Item 5.02.
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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On April 5, 2017, the Company entered into
an Amendment to Executive Employment Agreement (the “Amendment”) with Gerard J. Gallagher, Chief Technical Officer
of the Company, amending that certain Executive Employment Agreement, effective January 19, 2007, as amended by Amendment No. 1,
dated August 26, 2008, further amended by the Amendment to Executive Employment Agreement, effective February 28, 2010, further
amended by the Amendment to Executive Employment Agreement, effective January 3, 2012, further amended by the Amendment to Executive
Employment Agreement, effective March 14, 2012, further amended by the Amendment to Executive Employment Agreement, effective May
21, 2013, and further amended by the Amendment to Executive Employment Agreement, effective August 13, 2013. The Amendment provides that Mr. Gallagher’s position changes from Chief Technical Officer
of the Company to Senior Technical Advisor and Founder of the Company. Additionally, the Amendment decreases Mr. Gallagher’s
annual base salary to $35,000, effective April 5, 2017. A copy of the Amendment is filed as Exhibit 99.1 to this Form 8-K and is
incorporated herein by reference.
On April 30, 2012, the Company granted Anthony
Angelini, the President and Chief Executive Officer of the Company, options to purchase 750,000 shares of the Company’s common
stock. The exercise price per share for these stock options is equal to the average of the high and low bid prices for the Company’s
common stock reported daily on the OTCQB Marketplace during the 20 trading days following April 30, 2012, which was $0.44. These
stock options became exercisable in installments as follows: (a) with respect to 125,000 shares, when the fair market value of
the Company’s common stock is $1.50 for 20 consecutive business days; (b) with respect to 125,000 shares, when the fair market
value of the Company’s common stock is $2.00 for 20 consecutive business days; (c) with respect to 125,000 shares, when the
fair market value of the Company’s common stock is $2.50 for 20 consecutive business days; (d) with respect to 125,000 shares,
when the fair market value of the Company’s common stock is $3.00 for 20 consecutive business days; (e) with respect to 125,000
shares, when the fair market value of the Company’s common stock is $3.50 for 20 consecutive business days; and (f) with
respect to 125,000 shares, when the fair market value of the Company’s common stock is $4.00 for 20 consecutive business
days.
On April 10, 2017, the Company and Mr.
Angelini agreed to amend the exercise price and vesting schedule applicable to these stock options. In accordance with
amendments to the stock option agreements governing these stock options, the revised exercise price per share is $0.10. As amended,
the stock options become exercisable (a) with respect to 375,000 shares, on April 10, 2018, and (b) with respect to
375,000 shares, on April 10, 2019. Except as otherwise described herein, the other terms and conditions of these stock
options remain in full force and effect. Copies of the amendments to the stock option agreements are filed as Exhibit 99.2
and 99.3 to this Form 8-K and are incorporated herein by reference.
On January 14, 2014, the Company granted
Martin T. Olsen, the Executive Vice President, Sales & Marketing of the Company, options to purchase 200,000 shares of the
Company’s common stock. The exercise price per share for these stock options is equal to the average of the high and low
bid prices for the Company’s common stock reported daily on the OTCQB Marketplace during the 20 trading days following January
14, 2014, which was $0.49. On August 29, 2014, the Company granted John K. Penver, the Chief Financial Officer of the Company,
options to purchase 200,000 shares of the Company’s common stock. The exercise price per share for these stock options is
equal to the average of the high and low bid prices for the Company’s common stock reported daily on the OTCQB Marketplace
during the 20 trading days following August 29, 2014, which was $0.20. The stock options granted to each of Messrs. Olsen and Penver
became exercisable in installments as follows: (a) with respect to 100,000 shares, when the fair market value of the Company’s
common stock is $2.00 for 20 consecutive business days; and (b) when the fair market value of the Company’s common stock
is $3.00 for 20 consecutive business days.
On April 10, 2017, the Company and
each of Messrs. Olsen and Penver agreed to amend the number of shares underlying these stock options and the exercise price
and the vesting schedule applicable to these stock options. In each case, the number of shares underlying these stock options
was increased to 300,000 shares of the Company’s common stock. In accordance with amendments to the applicable award
agreement governing these stock options, the revised exercise price per share is $0.10. As amended, the stock options become
exercisable (a) with respect to 150,000 shares, on April 10, 2018, and (b) with respect to 150,000 shares, on April 10, 2019.
Except as otherwise described herein, the other terms and conditions of these stock options remain in full force and effect.
Copies of the amendments to the award agreements between the Company and Messrs. Olsen and Penver are filed as Exhibits 99.4
and 99.5, respectively, to this Form 8-K and are incorporated herein by reference.