UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01 Entry into a Material Definitive Agreement.
Effective January 24, 2024, the Board of Directors (the “Board”) of Edible Garden AG Incorporated (the “Company”) approved a form of indemnification agreement (the “Indemnification Agreement”) and the Company entered into Indemnification Agreements with each of its directors and executive officers. The Indemnification Agreement provides for the indemnification of directors and officers to the fullest extent permitted by the laws of the State of Delaware for claims brought against them relating to their service on behalf of the Company, the advancement of expenses in connection with any such claim, and the process for seeking indemnification and the advancement of expenses.
The foregoing description of the Indemnification Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Indemnification Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Effective January 25, 2024, Michael James retired from his positions as Chief Financial Officer, Treasurer, Secretary and Director of the Company. In connection with Mr. James’s retirement, on January 24, 2024, the Company and Mr. James entered into a separation agreement (the “Separation Agreement”). Mr. James has the right to revoke the Separation Agreement within seven days after executing it. After this revocation period, the Separation Agreement will be fully effective and enforceable. Pursuant to the terms of the Separation Agreement, the Company agreed to pay Mr. James a severance payment of $300,000 in the form of salary continuation over the next 12 months. In addition, Mr. James will be eligible to earn milestone payments under the Separation Agreement in an aggregate amount up to $300,000 if he completes certain transitional deliverables for the Company. The Company agreed to grant Mr. James a restricted stock award with a fair value equal to $25,000 as of the trading day after the date the Company files its Annual Report on Form 10-K for the year ended December 31, 2023. Under the Separation Agreement, Mr. James provided a general release of claims in favor of the Company and its affiliates, subject to customary exceptions. The foregoing description of the Separation Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Separation Agreement, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.
Effective January 25, 2024, the Board appointed Kostas Dafoulas to serve as the Company’s interim Chief Financial Officer following the retirement of Mr. James. Since November 1, 2023, Mr. Dafoulas, age 44, has served as a consultant to the Company on behalf of CapConnect+, Inc. (“CapConnect”) to provide financial reporting and related services to the Company. Mr. Dafoulas will continue in his role as Head of Advisory & Finance at CapConnect while he serves as our interim Chief Financial Officer. Mr. Dafoulas has served as Head of Advisory & CFO at CapConnect since September 2021. Mr. Dafoulas previously served as Treasurer at Semrush, Inc. from April 2020 to September 2021. From December 2017 to April 2020, Mr. Dafoulas was Director of Treasury at Circle Internet Financial, as well as Head of Finance for Poloniex, a subsidiary of Circle.
Mr. Dafoulas has no family relationship with any director or executive officer of the Company. Mr. Dafoulas may be deemed to have an indirect interest in the fees that the Company has paid to CapConnect relating to its consulting services. To date, those fees are less than $120,000.
The Company will continue to compensate Mr. Dafoulas pursuant to the terms of the consulting agreement with CapConnect at a rate of $300 per hour.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On January 24, 2024, the Board approved an amendment to the Company’s Amended and Restated Bylaws (the “Amendment”). The Amendment, which became effective immediately, reduces the quorum requirement at all meetings of the Company’s stockholders from a majority of the voting power of the Company’s shares issued and outstanding and entitled to vote at the meeting to at least one-third of the shares entitled to vote at the meeting.
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To align with recent amendments to the General Corporation Law of the State of Delaware, the Amendment also changes the vote required at meetings of the Company’s stockholders for any matter, other than the election of directors, from the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the matter to a majority of votes cast on the matter.
This description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 3.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
| Description |
| Amendment No. 1 to the Amended and Restated Bylaws of Edible Garden AG Incorporated | |
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104 |
| Cover Page Interactive Data File (embedded within the Inline XBRL document) |
# | Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish a copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request. | |||
* | Management contract or compensatory plan or arrangement. | |||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| EDIBLE GARDEN AG INCORPORATED |
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Date: January 26, 2024 | By: | /s/ James Kras |
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| Name: | James Kras |
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| Title: | President and Chief Executive Officer |
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EXHIBIT 3.1
AMENDMENT NO. 1
TO THE
AMENDED AND RESTATED BYLAWS
OF
EDIBLE GARDEN AG INCORPORATED
On January 24, 2024 the Board of Directors of Edible Garden AG Incorporated, a Delaware corporation (the “Corporation”), approved at a meeting of the Board of Directors an amendment to the Corporation’s Amended and Restated Bylaws (the “Bylaws”) as follows:
1. Section 2.4 of the Bylaws is hereby amended and restated in its entirety to read as follows:
“Section 2.4 Quorum. At least one-third of the shares entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by the General Corporation Law of the State of Delaware (“DGCL”), the Corporation’s Certificate of Incorporation, as amended (the “Certificate of Incorporation”) or these Bylaws. Where a separate vote by class or series is required, at least one-third of the shares of such class or series present in person or represented by proxy and entitled to vote shall constitute a quorum entitled to take action with respect to that vote on that matter. If a quorum shall not be present or represented at any meeting of stockholders, then the chair of the meeting or the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote, shall have the power to adjourn the meeting from time to time, without notice (except as required by law or Section 2.3 of these Bylaws) until a quorum shall again be present or represented by proxy. A quorum, once established, shall not be broken by the subsequent withdrawal of enough votes to leave less than a quorum.”
2. Section 2.9(c) of the Bylaws is hereby amended and restated in its entirety to read as follows:
“(c) Other Matters. Unless otherwise required by law, the Certificate of Incorporation, or these Bylaws, any matter, other than the election of directors, brought before any meeting of stockholders at which a quorum is present, shall be decided by a majority of votes cast on the matter.”
3. All other provisions of the Bylaws remain in full force and effect.
EXHIBIT 10.1
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement"), dated as of _________, 20___, is by and between Edible Garden AG Incorporated, a Delaware corporation (the "Company") and the individual whose name appears below the word “Indemnitee” on the signature page hereto (the "Indemnitee").
WHEREAS, Indemnitee is a director and/or an officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies;
WHEREAS, the board of directors of the Company (the "Board") has determined that enhancing the ability of the Company to retain and attract as directors and officers the most capable persons is in the best interests of the Company and that the Company therefore should seek to assure such persons that indemnification and insurance coverage is available; and
WHEREAS, in recognition of the need to provide Indemnitee with substantial protection against personal liability, in order to procure Indemnitee's continued service as a director and/or officer of the Company and to enhance Indemnitee's ability to serve the Company in an effective manner, and in order to provide such protection pursuant to express contract rights (intended to be enforceable irrespective of, among other things, any amendment to the Company's certificate of incorporation, as amended, or amended and restated bylaws (collectively, the "Constituent Documents"), any change in the composition of the Board or any change in control or business combination transaction relating to the Company), the Company wishes to provide in this Agreement for the indemnification of, and the advancement of Expenses (as defined in Section 1(f) below) to, Indemnitee as set forth in this Agreement and for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies.
