive's employment may be terminated in any one of the following ways:
(a) Death. The Executive’s employment shall terminate upon the Executive’s death.
(b) Disability. The Company shall have the right to terminate the Executive’s employment as a result of the Executive’s Disability (as defined below). “Disability” shall mean (i) the Executive’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for not less than three (3) months over any 12-month period; (ii) the Executive is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for not less than three (3) months over any 12-month period, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering the Executive; or (iii) the Executive is determined to be totally disabled by the Social Security Administration.
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(c) Termination by the Company For Cause. The Company may terminate the employment upon written notice to Executive for “Cause”. For purposes hereof, “Cause” shall mean the occurrence of one or more of the following: (i) the conviction of, or plea of guilty or no contest to, a felony or a crime involving moral turpitude or any other action or inaction involving willful malfeasance or material fiduciary breach with respect to the Company or an affiliate; (ii) gross negligence or willful misconduct with respect to the Company or an affiliate; (iii) any act or acts of intentional dishonesty or willful misrepresentation (including by omission) of a material nature; (iv) material violation of the Company’s written policies or codes of conduct, including written policies related to discrimination, harassment, performance of illegal or unethical activities, and ethical misconduct; (v) Executive’s refusal to perform the material duties and responsibilities lawfully and ethically required to be performed by Executive under the terms of the definitive employment agreements; or (vi) a material breach by Executive of the definitive employment agreements or any other agreement to which Executive and the Company or its affiliates are parties (provided, however, failure alone to achieve any performance milestones will not be deemed a breach of this Agreement or a reason for Cause termination).
Any event described in (iv) through (vi) above shall not constitute Cause unless the Company delivers to Executive a written notice of termination for Cause describing the applicable circumstances within ninety (90) days after the Company first learns of the existence of the applicable circumstances giving rise to Cause, and within thirty (30) days following delivery of such notice, Executive has failed to cure the circumstances giving rise to Cause to the extent such circumstances may be cured.
In the event of a termination for Cause, as enumerated above, Executive shall have no right to any Separation Benefits (as defined in Subsection 6(e) below) or other compensation accruing after the effective date of termination (the “Separation Date”), and no right to bonus not yet due and payable at the time of termination.
(d) Termination Without Cause. At any time after the Start Date, the Company may terminate the Executive’s employment without Cause.
(e) Resignation for Good Reason. At any time after the Start Date, Executive may resign Executive’s employment with or without Good Reason. For purposes hereof, “Good Reason” means the occurrence of one or more of the following without Executive’s express written consent, which circumstances are not remedied by the Company within thirty (30) days of its receipt of a written notice from Executive describing the applicable circumstances (which notice must be provided by Executive within ninety (90) days of Executive’s knowledge of the applicable circumstances): (i) any adverse change in Executive’s duties, responsibilities, authority, title, status or reporting structure; (ii) a reduction in Executive’s Base Salary or bonus opportunity unless a reduction is part of an overall cost reduction program that affects all senior executives of the Company and does not disproportionately affect Executive and does not reduce Executive’s Base Salary or bonus opportunity by more than ten percent (10%); (iii) a mandated geographical relocation of Executive’s principal current home office location by more than twenty-five (25) miles; (iv) a breach by the Company of a material provision of this Agreement or any other agreement to which Executive and the Company or its Affiliates are parties; or (v) the Board not approving the Executive Awards in connection with its approval of this Agreement or upon Executive’s Start Date.
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8. Effect of Termination.
(a) Resignation from All Positions. Effective as of the Separation Date, the Executive will be automatically deemed to resign from all Company-related positions, including as an officer and director of the Company and the Affiliates, as applicable, and shall execute all documentation necessary to effectuate such resignation(s).
