UNITED STATES

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): August 13, 2018

 

HEALTHIER CHOICES MANAGEMENT CORP.

(Exact name of registrant as specified in its charter)

 

Delaware   001-36469   84-1070932
(State or Other Jurisdiction   (Commission   (I.R.S. Employer
of Incorporation)   File Number)   Identification No.)

 

3800 North 28th Way

Hollywood, Florida 33020

(Address of Principal Executive Office) (Zip Code)

 

(888) 766-5351

(Registrant’s telephone number, including area code)

 

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:

 

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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company  ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 

 

 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

The information set forth below under Item 5.02 is hereby incorporated by reference into this Item 1.01.

 

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

 

Effective as of August 13, 2018, Healthier Choices Management Corp. (the “ Company ”) entered into an amendment to the existing employment agreement (the “ Santi Amended Employment Agreement ”) with the Company’s President and Chief Operating Officer, Christopher Santi. Pursuant to the Santi Amended Employment Agreement, Mr. Santi will continue to be employed as the Company’s President and Chief Operating Officer for an additional one year extension period through January 29, 2021. Mr. Santi will receive a base salary of $330,000 for this additional year. The severance pay period for termination without cause was increased to up to 18 months based on time of service. Mr. Santi was also granted 8 billion shares of restricted common stock pursuant to the Santi Amended Employment Agreement on the condition that 8 billion of his options to purchase Company common stock are forfeited. This restricted stock will vest one year following the date of issuance provided that the grantee remains an employee of the Company through each applicable vesting date. The above description of the terms of the Santi Amended Employment Agreement is not complete and is qualified by reference to the complete document, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

 

Effective as of August 13, 2018, the Company entered into an amendment to the existing employment agreement (the “ Ollet Amended Employment Agreement ”) with the Company’s Chief Financial Officer, John Ollet. Pursuant to the Ollet Amended Employment Agreement, Mr. Ollet will continue to be employed as the Company’s Chief Financial Officer for an additional one year extension period through December 12, 2020. Mr. Ollet will receive a base salary of $250,000 for this additional year. Mr. Ollet was also granted 3 billion shares of restricted common stock pursuant to the Ollet Amended Employment Agreement. This restricted stock will vest one year following the date of issuance provided that the grantee remains an employee of the Company through each applicable vesting date. The above description of the terms of the Ollet Amended Employment Agreement not complete and is qualified by reference to the complete document, which is attached hereto as Exhibit 10.2 and incorporated herein by reference.

 

On August 13, 2018, the Company amended and restated its existing employment agreement with Jeffrey Holman, the Company’s Chief Executive Officer (the “ Holman Employment Agreement ”). The Holman Employment Agreement is for an additional three year term and provides for an annual base salary of $450,000 and a target bonus for 2018 only in an amount ranging from 20% to 200% of his base salaries subject to the Company meeting certain earnings before interest, taxes depreciation and amortization performance milestones. Mr. Holman is entitled to receive severance payments, including two years of his then base salary and other benefits in the event of a change of control, termination by the Company without cause, termination for good reason by the executive or non-renewal by the Company. Mr. Holman was also granted 11 billion shares of restricted common stock pursuant to the Holman Employment Agreement Amendment on the condition that 11 billion of his options to purchase Company common stock are forfeited. This restricted stock will vest one year following the date of issuance provided that the grantee remains an employee of the Company through each applicable vesting date. The above description of the terms of the Holman Employment Agreement is not complete and is qualified by reference to the complete document, which is attached hereto as Exhibit 10.3 and incorporated herein by reference.

 

Under the Restricted Stock Award Agreements with Messrs. Holman, Ollet and Santi, each recipient will have all rights of a stockholder of the Company, except the right to receive any dividends thereon until vested. This restricted stock will vest one year following the date of issuance provided that the grantee remains an employee of the Company through each applicable vesting date. The Company’s form of Restricted Stock Award is attached as Exhibit 10.4 and incorporated herein by reference.

 

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Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit    
Number   Description
     
10.1   Amended and Restated Employment Agreement, dated as of March 13, 2018 by and between the Company and Christopher Santi
10.2   Amended and Restated Employment Agreement, dated as of March 13, 2018 by and between the Company and John Ollet
10.3   Amended and Restated Employment Agreement, dated as of March 13, 2018 by and between the Company and Jeffrey Holman
10.4   Form of Restricted Stock Award Agreement

 

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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.

 

  HEALTHIER CHOICES MANAGEMENT CORP.
     
Date: August 17, 2018 By: /s/ Jeffrey E. Holman
    Jeffrey E. Holman
    Chief Executive Officer

 

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EXHIBIT INDEX

 

Exhibit Number   Description
     
10.1   Amended and Restated Employment Agreement, dated as of March 13, 2018 by and between the Company and Christopher Santi
10.2   Amended and Restated Employment Agreement, dated as of March 13, 2018 by and between the Company and John Ollet
10.3   Amended and Restated Employment Agreement, dated as of March 13, 2018 by and between the Company and Jeffrey Holman
10.4   Form of Restricted Stock Award Agreement

  

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Exhibit 10.1

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“ Agreement ”), shall be effective as of the 13 th day of August, 2018 (“ Effective Date ”), by and among, Christopher Santi (the “ Executive ”) and Healthier Choices Management Corp., a Delaware corporation (“ HCMC ” or the “ Company ”).

 

RECITALS

 

WHEREAS , Executive is currently employed by HCMC;

 

WHEREAS , Company wishes to amend and restate its Employment Agreement, dated January 30, 2018 with the Executive (the “Original Agreement”) to continue the services of Executive, and, in connection therewith, Company and Executive desire to enter into this Agreement to become effective on the Effective Date; and

 

WHEREAS , the parties have agreed to amend and restate the Original Agreement and the Executive shall continue to serve as President and Chief Operating Officer of the Company.

 

NOW, THEREFORE , In consideration of the mutual representations, warranties, covenants and agreements contained in this Agreement and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1.  Employment .

 

(a)  Employment Period . Subject to the terms and conditions set forth herein and unless sooner terminated as hereinafter provided, Company shall employ Executive and Executive agrees to serve as an employee of Company until January 30, 2021 (the “ Employment Term ”). The Employment Term shall be automatically renewed for successive one-year terms unless notice of non-renewal is given by either party at least 30 days before the end of the Term. For purposes of this Agreement, the Employment Term and any renewal term thereof are collectively referred to herein as the “ Employment Period .” This Agreement will terminate automatically upon a Change of Control (as defined in Section 3(e)).

 

(b)  Duties and Responsibilities . During the Employment Period, the Executive shall serve as President and Chief Operating Officer. In such role, Executive shall have such authority and responsibility and perform such duties as may be assigned to him from time to time by the Board of Directors of the Company (the “ Board ”), and in the absence of such assignment, such duties as are customary to Executive’s office and as are necessary or appropriate to the business and operations of the Company and its subsidiaries. During the Employment Period, the Executive’s employment shall be full time, Executive shall perform his duties honestly, diligently, in good faith and in the best interests of the Company and its subsidiaries, and Executive shall use his best efforts to promote the interests of the Company and its subsidiaries.

 

 

 

 

2.  Compensation .

 

(a)  Base Salary . In consideration for the Executive’s services hereunder and the restrictive covenants contained herein, the Executive shall initially be paid an annual base salary as follows: 2018: $250,000; 2019: $270,000; and 2020 and 2021: $330,000 (the “ Salary ”), which salary shall be payable commencing as of date hereof and shall be payable in accordance with the Company’s customary payroll practices.

 

(b)  Bonus . In addition to the Salary, for each Measurement Period, Executive shall be entitled to earn an annual bonus at the discretion of the Company’s board of Directors.

 

(c)  Restricted Stock Awards. The Company hereby grants to the Executive, on the Effective Date, 8 billion shares of restricted stock (the “ Executive Stock ”) representing 8 billion shares of the Company’s common stock, pursuant to the Restricted Stock Award Agreement in the form attached hereto as Exhibit A . Except as otherwise provided herein or the Restricted Stock Award Agreement, the Executive Stock shall vest and the restrictions associated with the Executive Stock shall lapse, subject to the Executive’s continued employment with the Company, on the first anniversary of this Agreement. As a condition to the issuance of the Executive Stock, the Executive agrees to forfeit (and the Company shall cancel) his outstanding and vested options (“ Options ”) to purchase 8 billion shares of Company common stock. The existing agreement evidencing the Options shall be amended to reflect the cancellation of these Options.

 

(d)  Vacations . The Executive shall be entitled to no less than twenty (20) days of vacation on an annual basis during the Term with additional paid vacation time being accrued in accordance with the Company’s vacation policy. Per the Company’s vacation policy, the Executive’s vacation does not carry over year over year.

 

(e)  Other Benefits . During the term of this Agreement, the Executive shall be entitled to coverage (subject to contributions required of other C-level executive employees of the Company generally) in the health and dental insurance plans of the Company and any life insurance programs, disability programs, pension plans and other fringe benefit plans and programs as are from time to time established and maintained for the benefit of the Company’s employees or officers, subject to the provisions of such plans and programs.

 

(f)  Expenses . The Executive shall be reimbursed for all out-of-pocket expenses reasonably incurred by his on behalf of or in connection with the business of the Company, pursuant to the normal standards and guidelines followed from time to time by the Company.

 

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3.  Termination .

 

(a)  For Cause . The Company shall have the right to terminate this Agreement and to discharge the Executive for Cause (as defined below), at any time during the Employment Period. Termination for “ Cause ” shall mean, during the Employment Period, (i)Executive’s conduct that would constitute under federal or state law either a felony or any other criminal offense involving dishonesty or moral turpitude, or a determination by the Board, after consideration of all available information and following the procedures set forth below, that Executive has willfully and materially violated Company policies or procedures involving discrimination, harassment, substance abuse, or workplace violence or use of confidential information, (ii) the Executive’s negligence or misconduct in the performance of his duties hereunder that has a material and adverse effect on the Company, (iii) a material breach by the Executive of this Agreement or a material failure on the part of Executive to perform his obligations hereunder or (iv) the Executive’s inability to perform his duties and responsibilities as provided herein due to his death or Disability (as defined herein). Any termination for Cause pursuant to this Section shall be delivered to the Executive in writing and shall set forth in detail all acts or omissions upon which the Company is relying to terminate the Executive for Cause. Except as otherwise specifically set forth herein, if the Executive is terminated for Cause, the Executive shall only be entitled to receive his accrued and unpaid Salary, any declared bonus and other benefits through the termination date and the Company shall have no further obligations under this Agreement from and after the date of termination. “ Disability ” shall mean any mental or physical illness, condition, disability or incapacity which prevents the Executive from reasonably discharging his duties and responsibilities under this Agreement for a period of ninety (90) days in any one hundred eighty (180) day period.

 

(b)  Termination by Executive . If the Executive shall resign or otherwise terminate his employment with the Company at any time during the term of this Agreement, the Executive shall only be entitled to receive his accrued and unpaid Salary, any declared bonus and other benefits through the termination date and the Company shall have no further obligations under this Agreement from and after the date of termination.

 

(c)  Termination by Company Without Cause . At any time during the term of this Agreement, the Company shall have the right to terminate this Agreement and to discharge the Executive without Cause effective upon delivery of written notice to the Executive. Upon any such termination by the Company without Cause, the Company shall pay to the Executive all of the Executive’s accrued but unpaid Salary through the date of termination and any declared bonus and (ii) any amount required pursuant to Section 3(e).