NOW, THEREFORE, in consideration of the foregoing and the Indemnitee's agreement to continue to provide services to the Company, the parties agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall have the following meanings:
(a) "Beneficial Owner" has the meaning given to the term "beneficial owner" in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) "Change in Control" means the occurrence after the date of this Agreement of any of the following events:
(i) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of the Company's then outstanding Voting Securities unless the change in relative Beneficial Ownership of the Company's securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors;
(ii) the consummation of a reorganization, merger or consolidation, unless immediately following such reorganization, merger or consolidation, all of the Beneficial Owners of the Voting Securities of the Company immediately prior to such transaction beneficially own, directly or indirectly, more than 50% of the combined voting power of the outstanding Voting Securities of the entity resulting from such transaction;
(iii) during any period of two consecutive years, not including any period prior to the execution of this Agreement, individuals who at the beginning of such period constituted the Board (including for this purpose any new directors whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the Board; or
(iv) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets.
(c) "Claim" means:
(i) any threatened, pending or completed action, suit, proceeding or alternative dispute resolution mechanism, whether civil, criminal, administrative, arbitrative, investigative or other, and whether made pursuant to federal, state or other law; or
(ii) any inquiry, hearing or investigation that the Indemnitee determines might lead to the institution of any such action, suit, proceeding or alternative dispute resolution mechanism.
(d) "Delaware Court" shall have the meaning ascribed to it in Section 9(e) below.
(e) "Disinterested Director" means a director of the Company who is not and was not a party to the Claim in respect of which indemnification is sought by Indemnitee.
(f) "Expenses" means any and all expenses, including attorneys' and experts' fees, court costs, transcript costs, travel expenses, duplicating, printing and binding costs, telephone charges, and all other costs and expenses incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness or participate in, any Claim. Expenses also shall include (i) Expenses incurred in connection with any appeal resulting from any Claim, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, and (ii) for purposes of Section 5 only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee's rights under this Agreement, by litigation or otherwise. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
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(g) "Expense Advance" means any payment of Expenses advanced to Indemnitee by the Company pursuant to Section 4 or Section 5 hereof.
(h) "Indemnifiable Event" means any event or occurrence, whether occurring before, on or after the date of this Agreement, related to the fact that Indemnitee is or was a director, officer, employee or agent of the Company or any subsidiary of the Company, or is or was serving at the request of the Company as a director, officer, employee, member, manager, trustee or agent of any other corporation, limited liability company, partnership, joint venture, trust or other entity or enterprise (collectively with the Company, "Enterprise") or by reason of an action or inaction by Indemnitee in any such capacity (whether or not serving in such capacity at the time any Loss is incurred for which indemnification can be provided under this Agreement).
(i) "Independent Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently performs, nor in the past three years has performed, services for either: (i) the Company or Indemnitee (other than in connection with matters concerning Indemnitee under this Agreement or of other indemnitees under similar agreements) or (ii) any other party to the Claim giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement.
(j) "Losses" means any and all Expenses, damages, losses, liabilities, judgments, fines, penalties (whether civil, criminal or other), ERISA excise taxes, amounts paid or payable in settlement, including any interest, assessments, any federal, state, local or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement and all other charges paid or payable in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness or participate in, any Claim.
(k) "Person" means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity and includes the meaning set forth in Sections 13(d) and 14(d) of the Exchange Act.
(l) "Standard of Conduct Determination" shall have the meaning ascribed to it in Section 9(b) below.
(m) "Voting Securities" means any securities of the Company that vote generally in the election of directors.
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2. Services to the Company. Indemnitee agrees to continue to serve as a director or officer of the Company for so long as Indemnitee is duly elected or appointed or until Indemnitee tenders the Indemnitee’s resignation or is no longer serving in such capacity. This Agreement shall not be deemed an employment agreement between the Company (or any of its subsidiaries or Enterprise) and Indemnitee. Indemnitee specifically acknowledges that the Indemnitee’s service to the Company or any of its subsidiaries or Enterprise is at will and the Indemnitee may be discharged at any time for any reason, with or without cause, except as may be otherwise provided in any written employment agreement between Indemnitee and the Company (or any of its subsidiaries or Enterprise), other applicable formal severance policies duly adopted by the Board or, with respect to service as a director or officer of the Company, by the Company's Constituent Documents or Delaware law.
3. Indemnification. Subject to Section 9 and Section 10 of this Agreement, the Company shall indemnify Indemnitee, to the fullest extent permitted by the laws of the State of Delaware in effect on the date hereof, or as such laws may from time to time hereafter be amended to increase the scope of such permitted indemnification, against any and all Losses if Indemnitee was or is or becomes a party to or participant in, or is threatened to be made a party to or participant in, any Claim by reason of or arising in part out of an Indemnifiable Event, including, without limitation, Claims brought by or in the right of the Company, Claims brought by third parties, and Claims in which the Indemnitee is solely a witness.
4. Advancement of Expenses. Indemnitee shall have the right to advancement by the Company, prior to the final disposition of any Claim by final adjudication to which there are no further rights of appeal, of any and all Expenses actually and reasonably paid or incurred by Indemnitee in connection with any Claim arising out of an Indemnifiable Event. Indemnitee's right to such advancement is not subject to the satisfaction of any standard of conduct. Without limiting the generality or effect of the foregoing, within 30 days after any request by Indemnitee, the Company shall, in accordance with such request, (a) pay such Expenses on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimburse Indemnitee for such Expenses. In connection with any request for Expense Advances, Indemnitee shall not be required to provide any documentation or information to the extent that the provision thereof would undermine or otherwise jeopardize attorney-client privilege. In connection with any request for Expense Advances, Indemnitee shall execute and deliver to the Company an undertaking (which shall be accepted without reference to Indemnitee's ability to repay the Expense Advances) to repay any amounts paid, advanced, or reimbursed by the Company for such Expenses to the extent that it is ultimately determined, following the final disposition of such Claim, that Indemnitee is not entitled to indemnification hereunder. Indemnitee's obligation to reimburse the Company for Expense Advances shall be unsecured and no interest shall be charged thereon.