(b) Payment Through Termination. Executive shall be entitled to receive all of the Base Salary earned and all reimbursements due through the Separation Date. Additional compensation subsequent to termination, if any, will be due and payable to Executive only to the extent and in the manner expressly provided in this Section 8. All other rights and obligations of the Company and Executive under this Agreement shall cease as of the Separation Date, except as otherwise provided in the Confidentiality Agreement (as defined in Section 12 of this Agreement) or any termination notice or separation and release agreement between the Executive and the Company.
(c) Separation Benefits. In the event the Company terminates Executive’s employment without Cause or Executive resigns for Good Reason, the Company shall, subject to the provisions of Subsection 8(d), provide Executive with the following benefits:
(i) the Company shall pay an amount equal to twelve (12) months of Executive’s then-current Base Salary, which shall be paid out in substantially equal installments in accordance with the Company’s payroll practice, as in effect at the time of Executive’s termination, over a twelve (12) month period following the Separation Date;
(ii) the Company will provide substantially similar coverage under the Company’s then current medical, health, and vision insurance plans to Executive and his eligible dependents for a period of twelve (12) months provided that Executive continues to make any required employee contribution;
(iii) any earned but unpaid Annual Bonus with respect to any completed performance period or milestone; and
(iv) if such separation occurs on the day of Executive’s first year anniversary of employment or after the first anniversary of the Start Date, (x) a pro-rated Annual Bonus for the fiscal year in which the employment is terminated equal to the pro-rated Annual Bonus that Executive would have received based on actual performance for such fiscal year if Executive had remained in the employ of the Company, to be paid at the same time annual bonuses are paid by the Company to other executives of the Company for the fiscal year in which Executive’s employment terminated, but no later than March 15th of the calendar year following the calendar year in which Executive terminated employment, and (y) accelerated vesting with respect to the Executive Awards as if Executive had remained in the employ of the Company through the first anniversary of the Separation Date.
(d) Notwithstanding anything to the contrary in this letter agreement, Executive shall not be entitled to any Separation Benefits unless, within twenty-one (21) or forty-five (45) days, as applicable, following the Separation Date, Executive executes and does not revoke a separation and release agreement in a form acceptable to the Company, which shall include a release against the Company, the Affiliates, and related persons and entities.
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9. Legal Fee Reimbursements. The Company will pay directly or promptly reimburse Executive for Executive’s reasonable, necessary and documented legal fees incurred in connection with the negotiation, drafting and execution of this Agreement and related matters related to Executive’s initial employment with the Company up to a one-time maximum amount of $20,000 (the “Legal Fees Payment”). The Company agrees to reasonably and in good faith review (with such advisors as the Company deems reasonably appropriate, including internal and external counsel and accountants) whether such Legal Fees Payment may be reasonably treated as non-taxable to Executive as a working condition fringe benefit under Section 132(d) of the Internal Revenue Code.
10. Indemnification. Promptly following the Start Date, the Executive and the Company will enter into an indemnification agreement in substantially the same form provided to other similarly situated officers and directors of the Company (the “Indemnification Agreement”). In addition, the Company shall maintain directors' and officers’ liability insurance providing coverage to the Executive on terms that are no less favorable than the coverage provided to other similarly situated officers and directors of the Company.
11. Governing Law. This Agreement is to be construed and enforced according to the laws of the State of California. The Parties agree that any litigation arising out of or related to this Agreement will be brought exclusively in any state or federal court in California. Each Party (a) consents to the personal jurisdiction of said courts, (b) waives any defense or objection to any proceeding maintained in such courts based on venue or inconvenient forum, and (c) except as expressly permitted above, agrees not to bring any proceeding arising out of or relating to this Agreement in any other court.
12. Employee Confidentiality, Invention Assignment and Certain Covenants Agreement. As a material inducement to the Company to enter into this Agreement, and as a condition to employment with the Company, the Executive will execute, deliver and comply with the Employee Confidentiality, Invention Assignment and Certain Covenants Agreement delivered to the Executive under separation cover (the “Confidentiality Agreement”); provided, that in the event the Executive is not elected or appointed to the Board at the Company’s 2024 annual stockholders meeting and resigns as a result, then Sections 4(a)-(b) of the Confidentiality Agreement shall be null and void ab initio.
