Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Employment Agreement with Steven P. Nickolas
On March 30, 2016, we entered into an employment agreement dated effective March 1, 2016 with Steven P. Nickolas, our president, chief executive officer and director, pursuant to which Mr. Nickolas agreed to perform such duties as are regularly and
customarily performed by the president and chief executive officer of a corporation, and any other duties consistent with Mr. Nickolas’s position in our company. Pursuant to the terms of the employment agreement, we have agreed to (i) pay Mr.
Nickolas $15,000 per month or such other amount as may be determined by our board of directors from time to time; and (ii) issue to Mr. Nickolas 1,500,000 shares of our Series C Preferred Stock (issued effective as of March 31, 2016). We also
agreed that each of the following events constitute a “Negotiated Trigger Event” as defined in the Certificate of Designation for the Series C Preferred Stock: (i) the occurrence of a change of control event; (ii) the death of Mr.
Nickolas; and (iii) the termination of the employment agreement for any reason.
In addition, we may (i) grant awards under our 2013 equity incentive plan to Mr. Nickolas from time to time and (ii) pay to Mr. Nickolas an annual discretionary performance bonus in an amount to be determined by our board of directors in its sole
discretion. Mr. Nickolas will also be eligible to participate in other bonus programs offered by our company to our senior staff from time to time.
In addition, Mr. Nickolas will be entitled to participate in all of our employee benefit plans provided by our company to our senior officers. If we do not provide such plans at any time, we agreed to reimburse Mr. Nickolas for the reasonable cost
of any such plans obtained privately. We also agreed to (i) provide Mr. Nickolas with vehicle leased in our company’s name, with lease payments not exceeding $700/month or such other amount as may be determined by our board of directors;
(ii) pay Mr. Nickolas an allowance of $5,000 per month or such other amount as may be determined by our board of directors, which may be used by Mr. Nickolas as he sees fit, including without limitation, the funding of non-qualified retirement
plans; (iii) reimburse Mr. Nickolas for any expenses that he incurs in connection with his duties under his employment agreement. Mr. Nickolas will be entitled in each year to five weeks’ paid vacation, in addition to weekends and statutory
holidays, to be taken in installments of no more than three consecutive weeks of paid time off.
The initial term of the employment agreement is three years and, on the third anniversary of the effective date of the employment and on each annual anniversary date thereafter, the term of the employment agreement will automatically be extended by
one additional year unless either party gives 90 days’ written notice to the other of its intention not to renew the employment agreement.
If, within 90 days of the occurrence of a change of control event, Mr. Nickolas resigns from his employment relationship with our company or our company terminates his employment agreement for any reason other than for just cause, then we agreed to
pay Mr. Nickolas severance in an amount equal to the following: 36 months’ salary plus an amount, if any, equal to the following: one month’s salary multiplied by the number of calendar years, starting on the effective date of the
employment agreement, that Mr. Nickolas is employed by our company under his employment agreement.
We may terminate Mr. Nickolas’s employment at any time for other than just cause by delivering to Mr. Nickolas written notice of termination. In such a case, we agreed to pay Mr. Nickolas severance in an amount equal to the following: 36
months’ salary plus an amount, if any, equal to the following: one month’s salary multiplied by the number of calendar years, starting on the effective date of the employment, that Mr. Nickolas is employed by our company under his
employment agreement.
Subject to applicable employment laws or similar legislation, we may terminate Mr. Nickolas’s employment in the event he has been unable to perform his duties for a period of eight consecutive months or a cumulative period of 12 months in any
consecutive 24 month period, because of a physical or mental disability. Mr. Nickolas’s employment will automatically terminate on his death. In the event Mr. Nickolas’s employment with our company terminates by reason of Mr.
Nickolas’s death or disability, then upon and immediately effective on the date of termination we agreed to promptly pay and provide Mr. Nickolas (or in the event of Mr. Nickolas’s death, Mr. Nickolas’s estate); any unpaid salary
and any outstanding and accrued regular and special vacation pay through the date of termination; reimbursement for any unreimbursed expenses incurred through to the date of termination; and any outstanding amounts due under any awards which will be
dealt with in accordance with our 2013 equity incentive plan and award agreement. In the event Mr. Nickolas’s employment is terminated due to a disability, we agreed to pay to Mr. Nickolas the severance referred to above.