 

(d)  Death of the Executive . In the event of the death of Executive, the employment of the Executive by the Company shall automatically terminate on the date of the Executive’s death and the Company shall be obligated to pay Executive’s estate the Executive’s accrued and unpaid Salary, any earned but unpaid bonus and other benefits through the termination date . Other than as set forth in the preceding sentence, the Company shall have no further obligations under this Agreement from and after the date of termination due to the death of the Executive.

 

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(e)  Severance . If Executive’s employment by the Company is terminated (i) by the Company without Cause or (ii) upon a Change of Control pursuant to Section 1(a), then (A) this Agreement shall be deemed to be terminated as of the date Executive ceases to be employed by the Company and (B) Executive shall be entitled to (i) receive any unpaid Salary and bonus and (ii) continue to receive Executive’s then Salary for the applicable Severance Period (as defined below) following the effective date of such termination (which shall be paid in arrears in accordance with the Company’s general payroll practices, over the applicable period commencing on the date of such termination and subject to withholding and other appropriate deductions) (the “ Severance Payments ”). As a condition to receiving the Severance Payments relating to periods following the date of such termination, Executive must sign, deliver, and not revoke a release in the form attached hereto as Exhibit A , such that it has become effective and enforceable as a condition to any payment pursuant to this Section 4(e) . “ Severance Period ” shall mean (i) upon a Change of Control, eighteen (18) months and (ii) in the event Executive’s employment is terminated without Cause, either (A) initially fifteen (15) months or (B) after the first anniversary of the Effective Date, fifteen (15) months plus one additional month for every additional four (4) months that Executive has been employed by the Company after the date of this Agreement, up to a maximum of eighteen (18) months. “ Change of Control ” shall have the meaning set forth in Treasury Regulation Section 1.409A-3(i)(5).

 

4.  Restrictive Covenants . In consideration of his employment and the other benefits arising under this Agreement, the Executive agrees that during the Employment Period, and for eighteen (18) months following the termination of this Agreement, the Executive (or any affiliate) shall not directly or indirectly:

 

(a) directly or indirectly, own, manage, operate, join, control or participate in the ownership, management, operation or control of, or be employed or retained by, render services to, provide financing (equity or debt) or advice to, or otherwise be connected in any manner with any business located within five (5) miles of any current or future store of the Company, that sells or provides products or services sold or provided by the Company including, without limitation, the ownership, management or operation of any (i) natural and/or organic grocery stores or markets or (ii) electronic cigarettes; or

 

(b) for any reason, (i) induce any material customer or supplier of the Company or any of its subsidiaries or affiliates to patronize or do business with any business directly or indirectly in competition with the businesses conducted by the Company or any of its subsidiaries or affiliates in any market in which the Company or any of its subsidiaries or affiliates does business; (ii) canvass, solicit or accept from any material customer or supplier of the Company or any of its subsidiaries or affiliates any such competitive business; or (iii) request or advise any material customer, supplier or other provider of services to the Company or any of its subsidiaries or affiliates to withdraw, curtail or cancel any such customer’s, supplier’s or provider’s business with the Company or any of its subsidiaries or affiliates; or

 

(c) for any reason, employ, or knowingly permit any company or business directly or indirectly controlled by his, to employ, any person who was employed by the Company or any of its subsidiaries or affiliates at or within the prior one (1) year, or in any manner seek to induce any such person to leave his or his employment.

 

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5.  Specific Performance; Injunction . The parties agree and acknowledge that the restrictions contained in Section 4 are reasonable in scope and duration and are necessary to protect the Company or any of its subsidiaries or affiliates. If any provision of Section 4 as applied to any party or to any circumstance is adjudged by a court to be invalid or unenforceable, the same shall in no way affect any other circumstance or the validity or enforceability of any other provision of this Agreement. If any such provision, or any part thereof, is held to be unenforceable because of the duration of such provision or the area covered thereby, the parties agree that the court making such determination shall have the power to reduce the duration and/or area of such provision, and/or to delete specific words or phrases, and in its reduced form, such provision shall then be enforceable and shall be enforced. The Executive agrees and acknowledges that the breach of Section 4 or Section 6 will cause irreparable injury to the Company or any of its subsidiaries or affiliates and upon breach of any provision of such Sections, the Company or any of its subsidiaries or affiliates shall be entitled to injunctive relief, specific performance or other equitable relief, without being required to post a bond; provided, however, that, this shall in no way limit any other remedies which the Company or any of its subsidiaries or affiliates may have (including, without limitation, the right to seek monetary damages).

 

6.  Confidentiality . The Executive agrees that at all times during and after the Employment Period, the Executive shall (i) hold in confidence and refrain from disclosing to any other party all information, whether written or oral, tangible or intangible, of a private, secret, proprietary or confidential nature, of or concerning the Company and its subsidiaries, their business and operations, and all files, letters, memoranda, reports, records, computer disks or other computer storage medium, data, models or any photographic or other tangible materials containing such information (“ Confidential Information ”), including without limitation, any sales, promotional or marketing plans, programs, techniques, practices or strategies, any expansion plans (including existing and entry into new geographic and/or product markets), and any customer or supplier lists, (ii) use the Confidential Information solely in connection with the Executive’s employment with the Company and for no other purpose, (iii) take all precautions necessary to ensure that the Confidential Information shall not be, or be permitted to be, shown, copies or disclosed to any third parties, without the prior written consent of the Company, and (iv) observe all security policies implemented by the Company from time to time with respect to the Confidential Information. In the event that the Executive is ordered to disclose any Confidential Information, whether in a legal or regulatory proceeding or otherwise, the Executive shall provide the Company with prompt notice of such request or order so that the Company may seek to prevent disclosure. In the case of any disclosure, the Executive shall disclose only that portion of the Confidential Information that the Executive is ordered to disclose.

 

7.  Notices . All notices, requests, demands, claims and other communications hereunder shall be in writing and shall be deemed given if delivered by hand delivery, by certified or registered mail (first class postage pre-paid), guaranteed overnight delivery or facsimile transmission if such transmission is confirmed by delivery by certified or registered mail (first class postage pre-paid) or guaranteed overnight delivery to, the following addresses and telecopy numbers (or to such other addresses or telecopy numbers which such party shall designate in writing to the other parties): (a) if to the Company, at its principal executive offices, addressed to the President, with a copy to Martin T. Schrier, Cozen O’Connor, 200 South Biscayne Blvd., Suite 3000, Miami, Florida 33131; and (b) if to the Executive, at the address listed on the signature page hereto.

 

8.  Amendment; Waiver . This Agreement may not be modified, amended, or supplemented, except by written instrument executed by all parties. No failure to exercise, and no delay in exercising, any right, power or privilege under this Agreement shall operate as a waiver, nor shall any single or partial exercise of any right, power or privilege hereunder preclude the exercise of any other right, power or privilege. No waiver of any breach of any provision shall be deemed to be a waiver of any preceding or succeeding breach of the same or any other provision, nor shall any waiver be implied from any course of dealing between the parties.

 

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9.  Assignment; Third Party Beneficiary . This Agreement, and the Executive’s rights and obligations hereunder, may not be assigned or delegated by him. The Company may assign its rights, and delegate its obligations, hereunder to any affiliate of the Company, or any successor to the Company, specifically including the restrictive covenants set forth in Section 4 hereof. The rights and obligations of the Company under this Agreement shall inure to the benefit of and be binding upon its respective successors and assigns.

 

10.  Severability; Survival . In the event that any provision of this Agreement is found to be void and unenforceable by a court of competent jurisdiction, then such unenforceable provision shall be deemed modified so as to be enforceable (or if not subject to modification then eliminated herefrom) to the extent necessary to permit the remaining provisions to be enforced in accordance with the parties intention. The provisions of Section 4 and 6 will survive the termination for any reason of the Executive’s relationship with the Company.

 

11.  Governing Law . This Agreement shall be construed in accordance with and governed for all purposes by the laws of the State of Florida applicable to contracts executed and to be wholly performed within Florida.

 

12.  Construction . This Agreement shall be construed as a whole according to its fair meaning and not strictly for or against any party. The parties acknowledge that each of them has reviewed this Agreement and has had the opportunity to have it reviewed by their respective attorneys and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this Agreement.

 

13.  Withholding . All payments made to the Executive shall be made net of any applicable withholding for income taxes and the Executive’s share of FICA, FUTA or other taxes. The Company shall withhold such amounts from such payments to the extent required by applicable law and remit such amounts to the applicable governmental authorities in accordance with applicable law.

 

14.  Attorneys’ Fees . In the event any legal proceeding is brought to enforce or interpret any part of this Agreement, the prevailing Party in such legal proceeding shall be entitled to an award of reasonable attorneys’ fees and costs incurred by the prevailing Party in such legal proceeding, at the trial level and at the appellate level and whether or not such proceeding is prosecuted to final judgment.

 

[REMAINDER OF PAGE BLANK]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first above written.

 

  Healthier Choices Management Corp.,
  a Delaware corporation
     
  By: /s/ Jeffrey Holman
  Name: Jeffrey Holman
  Title: Chief Executive Officer
     
  Executive:
     
  /s/ Christopher Santi
  Name: Christopher Santi

 

Signature Page for Amended and Restated Employment Agreement

 

 

 

 

Exhibit A

 

Release

 

1.  Release . I, Christopher Santi, do hereby release and discharge Healthier Choices Management Corp. and each of its parent companies, subsidiaries, each of the respective direct and indirect equity owners of any of the foregoing, each of the respective Affiliates of any of the foregoing, and each of the respective officers, directors, members, managers, partners, equity owners, employees, representatives and agents of any of the foregoing (collectively, the “ Employer Affiliates ”, and each an “ Employer Affiliate ”) from any and all claims, demands or liabilities whatsoever, whether known or unknown or suspected to exist by me, which I ever had or may now have against any Employer Affiliate, from the beginning of time to the Effective Date (as defined below), including, without limitation, any claims, demands or liabilities in connection with my employment, including wrongful termination, constructive discharge, breach of express or implied contract, unpaid wages, benefits, attorneys’ fees or pursuant to any federal, state, or local employment laws, regulations, or executive orders prohibiting inter alia , age, race, color, sex, national origin, religion, handicap, veteran status, and disability discrimination, including, without limitation, the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, the Civil Rights Act of 1866, the Employee Retirement Income Security Act of 1974, the Americans with Disabilities Act of 1990, and any similar state statute or any state statute relating to employee benefits or pensions but specifically excluding claims, demands or liabilities related to my ownership of equity in Holdings or for indemnification in connection with my service as a director or officer of the Company or any of its Affiliates. I fully understand that if any fact with respect to which this Release is executed is found hereafter to be other than or different from the facts believed by me to be true, I expressly accept and assume the risk of such possible difference in fact and agree that the release set forth herein shall be and remain effective notwithstanding such difference in fact. I acknowledge and agree that no consideration other than as provided for by the Amended and Restated Employment Agreement has been or will be paid or furnished by any Employer Affiliate.

