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 22, 2018
SOLIS TEK INC.
(Exact name of registrant as specified in its charter)
| Nevada | 000-53635 | 20-8609439 | ||
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(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
853 Sandhill Avenue, Carson, California 90746
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (888) 998-8881
Copy of correspondence to:
Marc J. Ross, Esq.
James M. Turner, Esq.
Sichenzia Ross Ference Kesner LLP
1185 Avenue of the Americas, 37 th Floor
New York, New York 10036
Tel: (212) 930-9700 Fax: (212) 930-9725
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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.
Item 1.02 Termination of a Material Definitive Agreement.
On August 22, 2018, Solis Tek Inc. (the “Company”) entered into an employment agreement (the “Lien Agreement”) with Alan Lien (“Lien”) to continue to serve as the Company’s President, Chief Executive Officer and Chief Financial Officer. On August 22, 2018, the Company entered into an employment agreement (the “Davis Agreement” and together with the Lien Agreement, the “Agreements”) with Tiffany Davis (“Davis” and together with Lien, the “Executives”) to continue to serve as our Chief Operating Officer. The Davis Agreement supersedes and replaces the employment agreement entered into between the Company and Davis on February 14, 2018, which was terminated on August 22, 2018.
The base salary for Lien under the Lien Agreement is $280,000 per annum and the base salary for Davis under the Davis Agreement is $230,000 per annum. The base salaries increase by 10% and 8% per annum for Lien and Davis, respectively. The Lien Agreement has an initial term of four years and the Davis Agreement has an initial term of three years and the Agreements automatically renew for successive one year terms unless either party delivers written notice not to renew at least 60 days prior to the end of the current term. Lien and Davis will receive signing bonuses of $46,500 and $55,000, respectively, within 30 days. The Executives are entitled to receive performance-based bonuses based on increases in the Company’s total gross, top-line revenue compared to the prior year. These performance-based bonuses are a percentage of their total salary and options to purchase the Company’s common stock.
Pursuant to the Agreements, Lien and Davis received options to purchase shares of common stock equal to 6% and 3%, respectively, of the Company’s total number of shares of common stock outstanding. These options are immediately exercisable, expire five years from issuance, and are exercisable at $0.74 per share. On the first, second and third anniversaries, (i) Lien shall receive options to purchase 3% of the total number of shares of common stock then outstanding and (ii) Davis shall receive options to purchase 2%, 2% and 3%, respectively, of the total number of shares of common stock then outstanding, with all such options having an exercise price equal to the closing price of the Company’s common stock on the trading day prior to such anniversary and exercisable for five years from issuance. In addition, Davis received 750,000 shares of common stock on the effective date of the Davis Agreement.
Pursuant to the Agreements, if the Company terminates Executive’s employment without Cause (as defined in the Agreements) or Executive resigns for Good Reason (as defined in the Agreement), the Executive is entitled to the following payments and benefits: (1) Executive’s fully earned but unpaid base salary through the date of termination at the rate then in effect, plus all other benefits, if any, under any group retirement plan, nonqualified deferred compensation plan, equity award plan or agreement, health benefits plan or other group benefit plan to which Executive may be entitled to under the terms of such plans or agreements; (2) a lump sum cash payment in an amount equal to 12 months of Executive’s base salary as in effect immediately prior to the date of termination; (3) continuation of health benefits for Executive and Executive’s eligible dependents for a period of 12 months following the date of termination; and (4) the automatic acceleration of the vesting and exercisability of outstanding unvested stock awards as to the number of stock awards that would have vested over the 12-month period following termination had such Executive remained continuously employed by the Company during such period.
Pursuant to the Agreements, if Executive’s employment is terminated as a result of death or permanent disability, Executive or Executive’s estate, as applicable, is entitled to Executive’s fully earned but unpaid base salary through the end of the month in which termination occurs at the rate then in effect.
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The foregoing description of the terms of the Agreements does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Agreements, which are filed herewith as Exhibits 10.01 and 10.02 and are incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of Peter Najarian
On August 22, 2018, the Board of Directors (the “Board”) of the Company increased the number of directors to three and appointed Mr. Peter Najarian as a director of the Company, effective immediately.
Peter Najarian, age 54, is a recognizable contributor on the CNBC mid-day show “Halftime Report” as well as CNBC’s post-market show “Fast Money”. Mr. Najarian is a founding member of Investitute.com, a financial education and newsletter services company established in 2016. He is also a founding member of Rebellion Partners, LLC, a private banking company, established in 2016.
He is also is a founding member of One Chicago, an electronic exchange in futures on individual stocks, narrow-based indexes, and ETFs. He is also the Co-Founder of Hedgehog, a stock, options, and futures trading platform and he co-developed the Heat Seeker™ and complementary programs identifying unusual buying activity in stocks, options, and futures.
Following a football career that included several seasons with the NFL’s Tampa Bay Buccaneers and Minnesota Vikings, he began options trading in 1992 at Mercury Trading, a market-making firm at the Chicago Board Options Exchange. Two years later, he assumed responsibility for Mercury’s risk and arbitrage departments. In 2005, Najarian co-founded, optionMONSTER, an options news and education firm, and tradeMONSTER, an online brokerage firm. Both were acquired in 2014 by private equity. Mr. Najarian graduated with a B.A. degree from the University of Minnesota.
Mr. Najarian will hold office until the next annual meeting of shareholders and until his successor shall have been elected and qualified or until his earlier death, resignation or removal. The Board has determined that Mr. Najarian satisfies the definition of “independent” director, including, without limitation, the applicable requirements of the NASDAQ Listing Rules and the Securities Exchange Act of 1934, as amended.
In connection with the appointment of Mr. Najarian, the Company granted him 100,000 shares of common stock, which vested immediately.
There is no understanding or arrangement between Mr. Najarian and any other person pursuant to which Mr. Najarian was selected as a director. Mr. Najarian does not have any family relationship with any director, executive officer or person nominated or chosen by the Company to become a director or executive officer.
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Appointment of Tiffany Davis
On August 22, 2018, the Board appointed Davis as a director of the Company, effective immediately.
Davis, 39, has served as the Company’s Chief Operating Officer since February 21, 2018. Between September 2017 and February 2018, Davis was an operations executive for the Company. Davis has had 19 years of experience as a financial professional working in both management consulting and private equity. She has held several key leadership positions in accounting, finance, and operations. She has extensive experience in supply chain functionality, financial and operational due diligence, cash flow forecasting, financial statement analysis, development and value retention in a number of industries including most recently in the cannabis industry. From January 2016 through August 2017, Davis worked as management consultant for Central Park Financial, a U.S. based cannabis consulting group supporting legal grows, assisting in license applications, developing programs for cultivators, business structuring for medical dispensaries including developing M&A opportunities and initiation of several start-up ventures. Between July 2013 and January 2016, Davis worked as a Group Vice President for Lockton Brokerage, LLC, a U.S. based private equity group, performing due diligence tasks resulting in placing hundreds of millions of dollars in creative investment and debt instruments for appropriate investment opportunities. Between 2011 and 2013, Davis was a private equity analyst at Beacon Bay Holdings. From 2009 to 2011, Davis was a Manger of Corporate Advisory for Grant Thornton, LLP, a worldwide accounting firm, in accounting and supply chain services during the automotive crisis in the U.S., specifically on the Chrysler turnaround project. From 2005 to 2008, Davis worked for an international technology sector company with $500 million in revenues as a Vice President of Special Projects for an automobile parts sourcing project in India from the company’s headquarters in Chicago, Il. Davis received her B.S. from DePaul University in 2002 and a MBA from University of Chicago Graduate School of Business in 2009.
Davis will hold office until the next annual meeting of shareholders and until her successor shall have been elected and qualified or until her earlier death, resignation or removal. The Board has determined that Davis does not satisfy the definition of “independent” director, including, without limitation, the applicable requirements of the NASDAQ Listing Rules and the Securities Exchange Act of 1934, as amended, as she is also an employee of the Company.
In connection with the appointment of Ms. Davis to the Board, the Company granted her 100,000 shares of common stock, which vested immediately.
There is no understanding or arrangement between Davis and any other person pursuant to which Davis was selected as a director. Davis does not have any family relationship with any director, executive officer or person nominated or chosen by the Company to become a director or executive officer.
Employment Agreements with Alan Lien and Tiffany Davis
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference
Resignation of Alvin Hao
On August 22, 2018, Alvin Hao resigned as a member of the Board, effective immediately. Mr. Hao remains as an Executive Vice President of the Company. In submitting his resignation, Mr. Hao did not express any disagreement with the Company on any matter relating to the registrant’s operations, policies or practices.
Item 8.01 Other Events.
On August 23, 2018, the Company issued a press release announcing certain appointments and resignations, as discussed in Item 5.02 above. A copy of the press release that discusses these matters is filed as Exhibit 99.01 to, and incorporated by reference in, this report.
The information contained in Item 8.01 of this Current Report on Form 8-K, including Exhibit 99.01, is furnished pursuant to, and shall not be deemed to be “filed” for the purposes of, Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information contained in Item 8.01 of this Current Report shall not be incorporated by reference into any registration statement or any other document filed pursuant to the Securities Act of 1933, as amended, except as otherwise expressly stated in such filing.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
* Furnished herewith.
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SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SOLIS TEK INC. | ||
| Date: August 23, 2018 | By: | /s/ TIFFANY DAVIS |
| Tiffany Davis | ||
| Chief Operating Officer | ||
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Exhibit 10.01
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT (the “ Agreement ”) dated August 22, 2018 (the “ Effective Date ”) by and between Solis Tek Inc., a company incorporated under the laws of Nevada (the “ Company ”), and Alan Lien, an individual (the “ Executive ”) with reference to the following facts:
WHEREAS, Executive currently serves as the President, Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors of the Company;
WHEREAS, the Company wishes to retain Executive as its President, Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors; and
WHEREAS, the parties wish to enter into this Agreement directly between Executive and the Company, on the terms and conditions contained in this Agreement, which will supersede all prior agreements and understandings between the Company and Executive, oral or written with respect to its subject matter.
NOW THEREFORE, in consideration of the mutual covenants contained herein, the parties, intending to be legally bound, agree as follows:
1. Definitions . As used in this Agreement, the following terms shall have the following meanings:
(a) “ Board ” means the Board of Directors of the Company.
