Document:

soagreementus.htm

  

NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE UNITED STATES SECURITIES ACT (THE "1933 ACT"), PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

STOCK OPTION AGREEMENT

 

(U.S. Persons)

 

 

This AGREEMENT is entered into as of the 25th day of November, 2013 (the “Date of Grant”).

 

BETWEEN:

 

KONARED CORPORATION, a company incorporated pursuant to the laws of the state of Nevada 

and having a business address of 2829 Ala Kalani Kaumaka St., Suite F-133, Koloa, HI 96756

 

(the “Corporation”)

 

AND:

 

Parker McLachlin, a businessperson with an address at 

7027 N. Scottsdale Road, #214, Scottsdale, AZ 85253

 

(the “Optionee”)

 

WHEREAS:  The Corporation wishes to grant 250,000 Options (as defined herein) to purchase Optioned Shares to the Optionee.

 

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

	
1.  

	
DEFINITIONS

 

In this Agreement, the following terms shall have the following meanings:

 

	
(a)  

	
“1933 Act” means the Securities Act of 1933, as amended;

 

	
(b)  

	
“Accredited Investor Questionnaire” means a questionnaire substantially in the form of the Accredited Investor Questionnaire attached to this Agreement as Schedule B;

 

	
(c)  

	
“Common Stock” means the shares of common stock of the Corporation;

 

	
(d)  

	
“Exercise Price” means $0.70 per Optioned Share;

 

	
(e)  

	
“Expiry Date” means November 25, 2016;

 

	
(f)  

	
“Notice of Exercise” means a notice in writing addressed to the Corporation at its address first recited hereto (or such other address of which the Corporation may from time to time notify the Optionee in writing), substantially in the form attached as Schedule A, which notice shall specify therein the number of Optioned Shares in respect of which the Options are being exercised;

 

	
(g)  

	
“Options” means the right and option to purchase, from time to time, all, or any part of the Optioned Shares granted to the Optionee by the Corporation pursuant to Section 2.1 of this Agreement;

 

	
(h)  

	
“Optioned Shares” means the shares of Common Stock that are issued pursuant to the exercise of the Options;

 

	
(i)  

	
“Prospective Investor Suitability Questionnaire” means a questionnaire substantially in the form of the Prospective Investor Suitability Questionnaire attached to this Agreement as Schedule C

 

	
(j)  

	
“Securities” means, collectively, the Options and the Optioned Shares;

 

	
(k)  

	
“Shareholders” means holders of record of the shares of Common Stock;

 

	
(l)  

	
“U.S. Person” shall have the meaning ascribed thereto in Regulation S under the 1933 Act, and for the purpose of the Agreement includes any person in the United States; and

 

	
2.  

	
THE OPTIONS

 

	
2.1  

	
The Corporation hereby grants to the Optionee, on the terms and conditions set out in this Agreement, Options to purchase a total of 250,000 Optioned Shares at the Exercise Price; provided that the Optionee at the time of exercise is deemed by the Corporation, acting reasonably, suitable under US Securities laws to be issued securities (see section 2.7).

 

	
2.2  

	
The Options may be exercised immediately.

 

	
2.3  

	
The Options shall, at 5:00 p.m. (Hawaii-Aleutian time) on the Expiry Date, expire and be of no further force or effect whatsoever.

 

	
2.4  

	
The Corporation shall not be obligated to cause the issuance, transfer or delivery of a certificate or certificates representing Optioned Shares to the Optionee, until provision has been made by the Optionee, to the satisfaction of the Corporation, for the payment of the aggregate Exercise Price for all Optioned Shares for which the Options shall have been exercised, and for satisfaction of any tax withholding obligations associated with such exercise.

 

	
2.5  

	
The Optionee shall have no rights whatsoever as a shareholder in respect of any of the Optioned Shares (including any right to receive dividends or other distribution therefrom or thereon) except in respect of which the Options have been properly exercised in accordance with the terms of this Agreement.

  

 

  

 

	
2.6  

	
Subject to the provisions of this Agreement and subject to compliance with any applicable securities laws, the Options shall be exercisable, in full or in part, until termination; provided, however, that if the Optionee is subject to the reporting and liability provisions of Section 16 of the Securities Exchange Act of 1934, as amended, with respect to the Common Stock, the Optionee shall be precluded from selling, transferring or otherwise disposing of any Common Stock underlying any of the Options during the six months immediately following the grant of the Options.  If less than all of the shares of any Options are purchased, the remainder may be purchased at any subsequent time prior to the Expiry Date.  Only whole shares may be issued pursuant to the exercise of any Options, and to the extent that any Option covers less than one share, it is not exercisable.

 

	
2.7  

	
Each exercise of the Options shall be by means of delivery of a Notice of Exercise (which may be in the form attached hereto as Schedule A) to the President of the Corporation at its principal executive office, specifying the number of Optioned Shares to be purchased and accompanied by:

 

	
(a)  

	
payment in cash or by certified check or cashier’s check in the amount of the full Exercise Price for the Common Stock to be purchased, and

 

	
(b)  

	
an executed copy of:

 

	
(i)  

	
an Accredited Investor Questionnaire attached as Schedule B, dated the same date as the Notice of Exercise (if the Optionee is at the time of exercise an accredited investor); or

 

	
(ii)  

	
a Prospective Investor Suitability Questionnaire, attached as Schedule C, dated the same date as the Notice of Exercise (if the Optionee is not an accredited investor at the time of exercise) showing that at the time of exercise the Optionee has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment in the Optioned Shares.

 

	
2.8  

	
It is a condition precedent to the issuance of Optioned Shares that the Optionee execute and/or deliver to the Corporation all documents and withholding taxes required in accordance with applicable laws.

 

	
2.9  

	
Nothing in this Agreement shall obligate the Optionee to purchase any Optioned Shares except those Optioned Shares in respect of which the Optionee shall have exercised the Options in the manner provided in this Agreement.

 

	
2.10  

	
Appropriate and proportional adjustments in the exercise price of the Options and in the number of Options granted or to be granted may be made by the Board of Directors in its discretion to give effect to adjustments in the number of common shares of the Corporation resulting from subdivisions, consolidations or reclassification of the common shares of the Corporation, the payment of stock dividends by the Corporation or other relevant changes in the capital of the Corporation.

  

2

  

 

	
2.11  

	
By accepting the Options, the Optionee represents and agrees that none of the Optioned Shares purchased upon exercise of the Options will be distributed in violation of applicable federal and state laws and regulations.  The Optionee further represents and agrees to provide the Corporation with any other document reasonably requested by the Corporation or the Corporation’s Counsel.

 

	
2.12  

	
The Options are not transferable or assignable.

 

	
2.13  

	
The Options are not granted pursuant to a stock option or incentive stock plan, however the Corporation reserves the right to have the Options come within the purvue and jurisdiction of such a plan, in the Corporation’s discretion. In such case, where a conflict exists between the terms of this Agreement or the plan, the terms of this Agreement will prevail.

 

	
3.  

	
TERMINATION OF OPTIONS

 

Options shall terminate, to the extent not previously exercised, upon the occurrence of the first of the following events:

 

	
(a)  

	
The Expiry Date.

 

	
(b)  

	
Termination for Cause.  Immediately on the date that the Optionee’s employment or contractual relationship with the Corporation or any related company is terminated for cause (as reasonably determined by the Corporation).

 

	
(c)  

	
Termination Due to Death or Disability.  The expiration of five years from the date of the death of the Optionee or cessation of an Optionee’s employment or contractual relationship by reason of disability.  If an Optionee’s employment or contractual relationship is terminated by death, any Option held by the Optionee shall be exercisable only by the person or persons to whom such Optionee’s rights under such Option shall pass by the Optionee’s will or by the applicable laws of descent and distribution.