 

2.  Covenant Not to Sue . I covenant and agree never, individually or with any person or in any way, to commence, aid in any way, prosecute or cause or permit to be commenced or prosecuted against any Employer Affiliate any action or other proceeding, including, without limitation, an arbitration or other alternative dispute resolution procedure, based upon any claim, demand, cause of action, obligation, damage, or liability that is the subject of this Release. I represent and agree that I have not and will not make or file or cause to be made or filed any claim, charge, allegation, or complaint that is the subject of this Release, whether formal, informal, or anonymous, with any governmental agency, department or division, whether federal, state or local, relating to any Employer Affiliate in any manner, including without limitation, any Employer Affiliate’s business or employment practices. I waive any right to monetary recovery should any administrative or governmental agency or entity pursue any claim on my behalf.

 

  A- 1  

 

 

3.  Indemnification . I agree to indemnify and hold each Employer Affiliate harmless from and against any and all claims, including each Employer Affiliate’s court costs and reasonable attorneys’ fees actually incurred, arising from or in connection with any claim, action, or other proceeding made, brought, or prosecuted, or caused or permitted to be commenced or prosecuted, by me, my successor(s), or my assign(s) contrary to the provisions of this Release. It is further agreed that this Release shall be deemed breached and a cause of action accrued thereon immediately upon the commencement of any action contrary to this Release, and in any such action this Release may be pleaded by the Employer Affiliates, or any of them, both as a defense and as a counterclaim or cross-claim in such action.

 

4.  Important General Provisions. If any provisions of this Release is held to be invalid or unenforceable by a court of competent jurisdiction , such invalidity or unenforceability shall not affect the validity and enforceability of the other provisions of this Release , and the provision held to be invalid or unenforceable shall be modified by the court finding such provisions invalid or unenforceable so that as revised the provision shall comply with the original terms and intent as nearly as possible and in such revised form shall be valid and enforceable . The provisions of this Release shall be governed by , and construed and enforced in accordance with , the laws of the State of Florida, both substantive and remedial . The undersigned hereby waives trial by jury in any judicial proceeding involving , directly or indirectly , any matter ( whether in tort , contract or otherwise ) in any way arising out of, related to, or connected hereto , the Amended and Restated Employment Agreement or this Release .

 

5.  Right to Consult Attorney . I ACKNOWLEDGE THAT I HAVE BEEN ADVISED, IN WRITING, TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS RELEASE.

 

6.  Waiver of Claims . Pursuant to the Older Workers Benefit Protection Act (“ OWBPA ”), which applies to the waiver of rights under the Age Discrimination in Employment Act, I hereby state that I have had a period of 21 calendar days from the date I was presented with this Release within which to consider this Release and my decision to execute the same, that I have carefully read this Release, that I have had the opportunity to have it reviewed by an attorney, that I fully understand its final and binding effect, that the only promises made to me to sign this Release are those stated in this Release and the Amended and Restated Employment Agreement, and that I am signing voluntarily with the full intent of releasing the Employer Affiliates of all claims subject to this Release. I acknowledge that I shall have a period of seven calendar days following my execution of this Release to revoke this Release. This Release, including any obligation to pay severance under the Amended and Restated Employment Agreement, shall not become effective if I timely exercise this right of revocation. To be effective, any such notice of revocation must be in writing, and must be received within said seven day period. This Release shall become effective upon expiration of said revocation period, if I have not prior thereto exercised my right of revocation (the “ Effective Date ”).

 

   
Name: Christopher Santi  

 

Date:______________________________

 

  A- 2  

 

Exhibit 10.2

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“ Agreement ”), shall be effective the 13 th day of August, 2018, (“ Effective Date ”) by and between Healthier Choices Management Corp., a Delaware corporation (“ Company ”), and John A. Ollet (“ Executive ”).

 

RECITALS

 

WHEREAS , Company wishes to amend the Employment Agreement dated December 12, 2016 (the “ Original Agreement ”) by and between the Company and the Executive; and

 

WHEREAS , the parties have agreed to amend and restate the Original Agreement and, pursuant thereto, Executive shall continue to serve as the Chief Financial Officer (“ CFO ”) of Company effective as of the Effective Date.

 

NOW, THEREFORE , In consideration of the mutual representations, warranties, covenants and agreements contained in this Agreement and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1. Employment .

 

(a) Employment Period . Subject to the terms and conditions set forth herein and unless sooner terminated as hereinafter provided, Company shall employ Executive and Executive agrees to serve as an employee of Company until December 12, 2020 (the “ Employment Term ”). For purposes of this Agreement, the Employment Term and any renewal term thereof are collectively referred to herein as the “ Employment Period .”

 

(b) Duties and Responsibilities . During the Employment Period, Executive shall serve as the Chief Financial Officer. In such role, Executive shall have such authority and responsibility and perform such duties as may be assigned to him from time to time by the Board of Directors of Company (the “ Board ”), and in the absence of such assignment, such duties as are customary to Executive’s office and as are necessary or appropriate to the business and operations of Company and its subsidiaries. During the Employment Period, Executive’s employment shall be full time, Executive shall perform his duties honestly, diligently, in good faith and in the best interests of Company and its subsidiaries, and Executive shall use his best efforts to promote the interests of Company and its subsidiaries.

 

2. Compensation .

 

(a) Base Salary . In consideration for Executive’s services hereunder and the restrictive covenants contained herein, Executive shall be paid an annual base salary as follows: 2018: $190,000; 2019: $200,000; and 2020: $250,000 (the “ Salary ”), which salary shall be payable commencing as of date hereof and shall be payable in accordance with Company’s customary payroll practices.

 

 

 

 

(b) Restricted Stock Grant . The Company hereby grants to the Executive, on the Effective Date, 3 billion shares of restricted stock (the “ Executive Stock ”) representing 3 billion shares of the Company’s common stock, pursuant to the Restricted Stock Award Agreement in the form attached hereto as Exhibit A . Except as otherwise provided herein or in the award agreement for the Executive Stock, the Executive Stock shall vest and the restrictions associated with the Executive Stock shall lapse, subject to the Executive’s continued employment with the Company, on the first anniversary of this Agreement.

 

(c) Bonus . Bonuses and other incentives not expressly set forth in this Agreement shall be at the exclusive discretion of Company comparable with the Bonuses and other incentives received by the other Named Executives of the Company based on performance, position and tenure.

 

(d) Vacations . Executive shall be entitled to no less than fifteen (15) days of vacation on an annual basis during the Term with additional paid vacation time being accrued in accordance with Company’s vacation policy. Per the policy, vacation time does NOT carry over year over year.

 

(e) Other Benefits . During the term of this Agreement, Executive shall be entitled to participate in the health and dental insurance plans of Company and any life insurance programs, disability programs, pension plans and other fringe benefit plans and programs as are from time to time established and maintained for the benefit of Company’s employees or officers, subject to the provisions of such plans and programs. At time of this offer, this executive role of the Company is provided with 100% coverage for the health insurance plan (that include medical, dental, and vision).

 

(f) Expenses . Executive shall be reimbursed for all out-of-pocket expenses reasonably incurred by him on behalf of or in connection with the business of Company, pursuant to the normal standards and guidelines followed from time to time by Company. Certain guidelines according to company policy may apply.

 

3. Termination .

 

(a) For Cause . Company shall have the right to terminate this Agreement and to discharge Executive for Cause (as defined below), at any time during the Employment Period. Termination for “ Cause ” shall mean, during the Employment Period, (i) Executive’s conduct that would constitute under federal or state law either a felony or any other criminal offense involving dishonesty or moral turpitude, (ii) after a determination by the Board, after consideration of all available information and following the procedures set forth below, that Executive has willfully and materially violated Company policies or procedures involving discrimination, harassment, substance abuse, workplace violence or use of confidential information, (iii) Executive’s negligence or misconduct in the performance of his duties hereunder that has a material and adverse effect on Company, (iv) a material breach by Executive of this Agreement or a material failure on the part of Executive to perform his obligations or duties hereunder or (v) Executive’s inability to perform his duties and responsibilities as provided herein due to his death or Disability (as defined herein). Any termination for Cause pursuant to this Section shall be delivered to Executive in writing and shall set forth in detail all acts or omissions upon which Company is relying to terminate Executive for Cause. Except as otherwise specifically set forth herein, if Executive is terminated for Cause, Executive shall only be entitled to receive his accrued and unpaid Salary, and all unused vacation time accrued, any declared bonus and other benefits through the termination date and Company shall have no further obligations under this Agreement from and after the date of termination. “ Disability ” shall mean any mental or physical illness, condition, disability or incapacity which prevents Executive from reasonably discharging his duties and responsibilities under this Agreement for a period of ninety (90) days in any one hundred eighty (180) day period.

 

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(b) Termination by Executive . If Executive shall resign or otherwise terminate his employment with Company at any time during the term of this Agreement, Executive shall only be entitled to receive his accrued and unpaid Salary and all unused vacation time accrued, any declared bonus and other benefits through the termination date and Company shall have no further obligations under this Agreement from and after the date of termination.

 

(c) Termination by Company Without Cause . At any time during the term of this Agreement, Company shall have the right to terminate this Agreement and to discharge Executive without Cause effective upon delivery of written notice to Executive. Upon any such termination by Company without Cause, Company shall pay to Executive (i) all of Executive’s accrued but unpaid Salary and all unused vacation time accrued through the date of termination and any declared bonus and (ii) any amount required pursuant to Section 3(e).

 

(d) Death of Executive . In the event of the death of Executive, the employment of Executive by Company shall automatically terminate on the date of Executive’s death and Company shall be obligated to pay Executive’s estate Executive’s accrued and unpaid Salary, any declared but unpaid bonus and other benefits through the termination date. Other than as set forth in the preceding sentence, Company shall have no further obligations under this Agreement from and after the date of termination due to the death of Executive.

 

(e) Severance . If Executive’s employment by Company is terminated by Company without Cause, then (A) this Agreement shall be deemed to be terminated as of the date Executive ceases to be employed by Company and (B) Executive shall be entitled to (i) receive any unpaid Salary and bonus and (ii) continue to receive Executive’s then Salary for the applicable Severance Period (as defined below) following the effective date of such termination (which shall be paid in arrears in accordance with Company’s general payroll practices, over the applicable period commencing on the date of such termination and subject to withholding and other appropriate deductions). As a condition to receiving such payments relating to periods following the date of such termination, Executive must sign, deliver, and not revoke a release in the form attached hereto as Exhibit B , such that it has become effective and enforceable as a condition to any payment pursuant to this Section 4(e) . “ Severance Period ” shall mean twelve (12) months.

 

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4. Restrictive Covenants . In consideration of his employment and the other benefits arising under this Agreement, Executive agrees that during the Employment Period, and for one (1) year following the termination of this Agreement, Executive (or any affiliate) shall not directly or indirectly:

 

(a) for any reason, (i) induce any material customer or supplier of Company or any of its subsidiaries or affiliates to patronize or do business with any business directly or indirectly in competition with the businesses conducted by Company or any of its subsidiaries or affiliates in any market in which Company or any of its subsidiaries or affiliates does business; (ii) canvass, solicit or accept from any material customer or supplier of Company or any of its subsidiaries or affiliates any such competitive business; or (iii) request or advise any material customer, supplier or other provider of services to Company or any of its subsidiaries or affiliates to withdraw, curtail or cancel any such customer’s, supplier’s or provider’s business with Company or any of its subsidiaries or affiliates; or

 

(b) for any reason, employ, or knowingly permit any company or business directly or indirectly controlled by him, to employ, any person who was employed by Company or any of its subsidiaries or affiliates at or within the prior one (1) year, or in any manner seek to induce any such person to leave his or her employment.