(b) “ Cause ” means any of the following:
| (i) | the commission of an act of fraud, embezzlement or dishonesty by Executive, or the commission of some other illegal act by Executive (other than traffic violations or other offenses or violations outside of the course of Executive’s employment), that has a demonstrable material adverse impact on the Company or any successor or affiliate thereof, provided however , that no act shall be deemed an illegal act, if such act would otherwise be legal, but for 21 U.S.C. § 801 et seq. (a/k/a the “Controlled Substances Act”). | |
| (ii) | a conviction of, or plea of “guilty” or “no contest” to, a felony by Executive; | |
| (iii) | any unauthorized use or disclosure by Executive of confidential information or trade secrets of the Company or any successor or affiliate thereof that has, or may reasonably be expected to have, a material adverse impact on any such entity; |
| (iv) | Executive’s gross negligence, failure to follow a material, lawful and reasonable request of the Board or material violation of any duty of loyalty to the Company or any successor or affiliate thereof, or any other demonstrable material willful misconduct on the part of Executive; | |
| (v) | Executive’s ongoing and repeated failure or refusal to perform or neglect of Executive’s duties as required by this Agreement, which failure, refusal or neglect continues for thirty (30) days following Executive’s receipt of written notice from the Board stating with specificity the nature of such failure, refusal or neglect; or | |
| (vi) | Executive’s material breach of any Company policy or any material provision of this Agreement; |
provided , however , that prior to the determination that “Cause” under this Section 1(b) has occurred, the Board shall (A) provide to Executive in writing, in reasonable detail, the reasons for the determination that such “Cause” exists, (B) other than with respect to clause (v) above which specifies the applicable period of time for Executive to remedy his breach, afford Executive a reasonable opportunity to remedy any such breach, (C) provide Executive an opportunity to be heard by the Board (with counsel present) prior to the final decision to terminate Executive’s employment hereunder for such “Cause” and (D) make any decision that such “Cause” exists in good faith and with the approval of two-thirds (2/3rds) of the independent members of the Board. For purposes hereof, no act shall be deemed “willful” if taken (or omitted) on the reasonable belief that it was in the best interest of the Company or upon the advice of counsel or other expert.
The foregoing definition shall not in any way preclude or restrict the right of the Company or any successor or affiliate thereof to discharge or dismiss Executive for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of this Agreement, to constitute grounds for termination for Cause.
(c) Change in Control. For purposes of this Agreement, “ Change in Control ” means the first to occur of any of the following transactions that also constitutes a change in the ownership or effective control of the Company, or a change in the ownership of a substantial portion of the Company’s assets, as described in Treasury Regulation Section 1.409A-3(i)(5): (A) a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which the Company is incorporated; (B) the sale, transfer or other disposition of all or substantially all of the assets of the Company (including the capital stock of the Company’s subsidiary corporations); (C) the complete liquidation or dissolution of the Company; (D) any reverse merger in which the Company is the surviving entity but in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger; or (E) an acquisition of the Company in a single or series of related transactions by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities. Notwithstanding anything to the contrary contained herein, the following transactions shall not constitute a Change in Control hereunder: (i) a sale by the Company of its securities in a bona fide financing transaction; and (ii) a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company. To the extent required for compliance with Section 409A of the Internal Revenue Code, in no event will a Change in Control be deemed to have occurred if such transaction is not also a “change in the ownership or effective control of” the Company or “a change in the ownership of a substantial portion of the assets of” the Company as determined under Treasury Regulations Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).
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Benefits upon a Change in Control. In the event of a Change in Control of the Company, the vesting and/or exercisability of twenty-five percent (25%) of the outstanding unvested equity awards then held by Executive (the “ Equity Awards ”) shall be accelerated as of immediately prior to the effective date of the Change of Control transaction. Further, in the event that the Equity Awards are not assumed or substituted and would otherwise terminate prior to and in connection with the Change in Control, the vesting and/or exercisability of an additional fifty percent (50%) of the Equity Awards shall be accelerated as of immediately prior to the effective date of the Change of Control transaction.
(d) “ Code ” means the Internal Revenue Code of 1986, as amended from time to time, and the Treasury Regulations and other interpretive guidance issued thereunder.
(e) “ Good Reason ” means the occurrence of any of the following events or conditions without Executive’s written consent:
| (i) | a material reduction of Executive’s title, authority, duties or responsibilities, or the assignment to Executive of duties materially inconsistent with Executive’s positions with the Company as stated in Section 2(a) hereof, provided, however, that the Company’s appointment of someone as Chief Financial Officer and removing such title, authority, duties and/or responsibilities associated with that title from Executive shall not constitute Good Reason; | |
| (ii) | a material diminution in Executive’s base compensation, unless a similar reduction is imposed across-the-board to senior management of the Company and is not greater than 15%; | |
| (iii) | a material change in the geographic location at which Executive must perform his duties (and the parties acknowledge that a relocation of Executive’s principal office to a location more than twenty-five (25) miles from the Company’s then current offices (excepting reasonable travel on the Company’s business) shall constitute a material change for purposes of this clause (iii)); |
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| (iv) | any other action or inaction that constitutes a material breach by the Company or any successor or affiliate of its obligations to Executive under this Agreement; or | |
| (v) | the Company’s delivery of a Non-Renewal Notice (as hereinafter defined). |
Executive must provide written notice to the Company of the occurrence of any of the foregoing events or conditions without Executive’s written consent within ninety (90) days of the occurrence of such event. The Company or any successor or affiliate shall have a period of thirty (30) days to cure such event or condition after receipt of written notice of such event from Executive. “Good Reason” shall not exist unless and until the Company fails to cure the condition within the allotted timeframe.
(f) “ Involuntary Termination ” means (i) Executive’s Separation from Service by reason of Executive’s discharge by the Company (or its successor(s) within twelve (12) months following a Change in Control) other than for Cause, or (ii) Executive’s Separation from Service by reason of Executive’s resignation of employment with the Company (or its successor(s) within twelve (12) months following a Change in Control) for Good Reason. Executive’s Separation from Service by reason of Executive’s death or discharge by the Company following Executive’s Permanent Disability shall not constitute an Involuntary Termination. Executive’s Separation from Service by reason of resignation from employment with the Company for Good Reason shall be an “Involuntary Termination” only if such Separation from Service occurs within six (6) months following the initial existence of the act or failure to act constituting Good Reason, and then only after an opportunity to cure has been provided in accordance with Section 1(d), or within twelve (12) months following a Change in Control, as provided for hereinabove in this Sub-section.
(g) “ Permanent Disability ” of Executive shall be deemed to have occurred if Executive shall become physically or mentally incapacitated or disabled or otherwise unable fully to discharge his duties hereunder for a period of ninety (90) consecutive calendar days or for one hundred twenty (120) calendar days in any one hundred eighty (180) calendar-day period. The existence of Executive’s Permanent Disability shall be determined by the Company on the advice of a physician chosen by the Company and the Company reserves the right to have Executive examined by a physician chosen by the Company at the Company’s expense.
(h) “ Separation from Service ,” with respect to Executive, means Executive’s “separation from service,” as defined in Treasury Regulation Section 1.409A-1(h).
(i) “ Stock Awards ” means all stock options, restricted stock and such other awards granted pursuant to the Company’s stock option and equity incentive award plans or agreements and any shares of stock issued upon exercise thereof.
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2. Services to Be Rendered.
(a) Duties and Responsibilities . Executive shall continue to serve as Chief Executive Officer, President, and Chief Financial Officer of the Company. The Company shall continue to nominate and recommend that Executive serve as a director on the Board and as its Chairman. In the performance of such duties, Executive shall report directly to and shall be subject to the direction of the Board. Executive hereby consents to serve as an officer and/or director of the Company or any subsidiary or affiliate thereof without any additional salary or compensation. Executive’s primary place of work shall be chosen by the Executive, in his own reasonable discretion. Executive shall also render services at such other places within or outside the United States as the Board may direct from time to time. Executive shall be subject to and comply with the policies and procedures generally applicable to senior executives of the Company to the extent the same are not inconsistent with any term of this Agreement.
(b) Exclusive Services . Executive shall at all times faithfully, industriously and to the best of his ability, experience and talent perform to the satisfaction of the Board all of the duties that may be assigned to Executive hereunder and shall devote substantially all of his productive time and efforts to the performance of such duties. Executive agrees that he will not join any boards, other than community and civic boards (which do not interfere with his duties to the Company), without the prior approval of the Board, such approval not to be unreasonably withheld or delayed. Except as provided below, the Company shall be entitled to all benefits, profits or other issues arising from or incidental to all work, services and advice performed or provided by Executive. Provided that the activities listed below do not materially interfere with Executive’s duties and responsibilities to the Company and are not otherwise prohibited by this Agreement, nothing in this Agreement shall preclude Employee from:
| (i) | Serving as a member or owner of any organization involving no conflict of interest with the Company, provided that Executive must obtain the prior written approval of the Board, which approval shall not be unreasonably withheld or delayed; | |
| (ii) | Serving as a consultant in his area of expertise to government, commercial and academic panels where it does not conflict with the interests of the Company; and | |
| (iii) | Managing his personal investments, including owning shares of companies whose securities are publicly traded, so long as such securities do not constitute more than five percent (5%) of the outstanding securities of any such company. |
3. Compensation and Benefits . The Company shall pay or provide, as the case may be, to Executive the compensation and other benefits and rights set forth in this Section 3.
(a) Base Salary . As of the Effective Date, the Company shall pay to Executive a base salary (the “ Base Salary ”) of $280,000 per year, payable in accordance with the Company’s usual pay practices (and in any event no less frequently than monthly).
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(b) Annual Salary Increase . The Base Salary shall increase at an annual rate of ten percent (10%) of the Base Salary in effect for the year immediately preceding such increase. Executive’s Base Salary shall be subject to review annually by the Board and/or the Compensation Committee and may be greater increased but not decreased.
(c) Annual Bonus . Executive shall be entitled to participate in any bonus plan that the Board and/or Compensation Committee of the Board or its designee may approve for the senior executives of the Company. Any bonus awarded under this Section 3(c) shall be calculated following the close of the fiscal year to which the bonus relates, and paid in a lump sum by no later than two and one-half (2 ½) months following the end of the fiscal year in which such bonus award is earned, provided that Executive remains employed on the date of payment (and has not given notice of resignation).
(d) Signing Bonus. The Company shall pay to Executive a lump sum signing bonus of $46,500 within thirty (30) days of the Effective Date.
(e) Performance-Based Bonus . In addition to any other compensation that Executive is entitled to under this Agreement, and subject to the conditions set forth in this Section 3(d), the Company shall pay to Executive an annual performance-based bonus (the “ Performance-Based Bonus ”) as follows:
| (i) | If the Company’s total gross, top-line revenue for the fiscal year in which such bonus award is earned has increased by at least twenty percent (20%) from the prior fiscal year, Executive shall receive thirty percent (30%) of the Base Salary for the fiscal year in which such bonus award is earned, plus an option to purchase two percent (2%) of the Company’s total outstanding shares of common stock on the last trading day of the fiscal year in which such bonus award is earned, exercisable immediately upon issuance for a period of five (5) years, at 100% of the closing price of the Company’s common stock on the last trading day of the fiscal year in which such bonus award is earned; or | |
| (ii) | If the Company’s total gross, top line revenue for the fiscal year in which such bonus award is earned has increased by at least thirty percent (30%) from the prior fiscal year, Executive shall receive fifty percent (50%) of the Base Salary for the fiscal year in which such bonus award is earned, plus an option to purchase two percent (2%) of the Company’s total outstanding shares of common stock on the last trading day of the fiscal year in which such bonus award is earned, exercisable immediately upon issuance for a period of five (5) years, at 100% of the closing price of the Company’s common stock on the last trading day of the fiscal year in which such bonus award is earned. |
Any Performance-Based Bonus awarded under this Section 3(d) shall be calculated following the close of the fiscal year to which the bonus relates, and paid in a lump sum by no later than two and one-half (2 ½) months following the end of the fiscal year in which such bonus award is earned, provided that Executive remains employed on the date of payment (and has not given notice of resignation).
