Item
1.01 Entry Into a Material Definitive Agreement
See
Item 5.02 below.
Item
5.02 Officer Compensation
Ingo
Mueller
Effective
August 1, 2021, the Board of Directors of AgriForce Growing Systems, Ltd. (the “Company”) entered into a new employment agreement
with Ingo Mueller that continues unless and until such employment is terminated by either party pursuant to the terms of the agreement,
as its Chief Executive Officer. Under the terms of this agreement, Mr. Mueller is entitled to an annual base salary of CDN $473,367 per
year, and is subject to annual reviews where the Company at its discretion may increase, but not decrease, Mr. Mueller’s base salary
each year. Mr. Mueller shall also receive on an annual basis, payable quarterly in arrears on the last trading day of each calendar quarter,
$468,313 Cdn of common shares of the Company, at a price per share equal to the volume weighted average price of a common share of the
Company listed on the Nasdaq Capital Market for the five trading days preceding the date of issuance, The employment agreement also entitles
Mr. Mueller to, among other benefits, the following compensation: (i) eligibility to receive an annual cash bonus of 30% of base salary
at target and up to 100% of base salary based on performance targets established by the Board from time to time; (ii) an opportunity
to participate in any stock option, performance share, performance unit or other equity based long-term incentive compensation plan commensurate
with the terms and conditions applicable to other senior executive officers and (iii) participation in health benefit plans, practices,
policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent available to
our other senior executive officers. Mr. Mueller will be entitled to receive 15% of the new options to be allocated upon the exercise
of the current granted options. These options shall be granted at the IPO price and as soon as practicable. Based on current recommendations
from management it is expected that the number of options to be granted to Mueller as of the effective date of this agreement, will be
approximately 172,000 to be vested over 3 years. Mr. Mueller will receive a signing bonus in cash of $68,750.
Pursuant
to the employment, regardless of the manner in which Mueller’s service terminates, each executive officer is entitled to receive
amounts earned during his term of service, including salary, other benefits. In addition, each of them is eligible to receive certain
benefits pursuant to his agreement with us described above.
The
Company is permitted to terminate the employment of Mr. Mueller, for the following reasons: (1) death, (2) Termination for Cause (as
defined below) or (3) for no reason. The employment of Mr. Mueller automatically terminates upon determination of permanent disability,
provided that the disability renders the executive officer incapable of performing his or her duty.
Each
officer is permitted Termination for Good Reason (as defined below) of such officer’s employment. In addition, each such officer
may terminate his or her employment upon written notice to the Company 30 days prior to the effective date of such termination. In the
event of such officer’s Termination for Cause by the Company or the termination of such officer’s employment as a result
of such officer’s resignation other than a Termination for Good Reason, such officer shall be provided certain benefits provided
in the employment agreement and payment of all accrued and unpaid compensation and wages, but such officer shall have no right to compensation
or benefits for any period subsequent to the effective date of termination. In the event of such officer’s termination without
Cause, the officer shall be entitled to severance in lieu of notice equal to six months of the then base salary, benefits continuation
for a period of three months following the termination date and payment of any outstanding and accrued vacation pay and expenses, as
applicable.
Under
the employment agreements, “Cause” means: any material breach of the employment agreement, and any act, omission, behavior,
conduct or circumstance of the Executive that constitutes just cause for dismissal of the Executive at common law, including an act involving
gross negligence, or willful misconduct, commission or a felony, becoming bankrupt, or any material omission in the performance of Services,
or the doing or condoning any unlawful or manifestly improper act. “Good Reason” means: (i) a material reduction in Executive’s
salary or benefits (excluding the substitution of substantially equivalent compensation and benefits), other than as a result of a reduction
in compensation affecting employees of the Company, or its successor entity, generally; (ii) a material diminution in Executive’s
duties or responsibilities, provided however, that, a mere change in title or reporting relationship alone shall not constitute “Good
Reason;” or (iii) relocation of Executive’s place of employment to a location more than 50 miles from the Company’s
office location.
If
within twelve (12) months following a change of control (as defined in the employment agreement), the officer’s employment is terminated
(1) involuntarily by the Company other than for Cause, (2) death, or (3) by such officer pursuant to a Voluntary Termination for Good
Reason, and such officer executes and does not revoke a general release of claims against the Company and its affiliates in a form acceptable
to the Company, then the Company shall provide such officer with, among other benefits:
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1.
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a
lump sum payment in the amount equal to twelve months of the then Base Salary;
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2.
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any
outstanding Vacation pay as at the Effective Date of Termination;
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3.
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any
outstanding Expenses as at the Effective Date of Termination; and
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4.