5. Indemnification for Expenses in Enforcing Rights. To the fullest extent allowable under applicable law, the Company shall also indemnify against, and, if requested by Indemnitee, shall advance to Indemnitee subject to and in accordance with Section 4, any Expenses actually and reasonably paid or incurred by Indemnitee in connection with any action or proceeding by Indemnitee for (a) indemnification or reimbursement or advance payment of Expenses by the Company under any provision of this Agreement, or under any other agreement or provision of the Constituent Documents now or hereafter in effect relating to Claims relating to Indemnifiable Events, and/or (b) recovery under any directors' and officers' liability insurance policies maintained by the Company. However, in the event that Indemnitee is ultimately determined not to be entitled to such indemnification or insurance recovery, as the case may be, then all amounts advanced under this Section 5 shall be repaid. Indemnitee shall be required to reimburse the Company in the event that a final judicial determination is made that such action brought by Indemnitee was frivolous or not made in good faith.
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6. Partial Indemnity. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for a portion of any Losses in respect of a Claim related to an Indemnifiable Event but not for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.
7. Notification and Defense of Claims.
(a) Notification of Claims. Indemnitee shall notify the Company in writing as soon as practicable of any Claim which could relate to an Indemnifiable Event or for which Indemnitee could seek Expense Advances, including a brief description (based upon information then available to Indemnitee) of the nature of, and the facts underlying, such Claim. The failure by Indemnitee to timely notify the Company hereunder shall not relieve the Company from any liability hereunder unless such failure materially prejudices the Company. If at the time of the receipt of such notice, the Company has directors' and officers' liability insurance in effect under which coverage for Claims related to Indemnifiable Events is potentially available, the Company shall give prompt written notice to the applicable insurers in accordance with the procedures set forth in the applicable policies. The Company shall provide to Indemnitee a copy of such notice delivered to the applicable insurers, and copies of all subsequent correspondence between the Company and such insurers regarding the Claim, in each case substantially concurrently with the delivery or receipt thereof by the Company.
(b) Defense of Claims. The Company shall be entitled to participate in the defense of any Claim relating to an Indemnifiable Event at its own expense and, except as otherwise provided below, to the extent the Company so wishes, it may assume the defense thereof with counsel reasonably satisfactory to Indemnitee. After notice from the Company to Indemnitee of its election to assume the defense of any such Claim, the Company shall not be liable to Indemnitee under this Agreement or otherwise for any Expenses subsequently directly incurred by Indemnitee in connection with Indemnitee's defense of such Claim other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ its own legal counsel in such Claim, but all Expenses related to such counsel incurred after notice from the Company of its assumption of the defense shall be at Indemnitee's own expense; provided, however, that if (i) Indemnitee's employment of its own legal counsel has been authorized by the Company, (ii) Indemnitee has reasonably determined that there may be a conflict of interest between Indemnitee and the Company in the defense of such Claim, (iii) after a Change in Control, Indemnitee's employment of its own counsel has been approved by the Independent Counsel or (iv) the Company shall not in fact have employed counsel to assume the defense of such Claim, then Indemnitee shall be entitled to retain its own separate counsel (but not more than one law firm plus, if applicable, local counsel in respect of any such Claim) and all Expenses related to such separate counsel shall be borne by the Company.
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8. Procedure upon Application for Indemnification. In order to obtain indemnification pursuant to this Agreement, Indemnitee shall submit to the Company a written request therefor, including in such request such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of the Claim, provided that documentation and information need not be so provided to the extent that the provision thereof would undermine or otherwise jeopardize attorney-client privilege. Indemnification shall be made insofar as the Company determines Indemnitee is entitled to indemnification in accordance with Section 9 below.
9. Determination of Right to Indemnification.
(a) Mandatory Indemnification; Indemnification as a Witness.
(i) To the extent that Indemnitee shall have been successful on the merits or otherwise in defense of any Claim relating to an Indemnifiable Event or any portion thereof or in defense of any issue or matter therein, including without limitation dismissal without prejudice, Indemnitee shall be indemnified against all Losses relating to such Claim in accordance with Section 3 to the fullest extent allowable by law, and no Standard of Conduct Determination (as defined in Section 9(b)) shall be required.
(ii) To the extent that Indemnitee's involvement in a Claim relating to an Indemnifiable Event is to prepare to serve and serve as a witness, and not as a party, the Indemnitee shall be indemnified against all Losses incurred in connection therewith to the fullest extent allowable by law and no Standard of Conduct Determination (as defined in Section 9(b)) shall be required.
(b) Standard of Conduct. To the extent that the provisions of Section 9(a) are inapplicable to a Claim related to an Indemnifiable Event that shall have been finally disposed of, any determination of whether Indemnitee has satisfied any applicable standard of conduct under Delaware law that is a legally required condition to indemnification of Indemnitee hereunder against Losses relating to such Claim and any determination that Expense Advances must be repaid to the Company (a "Standard of Conduct Determination") shall be made as follows:
(i) if no Change in Control has occurred, (A) by a majority vote of the Disinterested Directors, even if less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum or (C) if there are no such Disinterested Directors, by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered to Indemnitee; and
(ii) if a Change in Control shall have occurred, (A) if the Indemnitee so requests in writing, by a majority vote of the Disinterested Directors, even if less than a quorum of the Board or (B) otherwise, by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered to Indemnitee.
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The Company shall indemnify and hold harmless Indemnitee against and, if requested by Indemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within 30 days of such request, any and all Expenses incurred by Indemnitee in cooperating with the person or persons making such Standard of Conduct Determination.
(c) Making the Standard of Conduct Determination. The Company shall use its reasonable best efforts to cause any Standard of Conduct Determination required under Section 9(b) to be made as promptly as practicable. If the person or persons designated to make the Standard of Conduct Determination under Section 9(b) shall not have made a determination within 30 days after the later of (A) receipt by the Company of a written request from Indemnitee for indemnification pursuant to Section 8 (the date of such receipt being the "Notification Date") and (B) the selection of an Independent Counsel, if such determination is to be made by Independent Counsel, then Indemnitee shall be deemed to have satisfied the applicable standard of conduct; provided that such 30-day period may be extended for a reasonable time, not to exceed an additional 30 days, if the person or persons making such determination in good faith requires such additional time to obtain or evaluate information relating thereto. Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement of Indemnitee to indemnification under this Agreement shall be required to be made prior to the final disposition of any Claim.
(d) Payment of Indemnification. If, in regard to any Losses:
(i) Indemnitee shall be entitled to indemnification pursuant to Section 9(a);
(ii) no Standard Conduct Determination is legally required as a condition to indemnification of Indemnitee hereunder; or
(iii) Indemnitee has been determined or deemed pursuant to Section 9(b) or Section 9(c) to have satisfied the Standard of Conduct Determination,
then the Company shall pay to Indemnitee, within five days after the later of (A) the Notification Date or (B) the earliest date on which the applicable criterion specified in clause (i), (ii) or (iii) is satisfied, an amount equal to such Losses.
