Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
Employment Agreements
On February 1, 2023, Telkonet, Inc. (the "Company") entered into employment
agreements with John M. Srouji, the Company's Chief Sales and Operating Officer
("Mr. Srouji"), Jeffrey J. Sobieski, the Company's Chief Technology Officer
("Mr. Sobieski") and Richard E. Mushrush, the Company's Chief Financial Officer
("Mr. Mushrush"). The material terms of the employment agreements are set forth
below.
John M. Srouji
Effective February 1, 2023, Mr. Srouji entered into an Amended Employment
Agreement pursuant to which Mr. Srouji will continue to serve as the Company's
Chief Sales and Operating Officer.
Under the agreement, Mr. Srouji will receive a base salary of $300,000, which
may be increased, at any time, as determined by the board of directors of the
Company (the "Board"). Mr. Srouji will also be eligible for a Retention Bonus
Agreement (the "Bonus Agreement") pursuant to which he will be eligible to
receive up to 30% of his base salary should targets set forth in the Bonus Plan
be hit. The agreement provides that Mr. Srouji will have a guaranteed 2022 bonus
of $25,000, which Mr. Srouji received prior to January 1, 2023.
Mr. Srouji will also be paid a retention bonus of $90,000 in January 2026 if he
remains employed by the Company through the end of 2025. Finally, Mr. Srouji
will be eligible to participate in the Company's 2023 Long-Term Cash Incentive
Plan (the "Incentive Plan") for the 2023-2025 period.
The Incentive Plan, form of the Bonus Plan and descriptions thereof have
previously been filed as Exhibits 10.1 and 10.3, respectively, to the Company's
Form 8-K filed on February 3, 2023 and are incorporated herein by reference.
The term of Mr. Srouji's agreement runs through May 2026, and will automatically
renew for an additional twelve months unless Mr. Srouji or the Company take
action to not renew the Agreement. If Mr. Srouji's employment is terminated
without cause, or if he resigns with Good Reason (as that term is defined in the
Agreement), Mr. Srouji, upon signing a release of employment-related claims,
will be entitled to one year of base salary, and upon termination without cause,
the Company will reimburse Mr. Srouji for health insurance costs in compliance
with COBRA for the shorter of: one year or Mr. Srouji's securing new employment
providing similar benefits.
The foregoing description of the agreement between the Company and Mr. Srouji is
qualified in its entirety by reference to the actual terms of the agreement,
which has been filed as Exhibit 10.1 to this Current Report on Form 8-K, and
which is incorporated herein by reference.
Jeffrey J. Sobieski
Effective February 1, 2023, Mr. Sobieski entered into an Amended Employment
Agreement pursuant to which Mr. Sobieski will continue to serve as the Company's
Chief Technology Officer.
Under the agreement, Mr. Srouji will receive a base salary of $250,000. Mr.
Sobieski will also participate in the Bonus Plan, pursuant to which he will be
eligible to receive up to 15% of his base salary should targets set forth in the
Bonus Plan be hit. Mr. Sobieski will also be paid a retention bonus of $75,000
in January 2026 if he remains employed by the Company through the end of 2025.
Finally, Mr. Sobieski will be eligible to participate in the Incentive Plan for
the 2023-2025 period.
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The term of Mr. Sobieski's agreement runs through May 2026, and will
automatically renew for an additional twelve months unless Mr. Srouji or the
Company take action to not renew the agreement. If Mr. Sobieski's employment is
terminated without cause, or if he resigns with Good Reason (as that term is
defined in the agreement), Mr. Sobieski, upon signing a release of
employment-related claims, will be entitled to one year of base salary, and upon
termination without cause, the Company will reimburse Mr. Sobieski for health
insurance costs in compliance with COBRA for the shorter of: one year or Mr.
Sobieski's securing new employment providing similar benefits.
The foregoing description of the agreement between the Company and Mr. Sobieski
is qualified in its entirety by reference to the actual terms of the agreement,
which has been filed as Exhibit 10.2 to this Current Report on Form 8-K, and
which is incorporated herein by reference.
Richard E. Mushrush
Effective February 1, 2023, Richard E. Mushrush entered into an Amended
Employment Agreement pursuant to which Mr. Mushrush will continue to serve as
the Company's Chief Financial Officer.
Under the agreement, Mr. Mushrush will receive a base salary of $122,000. Mr.
Mushrush will also participate in the Company's Bonus Plan, pursuant to which he
will be eligible to receive up to 20% of his base salary should targets set
forth in the Bonus Plan be hit. Mr. Mushrush will also be paid a retention bonus
of $36,600 in January 2026 if he remains employed by the Company through the end
of 2025. Finally, Mr. Mushrush will be eligible to participate in the Incentive
Plan for the 2023-2025 period.
The term of Mr. Mushrush's agreement runs through May 2026, and will
automatically renew for an additional twelve months unless Mr. Srouji or the
Company take action to not renew the Agreement. If Mr. Mushrush's employment is
terminated without cause, or if he resigns with Good Reason (as that term is
defined in the Agreement), Mr. Mushrush, upon signing a release of
employment-related claims, will be entitled to one year of base salary, and upon
termination without cause, the Company will reimburse Mr. Mushrush for health
insurance costs in compliance with COBRA for the shorter of: one year or Mr.
Mushrush's securing new employment providing similar benefits.
The foregoing description of the agreement between the Company and Mr. Mushrush
is qualified in its entirety by reference to the actual terms of the agreement,
which has been filed as Exhibit 10.3 to this Current Report on Form 8-K, and
which is incorporated herein by reference.
Services Agreement
Effective February 1, 2023, the Company entered into a Services Agreement with
VDA Group S.p.A., which is the Company's largest shareholder. Pursuant to the
Services Agreement, the Company will provide VDA Group with outsourced services
traditionally associated with the role of a Chief Technology Officer (the
"Services"). The Services will primarily be provided by Mr. Sobieski and will
require Mr. Sobieski to regularly travel to VDA Group's offices in Italy.
Pursuant to the Services Agreement, VDA Group will pay to the Company 50% of the
cost of labor and expenses associated with the provision of the services.
The Services Agreement can be terminated by either party upon at least 30 days'
notice, and the Services Agreement will automatically terminate should the Mr.
Sobieski's employment terminate. The Services Agreement explicitly states that
no employment relationships are created thereby.
The foregoing description of the agreement between the Company and VDA Group
S.p.A. is qualified in its entirety by reference to the actual terms of the
agreement, which has been filed as Exhibit 10.4 to this Current Report on Form
8-K, and which is incorporated herein by reference.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 Employment Agreement, dated February 1, 2023, by and between
Telkonet, Inc. and John M. Srouji
10.2 Employment Agreement, dated February 1, 2023, by and between
Telkonet, Inc. and Jeffrey J. Sobiesk i
10.3 Employment Agreement, dated February 1, 2023, by and between
Telkonet, Inc. and Richard E. Mushrush
10.4 Services Agreement, dated February 1, 2023, by and between
Telkonet, Inc. and VDA Group S.p.A.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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