Item
5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
Change
of Principal Financial Officer
On
June 14, 2021, Sterling Jimenez notified Novo Integrated Sciences, Inc. (the “Company”) of his intent to resign as the Company’s
Principal Financial Officer, effective June 15, 2021. On June 15, 2021, the Company’s Board of Directors appointed James Zsebok,
as the Company’s Principal Financial Officer. Mr. Zsebok will also serve as the Company’s principal accounting officer.
Mr.
Zsebok, age 55, also serves as the Vice-President, Finance for Novo Healthnet Limited, a wholly owned subsidiary of the Company, which
provides multidisciplinary primary healthcare related services and products in Canada through the integration of medical technology,
advanced therapeutics and rehabilitative science. Mr. Zsebok brings over 29 years of corporate finance and operational experience, including
a 16-year tenure, from 1998 to 2014, holding the position of CFO, Director of Mergers and Acquisitions, and Treasurer.at Flex-N-Gate,
a provider of parts and systems for the automotive industry. From 1988 to 1998, Mr. Zsebok held various accounting and finance related
positions at Imperial Chemical Industries, Siemens Automotive, Cardon, PLC, and TRIAM Automotive, Inc. In 2014, Mr. Zsebok founded RTZ
Consulting Group, which provides fractional CFO services, as well as M&A and debt-equity advisory services.
In
1988, Mr. Zsebok graduated with a B.A., Economics (Honors) from Trent University in Peterborough, Canada.
The
Company agreed to pay Mr. Zsebok an annual base salary of CAD$120,000 (approximately $97,000) for a period of two months. Compensation
arrangements following the two-month provisional period will be finalized in the near future.
Robert
Mattacchione Executive Agreement
On
June 18, 2021, the Company entered into an executive agreement (the “June 2021 Mattacchione Agreement”) with GPE Global Holdings
Inc., an entity controlled by Robert Mattacchione and through which Mr. Mattacchione will provide services to the Company (“GPE”).
Mr. Mattacchione serves as the Company’s Chairman of the Board and Chief Executive Officer, and is the Company’s majority
stockholder. Pursuant to the terms of the June 2021 Mattacchione Agreement, Mr. Mattacchione will continue to serve as the Company’s
Chief Executive Officer. Mr. Mattacchione also continues to serve as Chairman of the Board. In consideration thereof, the
Company agreed to (i) pay Mr. Mattacchione an annual base salary of $186,000, (ii) pay Mr. Mattacchione a monthly bonus reconciled quarterly
and paid as follows: (a) quarterly cash bonuses equal to 10% of positive net income (“PNI”), and (b) PNI will be reconciled
within 30 days after the close of the quarter with payments to Mr. Mattacchione made within 45 days of the close of the quarter, and
(iii) pay Mr. Mattacchione bonuses based on increases in the Company’s market cap valuation (“MCV”) from the date of
the June 2021 Mattacchione Agreement, with the following milestone bonus parameters:
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(a)
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For
each and every $50,000,000 Company MCV increase sustained for a period of not less than 30 days (the “50M Bonus Event”),
Mr. Mattacchione will receive $1,000,000, or 2% of $50,000,000, in Company common stock. For the sake of clarity, Mr. Mattacchione
will only be issued compensation based on $50,000,000 MCV increments; there will be no compensation issued for anything above $50,000,000
until the subsequent $50,000,000 MCV milestone is achieved. This bonus will be capped at a Company MCV of $1 billion. The 50M Bonus
Event stock will be issued as (i) 50% restricted shares within 30 days of the respective 50M Bonus Event or at a later date as requested
by Mr. Mattacchione, and held as an allocation to Mr. Mattacchione, until the requisition date as provided in writing, by Mr. Mattacchione,
to the Company, and (ii) 50% registered shares from the Company’s current active incentive plan within 30 days of the respective
50M Bonus Event.