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(f) Equity Awards . On the Effective Date, the Company shall grant to Executive an option to purchase six percent (6%) of the Company’s total outstanding shares of common stock, exercisable at any time, for a period of five (5) years at one hundred percent (100%) of the closing price on the last trading day preceding the Effective Date. Subsequently, on each of the first (1 st ), second (2 nd ) and third (3 rd ) year anniversaries of the Effective Date, the Company shall grant to Executive an option to purchase three percent (3%) of the Company’s then total outstanding shares of common stock exercisable, for a five (5) year period from the date of each grant, at one hundred percent (100%) of the closing price on the last trading day preceding the first (1 st ), second (2 nd ) and third (3 rd ) anniversaries of the Effective Date, respectively. Executive has the right to execute such options on a “net exercise” or similar “cashless” conversion. Executive shall also be entitled to participate in any equity or other employee benefit plan that is generally available to senior executive officers, as distinguished from general management, of the Company. Except as otherwise provided in this Agreement, Executive’s participation in and benefits under any such plan shall be on the terms and subject to the conditions specified in the governing document of the particular plan.
(g) Benefits . Executive shall be entitled to participate in benefits under the Company’s benefit plans, profit sharing and arrangements, including, without limitation, any employee benefit plan or arrangement made available in the future by the Company to its employees or senior executives, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. The Company shall have the right to amend or delete any such benefit plan or arrangement made available by the Company to its employees or senior executives and not otherwise specifically provided for herein. Notwithstanding the foregoing, during the Employment Term (as hereinafter defined), the Company will provide, at the Company’s expense, health and major medical insurance benefits to the Executive and his family members which are at least equal to the benefits provided to the Executive and his family members immediately prior to the Effective Date.
(h) Expenses . The Company shall promptly reimburse Executive for reasonable out-of-pocket business expenses incurred in connection with the performance of his duties hereunder, subject to (i) such policies as the Company may from time to time establish, (ii) Executive furnishing the Company with evidence in the form of receipts satisfactory to the Company substantiating the claimed expenditures, and (iii) Executive receiving advance approval from the Board in the case of expenses (or a series of related expenses) in excess of $5,000.
(i) Vacation . Executive shall have the right to four weeks of vacation during each successive one year period of his employment by the Company, which vacation time shall be taken at such time or times in each such one year period so as not to materially and adversely interfere with the performance of his responsibilities under this Agreement. Executive shall not be entitled to carry over any unused vacation time from one year to the next and any accrued but unused vacation time will be waived. In addition, Executive shall be entitled to additional paid time off in accordance with the policies of the Company applicable to senior management personnel from time to time.
(j) Withholding . The Company shall be entitled to withhold from amounts payable or benefits accorded to Executive under this Agreement all federal, state and local income, employment and other taxes, as and in such amounts as may be required by applicable law.
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4. Employment Term . The term of this Agreement (as it may be extended by the following sentence or terminated earlier pursuant to Section 5, the (“ Employment Term ”) shall begin on the Effective Date and end on the fourth (4 th ) anniversary of the Effective Date. The Employment Term shall be automatically extended for additional one-year periods unless, at least sixty (60) days prior to the end of the expiration of the Employment Term, Executive or the Board notifies the other party in writing (a “ Non-Renewal Notice ”) that it does not wish to extend such Employment Term. Executive’s employment hereunder shall be coterminous with the Employment Term, unless sooner terminated as provided in Section 5.
5. Termination; Severance . Executive shall be entitled to receive benefits upon a Separation from Service only as set forth in this Section 5:
(a) General . Either the Board or Executive may terminate Executive’s employment hereunder, for any reason, at any time prior to the expiration of the Employment Term, upon thirty (30) days prior written notice to the other party. Upon termination of Executive’s employment hereunder for any reason, Executive shall be deemed simultaneously to have resigned from any other position or office he may at the time hold with the Company or any of its affiliates. In addition, upon termination of Executive’s employment hereunder for any reason, including, without limitation, expiration of the Employment Term, the Company shall (i) reimburse Executive for any expenses properly incurred under Section 3(g) and which have not previously been reimbursed as of the effective date of the termination, (ii) pay Executive for any accrued, but unused, vacation time as of the effective date of the termination, and (iii) pay Executive for any other accrued and unpaid compensation under Section 3, including, but not limited to, Base Salary through and including the effective date of termination (the “ Termination Date ”) (collectively, the “ Accrued Compensation ”). The Accrued Compensation will be paid in a lump sum on the Termination Date or on the first business day after the Termination Date, if the Termination Date falls on a weekend or holiday.
(b) Separation from Service by Death or Following Permanent Disability . Subject to Sections 5(e) and 10(p) and Executive’s continued compliance with Section 6, in the event of Executive’s Separation from Service as a result of Executive’s death or discharge by the Company following Executive’s Permanent Disability, Executive or Executive’s estate, as applicable, shall be entitled to receive his base salary through the end of the month in which Executive’s Separation from Service occurs as a result of Executive’s death or Permanent Disability.
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(c) Severance upon Involuntary Termination . Subject to Sections 5(e) and 10(p) and Executive’s continued compliance with Section 6, if Executive’s employment is Involuntarily Terminated, Executive shall be entitled to receive, in lieu of any severance benefits to which Executive may otherwise be entitled under any severance plan or program of the Company, the benefits provided below, which, with respect to clause (ii) and the last sentence of clause (iii) (if applicable) will be payable in a lump sum within ten (10) days following the effective date of Executive’s Release (as hereinafter defined):
| (i) | the Company shall pay to Executive his fully earned but unpaid base salary, when due, through the date of Executive’s Involuntary Termination at the rate then in effect (without regard to any reduction in salary that gave rise to an event of Good Reason), plus all other benefits, if any, under any Company group retirement plan, nonqualified deferred compensation plan, equity award plan or agreement, health benefits plan or other Company group benefit plan to which Executive may be entitled pursuant to the terms of such plans or agreements at the time of Executive’s Involuntary Termination; | |
| (ii) | Executive shall be entitled to receive severance pay in an amount equal to the base salary payable to Executive under Section 3(a) of this Agreement from the date of Executive’s Involuntary Termination until the one year anniversary of such Involuntary Termination (the “ Severance Period ”); | |
| (iii) | During the Severance Period (or, if earlier, until the date on which the applicable continuation period under COBRA expires), the Company shall arrange to provide Executive and his eligible dependents who were covered under the Company’s health insurance plans as of the date of Executive’s Involuntary Termination with health (including medical, dental and vision) insurance benefits substantially similar to those provided to Executive and his dependents immediately prior to the date of such Involuntary Termination. If any of the Company’s health benefits are self-funded as of the date of Executive’s Involuntary Termination, or if the Company cannot provide the foregoing benefits in a manner that is exempt from Section 409A (as defined below) or that is otherwise compliant with applicable law (including, without limitation, Section 2716 of the Public Health Service Act), instead of providing continued health insurance benefits as set forth above, the Company shall instead pay to Executive an amount equal to (A) the number of months from the date of Executive’s Involuntary Termination until the end of the Employment Term, as appropriate multiplied by (B) the monthly premium Executive would be required to pay for continuation coverage pursuant to COBRA for Executive and his eligible dependents who were covered under the Company’s health plans as of the date of Executive’s Involuntary Termination (calculated by reference to the premium as of the date of Involuntary Termination); and |
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| (iv) | That portion of the Stock Awards that would have vested over the Severance Period shall be automatically accelerated so as to be immediately vested as of the date of Involuntary Termination and any vested options or similar award (e.g., a stock appreciation right) may be exercised at any time during the Severance Period (subject to earlier termination (A) in connection with a recapitalization or similar transaction pursuant to the Company’s equity incentive plans governing such Stock Awards or (B) the contractual term of the Stock Award), or if longer, through the date such vested options or similar award are exercisable under the terms of the applicable Stock Award. |
(d) Termination for Cause or Voluntary Resignation Without Good Reason . In the event of Executive’s termination of employment as a result of Executive’s discharge by the Company for Cause or Executive’s resignation without Good Reason (other than as a result of Executive’s death or Separation from Service by reason of discharge by the Company following Executive’s Permanent Disability), the Company shall not have any other or further obligations to Executive under this Agreement (including any financial obligations) except that Executive shall be entitled to receive the Accrued Compensation. In addition, in the event of Executive’s Separation from Service as a result of Executive’s discharge by the Company for Cause or Executive’s resignation without Good Reason (other than as a result of Executive’s death or Separation from Service by reason of discharge by the Company following Executive’s Permanent Disability), all vesting of Executive’s unvested Stock Awards previously granted to him by the Company shall cease and none of such unvested Stock Awards shall be exercisable following the 90 th day following the date of such termination. The foregoing shall be in addition to, and not in lieu of, any and all other rights and remedies which may be available to the Company under the circumstances, whether at law or in equity.
(e) Termination in Connection with a Change in Control Event . Subject to Sections 5(f) and 10(p) and Executive’s continued compliance with Section 6, if Executive’s employment is Involuntarily Terminated within twelve (12) months after consummation of a Change in Control transaction or within ninety (90) days prior to the consummation of a Change in Control or if terminated after an agreement has been executed that contemplates the consummation of an Change in Control but before it closes, Executive shall be entitled to receive, in addition to (A) any severance benefits to which Executive may otherwise be entitled under any severance plan or program of the Company and (B) pursuant to Section 5(c) hereof, the vesting and/or exercisability of any outstanding unvested portions of such Stock Awards shall be automatically accelerated so as to be immediately vested and exercisable as of the date of Involuntary Termination and shall remain exercisable through the Severance Period (subject to earlier termination (A) in connection with a recapitalization or similar transaction pursuant to the Company’s equity incentive plans governing such Stock Awards or (B) the contractual term of the Stock Award).
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(f) Release . As a condition to Executive’s receipt of any post-termination benefits pursuant to Sections 5(b), (c) or (d) above, Executive (or, in the event of Executive’s incapacity as a result of his Permanent Disability, Executive’s legal representative) shall execute and not revoke a general release of all claims in favor of the Company (the “ Release ”) in a form reasonably acceptable to the Company. In the event the Release does not become effective within the fifty-five (55) day period following the date of Executive’s Separation from Service, Executive shall not be entitled to the aforesaid payments and benefits.
(g) Exclusive Remedy . Except as otherwise expressly required by law (e.g., COBRA) or as specifically provided herein, all of Executive’s rights to salary, severance, benefits, bonuses and other amounts hereunder (if any) accruing after the termination of Executive’s employment shall cease upon such termination. In the event of Executive’s termination of employment with the Company, Executive’s sole remedy shall be to receive the payments and benefits described in this Section 5. In addition, Executive acknowledges and agrees that he is not entitled to any reimbursement by the Company for any taxes payable by Executive as a result of the payments and benefits received by Executive pursuant to this Section 5, including, without limitation, any excise tax imposed by Section 4999 of the Code.
(h) No Mitigation . Executive shall not be required to mitigate the amount of any payment provided for in this Section 5 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 5 be reduced by any compensation earned by Executive as the result of employment by another employer or self-employment or by retirement benefits; provided , however , that loans, advances or other amounts owed by Executive to the Company may be offset by the Company against amounts payable to Executive under this Section 5.
