United Health Products, Inc 8-K, filed Jan 11, 2021
United Health Products, Inc. (UEEC)
About this 8-K
United Health Products, Inc filed this 8-K on January 11, 2021, reporting on events of January 6, 2021.
Items reported
- Item 3.02: Unregistered sale of equity
- Item 5.01: Change in control
- Item 5.02: Director or officer change, or executive pay
- Item 9.01: Financial statements and exhibits
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: January 11, 2021
(Date of earliest event reported: January 6, 2021)
| UNITED HEALTH PRODUCTS, INC. |
| (Exact name of registrant as specified in its charter) |
| Nevada |
| 000-27781 |
| 84-1517723 |
| (State or other jurisdiction of incorporation) |
| (Commission File Number) |
| (I.R.S. Employer Identification No.) |
10624 S. Eastern Ave., Ste. A209
Henderson, NV 89052
(Address of principal executive offices, zip code)
(877) 358-3444
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):
☐ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 23.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 24.14a-12)
☐ Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 24. 13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in 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 3.02. Unregistered Sale of Equity Securities
On January 6, 2021, a committee of the Board of Directors approved the second amendment to the Restricted Stock Unit Agreement between the Company and its former Chief Executive Officer and current Chairman of the Board, Douglas Beplate in conjunction with Mr. Beplate’s retirement from his day-to-day management role with the Company. The amendment accelerated the vesting and immediately settled his remaining Restricted Stock Units (“RSUs”) in a total of 28.3 million restricted shares. Further, as a bonus in recognition of Mr. Beplate’s eight years of service to the Company and its shareholders, including his leadership in the successful recruitment of new executive management to drive shareholder value going forward, the Company has agreed to issue to Mr. Beplate an additional 2 million restricted shares of common stock. As a result of the foregoing stock issuance, Mr. Beplate presently owns 35.8 million shares of the Company’s common stock, representing approximately 16.3% of the outstanding shares.
The above contains a brief description of the terms of the amendment to Mr. Beplate’s RSU Agreement and is qualified in its entirety by reference to the full text of that amendment, a copy of which is attached to this Current Report as Exhibit 10.1.
On January 6, 2021, the Company issued to various officers/director and other persons providing services to the Company, a total of 3.3 million shares of common stock, in settlement of the scheduled vesting of RSU’s that were originally issued in March 2019. Of the 3.3 million shares of common stock, 2 million shares were issued to Louis Schiliro, Chief Operating Officer/director, and 100,000 shares were issued to Kristofer Heaton, our Principal Financial Officer. (See Item 5.02 for further discussion about Mr. Heaton’s vested RSUs.)
All these shares were issued in private transactions, exempt from registration under Section 4(a)(2) of the Securities Act of 1933.
Item 5.01 Changes in Control of Registrant
On January 6, 2021, an aggregate of 30.73 million shares of common stock were issued to Douglas Beplate bringing his total ownership in the Company to 35.8 million shares, representing approximately 16.3% of the outstanding shares. For additional information regarding this transaction, see Item 3.02 above.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers, Compensatory arrangements of Certain Officers
In December 2020, the Company entered into an “at will” professional services agreement with Kristofer Heaton, whereby Mr. Heaton agreed to serve as Vice President of Finance and act as principal financial officer of the Company. Mr. Heaton shall receive a monthly fee of $7,500 until May 1, 2021 at which time the fee shall increase to $12,500 a month. On December 31, 2020, in connection with entering into the professional services agreement, Mr. Heaton was awarded RSUs for up to 1000,000 shares; 500,000 of which were granted on the award date and 500,000 of which will be granted on May 15, 2021 provided his professional services agreement is in effect on that date. The RSUs, subject to certain conditions, shall vest upon the achievement of certain Company objectives and milestones. Prior to Mr. Heaton becoming an officer of the Company, Mr. Heaton was granted RSU’s, for up to 500,000 shares, including 15%, of which vested in July 2020, 20% of which vested in January 2021, 15% of which vest upon receipt of FDA approval, and the balance of which vest upon obtaining certain Company objectives and milestones.
The above is a brief description of the terms of Mr. Heaton’s professional services agreement and RSU agreements and is qualified in its entirety by reference to the full text of those agreements, copies of which are attached to this Current Report as Exhibits 10.2 and 10.3.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibit.
