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
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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 (§ 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. |
Amendment to Employment Agreement with Randall J. Scott
On June 27, 2022, Rare Element Resources, Inc. (the “Company”), a Wyoming corporation and wholly owned subsidiary of Rare Element Resources Ltd. (the “Registrant”), entered into an amendment to the employment agreement with the Company’s Chief Executive Officer, Randall J. Scott, to provide for certain terms of Mr. Scott’s planned retirement (the “Employment Agreement Amendment” and the employment agreement, as amended by the Employment Agreement Amendment, the “Employment Agreement”).
Pursuant to the Employment Agreement Amendment, Mr. Scott shall continue to serve as the Company’s Chief Executive Officer until the earliest of (i) December 31, 2022 (the “Retirement Date”), (ii) the date on which Mr. Scott’s successor as Chief Executive Officer commences employment with the Company (the “CEO Succession Date”), or (iii) the date Mr. Scott’s employment is terminated by either the Company or Mr. Scott in accordance with the Employment Agreement. Until the earlier of the Retirement Date or the CEO Succession Date, Mr. Scott must continue to perform his duties and responsibilities arising out of his position as the Chief Executive Officer, as well as such succession planning and transition activities as are reasonably requested by the Board of Directors of the Registrant (the “Board”), including, without limitation, using reasonable efforts to ensure a smooth transition of his duties to the successor Chief Executive Officer or other officers of the Company.
Upon the termination of Mr. Scott’s employment with the Company in accordance with the terms of the Employment Agreement, the Company must pay or provide to Mr. Scott any accrued payments and benefits. In addition, subject to Mr. Scott’s execution of a consulting agreement (as described below) with the Company, and provided that Mr. Scott executes a general release of claims, the Company will also pay to Mr. Scott a severance payment equal to one year of Mr. Scott’s base salary as in effect on the date of termination. Such severance payment will be paid in a lump sum no later than the 30th day after the earlier of the CEO Succession Date or the Retirement Date.
The foregoing description of the Employment Agreement Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Employment Agreement Amendment, which is attached as Exhibit 10.1 to this report and incorporated herein by reference.
Form of Consulting Agreement with Randall J. Scott
In connection with the Employment Agreement Amendment, the Company will enter into a consulting agreement with Mr. Scott to provide for the terms of Mr. Scott’s continued service with the Company for a certain period of time following Mr. Scott’s planned retirement (the “Consulting Agreement”). The term of the Consulting Agreement is expected to begin on or around the Retirement Date and will continue through December 31, 2027, unless terminated sooner in accordance with the terms of the Consulting Agreement.
Pursuant to the Consulting Agreement, Mr. Scott will provide consulting services to the Company on such projects as the Chairman of the Board or the Chief Executive Officer of the Company may reasonably request, and Mr. Scott will reasonably agree, related to the business of the Company, including executive transition services to the Company, periodic advice and counseling to the Chief Executive Officer of the Company and transferring knowledge with respect to legacy items, and may additionally include advising and assisting on such other matters as may be requested by the Board or the Chief Executive Officer from time to time. As consideration for the consulting services provided under the Consulting Agreement, Mr. Scott will receive a consulting fee at a rate of $20,125 per month for the period commencing on the effective date of the Consulting Agreement and ending on December 31, 2022. Thereafter, the rate of the consulting fee will be agreed between the Company and Mr. Scott. In addition, all stock options granted to Mr. Scott pursuant to the Rare Element Resources, Ltd. 2011 Stock Option Plan or otherwise will remain outstanding and eligible to vest in accordance with their terms during the term of the Consulting Agreement as if Mr. Scott had remained employed by the Company through the term of the Consulting Agreement.
The Consulting Agreement contains certain restrictive covenants, including a confidentiality covenant and a non-competition covenant restricting Mr. Scott from acquiring any interest in any mining or millsite claims, minerals, real property, royalties or water within 20 miles from the outside boundaries of any of the properties of the Company.
The Company may terminate the Consulting Agreement in the event that Mr. Scott fails to provide the requested transition-related services from the effective date of the Consulting Agreement through December 31, 2022, or if Mr. Scott breaches any of the restrictive covenants set forth in the Employment Agreement or the Consulting Agreement or Mr. Scott disparages the Company or engages in egregious conduct detrimental to the Company. Mr. Scott may terminate the Consulting Agreement at any time after December 31, 2022 upon 10 days’ written notice. In addition, the Consulting Agreement will end upon Mr. Scott’s death or disability.
The form of the Consulting Agreement is an exhibit to the Employment Agreement Amendment.
Item 9.01Financial Statements and Exhibits.
(d)Exhibits.
Exhibit | Description | |
10.1* | ||
104 | Cover Page Interactive Data File (formatted in Inline XBRL and included as Exhibit 101. |
* Indicates a management contract or compensatory plan, contract or arrangement.
SIGNATURE
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.
Date: June 29, 2022
RARE ELEMENT RESOURCES LTD. | ||
By: | /s/ Wayne E. Rich | |
Name: | Wayne E. Rich | |
Title: | Chief Financial Officer |
Exhibit 10.1
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This First Amendment (this “Amendment”) to the Employment Agreement dated as of January 1, 2018 (the “Agreement”) by and between Randall J. Scott (the “Employee”) and Rare Element Resources, Inc., a Wyoming corporation (the “Company”) is made and entered into effective as of June 27, 2022 (the “Amendment Effective Date”).
