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Item
5.02
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
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On
November 5, 2020 Brownie’s Marine Group, Inc. (the “Company”) and Christopher H. Constable (the
“Executive”) entered into a three year employment agreement (the “Employment Agreement”) pursuant to which the Executive shall serve as chief executive officer of
the Company. In consideration for the Executive’s services, the Executive shall receive (i) an annual base salary of
$200,000, payable in accordance with the customary payroll practices of the Company (the “Base Salary”), and (ii)
issuable upon execution of the Employment Agreement and on each anniversary of the date of the agreement during the term, a
non-qualified immediately exercisable five-year stock option to purchase that number of shares equal to $100,000 of the value
of the Company’s common stock at an exercise price equal to the market price of the Common Stock on the date of
issuance. Therefore, the Executive shall receive an initial stock option grant to purchase 5,434,783 shares of the
Corporation’s common stock at an exercise price of $0.0184 per share pursuant to an option award agreement (the
“Option Award Agreement”).
In
addition, the Executive shall be entitled to receive four-year stock options to purchase shares of common stock at an exercise
price equal to $0.0184 per share in the amounts listed below based upon the following performance milestones during the term of
the Employment Agreement: (i) 2,000,000 shares - if the Company’s total net revenues, as reported in its statement of operations
in its financial statements in its filings with the Securities and Exchange Commission, including as a result of a stock or asset
acquisition of a third party (“Net Revenues”) are in excess of $5,000,000, in the aggregate, for four consecutive
fiscal quarters; (ii) 3,000,000 shares - if the Company’s Net Revenues are in excess of $7,500,000, in the aggregate, for
four consecutive fiscal quarters; (iii) 5,000,000 shares - if the Company’s Net Revenues are in excess of $10,000,000, in
the aggregate, for four consecutive fiscal quarters; and (iv) 20,000,000 shares - if the Company’s common stock is listed
on the on NASDAQ or New York Stock Exchange.
The
Executive is also entitled to participate in all benefit programs the Company offers to its executives, reimbursement for business
expenses and three weeks of annual paid vacation.
The
agreement may be terminated for cause, upon Executive’s death or disability, or by the Company without cause. Furthermore,
the Executive may terminate the agreement for “good reason” as defined in the agreement. If the Company terminates
the agreement for cause, or if it terminates upon the Executive’s death or disability, or if he voluntarily terminates the
agreement, neither the Executive nor his estate (as the case may be) is entitled to any severance or other benefits following
the date of termination. If the Company should terminate the agreement without cause or the Executive terminates for good reason,
the Company is obligated to continue to pay to the Executive his base salary for a period of six months. The agreement also contains
customary confidentiality, non-disclosure and indemnification provisions.
Pursuant
to the Employment Agreement, the Executive also agreed to serve on the Company’s board of directors and the Company agreed
to nominate the Executive to serve on the board during the term of his Employment Agreement. On November 9, 2020, Jeffrey
Guzy, a member of the Company’s board of directors resigned from the board of directors. Mr. Guzy’s decision to resign
was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies, or
practices during his period of service as a director. Furthermore, pursuant to the Employment Agreement, Robert
Carmichael resigned as chief executive officer of the Company. Mr. Carmichael continues to serve as the Company’s chairman,
president and chief financial officer.
Biographical
information for Mr. Constable is as follows:
Mr.
Constable, age 54, has over 16 years experience as serving as a chief financial officer. From 2003 through February, 2020 he
served as chief financial officer of John Keeler & Co., Inc., d/b/a Blue Star Foods,
a privately held Florida corporation, an international seafood company. In 2018 John Keeler merged into Blue Star Foods Corp.,
an SEC reporting and OTC Pink quoted company (BSFC). Mr. Constable served as chief financial officer and a member of BSFC’s
board of directors from the closing of the merger through February 2020. Prior thereto,
from 1999 to 2003, Mr. Constable was a consultant at Gateway Capital Corp., a business consulting firm, where he analyzed the
financial and reporting capabilities of prospective lending customers with revenues from $10 to $100 million. Additionally, Mr.
Constable was involved with loan workouts of facilities that required either liquidation or restructuring to ensure collectability
for the financial institutions. From 1990 to 1999, Mr. Constable was a commercial banker at Mercantile Bankshares in Baltimore,
Finova Capital Corporation and Capital Bank, both in south Florida. During 2020 Mr. Constable has also provided business
and financial consulting services. From August 2020 through the November 2020 the Executive provided consulting services to the
Company pursuant to a letter agreement dated August 10, 2020. In 1989 Mr. Constable received
his B.S. in Finance with an Accounting Minor from the Merrick School of Business at the University of Baltimore. Mr. Constable’s
experience with public companies and over 30 year background in finance and accounting led to the decision to appoint him to the
board of directors.
The
description of the terms and conditions of each of the Option Award Agreement and Employment Agreement is qualified in its entirety
by reference to the agreement which is filed as Exhibit 10.1 and Exhibit 10.2, respectively, to this report.