Item 5.01 Changes in Control of Registrant
On February 5, 2020, the Creative Learning Corporation (the "Company") entered
into an agreement with Christopher Rego and Rod Whiton, pursuant to which Bart
Mitchell resigned from the Company's board of directors, and Christopher Rego
and Rod Whiton were appointed to the Company's board of directors. See Item 5.07
herein.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(a) On February 5, 2020, Bart Mitchell resigned from the Company's board of
directors. Mr. Mitchell served on the board's Executive Committee and the
Compensation Committee. See Item 5.07 herein for a description of the
circumstances surrounding Mr. Mitchell's resignation.
(d) On February 5, 2020, Christopher Rego and Rod Whiton were appointed to
the Company's board of directors. See Item 5.07 herein for a description of the
circumstances surrounding Messrs. Rego and Whiton's appointment to the Company's
board. Messrs. Rego and Whiton have not been named to any committees of the
board.
In connection with Mr. Rego's appointment, he was also named chief executive
officer of BFK Franchise Company, LLC ("BFK"), a subsidiary of the Company, and
will become chief executive officer at the earlier of March 31, 2020 or when the
Company files its Form 10-K for the year ended September 30, 2019 and its Form
10-Q for the period ended December 31, 2019. Upon Mr. Rego's appointment as
chief executive officer, Mr. Mitchell will become the president of the Company.
The Company and Mr. Rego have not determined his compensation for serving as an
officer of BFK Franchise Company, LLC or the Company.
Item 5.07 Submission of Matters to a Vote of Security Holders
On or about December 6, 2019, Christopher Rego and Rod Whiton (the "Solicitors")
commenced a consent solicitation to the shareholders of the Company to approve
two resolutions: (i) a resolution to remove without cause Blake Furlow, Bart
Mitchell, Gary Herman and JoyAnn Kenny-Charlton from the Company's board; and
(2) a resolution to elect the Solicitors and John Simento and R. Gary Zell, II
as directors to the Company's board. On January 23, 2020, the Solicitors
informed the Company that they had received consents from shareholders holding
6,828,231 shares, allegedly representing 53.98% of the Company's outstanding
shares, to approve both resolutions. The Company notified the Solicitors that it
disputed the results of the solicitation with regard to the validity of certain
consents and the number of outstanding shares used by the Solicitors, among
other reasons, and exercised its right to review and challenge the results.
On February 5, 2020, the Company and the Solicitors entered into an agreement to
settle their dispute over the consent solicitation on the following terms:
· Bart Mitchell resigned from the board (Blake Furlow had previously resigned
from the board);
· Chris Rego and Rod Whiton were appointed to the board;
· Chris Rego was appointed chief executive officer of BFK;
· At the earlier of March 31, 2020, or the filing of the Company's Form 10-K for
the year ended September 30, 2019 and its Form 10-Q for the period ended
December 31, 2019, Chris Rego will become chief executive officer of the
Company and Bart Mitchell will become the president of the Company;
· The Company agreed to hold an annual meeting of shareholders approximately 60
days after it files its annual report on Form 10-K for the year ended September
30, 2019, which is estimated to result in an annual meeting about April 15,
2020;
· There will be a moratorium on compensation to the board until after the annual
meeting of shareholders, except that Gary Herman will be paid $7,250 for his
duties as audit committee chairperson for the second quarter of 2020;
· The Company agreed to place Messrs. Rego and Whiton on the ballot for election
at the annual meeting of shareholders;
· The Solicitors withdrew their nominations of Messrs. Simento and Zell to the
Company's board under the consent solicitation (but for the next annual meeting
of shareholders);
· The Company agreed to pay Messrs. Rego and Whiton $10,000 as reimbursement for
certain costs that they incurred in the consent solicitation;
· Each party entered into mutual releases, and covenanted not to file claims
against each other, except for any claims to enforce the agreement, any claims
based upon a business relationship with the Company, any claim against the
Company for indemnification, or any claim based on conduct occurring after the
date of the agreement.
Separately, BFK, Christopher Rego and John Simento entered into a settlement
agreement to settle a pending arbitration proceeding between them involving
Messrs. Rego's and Simento's franchise rights in the UAE. Under the settlement
agreement, the franchisees agreed to pay all costs to obtain government permits
or licenses to operate the franchise in the franchise territory, BFK agreed to
waive certain past franchise royalties, and BFK agreed to defer future franchise
royalties until the franchisees have obtained the necessary government permits
and licenses to operate the franchise in the franchise territory and to forgive
all franchise royalties if the franchisees Messrs. Rego and Simento are unable
to obtain the necessary government permits and licenses.
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Item 5.08 Shareholder Director Nominations
On January 27, 2020, the Company's board of directors approved a resolution to
hold an annual meeting of shareholders of the Company on April 15, 2020 in
Boise, Idaho (the "Annual Meeting"). Pursuant to the Company's bylaws,
shareholder nominations of persons to be elected as directors at the Annual
Meeting were due ten days after the public announcement of the Annual Meeting,
or by close of business on February 6, 2020. On February 4, 2020, the Company's
board approved a resolution to extend the deadline for shareholder nominations
to the close of business on February 18, 2020. The Company's board did not waive
any other requirements of the bylaws relating to shareholder nominations, such
that nominations must still include the information specified in the Company's
bylaws in order to be valid.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
10.1 Settlement Agreement dated February 5, 2020 by and among Creative
Learning Corporation, Bart Mitchell, Gary Herman, JoyAnn Kenny-Charlton,
Christopher Rego, Rod Whiton, John Simento and R. Gary Zell, II.
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