 

	
(d)  

	
Termination for Any Other Reason.  The expiration of six months from the date of an Optionee’s termination of employment or contractual relationship with the Corporation for any reason whatsoever other than cause, death or disability.

 

	
4.  

	
DOCUMENTS REQUIRED FROM OPTIONEE

 

	
4.1  

	
The Optionee must complete, sign and return an executed copy of this Agreement to the Corporation.

 

	
4.2  

	
The Optionee shall complete, sign and return to the Corporation as soon as possible, on request by the Corporation, any documents, questionnaires, notices and undertakings as may be required by regulatory authorities, and applicable law.

  

3

  

 

	
5.  

	
ACKNOWLEDGEMENTS OF THE OPTIONEE

 

The Optionee acknowledges and agrees that:

 

	
(a)  

	
the Optionee is a U.S. Person;

 

	
(b)  

	
none of the Options or the Optioned Shares have been registered under the 1933 Act or under any state securities or “blue sky” laws of any state of the United States, and, unless so registered, may not be offered or sold in the United States or, directly or indirectly, to U.S. Persons, except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in each case only in accordance with applicable state securities laws;

 

	
(c)  

	
the Corporation has not undertaken, and will have no obligation, to register any of the Securities under the 1933 Act;

 

	
(d)  

	
the Optionee has received and carefully read this Agreement and the public information which has been filed with the Securities and Exchange Commission (the “SEC”) in compliance or intended compliance with applicable securities legislation (collectively, the “Corporation Information”);

 

	
(e)  

	
the decision to execute this Agreement and acquire the Securities hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Corporation, and such decision is based entirely upon a review of the Corporation Information (the receipt of which is hereby acknowledged);

 

	
(f)  

	
no securities commission or similar regulatory authority has reviewed or passed on the merits of the Securities;

 

	
(g)  

	
there is no government or other insurance covering the Securities;

 

	
(h)  

	
there are risks associated with an investment in the Securities;

 

	
(i)  

	
the Optionee and the Optionee’s advisor(s) (if applicable) have had a reasonable opportunity to ask questions of and receive answers from the Corporation in connection with the distribution of the Securities hereunder, and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information about the Corporation;

 

	
(j)  

	
the books and records of the Corporation were available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by the Optionee during reasonable business hours at its principal place of business, and all documents, records and books in connection with the distribution of the Securities hereunder have been made available for inspection by the Optionee, the Optionee’s attorney and/or advisor(s) (if applicable);

  

4

  

 

	
(k)  

	
the Corporation is entitled to rely on the representations and warranties and the statements and answers of the Optionee contained in this Agreement;

 

	
(l)  

	
the Optionee will indemnify and hold harmless the Corporation and, where applicable, its directors, officers, employees, agents, advisors and shareholders, from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation or warranty of the Optionee contained herein or in any document furnished by the Optionee to the Corporation in connection herewith being untrue in any material respect or any breach or failure by the Optionee to comply with any covenant or agreement made by the Optionee to the Corporation in connection therewith;

 

	
(m)  

	
none of the Securities are listed on any stock exchange or automated dealer quotation system and no representation has been made to the Optionee that any of the Securities will become listed on any stock exchange or automated dealer quotation system; except that currently certain market makers make market in the Common Stock on the OTC Bulletin Board;

 

	
(n)  

	
the Corporation will refuse to register any transfer of the Securities not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from the registration requirements of the 1933 Act and in accordance with applicable state and provincial securities laws;

 

	
(o)  

	
the statutory and regulatory basis for the exemption claimed for the offer of the Securities, although in technical compliance, would not be available if the offering is part of a plan or scheme to evade the registration provisions of the 1933 Act or any applicable state and provincial securities laws;

 

	
(p)  

	
the Optionee has been advised to consult the Optionee’s own legal, tax and other advisors with respect to the merits and risks of an investment in the Securities and with respect to applicable resale restrictions, and it is solely responsible (and the Corporation is not in any way responsible) for compliance with:

 

	
(i)  

	
any applicable laws of the jurisdiction in which the Optionee is resident in connection with the distribution of the Securities hereunder, and

 

	
(ii)  

	
applicable resale restrictions; and

 

	
(q)  

	
this Agreement is not enforceable by the Optionee unless it has been accepted by the Corporation.

  

5

  

 

	
6.  

	
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE OPTIONEE

 

The Optionee hereby represents and warrants to and covenants with the Corporation (which representations, warranties and covenants shall survive the closing) that:

 

	
(a)  

	
the Optionee has the legal capacity and competence to enter into and execute this Agreement and to take all actions required pursuant hereto;

 

	
(b)  

	
the Optionee has duly executed and delivered this Agreement and it constitutes a valid and binding agreement of the Optionee enforceable against the Optionee in accordance with its terms;

 

	
(c)  

	
the Optionee is resident in the jurisdiction set out on page 1 of this Agreement;

 

	
(d)  

	
the Optionee is not an underwriter of, or dealer in, the Common Stock, nor is the Optionee participating, pursuant to a contractual agreement or otherwise, in the distribution of the Securities;

 

	
(e)  

	
the Optionee:

 

	
(i)  

	
has adequate net worth and means of providing for his/her/its current financial needs and possible personal contingencies;

 

	
(ii)  

	
has no need for liquidity in this investment; and

 

	
(iii)  

	
is able to bear the economic risks of an investment in the Securities for an indefinite period of time, and can afford the complete loss of such investment;

 

	
(f)  

	
the Optionee is aware that an investment in the Corporation is speculative and involves certain risks, including the possible loss of the investment, and the Optionee has carefully read and considered the matters set forth under the caption “Risk Factors” appearing in the Corporation’s various disclosure documents, filed with the SEC;

 

	
(g)  

	
the Optionee has the requisite knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment in the Securities and the Corporation;

 

	
(h)  

	
the Optionee understands and agrees that the Corporation and others will rely upon the truth and accuracy of the acknowledgements, representations and agreements contained in this Agreement, and agrees that if any of such acknowledgements, representations and agreements are no longer accurate or have been breached, the Optionee shall promptly notify the Corporation;

 

	
(i)  

	
the Optionee has made an independent examination and investigation of an investment in the Securities and the Corporation and has depended on the advice of its legal and financial advisors and agrees that the Corporation will not be responsible in anyway whatsoever for the Optionee’s decision to invest in the Securities and the Corporation;

  

6

  

 

	
(j)  

	
the Optionee is not aware of any advertisement of any of the Securities and is not acquiring the Securities as a result of any form of general solicitation or general advertising including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising;

 

	
(k)  

	
no person has made to the Optionee any written or oral representations:

 

	
(i)  

	
that any person will resell or repurchase any of the Securities;

 

	
(ii)  

	
that any person will refund the purchase price of any of the Securities; or

 

	
(iii)  

	
as to the future price or value of any of the Securities; and

 

	
(l)  

	
if the Optionee is a consultant of the Corporation, the Optionee has entered into a written consulting agreement with the Corporation or a related entity of the Corporation and spends or will spend a significant amount of time and attention on the affairs and business of the Corporation or such related entity.

 

	
7.  

	
ACKNOWLEDGEMENT

 

The Optionee has acknowledged that the decision to purchase the Securities was solely made on the basis of publicly available information contained in the Corporation Information.

 

	
8.  

