UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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):  May 27, 2015

 

CVSL INC.

(Exact name of registrant as specified in its charter)

 

Florida 001-36755 98-0534701
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation or organization)   Identification No.)

 

2400 North Dallas Parkway, Suite 230, Plano, Texas 75093

(Address of principal executive offices and zip code)

 

(972) 398-7120

(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:

 

¨ 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))

 

 
 

 

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

On May 29, 2015, CVSL Inc. (the “Company”) received a letter from Tamala L. Longaberger (the “Resignation Letter”), pursuant to which she resigned as a member of the Company’s Board of Directors (the “Board”), effective immediately on that date. The Company accepted Ms. Longaberger’s resignation upon receipt of the Resignation Letter. At the time of her resignation, Ms. Longaberger was not a member of any committee of the Board.

 

In the Resignation Letter, Ms. Longaberger stated that her resignation was due to certain disputes and disagreements with the Company. She asserted in the Resignation Letter that the Company: (i) had reduced her base salary in her capacity as the Chief Executive Officer of The Longaberger Company; (ii) has reduced and diminished the nature, status, duties and responsibilities of her position at The Longaberger Company; and (iii) has caused The Longaberger Company to fail to timely pay sales and use taxes to several states, prompting these state taxing authorities to seek to assess Ms. Longaberger personally.

 

A copy of the Resignation Letter is attached hereto as Exhibit 17.1 and the description of the contents of the Resignation Letter contained in this Current Report on Form 8-K is qualified in its entirety by reference to the full text of the Resignation Letter. The Company’s response letter, dated June 1, 2015, to Ms. Longaberger is attached to this Report as Exhibit 17.2.

 

As previously disclosed, Ms. Longaberger had delivered a notice of her resignation as the Chief Executive Officer of The Longaberger Company, a majority-owned subsidiary of the Company. The notice was to be effective on May 28, 2015, however, prior thereto, on May 27, 2015, the Company determined to terminate her employment for cause. A copy of the May 27, 2015 termination letter to Ms. Longaberger is attached to this Report as Exhibit 17.3.

 

In accordance with the requirements of Item 5.02 of Form 8-K, the Company has provided Ms. Longaberger with a copy of the disclosures that it is making in response to this Item 5.02 no later than the date of filing this Current Report on Form 8-K with the Securities and Exchange Commission and will provide Ms. Longaberger with the opportunity to furnish the Company, as promptly as possible, with a letter addressed to the Company stating whether Ms. Longaberger agrees with the statements made by the Company in response to this Item 5.02 and, if not, stating the respects in which she does not agree.

 

Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits

 

Exhibit No.   Description
     
17.1   Resignation Letter from Tamala L. Longaberger, dated May  29, 2015

17.2

17.3

 

Letter to Tamala L. Longaberger, dated June 1, 2015

Letter Tamala L. Longaberger, dated May 27, 2015

 

 
 

 

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, thereunto duly authorized.

 

  CVSL Inc.
   
Date: June 1, 2015 By:    /s/ John P. Rochon
    John P. Rochon
    Chief Executive Officer

 

 



 

Exhibit 17.1

 

TAMALA L. LONGABERGER

1 Miranova Place

Columbus, Ohio 43215

 

May 29, 2015

 

Via E-Mail

 

Mr. John P. Rochon

Chief Executive Officer, President and Chairman

CVSL, Inc.

2400 North Dallas Parkway, Suite 230

Plano, Texas 75093-4371

 

Dear Mr. Rochon:

 

I hereby resign, effective immediately, as a director of CVSL, Inc. (“CVSL’’). My resignation relates to the following circumstances:

 

On April 28, 2015, I resigned as a director of CVSL, as a director of The Longaberger Company and as CEO of The Longaberger Company. My resignation as director of CVSL and The Longaberger Company was effective immediately, and my resignation as CEO of The Longaberger Company was effective within 30 days pursuant to the resignation for good reason provision my employment agreement. During the 30 day period following my resignation, CVSL made no attempt to cure any of the circumstances that gave rise to my resignation.

 

In my April 28, 2015 letter, I cited the following circumstances regarding my resignation:

 

a.CVSL cut my base salary by $600,000 per year. Although you promised me that this cut in base salary was merely a four-month “deferral”, CVSL never made up any of my lost salary after expiration of the four-month deferral period.

 

b.CVSL has reduced and diminished the nature, status, duties and responsibilities of my position, and also has caused The Longaberger Company to engage one or more executives senior to me at the Company.

 

c.CVSL has caused The Longaberger Company to fail to timely pay sales and use taxes to several states, prompting these state taxing authorities to seek to assess me personally with the Company’s tax deficiencies.

 

Each of the circumstances cited above still exist as of the date of this letter.

 

 
 

 

Mr. John P. Rochon

May 29, 2015

Page 2

 

Following my resignation, my legal counsel and legal counsel for CVSL negotiated the terms of my separation from CVSL and The Longaberger Company. On May 4, 2015, the parties agreed through counsel to the terms of my separation from the company, and CVSL’s counsel requested that I withdraw my resignation as director of CVSL to allow the party’s time to memorialize these terms in writing without CVSL needing to disclose my resignation in an S.E.C. filing. Believing that CVSL would work in good faith to memorialize the terms of my separation. I withdrew my resignation as a director of CVSL on May 4.

 

Contrary to CVSL’s assurances, CVSL reneged on the agreement reached on May 4 and has not tried to resolve this situation in good faith. There have been unexplainable delays by your attorneys in responding to my counsel, including your attorneys’ most recent 10-day failure to respond to us without any reasonable explanation for their delay. During the delay caused by your attorneys, the circumstances that led to my April 28 resignation were exacerbated.

 

A prime example of this is the latest demand by a state taxing authority made upon me because, once again, CVSL, caused The Longaberger Company to fail to pay its tax obligations. On May 18, 2015, I received a letter from the Kansas taxing authority demanding payment of thirty-two thousand dollars of delinquent Longaberger Company sales taxes from me personally. My counsel provided this letter to CVSL’s counsel and asked for assurance that this tax liability would be promptly paid by the company so that I would not have to deal with this taxing authority, but we received no such assurance.

 

Also, under my employment agreement, you were obligated to continue to pay my salary during the 30-day notice period, but you failed to do so.

 

Additionally, when CVSL’s counsel raised generalized allegations against me, my attorneys asked for specific factual details so that we could address these issues. We were assured by your counsel that he would provide these details. Instead, 15 minutes later, we received a letter from you purporting to terminate my employment as The Longaberger Company CEO even though I had already resigned and you had no basis for terminating my employment.

 

It is obvious that CVSL had no intention to provide a separation consistent with the agreed terms, and the only reason CVSL asked me to withdraw my resignation was to delay its S.E.C. disclosure obligations and advance its own interests.

 

  Sincerely,
   
  /s/ Tamala L. Longaberger
  Tamala L. Longaberger

 

 



Exhibit 17.2

June 1, 2015

 

Via E-Mail

 

Ms. Tamala L. Longaberger

c/o Mr. John W. Zeiger

Zeiger, Tigges & Little LLP

3500 Huntington Center

41 South High Street

Columbus, Ohio 43215

 

Dear Ms. Longaberger:

 

I am in receipt of your May 29, 2015, correspondence. We accept your resignation as a director of CVSL Inc. (the “Company” or “CVSL”) effective as of that date. I am writing to you, however, to correct several inaccuracies contained in your correspondence with the Company.

 

Your attempted resignation of your employment position at The Longaberger Company is improper and ineffective because you were terminated for good cause on May 27, 2015. On that date, CVSL sent a letter to your attorney, Mr. John Zeiger, notifying you of your termination. CVSL was compelled to terminate you after an internal investigation revealed that you engaged in substantial misconduct that has damaged The Longaberger Company and CVSL. Contrary to your claim, our attorney never promised to provide you details of our internal investigation. CVSL’s decision to terminate you on May 27, 2015, for good cause was a decision that was well within its rights under your March 8, 2013 Employment Agreement (“Agreement”). In relevant part, Paragraph 4.2 of the Agreement provides: “the Company may immediately terminate this Agreement at any time during the Employment Period for ‘Good Cause.’” The Employment Period includes “such time as the Executive is employed with CVSL,” meaning that CVSL was within its rights to terminate you at the time of the termination letter.

 

Even absent your termination at The Longaberger Company for good cause, your resignation would be ineffective for a number of reasons under the Agreement. For example, the events that you claim constitute “good reason” for your resignation are without merit. Additionally, you, in violation of Paragraph 4.4.3 of the Agreement, failed to provide notice to CVSL of the events you mentioned in your April 28, 2015, letter within 90 days of their alleged occurrence, among other things.

 

Contrary to your assertion that CVSL “reneged on the agreement,” CVSL and The Longaberger Company have worked in good faith in an attempt to reach an amicable resolution. Nonetheless, no agreement was ever reached between you and CVSL/The Longaberger Company. First, the material terms of an agreement were not reached, nor was there ever a meeting of the minds as to material terms. As you know, your counsel insisted on terms that were never agreeable to CVSL or The Longaberger Company. Second, an agreement in writing never materialized, and no signed agreement exists, as would be required under the law given the proposed term of payments exceeding one year. Third, your characterization of the negotiations is incorrect, as CVSL’s counsel explained multiple times in no uncertain terms that we were working to propose and forge an agreement and ultimately ensure that it would be a valid agreement for the parties to sign. CVSL’s counsel never went 10 days without communicating with your counsel. Fourth, your extensive misconduct that we continue to uncover has undermined the possibility of CVSL and The Longaberger Company reaching an agreement with you.

