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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): August 26, 2021

 

VIRTRA, INC.

(Exact name of Registrant as Specified in Its Charter)

 

Nevada   001-38420   93-1207631
(State or Other Jurisdiction   (Commission   (IRS Employer
of Incorporation)   File Number)   Identification No.)

 

7970 S. Kyrene Rd.    
Tempe, AZ   85284
(Address of Principal Executive Offices)   (Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (480) 968-1488

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

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:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
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:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, $0.0001 par value   VTSI   NASDAQ Capital Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

 

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

 

On August 26, 2021, the Compensation Committee of the Board of Directors (the “Compensation Committee”) of VirTra, Inc. (the “Company”), relying upon third-party studies and recommendations, took several actions to bring the compensation of the Company’s Chief Executive Officer (CEO) and Chief Operating Officer (COO) up to industry standards and provide meaningful incentive for future performance. The Committee (1) approved grants of 224,133 and 168,090 performance-based restricted stock units pursuant to the Company’s 2017 Equity Incentive Plan (the “Plan”) to the Company’s CEO and COO, respectively; (2) approved grants of 14,057 and 10,543 restricted shares to the CEO and COO, respectively, based on the Company’s performance for the twelve months ended June 30, 2021; and (3) increased the annual base salaries effective August 15, 2021 to $349,860 and $251,140 for the CEO and COO, respectively. While their salaries have been annually increased with Company-wide cost-of-living adjustments, this was the first comprehensive review and adjustment undertaken since 2012.

 

General. Pursuant to the Plan, the Company may award restricted stock units, which represent the right to receive shares of our Common Stock at a future date without payment of a purchase price, subject to meeting performance targets, vesting or other conditions specified by the Compensation Committee. Holders of restricted stock units have no voting rights or rights to receive cash dividends unless and until shares of Common Stock are issued in settlement of such awards.

 

Vesting. Beginning on the last business day of August 2022, a tranche of restricted stock units, having approximate values of $40,000 and $30,000 for the CEO and COO, respectively, based on current prices, may vest if the Company has achieved net profit for the twelve months ending June 30, 2022 of at least $2,500,000. For every $500,000 earned in excess of $2,500,000 another tranche will vest. If the maximum net profit of $7,000,000 is achieved, ten tranches would vest. Similarly, on the last business day of August 2023, a tranche of restricted stock units may vest if the Company has achieved a net profit of at least $3,000,000, with the potential to have additional tranches vest up to a maximum of $9,000,000 in net profit. This vesting arrangement continues with the last business day of August 2024, with the minimum net profit threshold being $3,500,000 and the maximum net profit being $11,000,000.

 

The vesting schedule notwithstanding, the Compensation Committee shall have the discretion to declare the vesting of any number of restricted stock units should the Company experience unusual results of operations, such as falling below the net profit threshold one year and exceeding the maximum net profit the following year, so long as the total number of restricted stock units declared to be vested does not exceed the amount awarded. Additionally, while a maximum net profit per year has been set for allocation of the available shares at this time, it is very possible that the Company will exceed these levels during the next 3 years and if such performance occurs, the Compensation Committee will meet to determine if additional compensation is in the best interests of the Company at that time.

 

Certain Terminations of Employment. If the applicable executive’s employment terminates for Cause (as defined in the executive’s employment agreement with the Company) or as a result of death or disability, at any time before all of his restricted stock units have vested, the executive’s unvested restricted stock units shall be automatically forfeited upon such termination of service with the Company. Any Restricted Stock Units that have been earned as a result of the Company’s operating results, but not vested because of death or disability occurring prior to the vesting date, shall still be deemed to be vested and inure to the benefit of the grantee or the grantee’s estate, as the case may be.

 

Change of Control. In the event of a change of control of the Company, all then-unvested restricted stock units will vest in full as of the date of the change in control.

 

The foregoing summary is qualified in its entirety by reference to the full text of the Restricted Stock Unit Agreements, copies of which are attached hereto as Exhibits 10.1 and 10.2 and incorporated by reference herein.

