UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): May 28, 2015
RIGHTSCORP,
INC.
(Exact
name of registrant as specified in its charter)
Nevada |
|
000-55097 |
|
33-1219445 |
(State
or other jurisdiction |
|
(Commission |
|
(I.R.S.
Employer |
of
incorporation) |
|
File Number) |
|
Identification
Number) |
3100
Donald Douglas Loop North
Santa
Monica, CA 90405
(Address
of principal executive offices) (zip code)
310-751-7510
(Registrant’s
telephone number, including area code)
Copies
to:
Gregory
Sichenzia, Esq.
Jeff
Cahlon, Esq.
Sichenzia
Ross Friedman Ference LLP
61
Broadway
New
York, New York 10006
Phone:
(212) 930-9700
Fax:
(212) 930-9725
(Former
address, if changed since last report)
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 (see General Instruction A.2. below):
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item
5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
In
connection with the previously disclosed election of Cecil Bond Kyte as Chief Financial Officer of Rightscorp, Inc. (the “Company”),
on May 28, 2015, the Company and Mr. Kyte executed a CFO Offer Letter (the “Offer Letter”). Pursuant to the Offer
Letter, Mr. Kyte will be paid a base salary of $85,000 per year and additional wages of $16,250 per quarter, once the Company
achieves quarterly revenues in excess of $600,000 or, alternatively, once the Company has the equivalent of at least 6 months
of Operating Capital (as defined in the Offer Letter). The Company also agreed to issue to Mr. Kyte 2,000,000 shares of common
stock, five-year warrants to purchase 1,000,000 shares of common stock with an exercise price of $0.25, which will vest immediately,
and five-year warrants to purchase 2,000,000 shares of common stock, with an exercise price of $0.25, which will vest in accordance
with the schedule set forth in the Offer Letter. Mr. Kyte’s employment under the Offer Letter will be for an initial term
of one year commencing June 1, 2015, during which he may be terminated for Cause (as defined in the Offer Letter). In the event
Mr. Kyte is terminated without Cause during the initial term, he will be entitled to severance pay of 50% of his base salary,
and continuation of paid medical benefits for a period of two months or the remainder of the initial term, whichever is greater.
Item
9.01 Financial Statements and Exhibits.
(d) Exhibits
99.1
Form of Offer Letter.
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.
|
RIGHTSCORP, INC. |
|
|
|
Dated:
June 3, 2015 |
By: |
/s/ Christopher
Sabec |
|
Name: |
Christopher
Sabec |
|
Title: |
Chief
Executive Officer |
May
28, 2015
Cecil Bond
Kyte
P.O. Box
30864
Santa Barbara,
CA 93130
CFO
Offer Letter
Dear Mr.
Kyte:
The
purpose of this letter is to set forth the basic terms upon which we would like to offer you employment with Rightscorp, Inc.
(“Company” or “Rightscorp”) as our Chief Financial Officer “CFO”). This employment offer is
subject to the conditions described below and is contingent upon verification of the information you have provided, a positive
reference check, an acceptable background check and proof of your legal right to work in the United States. To that end, please
complete the enclosed forms authorizing the mandatory background check. Please read the instructions on the forms carefully as
they will apprize you of your rights with respect to the information provided to the Company as part of any background check.
Your
employment would be expected to commence on June 1, 2015. In your capacity as CFO, your duties will include the duties customarily
associated with this position. In addition, you will be responsible for soliciting and structuring financing offerings with the
support of the Chief Executive Officer (“CEO”) and President, recommending terms to the management team for a proposed
offering well in advance of any cash shortfall, and maintaining the Company’s capitalization such that the average cash
balance shall cover six months of the last quarter’s average monthly cash needs. You will be required to work with the Company’s
SEC counsel in the creation of any offer documents.
You
will also be responsible for issuing shares and warrants (with the assistance of Company legal counsel, as appropriate) and assisting
the CEO with shareholder communications, as well as organizing annual shareholder meetings. You will generally be responsible
for corporate governance, with management’s approval and such assistance of Company legal counsel as may be reasonable necessary.
You will be responsible to negotiate with vendors and minimize expenses where possible. It shall also be your responsibility to
prepare the Company to uplist on NASDAQ and to prepare and issue any other reporting as may be required or necessary, subject
to management’s approval. This will include you having the responsibility, with the support of the CEO and President, for
timely and accurate public filings.
Your
duties will also include managing the Company’s outsourced finance and accounting service providers. Finally, you will at
all times assist the Company in maintaining six months cash burn and in maximizing shareholder value. In addition, you will be
required to have proof of a valid driver’s license and current automobile insurance on file at all times as you may be requested
to drive on Company business from time to time.
3100
Donald Douglas Loop, North Santa Monica CA 90405
Phone: (310) 751-7510 Fax: (310) 584-8494 E-mail: info@digitalrightscorp.com Web: digitalrightscorp.com
Your
monthly base salary will be $7083.33, or $85,000.00 per year, and you will be paid once a month, less applicable withholdings.