(i) Return of the Company’s Property . In the event of Executive’s termination of employment for any reason, the Company shall have the right, at its option, to require Executive to vacate his offices prior to or on the effective date of separation and to cease all activities on the Company’s behalf. Upon Executive’s termination of employment in any manner, as a condition to Executive’s receipt of any severance benefits described in this Agreement, Executive shall immediately surrender to the Company all lists, books and records of, or in connection with, the Company’s business, and all other property belonging to the Company, it being distinctly understood that all such lists, books and records, and other documents, are the property of the Company. Executive shall deliver to the Company a signed statement certifying compliance with this Section 5(h) prior to the receipt of any severance benefits described in this Agreement.
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6. Certain Covenants .
(a) Confidential Information . Executive recognizes and acknowledges that by reason of Executive’s employment by and service to the Company before, during and, if applicable, after the Employment Term, Executive will have access to certain confidential and proprietary information relating to the Company’s business, which may include, but is not limited to, unique business strategies, theories and concepts, information regarding plans, strategies, opportunities, processes, ideas, research and know-how developed by or for the Company, trade secrets, patents, other intellectual property, clinical studies, regulatory dossiers, manufacturing, marketing, personnel, financial data, technical information, methods, processes, formulae and information which Company has obtained from third parties (collectively referred to as “ Confidential Information ”). Executive acknowledges that such Confidential Information is a valuable and unique asset of the Company and Executive covenants that he will not, unless expressly authorized in writing by the Company, at any time during the course of Executive’s employment use any Confidential Information or divulge or disclose any Confidential Information to any person, firm or corporation except in connection with the performance of Executive’s duties for the Company and in a manner consistent with the Company’s policies regarding Confidential Information. Executive also covenants that at any time after the termination of such employment, directly or indirectly, he will not use any Confidential Information or divulge or disclose any Confidential Information to any person, firm or corporation, unless such information is in the public domain through no fault of Executive or except when required to do so by a court of law, by any governmental agency having supervisory authority over the business of the Company or by any administrative or legislative body (including a committee thereof) with apparent jurisdiction to order Executive to divulge, disclose or make accessible such information. All written Confidential Information (including, without limitation, in any computer or other electronic format) which comes into Executive’s possession during the course of Executive’s employment shall remain the property of the Company. Except as required in the performance of Executive’s duties for the Company, or unless expressly authorized in writing by the Company, Executive shall not remove any written Confidential Information from the Company’s premises, except in connection with the performance of Executive’s duties for the Company and in a manner consistent with the Company’s policies regarding Confidential Information. Upon termination of Executive’s employment, Executive agrees to return immediately to the Company all written Confidential Information (including, without limitation, in any computer or other electronic format) in Executive’s possession. As a condition of Executive’s continued employment with the Company and in order to protect the Company’s interest in such proprietary information, the Company shall be allowed to require Executive’s execution of a confidentiality agreement and/or proprietary information and inventions agreement, as reasonably requested by the Board not inconsistent with the provisions of this paragraph 6(b).
(b) Solicitation of Employees . During the Restricted Period, Executive shall not, directly or indirectly, solicit or encourage any person to leave the employment of the Company or any of its affiliates, any employee of the Company or any of its affiliates.
(c) Solicitation of Consultants and other Third Parties . During the Restricted Period, Executive shall not, directly or indirectly, hire, solicit or encourage any person to cease work with the Company or any of its affiliates, consultants, distributors, licensees or other third party partners then under contract with the Company or any of its affiliates within one year of the termination of such consultant’s engagement by the Company or any of its affiliates..
(d) Rights and Remedies Upon Breach . If Executive breaches or threatens to commit a breach of any of the provisions of this Section 6 (the “ Restrictive Covenants ”), the Company shall have the following rights and remedies, each of which rights and remedies shall be independent of the other and severally enforceable, and all of which rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity:
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| (i) | Specific Performance . The right and remedy to have the Restrictive Covenants specifically enforced by any court having equity jurisdiction by way of a temporary restraining order, preliminary injunction, permanent injunction, or other equitable remedy, all without the need to post a bond or any other security or to prove any amount of actual damage or that money damages would not provide an adequate remedy, it being acknowledged and agreed that any such breach or threatened breach may cause irreparable injury to the Company and that money damages will not provide adequate remedy to the Company; and | |
| (ii) | Accounting and Indemnification . The right and remedy to require Executive to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits derived or received by Executive or any associated party deriving such benefits as a result of any such breach of the Restrictive Covenants. |
(e) Definitions . For purposes of this Section 6, the term “ Company ” means not only Solis Tek Inc., but also any company, partnership or entity which, directly or indirectly, controls, is controlled by or is under common control with Solis Tek Inc.
7. Insurance; Indemnification .
(a) Insurance . The Company shall have the right to take out life, health, accident, “key-man” or other insurance covering Executive, in the name of the Company and at the Company’s expense in any amount deemed appropriate by the Company. Executive shall assist the Company in obtaining such insurance, including, without limitation, submitting to any required examinations and providing information and data required by insurance companies.
(b) Indemnification . Executive will be provided with indemnification against third party claims related to his work for the Company to the fullest extent permitted by California law. The Company shall provide Executive with directors and officers liability insurance coverage at least as favorable as that which the Company shall maintain for members of the Board and other executive officers.
8. General Relationship . Executive shall be considered an employee of the Company within the meaning of all federal, state and local laws and regulations including, but not limited to, laws and regulations governing unemployment insurance, workers’ compensation, industrial accident, labor and taxes.
9. Representations and Warranties of Executive . Executive hereby represents and warrants to the Company that (a) the execution, delivery and performance of this Agreement by Executive does not and shall not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Executive is a party or any judgment, order or decree to which Executive is subject, (b) Executive is not a party to or bound by any employment agreement, (c) Executive is not a party to or bound by any consulting agreement, non-compete agreement, confidentiality agreement or similar agreement with any other person or entity that would affect the Company or the obligations of Executive hereunder and (d) upon the execution and delivery of this Agreement by the Company and Executive, this Agreement will be a valid and binding obligation of Executive, enforceable in accordance with its terms.
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10. Miscellaneous .
(a) Modification; Prior Claims . This Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof, supersedes all existing agreements between them concerning such subject matter. This Agreement may be amended or modified only with the written consent of Executive and an authorized representative of the Company. No oral waiver, amendment or modification will be effective under any circumstances whatsoever.
(b) Assignment; Assumption by Successor . The rights of the Company under this Agreement may, without the consent of Executive, be assigned by the Company, in its sole and unfettered discretion, to any person, firm, corporation or other business entity which at any time, (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise, acquires all or substantially all of the assets or business of the Company. The Company will require any successor(s) (whether direct or indirect, by purchase, merger or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and to agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place; provided , however , that no such assumption shall relieve the Company of its obligations hereunder. As used in this Agreement, the “ Company ” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise.
(c) Survival . The covenants, agreements, representations and warranties contained in or made in Sections 3(e), 3(f), 5, 6, 7, 9 and 10 of this Agreement shall survive the termination of Executive’s employment.
(d) Third-Party Beneficiaries . This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person not a party to this Agreement.
(e) Waiver . The failure of either party hereto at any time to enforce performance by the other party of any provision of this Agreement shall in no way affect such party’s rights thereafter to enforce the same, nor shall the waiver by either party of any breach of any provision hereof be deemed to be a waiver by such party of any other breach of the same or any other provision hereof.
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(f) Section Headings . The headings of the several sections in this Agreement are inserted solely for the convenience of the parties and are not a part of and are not intended to govern, limit or aid in the construction of any term or provision hereof.
(g) Notices . Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (i) by personal delivery when delivered personally; (ii) by overnight courier upon written verification of receipt; (iii) by email, telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or (iv) by certified or registered mail, return receipt requested, upon verification of receipt. Notice shall be sent to Executive at the address listed on the Company’s personnel records and to the Company at its principal place of business, or such other address as either party may specify in writing.
(h) Severability . All Sections, clauses and covenants contained in this Agreement are severable, and in the event any of them shall be held to be invalid by any court, this Agreement shall be interpreted as if such invalid Sections, clauses or covenants were not contained herein.
(i) Governing Law . This Agreement shall be governed by, and construed in accordance with and subject to, the laws of the State of California applicable to agreements made and to be performed entirely within such state without regard to its conflicts of law rules.
(j) Jurisdiction and Venue . The Company and Executive hereby irrevocably and unconditionally submit, for themselves and their property, to the exclusive jurisdiction of the California State courts or the United States District Court for the Central District of California, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or for recognition or enforcement of any judgment, and the Company and Executive hereby irrevocably and unconditionally agree that all claims in respect of any such action or proceeding may be heard and determined in any such California State court or, to the extent permitted by law, in the United States District Court for the Central District of California. The Company and Executive irrevocably waive, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. The Company and Executive agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(k) Non-transferability of Interest . None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement shall be assignable or transferable except through a testamentary disposition or by the laws of descent and distribution upon the death of Executive. Any attempted assignment, transfer, conveyance, or other disposition (other than as aforesaid) of any interest in the rights of Executive to receive any form of compensation to be made by the Company pursuant to this Agreement shall be void.
(l) Gender . Where the context so requires, the use of the masculine gender shall include the feminine and/or neuter genders and the singular shall include the plural, and vice versa, and the word “person” shall include any corporation, firm, partnership or other form of association.
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(m) Counterparts . The parties may execute this Agreement in multiple counterparts, each of which constitutes an original as against the party that signed it, and both of which together constitute one agreement. The signatures of both parties need not appear on the same counterpart. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
(n) Construction . The language in all parts of this Agreement shall in all cases be construed simply, according to its fair meaning, and not strictly for or against any of the parties hereto. Without limitation, there shall be no presumption against any party on the ground that such party was responsible for drafting this Agreement or any part thereof.
(o) Withholding and other Deductions . All compensation payable to Executive hereunder shall be subject to such deductions as the Company is from time to time required to make pursuant to law, governmental regulation or order.