We may terminate Mr. Nickolas’s employment for just cause at any time by delivering to Mr. Nickolas written notice of termination. In the event that Mr. Nickolas’s employment with our company is terminated by our company for just cause,
Mr. Nickolas will not be entitled to any additional payments or benefits (except as otherwise provided in his employment agreement), other than for amounts due and owing to Mr. Nickolas by our company as of the date of termination, except for any
awards under our 2013 equity incentive plan will be dealt with in accordance with the plan and award agreement.
Provided that Mr. Nickolas has acted within the scope of his authority, we agreed to indemnify and save harmless Mr. Nickolas (including his heirs and legal representatives) against any and all costs, claims and expenses (including any amounts paid
to settle any actions or satisfy any judgments) which: he may suffer or incur by reason of any matter or thing which he may in good faith do or have done or caused to be done as an employee, officer or director of our company, any of its
subsidiaries or of any of their respective affiliates; or was reasonably incurred by him in respect of any civil, criminal or administrative action or proceeding to which he is made a party by reason of being or having been an employee, officer or
director of our company, any of its subsidiaries or of any of their respective affiliates; provided that, the foregoing indemnification will apply only if: he acted honestly and in good faith with a view to the best interests of our company, any of
its subsidiaries or any of their respective affiliates; and in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, he had reasonable grounds for believing that his conduct was lawful.
Mr. Nickolas agreed to indemnify and save harmless our company against, and agree to hold it harmless from, any and all damages, injuries, claims, demands, actions, liability, costs and expenses (including reasonable legal fees) incurred or made
against our company arising from or connected with the performance or non-performance of his employment by him or the beach of any warranty, representation or covenant herein by him, other than claims by him pursuant to his employment agreement.
If and to the extent we maintain directors’ and officers’ liability insurance for the protection of our executives in connection with acts and omissions occurring during their employment with our company, we agreed that Mr. Nickolas will
be included as an officer and director who is covered by such policy on a basis no less favorable than made available to other executives of our company.
Cash Bonus to Steven P. Nickolas
Effective March 15, 2016, we agreed to pay Mr. Nickolas a cash bonus in the amount of $35,000 for past services that he has provided to our company.
Employment Agreement with Richard A. Wright
On March 30, 2016, we entered into an employment agreement dated effective March 1, 2016 with Richard A. Wright, our vice-president, secretary, treasurer and director, pursuant to which Mr. Wright agreed to perform such duties as are regularly and
customarily performed by the vice president, secretary and treasurer of a corporation, and any other duties consistent with Mr. Wright’s position in our company. Pursuant to the terms of the employment agreement, we have agreed to (i) pay Mr.
Wright $14,000 per month or such other amount as may be determined by our board of directors from time to time; and (ii) issue to Mr. Wright 1,500,000 shares of our Series C Preferred Stock (issued effective as of March 31, 2016). We also agreed
that each of the following events constitute a “Negotiated Trigger Event” as defined in the Certificate of Designation for the Series C Preferred Stock: (i) the occurrence of a change of control event; (ii) the death of Mr. Wright; and
(iii) the termination of the employment agreement for any reason.
In addition, we may (i) grant awards under our 2013 equity incentive plan to Mr. Wright from time to time and (ii) pay to Mr. Wright an annual discretionary performance bonus in an amount to be determined by our board of directors in its sole
discretion. Mr. Wright will also be eligible to participate in other bonus programs offered by our company to our senior staff from time to time.
In addition, Mr. Wright will be entitled to participate in all of our employee benefit plans provided by our company to our senior officers. If we do not provide such plans at any time, we agreed to reimburse Mr. Wright for the reasonable cost of
any such plans obtained privately. We also agreed to (i) provide Mr. Wright with vehicle leased in our company’s name, with lease payments not exceeding $700/month or such other amount as may be determined by our board of directors; (ii)
pay Mr. Wright an allowance of $5,000 per month or such other amount as may be determined by our board of directors, which may be used by Mr. Wright as he sees fit, including without limitation, the funding of non-qualified retirement plans;
(iii) reimburse Mr. Wright for any expenses that he incurs in connection with his duties under his employment agreement. Mr. Wright will be entitled in each year to five weeks’ paid vacation, in addition to weekends and statutory holidays, to
be taken in installments of no more than three consecutive weeks of paid time off.
