SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 8, 2016
PAYMENT DATA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 000-30152 | 98-0190072 | ||
| (State or other jurisdiction | (Commission | (IRS Employer | ||
| of incorporation) | File Number) | Identification No.) |
| 12500 San Pedro, Suite 120, San Antonio, TX | 78216 | |
| (Address of principal executive offices) | (Zip Code) |
(210) 249-4100
(Registrant’s telephone number, including area code)
Not applicable.
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Amendments to Employment Agreements with Michael R. Long and Louis A. Hoch
On September 8, 2016, we entered into amendments to our employment agreements with Michael R. Long, our Chairman of the Board of Directors and Louis A. Hoch, our President, Chief Executive and Chief Operating Officer and Vice Chairman of the Board of Directors.
In the event of termination of employment as a result of death of the executive, the amount of deferred compensation owed to the executive was amended to comprise an amount equal to 2.95 times of the executive’s base salary. The deferred compensation does not include amounts paid or accrued to executive for bonuses or bonus compensation, benefits or equity awards. Unpaid and unearned bonus compensation or bonus deferred compensation is forfeited. No deferred compensation will be due as long as we and/or an insurance company continues to pay executive’s base salary, minus any monthly base salary already paid to the executive prior to his death pursuant to the executive’s disability, to the executive’s estate for a period of up to 36 months. If these continuing payments cease before 36 months, we will have to pay the executive’s estate the deferred compensation minus any base salary payments within 30 days of the cessation. Further, all stock options issued to the executive and all restricted stock granted to executive shall continue on its vesting schedule.
In the event of termination of employment as a result of disability of the executive, the amount of deferred compensation owed to the executive was amended to comprise an amount equal to 36 monthly base salary payments to be made monthly on a continuing basis for up to 36 months, with the first payment due within 30 days after the event. For the avoidance of doubt, the deferred compensation does not include amounts paid or accrued to executive for bonuses or bonus compensation, benefits or equity awards. Unpaid and unearned bonus compensation or bonus deferred compensation is forfeited. Further, all stock options issued to the executive and all restricted stock granted to executive shall continue on their vesting schedule.
The foregoing description of the amendments to the respective employment agreements is qualified in its entirety by reference to the full text of the amendments to the employment agreements, which are filed herewith as Exhibit 10.1 and 10.2, and are incorporated herein by reference.
| Item 9.01. | Financial Statements and Exhibits. |
10.1 Sixth Amendment to Employment Agreement with Michael R. Long, dated September 8, 2016.
10.2 Sixth Amendment to Employment Agreement with Louis A. Hoch, dated September 8, 2016.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PAYMENT DATA SYSTEMS, INC. | ||
| Date: September 14, 2016 | ||
| By: | /s/ Louis A. Hoch | |
| Name: | Louis A. Hoch | |
| Title: | Chief Executive Officer and President | |
Exhibit 10.1
Sixth Amendment to Employment Agreement
This Sixth Amendment (“Sixth Amendment”), to the Employment Agreement (the “Agreement”) dated February 27, 2007 between Payment Data Systems, Inc. (“PDS”) and Michael R. Long (“Executive”) is entered into this 8th day of September, 2016, and is made part of the Agreement which is hereby amended as follows:
1. Definitions. All capitalized terms used herein and not expressly defined herein shall have the respective meanings given to such terms in the Agreement.
2. Entire Agreement. Except as expressly modified by this Sixth Amendment, the Agreement shall be and remain in full force and effect in accordance with its terms and shall constitute the legal, valid, binding and enforceable obligations of PDS and Executive.
3. Successors and Assigns. This Sixth Amendment shall be binding upon and inure to the benefit of the successors and permitted assigns of the parties hereto.
4. Section References. Section titles and references used in this Sixth Amendment shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreements among the parties hereto evidenced hereby.
5. Now, therefore, in consideration of the mutual covenants set forth herein and for other good and valuable consideration, the adequacy, receipt and sufficiency of which are hereby acknowledged:
| a. | Section 4(c) of the Agreement is hereby amended solely with respect to Executive’s termination as a result of death as follows: |
“(i) When Due . The estate of Executive shall be entitled to the Deferred Compensation as calculated below, the initial installment of which is to be paid within 30 days after the event giving rise to the payout (except as provided below) in the event that Executive’s employment is terminated for death of Executive. No Deferred Compensation shall be due if Executive’s estate receives continuation of Base Salary payments at the time of his death as follows: the Company and/or a third party insurance company shall continue to pay the Base Salary to the estate of Executive up to a maximum of 36 months minus the monthly Base Salary already paid to Executive prior to his death pursuant to his disability. If such Base Salary payments cease before 36 months for any reason, the Company shall pay Executive’s estate the Deferred Compensation minus Base Salary payments within 30 days.
(ii) Amount . The Deferred Compensation shall be an amount equal to 2.95 times of Base Salary (as defined in Section 4(a) of the Agreement) (“Deferred Compensation”). For the avoidance of doubt, Deferred Compensation shall not include amounts paid or accrued to Executive for bonuses or Bonus Compensation, benefits or equity awards. Unpaid and unearned Bonus Compensation or Bonus Deferred Compensation shall be forfeited.
The Deferred Compensation herein shall be deemed liquidated damages resulting from the Company’s termination of this Agreement due to death of the Executive and shall be the estate of the Executive’s sole and exclusive remedy for any such termination.
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(iii) Outstanding Equity Awards . All stock options issued to Executive and all restricted stock granted to Executive shall continue on their vesting schedule without acceleration. Upon vesting of such stock options or restricted stock, Company agrees to execute all documents and provide all legal opinions to the estate of the Executive as requested by the authorized representative in order for the estate of the Executive to sell, register, collateralize, or transfer such stock.”
| b. | Section 4(c) of the Agreement is hereby amended solely with respect to Executive’s termination as a result of disability as follows: |
“( i) When Due . Executive shall be entitled to the Deferred Compensation as calculated below the initial installment of which is to be paid within 30 days after the event giving rise to the payout (except as provided below) in the event that Executive’s employment is terminated for disability pursuant to Section 7(a).
(ii) Amount . The Deferred Compensation shall be an amount equal to 36 monthly Base Salary payments (for the avoidance of doubt one monthly Base Salary payment shall equal 1/12 th of Executive’s Base Salary and Base Salary shall be the salary amount paid to Executive on his last pay check before termination of the disability occurred) (“Deferred Compensation”) to be made monthly on a continuing basis for up to 36 months by the Company and/or a third party insurance company. For the avoidance of doubt, Deferred Compensation shall not include amounts paid or accrued to Executive for bonuses or Bonus Compensation, benefits or equity awards. Unpaid and unearned Bonus Compensation or Bonus Deferred Compensation shall be forfeited.
(iii) Outstanding Equity Awards . All stock options issued to Executive and all restricted stock granted to Executive shall continue on their vesting schedule without acceleration. Upon vesting of such stock options or restricted stock, Company agrees to execute all documents and provide all legal opinions to the estate of the Executive as requested by the authorized representative in order for the estate of the Executive to sell, register, collateralize, or transfer such stock.”
6. This Sixth Amendment amends the Agreement as set forth herein. All previously existing obligations under the Agreement are hereby reaffirmed in all respects.
[Signature Page follows.]
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In witness thereof, the parties hereto have caused this Sixth Amendment to the Employment Agreement to be executed on the day and year first above written.
| Payment Data Systems, Inc. | Executive | ||||
| By: | /s/ Peter Kirby | By: | /s/ Michael R. Long | ||
| Name: Peter Kirby | Name: Michael R. Long | ||||
| Title: Chairman of the | |||||
| Compensation Committee | |||||
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Exhibit 10.2
Sixth Amendment to Employment Agreement
This Sixth Amendment (“Sixth Amendment”), to the Employment Agreement (the “Agreement”) dated February 27, 2007 between Payment Data Systems, Inc. (“PDS”) and Louis A. Hoch (“Executive”) is entered into this 8th day of September, 2016, and is made part of the Agreement which is hereby amended as follows:
1. Definitions. All capitalized terms used herein and not expressly defined herein shall have the respective meanings given to such terms in the Agreement.
2. Entire Agreement. Except as expressly modified by this Sixth Amendment, the Agreement shall be and remain in full force and effect in accordance with its terms and shall constitute the legal, valid, binding and enforceable obligations of PDS and Executive.