	
LEGENDING OF SUBJECT SECURITIES

 

	
8.1  

	
The Optionee hereby consents to the placement of a legend on any certificate or the Optionee consents to the placement of a legend on any certificate or other document evidencing any of the Optioned Shares to the effect that such Optioned Shares have not been registered under the 1933 Act, any state securities or “blue sky” laws, or under the prospectus and registration requirements of any applicable Canadian securities laws, and setting forth or referring to the restrictions on transferability and sale thereof contained in this Agreement,  such legend to be substantially as follows:

 

NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE UNITED STATES SECURITIES ACT (THE "1933 ACT"), PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

  

7

  

 

	
8.2  

	
The Optionee hereby agrees to the Corporation making a notation on its records or giving instructions to the registrar and transfer agent of the Corporation in order to implement the restrictions on transfer set forth and described in this Agreement.

 

	
9.  

	
GENERAL RESALE RESTRICTIONS

 

	
9.1  

	
The Optionee acknowledges that any resale of any of the Optioned Shares will be subject to resale restrictions contained in the securities legislation applicable to the Optionee or proposed transferee.  The Optionee acknowledges that none of the Optioned Shares have been registered under the 1933 Act or the securities laws of any state of the United States.  The Optioned Shares may not be offered or sold in the United States unless registered in accordance with federal securities laws and all applicable state securities laws or exemptions from such registration requirements are available.

 

	
9.2  

	
The Optionee acknowledges and agrees that the Optionee is solely responsible (and the Corporation is not in any way responsible) for compliance with applicable resale restrictions.

 

	
10.  

	
NO EMPLOYMENT RELATIONSHIP

 

The grant of an Option shall in no way constitute any form of agreement or understanding binding on the Corporation or any related company, express or implied, that the Corporation or any related company will employ or contract with an Optionee, for any length of time, nor shall it interfere in any way with the Corporation’s or, where applicable, a related company’s right to terminate Optionee’s employment at any time, which right is hereby reserved.

 

	
11.  

	
GOVERNING LAW

 

This Agreement is governed by the laws of the State of Nevada.

 

	
12.  

	
COSTS

 

The Optionee acknowledges and agrees that all costs and expenses incurred by the Optionee (including any fees and disbursements of any special counsel retained by the Optionee) relating to the acquisition of the Securities shall be borne by the Optionee.

 

	
13.  

	
SURVIVAL

 

This Agreement, including without limitation the representations, warranties and covenants contained herein, shall survive and continue in full force and effect and be binding upon the parties hereto notwithstanding the completion of the purchase of the shares underlying the Options by the Optionee pursuant hereto.

 

	
14.  

	
ASSIGNMENT

 

This Agreement is not transferable or assignable.

  

8

  

 

	
15.  

	
CURRENCY

 

Unless explicitly stated otherwise, all funds in this Agreement are stated in United States dollars.

 

	
16.  

	
SEVERABILITY

 

The invalidity or unenforceability of any particular provision of this Agreement shall not affect or limit the validity or enforceability of the remaining provisions of this Agreement.

 

	
17.  

	
COUNTERPARTS AND ELECTRONIC MEANS

 

This Agreement may be executed in several counterparts, each of which will be deemed to be an original and all of which will together constitute one and the same instrument.  Delivery of an executed copy of this Agreement by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy will be deemed to be execution and delivery of this Agreement as of the date first above written.

 

	
18.  

	
ENTIRE AGREEMENT

 

This Agreement is the only agreement between the Optionee and the Corporation with respect to the Options, and this Agreement, supersede all prior and contemporaneous oral and written statements and representations and contain the entire agreement between the parties with respect to the Options.

 

IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as of the date first above written.

KONARED CORPORATION

Per:           /s/ Shaun Roberts

Authorized Signatory

	
WITNESSED BY:

	
)

	  
	  	
)

	  
	
Signature

	
)

	  
	  	
)

	  
	
Name

	
)

	
/s/ Parker McLachlin

	  	
)

	
PARKER MCLACHLIN

	
Address

	
)

	  
	  	
)

	  
	
Occupation

	
)

	  

  

9

  

 

SCHEDULE A

NOTICE OF EXERCISE

 

TO: KonaRed Corporation

       2829 Ala Kalani Kaumaka St., Suite F-133

       KOLOA, HI 96756

 

This Notice of Exercise shall constitute a proper Notice of Exercise pursuant to section 1(f) of the Stock Option Agreement dated November 25, 2013 (the “Agreement”), between KonaRed Corporation (the “Corporation”) and the undersigned.  The undersigned hereby elects to exercise the Optionee’s options to purchase ____________________ shares of the common stock of the Corporation at a price of $0.70 per share, for aggregate consideration of $____________, on the terms and conditions set forth in the Agreement.  Such aggregate consideration, in the form specified in section 1(f) of the Agreement, accompanies this notice.

 

The Optionee hereby represents and warrants to the Corporation that all representations and warranties set out in the Agreement are true as of the date of the exercise of the options under the Agreement.

 

The Optionee hereby further represents and warrants to the Corporation that the shares are being purchased only for investment and without intention to sell or distribute such shares.

 

The Optionee hereby directs the Corporation to issue, register and deliver the certificates representing the shares as follows:

 

	
Registration Information:

	  	
Delivery Instructions:

	  	  	  
	
Name to appear on certificates

	  	
Name

	  	  	  
	
Address

	  	
Address

	  	  	  
	
City, State, and Zip Code

	  	  
	  	  	  
	  	  	
Telephone Number

 

DATED at _____________________________, the _______ day of______________, _______.

	
X

	
Signature

	  
	
(Name and, if applicable, Office)

	  
	
(Address)

	  
	
(City, State, and Zip Code)

	  
	
Fax Number or E-mail Address

	  
	
Social Security/Tax I.D. No.

  

  

 

SCHEDULE B

ACCREDITED INVESTOR QUESTIONNAIRE

 

All capitalized terms herein, unless otherwise defined, have the meanings ascribed thereto in the Stock Option Agreement.

 

	
1.  

	
The Optionee covenants, represents and warrants to the Corporation that he or she satisfies one or more of the categories of “Accredited Investors”, as defined by Regulation D promulgated under the Securities Act of 1933 (the “Securities Act”), as indicated below:  (Please initial in the space provide those categories, if any, of an “Accredited Investor” which the Optionee satisfies)

	
[  ]

	
Category 1

	
An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the Securities, with total assets in excess of $5,000,000;

	
[  ]

	
Category 2

	
A natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000. For purposes of this Category 2, "net worth" means the excess of total assets at fair market value (including personal and real property, but excluding the estimated fair market value of a person's primary home) over total liabilities. Total liabilities excludes any mortgage on the primary home in an amount of up to the home's estimated fair market value as long as the mortgage was incurred more than 60 days before the Securities are acquired, but includes (i) any mortgage amount in excess of the home's fair market value and (ii) any mortgage amount that was borrowed during the 60-day period before the date of the acquisition of Securities for the purpose of investing in the Securities;

	
[  ]

	
Category 3

	
A natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

	
[  ]

	
Category 4

	
A “bank” as defined under Section (3)(a)(2) of the Securities Act or savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act acting in its individual or fiduciary capacity; a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934 (United States); an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Corporation Act of 1940 (United States) or a business development company as defined in Section 2(a)(48) of such Act; a Small Business Investment Corporation licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958 (United States); a plan with total assets in excess of $5,000,000 established and maintained by a state, a political subdivision thereof, or an agency or instrumentality of a state or a political subdivision thereof, for the benefit of its employees; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (United States) whose investment decisions are made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, whose investment decisions are made solely by persons that are accredited investors;

  

  

	
[  ]

	
Category 5

	
A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940 (United States);

	
[  ]

	
Category 6

	
A director or executive officer of the Corporation;

	
[  ]

	
Category 7

	
A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the Securities Act;

	
[  ]

	
Category 8

	
An entity in which all of the equity owners satisfy the requirements of one or more of the foregoing categories;

 

	
2.  