13. General Provisions.
(a) Entire Agreement. This Agreement, together with the Confidentiality Agreement, the Indemnification Agreement and the equity grant agreements, reflects the entire agreement between the parties hereto with respect to the subject matter hereof and, upon its effectiveness, shall supersede all prior agreements, understandings and arrangements, both oral and written, between the Executive and the Company (or any of its Affiliates) with respect to such subject matter.
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(b) Notices. All notices required or permitted to be given hereunder shall be in writing and shall be personally delivered by courier, sent by registered or certified mail, return receipt requested or sent by email addressed as set forth herein. All notices shall be deemed given on the date of delivery. Notice shall be sent:
(i) if to the Company, addressed to:
374Water Inc.
3710 Shannon Road, #51877,
Durham, North Carolina 27717
Attention: Legal Department
e-mail: legal@374water.com
(ii) if to the Executive, to the Executive's address as reflected on the payroll records of the Company or to such other address as either party hereto may from time to time give notice of to the other.
(c) Binding Effect. This Agreement shall be for the benefit of and binding upon the parties hereto and their respective heirs, personal representatives, legal representatives, successors and, where applicable, assigns, including, without limitation, any successor to the Company, whether by merger, consolidation, sale of stock, sale of assets or otherwise.
(d) Severability. The invalidity of any one or more of the words, phrases, sentences, clauses or sections contained in this Agreement shall not affect the enforceability of the remaining portions of this Agreement or any part thereof, all of which are inserted conditionally on their being valid in law.
(e) Waivers. The waiver by either party hereto of a breach or violation of any term or provision of this Agreement shall not operate nor be construed as a waiver of any subsequent breach or violation.
(f) Representation. Executive confirms that he has been individually represented by legal counsel of his own choosing in negotiating the terms of this Agreement and the Confidentiality Agreement.
(g) Section 409A. The intent of the parties is that payments and benefits under this Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the guidance issued thereunder (“Section 409A”) and, accordingly, to the maximum extent permitted, all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. Executive is hereby advised to seek independent advice from Executive’s tax advisor(s) with respect to any payments or benefits under this Agreement. Notwithstanding the foregoing, the Company does not guarantee the tax treatment of any payments or benefits provided under this Agreement, whether pursuant to the Code, federal, state, local or foreign tax laws and regulations.
(h) Section Headings. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
(i) Employment Eligibility Verification. In accordance with federal law, Executive will be required to provide to the Company documentary evidence of Executive’s identity and eligibility for employment in the United States. Such documentation must be provided to the Company within three (3) business days of the Start Date.
(j) Execution. This Agreement may be executed in separate counterparts, which taken together will constitute one agreement. Signatures to this Agreement transmitted via electronic mail, Docusign or similar platforms shall be valid and effective to bind the party so signing.
[Signatures Begin on Following Page.]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Effective Date.
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| 374WATER INC. |
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| By: | /s/ Jeffrey M. Quick |
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| Name: Jeffrey M. Quick |
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| Title: Interim Chief Executive Officer |
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| EXECUTIVE |
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| /s/ Christian Gannon |
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| Christian Gannon |
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EXHIBIT A
Initial Year Incentive Compensation Terms(1)
| Target Bonus Amount | Weight (% of Annual Salary) | Milestone | Due Date | Notes |
| Milestone 1 | 20% | * | 12/31/2024 | (2)(3) * |
| Milestone 2 | 25% | * | 1 year from hiring date | (2) * |
| Milestone 3 | 25% | * | 1 year from hiring date | (2) * |
| Milestone 4 | 20% | * | 1 year from hiring date | (2) * |
| Milestone 5 | 5% | * | *6/30/2024
**8/31/2024 | * (2) |
| Milestone 6 | 20% | * | * | (2) * |
| Milestone 7 | 10% | * | 6/30/2024 | (2) * |
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| 125% |
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(1) The initial Target Bonus amounts will be treated as a Cash Award for the purposes of Section 13.1(b) of the Equity Plan.