The following exhibit is filed with this Form 8-K.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
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| United Health Products, Inc. |
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| Dated: January 11, 2021 | By: | /s/ Brian Thom |
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| Brian Thom, Chief Executive Officer |
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EXHIBIT 10.1
SECOND AMENDMENT TO MARCH 25, 2019 RSU AGREEMENT
This AMENDMENT TO RESTRICTED STOCK UNIT AGREEMENT (this “Amendment”) is dated as of January 6, 2021, by and between United Health Products, Inc. (“United Health” or the “Company”) and Douglas Beplate (“Grantee”). United Health and Douglas Beplate are each sometimes referred to herein individually as a “Party” and together as the “Parties.”
W I T N E S S E T H
WHEREAS, Company and Grantee entered a Restricted Stock Unit Agreement, dated March 25, 2019 (the “RSU Agreement”).
WHEREAS, Grantee has retired from his role as Chief Executive Officer of the Company effective December 1, 2020 and relinquished his day-to-day leadership responsibilities while retaining the position of Chairman of the Board of Directors.
WHEREAS, Grantee has devoted considerable time and effort to successfully recruit certain qualified individuals to assume his executive management role and ensure a seamless transition to new leadership of the Company.
WHEREAS, Company and Grantee now wish to amend the RSU Agreement in accordance with the terms of this Amendment and as more particularly described in this Amendment.
NOW THEREFORE, in consideration of the mutual promises herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto hereby agree as follows:
1. Amend the first sentence of Section 3.1 Vesting to the following language:
Except as otherwise provided herein, provided that the Grantee remains in Continuous Service through the Vesting Date (as defined below), 15% of RSUs shall vest on July 15, 2020 and, subject to Grantee indemnifying the Company with respect to all relevant tax matters, the balance of all unvested RSUs shall vest on January 6, 2021 (each, a “Vesting Date”).
| 2. | Miscellaneous. Except to the extent expressly set forth in this Amendment, the RSU Agreement has not been amended. This Amendment contains the entire agreement among the Parties with respect to the matters that are herein described. There are no agreements, conditions, undertakings, warranties or representations, oral or written, express or implied, among them, regarding the matters described in this Amendment other than as set forth in this Amendment. This Agreement supersedes any discussions, verbal or written agreements and understanding relating the matters addressed herein. This Amendment is intended by the Parties hereto to be an integration of all prior or contemporaneous promises, agreements, conditions, negotiations and undertakings between the Parties with respect to the matters described in this Amendment. This Amendment may not be modified orally or in any manner other than by an agreement in writing signed by Company and Grantee. This Amendment may be signed in counterparts by the Parties and all of such counterparts, when taken together, shall be deemed to be a fully executed original of this Amendment. The transmission of a signed counterpart of this Amendment by facsimile or by portable document format (.pdf) shall have the same force and effect as delivery of an original signed counterpart of this Amendment and shall constitute valid and effective delivery for all purposes of this Amendment. This Amendment shall be governed by and in accordance with the laws of the State of New York. This Amendment shall be binding upon, and shall inure to the benefit of, the Parties and their respective successors and permitted assigns. This Amendment shall be deemed to be effective as of the date set forth above notwithstanding the fact that this Amendment may be executed and/or delivered by either or both of the Parties on a later or different date. |
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Intending to be legally bound hereby, the parties executed the foregoing Amendment as of the date set forth above.
| Douglas Beplate |
| United Health Products, Inc. | |||
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| By: |
| By: |
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| Name: | Douglas Beplate |
| Name: | Brian Thom |
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| Title: | Chairman of the Board |
| Title: | Chief Executive Officer |
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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this “Agreement”) dated as of December [ ], 2020, by and between UNITED HEALTH PRODUCTS, INC., a Nevada corporation (“Company”) and KRISTOFER HEATON (“Employee”).
W I T N E S S E T H:
WHEREAS, Company desires to engage the services of Employee and Employee desires to provide the services to Company in connection with Company’s business; and
WHEREAS, both parties desire to clarify and specify the rights and obligations which each have with respect to the other in connection with Employee’s services.
NOW, THEREFORE, in consideration of the agreements and covenants herein set forth, the parties hereby agree as follows:
1. Employment
Employee hereby agrees to be employed by Company as Vice President, Finance of the Company, and Employee hereby agrees to render his services in such capacities for the Term (as hereinafter defined), all subject to and on the terms and conditions herein set forth.
