Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
(a) Resignation of Jordi Arimany
On December 26, 2021 our board of directors accepted the resignation of Jordi
Arimany as a director of the Company effective as of September 8, 2021. Mr.
Arimany's resignation was as a result of his relocation to South Africa.
(b) Appointment of Mitchell Chupak
On December 26, 2021, our board of directors appointed Mitchell Chupak to fill
the vacancy created by the resignation of Jordi Arimany.
The following is a brief description of Mr. Chupak's background and business
experience
Mitchell Chupak. 67, has resided in Israel since 1972, where since 1997, he has
been the Director of Development for the Jaffa Institute, the largest not for
profit social service agency serving southern portions of Tel-Aviv-Jaffa, Israel
and its suburbs. During his over 25 years at the Jaffa Institute, Mr. Chupak has
grown the organization extensively and is responsible for development of major
social services, educational and community projects for which he secured
millions of dollars in funding. He developed funding sources worldwide and
enlisted the aid of major donors in the United States, Canada, Europe,
Australia, and South America.
In 2005, Mr. Chupak created the Israel Fundraisers Forum to assist other
non-profit organizations better understand methods of fundraising. The forum,
with which he has been associated since its founding, promotes professionalism
in fundraising and development and assists both organizations and individual
fundraisers to improve methods of the profession.
We believe that Mr. Chupak's spectrum of experience in both management and
funding, will add value our board of directors.
As is the case with all of our independent directors, Mr. Chupak will be
compensated with an annual grant of common stock, currently fixed at 100,000
shares annually.
Item 8.01 Other Information.
On December 27, 2021, KAYS entered into an Exchange Agreement (the "Exchange
Agreement") with the current holders of its 100,000 outstanding shares of Series
C Convertible Preferred Stock (the "Series C Preferred Stock"), Craig Frank, our
Chairman and Chief Executive Officer and BMN Consultants, Inc. ("BMN"), to
restructure their preferred holdings. Each of Mr. Frank and BMN held 50,000
shares of the Series C Preferred Stock, each share of which was convertible at
the option of the holder into 28.88665 shares of our common stock (an aggregate
of 2,888,665 shares) and voted on as "as converted" basis together with the
holders of shares of our common stock as single class, unless required otherwise
by Delaware law. As of December 27, 2021, Mr. Frank and BMN each held 8.2% (a
total of 16.4%) of the voting power of the Company's outstanding voting stock by
reason of their holding the Series C Preferred Stock.
As of the date of the Exchange Agreement, the Company owed each of Tudog
Consulting, LLC ("Tudog"), a limited liability company owned by Mr. Frank and
BMN, approximately $588,000 in accrued but unpaid compensation (a total of
$1,176,000). Pursuant to the Exchange Agreement, Tudog and BMN agreed to each
waive approximately $338,000 of the compensation due them and to defer payment
of the remaining $250,000 due to each of them to January 1, 2025. As a result
liabilities of approximately $676,000 will be removed from the Company's balance
sheet and $500,000 will be reclassified as long-term debt on the Company's
balance sheet.
In addition, pursuant to the Exchange Agreement, Mr. Frank and BMN each
exchanged their shares of the Series C Preferred Stock for the issuance to each
of them or their designees, of 20 shares of a newly-designated class of Series D
Convertible Preferred Stock, (the "Series D Preferred Stock"). Each share of the
Series D Preferred Stock is convertible at the option of the holder at any time
and from time to time, into one percent (1%) of the Company's "Fully Diluted
Capitalization" at the date of conversion. "Fully Diluted Capitalization"means
the number of issued and outstanding shares of KAYS' common stock, assuming the
conversion or exercise of all of the Company's outstanding convertible or
exercisable securities, including shares of convertible preferred stock and all
outstanding vested or unvested options or warrants to purchase shares common
stock, but excluding debt securities convertible into common stock.
The Series D Preferred Stock votes on as "as converted" basis together with the
holders of shares of our common stock as single class, unless required otherwise
by Delaware law. Accordingly, holders of the Series D Preferred Stock will hold
1% of the voting power of the Company's outstanding voting stock for each shares
of the Series Preferred Stock held or a total of 40% of such voting power.
The above transactions were approved by the "independent" directors of the
Company at a meeting held on December 26, 2021.
The above descriptions of the Series D Preferred Stock and the Exchange
Agreement are qualified in their entirety by reference to the copies of the
Certificate of Designation of the Series D Preferred Stock and the Exchange
Agreement, which are filed as Exhibits 3.1 and 10.1 to this Current Report on
Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No Description
3.1 Certificate of Designation of Series D Preferred Stock
10.1 Exchange Agreement dated December 27, 2021
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