-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vupy31zNAfaovo2/QQYABt3lA/xu7OWN+eDhD0w/T0EomE2gkJyH7v4b7PSu/Qt8 +VB8vCmdPFNfgVIryltVjQ== 0001172665-05-000576.txt : 20051103 0001172665-05-000576.hdr.sgml : 20051103 20051103103449 ACCESSION NUMBER: 0001172665-05-000576 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20051102 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Termination of a Material Definitive Agreement ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051103 DATE AS OF CHANGE: 20051103 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Optionable Inc CENTRAL INDEX KEY: 0001303433 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-121543 FILM NUMBER: 051175458 BUSINESS ADDRESS: STREET 1: 555 PLEASANTVILLE ROAD STREET 2: SOUTH BUILDING SUITE 110 CITY: BRIARCLIFF MANOR STATE: NY ZIP: 10510 BUSINESS PHONE: 914-773-1100 MAIL ADDRESS: STREET 1: 555 PLEASANTVILLE ROAD STREET 2: SOUTH BUILDING SUITE 110 CITY: BRIARCLIFF MANOR STATE: NY ZIP: 10510 8-K 1 form8k.txt ITEMS 1.01, 1.02, 5.02 AND 9.01 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) October 30, 2005 - -------------------------------------------------------------------------------- OPTIONABLE, INC. (Exact name of Registrant as specified in its charter) Delaware 333-121543 52-2219407 - -------------------------------------------------------------------------------- (State or other jurisdiction of (Commission File number) (IRS Employer incorporation or organization) Identification No.) 555 Pleasantville Road, South Building, Suite 110 Briarcliff Manor, NY 10150 ------------------------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (914) 773-1100 ---------------------------------------------------- (Registrant's Telephone Number, Including Area Code) --------------------------------------------------- (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 for 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)) Section 1--Registrant's Business and Operations Item 1.01. Entry into a Material Definitive Agreement. Effective October 30, 2005, Optionable, Inc. (the "Company") named Kevin P. Cassidy its Chief Executive Officer, elected him a director, and entered into an employment agreement with him (the "Agreement"). The initial term of the Agreement is for fifty months, subject to renewal or earlier termination. Mr. Cassidy's salary ("Fixed Compensation") will be as follows: $20,833 upon entering into the Agreement, $46,875 from October 30, 2005 to December 31, 2005, $275,000 from January 1 to December 31, 2006, $300,000 from January 1, 2007 to December 31, 2007, $325,000 from January 1 to December 31, 2008, $350,000 from January 1, 2009 to December 31, 2009. In addition, beginning with the first month of the quarter in which the amount payable to Mr. Cassidy, pursuant to the Addendum to Master Service Agreement, dated April 12, 2005, is fully paid, Mr. Cassidy will be paid (i) cash compensation amounting to five percent (5%) of Gross Revenues of the Company, and (ii) stock compensation amounting to two percent (2%) of the Gross Revenues of the Company. Gross Revenue is defined as the total gross revenue related to any and all aspects of the brokerage business, including incentive received from exchanges, based on generally accepted accounting principles. The shares of Company common stock will be granted at fair value at the date of grant. The Company will issue options to Mr. Cassidy equal to twenty percent (20%) of the number of shares of common stock issuable under warrants which become exercisable pursuant to any Order Flow Agreements (Order Flow Agreements are the agreements for the Company to issue warrants to a firm based on the volume of orders the firm placed with the Company). Those options will be fully vested Non-Statutory Stock Options granted under the Company's 2004 Stock Option Plan (the "Plan") at fair value at the date of grant. Also, the Company will issue to Mr. Cassidy 5,000 options each time a firm registers with and executes its first 10,000 lots on the Company's OPEX platform. The total number of such options will be limited to 2,500,000. Such options will be fully vested Non-Statutory Options granted under the Plan at fair value at the date of grant. Mr. Cassidy will be entitled to paid annual vacation, personal leave and holidays in accordance with the policies of the Company, and will be entitled to participate in health, welfare, and pension plans and any other employee benefit plan of the Company. In addition, the Company will advance to or reimburse Mr. Cassidy for the annual or monthly premium of his life insurance policy of one million dollars ($1,000,000) where the beneficiary is Mr. Cassidy's estate (immediate family). Upon the sale or merger or other business combination of the Company and another company or companies, Mr. Cassidy will be entitled to a lump sum payment of 50% of the unpaid Fixed Compensation should he desire not to be employed with the new or successor entity. Item 1.02. Termination of a Material Definitive Agreement. Effective October 15, 2005, the Company terminated its Consulting Agreement with Mr. Cassidy. See Item 5.02 below for a discussion of that agreement. Section 5 - Corporate Governance and