	
Note that the Optionee claiming to satisfy one of the above categories of Accredited Investor may be required to supply the Corporation with a balance sheet, prior years’ federal income tax returns or other appropriate documentation to verify and substantiate the Optionee’s status as an Accredited Investor.

 

	
3.  

	
If the Optionee is an entity which initialled the last category in reliance upon the Accredited Investor categories above, state the name, address, total personal income from all sources for the previous calendar year, and the net worth (exclusive of home, home furnishings and personal automobiles) for each equity owner of the said entity:

	  
	  

 

	
4.  

	
All information contained in this Questionnaire will be treated as confidential.  However, by signing and returning this Questionnaire, the Optionee agrees that, if necessary, this Questionnaire may be presented to such parties as the Corporation deems appropriate to establish the availability, under the Securities Act or applicable state securities law, of exemption from registration in connection with the issuance of the Securities hereunder.

 

	
5.  

	
The Optionee hereby certifies that the information contained in this Questionnaire is complete and accurate and the Optionee will notify the Corporation promptly of any change in any such information.

 

IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the _______ day of __________________, 20__.

 

X                                                                

Signature

 

Print or Type Name

 

Social Security/Tax I.D. No.

 

  

B-2

  

 

SCHEDULE C

PROSPECTIVE INVESTOR SUITABILITY QUESTIONNAIRE

 

All capitalized terms herein, unless otherwise defined, have the meanings ascribed thereto in the Stock Option Agreement.

 

The purpose of this Questionnaire is to assure the Corporation that the Optionee will meet the standards imposed by the Securities Act of 1933 (the “Securities Act”) and the appropriate exemptions of applicable state securities laws.  The Corporation will rely on the information contained in this Questionnaire for the purposes of such determination.  The Option and the Optioned Shares (together, the “Securities”) will not be registered under the Securities Act and has been issued in reliance upon the exemption from registration afforded by Section 3(b) and/or Section 4(a)(2) of the Securities Act and/or  Regulation D promulgated thereunder.  This Questionnaire is not an offer of any securities of the Corporation in any state other than those specifically authorized by the Corporation.

 

Please attach additional pages if necessary to answer any question fully.

 

REPRESENTATIONS OF OPTIONEE

 

This item is presented in alternative form.  Please initial in the space provided the applicable alternative.

 

	
[  ]

	
ALTERNATIVE ONE:

	
The Optionee covenants, represents and warrants to the Corporation that he or she has such knowledge and experience in financial and business matters that he or she is capable of evaluating the relative merits and risks of an investment in the Securities and Corporation and is not utilizing a purchaser representative in connection with evaluating such merits and risks.  The Optionee is providing evidence of its knowledge and experience in these matters through the information requested below in this Questionnaire.

	
[  ]

	
ALTERNATIVE TWO:

	
The Optionee covenants, represents and warrants to the Corporation that he or she has chosen to use the services of a purchaser representative acceptable to the Optionee in connection with the Optionee’s acquisition of the Securities. The Optionee hereby acknowledges that the person named below is his or her purchaser representative who will assist and advise the Optionee in evaluating the merits and risks of an investment in the Securities and the Corporation and affirms that such purchaser representative has previously disclosed in writing any material relationship that exists between the purchaser representative (or its affiliates) and the Corporation (or its affiliates) that is mutually understood to be contemplated, or that has existed at any time during the previous two years, and any compensation received or to be received as a result of such relationship.

 

(name of Purchaser Representative)

 

(address of Purchaser Representative)

 

If the Optionee utilizes a purchaser representative, this Questionnaire must be accompanied by a completed and signed purchaser representative Questionnaire, a copy of which can be obtained from the Corporation upon request.

  

  

 

FOR INDIVIDUAL INVESTORS

	
 

1. 

	
Name:

	  
	
 

2. 

	
Residential Address &

	  
	  	
Telephone Number:

	  
	
 

3. 

	
Length of Residence in State of Residence:

	  
	
 

4. 

	
U.S. Citizen:

	
[   ] Yes [   ] No

	
 

5. 

	
Social Security Number:

	  
	
 

6. 

	
Business Address &

	  
	  	
Telephone Number:

	  
	
 

7. 

	
Preferred Mailing Address:

	
[   ] Residence [   ] Business

	
 

8. 

	
Email and fax number:

	  
	
 

9. 

	
Date of Birth:

	  
	
 

10. 

	
Employer and Position:

	  
	
 

11. 

	
Name of Business:

	  

 

	
12.  

	
Business or Professional Education and Degrees:

	
School

	  	
Degree

	  	
Year Received

	  	  	  	  	  
	  	  	  	  	  

 

	
13.  

	
Prior Employment (last 5 years):

	
Employer

	  	
Nature of Duties

	  	
Dates of Employment

	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  

  

C-2

  

 

FOR SUBSCRIBERS THAT ARE CORPORATIONS, PARTNERSHIPS, TRUSTS OR OTHER ENTITIES

	
 

6. 

	
Name:

	  
	
 

7. 

	
Address of Principal Office:

	  
	
 

8. 

	
Telephone:

	  
	
 

9. 

	
Date and State of Incorporation or Organization:

	  
	
 

10. 

	
Taxpayer Identification Number:

	  
	
 

11. 

	
Nature of Business:

	  
	
 

12. 

	
Individual Authorized to Execute this Questionnaire

	  
	  	
(indicate name and office):

	  
	  	  	  

 

FOR ALL SUBSCRIBERS

	
Relationship to the Corporation, if any:

	  

 

	
1.  

	
Is the Subscriber an officer or director of a publicly-held company? [   ]Yes [   ]No

 

If yes, specify company:

 

	
2.  

	
Does the Subscriber beneficially own 10% or more of the voting securities of a publicly-held company?

 

[   ]Yes [   ]No

 

If yes, specify company:

 

	
3.  

	
Within the last five years, has the Subscriber personally invested in investments sold by means of private placements in reliance on exemptions from registration under the 1933 Act and State securities laws?

 

[   ]Yes [   ]No

  

C-3

  

 

	
4.  

	
Prior investments by Subscriber which were purchased in reliance on exemptions from registration under the 1933 Act and State securities laws (initial the highest number applicable):

 

	
  

	
Amount (Cumulative)

	
Real Estate

	  	  	  	  	  	  	  
	
None

	  	
Up to $50,000

	  	
$50,000 to $250,000

	  	
Over $250,000

	  
	  	  	  	  	  	  	  	  
	
Securities

	  	  	  	  	  	  	  
	
None

	  	
Up to $50,000

	  	
$50,000 to $250,000

	  	
Over $250,000

	  
	
Other

	  	  	  	  	  	  	  
	
None

	  	
Up to $50,000

	  	
$50,000 to $250,000

	  	
Over $250,000

	  

 

	
5.  

	
Does the Subscriber consider itself to be an experienced and sophisticated investor? [   ]Yes [   ]No

 

If so, please provide information of investment sophistication and/or experience:

	  
	  
	  

 

	
6.  

	
Does the Subscriber, or any person authorized to execute this Questionnaire, consider itself to have such knowledge of the Corporation and its business and such experience in financial and business matters to enable it to evaluate the merits and risks of an investment in the Shares and the Corporation, should the Subscriber be given an opportunity to so invest? [   ]Yes [   ]No

 

	
7.  