 

 

 

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.   Description

10.1

 

Restricted Stock Unit Agreement – Robert D. Ferris

10.2   Restricted Stock Unit Agreement – Matthew D. Burlend
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

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.

 

  VIRTRA, INC.
 
Date: August 27, 2021 By: /s/ Robert D. Ferris
  Name: Robert D. Ferris
  Title: Chief Executive Officer

 

 

 

 

Exhibit 10.1

 

Restricted Stock Unit Agreement

 

This Restricted Stock Unit Agreement (this “Agreement”) is made and entered into as of August 26, 2021 (the “Grant Date”) by and between VIRTRA, INC., a Nevada corporation (the “Company”) and ROBERT D. FERRIS (the “Grantee”).

 

WHEREAS, the Company has adopted the 2017 Equity Incentive (the “Plan”) pursuant to which awards of Restricted Stock Units may be granted; and

 

WHEREAS, the Committee has determined that it is in the best interests of the Company and its shareholders to grant the award of Restricted Stock Units provided for herein.

 

NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:

 

1. Grant of Restricted Stock Units.

 

1.1 Pursuant to Section 9 of the Plan, the Company hereby issues to the Grantee on the Grant Date an Award consisting of, in the aggregate, 224,133 Restricted Stock Units (the “Restricted Stock Units”). Each Restricted Stock Unit represents the right to receive one share of Common Stock, subject to the terms and conditions set forth in this Agreement and the Plan. Capitalized terms that are used but not defined herein have the meaning ascribed to them in the Plan.

 

1.2 The Restricted Stock Units shall be credited to a separate account maintained for the Grantee on the books and records of the Company (the “Account”). All amounts credited to the Account shall continue for all purposes to be part of the general assets of the Company.

 

2. Consideration. The grant of the Restricted Stock Units is made in consideration of the services to be rendered by the Grantee to the Company.

 

3. Vesting.

 

3.1 Except as otherwise provided herein, provided that the Grantee remains in Continuous Service1 through the applicable vesting date, and further provided that any additional conditions and performance goals set forth in Schedule I have been satisfied, the Restricted Stock Units will vest in accordance with the schedule (the period during which restrictions apply, the “Restricted Period”) set forth in Schedule I. Once vested, the Restricted Stock Units become “Vested Units.”

 

 

1 Continuous Service” means that the Grantee’s service with the Company or an Affiliate, whether as an Employee, Consultant or Director, is not interrupted or terminated. The Grantee’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Grantee renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Grantee renders such service, provided that there is no interruption or termination of the Grantee's Continuous Service; provided further that if any Award is subject to Section 409A of the Code, this sentence shall only be given effect to the extent consistent with Section 409A of the Code. For example, a change in status from an Employee of the Company to a Director of an Affiliate will not constitute an interruption of Continuous Service. Any approved leave of absence, including sick leave, military leave or any other personal or family leave of absence, shall not be deemed an interruption of Continuous Service. A Company transaction, such as a sale or spin-off of a division or subsidiary that employs a Grantee, shall not be deemed to result in a termination of Continuous Service for purposes of affected Awards.

 

 

 

 

3.2 The vesting schedule notwithstanding, if the Grantee’s Continuous Service terminates for Cause (as defined in Grantee’s Employment Agreement with the Company) or as a result of death or disability, at any time before all of his or her Restricted Stock Units have vested, the Grantee’s unvested Restricted Stock Units shall be automatically forfeited upon such termination of Continuous Service and neither the Company nor any Affiliate shall have any further obligations to the Grantee under this Agreement. Any Restricted Stock Units that have been earned as a result of the Company’s operating results, but not vested because of death or disability occurring prior to the Vesting Date, shall still be deemed to be vested and inure to the benefit of the Grantee or the Grantee’s estate, as the case may be.

 

3.3 The vesting schedule notwithstanding, upon the occurrence of a Change in Control, 100% of the unvested Restricted Stock Units shall vest as of the date of the Change in Control.