 

5. Specific Performance; Injunction . The parties agree and acknowledge that the restrictions contained in Section 4 are reasonable in scope and duration and are necessary to protect Company or any of its subsidiaries or affiliates. If any provision of Section 4 as applied to any party or to any circumstance is adjudged by a court to be invalid or unenforceable, the same shall in no way affect any other circumstance or the validity or enforceability of any other provision of this Agreement. If any such provision, or any part thereof, is held to be unenforceable because of the duration of such provision or the area covered thereby, the parties agree that the court making such determination shall have the power to reduce the duration and/or area of such provision, and/or to delete specific words or phrases, and in its reduced form, such provision shall then be enforceable and shall be enforced. Executive agrees and acknowledges that the breach of Section 4 or Section 6 will cause irreparable injury to Company or any of its subsidiaries or affiliates and upon breach of any provision of such Sections, Company or any of its subsidiaries or affiliates shall be entitled to injunctive relief, specific performance or other equitable relief, without being required to post a bond; provided, however, that, this shall in no way limit any other remedies which Company or any of its subsidiaries or affiliates may have (including, without limitation, the right to seek monetary damages).

 

6. Confidentiality . Executive agrees that at all times during and after the Employment Period, Executive shall (i) hold in confidence and refrain from disclosing to any other party all information, whether written or oral, tangible or intangible, of a private, secret, proprietary or confidential nature, of or concerning Company and its subsidiaries, their business and operations, and all files, letters, memoranda, reports, records, computer disks or other computer storage medium, data, models or any photographic or other tangible materials containing such information (“ Confidential Information ”), including without limitation, any sales, promotional or marketing plans, programs, techniques, practices or strategies, any expansion plans (including existing and entry into new geographic and/or product markets), and any customer or supplier lists, (ii) use the Confidential Information solely in connection with Executive’s employment with Company and for no other purpose, (iii) take all precautions necessary to ensure that the Confidential Information shall not be, or be permitted to be, shown, copies or disclosed to any third parties, without the prior written consent of Company, and (iv) observe all security policies implemented by Company from time to time with respect to the Confidential Information. In the event that Executive is ordered to disclose any Confidential Information, whether in a legal or regulatory proceeding or otherwise, Executive shall provide Company with prompt notice of such request or order so that Company may seek to prevent disclosure. In the case of any disclosure, Executive shall disclose only that portion of the Confidential Information that Executive is ordered to disclose.

 

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7. Notices . All notices, requests, demands, claims and other communications hereunder shall be in writing and shall be deemed given if delivered by hand delivery, by certified or registered mail (first class postage pre-paid), guaranteed overnight delivery or facsimile transmission if such transmission is confirmed by delivery by certified or registered mail (first class postage pre-paid) or guaranteed overnight delivery to, the following addresses and telecopy numbers (or to such other addresses or telecopy numbers which such party shall designate in writing to the other parties): (a) if to Company, at its principal executive offices, addressed to the President, with a copy to Martin T. Schrier, Cozen O’Connor, 200 South Biscayne Blvd., Suite 3000, Miami, Florida 33131; and (b) if to Executive, at the address listed on the signature page hereto.

 

8. Amendment; Waiver . This Agreement may not be modified, amended, or supplemented, except by written instrument executed by all parties. No failure to exercise, and no delay in exercising, any right, power or privilege under this Agreement shall operate as a waiver, nor shall any single or partial exercise of any right, power or privilege hereunder preclude the exercise of any other right, power or privilege. No waiver of any breach of any provision shall be deemed to be a waiver of any preceding or succeeding breach of the same or any other provision, nor shall any waiver be implied from any course of dealing between the parties.

 

9. Assignment; Third Party Beneficiary . This Agreement, and Executive’s rights and obligations hereunder, may not be assigned or delegated by him. Company may assign its rights, and delegate its obligations, hereunder to any affiliate of Company, or any successor to Company, specifically including the restrictive covenants set forth in Section 4 hereof. The rights and obligations of Company under this Agreement shall inure to the benefit of and be binding upon its respective successors and assigns.

 

10. Severability; Survival . In the event that any provision of this Agreement is found to be void and unenforceable by a court of competent jurisdiction, then such unenforceable provision shall be deemed modified so as to be enforceable (or if not subject to modification then eliminated herefrom) to the extent necessary to permit the remaining provisions to be enforced in accordance with the parties intention. The provisions of Sections 4 and 6 will survive the termination for any reason of Executive’s relationship with Company.

 

11. Governing Law . This Agreement shall be construed in accordance with and governed for all purposes by the laws of the State of Florida applicable to contracts executed and to be wholly performed within Florida.

 

12. Construction . This Agreement shall be construed as a whole according to its fair meaning and not strictly for or against any party. The parties acknowledge that each of them has reviewed this Agreement and has had the opportunity to have it reviewed by their respective attorneys and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this Agreement.

 

13. Withholding . All payments made to Executive shall be made net of any applicable withholding for income taxes and Executive’s share of FICA, FUTA or other taxes. Company shall withhold such amounts from such payments to the extent required by applicable law and remit such amounts to the applicable governmental authorities in accordance with applicable law.

 

14. Attorneys’ Fees . In the event any legal proceeding is brought to enforce or interpret any part of this Agreement, the prevailing Party in such legal proceeding shall be entitled to an award of reasonable attorneys’ fees and costs incurred by the prevailing Party in such legal proceeding, at the trial level and at the appellate level and whether or not such proceeding is prosecuted to final judgment.

 

[REMAINDER OF PAGE BLANK]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first above written.

 

  Healthier Choices Management Corp.,
  a Delaware corporation
     
  By: /s/ Jeffrey Holman
    Name:  Jeffrey Holman
    Title:    Chief Executive Officer
     
  Executive:
     
  /s/ John Ollet
  Name: John A. Ollet

 

 

  6  

 

 

Exhibit A

Restricted Stock Award Agreement

 

  A - 1  

 

 

Exhibit B

Release

 

1. Release . I, John A. Ollet, do hereby release and discharge Healthier Choices Management Corp. and each of its parent companies, subsidiaries, each of the respective direct and indirect equity owners of any of the foregoing, each of the respective Affiliates of any of the foregoing, and each of the respective officers, directors, members, managers, partners, equity owners, employees, representatives and agents of any of the foregoing (collectively, the “ Employer Affiliates ”, and each an “ Employer Affiliate ”) from any and all claims, demands or liabilities whatsoever, known or suspected to exist by me, which I ever had or may now have against any Employer Affiliate, from the beginning of time to the Effective Date (as defined below), including, without limitation, any claims, demands or liabilities in connection with my employment, including wrongful termination, constructive discharge, breach of express or implied contract, unpaid wages, benefits, attorneys’ fees or pursuant to any federal, state, or local employment laws, regulations, or executive orders prohibiting inter alia , age, race, color, sex, national origin, religion, handicap, veteran status, and disability discrimination, including, without limitation, the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, the Civil Rights Act of 1866, Employee Retirement Income Security Act of 1974, the Americans with Disabilities Act of 1990, and any similar state statute or any state statute relating to employee benefits or pensions but specifically excluding claims, demands or liabilities related to my ownership of equity in Holdings or for indemnification in connection with my service as a director or officer of Company or any of its Affiliates. I fully understand that if any fact with respect to which this Release is executed is found hereafter to be other than or different from the facts believed by me to be true, I expressly accept and assume the risk of such possible difference in fact and agree that the release set forth herein shall be and remain effective notwithstanding such difference in fact. I acknowledge and agree that no consideration other than as provided for by the Amended and Restated Employment Agreement has been or will be paid or furnished by any Employer Affiliate.

 

2. Covenant Not to Sue . I covenant and agree never, individually or with any person or in any way, to commence, aid in any way, prosecute or cause or permit to be commenced or prosecuted against any Employer Affiliate any action or other proceeding, including, without limitation, an arbitration or other alternative dispute resolution procedure, based upon any claim, demand, cause of action, obligation, damage, or liability that is the subject of this Release. I represent and agree that I have not and will not make or file or cause to be made or filed any claim, charge, allegation, or complaint that is the subject of this Release, whether formal, informal, or anonymous, with any governmental agency, department or division, whether federal, state or local, relating to any Employer Affiliate in any manner, including without limitation, any Employer Affiliate’s business or employment practices. I waive any right to monetary recovery should any administrative or governmental agency or entity pursue any claim on my behalf.

 

3. Indemnification . I agree to indemnify and hold each Employer Affiliate harmless from and against any and all claims, including each Employer Affiliate’s court costs and reasonable attorneys’ fees actually incurred, arising from or in connection with any claim, action, or other proceeding made, brought, or prosecuted, or caused or permitted to be commenced or prosecuted, by me, my successor(s), or my assign(s) contrary to the provisions of this Release. It is further agreed that this Release shall be deemed breached and a cause of action accrued thereon immediately upon the commencement of any action contrary to this Release, and in any such action this Release may be pleaded by the Employer Affiliates, or any of them, both as a defense and as a counterclaim or cross-claim in such action.

 

  B - 1  

 

 

4. Important General Provisions. If any provisions of this Release is held to be invalid or unenforceable by a court of competent jurisdiction , such invalidity or unenforceability shall not affect the validity and enforceability of the other provisions of this Release , and the provision held to be invalid or unenforceable shall be modified by the court finding such provisions invalid or unenforceable so that as revised the provision shall comply with the original terms and intent as nearly as possible and in such revised form shall be valid and enforceable . The provisions of this Release shall be governed by , and construed and enforced in accordance with , the laws of the State of Delaware, both substantive and remedial . The undersigned hereby waives trial by jury in any judicial proceeding involving , directly or indirectly , any matter ( whether in tort , contract or otherwise ) in any way arising out of, related to, or connected hereto , the Amended and Restated Employment Agreement or this Release .

 

5. Right to Consult Attorney . I ACKNOWLEDGE THAT I HAVE BEEN ADVISED, IN WRITING, TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS RELEASE.

 

6. Waiver of Claims . Pursuant to the Older Workers Benefit Protection Act (“ OWBPA ”), which applies to the waiver of rights under the Age Discrimination in Employment Act, I hereby state that I have had a period of 21 calendar days from the date I was presented with this Release within which to consider this Release and my decision to execute the same, that I have carefully read this Release, that I have had the opportunity to have it reviewed by an attorney, that I fully understand its final and binding effect, that the only promises made to me to sign this Release are those stated in this Release and the Amended and Restated Employment Agreement, and that I am signing voluntarily with the full intent of releasing the Employer Affiliates of all claims subject to this Release. I acknowledge that I shall have a period of seven calendar days following my execution of this Release to revoke this Release. This Release, including any obligation to pay severance under the Amended and Restated Employment Agreement, shall not become effective if I timely exercise this right of revocation. To be effective, any such notice of revocation must be in writing, and must be received within said seven day period. This Release shall become effective upon expiration of said revocation period, if I have not prior thereto exercised my right of revocation (the “ Effective Date ”).

 

   
Name: John A. Ollet  
   
Date:  

 

 

B - 2

 

Exhibit 10.3

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is entered into on August 13, 2018 and is effective as of August 1, 2018 (the “Effective Date”), between Healthier Choices Management Corp., a Delaware corporation (the “Company”), and Jeffrey Holman (the “Executive”).

