Item
5.02 - Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
(e)
Compensatory Arrangements of Certain Officers:
On
January 20, 2017, Sitestar Corporation (the “Company”) entered into a certain employment agreement with its Chief
Executive Officer, President and Chief Financial Officer of the Company, Steven L. Kiel (the “Kiel Employment Agreement”).
The Kiel Employment Agreement commenced as of January 20, 2017 and continues through December 31, 2018, unless earlier terminated
pursuant to its terms. From and after December 31, 2018, the Kiel Employment Agreement will automatically renew for successive
one-year periods, unless the Company elects not to extend the term upon 90 days’ advance notice to Mr. Kiel.
During
the term of the employment arrangement, Mr. Kiel will continue to serve as the Company’s Chief Executive Officer, President
and Chief Financial Officer. Mr. Kiel will be entitled to a base salary at the annualized rate of $100,000 ($8,333.33 monthly)
and will be eligible to receive an annual performance bonus upon meeting certain requirements described below and to participate
in employee benefit plans as the Company may maintain from time to time.
Pursuant
to the Kiel Employment Agreement, Mr. Kiel will be eligible to receive an annual performance bonus, in cash, based on the percentage
growth in the Company’s book value per share during each calendar year, subject to a 5% hurdle. The amount of the annual
bonus will equal a ten times multiple (10X) of the product of (i) Mr. Kiel’s annualized base salary, times (ii) the percentage
increase—in excess of 5%—in the Company’s book value per share at December 31 of the applicable calendar year
over the Company’s book value per share at December 31 of the immediately preceding year. Mr. Kiel must be employed by the
Company as of December 31 of a given calendar year in order to earn and be eligible to receive any annual bonus in respect of
such year. If Mr. Kiel’s employment with the Company terminates as a result of a termination for cause by the Company or
Mr. Kiel’s resignation, then Mr. Kiel will forfeit any earned but unpaid annual bonus.
Pursuant
to the Kiel Employment Agreement, the Company may terminate Mr. Kiel’s employment for “cause” upon the Company’s
determination that Mr. Kiel has committed certain acts enumerated in the Kiel Employment Agreement. The Company otherwise may
terminate Mr. Kiel’s employment, and Mr. Kiel may resign and terminate his employment, at any time for any reason or for
no reason upon five (5) business days’ prior written notice.
In the event that Mr. Kiel’s employment with
the Company terminates as a result of his death or disability, Mr. Kiel will be entitled to payment of his salary through the
date of termination and for a period of two (2) months
thereafter, any previously earned but unpaid annual bonus, any
amounts accrued or payable under any employee benefit plans and any unreimbursed business expenses. In the event that Mr.
Kiel’s employment terminates as a result of a termination for cause by the Company or Mr. Kiel’s resignation, Mr.
Kiel will be entitled to payment of his salary through the date of termination and any unreimbursed business expenses. In the
event that Mr. Kiel’s employment terminates as a result of a termination by the Company without cause, Mr. Kiel will be
entitled to payment of his salary through the date of termination, any previously earned but unpaid annual bonus, any amounts
accrued or payable under any employee benefit plans and any unreimbursed business expenses.
The
description of the Kiel Employment Agreement above is a summary of certain of its material terms, does not purport to be complete,
and is qualified in its entirety by reference, including for other terms and conditions of Mr. Kiel’s arrangement, to the
Kiel Employment Agreement, a copy of which is attached hereto as
Exhibit 10.1
and incorporated into this Item 5.02 by reference.