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(e) Selection of Independent Counsel for Standard of Conduct Determination. If a Standard of Conduct Determination is to be made by Independent Counsel pursuant to Section 9.1(b)(i), the Independent Counsel shall be selected by the Board of Directors, and the Company shall give written notice to Indemnitee advising the Indemnitee of the identity of the Independent Counsel so selected. If a Standard of Conduct Determination is to be made by Independent Counsel pursuant to Section 9.1(b)(ii), the Independent Counsel shall be selected by Indemnitee, and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either case, Indemnitee or the Company, as applicable, may, within five days after receiving written notice of selection from the other, deliver to the other a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not satisfy the criteria set forth in the definition of "Independent Counsel" in Section 1(i), and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person or firm so selected shall act as Independent Counsel. If such written objection is properly and timely made and substantiated, (i) the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit; and (ii) the non-objecting party may, at its option, select an alternative Independent Counsel and give written notice to the other party advising such other party of the identity of the alternative Independent Counsel so selected, in which case the provisions of the two immediately preceding sentences, the introductory clause of this sentence and numbered clause (i) of this sentence shall apply to such subsequent selection and notice. If applicable, the provisions of clause (ii) of the immediately preceding sentence shall apply to successive alternative selections. If no Independent Counsel that is permitted under the foregoing provisions of this Section 9(e) to make the Standard of Conduct Determination shall have been selected within 20 days after the Company gives its initial notice pursuant to the first sentence of this Section 9(e) or Indemnitee gives its initial notice pursuant to the second sentence of this Section 9(e), as the case may be, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware ("Delaware Court") to resolve any objection which shall have been made by the Company or Indemnitee to the other's selection of Independent Counsel and/or to appoint as Independent Counsel a person to be selected by the Court or such other person as the Court shall designate, and the person or firm with respect to whom all objections are so resolved or the person or firm so appointed will act as Independent Counsel. In all events, the Company shall pay all of the reasonable fees and expenses of the Independent Counsel incurred in connection with the Independent Counsel’s determination pursuant to Section 9(b).
(f) Presumptions and Defenses.
(i) Indemnitee's Entitlement to Indemnification. In making any Standard of Conduct Determination, the person or persons making such determination shall presume that Indemnitee has satisfied the applicable standard of conduct and is entitled to indemnification, and the Company shall have the burden of proof to overcome that presumption and establish that Indemnitee is not so entitled. Any Standard of Conduct Determination that is adverse to Indemnitee may be challenged by the Indemnitee in the Delaware Court. No determination by the Company (including by its directors or any Independent Counsel) that Indemnitee has not satisfied any applicable standard of conduct may be used as a defense to any legal proceedings brought by Indemnitee to secure indemnification or reimbursement or advance payment of Expenses by the Company hereunder or create a presumption that Indemnitee has not met any applicable standard of conduct.
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(ii) Reliance as a Safe Harbor. For purposes of this Agreement, and without creating any presumption as to a lack of good faith if the following circumstances do not exist, Indemnitee shall be deemed to have acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company if Indemnitee's actions or omissions to act are taken in good faith reliance upon the records of the Company, including its financial statements, or upon information, opinions, reports or statements furnished to Indemnitee by the officers or employees of the Company or any of its subsidiaries in the course of their duties, or by committees of the Board or by any other Person (including legal counsel, accountants and financial advisors) as to matters Indemnitee reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Company. In addition, the knowledge and/or actions, or failures to act, of any director, officer, agent or employee of the Company shall not be imputed to Indemnitee for purposes of determining the right to indemnity hereunder.
(iii) No Other Presumptions. For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, will not create a presumption that Indemnitee did not meet any applicable standard of conduct or have any particular belief, or that indemnification hereunder is otherwise not permitted.
(iv) Defense to Indemnification and Burden of Proof. It shall be a defense to any action brought by Indemnitee against the Company to enforce this Agreement (other than an action brought to enforce a claim for Losses incurred in defending against a Claim related to an Indemnifiable Event in advance of its final disposition) that it is not permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed. In connection with any such action or any related Standard of Conduct Determination, the burden of proving such a defense or that the Indemnitee did not satisfy the applicable standard of conduct shall be on the Company.
10. Exclusions from Indemnification. Notwithstanding anything in this Agreement to the contrary, the Company shall not be obligated to:
(a) indemnify or advance funds to Indemnitee for Expenses or Losses with respect to proceedings initiated by Indemnitee, including any proceedings against the Company or its directors, officers, employees or other indemnitees and not by way of defense, except:
(i) proceedings referenced in Section 5 above (unless a court of competent jurisdiction determines that each of the material assertions made by Indemnitee in such proceeding was not made in good faith or was frivolous); or
(ii) where the Company has joined in or the Board has consented to the initiation of such proceedings.
(b) indemnify Indemnitee if a final decision by a court of competent jurisdiction determines that such indemnification is prohibited by applicable law.
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(c) indemnify Indemnitee for the disgorgement of profits arising from the purchase or sale by Indemnitee of securities of the Company in violation of Section 16(b) of the Exchange Act, or any similar successor statute.
(d) indemnify or advance funds to Indemnitee for Indemnitee's reimbursement to the Company of any bonus or other incentive-based or equity-based compensation previously received by Indemnitee, or payment of any profits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements under Section 304 of the Sarbanes-Oxley Act of 2002 in connection with an accounting restatement of the Company or under the Company's clawback policy under Rule 10D-1 under the Exchange Act and Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (or any other clawback policy), or the payment to the Company of profits arising from the purchase or sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act).
11. Settlement of Claims. The Company shall not be liable to Indemnitee under this Agreement for any amounts paid in settlement of any threatened or pending Claim related to an Indemnifiable Event effected without the Company's prior written consent, which shall not be unreasonably withheld. The Company shall not settle any Claim related to an Indemnifiable Event in any manner that would impose any Losses on the Indemnitee without the Indemnitee's prior written consent.
12. Duration. All agreements and obligations of the Company contained herein shall continue during the period that Indemnitee is a director or officer of the Company (or is serving at the request of the Company as a director, officer, employee, member, trustee or agent of another Enterprise) and shall continue thereafter (i) so long as Indemnitee may be subject to any possible Claim relating to an Indemnifiable Event (including any rights of appeal thereto) and (ii) throughout the pendency of any proceeding (including any rights of appeal thereto) commenced by Indemnitee to enforce or interpret his or her rights under this Agreement, even if, in either case, he or she may have ceased to serve in such capacity at the time of any such Claim or proceeding.
13. Non-Exclusivity. The rights of Indemnitee hereunder will be in addition to any other rights Indemnitee may have under the Constituent Documents, the General Corporation Law of the State of Delaware, any other contract or otherwise (collectively, "Other Indemnity Provisions"); provided, however, that (a) to the extent that Indemnitee otherwise would have any greater right to indemnification under any Other Indemnity Provision, Indemnitee will be deemed to have such greater right hereunder and (b) to the extent that any change is made to any Other Indemnity Provision which permits any greater right to indemnification than that provided under this Agreement as of the date hereof, Indemnitee will be deemed to have such greater right hereunder.
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14. Liability Insurance. For the duration of Indemnitee's service as a director and/or officer of the Company, and thereafter for so long as Indemnitee shall be subject to any pending Claim relating to an Indemnifiable Event, the Company shall use commercially reasonable efforts (taking into account the scope and amount of coverage available relative to the cost thereof) to continue to maintain in effect policies of directors' and officers' liability insurance providing coverage that is at least substantially comparable in scope and amount to that provided by the Company's current policies of directors' and officers' liability insurance. In all policies of directors' and officers' liability insurance maintained by the Company, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are provided to the most favorably insured of the Company's directors, if Indemnitee is a director, or of the Company's officers, if Indemnitee is an officer (and not a director) by such policy. Upon request, the Company will provide to Indemnitee copies of all directors' and officers' liability insurance applications, binders, policies, declarations, endorsements and other related materials.
15. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment to Indemnitee in respect of any Losses to the extent Indemnitee has otherwise received payment under any insurance policy, the Constituent Documents, Other Indemnity Provisions or otherwise of the amounts otherwise indemnifiable by the Company hereunder.
16. Subrogation. In the event of payment to Indemnitee under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee. Indemnitee shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.
17. Amendments. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be binding unless in the form of a writing signed by the party against whom enforcement of the waiver is sought, and no such waiver shall operate as a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof.
18. Binding Effect. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part of the business and/or assets of the Company, by written agreement in form and substances satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.
19. Severability. The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any portion thereof) are held by a court of competent jurisdiction to be invalid, illegal, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
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20. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand, against receipt, or mailed, by postage prepaid, certified or registered mail:
(a) if to Indemnitee, to the address set forth on the signature page hereto.
(b) if to the Company, to:
Edible Garden AG Incorporated
283 County Road 519
Belvidere, NJ, 07823
Attention: Secretary
with a copy (which shall not constitute notice) to:
Harter Secrest & Emery LLP
1600 Bausch and Lomb Place,
Rochester, NY 14604
Attn: Alexander R. McClean, Esq.
Email: ###
Notice of change of address shall be effective only when given in accordance with this Section. All notices complying with this Section shall be deemed to have been received on the date of hand delivery or on the third business day after mailing.
21. Governing Law and Forum. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts made and to be performed in such state without giving effect to its principles of conflicts of laws. The Company and Indemnitee hereby irrevocably and unconditionally: (a) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Court and not in any other state or federal court in the United States, (b) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement and (c) waive, and agree not to plead or make, any claim that the Delaware Court lacks venue or that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.
22. Headings. The headings of the sections and paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction or interpretation thereof.
23. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original, but all of which together shall constitute one and the same Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
| EDIBLE GARDEN AG INCORPORATED |
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| INDEMNITEE
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[Signature page to Indemnification Agreement]
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EXHIBIT 10.2
SEPARATION AGREEMENT AND RELEASE OF ALL CLAIMS
Michael C. James (“Employee”) and Edible Garden AG Incorporated, a Delaware corporation (the “Company”), make this Separation Agreement and Release of All Claims (this “Agreement”) for Employee’s mutual and orderly separation from employment with the Company. Employee and the Company will be referred to herein collectively as the “Parties.”
WHEREAS, Employee has been employed by the Company pursuant to that certain Employment Agreement between Employee and the Company dated August 18, 2021 and amended on January 18, 2022 (the “Employment Agreement”); and
WHEREAS, the Company and Employee have agreed that Employee’s employment with the Company shall end on the Separation Date (defined below) as a result of Employee’s retirement; and
WHEREAS, notwithstanding anything contrary in the Employment Agreement, the Company desires to provide the benefits described herein in exchange for Employee’s acceptance of this Agreement.
NOW, THEREFORE, the Parties, in consideration for the promises and mutual covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which the Parties acknowledge, and the Parties acting on their own free will hereby irrevocably agree as follows:
1. Voluntary Resignation, Required Payments and Return of Company Property.
a. Pursuant to Section 3.1 of the Employment Agreement, Employee voluntarily resigns employment with the Company effective as of January 25, 2024 (the “Separation Date”). The Company and Employee agree that for the purposes of the Employment Agreement, Employee’s termination of Employment is a voluntary resignation without Good Reason (as defined by the Employment Agreement). To the extent that any such requirements exist, the Company and Employee mutually agree to waive any requirements under the Employment Agreement or other agreement relating to the form of notice or notice period of such voluntary resignation and understand that Employee shall not be entitled to any payment for such waived notice period. Effective as of the Separation Date, Employee also voluntarily resigns as a director of the Company and its subsidiaries and affiliates.
b. The Company shall pay the Accrued Benefits (as such term is defined in the Employment Agreement) in accordance with the Employment Agreement, which includes Employee’s remaining accrued but unused paid time off. For the avoidance of doubt, the Employee’s remaining accrued but unused paid time off will be paid in full in the payroll period immediately following the Separation Date. Except as set forth herein or as otherwise required by law, all of Employee’s employment benefits shall terminate on the Separation Date. The Company shall provide Employee with notice of Employee’s rights to benefits continuation at Employee’s cost.
c. Employee acknowledges that as a result of Employee’s resignation, Employee is not otherwise entitled to any of the severance benefits under the Employment Agreement or any other Company plan, policy or practice. Employee acknowledges that Employee’s vehicle allowance shall continue through the month including the Separation Date, but shall cease as of the first day of the next month.
d. Except as set forth below, by no later than the Separation Date, Employee, or Employee’s personal representative, shall return all documents, information and property of the Company in Employee’s possession or control, including all Company-owned computer equipment (hardware and software), telephones, facsimile machines, smartphones, tablet computer and other communication devices, credit cards, office keys, security access cards, badges, identification cards and all copies (including drafts) of any documentation or information (however stored or in whatever format) relating to the business of the Company and its subsidiaries and affiliates (collectively, the “Company Group”), the Company Group’s customers and clients, the Company Group’s prospective customers and clients, and the Company Group’s past, present and prospective employees and financial advisors. Employee understands and agrees that Employee may not retain any Company document or information or copies thereof in any format whatsoever without express written consent of the Company or as required by applicable law. Notwithstanding the foregoing, Employee may retain the Company laptop identified as EG-EWR2-MOB9; provided, that the Company shall be provided the opportunity to review, copy and/or delete any information from the laptop prior to Employee’s separation.
