Item
1.01 Entry into a Material Definitive Agreement.
On
December 29, 2020, Can B̅ Corp. (the “Company” or “CANB”) entered into separate Employee Services
Agreements (each, an “Employment Agreement” and, collectively, the “Employment Agreements”) with each
of Marco Alfonsi (“Alfonsi”), Stanley L. Teeple (“Teeple”), Phil Scala (“Scala”), and Pasquale
Ferro (“Ferro”) (each of the foregoing, individually, an “Executive” and, collectively, the “Executives”).
Pursuant to the Employment Agreements, Alfonsi agreed to serve as the Company’s Chief Executive Officer, Teeple agreed to
serve as the Company’s Chief Financial Officer, Scala agreed to serve as the Company’s Interim Chief Operating Officer,
and Ferro agreed to serve as President of Pure Health Products, LLC, a wholly-owned subsidiary of the Company. Each Employment
Agreement has an initial term of three (3) years and will automatically renew for an additional three (3) year term unless otherwise
terminated prior to the expiration of the initial term by the Company or the applicable Executive.
It
should be noted that the Executives have received only 50% of their applicable base salary since April 2020 due to the COVID-19
pandemic and will continue to receive reduced salaries until such time as those certain Original Issue Discount Senior Secured
Convertible Promissory Notes, as disclosed in CANB’s Current Report on Form 8-K filed with the SEC on December 16, 2020,
are fully repaid.
Pursuant
to the Employment Agreements, each of Alfonsi, Teeple, and Ferro will receive a base salary equal to $15,000 per month and Scala
will receive a base salary equal to $52,000 per year, all subject to an annual increase of not less than 10% on each anniversary
of the Employment Agreements during the term. If any amount of base salary cannot be paid due to cash flow considerations, such
amount will be deferred and may be paid in common or preferred stock of the Company, as determined by the Company. The Company
also agreed to issue a stock bonus to each Executive in accordance with the Company’s Incentive Stock Option Plan (“ISOP”)
in an amount of $100,000 each year during the term of the applicable Employment Agreement. Furthermore, the Company agreed to
issue 200 shares of the Company’s Series C Preferred Stock (“Series C Shares”) to each of Alfonsi, Teeple, and
Ferro, and 20 Series C Shares to Scala.
Each
Executive will also be eligible to receive other cash or stock bonuses as determined by CANB’s board of directors or, once
established, its compensation committee, and will be entitled to participate in any welfare, health and life insurance and pension
benefit and incentive programs, including sick pay and vacation time, as may be adopted from time to time by the Company. Until
the Company has such plans in place, the Company will reimburse each of Alfonsi, Teeple, and Ferro up to a maximum amount of $2,500
per month for the actual cost paid by such Executive for a family medical and dental insurance program, and for reimbursement
for the cost of personal life insurance at three (3) times the Executive’s annual base salary, pay an automobile-related
allowance of $1,200 per month, and pay a flat rate home office allowance of $1,200 per month. The Company will also reimburse
the Executives for all reasonable expenses incurred by them in performing their duties for the Company.
The
Company may terminate any Executive’s employment under the applicable Employment Agreement with or without cause at any
time, and any Executive may resign under the applicable Employment Agreement with or without good reason at any time, by providing
written notice to the other party. If CANB terminates an Employment Agreement with cause, or if an Executive resigns without good
reason, the Employment Agreement will terminate without further obligation by the Company, except such Executive shall be entitled,
if applicable, to all base salary previously earned but not paid, amounts due under benefit plans and profit sharing plans, and
reimbursement of business expenses accrued but unpaid through the date of termination. Furthermore, should an Executive be terminated
for cause, then all stock options granted to such Executive, whether vested or unvested, shall be forfeited by the Executive and
shall terminate.
If
an Employment Agreement is terminated by CANB without cause or by Alfonsi, Teeple, or Ferro with good reason prior to the expiration
of the initial term, the Company will pay such Executive a severance payment in the amount equal to all base salary due to him
for the remainder of the initial term, including consideration for each annual increase as described above. If Scala’s Employment
Agreement is terminated by CANB without cause or by Scala with good reason, the Company will pay Scala a severance payment in
the amount equal to all base salary previously earned but not paid, amounts due under benefit plans and profit sharing plans,
and reimbursement of business expenses accrued but unpaid through the date of termination. Notwithstanding the foregoing, the
Company’s obligation to pay the severance amount to an Executive is conditioned upon such Executive executing a release
agreement in the form agreed upon between CANB and the Executive. Additionally, if an Employment Agreement is terminated due to
a merger or acquisition, the Company shall arrange to pay each applicable Executive a severance in the amount previously described
in this paragraph plus an additional six (6) months’ worth of base salary.
If
an Employment Agreement is terminated as a result of the death or disability of an Executive, the Company will pay to Alfonsi,
Teeple, or Ferro or their respective designee(s), as applicable, all salary, amounts due under benefit plans and profit sharing
plans, and reimbursement of business expenses, through the date of termination plus the remaining base salary for the initial
term of the applicable Employment Agreement; and will pay to Scala or his designee(s), as applicable, all base salary previously
earned but not paid, amounts due under benefit plans and profit sharing plans, and reimbursement of business expenses accrued
but unpaid through the date of Scala’s death or disability. On the date of termination for any reason, except in the case
of termination by the Company for cause, each Executive shall only be entitled to the value of the shares of any class of stock
vested on or before the date of termination of employment, if any shares have vested by that date, in accordance with the vesting
schedule outlined in the applicable documentation between CANB and the Executive governing the vesting of such shares. As of the
date of termination, all vesting options will lapse with respect to all of the Executive’s then-unvested shares of any class
of stock.
The
Company agreed to indemnify each Executive for all claims against him by reason of such Executive being an officer, director,
or employee of the Company, as applicable, pursuant to separate indemnity agreements entered into concurrently with the Employment
Agreements. Notwithstanding the foregoing, the Company will not indemnify an Executive in the event any claim is the result of
such Executive’s gross negligence or willful misconduct, or in certain other situations.
The
Employment Agreements and the indemnity agreements contemplated thereby otherwise contain standard terms and conditions customary
of contracts for these types of transactions.