 

WHEREAS, Executive and the Company previously entered into an employment agreement, as amended from time to time, dated August 1, 2015 (the “Original Agreement”);

 

WHEREAS, the Company desires to continue to employ the Executive and to ensure the continued availability to the Company of the Executive’s services, and the Executive is willing to accept such employment and render such services; and

 

WHEREAS, the Parties desire to amend and restate the Original Agreement on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth in this Agreement, and intending to be legally bound, the Company and the Executive agree as follows:

 

1. Representations and Warranties . The Executive hereby represents and warrants to the Company that he (i) is not subject to any non- solicitation or non-competition agreement affecting his employment with the Company (other than any prior agreement with the Company), (ii) is not subject to any confidentiality or nonuse/nondisclosure agreement affecting his employment with the Company (other than any prior agreement with the Company), and (iii) has brought to the Company no trade secrets, confidential business information, documents, or other personal property of a prior employer. The Executive and the Company agree that this Agreement replaces that certain Employment Agreement between the Executive and the Company dated July 31, 2015.

 

2. Term of Employment.

 

(a) Term . The Company hereby employs the Executive, and the Executive hereby accepts employment with the Company for a period of three years commencing as of the Effective Date (such period, as it may be extended or renewed, the “Term”), unless sooner terminated in accordance with the provisions of Section 6. The Term shall be automatically renewed for successive one-year terms unless notice of non-renewal is given by either party at least 30 days before the end of the Term.

 

(b) Continuing Effect . Notwithstanding any termination of this Agreement, at the end of the Term or otherwise, the provisions of Sections 4(b), 6(e), 7, 8, 9, 10, 12 15, 18, 19, and 22 shall remain in full force and effect and the provisions of Section 9 shall be binding upon the legal representatives, successors and assigns of the Executive; provided , however , if the Executive is terminated without Cause or if he terminates his employment for Good Reason as those terms are defined in Sections 6(b) and (c), the provisions of Section 8(a) and 8(b) shall apply for nine months post termination. 4.

  

 

 

 

3. Duties .

 

(a) General Duties . The Executive shall serve as the Chief Executive Officer of the Company, with duties and responsibilities that are customary for such an executive. The Executive shall report to the Company’s Board of Directors (the “Board”). The Executive shall also perform services for such subsidiaries of the Company as may be necessary. The Executive shall use his best efforts to perform his duties and discharge his responsibilities pursuant to this Agreement competently, carefully and faithfully. In determining whether or not the Executive has used his best efforts hereunder, the Executive’s and the Company’s delegation of authority and all surrounding circumstances shall be taken into account and the best efforts of the Executive shall not be judged solely on the Company’s revenues or other results of the Executive’s performance, except as specifically provided to the contrary by this Agreement.

 

(b) Devotion of Time . Subject to the last sentence of this Section 3(b), the Executive shall devote such time, attention and energies to the affairs of the Company and its subsidiaries and affiliates as are necessary to perform his duties and responsibilities pursuant to this Agreement. The Executive shall not enter the employ of or serve as a consultant to, or in any way perform any services with or without compensation to, any other persons, business, or organization, without the prior consent of the Board. Notwithstanding the above, the Executive shall be permitted to devote a limited amount of his time, to professional, charitable or similar organizations, including serving as a non-executive director or an advisor to a board of directors, committee of any company or organization provided that such activities do not interfere with the Executive’s performance of his duties and responsibilities as provided hereunder. The Company hereby acknowledges that the Executive may devote a reasonable amount of time as President of Jeffrey E. Holman & Associates, P.A.

 

(c) Location of Office. The Executive’s principal business office shall be in Broward County, Florida or such other location to which the Company may, in the future, relocate its present Broward County, Florida office. However, the Executive’s job responsibilities shall include all business travel necessary for the performance of his job.

 

(d) Adherence to Inside Information Policies . The Executive acknowledges that the Company is publicly-held and, as a result, has implemented inside information policies designed to preclude its executives and those of its subsidiaries from violating the federal securities laws by trading on material, non-public information or passing such information on to others in breach of any duty owed to the Company, or any third party. The Executive shall promptly execute any agreements generally distributed by the Company to its employees requiring such employees to abide by the Company’s inside information policies.

 

4. Compensation and Expenses .

 

(a) Salary . For the services of the Executive to be rendered under this Agreement, the Company shall pay the Executive an annual salary of $450,000 (the “Base Salary”) during the first 12 months of the Term, less such deductions as shall be required to be withheld by applicable law and regulations payable in accordance with the Company’s customary payroll practices. Thereafter, on each 12th month anniversary of this Agreement, the Executive shall receive a minimum of a 10% increase in Base Salary.

  

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(b) Target Bonus . For each calendar year during the Term (beginning January 1, 2018 and continuing through December 31, 2018), the Executive shall have the opportunity to earn a bonus up to 200% of his then Base Salary (the “Target Bonus”) as follows:

 

When the Company achieves annual EBITDA (as defined below) at certain threshold levels (each, an “EBITDA Threshold”), the Executive shall receive an automatic cash bonus (the “Automatic Cash Bonus”) equal to a percentage of his then Base Salary. The Executive may opt to take said Automatic Cash Bonus in stock (subject to the Board’s prior approval), in which case he will receive a grant of fully vested shares of the Company’s common stock having an aggregate Fair Market Value (as such term is defined in the Company’s 2015 Equity Incentive Plan (“Incentive Plan”)) equal to 120% of the Executive’s Automatic Cash Bonus. Notwithstanding the preceding, no common stock shall be issued if such issuance would violate or trigger any anti-dilution rights contained in any agreements of which the Company is a party.

 

The EBITDA Thresholds and corresponding bonus levels are set forth in the table below. For the avoidance of doubt, the Executive shall only be eligible to receive the bonuses associated with a single EBITDA Threshold; for example: in the event the Company attains EBITDA Threshold (2), only the bonuses associated with EBITDA Threshold (2) below (and not the bonuses associated with EBITDA Threshold (1)) shall be applicable.

 

EBITDA Threshold   Automatic Cash Bonus
(1) $2,000,000   20%
(2) $4,000,000   50%
(3) $6,000,000   80%
(4) $8,000,000   110%
(5) $10,000,000   140%
(6) $12,000,000   170%
(7) $14,000,000 and over   200%

  

Provided , however , that the earning of the Automatic Cash Bonus is subject to the Executive continuing to provide services under this Agreement on the Target Bonus determination date. As used in this Agreement, EBITDA is calculated as earnings (or loss) solely from operations before interest expense, income taxes, depreciation and amortization. The Automatic Cash Bonus shall be paid within two-and-a-half months following the end of the applicable fiscal year in which it is earned.

 

(c) Discretionary Bonus . During the Term of the Agreement, the Compensation Committee shall have the discretion to award the Executive a bonus, in cash or the Company’s common stock, based upon the Executive’s job performance, the Company’s revenue growth or any other factors as determined by the Compensation Committee.

 

(d) Restricted Stock Grants . The Company hereby grants to the Executive, on the Effective Date, 11 billion shares of restricted stock (the “ Executive Stock ”) representing 11 billion shares of the Company’s common stock, pursuant to the Restricted Stock Award Agreement in the form attached hereto as Exhibit A . Except as otherwise provided herein, the Executive Stock shall vest and the restrictions associated with the Executive Stock shall lapse, subject to the Executive’s continued employment with the Company, on the first anniversary of this Agreement. As a condition to the issuance of the Executive Stock, the Executive agrees to forfeit (and the Company shall cancel) outstanding and vested options (“ Options ”) to purchase 11 billion shares of Company common stock. The existing agreement evidencing the Options shall be amended to reflect the cancellation of these Options.

  

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(e) Expenses . In addition to any compensation received pursuant to this Section 4, the Company will reimburse or advance funds to the Executive for all reasonable documented travel (including travel expenses incurred by the Executive related to his travel to the Company’s other offices), entertainment and miscellaneous expenses incurred in connection with the performance of his duties under this Agreement, provided that the Executive properly provides a written accounting of such expenses to the Company in accordance with the Company’s practices. Such reimbursement or advances will be made in accordance with policies and procedures of the Company in effect from time to time relating to reimbursement of, or advances to, its executive officers.

 

5. Benefits .

 

(a) Paid Time Off . For each 12-month period during the Term, the Executive shall be entitled to four weeks of Paid Time Off without loss of compensation or other benefits to which he is entitled under this Agreement, to be taken at such times as the Executive may select and the affairs of the Company may permit. Any unused days will be carried over to the next 12 month period. Notwithstanding anything contained herein, in no event shall the Executive be entitled to be paid cash for unused Paid Time Off, and any unused vacation days at the end of the Term or remaining as of the date of termination shall be forfeited.

 

(b) Employee Benefit Programs . The Executive is entitled to participate in any pension, 401(k), insurance or other employee benefit plan that is maintained by the Company for its executives, including programs of health insurance, life insurance and reimbursement of membership fees in professional organizations. The Company shall also pay for, or reimburse the Executive, medical insurance premiums for the Executive, his spouse and dependent children.

 

6. Termination .

 

(a) Death or Disability. Except as otherwise provided in this Agreement, this Agreement shall automatically terminate upon the death or disability of the Executive. For purposes of this Section 6(a), “disability” shall mean (i) the Executive is unable to engage in his customary duties by reason of any medically determinable physical or mental impairment that can be expected to result in death, or last for a continuous period of not less than 12 months; (ii) the Executive is, by reason of any medically determinable physical or mental impairment that can be expected to result in death, or last for continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company; or (iii) the Executive is determined to be totally disabled by the Social Security Administration. Any question as to the existence of a disability shall be determined by the written opinion of the Executive’s regularly attending physician (or his guardian) (or the Social Security Administration, where applicable). In the event that the Executive’s employment is terminated by reason of Executive’s death or disability, the Company shall pay the following to the Executive or his personal representative: (i) any accrued but unpaid Base Salary for services rendered to the date of termination, (ii) any accrued but unpaid expenses required to be reimbursed under this Agreement, (iii) any earned but unpaid bonuses, and (iv) all equity awards previously granted to the Executive under the Incentive Plan or similar plan shall thereupon become fully vested, and the Executive or his legally appointed guardian, as the case may be, shall have up to three months from the date of termination (or one year from the date of death) to exercise all such previously granted options, provided that in no event shall any option be exercisable beyond its term.

  

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(b) Termination by the Company for Cause or by the Executive Without Good Reason . The Company may terminate the Executive’s employment pursuant to the terms of this Agreement at any time for Cause (as defined below) by giving the Executive written notice of termination. Such termination shall become effective upon the giving of such notice. Upon any such termination for Cause, or in the event the Executive terminates his employment with the Company without Good Reason (as defined in Section 6(c)), then the Executive shall have no right to compensation, or reimbursement under Section 4, or to participate in any Executive benefit programs under Section 5, except as may otherwise be provided for herein or by law, for any period subsequent to the effective date of termination. For purposes of this Agreement, “ Cause ” shall mean: (i) the Executive is convicted of, or pleads guilty or nolo contendere to, a felony related to the business of the Company; (ii) the Executive, in carrying out his duties hereunder, has acted with gross negligence or intentional misconduct resulting, in any case, in harm to the Company; (iii) the Executive misappropriates Company funds or otherwise defrauds the Company; (iv) the Executive materially breaches any agreement with the Company; (v) the Executive breaches any provision of Section 8 or Section 9; (vi) the Executive becomes subject to a preliminary or permanent injunction issued by a United States District Court enjoining the Executive from violating any securities law administered or regulated by the Securities and Exchange Commission; (vii) the Executive becomes subject to a cease and desist order or other order issued by the Securities and Exchange Commission after an opportunity for a hearing; (viii) the Executive refuses to carry out a resolution adopted by the Company’s Board at a meeting in which the Executive was offered a reasonable opportunity to argue that the resolution should not be adopted; or (ix) the Executive abuses alcohol or drugs in a manner that interferes with the successful performance of his duties.