2. Duties and Responsibilities of Employee
(a) In his capacity as Vice President, Finance and recognizing that he shall serve as the principal financial officer of Company for SEC reporting purposes, subject to the other provisions of this Section 2. Employee may work from his home office so long as Employee is able to perform the duties associated with his position in accordance with the Company’s By-Laws.
(b) During the term of this Agreement, Employee will exercise such authority, perform such executive duties and functions and discharge such responsibilities as he deems appropriate as are customarily vested in an officer of a public company with said title. Such duties and responsibilities shall include the following:
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| 1. | Compile, review and coordinate with external auditors all quarterly and annual financial information for management activity and SEC disclosure; |
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| 2. | Prepare quarterly budget and liquidity forecasts to evaluate cash needs and funding of capital expenditures; |
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| 3. | Participate in discussions with potential banking service providers as operations grow and more complex payment systems, foreign exchange, cash management and other treasury functions become necessary; |
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| 4. | Lead the identification and evaluation of potential ERP systems that will serve Company going forward, reporting to the executive management on findings and recommendations; |
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| 5. | Upon the selection of a new ERP system, lead the implementation and optimization of such system to address Company’s operational and financial reporting needs; |
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| 6. | Support the evaluation of certain capital market initiatives such and reverse stock split benefits, dividend and stock buyback policies, and other options to boost the stock price and attract new investors; |
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| 7. | Evaluate the financial implications of potential commercial arrangements to grow revenues in various markets and geographic regions as resources and product development warrant; |
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| 8. | Supervise and evaluate future employees within Company’s finance department; and, |
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| 9. | Participate in identifying, evaluating and retain external providers of finance related activities. |
3. Exclusivity of Service
Company agrees that Employee shall be required to devote the necessary business time, effort and attention to the business and efforts of Company and its subsidiaries as Company deems necessary for the performance of his duties. Employee may pursue other outside business interests that are not related to Company’s business, as long as it does not interfere with Employee’s responsibilities to Company.
4. Compensation; Benefits; Bonus; Equity Incentive Participation
(a) In consideration for Employee’s services to be performed under this Agreement and as compensation therefor, Company shall pay to Employee, commencing as of the date set forth in Section 7 below, a base salary at the rate of Seven Thousand Five Hundred Dollars ($7,500) per month (the “Employee Base Salary”) which Employee Base Salary shall be increased to Twelve Thousand Five Hundred Dollars ($12,500) per month beginning on May 1, 2021 and which may be further increased at the sole discretion of the board of directors of Company (the “Board”). Employee’s Base Salary shall be on a monthly basis in arrears provided that, until the third month following Company’s receipt of an FDA Class III PMA for its gauze HemoStyp product, in lieu of the above monthly cash compensation Company may elect to pay the Employee Base Salary in the form of a convertible promissory note due March 31, 2021 and convertible at any time by Employee into shares of Company common stock at a conversion price of $0.50 per share.
(b) Upon the execution of this Agreement, Employee shall receive 500,000 restricted stock units (the “RSUs”). Provided this Agreement remains in effect through May 1, 2021, Employee shall receive an additional 500,000 RSUs on such date. Each RSU shall represent one share of Company’s Common Stock. Each RSU shall have no tangible value unless and until vested under the conditions set forth below. Upon vesting, Company shall issue one share of its common stock for each RSU and such shares shall be deemed validly issued, fully paid and non-assessable in exchange for services rendered. Company may withhold a portion of the common stock to satisfy certain tax liabilities of Employee, at Employee’s election and consistent with applicable tax laws then in effect. All RSUs granted to Employee shall vest as set forth in a separate RSU Agreement between Company and Employee.
(c) In addition to the Employee Base Salary, Employee shall be entitled to receive an annual or other bonus at the sole discretion of the Board.
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(d) Employee shall be entitled to reimbursement of all out-of-pocket expenses incurred on behalf of Company.
(e) In the event Company implements an employee benefits program which includes, among other benefits, participation in a Company sponsored health insurance program or retirement savings plan, Employee shall be permitted to participate in such programs.