(2) In the event of partial attainment of milestone, the Board and Employee will discuss, and the Board will consider in good faith, an appropriate partial incentive payment that corresponds to the progress toward such milestone(s), and a roll-forward of eligibility toward the remainder of such milestone.
(3) *
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EXHIBIT B
Supplemental Equity Award Performance-Based Vesting Terms
| Number | Vested Amount | Milestone | Due Date |
| Milestone 1 | Options:
1,375,000 shares
Restricted Stock Units:
625,000 shares | Fiscal year end completed with Operating Profit1. | None |
| Milestone 2 | Options:
1,375,000 shares
Restricted Stock Units:
625,000 shares |
Equal to or greater than $100M annual revenue, with linear interpolation applying between $0M annual revenue (no vesting) and $100M annual revenue (100% vesting), so long as annual revenue is at least $15M. | 12/31/2028
(1) |
(1) For purposes of illustration, linear interpolation will be calculated as follows: If annual revenue equaled $13 million, no vesting would occur. If annual revenue equaled $20 million, 20% vesting would occur. If annual revenue equaled $20 million the next year, no additional vesting would occur. If annual revenue instead equaled $30 million the next year, an additional 10% vesting would. If annual revenue equaled $60 million the year after that, an additional 30% vesting would occur.
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1 “Operating profit” means an amount equal to the remainder of (i) consolidated net income for such period, inclusive (i.e., without deduction with respect to) of (a) non-operating consolidated interest expense (excluding interest expense relating to the acquisition of non-RDE equipment), (b) income tax expense determined on a consolidated basis in accordance with GAAP, (c) research, development and engineering (RDE) (RDE will not be included as part of the “Operating Profit” calculation prior to the calculation for the fiscal year ended December 31, 2025), (d) any unusual or infrequently items as determined in accordance with GAAP resulting in losses and charges or other non-recurring items for such period, (e) all non-cash expenses related to Board, employee, or consultant compensation, (f) all other non-cash charges for such period (excluding any non-cash charge in respect of an item that was included in consolidated net income in a prior period and any non-cash charge that relates to the write-down or write-off of inventory and non-cash employee or vendor stock compensation), and (g) other costs to which the Board agrees, determined on a consolidated basis in accordance with GAAP, in each case for such period; less (ii) to the extent included in determining consolidated net income for such period, and without duplication, (a) unusual gains and (b) non-cash gains, excluding any non-cash gains that represent the reversal of any accrual of, or cash reserve for, anticipated cash items in any prior period (other than any such accruals or cash reserves that have been added back to consolidated net income in calculating Operating Profit in accordance with this definition).
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EXHIBIT 99.1
374Water Appoints Chris Gannon as New CEO to Spearhead Scaling of its Revolutionary Waste and Water Treatment Technology
DURHAM, NC, April 23, 2024 – 374Water Inc. (Nasdaq: SCWO), a global leader in cutting-edge, sustainable waste management technologies, today announced the appointment of Chris Gannon as its new President and Chief Executive Officer (CEO), effective immediately. Gannon brings a broad array of executive leadership experience in multiple disciplines and industries, including environmental technology development, highly engineered product, advanced manufacturing, and global customer support and service with customers in the municipal, industrial, commercial, defense, and medical spaces. Gannon has also served in numerous transformational roles at both publicly traded and private equity backed companies, where he has successfully built and grown world-class, customer-centric, technology-focused companies in industries governed by extensive regulatory requirements.
"Chris’s extensive and proven track record of developing and executing high growth strategies along with his experience in industrial technology innovation, product commercialization, manufacturing, field services, and the water and wastewater industries, aligns perfectly with our near and long-term goals," said Rene Estes, 374Water Board Chairwoman. "Under Chris’ leadership, 374Water will accelerate its work to redefine the water and waste management industries with our revolutionary AirSCWO technology, driving results for our customers, shareholders, and our communities.”