	
If the Subscriber is an individual, please indicate the Subscriber’s and his/her spouse’s combined gross income during the preceding two years (initial the highest number applicable):

	  	
2013

	  	  	
2012

	  	
Less than $75,000

	  	  	
Less than $75,000

	  	
$75,001 to $100,000

	  	  	
$75,001 to $100,000

	  	
$100,001 to $200,000

	  	  	
$100,001 to $200,000

	  	
$200,001 to $300,000

	  	  	
$200,001 to $300,000

	  	
Over $300,000

	  	  	
Over $300,000

If the Subscriber is an individual, please indicate the Subscriber’s and his/her spouse’s combined estimated net worth (exclusive of home, home furnishings and personal automobiles) (initial the highest number applicable):

	  	
Less than $100,000

	  	  	
$300,0001 to $500,000

	  	
$100,001 to $200,000

	  	  	
$500,001 to $1,000,000

	  	
$200,001 to $300,000

	  	  	
Over $1,000,000

 

	
8.  

	
Regardless of the amount of the proposed investment, will the Subscriber be able to bear the economic risk of its investment in this transaction? [   ]Yes [   ]No

  

C-4

  

 

	
9.  

	
Please provide answers to the following questions:

	
(a)

	
State total assets of the Subscriber, including cash, stocks and bonds, automobiles, real estate, and any other assets:

	  	
$

	
(b)

	
State total liabilities of the Subscriber including real estate indebtedness, accounts payable, taxes payable and any other liabilities:

	  	
$

	
(c)

	
State annual income of the Subscriber including salary, securities income, rental income and any other income:

	  	
$

	
(d)

	
State annual expenses of the Subscriber, excluding ordinary living expenses, including real estate payments, rent, property taxes and other expenses:

	  	
$

	
(e)

	
Does the Subscriber expect the amount of its assets, liabilities, income and expenses, as stated above, to be subject to significant change in the future:  [   ]Yes [   ]No

 

If yes, explain:

	  
	  

 

	
10.  

	
The Undersigned further acknowledges being furnished with the following specified information a reasonable time prior to purchase of the securities: a brief description of the securities being offered, the use of proceeds from the offering, and any material changes in the Corporation’s affairs that are not disclosed in the documents furnished; and that at a reasonable time prior to the purchase of the securities, it has been afforded the opportunity to ask questions and receive answers concerning the terms and conditions of the offering and to obtain any additional information which the Corporation possesses or can acquire without unreasonable effort or expense that is necessary to verify the accuracy of the information furnished.

 

	
11.  

	
The Undersigned further acknowledges being furnished with the following specified information a reasonable time prior to purchase of the securities: a brief description of the securities being offered, the use of proceeds from the offering, and any material changes in the Corporation’s affairs that are not disclosed in the documents furnished; and that at a reasonable time prior to the purchase of the securities, it has been afforded the opportunity to ask questions and receive answers concerning the terms and conditions of the offering and to obtain any additional information which the Corporation possesses or can acquire without unreasonable effort or expense that is necessary to verify the accuracy of the information furnished.

  

C-5

  

 

The Undersigned agrees that the securities purchased will be subject to resale restrictions under the laws of the United States and that a restrictive legend will be placed on certificates representing such securities.

 

The Subscriber hereby certifies that the information contained in this Questionnaire is complete and accurate and the Subscriber will notify the Corporation promptly of any change in any such information.  If this Questionnaire is being completed on behalf of a corporation, partnership, trust or estate, the person executing on behalf of the Subscriber represents that it has the authority to execute and deliver this Questionnaire on behalf of such entity.

 

IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the ________ day of __________________, 201__.

	
If a Corporation, Partnership or Other Entity:

	  	
If an Individual:

	  	  	  
	
Print of Type Name of Entity

	  	
Signature

	  	  	  
	
Signature of Authorized Signatory

	  	
Print or Type Name

	  	  	  
	
Type of Entity

	  	
Social Security/Tax I.D. No.

  

C-6Exhibit 10.1

 

SEPARATION AGREEMENT AND RELEASE

 

This Separation Agreement and Release (the “Agreement”) is made and entered into as of January 15, 2014, by and between Summer Infant, Inc. and its subsidiaries, including, without limitation, Summer Infant (USA), Inc. (collectively, the “Company”) and Jason Macari (“Macari”).

 

RECITALS

 

A.                                    Macari and the Company are parties to an Employment Agreement dated February 1, 2010 (the “Employment Agreement”).

 

B.                                    The Company has elected not to renew the Employment Agreement and, as a result, Macari will be relieved of all responsibilities as an officer and employee of the Company as of February 1, 2014.

 

C.                                    The parties wish for Macari to receive certain separation benefits from the Company, conditioned upon Macari’s entry into this Agreement effective February 1, 2014.

 

D.                                    The parties wish to settle and compromise fully and finally any and all claims Macari has or purports to have against the Company and others, including, but not limited to, those arising out of Macari’s employment, on the terms and conditions set forth in this Agreement.

 

AGREEMENT

 

In consideration of the mutual promises in this Agreement, the parties agree as follows:

 

1.                                      Separation.  The parties agree that Macari’s employment will cease effective as of February 1, 2014 (the “Separation Date”) and he shall be deemed to have resigned as an officer of the Company on such date and as an officer and director of all subsidiaries of the Company on such date.  The parties agree that, as of the Separation Date, the parties’ respective rights and obligations are governed only by this Agreement.  Effective as of the Separation Date, Macari will cease to be an employee of the Company and will no longer be entitled to any payments from the Company or to participate in any benefit plans or arrangements sponsored by the Company or any of its subsidiaries, except as specifically set forth in this Agreement or as required by applicable law.

 

2.                                      Transition.  From the Separation Date through July 31, 2014 (the “Transition Period”), Macari will make himself reasonably available to consult and travel, internationally and domestically, on an as-needed basis after reasonable advance notice with the Company’s Chief Executive Officer on business-related issues and to perform such other responsibilities as specifically assigned to him from time to time by the Company’s Chief Executive Officer commensurate with his role as a consultant to the Company’s Chief Executive Officer.  During the Transition Period, Macari shall make himself available to render such services on a full-time basis. At the end of the Transition Period, the Company may, in its sole discretion, elect to extend the Transition Period for an additional six-month period (the “Subsequent Transition

 

 

Period”), provided that the Company and Macari shall negotiate in good faith an additional amount to compensate Macari for any services to be provided during any Subsequent Transition Period.  Macari agrees to provide services during the Transition Period as part of the consideration described in Section 3 and shall not be entitled to any additional compensation for such services, other than reasonable and necessary expenses incurred by Macari in connection with the services in accordance with the Company’s expense reimbursement policies and procedures in effect from time to time.

 

3.                                      Consideration.  In consideration for the execution, delivery, and non-revocation of this Agreement by Macari, the Company will provide the consideration set forth in this Section 3.  Macari understands and agrees that he is receiving such consideration in part for the services provided in Section 2, the covenants contained in Section 4 and the release contained in Section 5, and Macari is not otherwise entitled to such consideration.

 

(a)                                 Following the Separation Date, the Company will pay Macari all earned wages, accrued but unpaid benefits relating to vacations, other perquisites, and reimbursements through the Separation Date.

 

(b)                                 For a period of eighteen months following the Separation Date, the Company shall pay to Macari an annualized gross amount of $400,000, payable on such dates as his base salary would otherwise have been paid by the Company in accordance with its regular payroll procedures, less applicable deductions and withholdings, provided Macari has not revoked this Agreement as provided in Section 9 and has otherwise complied with the terms of this Agreement.

 

(c)                                  For a period of eighteen months following the Separation Date, the Company agrees to continue substantially comparable medical and dental insurance in which Macari and his dependents, if any, are enrolled on the Separation Date at the same coverage levels and cost to Macari in effect on the Separation Date, except to the extent such coverage may be changed in its application to all Company employees and then the coverage provided to Macari shall be commensurate with such changed coverage.  Macari will continue to be responsible for the same premiums he currently pays which will be deducted from the payments described in Section 3(b).  If the Company’s insurance company informs the Company that Macari cannot continue under the applicable plans after the Separation Date, the Company will cooperate with Macari to provide coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (COBRA).  Notwithstanding the foregoing, during the eighteen months the Company is obligated to continue the medical and dental benefits under the terms of this Section 3(c), such benefits shall be discontinued immediately if any required premium is not paid in full on time, Macari becomes covered under another group health plan, Macari becomes entitled to Medicare benefits (under Part A, Part B, or both), or the Company ceases to provide any group health plan for its employees.  Continuation may also be terminated if for any reason the plan providing such coverage would terminate coverage of a participant or an eligible dependent.  The parties acknowledge and agree that Macari participated in the Company’s 401(k) plan, and his rights to benefits under that plan following the Separation Date will be governed by the terms of that plan.

 

2

 

(d)                                 Attached as Schedule 1 to this Agreement is a summary of Macari’s outstanding equity awards (the “Equity Awards”).  As approved by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”), the unvested portions of the Equity Awards shall continue to vest until July 31, 2015 according to their terms.  At July 31, 2015, (i) all vested but unexercised stock option awards shall remain vested and exercisable through the date that is the earlier of (A) October 31, 2015 or (B) the expiration date set forth in the applicable award agreement, and (ii) all vested but undelivered restricted stock awards outstanding as of July 31, 2015 shall be delivered promptly to Macari.  In addition, during such additional vesting period, Macari shall be entitled to the benefit of any accelerated vesting that may become available pursuant to the Company’s 2006 Performance Equity Plan, the applicable award agreements or that may otherwise be made available by the Company to all other employees holding equity awards.  The individual grant agreements relating to the Equity Awards are deemed amended to reflect the terms of this Section 3(d) as approved by the Compensation Committee.  Any unvested Equity Awards at July 31, 2015 shall be immediately forfeited and of no further effect as of such date.

 

(e)                                  The Company shall reimburse Macari for reasonable legal fees and expenses incurred by him in connection with the negotiation and execution of this Agreement, provided that such reimbursement amount shall not exceed $7,000.

 

(f)                                   The Company shall pay for the costs, not to exceed $12,000, of outplacement services for Macari from one or more firms chosen by the Company, for a period of twelve months following the Separation Date.

 

(g)                                  For avoidance of doubt, payment of any other perquisites paid to Macari prior to the Separation Date, including his car allowance, will be discontinued as of the Separation Date.  Macari shall be entitled to retain his cellular phone and number and use his Company-provided computer during the Transition Period.

 

(h)                                 Notwithstanding the foregoing, if Mr. Macari breaches any covenants contained in Section 4 of this Agreement during the term of this Agreement (i) the Company will suspend the vesting of the Equity Awards and the making of any payments required pursuant to this Section 3 and may seek to recover and terminate such payments as set forth in Section 4(f) and (ii) Macari will be deemed to have resigned from his position as a director of the Company, and Macari hereby agrees to such deemed resignation.  If for any reason Section 3(h)(ii) is deemed insufficient to effect such resignation, Macari hereby authorizes the Secretary and any Assistant Secretary of the Company to execute such documents or instruments as the Company may deem reasonably necessary or desirable to effect such resignation, and to act as Macari’s attorney-in fact solely for the purpose of so effecting such resignation.

 

4.                                      Covenants.

 

(a)                                 For a period of eighteen months from the Separation Date:

 

(i)                                     Macari will not, and will not permit any person subject to his direction or control to, directly or indirectly, whether alone or in association with others, as

 

3

 

principal, officer, agent, consultant, employee, director or owner of any corporation, partnership, association or other entity, or through the investment of capital, lending of money or property, rendering of services or otherwise, engage in, influence, control, have an interest in or otherwise become actively involved with any business that competes with the business of the Company.  Macari acknowledges that the business of the Company is national and international in scope, as its current and anticipated customers and suppliers are located throughout the United States and abroad, and that it is therefore reasonable that the restrictions set forth in this Section 4(a) not be limited to any specified geographic area.  For purposes of this Agreement, the “business of the Company” is the design, marketing and distribution of juvenile health, safety and wellness products (ages 0-3);

 

(ii)                                  Macari will not directly or indirectly attempt to encourage, induce or otherwise solicit, directly or indirectly, any employee of the Company, or any of its affiliates or subsidiaries, to breach his or her employment agreement or to leave their employment; and

 

(iii)                               Macari will not directly or indirectly (i) solicit, attempt to encourage, induce or otherwise solicit any business from, or attempt to sell, license, or provide the same or similar products or services as provided by the Company or any subsidiary of the Company to, any customer or prospective customer of the Company, or cause such persons to divert, terminate, limit, modify or fail to enter into any existing or potential relationship with the Company, or (ii) solicit, attempt to encourage, induce or otherwise solicit any business from, or provide services to any supplier of the Company, or cause such suppliers to divert, terminate, limit, modify or fail to enter into any existing or potential relationship with the Company.

 

(b)                                 Macari acknowledges that, during the course of his employment, he had access to various trade secrets, whether in existence or proposed, and confidential information of the Company, including but not limited to budgets, strategies, business plans, operating plans, patents, copyrights, product information, software, hardware, financial information and forecasts, manuals, training programs, profit margins, sales plans, marketing and branding plans, customer and supplier information and lists, and the specific terms of the Company’s relationships or agreements with its suppliers or customers.  Further, Macari agrees to disclose and assign to the Company as its exclusive property, all ideas, writings, inventions, discoveries, improvements and technical or business innovations relating to the business of the Company made or conceived by Macari prior to the date of this Agreement and during the Transition Period or any Subsequent Transition Period, which the parties acknowledge shall be considered “work for hire” under applicable intellectual property law, whether or not patentable or copyrightable, either solely or jointly with others, which are along the lines of the business, work or investigations of the Company.  Macari agrees that he shall not disclose such information or use it in any way, at any time in the future, except to the extent such information becomes publicly available through lawful and proper means, or to the extent that Macari is required to disclose such information pursuant to subpoena.  If such information is requested pursuant to a subpoena, Macari shall, if legally permissible, give prompt notice to the Company, so that the Company has a reasonable opportunity to seek, at its expense, judicial relief to preclude disclosure, if necessary.  Without limitation, the prohibition in this section includes Macari’s use of such information to directly or indirectly solicit any manufacturer, manufacturer’s representative, distributor, or customer of the

 

4

 

Company or any of its subsidiaries, and Macari’s use of such information to directly or indirectly interfere with the advantageous business relationship between the Company and any of its customers or suppliers.  For purposes hereof, the foregoing prohibitions shall not apply to any information that (i) at the time of disclosure or thereafter is generally available to or known by the public or the industries in which the Company is engaged (other than as a result of the disclosure by Macari in breach of this Agreement) or (ii) has been independently acquired, received or developed by Macari after the Transition Period without violating any of Macari’s obligations under this Agreement.  Notwithstanding the foregoing, Macari may retain any records relating to his employment with the Company and the negotiation and execution of this Agreement.

 

(c)                                  Macari agrees that he will not knowingly act in any manner that might damage the business of the Company.  Macari further agrees that he will not knowingly counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against any Releasees (as defined below), unless under a subpoena or other court order to do so.  Macari agrees, if legally permissible, to promptly notify the Company upon receipt of any such subpoena or court order, and to furnish, within three business days of its receipt, a copy of such subpoena or court order to the Company.  If approached by anyone for counsel or assistance in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints against any Releasees, Macari shall state no more than that he cannot provide counsel or assistance.

 

(d)                                 Macari agrees not to make to any person any statement that disparages the Company or its directors, officers, employees or affiliates or reflects negatively on the Company, including without limitation statements regarding the Company’s financial condition, business practices, employment practices or its predecessors, successors, subsidiaries, officers, directors, employees or affiliates.  The Company agrees not to make to any person any statement that disparages Macari or reflects negatively upon Macari.

 

(e)                                  The parties acknowledge that covenants and restrictions set forth in this Section 4 are necessary to protect the legitimate business interests of the Company.  The parties agree that, if the scope of enforceability of any or all the restrictive covenants set forth in this Agreement is in any way disputed at any time, a court may modify and enforce the covenants to the extent it believes to be reasonable under the circumstances existing at that time.

 

(f)                                   Macari acknowledges and agrees that any breach of any provision of this Agreement, including the covenants set forth in this Section 4, shall constitute a material breach of this Agreement and that the Company may seek to recover and cease paying the consideration provided to Macari under this Agreement.  If the Company seeks to recover and/or cease paying consideration under this Agreement as a result of an alleged breach of the Agreement by Macari, the Company will suspend the payment of such consideration until such time as a court of competent jurisdiction issues a final, non-appealable order with respect to any such alleged breach or the parties reach a mutual written agreement with respect to such alleged breach.  Macari agrees that the breach by him of the covenants set forth in this Agreement, including this Section 4, could not reasonably or adequately be compensated in damages in an action at law,

 

5

 

and that the Company shall be entitled to seek, in addition to other available remedies, a temporary or permanent injunction or other equitable relief against such breach or threatened breach from any court of competent jurisdiction, without the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity of posting any bond or other security.  However, no remedy conferred by any of the specific provisions of this Agreement (including this paragraph) is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder, or now or hereafter existing in law or in equity, or by statute or otherwise.  The election of any one or more remedies by the Company shall not constitute a waiver of the right to pursue other available remedies.

 

5.                                      Release.  The Release set forth in this section is effective as of the Effective Date (as defined in Section 9).

 

(a)                                 Except for the obligations of the Company hereunder and under any of Macari’s equity awards, Macari, for himself and, as applicable, his agents, attorneys, successors, and assigns, hereby knowingly and voluntarily irrevocably and unconditionally releases the Company, its predecessors, parent, subsidiaries, affiliated entities, and the past and present officers, directors, employees, fiduciaries, shareholders, agents, successors, representatives and assigns of each and all of them, and all persons acting by, through, under or in concert with them (each a “Releasee” and collectively referred to as “Releasees”), from any and all claims, charges, complaints, liabilities, and obligations of any nature whatsoever, which Macari may have against the Company or any of the Releasees, whether now known or unknown, and whether asserted or unasserted, arising from any event or omission occurring on or prior to the Effective Date of this Agreement.

 

(b)                                 Without limiting the foregoing, this release includes any and all claims arising out of or which could arise out of the employment relationship between Macari and the Company and the cessation of Macari’s employment, including but not limited to: (i) any and all claims under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, Section 1981 of the Civil Rights Act of 1866, the Age Discrimination in Employment Act, the Equal Pay Act, the Family and Medical Leave Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act (ERISA), COBRA, the Rhode Island Parental and Family Medical Leave Act, the Rhode Island Fair Employment Practices Act, the Rhode Island Civil Rights Act of 1990, the National Labor Relations Act, as amended, state and local civil rights laws, Rhode Island wage payment laws, and any and all similar laws in other states; (ii) any and all Executive Orders (governing fair employment practices) which may be applicable to the Company; and (iii) any other provision or theory of law or equity, including without limitation claims for wrongful discharge, breach of express or implied contract, breach of a covenant of good faith and fair dealing, violation of public policy, defamation, interference with contractual relations, interference with prospective economic advantage or advantageous relations, intentional or negligent infliction of emotional distress, misrepresentation, deceit, fraud, negligence, or any other statutory or common law claim under any state or federal law.  Macari understands and acknowledges that Title VII of the Civil Rights Act of 1964, ERISA, and state and local civil right laws, provide Macari the right to bring actions against the Company if,

 

6

 

among other things, Macari believes he has been discriminated against on the basis of race, ancestry, color, religion, sex, national origin, medical condition, sexual orientation, disability, or benefit eligibility.  With full understanding of the right afforded under these Acts, Macari agrees that he will not file any action against the Company or any Releasee based upon any alleged violation of these Acts or under any other theory of law or statute, including but not limited to, back pay, front pay, attorney’s fees, damages, interest, waiting time, penalties, reinstatement, or injunctive relief that could be assessed by any federal, state or local court, any administrative agency, or any other forum with competent jurisdiction.  This release may be pled as a complete bar and defense to any claim brought with respect to the matters released in this Agreement.

 

(c)                                  Macari acknowledges and agrees that the consideration he is receiving under this Agreement is sufficient consideration to support the release of all entities and persons identified in this Section 5, and that said consideration is in addition to anything of value to which Macari is entitled.

 

(d)                                 Macari agrees and represents that he has not filed, or caused to be filed, any claim or charge with any adjudicative body, regulatory body, or agency arising out of his employment or the cessation of his employment.  With respect to the claims Macari is releasing and waiving herein, Macari acknowledges and agrees that he is waiving his right to receive money or any other relief in any actions instituted on his behalf by any other person, entity, or government agency.

 

(e)                                  Macari specifically understands and acknowledges that the Age Discrimination in Employment Act of 1967, as amended, provides him the right to bring a claim against the Company if he believes that he has been discriminated against on the basis of age. Macari understands the rights afforded under this Act and agrees that he will not file any such claim or action against the Company or any Releasee, including, but not limited to, back pay, front pay, attorney’s fees, damages, reinstatement, or injunctive relief.

 

(f)                                   To the fullest extent permitted by law, at no time subsequent to the execution of this Agreement will Macari pursue, or cause or knowingly permit the prosecution, in any state, federal or foreign court, or before any local, state, federal or administrative agency, or any other tribunal, any charge, claim or action of any kind, nature and character whatsoever, known or unknown, which Macari may now have, has ever had, or in the future may have against any Releasee, which is based in whole or in part on any matter covered by this Agreement.

 

6.                                      Board Membership.  Macari agrees that he will resign as a director of the Company on the earlier of (i) a deemed resignation pursuant to Section 3(h)(ii), (ii) Macari’s voluntarily resignation and (iii) the date eighteen months from the Separation Date.

 

7.                                      Communications; Company Property.  From and after the Separation Date, Macari shall not represent himself as an employee or officer of the Company or any of its subsidiaries.  Effective as of the Separation Date, Macari shall have no authority to act on behalf of the Company and shall not hold himself out as having such authority, enter into any agreement or incur any obligations on behalf of the Company or otherwise act in an executive

 

7

 

capacity.  Macari acknowledges and agrees that all notes, computers, records, materials, documents and other property delivered to or compiled by Macari by or on behalf of the Company or its representatives, vendors, or customers that pertain to the business of the Company, regardless of the type of medium in which they are preserved, are the sole and exclusive property of the Company, and upon request Macari shall deliver to the Company such Company property at the end of the Transition Period, or upon the earlier request of the Company.

 

8.                                      Sufficient Time to Review.  Macari acknowledges that he has been afforded a reasonable opportunity to consider this Agreement and is encouraged to consult with an attorney of his own choosing in deciding whether to execute this Agreement.  Macari acknowledges that he has been given a period of at least 21 days within which to consider this Agreement, and that he has read and fully understands the Agreement and enters into it freely, voluntarily, and without coercion, and in the event that he executes this Agreement in less than 21 days, his election to do so has been knowing and voluntary.