5. Indemnification
Employee shall be entitled to the following during and in respect of the term of this Agreement:
Company shall provide to Employee to the full extent provided for under the laws of Company’s state of incorporation and Company’s Certificate of Incorporation and Bylaws, indemnification for any claim or lawsuit which may be asserted against Employee when acting in such capacity for Company and/or any subsidiary or affiliated business. Company shall use reasonable best efforts to include Employee as an insured under all applicable directors’ and officers’ liability insurance policies maintained by Company, and any other subsidiary or affiliated business.
6. Additional Compensation
In the event Company seeks to terminate this Agreement in connection with a change in control, merger and/or strategic acquisition, the Board of Directors of Company may determine in its sole discretion to provide termination pay in the form of cash, stock and/or other securities.
7. Term of Employment
Employee’s employment with Company shall commence on December 15, 2020 and be considered “at will,” except for the notice provisions provided in the next sentence. Employee and the Company agree to provide 30 days prior written notice to the other party prior to the termination of Employee’s employment with Company. In the event of termination by Company without Cause or by Employee for Good Reason, any unvested RSUs held by Employee shall vest at the end of the 30-day notice period. “Cause” shall generally include willful and continued failure by Employee to substantially perform his assigned duties or willfully engaging in illegal conduct injurious to Company, and “Good Reason” shall generally include any change in Employee’s position or responsibilities that does not represent a promotion, a decrease in compensation, or a base office relocation.
8. Non-Competition; Non-Solicitation
(a) Employee hereby agrees and covenants that during the Term hereof that he will not directly or indirectly engage in or become interested (whether as an owner, principal, agent, stockholder, member, partner, trustee, venturer, lender or other investor, director, officer, employee, consultant or through the agency of any corporation, limited liability company, partnership, association or agent or otherwise) in any business enterprise which is engaged in the then current business of Company; provided, however, that ownership of not more than 15% of the outstanding securities of any class of any entity that are listed on a national securities exchange or traded in the over-the-counter market shall not be considered a breach of this Section 8.
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(b) Employee agrees and covenants that during the Term hereof he and his agents will not (without first obtaining the written permission of Company) directly or indirectly participate in the solicitation of any business of any type conducted by Company during the period of this Agreement from any person or entity which was a client or customer of Company during the period of this Agreement, or was a prospective customer of Company from which Employee solicited business or for which a proposal for submission was prepared during the period.
(c) Employee agrees and covenants that during the Term of this Agreement he will not (without first obtaining the written permission of Company) directly or indirectly recruit for employment, or induce or seek to cause such person to terminate his or her employment with Company, any person who then is an employee of Company or who was an employee of Company during the preceding six (6) months.
9. Violation of Other Agreements and Authority
Employee represents and warrants to Company that he is legally able to enter into this Agreement; that he is not prohibited by the terms of any agreement, understanding or policy from entering into this Agreement; that the terms hereof will not and do not violate or contravene the terms of any agreement, understanding or policy to which Employee is or may be a party, or by which Employee may be bound; that Employee is under no physical or mental disability that would materially interfere with the performance of his duties under this Agreement. Employee agrees that, as it is a material inducement to Company that Employee make the foregoing representations and warranties and that they be true in all material respects.
10. Company Authority Relative to this Agreement
Company has the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated by this Agreement. The Board of Directors of the Company has duly authorized the execution and delivery of this Agreement by Company and the consummation by Company of the transactions contemplated on its part by this Agreement, and no other corporate proceedings on the part of Company are necessary to authorize this Agreement or for Company to consummate the transactions contemplated by it. Company has duly validly executed and delivered this Agreement and it is a valid and binding Agreement of Company, enforceable against Company in accordance with its terms, subject to bankruptcy or insolvency laws affecting creditors’ rights generally and to general principles of equity.
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11. Notices
Any and all notices, demands or requests required or permitted to be given under this Agreement shall be given in writing and sent by email to the email address set forth at the foot of this Agreement. In the case of Employee sending an email to Company, Employee shall provide a formal notice to the Chief Executive Officer of Company.
12. Waivers
No waiver by any party of any default with respect to any provision, condition or requirement hereof shall be deemed to be a waiver of any other provision, condition or requirement hereof; nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.
13. Preservation of Intent
Should any provision of this Agreement be determined by a court having jurisdiction in the premises to be illegal or in conflict with any laws of any state or jurisdiction or otherwise unenforceable, Company and Employee agree that such provision shall be modified to the extent legally possible so that the intent of this Agreement may be legally carried out.