This is a pivotal time for the company as it prepares to deploy its commercial-grade AirSCWO6 technology in several major projects, including the Orange County Sanitation District and the City of Orlando’s Iron Bridge Regional Water Reclamation Facility. 374Water will also continue to advance its partnership with the Department of Defense to complete PFAS, AFFF, and otherwaste destruction testing engagements, and with other treatment, storage and disposal facilities across the United States to destroy PFAS contaminated fluids.
"I would like to thank 374Water’s Board of Directors for the opportunity to lead the company at this defining moment. I am excited to join this great team and to bring 374Water’s pioneering technology to customers and communities around the world,” said Gannon. “The economic and environmental benefits of waste destruction versus disposal are compelling, and our AirSCWO technology can bring these benefits to market at scale. This technology can deliver profoundly positive impacts to global water and waste management challenges for generations to come.”
U.S. wastewater treatment plants alone treat 34 billion gallons of wastewater daily, translating into 292 million tons of solid waste produced annually. Present waste disposal options, such as land application, landfill, incineration and deep well injection, are inadequate and all have environmental, health and liability repercussions. In addition, the EPA’s April 2024 PFAS in drinking water regulations surrounding Per- and Polyfluorinated Substances (PFAS), commonly known as "forever chemicals,” further underscore the need for advancements in waste treatment and destruction technologies.
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374Water’s AirSCWO system efficiently, continuously, cost-effectively, and with unprecedented reliability transforms a range of organic wastes - including biosolids, PFAS, AFFF, water and waste treatment residuals, landfill leachate, oily sludge, granulated activated carbon, and ion exchange resins - into clean water, safe minerals, and renewable energy. Leveraging the waste-agnostic AirSCWO technology, 374Water intends to tackle this global environmental challenge in a comprehensive and cost effective way, thereby redefining the waste management and water treatment industries.
Gannon further commented, “My immediate goal is to establish a growth-accelerating strategy and secure the essential tools and funding for implementation. Growing our revenue and team, investing in technology and our manufacturing platform are crucial for future success. As we progress, we will maintain active engagement with our key stakeholders. I am confident in 374Water and our AirSCWO technology’s ability to revolutionize the waste management and water treatment industries.”
Chris Gannon Background
Gannon brings extensive experience in scaling companies and deep expertise in capital markets and engineering. As the former President and CEO of Energy Recovery, Inc. (NASDAQ: ERII), he spearheaded the company’s rapid growth in the core water business and its expansion into the wastewater and refrigeration markets. His leadership saw a quadruple increase in market capitalization and a tripling of annual revenue, achieved through expanding manufacturing, building a top-tier R&D&E division, and forging strategic partnerships. Later, as CEO of National Fire and Safety, he transformed and scaled the company, growing to over 900 employees and expanding its operational footprint through strategic acquisitions and a revamped revenue model. He holds an MBA from the University of Chicago Booth School of Business and a BSE from the University of Michigan’s College of Engineering.
Austin Meyermann, founder and President of Hunter Crown, LLC, with a specialization in the water and wastewater industry, led the CEO search on behalf of 374Water.
About 374Water
374Water Inc. (NASDAQ: SCWO) is a global cleantech company with innovative solutions to wastewater treatment and waste management issues. 374Water’s AirSCWO technology transforms organic “wastes” into minimal impact, value-added products, effectively shifting the waste management paradigm from disposal to resource recovery. 374Water is leading a new era of creating value in sustainability, eliminating PFAS and protecting our communities. Follow us on LinkedIn.
Cautionary Language
This press release contains "forward-looking statements," as that term is defined under the Private Securities Litigation Reform Act of 1995 (PSLRA), which statements may be identified by words such as "expects," "plans," "projects," "will," "may," "anticipates," "believes," "should," "intends," "estimates," and other words of similar meaning.
Investor Contact:
Heather Crowell
ir@374water.com
Media Contacts:
Christian Rizzo
media@374water.com
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