Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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The following is a summary of the material features of the Employment Agreement and is qualified in its entirety by reference to the full text of the Employment Agreement, a copy of which is filed as Exhibit 10.1 to this Report on Form 8-K. Capitalized terms used but not defined in this Report on Form 8-K shall have the meanings given to them in the Employment Agreement.
The initial term of the Employment Agreement is three years but it contains an "evergreen" feature under which it is automatically extended on an annual basis for a one year renewal term unless written notice of nonrenewal is given by either party. If a notice of nonrenewal is given, the term of employment then ends at the end of the initial term or renewal term, as the case may be, unless terminated earlier as described below. The Employment Agreement provides for the Executive to receive a base salary, potential cash bonus, equity compensation, and certain other benefits, which are summarized below.
Base Salary. The Executive's initial annual base salary is
Bonus. The Executive will be eligible for an annual target bonus of 50% of the
current Base Salary ("Target Bonus"). Notwithstanding, the actual annual bonus
may range from 0% to 100% of the Base Salary and will be determined based upon
achievement of performance goals set by the Compensation Committee of the Board
of Directors of the Company (the "Committee"). For the 2021 performance year,
the Executive will be paid a minimum bonus of
Equity Compensation. The Employment Agreement provides for the grant to the
Executive of a stock option for 43,000 shares of voting common stock. Such grant
shall be subject to the terms and conditions set forth in the
Benefits. The Company will provide the Executive retirement and other benefits as are customarily provided to similarly situated executives of the Company, including paid vacation, coverage under the Company's medical, life, disability and other insurance plans, and reimbursement for all reasonable business expenses in accordance with the Company's expense reimbursement policy.
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Termination. The Company or Executive may terminate the Agreement prior to the expiration of its Term at any time upon written notice.
Effect of Termination; Severance.
In the event of voluntary resignation of employment by Executive without Good Reason (as defined below) or in connection with her retirement, Executive shall be entitled to payment of her Base Salary for a period of 12 months following her resignation and shall be paid any earned but unpaid Target Bonus for the prior year; provided, that Executive is in compliance with the non-compete provisions of the Employment Agreement.
In the event of a termination of employment due to (i) death, (ii) permanent disability, (iii) by the Company for Good Cause (as defined below), or (iv) by Executive with Good Reason (as defined below), Executive shall be entitled to payment of any earned but unpaid Base Salary, Target Bonus and other benefits and unreimbursed business expenses.
In addition to the foregoing, if (i) the Company terminates Executive's employment except for death, permanent disability or for Good Cause, or (ii) Executive terminates her employment for Good Reason (a "Qualifying Termination"), then provided that Executive executes and does not revoke the release attached as an exhibit to the Employment Agreement (the "Release"), the Company has agreed to (i) pay Executive, on a quarterly basis, her Base Salary and Target Bonus for 12 months following her termination, (ii) continued vesting of all of her outstanding stock options and equity awards through the 12-month severance period and (iii) to the extent Executive elects to continue health coverage under our health plan under COBRA, reimburse her for premiums she pays to extend such coverage for up to 18 months following her termination; provided, however, that such reimbursement shall cease if she obtains other employment that offers group health benefits.
Non-Competition. During her employment with the Company and for a period of 12
months thereafter, Executive may not directly or indirectly compete with the
Company within
Clawbacks. Executive's incentive compensation will be subject to clawback regulations in effect under applicable law or stock exchange listing standards.
"Good Cause" generally includes (subject to certain cure provisions):
(i) Executive willfully engages in acts or omissions determined to constitute fraud, breach of fiduciary duty or intentional wrongdoing or malfeasance;
(ii) Executive is convicted of, or enters a plea of guilty or nolo contendere to charges of, any criminal violation involving fraud, theft or dishonesty;
(iii) Executive is convicted of, or enters a plea of guilty or nolo contendere to charges of, any non-vehicular felony which has or is substantially likely to have a material adverse effect on Executive's ability to carry out her duties under the Employment Agreement or on the reputation or activities of the Company;
(iv) Executive habitually abuses alcohol, illegal drugs or controlled substances or non-prescribed prescription medicine, and such abuse materially and adversely interferes with the performance of the Executive's duties and responsibilities to the Company;
(v) Executive materially breaches the terms of any agreement between Executive and the Company relating to Executive's employment;
(vi) Executive engages in acts or omissions constituting gross negligence by Executive in the performance (or non-performance) of her duties; or
(vii) Executive materially fails in the performance of her duties and/or responsibilities on behalf of the Company.
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"Good Reason" generally means (subject to certain cure provisions):
(i) the diminution of any duties, responsibilities, and authorities inconsistent in any respect with the Executive's position as a President and Chief Financial Officer;
(ii) any failure by the Company to comply with any of the compensation provisions of the Employment Agreement (except for isolated, insubstantial and inadvertent failure not occurring in bad faith and which are remedied by the Company);
(iii) the Company materially breaches the terms of any agreement between the Executive and the Employer relating to the Executive's employment, or materially fails to satisfy the conditions and requirements of the Employment Agreement; or
Item 8.01 Other Events.
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The information in this report shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. Exhibit No. Description Executive Employment Agreement datedSeptember 8, 2021 by and 10.1 betweenMidwest Holding Inc. andGeorgette C. Nicholas 99.1Midwest Holding Inc. Press Release datedSeptember 7, 2021 . Cover Page Interactive Data File (embedded within the Inline XBRL 104 document)
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