 

3.4 The vesting schedule notwithstanding, the Compensation Committee of the Company’s Board of Directors shall have the discretion to declare the vesting of any number of Restricted Stock Units should the Company experience unusual results of operations, such as falling below the net profit threshold one year and exceeding the maximum net profit the following year, so long as the total number of Restricted Stock Units declared to be vested does not exceed that amount set forth in Section 1.1 above. Additionally, while a maximum net profit per year has been set for allocation of the available shares at this time, it is very possible that the Company will exceed these levels during the next 3 years and if such performance occurs, the Compensation Committee shall have the discretion to determine if additional compensation is in the best interests of the Company at that time.

 

4. Restrictions. Subject to any exceptions set forth in this Agreement or the Plan, during the Restricted Period and until such time as the Restricted Stock Units are settled in accordance with Section 6, the Restricted Stock Units or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Grantee. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Restricted Stock Units or the rights relating thereto shall be wholly ineffective and, if any such attempt is made, the Restricted Stock Units will be forfeited by the Grantee and all of the Grantee’s rights to such units shall immediately terminate without any payment or consideration by the Company.

 

5. Rights as Shareholder; Dividend Equivalents.

 

5.1 The Grantee shall not have any rights of a shareholder with respect to the shares of Common Stock underlying the Restricted Stock Units unless and until the Restricted Stock Units vest and are settled by the issuance of such shares of Common Stock.

 

5.2 Upon and following the settlement of the Restricted Stock Units, the Grantee shall be the record owner of the shares of Common Stock underlying the Restricted Stock Units unless and until such shares are sold or otherwise disposed of, and as record owner shall be entitled to all rights of a shareholder of the Company (including voting rights).

 

VirTra, Inc. Restricted Stock Unit Agreement – Robert D. Ferris – page 2

 

 

5.3 The Grantee shall not be entitled to any Dividend Equivalents with respect to the Restricted Stock Units to reflect any dividends payable on shares of Common Stock.

 

6. Settlement of Restricted Stock Units.

 

6.1 Subject to Section 9 hereof, promptly following the vesting date, and in any event no later than March 15 of the calendar year following the calendar year in which such vesting occurs, the Company shall (a) issue and deliver to the Grantee the number of shares of Common Stock equal to the number of Vested Units; and (b) enter the Grantee’s name on the books of the Company as the shareholder of record with respect to the shares of Common Stock delivered to the Grantee.

 

6.2 Notwithstanding Section 6.1, in accordance with Section 9.6 of the Plan, the Committee may, but is not required to, prescribe rules pursuant to which the Grantee may elect to defer settlement of the Restricted Stock Units. Any deferral election must be made in compliance with such rules and procedures as the Committee deems advisable.

 

If the Grantee is deemed a “specified employee” within the meaning of Section 409A of the Code, as determined by the Committee, at a time when the Grantee becomes eligible for settlement of the RSUs upon his “separation from service” within the meaning of Section 409A of the Code, then to the extent necessary to prevent any accelerated or additional tax under Section 409A of the Code, such settlement will be delayed until the earlier of: (a) the date that is six months following the Grantee’s separation from service and (b) the Grantee’s death.

 

6.3 To the extent that the Grantee does not vest in any Restricted Stock Units, all interest in such Restricted Stock Units shall be forfeited. The Grantee has no right or interest in any Restricted Stock Units that are forfeited.

 

7. No Right to Continued Service. Neither the Plan nor this Agreement shall confer upon the Grantee any right to be retained in any position, as an Employee, Consultant or Director of the Company. Further, nothing in the Plan or this Agreement shall be construed to limit the discretion of the Company to terminate the Grantee’s Continuous Service at any time, with or without Cause.

 

8. Adjustments. If any change is made to the outstanding Common Stock or the capital structure of the Company, if required, the Restricted Stock Units shall be adjusted or terminated in any manner as contemplated by Section 4.4 of the Plan.

