Item 5.02 Departure of Directors or Certain Officers; Election of Directors,
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Transition of Chief Acquisition Officer
On January 20, 2020, the Board of Directors (the "Board") of Conversion Labs,
Inc. (the "Company") approved the transition of Mr. Sean Fitzpatrick from the
role of the Company's Chief Acquisition Officer, to the role of President of
LegalSimpli Software, LLC, ("LegalSimpli") a majority owned subsidiary of the
Company (the "CAO Transition"). Mr. Fitzpatrick has previously served as
President of LegalSimpli prior to his appointment as Chief Acquisition Officer
of the Company.
Mr. Fitzpatrick's transition is not a result of any disagreement with the
Company on any matter relating to the Company's operations, policies or
practices. He remains an extremely valuable member of Conversion Labs' executive
team, but due to the strong growth of PDF Simpli, the Company and Mr.
Fitzpatrick believes his efforts should be focused on this segment of the
business.
In connection with Mr. Fitzpatrick's transition, the Company agreed to amend
that certain services agreement entered into on July 23, 2018, by and between
the Company and Mr. Fitzpatrick (the "Fitzpatrick Services Agreement"), to: (i)
reflect that Mr. Fitzpatrick will serve as an employee of LegalSimpli and will
no longer serve as Chief Acquisition Officer of the Company; (ii) decrease the
number of options to purchase the Company's common stock previously granted to
Mr. Fitzpatrick (the "Fitzpatrick Options") from 5,000,000 to 2,500,000, 650,000
of which have vested as of the effective date; (iii) amend the vesting schedule
for the remaining 1,850,000 Fitzpatrick Options to include four performance
metrics that, if met, each trigger the vesting of 462,500 Fitzpatrick Options
(the "Fitzpatrick Amendment").
Appointment of Chief Acquisition Officer
On January 20, 2020, in connection with the CAO Transition, the Board appointed
Mr. Nicholas Alvarez as Chief Acquisition Officer, effective January 20, 2020
(the "CAO Appointment").
Nicholas Alvarez, age 27, is an accomplished executive in the digital marketing
space. He is responsible for overseeing Conversion Labs' customer acquisition
efforts including media buying and advertising strategy across all brands,
excluding PDF Simpli. Prior to Conversion Labs, he worked at agencies Cheviot
Capital and Internet Brands, managing over $100 million in paid media budgets.
From 2015-2016 he was a digital marketing specialist for Internet Brands and
worked on sites such as Lawyers.com, Carsdirect.com, among others. From
2016-2018 he worked as a Head Media Buyer at Cheviot Capital, and from 2018 to
the present has served as Head of Customer Acquisition at Conversion Labs. He
has an undergraduate degree from Loyola Marymount University.
Mr. Alvarez and the Company will continue to operate under the employment
agreement (the "Alvarez Employment Agreement") entered into on July 26, 2018
with a three (3) year term. Mr. Alvarez shall earn a salary of $120,000 per
annum (the "Alvarez Salary"). In addition to the Alvarez Salary, Mr. Alvarez is
eligible for a monthly bonus pursuant to the schedule attached to the Alvarez
Employment Agreement, and Mr. Alvarez has been granted a ten-year option to
purchase up to 600,000 shares of Common Stock of the Company (the "Alvarez
Options"), which shall vest at a rate of 200,000 options at each of the seven
(7) month anniversary, sixteen (16) month anniversary, twenty-five (25) month
anniversary of the Alvarez Employment Agreement. As of the date of this report,
400,000 Alvarez Options have vested, and the remaining 200,000 Alvarez Options
shall vest, assuming the Alvarez Employment Agreement has not been terminated
prior to or on August 26, 2020.
There is no arrangement or understanding between Mr. Alvarez and any other
persons pursuant to which Mr. Alvarez was selected as an officer.
There are no family relationships between Mr. Alvarez and any director,
executive officer or person nominated or chosen by the Company to become a
director or executive officer of the Company within the meaning of Item 401(d)
of Regulation S-K under the U.S. Securities Act of 1933 ("Regulation S-K").
Since the beginning of the Company's last fiscal year, the Company has not
engaged in any transaction in which Mr. Alvarez had a direct or indirect
material interest within the meaning of Item 404(a) of Regulation S-K.
The above descriptions of the Fitzpatrick Amendment and Alvarez Employment
Agreement do not purport to be complete and are qualified in their entirety by
reference to such documents filed as Exhibits 10.1 and 10.2, respectively,
hereto.
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Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
Effective January 21, 2020, the Company amended its Certificate of
Incorporation, by filing a certificate of amendment of certificate of
incorporation (the "Certificate") with the Secretary of State of Delaware, to
effect the authorization of 5,000,000 shares of blank check preferred stock (the
"Blank Check Preferred") and to further effect the designation of 2,000,000
shares as 13% Cumulative Redeemable Perpetual Series A Preferred Stock (the
"Series A Preferred"), a new class of stock having the designations, rights and
preference set forth in such Certificate, all as approved an authorized by the
Board. As reflected in such Certificate, the Company's 5,000,000 authorized
shares of preferred stock are comprised of 2,000,000 shares of Series A
Preferred stock, and 3,000,000 shares of undesignated preferred stock for which
the Board is authorized to determine the number of series into which such
undesignated shares may be divided, the number of shares within each series, and
the designations, rights and preferences associated with such shares.
The Series A Preferred shares shall have a stated value of $25 per share (the
"Stated Value"), and Series A Preferred holders shall be entitled to receive
dividends at a rate of 13% of the Stated Value per share per annum. The Series A
Preferred shares shall not have voting rights, except for on each matter which
Series A Preferred holders are entitled to vote as a separate class in which
case each Series A Preferred Holder shall be entitle to one vote per share of
Series A Preferred. The Company retains an optional right to redeem the shares
of Series A Preferred commencing on the third anniversary of the date of
issuance of each shares of Series A Preferred.
The foregoing descriptions of the Certificate effective January 21, 2020 for the
Series A Preferred, does not purport to be complete and is subject to, and is
qualified in their entirety by the full text of such document, a copy of which
are attached hereto as Exhibit 3.1, and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
Exhibit No. Description of Exhibit
3.1* Certificate of Amendment of Certificate of Incorporation
10.1* Fitzpatrick Amendment by and between the Company and Mr. Sean
Fitzpatrick.
10.2* Employment Agreement by and between the Company and Mr. Nicholas
Alvarez.
* Filed herewith
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