(p) Code Section 409A .
| (i) | This Agreement is not intended to provide for any deferral of compensation subject to Section 409A of the Code, and, accordingly, the severance payments payable under Sections 5(c)(ii) and 5(c)(iii) shall be paid no later than the later of: (A) the fifteenth (15th) day of the third month following Executive’s first taxable year in which such severance benefit is no longer subject to a substantial risk of forfeiture, and (B) the fifteenth (15th) day of the third month following first taxable year of the Company in which such severance benefit is no longer subject to substantial risk of forfeiture, as determined in accordance with Code Section 409A and any Treasury Regulations and other guidance issued thereunder. To the extent applicable, this Agreement shall be interpreted in accordance with Code Section 409A and Department of Treasury regulations and other interpretive guidance issued thereunder. | |
| (ii) | If Executive is a “specified employee” (as defined in Section 409A of the Code), as determined by the Company in accordance with Section 409A of the Code, on the date of Executive’s Separation from Service, to the extent that the payments or benefits under this Agreement are subject to Section 409A of the Code and the delayed payment or distribution of all or any portion of such amounts to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, then such portion deferred pursuant to this Section 9(p)(ii) shall be paid or distributed to Executive in a lump sum on the earlier of (A) the date that is six (6)-months following Executive’s Separation from Service, (B) the date of Executive’s death or (C) the earliest date as is permitted under Section 409A of the Code. Any remaining payments due under the Agreement shall be paid as otherwise provided herein. |
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| (iii) | To the extent applicable, this Agreement shall be interpreted in accordance with the applicable exemptions from Section 409A of the Code. If Executive and the Company determine that any payments or benefits payable under this Agreement intended to comply with Sections 409A(a)(2), (3) and (4) of the Code do not comply with Section 409A of the Code, Executive and the Company agree to amend this Agreement, or take such other actions as Executive and the Company deem reasonably necessary or appropriate, to comply with the requirements of Section 409A of the Code and the Treasury Regulations thereunder (and any applicable transition relief) while preserving the economic agreement of the parties. To the extent that any provision in this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner that no payments payable under this Agreement shall be subject to an “additional tax” as defined in Section 409A(a)(1)(B) of the Code. | |
| (iv) | Any reimbursement of expenses or in-kind benefits payable under this Agreement shall be made in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv) and shall be paid on or before the last day of Executive’s taxable year following the taxable year in which Executive incurred the expenses. The amount of expenses reimbursed or in-kind benefits payable in one year shall not affect the amount eligible for reimbursement or in-kind benefits payable in any other taxable year of Executive’s, and Executive’s right to reimbursement for such amounts shall not be subject to liquidation or exchange for any other benefit. | |
| (v) | In the event that the amounts payable under Sections 5(c)(ii) and 5(c)(iii) are subject to Section 409A of the Code and the timing of the delivery of Executive’s Release could cause such amounts to be paid in one or another taxable year, then notwithstanding the payment timing set forth in such sections, such amounts shall not be payable until the later of (A) the payment date specified in such Section or (B) the first business day of the taxable year following Executive’s Separation from Service. |
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IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first written above.
| EXECUTIVE: | SOLIS TEK INC. | |
| /s/ ALAN LIEN | /s/ TIFFANY DAVIS | |
| Alan Lien | Name: Tiffany Davis | |
| Title: Chief Operating Officer |
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Exhibit 10.02
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT (the “ Agreement ”) dated August 22, 2018 (the “ Effective Date ”) by and between Solis Tek Inc., a company incorporated under the laws of Nevada (the “ Company ”), and Tiffany Davis, an individual (the “ Executive ”) with reference to the following facts:
WHEREAS, Executive currently serves as the Chief Operating Officer of the Company;
WHEREAS, the Company wishes to retain Executive as its Chief Operating Officer; and
WHEREAS, the parties wish to enter into this Agreement directly between Executive and the Company, on the terms and conditions contained in this Agreement, which will supersede all prior agreements and understandings between the Company and Executive, oral or written with respect to its subject matter.
NOW THEREFORE, in consideration of the mutual covenants contained herein, the parties, intending to be legally bound, agree as follows:
1. Definitions . As used in this Agreement, the following terms shall have the following meanings:
| (a) | “ Board ” means the Board of Directors of the Company. | |
| (b) | “ Cause ” means any of the following: |
| (i) | the commission of an act of fraud, embezzlement or dishonesty by Executive, or the commission of some other illegal act by Executive (other than traffic violations or other offenses or violations outside of the course of Executive’s employment), that has a demonstrable material adverse impact on the Company or any successor or affiliate thereof, provided however , that no act shall be deemed an illegal act, if such act would otherwise be legal, but for 21 U.S.C. § 801 et seq. (a/k/a the “Controlled Substances Act”). | ||
| (ii) | a conviction of, or plea of “guilty” or “no contest” to, a felony by Executive; | ||
| (iii) | any unauthorized use or disclosure by Executive of confidential information or trade secrets of the Company or any successor or affiliate thereof that has, or may reasonably be expected to have, a material adverse impact on any such entity; | ||
| (iv) | Executive’s gross negligence, failure to follow a material, lawful and reasonable request of the Company’s chief executive officer (“CEO”) or material violation of any duty of loyalty to the Company or any successor or affiliate thereof, or any other demonstrable material willful misconduct on the part of Executive; |
| (v) | Executive’s ongoing and repeated failure or refusal to perform or neglect of Executive’s duties as required by this Agreement, which failure, refusal or neglect continues for thirty (30) days following Executive’s receipt of written notice from the Company stating with specificity the nature of such failure, refusal or neglect; or | ||
| (vi) | Executive’s material breach of any Company policy or any material provision of this Agreement; |
provided , however , that prior to the determination that “Cause” under this Section 1(b) has occurred, the Company shall (A) provide to Executive in writing, in reasonable detail, the reasons for the determination that such “Cause” exists, (B) other than with respect to clause (v) above which specifies the applicable period of time for Executive to remedy her breach, afford Executive a reasonable opportunity to remedy any such breach, (C) provide Executive an opportunity to be heard by the Board (with counsel present) prior to the final decision to terminate Executive’s employment hereunder for such “Cause” and (D) make any decision that such “Cause” exists in good faith and with the approval of two-thirds (2/3rds) of the independent members of the Board. For purposes hereof, no act shall be deemed “willful” if taken (or omitted) on the reasonable belief that it was in the best interest of the Company or upon the advice of counsel or other expert.
The foregoing definition shall not in any way preclude or restrict the right of the Company or any successor or affiliate thereof to discharge or dismiss Executive for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of this Agreement, to constitute grounds for termination for Cause.
(c) Change in Control. For purposes of this Agreement, “ Change in Control ” means the first to occur of any of the following transactions that also constitutes a change in the ownership or effective control of the Company, or a change in the ownership of a substantial portion of the Company’s assets, as described in Treasury Regulation Section 1.409A-3(i)(5): (A) a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which the Company is incorporated; (B) the sale, transfer or other disposition of all or substantially all of the assets of the Company (including the capital stock of the Company’s subsidiary corporations); (C) the complete liquidation or dissolution of the Company; (D) any reverse merger in which the Company is the surviving entity but in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger; or (E) an acquisition of the Company in a single or series of related transactions by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities. Notwithstanding anything to the contrary contained herein, the following transactions shall not constitute a Change in Control hereunder: (i) a sale by the Company of its securities in a bona fide financing transaction; and (ii) a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company. To the extent required for compliance with Section 409A of the Internal Revenue Code, in no event will a Change in Control be deemed to have occurred if such transaction is not also a “change in the ownership or effective control of” the Company or “a change in the ownership of a substantial portion of the assets of” the Company as determined under Treasury Regulations Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).
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Benefits upon a Change in Control. In the event of a Change in Control of the Company, in addition to any other benefits Executive is entitled to pursuant to the terms of this Agreement, the vesting and/or exercisability of twenty-five percent (25%) of the outstanding unvested equity awards then held by Executive (the “ Equity Awards ”) shall be accelerated as of immediately prior to the effective date of the Change of Control transaction. Further, in the event that the Equity Awards are not assumed or substituted and would otherwise terminate prior to and in connection with the Change in Control, the vesting and/or exercisability of an additional fifty percent (50%) of the Equity Awards shall be accelerated as of immediately prior to the effective date of the Change of Control transaction.
(d) “ Code ” means the Internal Revenue Code of 1986, as amended from time to time, and the Treasury Regulations and other interpretive guidance issued thereunder.
(e) “ Good Reason ” means the occurrence of any of the following events or conditions without Executive’s written consent:
| (i) | a material reduction of Executive’s title, authority, duties or responsibilities, or the assignment to Executive of duties materially inconsistent with Executive’s positions with the Company as stated in Section 2(a) hereof; | ||
| (ii) | a material diminution in Executive’s base compensation, unless a similar reduction is imposed across-the-board to senior management of the Company and is not greater than 15%; | ||
| (iii) | a material change in the geographic location at which Executive must perform her duties (and the parties acknowledge that a relocation of Executive’s principal office to a location more than twenty-five (25) miles from the Company’s then current offices (excepting reasonable travel on the Company’s business) shall constitute a material change for purposes of this clause (iii)); | ||
| (iv) | any other action or inaction that constitutes a material breach by the Company or any successor or affiliate of its obligations to Executive under this Agreement; or | ||
| (v) | the Company’s delivery of a Non-Renewal Notice (as hereinafter defined). |
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Executive must provide written notice to the Company of the occurrence of any of the foregoing events or conditions without Executive’s written consent within ninety (90) days of the occurrence of such event. The Company or any successor or affiliate shall have a period of thirty (30) days to cure such event or condition after receipt of written notice of such event from Executive. “Good Reason” shall not exist unless and until the Company fails to cure the condition within the allotted timeframe.
(f) “ Involuntary Termination ” means (i) Executive’s Separation from Service by reason of Executive’s discharge by the Company (or its successor(s) within twelve (12) months following a Change in Control) other than for Cause, or (ii) Executive’s Separation from Service by reason of Executive’s resignation of employment with the Company (or its successor(s) within twelve (12) months following a Change in Control) for Good Reason. Executive’s Separation from Service by reason of Executive’s death or discharge by the Company following Executive’s Permanent Disability shall not constitute an Involuntary Termination. Executive’s Separation from Service by reason of resignation from employment with the Company for Good Reason shall be an “Involuntary Termination” only if such Separation from Service occurs within six (6) months following the initial existence of the act or failure to act constituting Good Reason, and then only after an opportunity to cure has been provided in accordance with Section 1(d), or within twelve (12) months following a Change in Control, as provided for hereinabove in this Sub-section.
(g) “ Permanent Disability ” of Executive shall be deemed to have occurred if Executive shall become physically or mentally incapacitated or disabled or otherwise unable fully to discharge her duties hereunder for a period of ninety (90) consecutive calendar days or for one hundred twenty (120) calendar days in any one hundred eighty (180) calendar-day period. The existence of Executive’s Permanent Disability shall be determined by the Company on the advice of a physician chosen by the Company and the Company reserves the right to have Executive examined by a physician chosen by the Company at the Company’s expense.
(h) “ Separation from Service ,” with respect to Executive, means Executive’s “separation from service,” as defined in Treasury Regulation Section 1.409A-1(h).
(i) “ Stock Awards ” means all stock options, restricted stock and such other awards granted pursuant to the Company’s stock option and equity incentive award plans or agreements and any shares of stock issued upon exercise thereof.
2. Services to Be Rendered.
(a) Duties and Responsibilities . Executive shall continue to serve as Chief Operating Officer of the Company. In the performance of such duties, Executive shall report directly to and shall be subject to the direction of the CEO. In the event of the CEO’s incapacity or unavailability, Executive shall be subject to the direction of the President or other person so designated by the Board. Executive shall be employed by the Company on a full-time basis. Executive’s primary place of work shall be the Company’s executive offices in Carson, California, or such other location within the Los Angeles metropolitan area as may be designated by the CEO from time to time. Executive shall also render services at such other places within or outside the United States as the CEO may direct from time to time. Executive shall be subject to and comply with the policies and procedures generally applicable to senior executives of the Company to the extent the same are not inconsistent with any term of this Agreement.