 

 
 

 

Ms. Tamala L. Longaberger

Page Two

June 1, 2015

 

Regarding our decision to terminate you for cause, I would like to note that, upon learning of your intention to leave The Longaberger Company, we immediately put a team into place to effect a transition. That team has uncovered evidence of your misconduct harmful to The Longaberger Company, which made it necessary to terminate you.

 

As for your resignation as a director of CVSL, as stated above, CVSL accepts your resignation from that position. The reasons you cite in your letter for resigning as a director, however, are unfounded and improper. Those purported reasons relate to issues that, to the extent they actually existed, involved CVSL’s subsidiary, not CVSL itself. Moreover, as CEO of that subsidiary, you did nothing to cure or alleviate any of the issues about which you complain in your letter.

 

The reasons cited in your first draft of a letter to CVSL of April 28, 2015 offering your resignation as a director, to which you now refer notwithstanding that your letter (and proffered resignation as a CVSL director) was completely retracted prior the filing of the Company’s Current Report on 8-K, dated May 4, 2015, were also incorrect. For example, you claimed that your resignation was prompted by three factors: Having your salary of $850,000 reduced; having your responsibilities reduced with another executive supposedly “engaged senior to [you] at the Company”; and a purported concern over the company’s payment of state sales and use taxes. These purported grievances are completely without justification.

 

Regarding state sales and use taxes, The Longaberger Company has made every good faith effort to pay all state taxes appropriately. When notices relating to state taxes were received by you and forwarded to CVSL, they were forwarded to Longaberger’s payables to be processed accordingly.

 

Regarding your salary, while your salary was indeed reduced to $250,000, you failed to note that it was done at the insistence of The Longaberger Company’s bank at the time of the reduction and with your express consent. Nevertheless, you still remained the highest-paid executive at the company.

 

Regarding your authority, CVSL firmly maintains that there is no truth to your statement that someone was placed senior to you in authority at the company. You were chairman until the time of your attempted resignation. No Longaberger executive was ever given authority over you. With respect to your job responsibilities, you were asked to focus on strengthening relations with the sales field and agreed to do so. Unfortunately for the company, you showed an unwillingness to perform this important work consistently, or even to spend time at the company’s principal office, which directly impacted your job performance. Your lengthy absences from the company’s home office became so frequent and egregious that you made yourself an absentee CEO.

 

Additionally, by your own admission, you engaged in an inappropriate personal relationship with a subordinate executive who was in a senior position with The Longaberger Company. This represented a clear conflict of interest to us.

 

 
 

 

Ms. Tamala L. Longaberger

Page Three

June 1, 2015

 

For at least these reasons, neither your withdrawn resignation letter as a CVSL director of April 28, 2015, your revised attempted resignation letter as an employee at The Longaberger Company of April 28, 2015, nor your resignation letter as a CVSL director of May 29, 2015 is completely accurate, nor puts forth a good reason such that you could terminate your relationships with CVSL and The Longaberger Company in the manner you attempted to do so. Nor does it put forth a good reason for not fulfilling your responsibilities as a CVSL director and serving out the balance of your term through June 23, 2015.

 

As you know, on June 23, 2015, the Company will be holding its Annual Meeting of Shareholders at which, among other things, the election of ten (10) directors to our Board of Directors to hold office until our next Annual Meeting of Stockholders and until their successors are elected is the first item for our shareholders to be acted on. As we had advised you, we did not include you in the slate of the ten (10) directors seeking re-election because of your desire to separate your relationship from the Company. We fully expected, however, that you would fully serve out the balance of your term as a director, which absent your resignation of May 29, 2015, which has been accepted, would have terminated by its own terms on June 23, 2015.

 

Finally, please note that, in light of CVSL’s decision to terminate you on May 27, 2015, CVSL will comply with the provisions of the Agreement that apply to termination for good cause. See Paragraph 4.2 of the Agreement.

 

This letter does not constitute complete statement of the Company’s rights and remedies in respect of the foregoing, all of which are reserved.

 

Sincerely,

 

Heidi Hafer

General Counsel

 

cc:Board of Directors

Gracin & Marlow, LLP

Fish & Richardson P.C.

 

 



Exhibit 17.3

 

May 27, 2014

 

Via E-Mail & First Class Mail, Return Receipt Requested

 

Ms. Tamala L. Longaberger

c/o Mr. John W. Zeiger

Zeiger, Tigges & Little LLP

3500 Huntington Center

41 South High Street

Columbus, Ohio 43215

 

Dear Ms. Longaberger:

 

CVSL Inc. (“CVSL”) immediately terminates any and all of your employment positions with The Longaberger Company and CVSL for good cause as defined by at least your Employment Agreement Paragraphs 4.2.2(ii), 4.2.2(iii), and 4.2.2(v).

 

Sincerely,

 

John P. Rochon

Chairman

 

 

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