 

Except for a failure, breach or refusal which, by its nature, cannot reasonably be expected to be cured, the Executive shall have 10 business days from the delivery of written notice by the Company within which to cure any acts constituting Cause; provided however, that, if the Company reasonably expects irreparable injury from a delay of 10 business days, the Company may give the Executive notice of such shorter period within which to cure as is reasonable under the circumstances, which may include the termination of the Executive’s employment without notice and with immediate effect.

 

(c) Other Termination .

 

(1) This Agreement may be terminated: (i) by the Executive for Good Reason (as defined below), (ii) by the Company without Cause, (iii) automatically upon any Change of Control event as defined in Treasury Regulation Section 1.409A-3(i)(5) through (vii) at the end of a Term after the Company provides the Executive with notice of non-renewal.

   

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(2) In the event this Agreement is terminated by the Executive for Good Reason or by the Company without Cause, the Executive shall be entitled to the following:

 

(A) any accrued but unpaid Base Salary for services rendered to the date of termination;

 

(B) any accrued but unpaid expenses required to be reimbursed under this Agreement;

 

(C) a payment equal to two years of the then Base Salary (“Severance Amount”);

 

(D) the Executive or his legally appointed guardian, as the case may be, shall have up to two years from the date of termination to exercise all such previously granted options, provided that in no event shall any option be exercisable beyond its term;

 

(E) all equity awards previously granted to the Executive under the Incentive Plan or similar plan shall thereupon become fully vested;

 

(F) any benefits (except perquisites) to which the Executive was entitled pursuant to Section 5(b) hereof shall continue to be paid or provided by the Company, as the case may be, for 18 months, subject to the terms of any applicable plan or insurance contract and applicable law provided that such benefits are exempt from Section 409A of the Code by reason of Treasury Regulation 1.409A-1(a)(5) or otherwise. In the event all or a portion of the benefits to which the Executive was entitled pursuant to Section 5(b) hereof are subject to 409A of the Code, the Executive shall not be entitled to the benefits that are subject to Section 409A of the Code subsequent to the “applicable 2 % month period” (as such term is defined under Treasury Regulation Section 1.409A- 1(b)(4)(i)(A)); and

 

(G) a payment equal to the product of (i) the Target Bonus, if any, that the Executive would have earned for the fiscal year in which the termination date (as determined in accordance with Section 6) occurs based on achievement of the applicable EBITDA Thresholds and corresponding bonus levels for such year and (ii) a fraction, the numerator of which is the number of days the Executive was employed by the Company during the year of termination and the denominator of which is the number of days in such year (the “Pro-Rata Target Bonus”). This amount shall be paid on the date which is the later of: (i) April 30 th of the year following the year in which the termination occurs and (ii) the six month anniversary of the termination date.

 

(3) In the event of a Change of Control during the Term, the Executive receive each of the provisions of Section 6(c)(2)(A) - (F) above except the Executive shall receive 100% of the existing Target Bonus, for that fiscal year, when the Change of Control occurs. All payments due to the Executive shall be paid immediately on the occurrence of a Change of Control.

  

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(4) In the event this Agreement is terminated at the end of a Term after the Company provides the Executive with notice of non-renewal and the Executive remains employed until the end of the Term, the Executive shall be entitled to the following:

 

(A) any accrued but unpaid Base Salary for services rendered to the date of termination;

 

(B) any accrued but unpaid expenses required to be reimbursed under this Agreement;

 

(C) a Severance Amount equal to two years of the then Base Salary;

 

(D) the Executive or his legally appointed guardian, as the case may be, shall have up to two years from the date of termination to exercise all such previously granted options, provided that in no event shall any option be exercisable beyond its Term;

 

(E) any benefits (except perquisites) to which the Executive was entitled pursuant to Section 5(b) hereof shall continue to be paid or provided by the Company, as the case may be, for 18 months, subject to the terms of any applicable plan or insurance contract and applicable law provided that such benefits are exempt from Section 409A of the Code by reason of Treasury Regulation 1.409A-1(a)(5) or otherwise. In the event all or a portion of the benefits to which the Executive was entitled pursuant to Section 5(b) hereof are subject to 409A of the Code, the Executive shall not be entitled to the benefits that are subject to Section 409A of the Code subsequent to the “applicable 2 % month period” (as such term is defined under Treasury Regulation Section 1.409A- 1(b)(4)(i)(A)); and

 

(F) the Target Bonus, if any, due to the Executive.

 

Provided , however , that the Executive shall only be entitled to receive each of the provisions of this Section 6(c)(4)(A)-(F) if the Executive is willing and able (i) to execute a new agreement providing terms and conditions substantially similar to those in this Agreement with a Base Salary equal to or greater than the then Base Salary and (ii) to continue providing such services, and therefore, the Company’s non-renewal of the Term will be considered an “involuntary separation from service” within the meaning of Treasury Regulation Section 1.409A-1(n).

 

(5) In the event of a termination for Good Reason, without Cause, or non-renewal by the Company, the payment of the Severance Amount shall be shall be paid at the same times as the Company pays compensation to its employees over the applicable monthly periods and any other payments (except the Target Bonus or the Pro-Rata Target Bonus) shall be promptly paid. Provided , however , that any balance of the Severance Amount remaining due on the “applicable 2 month period” (as such term is defined under Treasury Regulation Section 1.409A- 1(b)(4)(i)(A)) after the end of the tax year in which the Executive’s employment is terminated or the Term ends shall be paid on the last day of the applicable 2 month period. The payment of the Severance Amount shall be conditioned on the Executive signing an Agreement and General Release (in the form which is attached as Exhibit A ) which releases the Company or any of its affiliates (including its officers, directors and their affiliates) from any liability under this Agreement or related to the Executive’s employment with the Company provided that (x) the payment of the

  

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Severance Amount is made on or before the 90 th day following the Executive’s termination of employment; (y) such Agreement and General Release is executed by the Executive, submitted to the Company, and the statutory period during which the Executive is entitled to revoke the Agreement and General Release under applicable law has expired on or before that 90 th day; and (z) in the event that the 90 day period begins in one taxable year and ends in a second taxable year, then the payment of the Severance Amount shall be made in the second taxable year.

 

The term “ Good Reason ” shall mean: (i) a material diminution in the Executive’s authority, duties or responsibilities; (ii) the Company no longer maintains or operates an office in the Dade or Broward County Area; or (iii) any other action or inaction that constitutes a material breach by the Company under this Agreement. Prior to the Executive terminating his employment with the Company for Good Reason, the Executive must provide written notice to the Company, within 30 days following the Executive’s initial awareness of the existence of such condition, that such Good Reason exists and setting forth in detail the grounds the Executive believes constitutes Good Reason. If the Company does not cure the condition(s) constituting Good Reason within 30 days following receipt of such notice, then the Executive’s employment shall be deemed terminated for Good Reason.

 

(d) Any termination made by the Company under this Agreement shall be approved by the Board.

 

(e) Upon (a) voluntary or involuntary termination of the Executive’s employment or (b) the Company’s request at any time during the Executive’s employment, the Executive shall (i) provide or return to the Company any and all Company property, including keys, key cards, access cards, security devices, employer credit cards, network access devices, computers, cell phones, smartphones, manuals, work product, thumb drives or other removable information storage devices, and hard drives, and all Company documents and materials belonging to the Company and stored in any fashion, including but not limited to those that constitute or contain any Confidential Information or work product, that are in the possession or control of the Executive, whether they were provided to the Executive by the Company or any of its business associates or created by the Executive in connection with his employment by the Company; and (ii) delete or destroy all copies of any such documents and materials not returned to the Company that remain in the Executive’s possession or control, including those stored on any non-Company devices, networks, storage locations and media in the Executive’s possession or control.

 

7. Indemnification . The Company shall indemnify the Executive, to the maximum extent permitted by applicable law, against all costs, charges and expenses incurred or sustained by his in connection with any action, suit or proceeding to which he may be made a party by reason of his being an officer, director or employee of the Company or of any subsidiary or affiliate of the Company. This indemnification shall be pursuant to an Indemnification Agreement, a copy of which is annexed as Exhibit B .

  

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8. Non-Competition Agreement .

 

(a) Competition with the Company . Except as provided for in Section 2(b), until termination of his employment and for a period of 18 months commencing on the date of termination, the Executive (individually or in association with, or as a shareholder, director, officer, consultant, employee, partner, joint venturer, member, or otherwise, of or through any person, firm, corporation, partnership, association or other entity) shall not, directly or indirectly, act as an employee or officer (or comparable position) of, owning an interest in, or providing services substantially similar to those services the Executive provided to the Company.

 

(b) Solicitation of Employees. During the period in which the provisions of Section 8(a) shall be in effect, the Executive agrees that he shall not, directly or indirectly, request, recommend or advise any employee of the Company to terminate his employment with the Company, for the purposes of providing services for a Prohibited Business, or solicit for employment or recommend to any third party the solicitation for employment of any individual who was employed by the Company or any of its subsidiaries and affiliates at any time during the one year period preceding the Executive’s termination of employment. A “ Prohibited Business ” means any entity in the same or similar business as the Company including those engaged in the vaporizer business or operating natural and/or organic grocery stores.

 

(c) Non-disparagement. The Executive agrees that, after the end of his employment, he will refrain from making, in writing or orally, any unfavorable comments about the Company, its operations, policies, or procedures that would be likely to injure the Company’s reputation or business prospects; provided, however, that nothing herein shall preclude the Executive from responding truthfully to a lawful subpoena or other compulsory legal process or from providing truthful information otherwise required by law.

 

(d) No Payment . The Executive acknowledges and agrees that no separate or additional payment will be required to be made to his in consideration of his undertakings in this Section 8, and confirms he has received adequate consideration for such undertakings.

 

(e) References . References to the Company in this Section 8 shall include the Company’s subsidiaries and affiliates.

 

9. Non-Disclosure of Confidential Information .

 

(a) Confidential Information . For purposes of this Agreement, “Confidential Information” includes, but is not limited to, trade secrets, processes, policies, procedures, techniques, designs, drawings, know-how, show-how, technical information, specifications, computer software and source code, information and data relating to the development, research, testing, costs, marketing, and uses of the Company’s products and/or services, the Company’s budgets and strategic plans, and the identity vendors and suppliers, subjects and databases, data, and all technology relating to the Company’s businesses, systems, methods of operation, and solicitation leads, marketing and advertising materials, methods and manuals and forms, all of which pertain to the activities or operations of the Company, the names, home addresses and all telephone numbers and email addresses of the Company’s directors, employees, officers, executives, former executives. Confidential Information also includes, without limitation, Confidential Information received from the Company’s subsidiaries and affiliates. For purposes of this Agreement, the following will not constitute Confidential Information (i) information which is or subsequently becomes generally available to the public through no act or fault of the Executive, (ii) information set forth in the written records of the Executive prior to disclosure to the Executive by or on behalf of the Company which information is given to the Company in writing as of or prior to the date of this Agreement, and (iii) information which is lawfully obtained by the Executive in writing from a third party (excluding any affiliates of the Executive) who lawfully acquired the confidential information and who did not acquire such confidential information or trade secret, directly or indirectly, from the Executive or the Company or its subsidiaries or affiliates and who has not breached any duty of confidentiality.