The initial term of the employment agreement is three years and, on the third anniversary of the effective date of the employment and on each annual anniversary date thereafter, the term of the employment agreement will automatically be extended by
one additional year unless either party gives 90 days’ written notice to the other of its intention not to renew the employment agreement.
If, within 90 days of the occurrence of a change of control event, Mr. Wright resigns from his employment relationship with our company or our company terminates his employment agreement for any reason other than for just cause, then we agreed to
pay Mr. Wright severance in an amount equal to the following: 36 months’ salary plus an amount, if any, equal to the following: one month’s salary multiplied by the number of calendar years, starting on the effective date of the
employment agreement, that Mr. Wright is employed by our company under his employment agreement.
We may terminate Mr. Wright’s employment at any time for other than just cause by delivering to Mr. Wright written notice of termination. In such a case, we agreed to pay Mr. Wright severance in an amount equal to the following: 36
months’ salary plus an amount, if any, equal to the following: one month’s salary multiplied by the number of calendar years, starting on the effective date of the employment, that Mr. Wright is employed by our company under his
employment agreement.
Subject to applicable employment laws or similar legislation,
we may terminate Mr. Wrights employment in the event he has been unable to
perform his duties for a period of eight consecutive months or a cumulative
period of 12 months in any consecutive 24 month period, because of a physical or
mental disability. Mr. Wrights employment will automatically terminate on his
death. In the event Mr. Wrights employment with our company terminates by
reason of Mr. Wrights death or disability, then upon and immediately effective
on the date of termination we agreed to promptly pay and provide Mr. Wright (or
in the event of Mr. Wrights death, Mr. Wrights estate); any unpaid salary and
any outstanding and accrued regular and special vacation pay through the date of
termination; reimbursement for any unreimbursed expenses incurred through to the
date of termination; and any outstanding amounts due under any awards which will
be dealt with in accordance with our 2013 equity incentive plan and the award
agreement. In the event Mr. Wrights employment is terminated due to a
disability, we agreed to pay to Mr. Wright the severance referred to above.
We may terminate Mr. Wrights employment for just cause at any
time by delivering to Mr. Wright written notice of termination. In the event
that Mr. Wrights employment with our company is terminated by our company for
just cause, Mr. Wright will not be entitled to any additional payments or
benefits (except as otherwise provided in his employment agreement), other than
for amounts due and owing to Mr. Wright by our company as of the date of
termination, except for any awards under our 2013 equity incentive plan will be
dealt with in accordance with the plan and award agreement.
Provided that Mr. Wright has acted within the scope of his
authority, we agreed to indemnify and save harmless Mr. Wright (including his
heirs and legal representatives) against any and all costs, claims and expenses
(including any amounts paid to settle any actions or satisfy any judgments)
which: he may suffer or incur by reason of any matter or thing which he may in
good faith do or have done or caused to be done as an employee, officer or
director of our company, any of its subsidiaries or of any of their respective
affiliates; or was reasonably incurred by him in respect of any civil, criminal
or administrative action or proceeding to which he is made a party by reason of
being or having been an employee, officer or director of our company, any of its
subsidiaries or of any of their respective affiliates; provided that, the
foregoing indemnification will apply only if: he acted honestly and in good
faith with a view to the best interests of our company, any of its subsidiaries
or any of their respective affiliates; and in the case of a criminal or
administrative action or proceeding that is enforced by a monetary penalty, he
had reasonable grounds for believing that his conduct was lawful.
Mr. Wright agreed to indemnify and save harmless our company
against, and agree to hold it harmless from, any and all damages, injuries,
claims, demands, actions, liability, costs and expenses (including reasonable
legal fees) incurred or made against our company arising from or connected with
the performance or non-performance of his employment by him or the beach of any
warranty, representation or covenant herein by him, other than claims by him
pursuant to his employment agreement.
If and to the extent we maintain directors and officers
liability insurance for the protection of our executives in connection with acts
and omissions occurring during their employment with our company, we agreed that
Mr. Wright will be included as an officer and director who is covered by such
policy on a basis no less favorable than made available to other executives of
our company.
Cash Bonus to Richard A. Wright
Effective March 15, 2016, we agreed to pay Mr. Wright a cash
bonus in the amount of $35,000 for past services that he has provided to our
company.