 

9. Tax Liability and Withholding.

 

9.1 The Grantee shall be required to pay to the Company, and the Company shall have the right to deduct from any compensation paid to the Grantee pursuant to the Plan, the amount of any required withholding taxes in respect of the Restricted Stock Units and to take all such other action as the Committee deems necessary to satisfy all obligations for the payment of such withholding taxes. The Committee may permit the Grantee to satisfy any federal, state or local tax withholding obligation by any of the following means, or by a combination of such means:

 

VirTra, Inc. Restricted Stock Unit Agreement – Robert D. Ferris – page 3

 

 

(a) tendering a cash payment.

 

(b) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable or deliverable to the Grantee as a result of the vesting of the Restricted Stock Units; provided, however, that no shares of Common Stock shall be withheld with a value exceeding the maximum amount of tax required to be withheld by law.

 

(c) delivering to the Company previously owned and unencumbered shares of Common Stock.

 

9.2 Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Grantee’s responsibility and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant, vesting or settlement of the Restricted Stock Units or the subsequent sale of any shares; and (b) does not commit to structure the Restricted Stock Units to reduce or eliminate the Grantee’s liability for Tax-Related Items.

 

10. Compliance with Law. The issuance and transfer of shares of Common Stock shall be subject to compliance by the Company and the Grantee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company’s shares of Common Stock may be listed. No shares of Common Stock shall be issued or transferred unless and until any then applicable requirements of state and federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel.

 

11. Notices. Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the Chief Financial Officer of the Company at the Company’s principal corporate offices. Any notice required to be delivered to the Grantee under this Agreement shall be in writing and addressed to the Grantee at the Grantee’s address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.

 

12. Governing Law. This Agreement will be construed and interpreted in accordance with the laws of the State of Nevada without regard to conflict of law principles.

 

13. Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by the Grantee or the Company to the Committee for review. The resolution of such dispute by the Committee shall be final and binding on the Grantee and the Company.

 

14. Restricted Stock Units Subject to Plan. This Agreement is subject to the Plan as approved by the Company’s shareholders. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

 

VirTra, Inc. Restricted Stock Unit Agreement – Robert D. Ferris – page 4

 

 

15. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Grantee and the Grantee’s beneficiaries, executors, administrators and the person(s) to whom the Restricted Stock Units may be transferred by will or the laws of descent or distribution.

 

16. Severability. The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the validity or enforceability of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall be severable and enforceable to the extent permitted by law.

 

17. Discretionary Nature of Plan. The Plan is discretionary and may be amended, cancelled or terminated by the Company at any time, in its discretion. The grant of the Restricted Stock Units in this Agreement does not create any contractual right or other right to receive any Restricted Stock Units or other Awards in the future. Future Awards, if any, will be at the sole discretion of the Company. Any amendment, modification, or termination of the Plan shall not constitute a change or impairment of the terms and conditions of the Grantee’s employment with the Company.

 

18. Amendment. The Committee has the right to amend, alter, suspend, discontinue or cancel the Restricted Stock Units, prospectively or retroactively; provided, that, no such amendment shall adversely affect the Grantee’s material rights under this Agreement without the Grantee’s consent.

 

19. Section 409A. This Agreement is intended to comply with Section 409A of the Code or an exemption thereunder and shall be construed and interpreted in a manner that is consistent with the requirements for avoiding additional taxes or penalties under Section 409A of the Code. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A of the Code and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Grantee on account of non-compliance with Section 409A of the Code.

 

20. No Impact on Other Benefits. The value of the Grantee’s Restricted Stock Units is not part of his or her normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.

 

21. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

 

22. Acceptance. The Grantee hereby acknowledges receipt of a copy of the Plan and this Agreement. The Grantee has read and understands the terms and provisions thereof, and accepts the Restricted Stock Units subject to all of the terms and conditions of the Plan and this Agreement. The Grantee acknowledges that there may be adverse tax consequences upon the vesting or settlement of the Restricted Stock Units or disposition of the underlying shares and that the Grantee has been advised to consult a tax advisor prior to such vesting, settlement or disposition.

 

[signature page follows]

 

VirTra, Inc. Restricted Stock Unit Agreement – Robert D. Ferris – page 5

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

  “Company”
  VIRTRA, INC.
   