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(b) Exclusive Services . Executive shall at all times faithfully, industriously and to the best of her ability, experience and talent perform to the satisfaction of the Company all of the duties that may be assigned to Executive hereunder and shall devote substantially all of her productive time and efforts to the performance of such duties. Executive agrees that she will not join any boards, other than community and civic boards (which do not interfere with her duties to the Company), without the prior approval of the Board, such approval not to be unreasonably withheld or delayed. Except as provided below, the Company shall be entitled to all benefits, profits or other issues arising from or incidental to all work, services and advice performed or provided by Executive. Provided that the activities listed below do not materially interfere with Executive’s duties and responsibilities to the Company and are not otherwise prohibited by this Agreement, nothing in this Agreement shall preclude Employee from:
| (i) | Serving as a member or owner of any organization involving no conflict of interest with the Company, provided that Executive must obtain the prior written approval of the Board, which approval shall not be unreasonably withheld or delayed; | ||
| (ii) | Serving as a consultant in her area of expertise to government, commercial and academic panels where it does not conflict with the interests of the Company; and | ||
| (iii) | Managing her personal investments, including owning shares of companies whose securities are publicly traded, so long as such securities do not constitute more than five percent (5%) of the outstanding securities of any such company. |
3. Compensation and Benefits . The Company shall pay or provide, as the case may be, to Executive the compensation and other benefits and rights set forth in this Section 3.
(a) Base Salary . As of the Effective Date, the Company shall pay to Executive a base salary (the “ Base Salary ”) of $230,000 per year, payable in accordance with the Company’s usual pay practices (and in any event no less frequently than monthly).
(b) Annual Salary Increase . The Base Salary shall increase at an annual rate of eight percent (8%) of the Base Salary in effect for the year immediately preceding such increase. Executive’s Base Salary shall be subject to review annually by the Board and/or the Compensation Committee and may be greater increased but not decreased.
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(c) Annual Bonus . Executive shall be entitled to participate in any bonus plan that the Board and/or Compensation Committee of the Board or its designee may approve for the senior executives of the Company. Any bonus awarded under this Section 3(c) shall be calculated following the close of the fiscal year to which the bonus relates, and paid in a lump sum by no later than two and one-half (2 ½) months following the end of the fiscal year in which such bonus award is earned, provided that Executive remains employed on the date of payment (and has not given notice of resignation).
(d) Signing Bonus . The Company shall pay to Executive a lump sum signing bonus of $55,000 within thirty (30) days of the Effective Date.
(e) Performance-Based Bonus . In addition to any other compensation that Executive is entitled to under this Agreement, and subject to the conditions set forth in this Section 3(d), the Company shall pay to Executive an annual performance-based bonus (the “ Performance-Based Bonus ”) as follows:
| (i) | If the Company’s total gross, top-line revenue for the fiscal year in which such bonus award is earned has increased by at least twenty percent (20%) from the prior fiscal year, Executive shall receive thirty percent (30%) of the Base Salary for the fiscal year in which such bonus award is earned, plus an option to purchase one percent (1%) of the Company’s total outstanding shares of common stock on the last trading day of the fiscal year in which such bonus award is earned, exercisable immediately upon issuance for a period of five (5) years, at 100% of the closing price of the Company’s common stock on the last trading day of the fiscal year in which such bonus award is earned; or | |
| (ii) | If the Company’s total gross, top-line revenue for the fiscal year in which such bonus award is earned has increased by at least thirty percent (30%) from the prior fiscal year, Executive shall receive fifty percent (50%) of the Base Salary for the fiscal year in which such bonus award is earned, plus an option to purchase one percent (1%) of the Company’s total outstanding shares of common stock on the last trading day of the fiscal year in which such bonus award is earned, exercisable immediately upon issuance for a period of five (5) years, at 100% of the closing price of the Company’s common stock on the last trading day of the fiscal year in which such bonus award is earned. |
Any Performance-Based Bonus awarded under this Section 3(d) shall be calculated following the close of the fiscal year to which the bonus relates, and paid in a lump sum by no later than two and one-half (2 ½) months following the end of the fiscal year in which such bonus award is earned, provided that Executive remains employed on the date of payment (and has not given notice of resignation).
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(f) Equity Awards . On the Effective Date, the Company shall grant to Executive an option to purchase three percent (3%) of the Company’s total outstanding shares of common stock, exercisable at any time, for a period of five (5) years at one hundred percent (100%) of the closing price on the last trading day preceding the Effective Date. Subsequently, on the (i) first (1 st ), (ii) second (2 nd ) and (iii) third (3 rd ) year anniversaries of the Effective Date, the Company shall grant to Executive an option to purchase (i) two percent (2%), (ii) two percent (2%) and (iii) three percent (3%), respectively, of the Company’s then total outstanding shares of common stock exercisable, for a five (5) year period from the date of each grant, at one hundred percent (100%) of the closing price on the last trading day preceding the first (1 st ), second (2 nd) , and third (3 rd ) anniversaries of the Effective Date, respectively. Executive has the right to execute such options on a “net exercise” or similar “cashless” conversion. Executive shall also be entitled to participate in any equity or other employee benefit plan that is generally available to senior executive officers, as distinguished from general management, of the Company. Except as otherwise provided in this Agreement, Executive’s participation in and benefits under any such plan shall be on the terms and subject to the conditions specified in the governing document of the particular plan. Executive shall also receive a stock equity grant of 750,000 shares vesting on the Effective Date.
(g) Benefits . Executive shall be entitled to participate in benefits under the Company’s benefit plans, profit sharing and arrangements, including, without limitation, any employee benefit plan or arrangement made available in the future by the Company to its employees or senior executives, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. The Company shall have the right to amend or delete any such benefit plan or arrangement made available by the Company to its employees or senior executives and not otherwise specifically provided for herein. Notwithstanding the foregoing, during the Employment Term (as hereinafter defined), the Company will provide, at the Company’s expense, health and major medical insurance benefits to the Executive and her family members which are at least equal to the benefits provided to the Executive and her family members immediately prior to the Effective Date.
(h) Expenses . The Company shall promptly reimburse Executive for reasonable out-of-pocket business expenses incurred in connection with the performance of her duties hereunder, subject to (i) such policies as the Company may from time to time establish, (ii) Executive furnishing the Company with evidence in the form of receipts satisfactory to the Company substantiating the claimed expenditures, and (iii) Executive receiving advance approval from the CEO in the case of expenses (or a series of related expenses) in excess of $5,000.
(i) Vacation . Executive shall have the right to four weeks of vacation during each successive one year period of her employment by the Company, which vacation time shall be taken at such time or times in each such one year period so as not to materially and adversely interfere with the performance of his responsibilities under this Agreement. Executive shall not be entitled to carry over any unused vacation time from one year to the next and any accrued but unused vacation time will be waived. In addition, Executive shall be entitled to additional paid time off in accordance with the policies of the Company applicable to senior management personnel from time to time.
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(j) Withholding . The Company shall be entitled to withhold from amounts payable or benefits accorded to Executive under this Agreement all federal, state and local income, employment and other taxes, as and in such amounts as may be required by applicable law.
4. Employment Term . The term of this Agreement (as it may be extended by the following sentence or terminated earlier pursuant to Section 5, the “ Employment Term ”) shall begin on the Effective Date and end on the third (3 rd ) anniversary of the Effective Date. The Employment Term shall be automatically extended for additional one-year periods unless, at least sixty (60) days prior to the end of the expiration of the Employment Term, Executive or the Company notifies the other party in writing (a “ Non-Renewal Notice ”) that it does not wish to extend such Employment Term. Executive’s employment hereunder shall be coterminous with the Employment Term, unless sooner terminated as provided in Section 5.
5. Termination; Severance . Executive shall be entitled to receive benefits upon a Separation from Service only as set forth in this Section 5:
(a) General . Either the Company or Executive may terminate Executive’s employment hereunder, for any reason, at any time prior to the expiration of the Employment Term, upon thirty (30) days prior written notice to the other party. Upon termination of Executive’s employment hereunder for any reason, Executive shall be deemed simultaneously to have resigned from any other position or office she may at the time hold with the Company or any of its affiliates. In addition, upon termination of Executive’s employment hereunder for any reason, including, without limitation, expiration of the Employment Term, the Company shall (i) reimburse Executive for any expenses properly incurred under Section 3(g) and which have not previously been reimbursed as of the effective date of the termination, (ii) pay Executive for any accrued, but unused, vacation time as of the effective date of the termination, and (iii) pay Executive for any other accrued and unpaid compensation under Section 3, including, but not limited to, Base Salary through and including the effective date of termination (the “ Termination Date ”) (collectively, the “ Accrued Compensation ”). The Accrued Compensation will be paid in a lump sum on the Termination Date or on the first business day after the Termination Date, if the Termination Date falls on a weekend or holiday.
(b) Separation from Service by Death or Following Permanent Disability . Subject to Sections 5(e) and 10(p) and Executive’s continued compliance with Section 6, in the event of Executive’s Separation from Service as a result of Executive’s death or discharge by the Company following Executive’s Permanent Disability, Executive or Executive’s estate, as applicable, shall be entitled to receive her base salary through the end of the month in which Executive’s Separation from Service occurs as a result of Executive’s death or Permanent Disability.
(c) Severance upon Involuntary Termination . Subject to Sections 5(e) and 10(p) and Executive’s continued compliance with Section 6, if Executive’s employment is Involuntarily Terminated, Executive shall be entitled to receive, in lieu of any severance benefits to which Executive may otherwise be entitled under any severance plan or program of the Company, the benefits provided below, which, with respect to clause (ii) and the last sentence of clause (iii) (if applicable) will be payable in a lump sum within ten (10) days following the effective date of Executive’s Release (as hereinafter defined):
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| (i) | the Company shall pay to Executive her fully earned but unpaid base salary, when due, through the date of Executive’s Involuntary Termination at the rate then in effect (without regard to any reduction in salary that gave rise to an event of Good Reason), plus all other benefits, if any, under any Company group retirement plan, nonqualified deferred compensation plan, equity award plan or agreement, health benefits plan or other Company group benefit plan to which Executive may be entitled pursuant to the terms of such plans or agreements at the time of Executive’s Involuntary Termination; | ||
| (ii) | Executive shall be entitled to receive severance pay in an amount equal to the base salary payable to Executive under Section 3(a) of this Agreement from the date of Executive’s Involuntary Termination until the one year anniversary of such Involuntary Termination (the “ Severance Period ”); | ||
| (iii) | During the Severance Period (or, if earlier, until the date on which the applicable continuation period under COBRA expires), the Company shall arrange to provide Executive and her eligible dependents who were covered under the Company’s health insurance plans as of the date of Executive’s Involuntary Termination with health (including medical, dental and vision) insurance benefits substantially similar to those provided to Executive and his dependents immediately prior to the date of such Involuntary Termination. If any of the Company’s health benefits are self-funded as of the date of Executive’s Involuntary Termination, or if the Company cannot provide the foregoing benefits in a manner that is exempt from Section 409A (as defined below) or that is otherwise compliant with applicable law (including, without limitation, Section 2716 of the Public Health Service Act), instead of providing continued health insurance benefits as set forth above, the Company shall instead pay to Executive an amount equal to (A) the number of months from the date of Executive’s Involuntary Termination until the end of the Employment Term, as appropriate multiplied by (B) the monthly premium Executive would be required to pay for continuation coverage pursuant to COBRA for Executive and her eligible dependents who were covered under the Company’s health plans as of the date of Executive’s Involuntary Termination (calculated by reference to the premium as of the date of Involuntary Termination); and |
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| (iv) | That portion of the Stock Awards that would have vested over the Severance Period shall be automatically accelerated so as to be immediately vested as of the date of Involuntary Termination and any vested options or similar award (e.g., a stock appreciation right) may be exercised at any time during the Severance Period (subject to earlier termination (A) in connection with a recapitalization or similar transaction pursuant to the Company’s equity incentive plans governing such Stock Awards or (B) the contractual term of the Stock Award), or if longer, through the date such vested options or similar award are exercisable under the terms of the applicable Stock Award. |
(d) Termination for Cause or Voluntary Resignation Without Good Reason . In the event of Executive’s termination of employment as a result of Executive’s discharge by the Company for Cause or Executive’s resignation without Good Reason (other than as a result of Executive’s death or Separation from Service by reason of discharge by the Company following Executive’s Permanent Disability), the Company shall not have any other or further obligations to Executive under this Agreement (including any financial obligations) except that Executive shall be entitled to receive the Accrued Compensation. In addition, in the event of Executive’s Separation from Service as a result of Executive’s discharge by the Company for Cause or Executive’s resignation without Good Reason (other than as a result of Executive’s death or Separation from Service by reason of discharge by the Company following Executive’s Permanent Disability), all vesting of Executive’s unvested Stock Awards previously granted to her by the Company shall cease and none of such unvested Stock Awards shall be exercisable following the 90 th day following the date of such termination. The foregoing shall be in addition to, and not in lieu of, any and all other rights and remedies which may be available to the Company under the circumstances, whether at law or in equity.