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(b)
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Upon
the Company reaching and sustaining a MCV of $1 billion for no less than 30 days (the “1B Bonus Event”), Mr. Mattacchione
will receive $50,000,000, or 5% of $1 billion, in restricted shares of Company common stock. The 1B Bonus Event stock will be issued
within 30 days of the 1B Bonus Event or at a later date as requested by Mr. Mattacchione, and held as an allocation to Mr. Mattacchione,
until the requisition date as provided in writing, by Mr. Mattacchione, to the Company.
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(c)
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For
each additional $1 billion MCV, beyond the initial 1B Bonus Event, sustained for a period of no less than 30 days, Mr. Mattacchione
will receive $50,000,000, or 5% of $1 billion, in restricted shares of the Company’s common stock. This additional 1B Bonus
Event Stock, commencing with a $2 billion MCV and each additional 1B MCV increase, beyond $2 billion, will be issued within 30 days
of the Bonus Event, or at a later date as requested by Mr. Mattacchione, and held as an allocation to Mr. Mattacchione, until the
requisition date as provided in writing, by Mr. Mattacchione, to the Company.
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The
June 2021 Mattacchione Agreement supersedes all prior compensation arrangements between the Company and Mr. Mattacchione.
The
Company will be deemed to be in default under the June 2021 Mattacchione Agreement upon the occurrence of any of the following events:
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(a)
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if
the Company shall become insolvent, or bankrupt, or subject to the provisions of the U.S. Bankruptcy Code, or shall go into liquidation,
either voluntarily or under an order of a Court of competent jurisdiction, or shall make a general assignment for the benefit of
its creditors, or otherwise acknowledge its insolvency; or
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(b)
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if
a liquidator or liquidators or receiver or receivers or a trustee or trustees in bankruptcy, be appointed to the Company, or if its
secured creditors take possession of the property of the Company or any substantial or essential part thereof in the sole determination
of Mr. Mattacchione; or
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(c)
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if
the Company fails, refuses or neglects to promptly pay any monies owing to Mr. Mattacchione when due under the June 2021 Mattacchione
Agreement.
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Mr.
Mattacchione will be deemed to be in default under the June 2021 Mattacchione Agreement upon the occurrence of any of the following events:
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a)
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if
Mr. Mattacchione fails, refuses or neglects to promptly perform any material obligations owing to the Company when due under the
June 2021 Mattacchione Agreement, and such failure in performance shall continue for 10 business days following notice from the Company
unless Mr. Mattacchione shall have commenced within the 10 days following notice and is continuing acceptable measures to remedy
the said failure in performance.
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b)
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If
the performance of Mr. Mattacchione is not to minimum standards as expected by the Board of Directors of the Company.
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The
term of the June 2021 Mattacchione Agreement will run for an initial term of 36 months. The term may be extended at the end of the initial
term if the Company and Mr. Mattacchione mutually agree.
Mr.
Mattacchione may terminate the June 2021 Mattacchione Agreement at any time, upon 90 days’ written notice to the Company, and receive
(i) additional compensation equal to $1,500,000 in restricted shares of the Company’s common stock as consideration for the previous
tenure of unpaid service filling the roles and responsibilities as the Company’s Chief Executive Officer since October 17, 2018,
and (ii) any other compensation earned within the June 2021 Mattacchione Agreement.
Notwithstanding
anything in the June 2021 Mattacchione Agreement to the contrary, the Company may terminate Mr. Mattacchione’s service for cause
for any one of the following reasons: (i) conviction of a felony, any act involving moral turpitude, or a misdemeanor where imprisonment
is imposed, (ii) commission of any act of theft, fraud, dishonesty, or falsification of any Company records, (iii) improper disclosure
of the Company’s confidential or proprietary information, (iv) any action by Mr. Mattacchione which has a detrimental effect on
the Company’s reputation or business, (v) Mr. Mattacchione’s failure or inability to perform any reasonable assigned duties
after written notice from the Company thereof, and a reasonable opportunity to cure, such failure or inability, (vi) any breach of the
June 2021 Mattacchione Agreement, which breach is not cured within 15 days following written notice of such breach, (vii) a course of
conduct amounting to gross incompetence, (viii) chronic and unexcused absenteeism, (ix) unlawful appropriation of a corporate opportunity,
or (x) misconduct in connection with the performance of any of Mr. Mattacchione’s duties, including, without limitation, misappropriation
of funds or property of the Company, securing or attempting to secure personally any profit in connection with any transaction entered
into on behalf of the Company, misrepresentation to the Company, or any violation of law or regulations on Company premises or to which
the Company is subject. Upon termination of Mr. Mattacchione’s services with the Company for cause, the Company shall be under
no further obligation to Mr. Mattacchione, except to pay all accrued but unpaid renumeration.
The
Company may terminate Mr. Mattacchione’s services at any time without cause; provided, however, that Mr. Mattacchione will be entitled
to severance pay in the amount of three years renumeration and certain additional compensation as identified in the June 2021 Mattacchione
Agreement, but if, and only if, Mr. Mattacchione executes a valid and comprehensive release of any and all claims that Mr. Mattacchione
may have against the Company in a form provided by the Company and Mr. Mattacchione executes such form within 30 days of tender.
The
foregoing description of the June 2021 Mattacchione Agreement is not complete and is qualified in its entirety by reference to the text
of the June 2021 Mattacchione Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Christopher
David Appointment as Chief Operating Officer & Employment Agreement
On
June 18, 2021, the Company entered into an employment agreement (the “June 2021 David Agreement”) with Christopher David,
the Company’s President and a member of the Company’s Board of Directors. Pursuant to the terms of the June 2021 David Agreement,
Mr. David will serve as the Company’s President and Chief Operating Officer. In consideration thereof, the Company agreed to (i)
pay Mr. David an annual base salary of $171,000, (ii) pay Mr. David a monthly bonus reconciled quarterly and paid as follows: (a) quarterly
cash bonuses equal to 10% of PNI, and (b) PNI will be reconciled within 30 days after the close of the quarter with payments to Mr. David
made within 45 days of the close of the quarter, and (iii) pay Mr. David bonuses based on increases in the Company’s MCV from the
date of the June 2021 David Agreement, with the following milestone bonus parameters:
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(d)
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For
each and every $50,000,000 Company MCV increase sustained for a period of not less than 30 days (the “50M Bonus Event”),
Mr. David will receive $500,000, or 1% of $50,000,000, in Company common stock. For the sake of clarity, Mr. David will only be issued
compensation based on $50,000,000 MCV increments; there will be no compensation issued for anything above $50,000,000 until the subsequent
$50,000,000 MCV milestone is achieved. This bonus will be capped at a Company MCV of $1 billion. The 50M Bonus Event stock will be
issued as (i) 50% restricted shares within 30 days of the respective 50M Bonus Event or at a later date as requested by Mr. David,
and held as an allocation to Mr. David, until the requisition date as provided in writing, by Mr. David, to the Company, and (ii)
50% registered shares from the Company’s current active incentive plan within 30 days of the respective 50M Bonus Event.
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(e)
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Upon
the Company reaching and sustaining a MCV of $1 billion for no less than 30 days (the “1B Bonus Event”), Mr. David will
receive $20,000,000, or 2% of $1 billion, in restricted shares of Company common stock. The 1B Bonus Event stock will be issued within
30 days of the 1B Bonus Event or at a later date as requested by Mr. David, and held as an allocation to Mr. David, until the requisition
date as provided in writing, by Mr. David, to the Company.
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(f)
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For
each additional $1 billion MCV, beyond the initial 1B Bonus Event, sustained for a period of no less than 30 days, Mr. David will
receive $20,000,000, or 2% of $1 billion, in restricted shares of the Company’s common stock. This additional 1B Bonus Event
Stock, commencing with a $2 billion MCV and each additional 1B MCV increase, beyond $2 billion, will be issued within 30 days of
the Bonus Event, or at a later date as requested by Mr. David, and held as an allocation to Mr. David, until the requisition date
as provided in writing, by Mr. David, to the Company.
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The
June 2021 David Agreement supersedes the employment agreement dated August 6, 2020 between the Company and Mr. David.
The
Company will be deemed to be in default under the June 2021 David Agreement upon the occurrence of any of the following events:
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(d)
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if
the Company shall become insolvent, or bankrupt, or subject to the provisions of the U.S. Bankruptcy Code, or shall go into liquidation,
either voluntarily or under an order of a Court of competent jurisdiction, or shall make a general assignment for the benefit of
its creditors, or otherwise acknowledge its insolvency; or
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(e)
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if
a liquidator or liquidators or receiver or receivers or a trustee or trustees in bankruptcy, be appointed to the Company, or if its
secured creditors take possession of the property of the Company or any substantial or essential part thereof in the sole determination
of Mr. David; or
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(f)
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if
the Company fails, refuses or neglects promptly pay any monies owing to Mr. David when due under the June 2021 David Agreement.
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Mr.
David will be deemed to be in default under the June 2021 David Agreement upon the occurrence of any of the following events:
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c)
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if
Mr. David fails, refuses or neglects to promptly perform any material obligations owing to the Company when due under the June 2021
David Agreement, and such failure in performance shall continue for 10 business days following notice from the Company unless Mr.
David shall have commenced within the 10 days following notice and is continuing acceptable measures to remedy the said failure in
performance.
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d)
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If
the performance of Mr. David is not to minimum standards as expected by the Board of Directors of the Company.
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The
term of the June 2021 David Agreement will run for an initial term of 36 months. The term may be extended at the end of the initial term
if the Company and Mr. David mutually agree.
Mr.
David may terminate the June 2021 David Agreement at any time, upon 90 days’ written notice to the Company, and receive (i) additional
compensation equal to $300,000 in restricted shares of the Company’s common stock as consideration for the discount to market salary
Mr. David was paid, from July 12, 2017 through May 31, 2021, filling the roles and responsibilities as the Company’s President,
and (ii) any other compensation earned within the June 2021 David Agreement.
Notwithstanding
anything in the June 2021 David Agreement to the contrary, the Company may terminate Mr. David’s employment for cause for any one
of the following reasons: (i) conviction of a felony, any act involving moral turpitude, or a misdemeanor where imprisonment is imposed,
(ii) commission of any act of theft, fraud, dishonesty, or falsification of any Company records, (iii) improper disclosure of the Company’s
confidential or proprietary information, (iv) any action by Mr. David which has a detrimental effect on the Company’s reputation
or business, (v) Mr. David’s failure or inability to perform any reasonable assigned duties after written notice from the Company
thereof, and a reasonable opportunity to cure, such failure or inability, (vi) any breach of the June 2021 David Agreement, which breach
is not cured within 15 days following written notice of such breach, (vii) a course of conduct amounting to gross incompetence, (viii)
chronic and unexcused absenteeism, (ix) unlawful appropriation of a corporate opportunity, or (x) misconduct in connection with the performance
of any of Mr. David’s duties, including, without limitation, misappropriation of funds or property of the Company, securing or
attempting to secure personally any profit in connection with any transaction entered into on behalf of the Company, misrepresentation
to the Company, or any violation of law or regulations on Company premises or to which the Company is subject. Upon termination of Mr.
David’s employment with the Company for cause, the Company shall be under no further obligation to Mr. David, except to pay all
accrued but unpaid renumeration.
The
Company may terminate Mr. David’s employment at any time without cause; provided, however, that Mr. David will be entitled to severance
pay in the amount of three years renumeration and certain additional compensation as identified in the June 2021 David Agreement, but
if, and only if, Mr. David executes a valid and comprehensive release of any and all claims that Mr. David may have against the Company
in a form provided by the Company and Mr. David executes such form within 30 days of tender.
The
foregoing description of the June 2021 David Agreement is not complete and is qualified in its entirety by reference to the text of the
June 2021 David Agreement, a copy of which is attached hereto as Exhibit 10.2 and incorporated herein by reference.