14. Entire Agreement
This Agreement sets forth the entire and only agreement or understanding between the parties relating to the subject matter hereof and supersedes and cancels all previous agreements, negotiations, letters of intent, correspondence, commitments and representations in respect thereof among them, and no party shall be bound by any conditions, definitions, warranties or representations with respect to the subject matter of this Agreement except as provided in this Agreement.
15. Inurement; Assignment
The rights and obligations of Company under this Agreement shall inure to the benefit of and shall be binding upon any successor of Company or to the business of Company, subject to the provisions hereof. Neither this Agreement nor any rights or obligations of Employee hereunder shall be transferable or assignable by Employee.
16. Amendment
This Agreement may not be amended in any respect except by an instrument in writing signed by the parties hereto.
17. Headings
The headings in this Agreement are solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement.
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18. Counterparts
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which when taken together shall constitute one and the same instrument.
19. Governing Law
This Agreement shall be governed by, construed and enforced in accordance with the internal laws of the State of Nevada, without giving reference to principles of conflict of laws. Any lawsuit commenced under the terms of this Agreement shall be commenced in a federal and/or state court located in Las Vegas, Nevada.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
| UNITED HEALTH PRODUCTS, INC. | |||
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| Brian Thom, Chief Executive Officer | |
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| b.thom @unitedhealthproductsinc.com | |||
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| EMPLOYEE |
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| Kristofer Heaton |
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| kris@heatoncpas.com |
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EXHIBIT 10.3
Second Restricted Stock Unit Agreement
This Second Restricted Stock Unit Agreement (this "Agreement") is made and entered into as of December 31, 2020 (the “Initial Grant Date”) by and between UNITED HEALTH PRODUCTS INC., a Nevada corporation (the "Company") and KRISTOFER HEATON (the "Grantee").
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that it is in the best interests of the Company and its shareholders to grant awards of Restricted Stock Units to the Grantee as provided for herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:
1. Grant of Restricted Stock Units.
1.1 The Company hereby issues to the Grantee on the Initial Grant Date an Award consisting of 500,000 Restricted Stock Units and, provided this Agreement remains in effect on May 15, 2021, an Award consisting of an additional 500,000 Restricted Stock Units (together, the "Restricted Stock Units"). Each Restricted Stock Unit represents the right to receive one share of common stock, $0.001 par value per share, of the Company (the “Common Stock”) subject to the terms and conditions set forth in this Agreement. The Restricted Stock Units described in this Agreement are separate from, and in addition to those restricted stock units granted under the RSU Agreement dated March 25, 2019, as amended.
1.2 The Restricted Stock Units shall be credited to a separate account maintained for the Grantee on the books and records of the Company (the "Account"). All amounts credited to the Account shall continue for all purposes to be part of the general assets of the Company.
2. Consideration. The grants of the Restricted Stock Units are made in consideration of the services rendered and to be rendered by the Grantee to the Company.
3. Vesting.
3.1 Except as otherwise provided herein, provided that the Grantee remains in Continuous Service through each associated Vesting Date (as defined below), 20% of the Restricted Stock Units will vest on the date that the SEC declares the Company’s registration statement effective, an additional 20% will vest on the date that the shares of the Company’s common stock begin trading on the Nasdaq Capital Markets or similar exchange, and any remaining Restricted Stock Units will vest upon the earliest date that (a) the Company achieves $30 million in gross cumulative sales commencing as of January 1, 2021, (b) a Covered Transaction (as defined below) is consummated or (c) a Trigger Event (as defined below) occurs (each of the above events, a “Vesting Date”). The period during which any Restricted Stock Units are unvested is referred to as the "Restricted Period". The Grantee has the option to delay any Vesting Date of all or part of his Restricted Stock Units that would otherwise vest on such date until no later than the occurrence of an event described in (b) or (c) above, by serving written notice to the Company prior to such Vesting Date. The term “Covered Transaction” means any one of the following events which is approved by the Board and the shareholders of the Company: (i) the closing of the sale or transfer of all, or substantially all, of the Company’s consolidated assets to an unaffiliated third party in one or a series of related transactions; or (ii) the consummation of any merger, consolidation, combination or statutory share exchange or similar form of corporate transaction to which the Company is a party, other than a merger, consolidation, combination or similar transaction in which (A) the Company is the surviving or continuing entity and the shareholders of the Company immediately prior to the closing of such transaction continue to own a majority of the voting capital stock of the Company immediately following the closing of such transaction, or (B) the Company is not the surviving