Item 5.02 Departure of Directors
or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of Chief Operating Officer
On August 23, 2016, Michael Collester, age 52, was elected
as the Chief Operating Officer of JetPay Corporation (the “Company” or “JePay”), effective immediately. Mr. Collester
does not have a family relationship with any director, executive officer or person nominated or chosen by the Company to
become a director or executive officer.
Mr. Collester has served
as the President of ACI Merchant Systems, LLC (“ACI”), a wholly-owned subsidiary of JetPay, since its formation in
2004. His responsibilities at ACI encompass overseeing customer service, technical initiatives, finance, and
sales management. Mr. Collester has more than 25 years of executive experience in the strategic partner and merchant services space.
In 1989, he founded ACI Merchant Services, Inc., a merchant services provider dedicated exclusively to serving financial institutions.
ACI Merchant Services later became recognized as a premier Agent/Referral Bank processing company in the United States and, in
2000, was acquired by Fifth Third Bank. In 2004, Mr. Collester formed ACI, which was acquired by JetPay in November 2014.
Compensatory Arrangements
On August 23, 2016, the Company and Mr. Collester entered into an
amended and restated employment agreement (the “Agreement”), commencing on August 23, 2016 (the “Commencement
Date”). The Agreement amends and restates the employment agreement, dated as of November 7, 2014, by and between ACI and
Mr. Collester. Pursuant to the Agreement, Mr. Collester shall serve as Chief Operating Officer of the Company for an initial term
ending December 31, 2017 (the “Employment Period”).
Compensation
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Base Salary
. Mr. Collester shall receive a base salary of $300,000 beginning on the Commencement Date and ending on
December 31, 2016, and thereafter a base salary of $325,000 through the end of the Employment Period.
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Annual Bonus
. In addition to his base salary, Mr. Collester shall be eligible to receive an annual bonus as determined
by the Board of Directors in its sole discretion.
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Employee Benefits and Perquisites
. Mr. Collester shall be eligible to participate in all of the Company’s employee
benefit plans, as may be maintained by the Company from time to time, on the same terms as similarly situated employees of the
Company. During the Employment Period, the Company shall rent for Mr. Collester an apartment in or around Dallas, Texas, for up
to a maximum of $2,500 per month, and reimburse Mr. Collester for the reasonable costs for travel to and from Dallas,
Texas.
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Termination and Severance
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The Agreement may be terminated at any time by the Company with
or without Cause (as defined in the Agreement) or by Mr. Collester with or without Good Reason (as defined in the Agreement), in
either case in accordance with the Agreement.
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Termination without Cause or for Good Reason.
If Mr. Collester is terminated by the Company without Cause
(other than by notice of nonrenewal of the Employment Period) or Mr. Collester terminates his employment for Good Reason, then,
contingent upon the effectiveness of a general release of claims, in addition to the payment of any base salary
earned but unpaid through the date of termination, the Company shall continue to pay to Mr. Collester his base salary during the
Severance Period. “Severance Period” is defined in the Agreement to mean the period commencing on the 60
th
date
following such separation and ending 60 days following the last day of the then-current Employment Period.
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In addition, subject to certain conditions,
Mr. Collester may be entitled to receive certain other payments, including the annual bonus he would have received for the calendar
year in which he separated from the Company; payment of certain health insurance premiums during the Severance Period; vesting of unvested equity granted to Mr. Collester under the Company’s equity incentive plans; any accrued and vested
benefits under any employee benefit plan of the Company or its affiliates; and any unreimbursed expenses together with accrued
but unused vacation time. If Mr. Collester’s employment is terminated by the Company without Cause and in bad faith with
the intention of thwarting Mr. Collester’s ability to earn contingency consideration under that certain Unit Purchase Agreement,
dated as of November 7, 2014, by and among Mr. Collester, Cathy Smith, ACI and the Company, Mr. Collester shall be entitled to the
payment of contingency consideration as set forth in the Agreement.
If Mr. Collester breaches the provisions
of the Agreement relating to confidential information, non-disparagement, non-competition or non-solicitation, any and all
remaining payments and benefits under the Agreement shall be forfeited.
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Other Termination
. In the event that Mr. Collester is terminated by the Company for
Cause or due to nonrenewal of the Employment Period or by Mr. Collester without Good Reason, the Company shall pay to Mr. Collester any accrued but unpaid base salary, accrued but unused vacation time and any
accrued and vested benefits under any employee benefit plan of the Company or its affiliates.
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If Mr. Collester’s employment
is terminated during the Employment Period due to Mr. Collester’s death or disability, the Company shall also pay to Mr.
Collester (or his estate or beneficiaries, as the case may be) unreimbursed expenses; any earned but unpaid annual bonus with respect
to the year prior to the year of termination; and a pro rata bonus with respect to the year of separation equal to a fraction where
the numerator is the number of completed calendar months of employment in such year and the denominator is 12, payable when such
bonuses are paid to other employees of the Company or its affiliates.
Restrictive Covenants
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Following the termination of his employment, Mr. Collester shall
have certain continuing obligations under the Agreement, including but not limited to those relating to the non-disclosure of confidential
information, non-competition, non-solicitation and proprietary rights.
The above summary of the Agreement does not
purport to be complete and is qualified in its entirety by reference to the Agreement, a copy of which is filed as Exhibit 10.1
to this Current Report on Form 8-K and incorporated into this Item 5.02 by reference.