  By:

/s/ Marsha J. Foxx

  Name:

Marsha J. Foxx

  Title: Chief Accounting Officer
     
  “Grantee”
   
    /s/ Robert D. Ferris
  Name:

Robert D. Ferris

 

VirTra, Inc. Restricted Stock Unit Agreement – Robert D. Ferris – page 6

 

 

SCHEDULE I

 

Vesting Date:

 

Last business day of August 2022

 

    Company achieves a net profit for the 12 months ending June 30, 2022 of at least:  
    $ 2.5MM   $ 3.0MM   $ 3.5MM   $ 4.0MM   $ 4.5MM   $ 5.0MM   $ 5.5MM   $ 6.0MM   $ 6.5MM   $ 7.0MM
No. of RSUs that vest     5,747       11,494       17,241       22,988       28,735       34,482       40,229       45,976       51,723       57,470  

 

Last business day of August 2023

 

    Company achieves a net profit for the 12 months ending June 30, 2023 of at least:  
    $ 3.0MM   $ 3.5MM   $ 4.0MM   $ 4.5MM   $ 5.0MM   $ 5.5MM   $ 6.0MM   $ 6.5MM   $ 7.0MM   $ 7.5MM
No. of RSUs that vest     5,747       11,494       17,241       22,988       28,735       34,482       40,229       45,976       51,723       57,470  
    $ 8.0MM   $ 8.5MM   $ 9.0MM                                                        
      63,217       68,964       74,711                                                          

 

Last business day of August 2024

 

    Company achieves a net profit for the 12 months ending June 30, 2024 of at least:  
    $ 3.5MM   $ 4.0MM   $ 4.5MM   $ 5.0MM   $ 5.5MM   $ 6.0MM   $ 6.5MM   $ 7.0MM   $ 7.5MM   $ 8.0MM
No. of RSUs that vest     5,747       11,494       17,241       22,988       28,735       34,482       40,229       45,976       51,723       57,470  
    $ 8.5MM   $ 9.0MM   $ 9.5MM   $ 10.0MM   $ 10.5MM   $ 11.0MM                                
      63,217       68,964       74,711       80,458       86,205       91,952                                  

 

 

 

 

Exhibit 10.2

 

Restricted Stock Unit Agreement

 

This Restricted Stock Unit Agreement (this “Agreement”) is made and entered into as of August 26, 2021 (the “Grant Date”) by and between VIRTRA, INC., a Nevada corporation (the “Company”) and MATTHEW D. BURLEND (the “Grantee”).

 

WHEREAS, the Company has adopted the 2017 Equity Incentive (the “Plan”) pursuant to which awards of Restricted Stock Units may be granted; and

 

WHEREAS, the Committee has determined that it is in the best interests of the Company and its shareholders to grant the award of Restricted Stock Units provided for herein.

 

NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:

 

1. Grant of Restricted Stock Units.

 

1.1 Pursuant to Section 9 of the Plan, the Company hereby issues to the Grantee on the Grant Date an Award consisting of, in the aggregate, 168,090 Restricted Stock Units (the “Restricted Stock Units”). Each Restricted Stock Unit represents the right to receive one share of Common Stock, subject to the terms and conditions set forth in this Agreement and the Plan. Capitalized terms that are used but not defined herein have the meaning ascribed to them in the Plan.

 

1.2 The Restricted Stock Units shall be credited to a separate account maintained for the Grantee on the books and records of the Company (the “Account”). All amounts credited to the Account shall continue for all purposes to be part of the general assets of the Company.

 

2. Consideration. The grant of the Restricted Stock Units is made in consideration of the services to be rendered by the Grantee to the Company.

 

3. Vesting.

 

3.1 Except as otherwise provided herein, provided that the Grantee remains in Continuous Service1 through the applicable vesting date, and further provided that any additional conditions and performance goals set forth in Schedule I have been satisfied, the Restricted Stock Units will vest in accordance with the schedule (the period during which restrictions apply, the “Restricted Period”) set forth in Schedule I. Once vested, the Restricted Stock Units become “Vested Units.”