  

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(b) Legitimate Business Interests . The Executive recognizes that the Company has legitimate business interests to protect and as a consequence, the Executive agrees to the restrictions contained in this Agreement because they further the Company’s legitimate business interests. These legitimate business interests include, but are not limited to (i) trade secrets; (ii) valuable confidential business, technical, and/or professional information that otherwise may not qualify as trade secrets, including, but not limited to, all Confidential Information; (iii) substantial, significant, or key relationships with specific prospective or existing vendors or suppliers; (iv) goodwill associated with the Company’s business; and (v) specialized training relating to the Company’s products, services, methods, operations and procedures. Notwithstanding the foregoing, nothing in this Section 9(b) shall be construed to impose restrictions greater than those imposed by other provisions of this Agreement.

 

(c) Confidentiality . During the Term of this Agreement and following termination of employment, for any reason, the Confidential Information shall be held by the Executive in the strictest confidence and shall not, without the prior express written consent of the Company, be disclosed to any person other than in connection with the Executive’s employment by the Company. The Executive further acknowledges that such Confidential Information as is acquired and used by the Company or its subsidiaries or affiliates is a special, valuable and unique asset. The Executive shall exercise all due and diligent precautions to protect the integrity of the Company’s Confidential Information and to keep it confidential whether it is in written form, on electronic media, oral, or otherwise. The Executive shall not copy any Confidential Information except to the extent necessary to his employment nor remove any Confidential Information or copies thereof from the Company’s premises except to the extent necessary to his employment. All records, files, materials and other Confidential Information obtained by the Executive in the course of his employment with the Company are confidential and proprietary and shall remain the exclusive property of the Company. The Executive shall not, except in connection with and as required by his performance of his duties under this Agreement, for any reason use for his own benefit or the benefit of any person or entity other than the Company or disclose any such Confidential Information to any person, firm, corporation, association or other entity for any reason or purpose whatsoever without the prior express written consent of an executive officer of the Company (excluding the Executive).

 

(d) References . References to the Company in this Section 9 shall include the Company’s subsidiaries and affiliates.

  

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10. Equitable Relief .

 

(a) The Company and the Executive recognize that the services to be rendered under this Agreement by the Executive are special, unique and of extraordinary character, and that in the event of the breach by the Executive of the terms and conditions of this Agreement or if the Executive, without the prior express consent of the Board, shall leave his employment for any reason and/or take any action in violation of Section 8 and/or Section 9, the Company shall be entitled to institute and prosecute proceedings in any court of competent jurisdiction referred to in Section 10(b) below, to enjoin the Executive from breaching the provisions of Section 8 and/or Section 9.

 

(b) Any action arising from or under this Agreement must be commenced only in the appropriate state or federal court located in Broward County, Florida. The Executive and the Company irrevocably and unconditionally submit to the exclusive jurisdiction of such courts and agree to take any and all future action necessary to submit to the jurisdiction of such courts. The Executive and the Company irrevocably waive any objection that they now have or hereafter may have to the laying of venue of any suit, action or proceeding brought in any such court and further irrevocably waive any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Final judgment against the Executive or the Company in any such suit shall be conclusive and may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and the amount of any liability of the Executive or the Company therein described, or by appropriate proceedings under any applicable treaty or otherwise.

 

11. Conflicts of Interest . While employed by the Company, the Executive shall not, unless approved by the Compensation Committee, directly or indirectly:

 

(a) participate as an individual in any way in the benefits of transactions with any of the Company’s suppliers, vendors, or subjects, including, without limitation, having a financial interest in the Company’s suppliers, vendors, or subjects, or making loans to, or receiving loans, from, the Company’s suppliers, vendors, or subjects;

 

(b) realize a personal gain or advantage from a transaction in which the Company has an interest or use information obtained in connection with the Executive’s employment with the Company for the Executive’s personal advantage or gain; or

 

(c) accept any offer to serve as an officer, director, partner, consultant, manager with, or to be employed in a professional, medical, technical, or managerial capacity by, a person or entity which does business with the Company.

   

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12. Inventions, Ideas, Processes, and Designs . All inventions, ideas, processes, programs, software, and designs (including all improvements) directly related to the Company’s business (i) conceived or made by the Executive during the course of his employment with the Company (whether or not actually conceived during regular business hours) and for a period of six months subsequent to the termination (whether by expiration of the Term or otherwise) of such employment with the Company, and (ii) related to the business of the Company, shall be disclosed in writing promptly to the Company and shall be the sole and exclusive property of the Company, and the Executive hereby assigns any such inventions to the Company. An invention, idea, process, program, software, or design (including an improvement) shall be deemed directly related to the business of the Company if (a) it was made with the Company’s funds, personnel, equipment, supplies, facilities, or Confidential Information, (b) results from work performed by the Executive for the Company, or (c) pertains to the current business or demonstrably anticipated research or development work of the Company. The Executive shall cooperate with the Company and its attorneys in the preparation of patent and copyright applications for such developments and, upon request, shall promptly assign all such inventions, ideas, processes, and designs to the Company. The decision to file for patent or copyright protection or to maintain such development as a trade secret, or otherwise, shall be in the sole discretion of the Company, and the Executive shall be bound by such decision. The Executive hereby irrevocably assigns to the Company, for no additional consideration, the Executive’s entire right, title and interest in and to all work product and intellectual property rights, including the right to sue, counterclaim and recover for all past, present and future infringement, misappropriation or dilution thereof, and all rights corresponding thereto throughout the world. Nothing contained in this Agreement shall be construed to reduce or limit the Company’s rights, title or interest in any work product or intellectual property rights so as to be less in any respect than the Company would have had in the absence of this Agreement. If applicable, the Executive shall provide as a schedule to this Agreement, a complete list of all inventions, ideas, processes, and designs, if any, patented or unpatented, copyrighted or otherwise, or non-copyrighted, including a brief description, which he made or conceived prior to his employment with the Company and which therefore are excluded from the scope of this Agreement. References to the Company in this Section 12 shall include the Company, its subsidiaries and affiliates.

 

13. Indebtedness . If, during the course of the Executive’s employment under this Agreement, the Executive becomes indebted to the Company for any reason, the Company may, if it so elects, and if permitted by applicable law, set off any sum due to the Company from the Executive and collect any remaining balance from the Executive unless the Executive has entered into a written agreement with the Company.

 

14. Assignability . The rights and obligations of the Company under this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company, provided that such successor or assign shall acquire all or substantially all of the securities or assets and business of the Company. The Executive’s obligations hereunder may not be assigned or alienated and any attempt to do so by the Executive will be void.

 

15. Severability .

 

(a) The Executive expressly agrees that the character, duration and geographical scope of the non-competition provisions set forth in this Agreement are reasonable in light of the circumstances as they exist on the date hereof. Should a decision, however, be made at a later date by a court of competent jurisdiction that the character, duration or geographical scope of such provisions is unreasonable, then it is the intention and the agreement of the Executive and the Company that this Agreement shall be construed by the court in such a manner as to impose only those restrictions on the Executive’s conduct that are reasonable in the light of the circumstances and as are necessary to assure to the Company the benefits of this Agreement. If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants deemed included herein because taken together they are more extensive than necessary to assure to the Company the intended benefits of this Agreement, it is expressly understood and agreed by the parties hereto that the provisions of this Agreement that, if eliminated, would permit the remaining separate provisions to be enforced in such proceeding shall be deemed eliminated, for the purposes of such proceeding, from this Agreement.

  

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(b) If any provision of this Agreement otherwise is deemed to be invalid or unenforceable or is prohibited by the laws of the state or jurisdiction where it is to be performed, this Agreement shall be considered divisible as to such provision and such provision shall be inoperative in such state or jurisdiction and shall not be part of the consideration moving from either of the parties to the other. The remaining provisions of this Agreement shall be valid and binding and of like effect as though such provisions were not included.

 

16. Notices and Addresses . All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by FedEx or similar receipted delivery, or next business day delivery to the addresses detailed below (or to such other address, as either of them, by notice to the other may designate from time to time), or by e-mail delivery (in which event a copy shall immediately be sent by FedEx or similar receipted delivery), as follows:

 

  To the Company: Christopher Santi
    President – Healthier Choices Management Corp.
    3800 N. 28 th Way
    Suite #1
    Hollywood, FL 33020
    Email: csanti@hcmc1.com
     
  With a copy to: Cozen O’Connor
    Martin Schrier
    200 S. Biscayne Blvd.
    Suite 3000
    Miami, Florida 33141
    Email: mschrier@cozen.com
     
  To the Executive: Jeffrey Holman
    3800 N. 28 th Way
    Suite #1
    Hollywood, FL 33020
    Email: jholman@hcmc1.com

 

17. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature.

 

18. Attorneys’ Fees . In the event that there is any controversy or claim arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and expenses (including such fees and costs on appeal).

  

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19. Governing Law . This Agreement shall be governed or interpreted according to the internal laws of the State of Delaware without regard to choice of law considerations and all claims relating to or arising out of this Agreement, or the breach thereof, whether sounding in contract, tort, or otherwise, shall also be governed by the laws of the State of Delaware without regard to choice of law considerations.

 

20. Entire Agreement . This Agreement constitutes the entire Agreement between the parties and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, except by a statement in writing signed by the party or parties against which enforcement or the change, waiver discharge or termination is sought.

 

21. Section and Paragraph Headings . The section and paragraph headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

 

22. Investigations/Clawbacks .

 

(a) In the event the Executive or the Company is the subject of an investigation (whether criminal, civil, or administrative) involving possible violations of the United States federal securities laws by the Executive, the Compensation Committee or the Board may, in its sole discretion, direct the Company to withhold any and all payments to the Executive (whether compensation or otherwise) which would have otherwise been made pursuant to this Agreement or otherwise would have been paid or payable by the Company, which the Compensation Committee or the Board believes, in its sole discretion, may or could be considered an “extraordinary payment” and therefore at risk and potentially subject to, the provisions of Section 1103 of the Sarbanes-Oxley Act of 2002 (including, but not limited to, any severance payments made to the Executive upon termination of employment). The withholding of any payment shall be until such time as the investigation is concluded, without charges having been brought or until the successful conclusion of any legal proceedings brought in connection with such amounts as directed by the Compensation Committee or the Board to be withheld with or without the accruing of interest (and if with interest the rate thereof). Except by an admission of wrongdoing or the final adjudication by a court or administrative agency finding the Executive liable for or guilty of violating any of the federal securities laws, rules or regulations, the Compensation Committee or the Board shall pay to the Executive such compensation or other payments. Notwithstanding the exclusion caused by the first clause of the prior sentence, the Executive shall receive such payments if provided for by a court or other administrative order.