(e) Termination in Connection with a Change in Control Event . Subject to Sections 5(f) and 10(p) and Executive’s continued compliance with Section 6, if Executive’s employment is Involuntarily Terminated within twelve (12) months after consummation of a Change in Control transaction or within ninety (90) days prior to the consummation of a Change in Control or if terminated after an agreement has been executed that contemplates the consummation of an Change in Control but before it closes, Executive shall be entitled to receive, in addition to (A) any severance benefits to which Executive may otherwise be entitled under any severance plan or program of the Company and (B) pursuant to Section 5(c) hereof, the vesting and/or exercisability of any outstanding unvested portions of such Stock Awards shall be automatically accelerated so as to be immediately vested and exercisable as of the date of Involuntary Termination and shall remain exercisable through the Severance Period (subject to earlier termination (A) in connection with a recapitalization or similar transaction pursuant to the Company’s equity incentive plans governing such Stock Awards or (B) the contractual term of the Stock Award).
(f) Release . As a condition to Executive’s receipt of any post-termination benefits pursuant to Sections 5(b), (c) or (d) above, Executive (or, in the event of Executive’s incapacity as a result of his Permanent Disability, Executive’s legal representative) shall execute and not revoke a general release of all claims in favor of the Company (the “ Release ”) in a form reasonably acceptable to the Company. In the event the Release does not become effective within the fifty-five (55) day period following the date of Executive’s Separation from Service, Executive shall not be entitled to the aforesaid payments and benefits.
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(g) Exclusive Remedy . Except as otherwise expressly required by law (e.g., COBRA) or as specifically provided herein, all of Executive’s rights to salary, severance, benefits, bonuses and other amounts hereunder (if any) accruing after the termination of Executive’s employment shall cease upon such termination. In the event of Executive’s termination of employment with the Company, Executive’s sole remedy shall be to receive the payments and benefits described in this Section 5. In addition, Executive acknowledges and agrees that she is not entitled to any reimbursement by the Company for any taxes payable by Executive as a result of the payments and benefits received by Executive pursuant to this Section 5, including, without limitation, any excise tax imposed by Section 4999 of the Code.
(h) No Mitigation . Executive shall not be required to mitigate the amount of any payment provided for in this Section 5 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 5 be reduced by any compensation earned by Executive as the result of employment by another employer or self-employment or by retirement benefits; provided , however , that loans, advances or other amounts owed by Executive to the Company may be offset by the Company against amounts payable to Executive under this Section 5.
(i) Return of the Company’s Property . In the event of Executive’s termination of employment for any reason, the Company shall have the right, at its option, to require Executive to vacate her offices prior to or on the effective date of separation and to cease all activities on the Company’s behalf. Upon Executive’s termination of employment in any manner, as a condition to Executive’s receipt of any severance benefits described in this Agreement, Executive shall immediately surrender to the Company all lists, books and records of, or in connection with, the Company’s business, and all other property belonging to the Company, it being distinctly understood that all such lists, books and records, and other documents, are the property of the Company. Executive shall deliver to the Company a signed statement certifying compliance with this Section 5(h) prior to the receipt of any severance benefits described in this Agreement.
6. Certain Covenants .
(a) Confidential Information . Executive recognizes and acknowledges that by reason of Executive’s employment by and service to the Company before, during and, if applicable, after the Employment Term, Executive will have access to certain confidential and proprietary information relating to the Company’s business, which may include, but is not limited to, unique business strategies, theories and concepts, information regarding plans, strategies, opportunities, processes, ideas, research and know-how developed by or for the Company, trade secrets, patents, other intellectual property, clinical studies, regulatory dossiers, manufacturing, marketing, personnel, financial data, technical information, methods, processes, formulae and information which Company has obtained from third parties (collectively referred to as “ Confidential Information ”). Executive acknowledges that such Confidential Information is a valuable and unique asset of the Company and Executive covenants that he will not, unless expressly authorized in writing by the Company, at any time during the course of Executive’s employment use any Confidential Information or divulge or disclose any Confidential Information to any person, firm or corporation except in connection with the performance of Executive’s duties for the Company and in a manner consistent with the Company’s policies regarding Confidential Information. Executive also covenants that at any time after the termination of such employment, directly or indirectly, she will not use any Confidential Information or divulge or disclose any Confidential Information to any person, firm or corporation, unless such information is in the public domain through no fault of Executive or except when required to do so by a court of law, by any governmental agency having supervisory authority over the business of the Company or by any administrative or legislative body (including a committee thereof) with apparent jurisdiction to order Executive to divulge, disclose or make accessible such information. All written Confidential Information (including, without limitation, in any computer or other electronic format) which comes into Executive’s possession during the course of Executive’s employment shall remain the property of the Company. Except as required in the performance of Executive’s duties for the Company, or unless expressly authorized in writing by the Company, Executive shall not remove any written Confidential Information from the Company’s premises, except in connection with the performance of Executive’s duties for the Company and in a manner consistent with the Company’s policies regarding Confidential Information. Upon termination of Executive’s employment, Executive agrees to return immediately to the Company all written Confidential Information (including, without limitation, in any computer or other electronic format) in Executive’s possession. As a condition of Executive’s continued employment with the Company and in order to protect the Company’s interest in such proprietary information, the Company shall be allowed to require Executive’s execution of a confidentiality agreement and/or proprietary information and inventions agreement, as reasonably requested by the Board not inconsistent with the provisions of this paragraph 6(b).
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(b) Solicitation of Employees . During the Restricted Period, Executive shall not, directly or indirectly, solicit or encourage any person to leave the employment of the Company or any of its affiliates, any employee of the Company or any of its affiliates.
(c) Solicitation of Consultants and other Third Parties . During the Restricted Period, Executive shall not, directly or indirectly, hire, solicit or encourage any person to cease work with the Company or any of its affiliates, consultants, distributors, licensees or other third party partners then under contract with the Company or any of its affiliates within one year of the termination of such consultant’s engagement by the Company or any of its affiliates.
(d) Rights and Remedies Upon Breach . If Executive breaches or threatens to commit a breach of any of the provisions of this Section 6 (the “ Restrictive Covenants ”), the Company shall have the following rights and remedies, each of which rights and remedies shall be independent of the other and severally enforceable, and all of which rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity:
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| (i) | Specific Performance . The right and remedy to have the Restrictive Covenants specifically enforced by any court having equity jurisdiction by way of a temporary restraining order, preliminary injunction, permanent injunction, or other equitable remedy, all without the need to post a bond or any other security or to prove any amount of actual damage or that money damages would not provide an adequate remedy, it being acknowledged and agreed that any such breach or threatened breach may cause irreparable injury to the Company and that money damages will not provide adequate remedy to the Company; and | ||
| (ii) | Accounting and Indemnification . The right and remedy to require Executive (A) to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits derived or received by Executive or any associated party deriving such benefits as a result of any such breach of the Restrictive Covenants; |
(e) Definitions . For purposes of this Section 6, the term “ Company ” means not only Solis Tek Inc., but also any company, partnership or entity which, directly or indirectly, controls, is controlled by or is under common control with Solis Tek Inc.
7. Insurance; Indemnification .
(a) Insurance . The Company shall have the right to take out life, health, accident, “key-man” or other insurance covering Executive, in the name of the Company and at the Company’s expense in any amount deemed appropriate by the Company. Executive shall assist the Company in obtaining such insurance, including, without limitation, submitting to any required examinations and providing information and data required by insurance companies.
(b) Indemnification . Executive will be provided with indemnification against third party claims related to her work for the Company to the fullest extent permitted by California law. The Company shall provide Executive with directors and officers liability insurance coverage at least as favorable as that which the Company shall maintain for members of the Board and other executive officers.
8. General Relationship . Executive shall be considered an employee of the Company within the meaning of all federal, state and local laws and regulations including, but not limited to, laws and regulations governing unemployment insurance, workers’ compensation, industrial accident, labor and taxes.
9. Representations and Warranties of Executive . Executive hereby represents and warrants to the Company that (a) the execution, delivery and performance of this Agreement by Executive does not and shall not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Executive is a party or any judgment, order or decree to which Executive is subject, (b) Executive is not a party to or bound by any employment agreement, (c) Executive is not a party to or bound by any consulting agreement, non-compete agreement, confidentiality agreement or similar agreement with any other person or entity that would affect the Company or the obligations of Executive hereunder and (d) upon the execution and delivery of this Agreement by the Company and Executive, this Agreement will be a valid and binding obligation of Executive, enforceable in accordance with its terms.
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10. Miscellaneous .
(a) Modification; Prior Claims . This Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof, supersedes all existing agreements between them concerning such subject matter. This Agreement may be amended or modified only with the written consent of Executive and an authorized representative of the Company. No oral waiver, amendment or modification will be effective under any circumstances whatsoever.
(b) Assignment; Assumption by Successor . The rights of the Company under this Agreement may, without the consent of Executive, be assigned by the Company, in its sole and unfettered discretion, to any person, firm, corporation or other business entity which at any time, (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise, acquires all or substantially all of the assets or business of the Company. The Company will require any successor(s) (whether direct or indirect, by purchase, merger or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and to agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place; provided , however , that no such assumption shall relieve the Company of its obligations hereunder. As used in this Agreement, the “ Company ” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise.
(c) Survival . The covenants, agreements, representations and warranties contained in or made in Sections 3(e), 3(f), 5, 6, 7, 9 and 10 of this Agreement shall survive the termination of Executive’s employment.
(d) Third-Party Beneficiaries . This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person not a party to this Agreement.