RECITALS
WHEREAS, the Employee and the Company are party to the Agreement, pursuant to which the Employee serves as the President and Chief Executive Officer of the Company; and
WHEREAS, the Employee intends to retire from the Company, and the parties mutually desire to arrange for the retirement to be under certain terms and conditions intended to provide for a smooth transition of the Employee’s duties and responsibilities to the Employee’s successor.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements contained herein, the parties agree as follows:
“Until the earlier of (x) the Retirement Date (as defined below), or (y) the CEO Succession Date (as defined below), the Employee shall continue to fully execute the responsibilities, duties, and authority attendant to his position as described in this Section 1.1; and the Employee shall perform such succession planning and transition activities as are reasonably requested by the Board, including, but not limited to, using reasonable efforts to ensure a smooth transition of his duties to the successor Chief Executive Officer or other officers of the Company.”
“2.Period of Employment. The Employee shall be employed in the position set forth above as of the Effective Date and shall continue in such position until the earliest of (i) December 31, 2022 (the “Retirement Date”), (ii) the date on which the Employee’s successor as Chief Executive Officer commences employment with the Company (the “CEO Succession Date”), or (iii) the date the Employee’s employment is terminated by either the Company or the Employee pursuant to Section 7 of the Agreement.”
“7.6Retirement. Unless earlier terminated pursuant to Section 7, the Employee’s employment with the Company shall end on the earlier of (i) the Retirement Date or (ii) the CEO Succession Date, as set forth in Section 2. Upon such termination pursuant to this Section 7.6, the Company shall pay or provide to the Employee the Accrued Obligations
and, subject to the Employee’s execution of the Consulting Agreement substantially in the form attached as Exhibit A to this Amendment, and provided the Employee executes the Release in accordance with Section 7.8 below, the Company shall also pay to Employee a severance payment equal to one year of the Employee’s Base Salary as in effect on the date of termination. Such amount shall be paid in a lump sum no later than the thirtieth (30th) day after the earlier of the CEO Succession Date or the Retirement Date.
[Signature Page to Follow]
2
IN WITNESS WHEREOF, the parties hereto have entered into this Amendment effective as of the date first above written.
THE COMPANY
RARE ELEMENT RESOURCES, INC.
By:/s/ Gerald Grandey
Name: Gerald W. Grandey
Title: Chairman
THE EMPLOYEE
/s/ Randall J. Scott
Randall J. Scott
[Signature Page to First Amendment to Employment Agreement]
EXHIBIT A
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this “Agreement”) is made effective as of [●], 2022 (the “Effective Date”), by and between Randall J. Scott (the “Consultant”) and Rare Element Resources, Inc., a Wyoming corporation (the “Company”).
RECITALS
WHEREAS, the Consultant, the former Chief Executive Officer of the Company, retired effective [●], 2022 pursuant to that certain Employment Agreement between the Company and the Consultant dated January 1, 2018, as amended on June 27, 2022 (the “Employment Agreement”);
WHEREAS, the Company intends to engage the Consultant to perform certain consulting services for the Company following the Consultant’s retirement; and
WHEREAS, the parties desire to enter into this Agreement in order to incorporate the agreed upon terms and conditions of the Consultant’s consulting services.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows:
1. | Consulting Services. |
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2
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2. | 409A. The payments and benefits provided hereunder are intended to be exempt from the requirements of Section 409A of the Code. Notwithstanding any provision of this Agreement to the contrary, in the event that the Company reasonably determines that any payments or benefits hereunder are not either exempt from or compliant with the requirements of Section 409A of the Code, the Company shall have the right to adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that are necessary or appropriate (i) to preserve the intended tax treatment of the payments and benefits provided hereunder, to preserve the economic benefits with respect to such payments and benefits, and/or (ii) to exempt such payments and benefits from Section 409A of the Code or to comply with the requirements of Section 409A of the Code and thereby avoid the application of penalty taxes thereunder; provided, however, that this Section does not, and shall not be construed so as to, create any obligation on the part of the Company to adopt any such amendments, policies or procedures or to take any other such actions or to indemnify the Consultant for any failure to do so. |
3. | Disclosure of Information and Non-Competition |
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4. | General Provisions. |
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If to the Consultant:
Randall J. Scott
4 Shining Oak
Littleton, CO 80127
rscott@rareelementresources.com
If to the Company:
Rare Element Resources, Inc.
PO Box 271049
Littleton, CO 80127
Attn: Corporate Secretary
8
Any party may change his or its address or facsimile number for notice purposes by providing written notice to the other parties.
[Remainder of Page Intentionally Blank]
9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.
RARE ELEMENT RESOURCES, INC.
By:
Name:
Title:
CONSULTANT
By:
Randall J. Scott
10
Document and Entity Information |
Jun. 27, 2022 |
---|---|
Document and Entity Information [Abstract] | |
Document Type | 8-K |
Document Period End Date | Jun. 27, 2022 |
Entity File Number | 001-34852 |
Entity Registrant Name | RARE ELEMENT RESOURCES LTD. |
Entity Incorporation, State or Country Code | A1 |
Entity Tax Identification Number | 00-0000000 |
Entity Address, Address Line One | P.O. Box 271049 |
Entity Address, City or Town | Littleton |
Entity Address, State or Province | CO |
Entity Address, Postal Zip Code | 80127 |
City Area Code | 720 |
Local Phone Number | 278-2460 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Entity Emerging Growth Company | false |
Entity Central Index Key | 0001419806 |
Amendment Flag | false |
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