 

(b) Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation, or any other compensation, paid to the Executive pursuant to this Agreement or any other agreement or arrangement with the Company which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement).

  

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23. Section 409A Compliance .

 

(a) This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), or an exemption thereunder. This Agreement shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement to the contrary, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service (including a voluntary separation from service for good reason that is considered an involuntary separation for purposes of the separation pay exception under Treasury Regulation 1.409A-1(n)(2)) or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment shall only be made if such termination of employment constitutes a “separation from service” under Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.

 

(b) Notwithstanding any other provision of this Agreement, if at the time of the Executive’s termination of employment, the Executive is a “specified employee”, determined in accordance with Section 409A, any payments and benefits provided under this Agreement that constitute “nonqualified deferred compensation” subject to Section 409A (e.g., payments and benefits that do not qualify as a short-term deferral or as a separation pay exception) that are provided to the Executive on account of the Executive’s separation from service shall not be paid until the first payroll date to occur following the six-month anniversary of the Executive’s termination date (“Specified Employee Payment Date”). The aggregate amount of any payments that would otherwise have been made during such six-month period shall be paid in a lump sum on the Specified Employee Payment Date without interest and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule. If the Executive dies during the six-month period, any delayed payments shall be paid to the Executive’s estate in a lump sum upon the Executive’s death.

 

(c) To the extent required by Section 409A, each reimbursement or in-kind benefit provided under this Agreement shall be provided in accordance with the following:

 

(1) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year;

 

(2) any reimbursement of an eligible expense shall be paid to the Executive on or before the last day of the calendar year following the calendar year in which the expense was incurred; and

  

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(3) any right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit.

 

(d) In the event the Company determines that the Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code at the time of the Executive’s separation from service, then to the extent any payment or benefit that the Executive becomes entitled to under this Agreement on account of the Executive’s separation from service would be considered deferred compensation subject to Section 409A as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (i) six months and one day after the Executive’s separation from service, or (ii) the Executive’s death (the “Six Month Delay Rule”).

 

(1) For purposes of this subparagraph, amounts payable under the Agreement should not provide for a deferral of compensation subject to Section 409A to the extent provided in Treasury Regulation Section 1.409A-1(b)(4) (e.g., short-term deferrals), Treasury Regulation Section 1.409A-1(b)(9) (e.g., separation pay plans, including the exception under subparagraph (iii)), and other applicable provisions of the Treasury Regulations.

 

(2) To the extent that the Six Month Delay Rule applies to payments otherwise payable on an installment basis, the first payment shall include a catch-up payment covering amounts that would otherwise have been paid during the six-month period but for the application of the Six Month Delay Rule, and the balance of the installments shall be payable in accordance with their original schedule.

 

(3) To the extent that the Six Month Delay Rule applies to the provision of benefits (including, but not limited to, life insurance and medical insurance), such benefit coverage shall nonetheless be provided to the Executive during the first six months following his separation from service (the “Six Month Period”), provided that, during such Six-Month Period, the Executive pays to the Company, on a monthly basis in advance, an amount equal to the Monthly Cost (as defined below) of such benefit coverage. The Company shall reimburse the Executive for any such payments made by the Executive in a lump sum not later than 30 days following the sixth month anniversary of the Executive’s separation from service. For purposes of this subparagraph, “Monthly Cost” means the minimum dollar amount which, if paid by the Executive on a monthly basis in advance, results in the Executive not being required to recognize any federal income tax on receipt of the benefit coverage during the Six Month Period.

 

(e) The parties intend that this Agreement will be administered in accordance with Section 409A. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A. The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.

 

(f) The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A but do not satisfy an exemption from, or the conditions of, such Section.

 

Signature Page To Follow

   

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IN WITNESS WHEREOF, the Company and the Executive have executed this Agreement as of the date and year first above written.

  

  Healthier Choices Management Corp.,
a Delaware corporation
   
  By: /s/ Christopher Santi
    Christopher Santi
    President and Chief Operating Officer
   
  Executive:
   
  By:   /s/ Jeffrey Holman
    Jeffrey Holman

  

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Exhibit 10.4

 

HEALTHIER CHOICES MANAGEMENT CORP.

 

RESTRICTED STOCK AWARD AGREEMENT

 

RESTRICTED STOCK AWARD AGREEMENT (this “ Agreement ”), made as of August 13, 2018 (the “ Date of Grant ”), between Healthier Choices Management Corp., a Delaware corporation (the “ Company ”), and __________ (the “ Grantee ”).

 

WHEREAS, the Company has adopted the Vapor Corp 2015 Equity Incentive Plan, as amended (the “ Plan ”), in order to provide incentive compensation to certain employees and directors of the Company and its Subsidiaries; and

 

WHEREAS, the Committee has determined to grant to the Grantee an Award of Restricted Stock (as defined in the Plan) as provided under the Plan and as described herein to encourage the Grantee’s efforts toward the continuing success of the Company.

 

NOW, THEREFORE, the parties hereto agree as follows:

 

1. Grant of Restricted Stock .

 

1.1. The Company hereby grants to the Grantee an award of __________ shares of Restricted Stock (the “ Award ”). The shares of Restricted Stock granted pursuant to the Award shall be issued in the form of book entry shares in the name of the Grantee as soon as reasonably practicable after the Date of Grant and shall be subject to the execution and return of this Agreement by the Grantee (or the Grantee’s estate, if applicable) to the Company as provided in Section 9 hereof.

 

1.2. Except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan. This grant and the Award are subject to the terms of the Plan, except as expressly provided herein.

 

2.  Restrictions on Transfer . The shares of Restricted Stock issued under this Agreement may not be sold, transferred or otherwise disposed of and may not be pledged or otherwise hypothecated until all restrictions on such Restricted Stock shall have lapsed in the manner provided in Section 3, 4 or 5 hereof.

 

3.  Lapse of Restrictions Generally . Except as provided in Sections 4, 5 and 6 hereof, all of the shares of Restricted Stock issued hereunder (rounded down to the nearest whole share, if necessary) shall vest, and the restrictions with respect to such Restricted Stock shall lapse, on the first anniversary of the Date of Grant.

 

4.  Effect of Certain Terminations of Employment . If the Grantee’s employment terminates as a result of the Grantee’s death, retirement or becoming disabled after the Date of Grant, all shares of Restricted Stock which have not become vested in accordance with Section 3 or 5 hereof shall vest, and the restrictions on such Restricted Stock shall lapse, as of the date of such termination.

 

 

 

 

5.  Effect of Change in Control . In the event of a Change in Control at any time on or after the Date of Grant, all shares of Restricted Stock which have not become vested in accordance with Section 3 or 4 hereof shall vest, and the restrictions on such Restricted Stock shall lapse, immediately.

 

6.  Forfeiture of Restricted Stock . In addition to the circumstance described in Section 9(a) hereof, any and all shares of Restricted Stock which have not become vested in accordance with Section 3, 4 or 5 hereof shall be forfeited and shall revert to the Company upon the termination by the Grantee, the Company or its subsidiaries of the Grantee’s employment for any reason other than those set forth in Section 4 or other than without “Cause” hereof prior to the date on which such shares of Restricted Stock would otherwise vest. All or any portion of the Restricted Stock may be forfeited by the Grantee prior to vesting at his or her sole discretion.

 

7.  Delivery of Restricted Stock . A stock certificate with respect to shares attributable to Restricted Stock for which the restrictions have lapsed shall be delivered to the Grantee or the Grantee’s estate, if applicable, as soon as practicable following the date on which the restrictions on such Restricted Stock have lapsed, free of all restrictions hereunder.

 

8.  Dividends and Voting Rights . Subject to the terms of the Plan, upon issuance of the Restricted Stock, the Grantee shall have all of the rights of a stockholder with respect to such Stock, including the right to vote the Stock; provided, however, that the Grantee shall have no right to receive all dividends or other distributions paid or made with respect thereto.

 

9.  Execution of Award Agreement . The shares of Restricted Stock granted to the Grantee pursuant to the Award shall be subject to the Grantee’s execution and return of this Agreement to the Company or its designee (including by electronic means, if so provided) no later than August 14, 2018 (the “Return Date”). If this Agreement is not so executed and returned on or prior to the Return Date, the shares of Restricted Stock evidenced by this Agreement shall be forfeited, and neither the Grantee nor the Grantee’s heirs, executors, administrators and successors shall have any rights with respect thereto.

 

10.  No Right to Continued Employment . Nothing in this Agreement or the Plan shall interfere with or limit in any way the right of the Company or its Subsidiaries to terminate the Grantee’s employment, nor confer upon the Grantee any right to continuance of employment by the Company or any of its Subsidiaries or continuance of service as a Board member.

 

11.  Withholding of Taxes . Except as otherwise agreed by the Company and Grantee, prior to the delivery to the Grantee (or the Grantee’s estate, if applicable) of a stock certificate with respect to shares of Restricted Stock for which all restrictions have lapsed, the Grantee (or the Grantee’s estate) shall pay to the Company the federal, state and local income taxes and other amounts as may be required by law to be withheld by the Company (the “ Withholding Taxes ”) with respect to such Restricted Stock. By executing and returning this Agreement in the manner provided in Section 9 hereof, the Grantee (or the Grantee’s estate) shall be deemed to elect to have the Company withhold a portion of such Restricted Stock having an aggregate Fair Market Value equal to the Withholding Taxes in satisfaction of the Withholding Taxes, such election to continue in effect until the Grantee (or the Grantee’s estate) notifies the Company before such delivery that the Grantee (or the Grantee’s estate) shall satisfy such obligation in cash, in which event the Company shall not withhold a portion of such Restricted Stock as otherwise provided in this Section 11.

 

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12.  Grantee Bound by the Plan . The Grantee hereby acknowledges receipt of a copy of the Plan and this Agreement, and that he or she has been granted the opportunity to review and consult with advisors on such agreements, and agrees to be bound by all the terms and provisions thereof.

 

13.  Modification of Agreement . This Agreement may be modified, amended, suspended or terminated, and any terms or conditions may be waived by the Company prior to the lapse of restriction. Notwithstanding the foregoing, no such modification may negatively impact the rights of the Grantee without the Grantee’s written consent.

 

14.  Severability . Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms.

 

15.  Governing Law . The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Delaware without giving effect to the conflicts of laws principles thereof.

 

16.  Successors in Interest . This Agreement shall inure to the benefit of and be binding upon any successor to the Company. This Agreement shall inure to the benefit of the Grantee’s legal representatives. All obligations imposed upon the Grantee and all rights granted to the Company under this Agreement shall be binding upon the Grantee’s heirs, executors, administrators and successors.

 

17.  Entire Agreement . This Agreement and the Plan constitute the entire understanding between the Grantee and the Company and its Subsidiaries, and supersede all other agreements, whether written or oral, with respect to the Award.

 

18.  Headings . The headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

 

19.  Counterparts . This Agreement may be executed simultaneously in two or more counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same agreement.

 

[REMINDER OF PAGE INTENTIONALLY LEFT BLANK.]

 

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IN WITNESS WHEREOF , the Company has caused this Restricted Stock Award Agreement to be executed by its duly authorized representative and Grantee has executed this Agreement, each as of the Date of Grant.

 

  HEALTHIER CHOICES MANAGEMENT CORP.
   
  By:               
  Name:  
  Title:  
     
  By:  
  Name: