Item
5.02
|
Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
|
On
October 5, 2018, John J. Gormally submitted to the Board his resignation from his position as the Chief Executive Officer of the
Company as a member of the Board, effective immediately. Mr. Gormally’s resignation was voluntary and for health reasons
and not a result of any disagreement with the Company or its executive officers on any matter relating to the Company’s
operations, policies or practices. In connection with his resignation from the Board, Mr. Gormally entered into a Resignation
Agreement with the Company (the “
Resignation Agreement
”).
In
connection with his resignation from the Company, Mr. Gormally will receive the following benefits pursuant to the Resignation
Agreement: (i) a cash payment of one hundred thousand dollars ($100,000), which includes any and all wages, bonuses or incentives
to which Mr. Gormally may otherwise be entitled, to be paid ten (10) business days after the execution of the Resignation Agreement,
and (ii) the Company and Mr. Gormally acknowledge that, in June 2016, the Company attempted to grant Mr. Gormally twenty seven
thousand and five hundred (27,500) restricted shares of Company’s common stock, no par value (the “
Common Stock
”)
pursuant to the Company’s 2013 Equity Incentive Plan (the “
2013 Shares
”), and the Company and Mr. Gormally
agree that ten (10) business days after the execution of the Resignation Agreement the Company and Mr. Gormally shall cancel the
2013 Shares and shall grant to Mr. Gormally twenty seven thousand and five hundred (27,500) restricted shares of Common Stock
pursuant to the Company’s 2017 Equity Incentive Plan (the “
Plan
”), and those shares to be deemed fully
vested on that date. The Resignation Agreement contains customary provisions, including mutual releases of claims by the Company
and Mr. Gormally, as well as confidentiality and non-disparagement covenants. The foregoing description of the Resignation Agreement
does not purport to be complete and is qualified in its entirety by reference to the form of Resignation Agreement, a copy of
which is filed as Exhibit 10.1 hereto, which is hereby incorporated into this report by reference.
Effective
on October 5, 2018, the Board appointed Howard R. Yeaton, who through Financial Consulting Strategies LLC (“
FCS
”)
served previously as a consultant to the Company, to serve as the Chief Executive Officer and interim Chief Financial Officer
of the Company. Mr. Yeaton is the managing principal of FCS and the Company’s relationship with FCS shall continue, with
FCS continuing to provide accounting services to the Company. FCS is considered to be a related party. During the three and nine
months ended September 30, 2018, the Company paid a total of $58,000 to FCS in connection with these services.
In
connection with his appointment as the Chief Executive Officer and interim Chief Financial Officer of the Company, the Company
and Mr. Yeaton entered into an offer of employment, dated October 5, 2018 (the “Employment Agreement”).
The
Employment Agreement provides for the following compensation for Mr. Yeaton: (i) twenty-five thousand dollars ($25,000) per annum
in base salary, (ii) a monthly grant of thirty thousand (30,000) unrestricted shares of the Common Stock pursuant to the Plan,
(iii) Mr. Yeaton will be afforded other Company employee benefits including, health insurance, dental insurance, basic life and
accidental death and dismemberment insurance, long and short term disability insurance and participation in the Company’s
401(k) Plan, and (iv) will be reimbursed for reasonable and necessary travel and business expenses including the expenses of travel
and hotel stays in or near Thorofare, New Jersey.
The
Company may terminate the Employment Agreement for any reason or no reason, and Mr. Yeaton may voluntarily resign for any reason
or no reason, in either case upon 60 days advance written notice to the other party. In the event that the Employment Agreement
is terminated as a result of a Change of Control (as defined in the Employment Agreement), the company will award two hundred
thousand (200,000) unrestricted shares of the Common Stock pursuant to the Plan.
The
foregoing description of the Employment Agreement is a summary and is qualified in its entirety by reference to the Employment
Agreement, which is attached hereto as Exhibit 10.2 and is incorporated by reference herein.
The
following is certain biographical information regarding the Company’s new Chief Executive Officer and Chief Financial Officer:
Howard
R. Yeaton
, has been the Managing Principal of Financial Consulting Strategies, LLC since 2003, a firm serving principally
early stage public companies with financial reporting support and other related strategic services. Mr. Yeaton currently serves
as a director, Vice Chairman and Chairman of the audit committee for Stewardship Financial Corporation, a community bank. Mr.
Yeaton has served as Interim Chief Financial Officer of Propel Media, Inc. since 2014 and, from July 2014 to July 2015, Mr. Yeaton
served as Interim Chief Financial Officer of Energous Corporation, a public company listed on the Nasdaq Capital Market; both
clients of Financial Consulting Strategies, LLC. In addition, prior to founding Financial Consulting Strategies, LLC, Mr. Yeaton
served in various financial leadership positions for Konica and Teco Energy. Mr. Yeaton began his career with Deloitte, an international
accounting and auditing firm. Mr. Yeaton has a BS in accounting from Florida State University in Tallahassee, FL, and a Master’s
in Business Administration from the University of Connecticut in Storrs, CT.