 

9.                                      Revocation Period.  Macari understands that he has a period of seven days from the date he signs this Agreement to revoke this Agreement, and that, should he decide to revoke it within said seven-day period, he shall not be entitled to the consideration recited herein.  Macari further understands that this Agreement shall not become effective or enforceable until the expiration of the seven-day period, and, therefore, that he shall not receive the consideration set forth herein until the revocation period has expired without Macari exercising his right of revocation.  Macari agrees that he must provide written notice of revocation of this Agreement to Mark Strozik, Vice President, Human Resources, Summer Infant, Inc., 1275 Park East Drive, Woonsocket, RI 02895, should he wish to exercise his rights to revoke this Agreement within the revocation period.  If this Agreement is not timely revoked, this Agreement will become effective as of the expiration of the revocation period (“Effective Date”).

 

10.                               Section 409A.  It is the intention of the parties that compensation or benefits payable under this Agreement not be subject to the additional tax imposed pursuant to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and this Agreement shall be interpreted accordingly.  To the extent such potential payments or benefits could become subject to additional tax under such Section, the parties shall cooperate to amend this Agreement with the goal of giving Macari the economic benefits described herein in a manner that does not result in such tax being imposed.  Each payment or benefit made pursuant to this Agreement shall be deemed to be a separate payment for purposes of Code Section 409A and each payment made in installments shall be treated as a series of separate payments for purposes of Code Section 409A, to the extent permitted under applicable law.  To the extent that payments or benefits pursuant to this Agreement are conditioned upon the execution and delivery by Macari of the Release, Macari shall forfeit all rights to such payments and benefits unless such Release is signed and delivered (and no longer subject to revocation, if applicable) within sixty days following the Separation Date.  All taxable reimbursements provided hereunder that are deferred compensation subject to the requirements of Code Section 409A shall be made not later than the calendar year following the calendar year in which the expense was incurred.   Any such taxable

 

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reimbursements or any taxable in-kind benefits provided in one calendar year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year.

 

11.                               Acknowledgement.  Macari acknowledges, represents and warrants that he enters into this Agreement knowingly, voluntarily, free of duress or coercion, and with a full understanding of all terms and conditions contained herein.

 

12.                               Headings.  The headings are for convenience of the parties, and are not to be construed as terms and conditions of this Agreement.

 

13.                               Severability.  Should any provision in this Agreement be declared or determined to be illegal or invalid (with the exception of Section 5, in whole or in part, subsections included), the validity of the remaining parts, terms, or provisions shall not be affected and the illegal or invalid part, term, or provisions shall be deemed not to be part of this Agreement.

 

14.                               Integration.  This Agreement constitutes the entire agreement between the parties, and supersede all oral negotiations and any prior and other writings with respect to the subject matter of this Agreement, and is intended by the parties as the final, complete and exclusive statement of the terms agreed to by them.

 

15.                               Choice of Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Rhode Island.

 

16.                               Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT HE OR IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS AGREEMENT, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY.  EACH PARTY HERETO (A) CERTIFIES THAT NO AGENT, ATTORNEY, REPRESENTATIVE OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF LITIGATION, AND (B) ACKNOWLEDGES THAT HE OR IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

17.                               Amendment.  This Agreement shall be binding upon the parties and may not be amended, supplemented, changed, or modified in any manner, orally or otherwise, except by an instrument in writing of concurrent or subsequent date signed by the parties.

 

18.                               Successors and Assigns.  This Agreement is and shall be binding upon and inure to the benefit of the heirs, executors, successors and assigns of each of the parties.

 

19.                               Non-Admission.  This Agreement shall not in any way be construed as an admission by the Company that it has acted wrongfully with respect to Macari, and the Company specifically denies the commission of any wrongful acts against Macari.  This Agreement shall not in any way be construed as an admission by Macari that he has acted wrongfully with respect

 

9

 

to the Company or failed to perform any of his obligations to the Company, and Macari specifically denies the commission of any wrongful acts against the Company.

 

20.                               Reservation of Rights to Indemnification and Director and Officer Liability Insurance for Actions Taken or Omitted While an Executive Officer.  Macari’s right to indemnification to the fullest extent permitted by Delaware General Corporation Law and the Company’s Certificate of Incorporation and By-Laws for expenses (including attorney’s fees and disbursements), judgments, fines and amounts paid in settlement actually and reasonably incurred by Macari in connection with any proceeding arising by reason of acts taken or omissions to act occurring while Macari was an executive officer of the Company or an executive officer or director of any of the Company’s subsidiaries, shall continue unabridged after the Separation Date.

 

21.                               Notice.  Each notice or other communication required or permitted under this Agreement shall be in writing and transmitted, delivered, or sent by personal delivery, prepaid courier or messenger service (whether overnight or same-day), or prepaid certified United States mail (with return receipt requested), addressed (in any case) to the other Party at the address set forth as follows:

 

If to Macari:

 

Jason Macari
 3100 Diamond Hill Road
 Cumberland, RI  02864

 

With a copy to:

 

Hinckley, Allen & Snyder LLP
 Attention:  Aaron A. Gilman, Esq.
 28 State Street
 Boston, MA, 02109

 

If to the Company:

 

Summer Infant, Inc.
 Attention:  Senior Vice President — Human Resources
 1275 Park East Drive
 Woonsocket, Rhode Island 02895

 

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With a copy to:

 

Greenberg Traurig, LLP
 Attention:  Elizabeth Fraser, Esq.
 One International Place
 Boston, MA  02110

 

Each notice or communication so transmitted, delivered, or sent in person, by courier or messenger service, or by certified United States mail shall be deemed given, received, and effective on the date delivered to or refused by the intended recipient (with the return receipt, or the equivalent record of the courier or messenger, being deemed conclusive evidence of delivery or refusal).  Nevertheless, if the date of delivery is after 5:00 p.m. on a business day, the notice or other communication shall be deemed given, received, and effective on the next business day.

 

22.                               Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together constitute one and the same instrument.

 

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, the parties execute this Agreement as of the date first written above.

 

 

	
 
    	
 
    	
Summer   Infant, Inc.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
/s/   Jason Macari
    	
 
    	
By:
    	
/s/   Paul Francese
    
	
Jason   Macari
    	
 
    	
Name:
    	
Paul   Francese
    
	
 
    	
 
    	
Title:
    	
Chief   Financial Officer
    

 

Signature page – Separation Agreement and Release

 

 

Schedule 1

 

EQUITY AWARDS

 

1.              Option to purchase 310,000 shares at an exercise price of $2.14 per share, granted January 5, 2009; fully vested.

 

2.              Restricted stock award of 30,813 shares, granted June 15, 2011; 50% vested, remaining 50% vests 25% in June 2014 and 25% in June 2015.

 

3.              Restricted stock award of 24,914 shares, granted April 16, 2012; 25% vested; remaining 75% vests 25% in April 2014, 25% in April 2015 and 25% in April 2016.

 

4.              Option to purchase 45,886 shares at an exercise price of $5.55 per share, granted April 16, 2012; 25% vested; remaining 75% vests 25% in April 2014, 25% in April 2015 and 25% in April 2016.

 

5.              Restricted stock award of 31,000 shares, granted June 12, 2013; none vested; vests 25% in June 2014, 25% in June 2015, 25% in June 2016 and 25% in June 2017.

 

6.              Option to purchase 58,000 shares at an exercise price of $3.38 per share, granted June 12, 2013; none vested; vests 25% in June 2014, 25% in June 2015, 25% in June 2016 and 25% in June 2017.

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