(e) Waiver . The failure of either party hereto at any time to enforce performance by the other party of any provision of this Agreement shall in no way affect such party’s rights thereafter to enforce the same, nor shall the waiver by either party of any breach of any provision hereof be deemed to be a waiver by such party of any other breach of the same or any other provision hereof.
(f) Section Headings . The headings of the several sections in this Agreement are inserted solely for the convenience of the parties and are not a part of and are not intended to govern, limit or aid in the construction of any term or provision hereof.
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(g) Notices . Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (i) by personal delivery when delivered personally; (ii) by overnight courier upon written verification of receipt; (iii) by email, telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or (iv) by certified or registered mail, return receipt requested, upon verification of receipt. Notice shall be sent to Executive at the address listed on the Company’s personnel records and to the Company at its principal place of business, or such other address as either party may specify in writing.
(h) Severability . All Sections, clauses and covenants contained in this Agreement are severable, and in the event any of them shall be held to be invalid by any court, this Agreement shall be interpreted as if such invalid Sections, clauses or covenants were not contained herein.
(i) Governing Law . This Agreement shall be governed by, and construed in accordance with and subject to, the laws of the State of California applicable to agreements made and to be performed entirely within such state without regard to its conflicts of law rules.
(j) Jurisdiction and Venue . The Company and Executive hereby irrevocably and unconditionally submit, for themselves and their property, to the exclusive jurisdiction of the California State courts or the United States District Court for the Central District of California, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or for recognition or enforcement of any judgment, and the Company and Executive hereby irrevocably and unconditionally agree that all claims in respect of any such action or proceeding may be heard and determined in any such California State court or, to the extent permitted by law, in the United States District Court for the Central District of California. The Company and Executive irrevocably waive, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. The Company and Executive agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(k) Non-transferability of Interest . None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement shall be assignable or transferable except through a testamentary disposition or by the laws of descent and distribution upon the death of Executive. Any attempted assignment, transfer, conveyance, or other disposition (other than as aforesaid) of any interest in the rights of Executive to receive any form of compensation to be made by the Company pursuant to this Agreement shall be void.
(l) Gender . Where the context so requires, the use of the masculine gender shall include the feminine and/or neuter genders and the singular shall include the plural, and vice versa, and the word “person” shall include any corporation, firm, partnership or other form of association.
(m) Counterparts . The parties may execute this Agreement in multiple counterparts, each of which constitutes an original as against the party that signed it, and both of which together constitute one agreement. The signatures of both parties need not appear on the same counterpart. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
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(n) Construction . The language in all parts of this Agreement shall in all cases be construed simply, according to its fair meaning, and not strictly for or against any of the parties hereto. Without limitation, there shall be no presumption against any party on the ground that such party was responsible for drafting this Agreement or any part thereof.
(o) Withholding and other Deductions . All compensation payable to Executive hereunder shall be subject to such deductions as the Company is from time to time required to make pursuant to law, governmental regulation or order.
(p) Code Section 409A .
| (i) | This Agreement is not intended to provide for any deferral of compensation subject to Section 409A of the Code, and, accordingly, the severance payments payable under Sections 5(c)(ii) and 5(c)(iii) shall be paid no later than the later of: (A) the fifteenth (15th) day of the third month following Executive’s first taxable year in which such severance benefit is no longer subject to a substantial risk of forfeiture, and (B) the fifteenth (15th) day of the third month following first taxable year of the Company in which such severance benefit is no longer subject to substantial risk of forfeiture, as determined in accordance with Code Section 409A and any Treasury Regulations and other guidance issued thereunder. To the extent applicable, this Agreement shall be interpreted in accordance with Code Section 409A and Department of Treasury regulations and other interpretive guidance issued thereunder. | ||
| (ii) | If Executive is a “specified employee” (as defined in Section 409A of the Code), as determined by the Company in accordance with Section 409A of the Code, on the date of Executive’s Separation from Service, to the extent that the payments or benefits under this Agreement are subject to Section 409A of the Code and the delayed payment or distribution of all or any portion of such amounts to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, then such portion deferred pursuant to this Section 9(p)(ii) shall be paid or distributed to Executive in a lump sum on the earlier of (A) the date that is six (6)-months following Executive’s Separation from Service, (B) the date of Executive’s death or (C) the earliest date as is permitted under Section 409A of the Code. Any remaining payments due under the Agreement shall be paid as otherwise provided herein. |
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| (iii) | To the extent applicable, this Agreement shall be interpreted in accordance with the applicable exemptions from Section 409A of the Code. If Executive and the Company determine that any payments or benefits payable under this Agreement intended to comply with Sections 409A(a)(2), (3) and (4) of the Code do not comply with Section 409A of the Code, Executive and the Company agree to amend this Agreement, or take such other actions as Executive and the Company deem reasonably necessary or appropriate, to comply with the requirements of Section 409A of the Code and the Treasury Regulations thereunder (and any applicable transition relief) while preserving the economic agreement of the parties. To the extent that any provision in this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner that no payments payable under this Agreement shall be subject to an “additional tax” as defined in Section 409A(a)(1)(B) of the Code. | ||
| (iv) | Any reimbursement of expenses or in-kind benefits payable under this Agreement shall be made in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv) and shall be paid on or before the last day of Executive’s taxable year following the taxable year in which Executive incurred the expenses. The amount of expenses reimbursed or in-kind benefits payable in one year shall not affect the amount eligible for reimbursement or in-kind benefits payable in any other taxable year of Executive’s, and Executive’s right to reimbursement for such amounts shall not be subject to liquidation or exchange for any other benefit. | ||
| (v) | In the event that the amounts payable under Sections 5(c)(ii) and 5(c)(iii) are subject to Section 409A of the Code and the timing of the delivery of Executive’s Release could cause such amounts to be paid in one or another taxable year, then notwithstanding the payment timing set forth in such sections, such amounts shall not be payable until the later of (A) the payment date specified in such Section or (B) the first business day of the taxable year following Executive’s Separation from Service. |
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IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first written above.
| EXECUTIVE: | SOLIS TEK INC. | ||
| /s/ TIFFANY DAVIS | /s/ ALAN LIEN | ||
| Tiffany Davis | Name: | Alan Lien | |
| Title: | Chief Executive Officer | ||
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Exhibit 17.01
ALVIN HAO
c/o Solis Tek Inc.
853 Sandhill Avenue
Carson, California 90746
August 22, 2018
Solis Tek Inc.
853 Sandhill Avenue
Carson, California 90746
Attn: Alan Lien
| Re: | Resignation |
Dear Alan,
Effective immediately, I hereby resign as a member of the Board of Directors of Solis Tek Inc. (“Solis Tek”). I shall continue to serve Solis Tek in my position as Executive Vice President.
| Sincerely, | |
| /s/ ALVIN HAO | |
| Alvin Hao |
Exhibit 99.01
Solis Tek Appoints Peter Najarian and Tiffany Davis to its Board of Directors
Adds Capital Markets Expertise and Entrepreneurial Spirit
CARSON, CA - (GlobeNewswire - August 23, 2018) - Solis Tek Inc. (OTCQB: SLTK) (“Solis Tek”), a vertically integrated cannabis technology innovator, manufacturer and distributor, is pleased to announce the additions of Peter Najarian and Tiffany Davis to its Board of Directors.
Mr. Najarian, a recognizable contributor on the CNBC mid-day show “Halftime Report” as well as CNBC’s post-market show “Fast Money” https://www.cnbc.com/fast-money/ .
Ms. Davis is currently the Chief Operating Officer of Solis Tek and has nearly 20 years of experience as a financial restructuring professional working in both management consulting and private equity.
Peter Najarian stated, “I am excited to join the Solis Tek team as they continue to successfully grow and broaden their scope in the cannabis sector. With my experience in capital markets, I am positioned to provide knowledge that will help Solis Tek achieve its mission to bring safe, consistent and quality products to patients and legal consumers. I am confident that the management team will execute its business plan and create a variety of opportunities in the legalized cannabis industry.”
Alan Lien, Chief Executive Officer of Solis Tek, commented, “I am pleased to welcome Pete and Tiffany to our Board of Directors. Pete comes to us with an entrepreneurial and capital markets background, which will enable Pete to provide guidance and direction as we continue to diversify our portfolio. Tiffany is a veteran in operations, having worked with many companies in multiple sectors, including the cannabis industry. She will continue to stabilize our operations as we expect increased growth in the next few years. As the industry transforms, so must Solis Tek, and my co-founder Alvin Hao has resigned from the Board to focus his attention on research and development and product innovation. This is key to our long-term growth and continued success. I continue to rely on Alvin’s expertise and look forward to our ongoing partnership.”
Peter Najarian is a founding member of Investitute.com , a financial education and newsletter services company established in 2016. Pete is a founding member of Rebellion Partners, LLC, a private banking company, established in 2016. He is also a founding member of One Chicago, an electronic exchange in futures on individual stocks, narrow-based indexes, and ETFs. He is also the Co-Founder of Hedgehog, a stock, options, and futures trading platform and he co-developed the Heat Seeker™ and complementary programs identifying unusual buying activity in stocks, options, and futures. Following a football career that included several seasons with the NFL’s Tampa Bay Buccaneers and Minnesota Vikings, he began options trading in 1992 at Mercury Trading, a market-making firm at the Chicago Board Options Exchange (CBOE). Two years later, he assumed responsibility for Mercury’s risk and arbitrage departments. In 2005, Najarian co-founded, optionMONSTER, an options news and education firm, and tradeMONSTER, an online brokerage firm. Both were acquired in 2014 by private equity. Mr. Najarian graduated with a BA from the University of Minnesota.
Tiffany Davis has nearly 20 years of experience as a financial restructuring professional working in both management consulting and private equity. She has extensive experience in supply chain functionality, financial and operational due diligence, cash flow forecasting, financial statement analysis, development and value retention across multiple industries, including most recently in the cannabis sector. Previous to joining Solis Tek, Ms. Davis worked as a management consultant for a U.S. based cannabis consulting group supporting legal grows, assisting in license applications, developing programs for cultivators, and business structuring for medical dispensaries. Among her previous experience, Ms. Davis served as a Manager of Corporate Advisory for Grant Thornton, a worldwide accounting firms, overseeing accounting and supply chain advisory services during the automotive crisis in the U.S. Ms. Davis received her B.S. from DePaul University and an MBA from University of Chicago Graduate School of Business.
About Solis Tek Inc.
Solis Tek Inc. (OTCQB: SLTK) is a vertically integrated technology innovator, developer, manufacturer and distributor focused on bringing products and solutions to commercial cannabis growers in both the medical and recreational space in legal markets across the U.S. For nearly a decade, growers have used Solis Tek’s lighting solutions to increase yield, lower costs and grow better to maximize their return on investment. Solis Tek’s customers include retail stores, distributors, ecommerce, and commercial growers. In 2018, Solis Tek expanded into the “touch-the-plant” side of the cannabis business under a contract with an Arizona licensee and its ongoing build-out of a cultivation and processing facility in Phoenix, AZ. For more information, please visit our website, www.solis-tek.com.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on the current plans and expectations of management and are subject to a number of uncertainties and risks that could significantly affect Solis Tek’s current plans and expectations, as well as future results of operations and financial condition. Solis Tek undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.
Investors Contact:
Hayden IR
917-658-7878
hart@haydenir.com