 

 

1“Continuous Service” means that the Grantee’s service with the Company or an Affiliate, whether as an Employee, Consultant or Director, is not interrupted or terminated. The Grantee’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Grantee renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Grantee renders such service, provided that there is no interruption or termination of the Grantee's Continuous Service; provided further that if any Award is subject to Section 409A of the Code, this sentence shall only be given effect to the extent consistent with Section 409A of the Code. For example, a change in status from an Employee of the Company to a Director of an Affiliate will not constitute an interruption of Continuous Service. Any approved leave of absence, including sick leave, military leave or any other personal or family leave of absence, shall not be deemed an interruption of Continuous Service. A Company transaction, such as a sale or spin-off of a division or subsidiary that employs a Grantee, shall not be deemed to result in a termination of Continuous Service for purposes of affected Awards.

 

 
 

 

3.2 The vesting schedule notwithstanding, if the Grantee’s Continuous Service terminates for Cause (as defined in Grantee’s Employment Agreement with the Company) or as a result of death or disability, at any time before all of his or her Restricted Stock Units have vested, the Grantee’s unvested Restricted Stock Units shall be automatically forfeited upon such termination of Continuous Service and neither the Company nor any Affiliate shall have any further obligations to the Grantee under this Agreement. Any Restricted Stock Units that have been earned as a result of the Company’s operating results, but not vested because of death or disability occurring prior to the Vesting Date, shall still be deemed to be vested and inure to the benefit of the Grantee or the Grantee’s estate, as the case may be.

 

3.3 The vesting schedule notwithstanding, upon the occurrence of a Change in Control, 100% of the unvested Restricted Stock Units shall vest as of the date of the Change in Control.

 

3.4 The vesting schedule notwithstanding, the Compensation Committee of the Company’s Board of Directors shall have the discretion to declare the vesting of any number of Restricted Stock Units should the Company experience unusual results of operations, such as falling below the net profit threshold one year and exceeding the maximum net profit the following year, so long as the total number of Restricted Stock Units declared to be vested does not exceed that amount set forth in Section 1.1 above. Additionally, while a maximum net profit per year has been set for allocation of the available shares at this time, it is very possible that the Company will exceed these levels during the next 3 years and if such performance occurs, the Compensation Committee shall have the discretion to determine if additional compensation is in the best interests of the Company at that time.

 

4. Restrictions. Subject to any exceptions set forth in this Agreement or the Plan, during the Restricted Period and until such time as the Restricted Stock Units are settled in accordance with Section 6, the Restricted Stock Units or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Grantee. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Restricted Stock Units or the rights relating thereto shall be wholly ineffective and, if any such attempt is made, the Restricted Stock Units will be forfeited by the Grantee and all of the Grantee’s rights to such units shall immediately terminate without any payment or consideration by the Company.

 

5. Rights as Shareholder; Dividend Equivalents.

 

5.1 The Grantee shall not have any rights of a shareholder with respect to the shares of Common Stock underlying the Restricted Stock Units unless and until the Restricted Stock Units vest and are settled by the issuance of such shares of Common Stock.

 

VirTra, Inc. Restricted Stock Unit Agreement – Matthew D. Burlend – page 2
 

 

5.2 Upon and following the settlement of the Restricted Stock Units, the Grantee shall be the record owner of the shares of Common Stock underlying the Restricted Stock Units unless and until such shares are sold or otherwise disposed of, and as record owner shall be entitled to all rights of a shareholder of the Company (including voting rights).

 

5.3 The Grantee shall not be entitled to any Dividend Equivalents with respect to the Restricted Stock Units to reflect any dividends payable on shares of Common Stock.

 

6. Settlement of Restricted Stock Units.

 

6.1 Subject to Section 9 hereof, promptly following the vesting date, and in any event no later than March 15 of the calendar year following the calendar year in which such vesting occurs, the Company shall (a) issue and deliver to the Grantee the number of shares of Common Stock equal to the number of Vested Units; and (b) enter the Grantee’s name on the books of the Company as the shareholder of record with respect to the shares of Common Stock delivered to the Grantee.