3. Successors and Assigns. This Sixth Amendment shall be binding upon and inure to the benefit of the successors and permitted assigns of the parties hereto.
4. Section References. Section titles and references used in this Sixth Amendment shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreements among the parties hereto evidenced hereby.
5. Now, therefore, in consideration of the mutual covenants set forth herein and for other good and valuable consideration, the adequacy, receipt and sufficiency of which are hereby acknowledged:
| a. | Section 4(c) of the Agreement is hereby amended solely with respect to Executive’s termination as a result of death as follows: |
“(i) When Due . The estate of Executive shall be entitled to the Deferred Compensation as calculated below, the initial installment of which is to be paid within 30 days after the event giving rise to the payout (except as provided below) in the event that Executive’s employment is terminated for death of Executive. No Deferred Compensation shall be due if Executive’s estate receives continuation of Base Salary payments at the time of his death as follows: the Company and/or a third party insurance company shall continue to pay the Base Salary to the estate of Executive up to a maximum of 36 months minus the monthly Base Salary already paid to Executive prior to his death pursuant to his disability. If such Base Salary payments cease before 36 months for any reason, the Company shall pay Executive’s estate the Deferred Compensation minus Base Salary payments within 30 days.
(ii) Amount . The Deferred Compensation shall be an amount equal to 2.95 times of Base Salary (as defined in Section 4(a) of the Agreement) (“Deferred Compensation”). For the avoidance of doubt, Deferred Compensation shall not include amounts paid or accrued to Executive for bonuses or Bonus Compensation, benefits or equity awards. Unpaid and unearned Bonus Compensation or Bonus Deferred Compensation shall be forfeited.
The Deferred Compensation herein shall be deemed liquidated damages resulting from the Company’s termination of this Agreement due to death of the Executive and shall be the estate of the Executive’s sole and exclusive remedy for any such termination.
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(iii) Outstanding Equity Awards . All stock options issued to Executive and all restricted stock granted to Executive shall continue on their vesting schedule without acceleration. Upon vesting of such stock options or restricted stock, Company agrees to execute all documents and provide all legal opinions to the estate of the Executive as requested by the authorized representative in order for the estate of the Executive to sell, register, collateralize, or transfer such stock.”
| b. | Section 4(c) of the Agreement is hereby amended solely with respect to Executive’s termination as a result of disability as follows: |
“( i) When Due . Executive shall be entitled to the Deferred Compensation as calculated below the initial installment of which is to be paid within 30 days after the event giving rise to the payout (except as provided below) in the event that Executive’s employment is terminated for disability pursuant to Section 7(a).
(ii) Amount . The Deferred Compensation shall be an amount equal to 36 monthly Base Salary payments (for the avoidance of doubt one monthly Base Salary payment shall equal 1/12 th of Executive’s Base Salary and Base Salary shall be the salary amount paid to Executive on his last pay check before termination of the disability occurred) (“Deferred Compensation”) to be made monthly on a continuing basis for up to 36 months by the Company and/or a third party insurance company. For the avoidance of doubt, Deferred Compensation shall not include amounts paid or accrued to Executive for bonuses or Bonus Compensation, benefits or equity awards. Unpaid and unearned Bonus Compensation or Bonus Deferred Compensation shall be forfeited.
(iii) Outstanding Equity Awards . All stock options issued to Executive and all restricted stock granted to Executive shall continue on their vesting schedule without acceleration. Upon vesting of such stock options or restricted stock, Company agrees to execute all documents and provide all legal opinions to the estate of the Executive as requested by the authorized representative in order for the estate of the Executive to sell, register, collateralize, or transfer such stock.”
6. This Sixth Amendment amends the Agreement as set forth herein. All previously existing obligations under the Agreement are hereby reaffirmed in all respects.
[Signature Page follows.]
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In witness thereof, the parties hereto have caused this Sixth Amendment to the Agreement to be executed on the day and year first above written.
| Payment Data Systems, Inc. | Executive | ||||
| By: | /s/ Peter Kirby | By: | /s/ Louis A. Hoch | ||
| Name: Peter Kirby | Name: Louis A. Hoch | ||||
| Title: Chairman of the | |||||
| Compensation Committee | |||||
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