2. Consideration. In consideration of Employee executing and not revoking this Agreement and Employee’s continued compliance with the terms of this Agreement, the Parties agree that the Company shall provide the following benefits to Employee (collectively, the “Benefits”):
a. The Company shall pay Employee a severance payment of Three Hundred Thousand Dollars ($300,000) (the “Severance Payment”), less applicable withholdings. The Severance Payment shall be paid in the form of salary continuation in monthly installments over twelve (12) consecutive months, commencing on the next regular pay date of the Company following the Effective Date (defined in Section 11 below). If the Company fails to make any scheduled payment, Employee shall notify Company of such failure and the Company shall make the payment within five (5) business days of receipt of such notice. If the Company fails to make the payment after such period, interest shall accrue at the rate of fifteen percent (15%) per annum. The Company will reimburse Employee for the reasonable cost of counsel if necessary to collect the Severance Payment.
b. Upon the Separation Date, the Company shall engage Employee as an independent contractor to provide certain transitional and advisory work consisting of the deliverables described in Exhibit A. As set forth in Exhibit A, the Company shall pay Employee a fee upon the completion of each deliverable. If Employee completes all deliverables, the aggregate fees shall total Three Hundred Thousand Dollars ($300,000). If the Company fails to make any earned payment, Employee shall notify Company of such failure and the Company shall make the payment within five (5) business days of receipt of such notice. If the Company fails to make the payment after such period, interest shall accrue at the rate of fifteen percent (15%) per annum. The Company will reimburse Employee for the reasonable cost of counsel if necessary to collect the fees set forth in Exhibit A.
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c. As of the second trading day after the Company files its Annual Report on Form 10-K for the year ended December 31, 2023 (the “10-K File Date”), the Company shall grant the Employee an immediately vesting award under the Company’s 2022 Equity Incentive Plan, as amended, of a number of shares of restricted stock equal to $25,000 divided by the Nasdaq Official Closing Price of the Company’s common stock on the first trading day after the 10-K File Date (as such price is reported on https://www.nasdaq.com/market-activity/stocks/edbl/historical-nocp).
d. The Company shall, at its expense, cause its counsel to issue a legal opinion to the Company’s transfer agent to effect the removal of legends from shares of the Company’s common stock owned by the Employee and his immediate family members.
Employee agrees that Employee (i) is not entitled to the Benefits absent this Agreement and (ii) is not entitled to any other compensation (including, but not limited to, salary or bonuses), benefits, or payments of any kind or description from the Company, from or under any other promise, contract or agreement of any kind or description between Employee and any of Employee’s affiliates or related parties, on the one hand, and the Company or any member of the Company Group, on the other hand.
3. Waiver and Release.
a. Except as set forth in Section 3(e) below and for any claims arising out of personal guarantees by Employee on behalf of the Company, Employee for Employee’s own self and Employee’s affiliates, executors, heirs, successors and assigns, in consideration of the Benefits provided in Section 2 of this Agreement, does hereby fully and forever discharge and release the Company, the Company Group, and all of their parents, subsidiaries and affiliates, and with respect to each of the foregoing, its owners, agents, officers, shareholders, members, directors, employees, successors and assigns and each and all of the foregoing (collectively with Employee referred to in this Agreement as the “Released Company Parties”), individually and collectively, from any and all debts, demands, actions, causes of action, accounts, covenants, contracts, agreements, damages, omissions, promises, and any and all claims or liabilities whatsoever, of every name and nature, known or unknown, suspected or unsuspected, both in law and equity (individually or collectively “Claims”) that Employee now has or may in the future have, or that any person or entity may have on Employee’s behalf, on account of or arising out of any matter or thing which has happened, developed or occurred prior to Employee’s signing of this Agreement, including, without limitation, all Claims arising from Employee’s employment with the Company, any promise, contract or agreement between Employee and Released Company Parties, Employee’s separation from employment with the Company, Employee’s other relationships and dealings with the Company and other Released Company Parties, and the termination of such other relationships or dealings. Employee hereby waives any and all such legal rights and Claims of any type or description that Employee has or might have against the Company and/or any of the other Released Company Parties. This Agreement is intended to be interpreted in the broadest possible manner to include all actual or potential Claims that Employee may have against the Company, whether now known or unknown, except as specifically provided otherwise in this Agreement.
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b. Employee agrees to fully and forever release all legal rights and Claims against the Released Company Parties, whether or not presently known and including future legal rights and Claims if based in whole or in part on acts or omissions occurring before Employee executes this Agreement. Employee agrees that the legal rights and Claims that Employee is giving up include, but are not limited to, legal rights and Claims, if any, under all State and Federal statutes that protect individuals from discrimination in employment, such as the Age Discrimination in Employment Act, as amended (“ADEA”), the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, the Rehabilitation Act of 1973, the Americans With Disabilities Act (“ADA”), the Equal Pay Act (“EPA”), the Family and Medical Leave Act (“FMLA”), the Genetic Information Nondiscrimination Act of 2008 (“GINA”), the Employee Retirement and Income Security Act (“ERISA”), the Worker Adjustment and Retraining Notification Act (“WARN”), the National Labor Relations Act (“NLRA”), Federal and State False Claims Acts, the New Jersey Law Against Discrimination, the New Jersey Conscientious Employee Protection Act, the New Jersey Wage and Hour Law and any similar Federal, State or local statute, regulation or order.
c. Employee further agrees that the legal rights and Claims that Employee is giving up include any rights or Claims relating to any oral or written promise, agreement or contract of employment with the Company and/or other Released Company Parties, express or implied, or any oral or written promise, agreement or contract, express or implied, purporting to establish terms and conditions of employment. The Parties to this Agreement agree that any promise, agreement or contract concerning the employment of Employee by the Company or the terms and conditions of such employment or the termination of such employment, whether oral or written, express or implied is hereby terminated, is null and void, and has no further force or effect.
d. Employee understands and agrees that the release provided in this Agreement also includes any and all Claims for defamation; wrongful discharge; constructive discharge; breach of contract (including employment contracts or collective bargaining agreements); breach of implied contract; breach of the covenant of good faith and fair dealing; tortious interference with business and/or contractual relationship (or prospective relationship); retaliatory discharge; whistleblower's claims (if waivable); estoppel of any kind; common-law intentional torts; negligence; intentional or negligent infliction of mental or emotional distress; discrimination, harassment and/or retaliation or wrongful action that has been or could have been alleged under the common law, any civil rights or equal opportunity employment law, or any other statute, regulation, ordinance or rule; and any Claims against Released Company Parties for attorneys’ fees, liquidated damages, civil penalties, compensatory damages, punitive damages, costs, interest or any other kind of penalties or damages that exist or may exist as of the date that Employee signs this Agreement. Employee agrees that the complete release set forth in this Agreement is intended to apply to Claims that Employee does not presently know to exist. Subject to the representations and warranties contained in this Agreement, Employee understands that the facts with respect to which this Agreement is given may hereafter prove to be different from the facts now known or believed by them, and they hereby accept and assume the risk thereof and agree that this Agreement shall be and shall remain, in all respects, effective and not subject to termination or rescission by reason of any such difference in facts.