Management Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers. (c) See Item 1.01 above for a description of the Employment Agreement between the Company and Kevin P. Cassidy. Mr. Cassidy, age 46, previously served as the Company's Chief Executive Officer from February 2000 through March 2004. Additionally, Mr. Cassidy is a 50% stockholder of and serves as the Managing Director of Capital Energy Services LLC ("CES") and as a principal of Sleepy Hollow Coffee Roasters, Inc. ("Sleepy Hollow"). In April 2004, the Company entered into a Master Services Agreement with CES, whereby (i) the Company provides commodity derivatives services on the floor of the New York Mercantile Exchange through CES and (ii) CES provides Mr. Cassidy as a consultant to the Company to act as a management consultant and Director of Brokerage Operations. Mr. Cassidy has advised the Company that he intends to continue his affiliation with CES and Sleepy Hollow. Mr. Cassidy is not related to any other director or executive officer of the Company. The Company is a party to a Master Services Agreement with CES pursuant to which the Company provides brokerage services on the floor of the New York Mercantile Exchange. In addition to Mr. Cassidy, Edward J. O'Connor, the Company's president and a director, is a 50% stockholder of CES. Pursuant to this arrangement, the Company pays CES a minimum annual fixed fee of $50,000 and assumes all expenses directly incurred by CES's associated floor brokerage services. Additionally, the Company will pay CES $1,525,000 on April 1, 2014. However, upon a Capital Raise, as defined in the Master Services Agreement, the Company will pay up to 10.67% of the amount raised during the Capital Raise, up to $762,500, to CES, with the remaining principal and accrued interest of 12% from the date of the Capital Raise payable on April 1, 2014. The Company's share of revenues and expenses of the floor brokerage services amounted to approximately $1.0 million and $467,000, respectively during 2004, and $1.4 million and $635,000, respectively, during the nine months ended September 30, 2005. The Company received $250,000 from CES in connection with such floor brokerage services during 2004 and $635,000 during the first nine months of 2005, and CES owed the Company approximately $340,000 at September 30, 2005. During April 2004, Mr. Cassidy forfeited aggregate compensation of $375,000. Effective April 1, 2004, the Company entered into an agreement providing for the reimbursement of certain administrative expenses for services provided to a coffee bean roaster, Sleepy Hollow Coffee Roasters, Inc., a company owned by Mr. O'Connor and Mr. Cassidy. The Company charged an administrative fee of $1,500 for the nine-month period ended September 30, 2004. The Company currently charges an administrative fee of $1,400 per month. On April 1, 2004, the Company entered into a Consulting Agreement with Mr. Cassidy whereby Mr. Cassidy was engaged for a period of five years as an OTC broker, marketing manager, and management consultant for $215,000 per year total compensation. The Company reimbursed Mr. Cassidy for his health insurance and a $1,000,000 life insurance policy during the term of the Consulting Agreement. Furthermore, the Company issued warrants to purchase 1,200,000 shares of its common stock to Pierpont Capital Corp., an entity owned by Mr. Cassidy. The warrants are exercisable at a price of $0.20 per share and expire in June 2007. The warrants are exercisable in six tranches of up to 200,000 warrants if certain trading milestones are met during three six month periods following the issuance of such warrants, and were intended to induce Mr. Cassidy to introduce additional customers to the Company. The Company did not receive any cash consideration for the issuance of these warrants. The Consulting Agreement was terminated by mutual agreement of the parties upon the effectiveness of Mr. Cassidy's employment agreement with the Company, although the associated warrants remain outstanding. During April 2005, CES assigned its rights to the Company's liability of $1,525,000 equally to Mr. O'Connor and Mr. Cassidy, the co-owners of CES. Subsequently, during April 2005, the Company entered into modifications of the terms of the amounts due from it to Mark Nordlicht, Mr. O'Connor and Mr. Cassidy. The modified terms provide that, among other things, in the event of a Capital Raise, the interest rate accrued after such event is reduced from 12% to 4.68%. Additionally, the Company may make principal repayments towards such liabilities amounting to approximately 25% of its quarterly cash flows from operating activities less capital expenditures. Furthermore, the Company made a principal repayment of $150,000 on the amount due to Kevin Cassidy and $69,638 on the amount due to Mark Nordlicht. (d) Effective October 30, 2005, the Board of Directors increased the size of the Board to four directors and elected Kevin P. Cassidy a director of the Company. Section 9 - Financial Statements and Exhibits Item 9.01. Financial Statements and Exhibits. (c) Exhibits Exhibit Number Description 10 Employment Agreement dated October 30, 2005, between Optionable, Inc. and Kevin P. Cassidy. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. OPTIONABLE, INC. Date: November 2, 2005 By: /s/ Edward J. O'Connor -------------------------------- Edward J. O'Connor President EX-10 2 ex10.txt CONTRACT EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT, dated as of October 30, 2005 (this "Agreement"), between OPTIONABLE, INC., a Delaware corporation ("Employer") and KEVIN P. CASSIDY ("Employee"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, Employer is engaged in the business of providing trading and brokerage services to brokerage firms, financial institutions, energy traders, and hedge funds, and developing an automated electronic trading system; and WHEREAS, Employee seeks to be employed by Employer and Employer seeks to so engage Employee as its Chief Executive Officer and Vice Chairman; NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending legally to be bound, agree as follows. 1. Employment. Employer agrees to employ Employee and Employee accepts employment with Employer, on the terms and conditions set forth in this Agreement. 2. Term of Employment. Employer hereby employs Employee and Employee hereby accepts employment for a term commencing on the date first written above (the "Commencement Date"), and expiring on that date five (5) years after the Commencement Date, unless sooner terminated as hereinafter provided (the "Employment Period"). This Agreement shall be renewable for succeeding terms, if any (each of the Employment Period and each successive term of employment hereunder, a "Term") only by written agreement by Employer and Employee entered into within thirty (30) days prior to the expiration of the then current Term. In the absence of such renewal, this Agreement shall terminate at the end of the then current Term. 3. Duties During Employment. Employee shall be employed by Employer during each Term as its Chief Executive Officer. As soon as practicable after the execution and delivery of this agreement, the Board of Directors shall vote on the election of Employee as a Director of Employer. In carrying out his duties under this Agreement, Employee shall have such powers and duties usually incident to the office of Chief Executive Officer. Employee shall have authority do such acts and to make such contracts as are necessary or proper to carry on the business of Employer, including but not limited to: (a) managing and overseeing the brokerage operations of the Employer; (b) managing and overseeing the marketing operations of the Employer; (c) management and oversight of employees of the Employer; (d) leading senior level management and participating in Board meetings at the request of the directors; and (e) use of his best efforts to carry into effect the policies, initiatives and directives of the Board. Employee agrees that he shall devote no less than eighty (80%) percent of his working time to carrying out his duties and obligations hereunder. It is expressly acknowledged, however, that, subject to the preceding sentence, Employee shall be permitted to continue to be active in and pursue other business activities and opportunities (whether or not now existing) provided, that while employed hereunder he shall not engage in any other business that competes directly or indirectly with Employer. Moreover, and subject to the first sentence of this paragraph and the Employee's duty of loyalty to Employer, it is understood that Employee may engage in personal activities of a civic, charitable or educational nature and may manage his personal investments. 4. Place of Performance. Employee's place of employment shall be Briarcliff Manor, New York ("Place of Performance") and shall not be changed without Employee's prior written consent. 5. Compensation. As compensation for all of the services to be rendered hereunder, whether or not anticipated as being within the scope of this Agreement, Employer shall compensate Employee as follows. (a) Employee's gross salary during the Employment Period ("Fixed Compensation") shall be as follows: (i) upon entering into this agreement, $20,833; (ii) from October 30, 2005 to December 31, 2005, $46,875; (iii) from January 1 to December 31, 2006, $275,000; (iv) from January 1, 2007 to December 31, 2007,,$300,000; (v) from January 1 to December 31, 2008, $325,000; and (vi) from January 1, 2009 to December 31, 2009: $350,000; payable in accordance with the Employer's regular payroll policies and subject to usual payroll deductions provided by law. (b) During the Employment Period and beginning with the first month of the quarter in which the amount payable to Employee, pursuant to the Addendum to Master Service Agreement dated April 12, 2005, is fully paid, Employer shall pay Employee (i) cash compensation amounting to five percent (5%) of Gross Revenues of Employer, and (ii) stock compensation ("Stock Compensation") amounting to two percent (2%) of the Gross Revenues of Employer (together the "Variable Compensation"). Gross Revenue is defined as the total gross revenue related to any all aspects of the brokerage business, including incentive received from exchanges, based on generally accepted accounting principles. Stock will be granted at fair value at the date of grant. The Variable Compensation will be paid (in the case of cash) and issued (in the case