or continuing entity but shareholders owning a majority of the voting capital stock of the Company immediately prior to the closing own a majority-in-interest of the voting capital stock of the surviving or continuing entity immediately following the closing. The term “Triggering Event” means the earliest date of any of the following undertaken by any person acting alone, or Acting in Concert (as defined below) with any other person(s), unless approved or consented to in advance in writing by the Board: (x) the commencement of, or the first public disclosure of an intent to commence (including, without limitation, any “solicitation” of “proxies” as such terms are defined or used in Regulation 14A of the Securities Exchange Act of 1934, as amended, or communication with the press or media), (I) a tender or exchange offer for outstanding shares of Common Stock of the Company, (II) a process to solicit, seek, or offer to effect any business combination, merger, acquisition of assets, restructuring, recapitalization, liquidation, or similar transaction involving the Company, or (III) a process to seek representation on the Board or otherwise seek to control or influence the management, the Board, or polices of the Company, or (y) the acquisition of shares of Common Stock of the Company resulting in the acquiror becoming the owner of more than 12.5% of the Company’s outstanding Common Stock, except for an acquirer who is a person named under Item 12 (Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters) in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 or such person’s affiliates. A person shall be deemed “Acting in Concert” with another person if such person knowingly acts (whether or not pursuant to an express agreement, arrangement or understanding) in concert with such other person in, or towards a common goal relating to, changing or influencing the control of the Company or in connection with or as a participant in any transaction having that purpose or effect, in parallel with such other person where at least one additional factor supports a determination by the Board of Directors that such person intended to act in concert or in parallel with the other person, which such additional factors may include, without limitation, exchanging information, attending meetings, conducting discussions, or making or soliciting invitations to act in concert or in parallel. A person who or which is Acting in Concert with another person shall.
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Once vested, the Restricted Stock Units become "Vested Units."
3.2 The foregoing vesting schedule notwithstanding, if the Grantee's Continuous Service terminates for any reason at any time before all of his Restricted Stock Units have vested, the Grantee's unvested Restricted Stock Units shall be automatically forfeited upon such termination of Continuous Service and neither the Company nor any Affiliate shall have any further obligations to the Grantee under this Agreement, except that, if the Grantee's Continuous Service terminates as a result of the Grantee's death, disability, a termination by the Company without Cause or the Grantee’s resignation for Good Reason, 100% of the unvested Restricted Stock Units shall vest as of the date of such termination or resignation. For the purposes hereof, “Cause” shall general include willful and continued failure by the Grantee to substantially perform his assigned duties or willfully engaging in illegal conduct injurious to the Company, and “Good Reason” shall generally include any change in the Grantee’s position or responsibilities that does not represent a promotion, a decrease in compensation, or a base office relocation. “Good Reason” shall also include the failure to be appointed to the position of Chief Executive Officer within three months of the date hereof. The term "Continuous Service" means that the Grantee's service with the Company, whether as a contractor, consultant, employee or director, is not interrupted or terminated. The Grantee's Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Grantee renders service to the Company as contractor, consultant, employee or director, or a change in the entity for which the Grantee renders such service from the Company directly to a subsidiary of the Company or vice-versa, provided that there is no interruption or termination of the Grantee's Continuous Service; and provided further that if any Grant is subject to Section 409A of the Internal Revenue Code of 1986, as it may be amended from time to time, and any regulations promulgated thereunder (the “Code”), this sentence shall only be given effect to the extent consistent with Section 409A of the Code. The Board, or a committee appointed by the Board, in its sole discretion and acting in good faith, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal or family leave of absence. The Board, or a committee appointed by the Board, in its sole discretion and acting in good faith, may determine whether a Company transaction, such as a sale or spin-off of a division or subsidiary that engages or employs a Grantee, shall be deemed to result in a termination of Continuous Service for purposes of affected the Grant, and such decision shall be final, conclusive and binding.
4. Restrictions. Subject to any exceptions set forth in this Agreement, during the Restricted Period and until such time as the Restricted Stock Units are settled in accordance with Section 6, the Restricted Stock Units or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Grantee. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Restricted Stock Units or the rights relating thereto shall be wholly ineffective and, if any such attempt is made, the Restricted Stock Units will be forfeited by the Grantee and all of the Grantee's rights to such units shall immediately terminate without any payment or consideration by the Company.
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5. Rights as Shareholder; Dividend Equivalents.
5.1 The Grantee shall not have any rights of a shareholder with respect to the shares of Common Stock underlying the Restricted Stock Units unless and until the Restricted Stock Units vest and are settled by the issuance of such shares of Common Stock.
5.2 Upon and following the settlement of the Restricted Stock Units, the Grantee shall be the record owner of the shares of Common Stock underlying the Restricted Stock Units unless and until such shares are sold or otherwise disposed of, and as record owner shall be entitled to all rights of a shareholder of the Company (including voting rights).
5.3 If, prior to the settlement date, the Company declares a cash or stock dividend on the shares of Common Stock, then, on the payment date of the dividend, the Grantee's Account shall be credited with dividends in an amount and of the type equal to the dividends that would have been paid to the Grantee if one share of Common Stock had been issued on the Initial Grant Date for each Restricted Stock Unit granted to the Grantee as set forth in this Agreement (the “Dividend Equivalents”).
5.1 The Dividend Equivalents credited to the Grantee's Account will be deemed to be reinvested in additional Restricted Stock Units (rounded to the nearest whole share) at a per share rate equal to the Fair Market Value of one share of Common Stock at the time such Dividend Equivalents are credited to the Grantee's Account, and will be subject to the same terms and conditions as the Restricted Stock Units to which they are attributable and shall vest or be forfeited (if applicable) at the same time as the Restricted Stock Units to which they are attributable. Such additional Restricted Stock Units shall also be credited with additional Restricted Stock Units as any further dividends are declared. "Fair Market Value" means, as of any date, the value of the Common Stock as determined below. If the Common Stock is listed on any established stock exchange, a national market system, or over-the-counter market, the Fair Market Value shall be the closing price or reported price of a share of Common Stock (or if no sales were reported the closing price or reported price on the date immediately preceding such date) as quoted on such exchange, system or market, on the day of determination. In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Board or a committee appointed by the Board and such determination shall be conclusive and binding on all persons.
6. Settlement of Restricted Stock Units.
6.1 Subject to Section 9 hereof, promptly following the vesting date, and, if requested by the Grantee, at a later time but in no event later than March 15 of the calendar year following the calendar year in which such vesting occurs, the Company shall (a) issue and deliver to the Grantee the number of shares of Common Stock equal to the number of Vested Units; and (b) enter the Grantee's name on the books of the Company as the shareholder of record with respect to the shares of Common Stock delivered to the Grantee.
6.2 If the Grantee is deemed a "specified employee" within the meaning of Section 409A of the Code, as determined by the Board or a committee appointed by the Board, at a time when the Grantee becomes eligible for settlement of the RSUs upon his "separation from service" within the meaning of Section 409A of the Code, then to the extent necessary to prevent any accelerated or additional tax under Section 409A of the Code, such settlement will be delayed until the earlier of: (a) the date that is six months following the Grantee's separation from service and (b) the Grantee's death.
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7. No Right to Continued Service. Neither the Plan nor this Agreement shall confer upon the Grantee any right to be retained in any position, as an employee, consultant or director of the Company. Further, nothing in the Plan or this Agreement shall be construed to limit the discretion of the Company to terminate the Grantee's Continuous Service at any time, with or without Cause.
8. Adjustments Upon Changes in Stock. In the event of changes in the outstanding Common Stock or in the capital structure of the Company by reason of any stock or extraordinary cash dividend, stock split, reverse stock split, an extraordinary corporate transaction such as any recapitalization, reorganization, merger, consolidation, combination, exchange, or other relevant change in capitalization (each an “Extraordinary Corporate Transaction”) occurring after the Initial Grant Date, the Grant granted under this Agreement will be equitably adjusted or substituted, as to the number of shares of Common Stock or number or type of security to the extent necessary to preserve the economic intent of the Grant provided for in this Agreement. If permitted by applicable law, such adjustment may include a substitution of a security of another entity into which one share of Common Stock is exchanged or converted in any Extraordinary Corporate Transaction, if so determined by the Board or a committee appointed by the Board. The Company shall give the Grantee notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.
9. Tax Liability and Withholding.
9.1 The provisions of this Section 9.1 are applicable to Grantees whose compensation is subject to withholding taxes. The Grantee shall be required to pay to the Company, and the Company shall have the right to deduct from any compensation paid to the Grantee, the amount of any required withholding taxes in respect of the Restricted Stock Units and to take all such other action as the Board or a committee appointed by the Board deems necessary to satisfy all obligations for the payment of such withholding taxes. The Board or a committee appointed by the Board may permit the Grantee to satisfy any federal, state or local tax withholding obligation by any of the following means, or by a combination of such means:
(a) tendering a cash payment.
(b) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable or deliverable to the Grantee as a result of the vesting of the Restricted Stock Units; provided, however, that no shares of Common Stock shall be withheld with a value exceeding the minimum amount of tax required to be withheld by law unless the Grantee consents otherwise.
(c) delivering to the Company previously owned and unencumbered shares of Common Stock.
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9.2 Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding ("Tax-Related Items"), the ultimate liability for all Tax-Related Items is and remains the Grantee's responsibility and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant, vesting or settlement of the Restricted Stock Units or the subsequent sale of any shares; and (b) does not commit to structure the Restricted Stock Units to reduce or eliminate the Grantee's liability for Tax-Related Items.
9.3 Compliance with Law. The issuance and transfer of shares of Common Stock shall be subject to compliance by the Company and the Grantee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company's shares of Common Stock may be listed. No shares of Common Stock shall be issued or transferred unless and until any then applicable requirements of state and federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel. The Grantee understands the Company has no obligation to register the shares of Common Stock under the Securities Act of 1933, as amended, or any state securities laws at the time they are issued upon settlement of the Restricted Stock Unit, and that a legend may be placed on any certificate(s) or other document(s) representing such shares of Common Stock delivered to the Grantee indicating conditions and restrictions on transferability of such shares under the rules, regulations and other requirements of the Securities and Exchange Commission, any applicable federal or state securities laws or any stock exchange on which the shares of Common Stock are then listed or quoted.
10. Notices. Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the Chief Executive Officer of the Company at the Company's principal corporate offices. Any notice required to be delivered to the Grantee under this Agreement shall be in writing and addressed to the Grantee at the Grantee's address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.
11. Governing Law. This Agreement will be construed and interpreted in accordance with the laws of the State of Nevada without regard to conflict of law principles.
12. Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by the Grantee or the Company to the Board or a committee appointed by the Board for review. The resolution of such dispute by the Board or a committee appointed by the Board shall be final and binding on the Grantee and the Company.
13. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Grantee and the Grantee's beneficiaries, executors, administrators and the person(s) to whom the Restricted Stock Units may be transferred by will or the laws of descent or distribution.
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14. Severability. If any provision, or part thereof, of this Agreement shall be held to be invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and not in any way affect or render invalid or unenforceable any other provisions of this Agreement, and this Agreement shall be carried out as if such invalid or unenforceable provision, or part thereof, had been reformed, and any court of competent jurisdiction or arbiters, as the case may be, are authorized to so reform such invalid or unenforceable provision, or part thereof, so that it would be valid, legal and enforceable to the fullest extent permitted by applicable law.
15. Section 409A. This Agreement is intended to comply with Section 409A of the Code or an exemption thereunder and shall be construed and interpreted in a manner that is consistent with the requirements for avoiding additional taxes or penalties under Section 409A of the Code. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A of the Code and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Grantee on account of non-compliance with Section 409A of the Code.
16. No Impact on Other Benefits. The value of the Grantee's Restricted Stock Units is not part of his normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit (if any).
17. Counterparts; Signatures. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.
18. Acceptance. The Grantee hereby acknowledges receipt of this Agreement. The Grantee has read and understands the terms and provisions thereof, and accepts the Restricted Stock Units subject to all of the terms and conditions of this Agreement. The Grantee acknowledges that there may be adverse tax consequences upon the vesting or settlement of the Restricted Stock Units or disposition of the underlying shares and that the Grantee has been advised to consult a tax advisor prior to such vesting, settlement or disposition.
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IN WITNESS WHEREOF, the parties hereto have executed this Second Restricted Stock Unit Agreement as of the date first above written.
| UNITED HEALTH PRODUCTS INC. | |||
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| Name: | Brian Thom | |
| Title: | Chief Executive Officer | ||
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| GRANTEE: |
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| Kris Heaton Title: Vice President of Finance |
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