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e. Nothing in this Agreement is intended as, or shall be deemed or operate as, a release by Employee of Claims or rights related to the following matters (the “Excluded Matters”), in each case only to the extent that a Claim or right is directly related to such Excluded Matter: (i) Employee’s vested rights, if any, under any qualified retirement plan in which Employee participates (e.g., 401(k) benefits); (ii) Employee’s COBRA, unemployment insurance and workers’ compensation rights, and (iii) all rights that Employee has to be indemnified by any Released Company Party (as described in Section 6(a) below). Additionally, nothing in this Agreement shall be construed to constitute a waiver of (i) any Claims that Employee may have against the Released Company Parties that arise from acts or omissions that occur after the date of Employee’s execution of this Agreement, (ii) Employee’s rights, protected under law, to file a complaint or charge with, communicate with, provide relevant and truthful information to or otherwise cooperate with any governmental authority -- including the Equal Employment Opportunity Commission (“EEOC”), the National Labor Relations Board (“NLRB”), the Occupational Safety and Health Administration (“OSHA”), and, as further set out in Section 7 below, the Securities and Exchange Commission (“SEC”) -- regarding a possible violation of law or respond to any inquiry from such governmental authority, including an inquiry about the existence of this Agreement or its underlying facts, (iii) Employee’s right to communicate with any government agency or right to participate in any regulatory or law enforcement investigation, including their right to report any suspected violations of law, and (iv) any Claims Employee cannot waive as a matter of law. Employee agrees, however, to waive and release any right to receive any individual remedy or to recover any individual monetary or non-monetary damages as a result of any administrative charge, complaint or lawsuit filed by Employee or anyone on Employee’s behalf, except as explicitly prohibited by law or as set forth in Section 7. Finally, the release of all Claims set forth in this Section 3 does not affect Employee’s rights as expressly created by this Agreement and does not limit Employee’s ability to enforce this Agreement.
f. This Waiver and Release includes, but is not limited to, a waiver, discharge and release by Employee of the Released Company Parties from any damages or relief of whatever nature or description, including, but not limited to, compensatory damages, liquidated damages, punitive damages, equitable forms of relief, as well as any Claims for attorneys’ fees or costs, civil penalties and/or interest, which may arise from any of the Claims waived, discharged or released.
4. Enforcement and Legal Actions. The Parties agree that this Agreement may be enforced in any court, federal, state or local, and before any administrative agency or body, federal, state or local. This Agreement may be used as a complete defense in the future should Employee (or anyone on Employee’s behalf) bring a lawsuit or complaint based on any Claim that has been released, and if the Company successfully enforces the Waiver and Release in Section 3 above in a lawsuit or complaint involving Claims under any statute, Employee will pay for all costs incurred by the Company, including reasonable attorney’s fees, in defending such lawsuit or complaint, except as prohibited by the ADEA or other law.
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5. Continuing Obligations; Restrictive Covenants. Employee specifically acknowledges and agrees to fully comply with Employee’s continuing obligations under the Employment Agreement, including, but not limited to the non-competition, non-solicitation, and mutual non-disparagement provisions under Sections 4.3 through 4.5 thereof. Employee acknowledges that the Company’s agreement to provide the Benefits described in Section 2 are conditioned upon Employee’s compliance with all of Employee’s continuing obligations under the Employment Agreement and this Agreement and, as a result, Employee understands and agrees that Employee’s breach of any of Employee’s continuing obligations under such agreements shall result the cancellation of the Benefits; provided, that prior to any cancellation of Benefits based on Employee’s breach of these continuing obligations, the Company shall notify Employee of the breach, and Employee shall have ten (10) calendar days to cure such breach, if feasible.
6. Indemnification; Cooperation; Transitional Services.
a. Nothing in this Agreement, including the Waiver and Release in Section 3 is intended as, or shall be deemed or operate as, a release by Employee of any right that Employee has prior to the execution of this Agreement to be indemnified by any Released Company Party or to coverage under any directors and officers’ insurance policy and any run-off policy thereto.
b. Following the Separation Date, Employee agrees to cooperate fully, upon the reasonable request of the Company or any Released Company Party, in assisting such party with: (i) any investigation, audit or review by the Company or Released Company Party, (ii) any investigation, audit or review or by any federal, state or local regulatory, quasi-regulatory or self-regulatory organization, and (iii) any actual or threatened claim, lawsuit or proceeding, in all cases, that relate in any manner to events occurring during Employee’s employment with the Company or Employee’s past or present obligations to any of the Released Company Parties. Such cooperation shall include, but not be limited to (taking into account Employee’s personal and professional obligations), being reasonably available to meet and speak with officers or employees of the Company or applicable Released Company Party, and/or their counsel, at reasonable times and locations, executing accurate and truthful documents, giving accurate and truthful testimony, and taking such other actions as may reasonably be requested by the Company, any applicable Released Company Party, and/or their counsel to effectuate the foregoing. In connection with such cooperation, the Company will reimburse Employee for (i) his time at a rate of $250 per hour and (ii) reasonable pre-approved out-of-pocket expenses Employee may incur in connection with such cooperation. However, Employee and the Company agree that no compensation shall be paid under any circumstances for the content or substance of any testimony in any litigation, proceeding, audit, investigation or inquiry.
c. In consideration of the Benefits and in order to complete the deliverables described in Section 2, following the Separation Date, Employee will provide transitional and advisory work for the Company until such deliverables are completed. For the period from the Separation Date until March 31, 2024, Employee will make himself available for this transitional and advisory work for up to two hours per week. Although Employee will not be entitled to any compensation in addition to the Benefits described in Section 2 for such transitional and advisory work, the Company will reimburse Employee for any pre-approved travel expenses incurred during the course of such work.