of stock) on a quarterly basis. It is understood that shares of Employer's common stock constituting the Stock Compensation will be "restricted stock," as such term is defined in Rule 144 of the Securities and Exchange Commission. (c) Employer shall issue common stock purchase options to Employee to purchase that number of shares of common stock equal to twenty percent (20%) of the number of shares of common stock issuable under warrants which become exercisable pursuant to any Order Flow Agreements. Order Flow Agreements being those agreements in which the Employer has agreed to issue warrants to an entity based on the volume of orders that such entity has placed with the Employer. Such options will be Non-Statutory Stock Options granted under Employer's 2004 Stock Option Plan (the "Plan") at fair value at the date of grant and will be fully-vested upon grant. (d) Employer shall issue to Employee 5,000 common stock purchase options each time a firm registers with and executes its first 10,000 lots on Employer's OPEX platform. The total number of options issueable under this Section 5(d) will be limited to 2,500,000. Such options will be Non-Statutory Options granted under the Plan at fair value at the date of grant and will be fully-vested upon grant. (e) Employee shall be entitled to paid annual vacation, personal leave and holidays in accordance with the policies of Employer. Employee will be entitled to participate in health, welfare, and pension plans and any other employee benefit plan of Employer on the same basis as such benefits are generally available to similarly situated employees of Employer. (f) Employer will advance to or reimburse Employee for all reasonable travel and entertainment and other reasonable expenses incurred by the Employee in connection with his performance under this Agreement upon submission of written or printed receipts in accordance with Employer's usual and customary policy. Employer agrees that Employee's travel by first class air travel and by executive limousine ground transportation are reasonable expenses. (g) Employer shall advance to or reimburse Employee for the annual or monthly premium of Employee's life insurance policy of one million dollars ($1,000,000) where the beneficiary is the Employee's estate (immediate family), provided that Employee submits to Employer a copy of the invoice for such premium upon request. 6. Early Termination. This Agreement may be terminated by either party at any time in accordance with the terms and conditions set forth in this Section 6. (a) If Employee resigns from his employment under this Agreement without Good Reason, as defined below, or if Employer terminates Employee's employment for Cause, as defined below, Employer shall have no financial obligation to Employee except to pay his Fixed Compensation through the date of termination and continue his employee benefits through such date. Employer shall give Employee written notice of a termination for Cause, and Employee shall give written notice to Employer of resignation for Good Reason. For purposes of this Agreement, "Cause" shall mean (i) the Employee's willful misconduct in the performance of his duties hereunder, provided that Employer shall have given written notice of such willful misconduct to Employee and Employee shall not have substantially cured such willful misconduct within fifteen (15) days after his receipt of such notice; (ii) a non-appealable conviction of a felony; or (iii) issuance of a final consent decree, cease-and-desist or similar order against Employee prohibiting Employee from engaging in the securities and/or commodities business. For purposes of this Agreement, "Good Reason" shall mean the occurrence of any of the following: (A) Employer shall have materially defaulted in its obligations hereunder; (B) a material diminution in Employee's authority, or responsibilities, or (C) a change in Employee's Place of Performance without Employee's prior written consent. (b) Upon the sale or merger or other business combination of Employer and another company or companies, Employee will be entitled to a lump sum payment of 50% of the unpaid Fixed Compensation should he desire not to be employed with the new or successor entity. (c) If Employee becomes incapable, by reason of death or Disability, as defined below, of performing his duties under this Agreement, Employer may terminate Employee on the following terms. Employer will pay to him, or to a person duly authorized to act on his or his estate's behalf, a lump sum equal to the sum of any unpaid Fixed Compensation accrued to the date of termination (the "Section 6(d) Sum"). In such circumstances, payment of the Section 6(d) Sum shall satisfy all financial obligations of Employer to Employee under this Agreement, but Employee's employment hereunder shall continue for the duration of the condition that occasioned the Disability, after which his employment for all purposes shall cease. For purposes of this Agreement, "Disability" shall mean the inability of Employee, by reason of physical or mental illness or injury, substantially to perform his duties hereunder for a period of time exceeding 180 days in the aggregate during any period of twelve consecutive months. Employer shall give Employee or a person duly authorized to act on his behalf written notice of a termination based on Disability. (d) Employee shall have no duty to mitigate Employer's damages or losses, if any, with respect to any payments due him pursuant to this Section 6, by seeking or accepting other employment. Moreover, should Employee seek and accept other employment no amounts payable to Employee by a subsequent employer shall be deemed to offset to any amounts owed by Employer to Employee under this Agreement. 