 

6.2 Notwithstanding Section 6.1, in accordance with Section 9.6 of the Plan, the Committee may, but is not required to, prescribe rules pursuant to which the Grantee may elect to defer settlement of the Restricted Stock Units. Any deferral election must be made in compliance with such rules and procedures as the Committee deems advisable.

 

If the Grantee is deemed a “specified employee” within the meaning of Section 409A of the Code, as determined by the Committee, at a time when the Grantee becomes eligible for settlement of the RSUs upon his “separation from service” within the meaning of Section 409A of the Code, then to the extent necessary to prevent any accelerated or additional tax under Section 409A of the Code, such settlement will be delayed until the earlier of: (a) the date that is six months following the Grantee’s separation from service and (b) the Grantee’s death.

 

6.3 To the extent that the Grantee does not vest in any Restricted Stock Units, all interest in such Restricted Stock Units shall be forfeited. The Grantee has no right or interest in any Restricted Stock Units that are forfeited.

 

7. No Right to Continued Service. Neither the Plan nor this Agreement shall confer upon the Grantee any right to be retained in any position, as an Employee, Consultant or Director of the Company. Further, nothing in the Plan or this Agreement shall be construed to limit the discretion of the Company to terminate the Grantee’s Continuous Service at any time, with or without Cause.

 

8. Adjustments. If any change is made to the outstanding Common Stock or the capital structure of the Company, if required, the Restricted Stock Units shall be adjusted or terminated in any manner as contemplated by Section 4.4 of the Plan.

 

VirTra, Inc. Restricted Stock Unit Agreement – Matthew D. Burlend – page 3
 

 

9. Tax Liability and Withholding.

 

9.1 The Grantee shall be required to pay to the Company, and the Company shall have the right to deduct from any compensation paid to the Grantee pursuant to the Plan, the amount of any required withholding taxes in respect of the Restricted Stock Units and to take all such other action as the Committee deems necessary to satisfy all obligations for the payment of such withholding taxes. The Committee may permit the Grantee to satisfy any federal, state or local tax withholding obligation by any of the following means, or by a combination of such means:

 

(a) tendering a cash payment.

 

(b) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable or deliverable to the Grantee as a result of the vesting of the Restricted Stock Units; provided, however, that no shares of Common Stock shall be withheld with a value exceeding the maximum amount of tax required to be withheld by law.

 

(c) delivering to the Company previously owned and unencumbered shares of Common Stock.

 

9.2 Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Grantee’s responsibility and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant, vesting or settlement of the Restricted Stock Units or the subsequent sale of any shares; and (b) does not commit to structure the Restricted Stock Units to reduce or eliminate the Grantee’s liability for Tax-Related Items.

 

10. Compliance with Law. The issuance and transfer of shares of Common Stock shall be subject to compliance by the Company and the Grantee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company’s shares of Common Stock may be listed. No shares of Common Stock shall be issued or transferred unless and until any then applicable requirements of state and federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel.

 

11. Notices. Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the Chief Financial Officer of the Company at the Company’s principal corporate offices. Any notice required to be delivered to the Grantee under this Agreement shall be in writing and addressed to the Grantee at the Grantee’s address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.

 

12. Governing Law. This Agreement will be construed and interpreted in accordance with the laws of the State of Nevada without regard to conflict of law principles.

 

13. Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by the Grantee or the Company to the Committee for review. The resolution of such dispute by the Committee shall be final and binding on the Grantee and the Company.

 

14. Restricted Stock Units Subject to Plan. This Agreement is subject to the Plan as approved by the Company’s shareholders. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

 

VirTra, Inc. Restricted Stock Unit Agreement – Matthew D. Burlend – page 4
 

 

15. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Grantee and the Grantee’s beneficiaries, executors, administrators and the person(s) to whom the Restricted Stock Units may be transferred by will or the laws of descent or distribution.

 

16. Severability. The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the validity or enforceability of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall be severable and enforceable to the extent permitted by law.