Your position will be exempt from earning overtime. In addition to your base salary and employee benefits, you will be entitled
to a be paid the additional wages of $16,250 per quarter (in the monthly amount of $5416.66), less withholdings, once the Company
achieves quarterly revenues in excess of $600,000 or, alternatively, once the Company has the equivalent of at least six (6) months
of Operating Capital in the bank, inclusive of all salary and bonus requirements. “Operating Capital” is defined as
the amount of actual money spent in the prior six months, not including obligations to note holders. Please be advised that the
Company reserves the right to modify its salary and bonus structure from time to time as it deems appropriate in its business
judgment. You will be provided notice of such modification prior to its implementation. We agree that the amount of your compensation
going forward may be revisited and revised after the Company has raised $3,000,000 in capital and/or upon the expiration of the
Term and possible continuation of your employment, as discussed below.
As
a signing bonus, you will be issued 2,000,000 shares of Rightscorp Common Stock with immediate vesting as unrestricted stock and
a warrant to purchase 1,000,000 shares of Common Stock under the same terms as AIGH with immediate vesting. In addition, you will
be issued another warrant to purchase 2,000,000 shares of Common Stock under the same terms as AIGH for which vesting shall commence
on December 1, 2015 at 500,000. The remaining vesting schedule for these shares shall be as follows: June 1, 2016 another 500,000;
December 1, 2016, another 500,000; and on June 1, 2017 the final 500,000 shares will vest. These warrants will be subject to the
terms and conditions as set forth therein and any applicable stock plan or agreement. In the event of termination by either the
Company or you, vested warrants shall remain intact throughout their maturity (thereby eliminating any post-termination 90-day
exercise requirement).
In
addition, you will be eligible to participate in all health insurance and employee benefit plans adopted by us, which are subject
to change from time to time. Currently, this includes the health plans offered through TriNet.
The
Company will reimburse you for normal business expenses, including travel expenses as well as mileage on a personal vehicle, incurred
and submitted in accordance with Company policy. Vacation, sick pay and holidays also will be in accordance with Company policy,
which is subject to revision from time to time.
Your
initial employment will be for a one year term (“Term”). During this time period, your employment may be terminated
“for Cause”. “Cause” will be defined as follows: a) your failure to adequately pursue maintaining a minimum
six-month Operating Capital, as determined in the Company’s sole discretion, b) any material breach by you of this agreement
or material violation of any Company policy or any other material written agreement between you and Company; c) your negligence
in the performance of your duties under this agreement or any other material written agreement between you and Company; d) your
fraud, willful misconduct, insubordination, dishonesty, reckless disregard of his responsibilities to Company, or illegal use
of controlled substances; or e) your conviction or plea of nolo contendre or the equivalent in respect of either a felony or a
misdemeanor involving fraud, larceny, embezzlement, or any other crime involving moral turpitude. In the event the Company in
its sole discretion deems that the nature of your termination for Cause is of a nature that can be cured, the Company will give
you sixty (60) days written notice to cure. In the event you are terminated for Cause under sections (a) or (c) of this paragraph,
the Company will offer you two (2) months of Severance Pay (defined below).
In
the event of your termination by the Company without Cause prior to the end of the Term, you shall be eligible to receive Severance
Pay. The Severance Pay will be Fifty-Percent (“50%”) of your then-current base salary, less withholdings (“Severance
Pay”), and continuation of paid medical benefits through payment of COBRA or Cal-COBRA on your behalf, which will be prorated
for any partial month and for the remainder of the Term or for a period of two (2) months, whichever is greater. Payment of any
Severance Pay shall be conditioned upon the execution and delivery by you of a general release of claims in favor of the Company
in a form to be provided by the Company in its sole discretion.
In
the event the Company wishes to renew the Term of your employment for an additional one-year period, it will notify of its desire
to do so in writing at least one (1) month prior to the expiration of the Term. Such renewal will be subject to a written agreement
to be signed by you and the Company, the terms of which shall include terms of vesting the remaining portion of the 2,000,000
shares of Common Stock which are subject to vesting.
Upon
acceptance, this letter will constitute the entire understanding between you and Rightscorp with regard to your employment with
us, and no previous understandings, verbal or written, shall modify this letter and the consulting agreement dated May 12th shall
be cancelled along with all compensation therein. Your employment will also be subject to any Company policies, employment manuals
or other materials which affect the employment of its employees, including the policy on the arbitration of disputes (which are
subject to revision from time to time except for the policies of at-will employment and the arbitration of disputes), unless these
policies conflict with the specific terms of this letter, in which case this letter will apply. Any future modifications to the
terms of your employment must be in writing and signed by Rightscorp’s President.
If
the above proposal conforms to your understanding of our agreement, please let me know by signing this letter in the space provided
below and returning it to me. In addition, sign please execute the enclosed Employee Confidentiality & Inventions Agreement
and return it to me with your signed copy of this letter and other mentioned forms. Your execution of these documents is a standard
condition of employment with the Company. If you have any questions prior to signing them, please feel free to contact me or to
discuss them with an attorney.
Cecil,
we look forward to working with you in the near future. If you have any questions pertaining to your new position or anything
discussed in this letter, please do not hesitate to contact me at (310) 751-7511.
|
Sincerely,
|
|
|
|
Christopher
Sabec |
|
Chief
Executive Officer |
I
have reviewed the terms of the employment offer described above, I have had an opportunity to ask questions about them, I understand
them and I accept them.
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