7. Post Employment Restrictions. Regardless of the reason for the resignation from or termination of Employee's employment with Employer, Employer acknowledges that there are no restrictions on Employee's post-employment activities, except as follows: Employee covenants and agrees that for a period of nine (9) months after his employment hereunder terminates for reasons other than the expiration of the then current Term (the "Non-compete Period"), Employee will not engage in business that competes directly or indirectly with Employer so long as Employer continues to pay to Employee his Fixed Compensation during the Non-Compete Period. 8. Termination of Consulting Agreement. Upon execution of this Agreement, the Consulting Agreement, dated April 1, 2004 between the Employer and the Employee, which is pursuant to the Master Services Agreement, dated April 1, 2004, between the Employer and Capital Energy Services LLC, is terminated retroactively on October 15, 2005.. However, all other terms of the Master Services Agreement, other than those relating to the Consultant, will remain unchanged. 9. Governing Law; Jurisdiction; Venue. This Agreement shall be governed by and is to be construed and enforced in accordance with the internal laws of the State of New York without regard to principles of conflicts of laws. Any action to enforce any term hereof shall be brought in the state or federal courts located in the City of New York, State of New York, to which jurisdiction and venue all parties hereby submit themselves. 10. Notices. All notices required to be given under this Agreement shall be in writing and shall be deemed effective when delivered in person, by facsimile transmission, overnight mail service or by certified U.S. mail, addressed, in the case of Employee, to him at his residential address as reflected in the Employer's personnel records or, in the case of Employer, to 555 Pleasantville Road, South Building, Suite 110, Briarcliff Manor, NY 10510, or to such other address as Employee or Employer may designate in writing to the other party. 11. Miscellaneous. (a) This Agreement contains the entire agreement and understanding between the parties and supersedes all other prior agreements, discussions, negotiations, commitments, and understandings between them with respect to the subject matter hereof. There are no representations, agreements, arrangements or understandings, oral or written, between the parties concerning the subject matter hereof which are not fully expressed herein. (b) No waiver by either party of or failure to assert any provision or condition of this Agreement by him or it to be performed or right to be exercised shall be deemed a waiver of such or similar or dissimilar provisions and conditions or rights at the same time or any prior or subsequent time. (c) This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their heirs, successors, assigns and personal representations. In no event may Employee assign any rights or duties under this Agreement and in no event may Employer assign any rights or duties under this Agreement without the prior written authorization of Employee, provided, however, that Employer may assign its rights under this Agreement in connection with any merger, consolidation or sale of substantially all of its assets subject to Section 6(b). (d) Each in consultation with its respective legal counsel, Employer and Employee have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. (e) Employer shall indemnify and hold Employee harmless with respect to any liability, loss or expense, including reasonable attorneys' fees ("Loss") (Employee shall have the right to choose such attorneys, subject to the consent of Employer, which consent shall not be unreasonably withheld) incurred by him, as a result of any claim relating to or arising out of the performance of duties pursuant to this Agreement, provided, however, that if it is determined that the Loss arose as a result of Employee's willful misconduct or gross negligence, then Employee shall not be entitled to indemnification for such Loss and Employee shall be required promptly to return to Employer any amounts paid by Employer pursuant to this Section 10(e). [Signatures appear on the following page] IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the year and day first above written. EMPLOYER Optionable, Inc. By /s/ Mark Nordlicht ------------------------------------ Mark Nordlicht, Chairman EMPLOYEE Kevin P. Cassidy /s/ Kevin P. Cassidy ------------------------------------ Kevin P. Cassidy As to Section 8 only: CAPITAL ENERGY SERVICES LLC By: /s/ Kevin P. Cassidy ----------------------------------- Kevin P. Cassidy, Managing Director -----END PRIVACY-ENHANCED MESSAGE-----