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7. Communications with SEC and Whistleblower Rights. Nothing contained in this Agreement shall be construed to prevent the reporting of any act or failure to act to the SEC or other governmental body or prevent Employee from reporting information or recovering a reward as a “whistleblower” under Rule 21F-17(a) under the Securities Exchange Act of 1934 or other rules or regulations implemented under the Dodd-Frank Wall Street Reform Act and Consumer Protection Act. The parties acknowledge and agree that no party has any duty to notify any other party prior to reporting information about a possible securities law violation to the SEC. Furthermore, the Defend Trade Secrets Act of 2016 is applicable. It provides that no employee may be held criminally or civilly liable under any federal or state trade secret law for any disclosure of a trade secret (i) made in confidence, and solely for the purpose of reporting or investigating a suspected violation of law, to a federal, state, or local government official or to an attorney, (ii) made to an employee’s attorney if the employee files a lawsuit for retaliation by the Company for reporting a suspected violation of law, (iii) used in a court proceeding alleging retaliation if disclosed pursuant to a court order, or (iv) made in a complaint or other document filed under seal in a legal proceeding.
8. No Disability. Employee agrees that Employee has not sustained any disabling personal injury and/or occupational disease which has resulted in a loss of wage-earning capacity during Employee’s employment with the Company or due to the termination of Employee’s employment and that Employee has no personal injury and/or occupational disease which has been contributed to, or aggravated or accelerated in a significant manner, by Employee’s employment with the Company and/or the termination of Employee’s employment.
9. No Pending Action. Subject to Section 3(e) above, Employee represents that, as of the date Employee executed this Agreement, Employee has not filed any charge, complaint or action in any forum against any Released Company Party.
10. Consultation with Attorney. The Company has advised Employee and herby advises Employee in writing to consult with an attorney of Employee’s choosing, prior to signing this Agreement, concerning all of the terms of this Agreement and the termination of Employee’s employment with the Company. Employee represents that Employee has engaged and consulted with an attorney of Employee’s choice in connection with such matters.
11. Review Period. Employee represents and warrants that the Company has given Employee at least 21 days (the “review period”) to consider all of the terms of this Agreement, and for the purpose of consulting with an attorney if Employee so chooses. If this Agreement has been executed by Employee prior to the end of the review period, Employee represents that Employee has freely and willingly elected to do so. Employee and the Company agree that any changes to this Agreement, whether material or immaterial, do not operate to restart the review period. Once signed, Employee will have seven (7) days to revoke the Agreement, in writing, which revocation must be submitted via email to Mathew McConnell, Lead Independent Director of the Company’s board of directors at ###, with a copy (with shall not constitute notice of revocation) to Alexander R. McClean, Esq. at ###. If revoked, this Agreement shall not go into effect. If the Agreement is not revoked, it shall become effective on the eighth day after Employee signs it (the “Effective Date”).
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12. Review of Agreement. Employee represents and warrants that Employee has carefully read each and every provision of this Agreement and fully understands all of the terms and conditions of this Agreement.
13. Voluntary Agreement. Employee represents and warrants that Employee enters into this Agreement voluntarily of Employee’s own free will, without any pressure or coercion from any person or entity, including, but not limited to, the Company or any of its representatives.
14. Interpretation. The Parties agree that, whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement, which shall be fully severable and given full force and effect.
15. Governing Law. This Agreement shall be construed and governed in accordance with the internal laws of the State of New Jersey, without regard to principles of conflicts of laws, to the maximum extent possible.
16. Non-Assignment. Employee warrants, represents and agrees that Employee has not heretofore assigned or transferred or purported to assign or transfer to any person, firm, partnership, corporation or entity whatsoever, any of the legal rights or Claims waived or released herein.
17. No Admission of Liability. Employee agrees that neither the Benefits provided under this Agreement, nor any term or condition of it, shall be construed at any time as an admission of liability or wrongdoing by the Released Company Parties.
18. Third Party Beneficiaries. The Parties agree that the Released Company Parties (other than the Company) are intended third party beneficiaries of this Agreement. The Released Company Parties’ rights under this Section 18 shall be irrevocable.
19. Binding Effect. This Agreement shall be binding upon and inure to the benefit of Employee, Employee’s heirs and legal representatives, the Company, and the Company’s successors and assigns. The obligations of this Agreement survive the resignation of Employee’s employment, and Employee may not assign this Agreement or any of its obligations without the Company’s prior written consent. Employee agrees that the Company may freely assign this Agreement to a successor corporation or purchaser of its assets.
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20. Entire Agreement and Amendment. This Agreement (along with the Employment Agreement) sets forth the entire agreement and understanding between Employee and the Company with respect to the matters addressed herein and merges and supersedes all prior discussions, agreements, arrangements and understandings of every kind and nature, written or oral, about such matters between the Parties, except as otherwise provided in this Agreement. This Agreement may not be amended or modified except by a writing signed by the Parties.
21. Notices. All communications hereunder, except as may be otherwise specifically provided herein, shall be in writing, and shall be mailed, delivered, or emailed and confirmed in writing to:
Edible Garden AG Incorporated
283 County Road 519
Belvidere, New Jersey 07823
Attn: Chief Executive Officer
Email: ###
with a copy to:
Harter Secrest & Emery LLP
1600 Bausch & Lomb Place
Rochester, New York 14604
Attn: Alexander R. McClean, Esq.
Email: ###
The Parties acknowledge and agree that notice by email is sufficient under this Section 21.
22. Section 409A. The benefits and compensation payable under this Agreement are intended to be exempt from or comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the treasury regulations promulgated and other official guidance issued thereunder (collectively, “Section 409A”), and this Agreement shall be administered and interpreted consistent with that intent. Notwithstanding the foregoing, the Company makes no representations that the benefits and compensation provided under this Agreement are exempt from or comply with Section 409A, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Employee on account of non-compliance with Section 409A. Each payment under this Agreement shall be designated as a “separate payment” within the meaning of Section 409A.
23. Counterparts. This Agreement may be executed in multiple originals, each of which shall be considered as an original instrument, but all of which shall constitute one agreement. Facsimile or electronic signature copies, including without limitation transmission by .PDF or other fixed image form or any electronic signature complying with U.S. Federal E-Sign Act of 2000 (e.g. www.docusign.com or www.echosign.adobe.com), of signed signature pages will be deemed binding originals.
[Signature Page Follows]
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I UNDERSTAND THAT THIS AGREEMENT AFFECTS IMPORTANT RIGHTS. I HAVE READ IT CAREFULLY AND AM SATISFIED THAT I UNDERSTAND IT COMPLETELY. I HAVE HAD THE OPPORTUNITY TO CONSULT INDEPENDENT COUNSEL OF MY OWN CHOOSING PRIOR TO EXECUTING THIS AGREEMENT.
| DATED: 1/24/2024 | /s/ Michael C. James |
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| Michael C. James |
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| Edible Garden AG Incorporated |
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| DATED: 1/24/2024 | By: | /s/ James E. Kras |
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| Name: | James E. Kras |
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| Title: | President and Chief Executive Officer |
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[Signature Page to James Separation Agreement]
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Exhibit A
Transitional Work and Related Milestone Payments
| A-1 |
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