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maintain
the Executive’s then Group Benefits for a period of three months from the Effective Date of Termination.
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Richard
Wong
Effective
August 1, 2021, the Board of Directors of AgriForce Growing Systems, Ltd. (the “Company”) entered into a new employment agreement
with Richard Wong that continues unless and until such employment is terminated by either party pursuant to the terms of the agreement,
as its Chief Executive Officer. Under the terms of this agreement, Mr. Wong is entitled to an annual base salary of CDN $339,406 per
year, and is subject to annual reviews where the Company at its discretion may increase, but not decrease, Mr. Wong’s base salary
each year. Mr. Wong shall also receive on an annual basis, payable quarterly in arrears on the last trading day of each calendar quarter,
$112,505 Cdn of common shares of the Company, at a price per share equal to the volume weighted average price of a common share of the
Company listed on the Nasdaq Capital Market for the five trading days preceding the date of issuance, The employment agreement also entitles
Mr. Wong to, among other benefits, the following compensation: (i) eligibility to receive an annual cash bonus of 30% of base salary
at target and up to 100% of base salary based on performance targets established by the Board from time to time; (ii) an opportunity
to participate in any stock option, performance share, performance unit or other equity based long-term incentive compensation plan commensurate
with the terms and conditions applicable to other senior executive officers and (iii) participation in health benefit plans, practices,
policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent available to
our other senior executive officers. Mr. Wong will be entitled to receive 15% of the new options to be allocated upon the exercise of
the current granted options. These options shall be granted at the IPO price and as soon as practicable. Based on current recommendations
from management it is expected that the number of options to be granted to Wong as of the effective date of this agreement, will be approximately
114,000 to be vested over 3 years.
Pursuant
to the employment, regardless of the manner in which Wong’s service terminates, each executive officer is entitled to receive amounts
earned during his term of service, including salary, other benefits. In addition, each of them is eligible to receive certain benefits
pursuant to his agreement with us described above.
The
Company is permitted to terminate the employment of Mr. Wong, for the following reasons: (1) death, (2) Termination for Cause (as defined
below) or (3) for no reason. The employment of Mr. Wong automatically terminates upon determination of permanent disability, provided
that the disability renders the executive officer incapable of performing his or her duty.
Each
officer is permitted Termination for Good Reason (as defined below) of such officer’s employment. In addition, each such officer
may terminate his or her employment upon written notice to the Company 30 days prior to the effective date of such termination. In the
event of such officer’s Termination for Cause by the Company or the termination of such officer’s employment as a result
of such officer’s resignation other than a Termination for Good Reason, such officer shall be provided certain benefits provided
in the employment agreement and payment of all accrued and unpaid compensation and wages, but such officer shall have no right to compensation
or benefits for any period subsequent to the effective date of termination. In the event of such officer’s termination without
Cause, the officer shall be entitled to severance in lieu of notice equal to six months of the then base salary, benefits continuation
for a period of three months following the termination date and payment of any outstanding and accrued vacation pay and expenses, as
applicable.
Under
the employment agreements, “Cause” means: any material breach of the employment agreement, and any act, omission, behavior,
conduct or circumstance of the Executive that constitutes just cause for dismissal of the Executive at common law, including an act involving
gross negligence, or willful misconduct, commission or a felony, becoming bankrupt, or any material omission in the performance of Services,
or the doing or condoning any unlawful or manifestly improper act. “Good Reason” means: (i) a material reduction in Executive’s
salary or benefits (excluding the substitution of substantially equivalent compensation and benefits), other than as a result of a reduction
in compensation affecting employees of the Company, or its successor entity, generally; (ii) a material diminution in Executive’s
duties or responsibilities, provided however, that, a mere change in title or reporting relationship alone shall not constitute “Good
Reason;” or (iii) relocation of Executive’s place of employment to a location more than 50 miles from the Company’s
office location.
If
within twelve (12) months following a change of control (as defined in the employment agreement), the officer’s employment is terminated
(1) involuntarily by the Company other than for Cause, (2) death, or (3) by such officer pursuant to a Voluntary Termination for Good
Reason, and such officer executes and does not revoke a general release of claims against the Company and its affiliates in a form acceptable
to the Company, then the Company shall provide such officer with, among other benefits:
|
1.
|
a
lump sum payment in the amount equal to twelve months of the then Base Salary;
|
|
2.
|
any
outstanding Vacation pay as at the Effective Date of Termination;
|
|
3.
|
any
outstanding Expenses as at the Effective Date of Termination; and
|
|
4.
|
maintain
the Executive’s then Group Benefits for a period of three months from the Effective Date of Termination.
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