 

17. Discretionary Nature of Plan. The Plan is discretionary and may be amended, cancelled or terminated by the Company at any time, in its discretion. The grant of the Restricted Stock Units in this Agreement does not create any contractual right or other right to receive any Restricted Stock Units or other Awards in the future. Future Awards, if any, will be at the sole discretion of the Company. Any amendment, modification, or termination of the Plan shall not constitute a change or impairment of the terms and conditions of the Grantee’s employment with the Company.

 

18. Amendment. The Committee has the right to amend, alter, suspend, discontinue or cancel the Restricted Stock Units, prospectively or retroactively; provided, that, no such amendment shall adversely affect the Grantee’s material rights under this Agreement without the Grantee’s consent.

 

19. Section 409A. This Agreement is intended to comply with Section 409A of the Code or an exemption thereunder and shall be construed and interpreted in a manner that is consistent with the requirements for avoiding additional taxes or penalties under Section 409A of the Code. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A of the Code and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Grantee on account of non-compliance with Section 409A of the Code.

 

20. No Impact on Other Benefits. The value of the Grantee’s Restricted Stock Units is not part of his or her normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.

 

21. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

 

22. Acceptance. The Grantee hereby acknowledges receipt of a copy of the Plan and this Agreement. The Grantee has read and understands the terms and provisions thereof, and accepts the Restricted Stock Units subject to all of the terms and conditions of the Plan and this Agreement. The Grantee acknowledges that there may be adverse tax consequences upon the vesting or settlement of the Restricted Stock Units or disposition of the underlying shares and that the Grantee has been advised to consult a tax advisor prior to such vesting, settlement or disposition.

 

[signature page follows]

 

VirTra, Inc. Restricted Stock Unit Agreement – Matthew D. Burlend – page 5
 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

 

“Company”

   
  VIRTRA, INC.
   
  By:

/s/ Marsha J. Foxx

  Name:

Marsha J. Foxx

  Title: Chief Accounting Officer
     
  “Grantee”
   
    /s/ Matthew D. Burlend
  Name:

Matthew D. Burlend

 

VirTra, Inc. Restricted Stock Unit Agreement – Matthew D. Burlend – page 6
 

 

SCHEDULE I

 

Vesting Date:

 

Last business day of August 2022

 

    Company achieves a net profit for the 12 months ending June 30, 2022 of at least:  
    $ 2.5MM   $ 3.0MM   $ 3.5MM   $ 4.0MM   $ 4.5MM   $ 5.0MM   $ 5.5MM   $ 6.0MM   $ 6.5MM   $ 7.0MM
No. of RSUs that vest     4,310       8,620       12,930       17,240       21,550       25,860       30,170       34,480       38,790       43,100  

 

Last business day of August 2023

 

    Company achieves a net profit for the 12 months ending June 30, 2023 of at least:  
    $ 3.0MM   $ 3.5MM   $ 4.0MM   $ 4.5MM   $ 5.0MM   $ 5.5MM   $ 6.0MM   $ 6.5 MM   $ 7.0 MM   $ 7.5MM
No. of RSUs that vest     4,310       8,620       12,930       17,240       21,550       25,860       30,170       34,480       38,790       43,100  
  $ 8.0 MM   $ 8.5 MM   $ 9.0 MM                                                        
    47,410       51,720       56,030                                                          

 

Last business day of August 2024

 

    Company achieves a net profit for the 12 months ending June 30, 2024 of at least:  
    $ 3.5MM   $ 4.0MM   $ 4.5MM   $ 5.0MM   $ 5.5MM   $ 6.0MM   $ 6.5MM   $ 7.0MM   $ 7.5MM   $ 8.0MM
No. of RSUs that vest     4,310       8,620       12,930       17,240       21,550       25,860       30,170       34,480       38,790       43,100  
    $ 8.5MM   $ 9.0MM   $ 9.5MM   $ 10.0MM   $ 10.5MM   $ 11.0MM                                
      47,410       51,720       56,030       60,340       64,650       68,960                                  

 

VirTra, Inc. Restricted Stock Unit Agreement – Matthew D. Burlend – page 7