|SEVEN STARS CLOUD GROUP, INC. filed this Form DEF 14A on 11/20/2017|
On January 26, 2016, the Company entered into an employment agreement with Mr. Tao effective as of January 22, 2016. Mr. Tao’s employment agreement had an initial term of two years, with automatic one–year extensions thereafter unless written notice of non–renewal is given by either party not less than 90 days prior to the end of the then current term. Mr. Tao was paid an initial base salary of $200,000 per year, subject to annual review by the Compensation Committee of the Board. In addition, Mr. Tao received a one–time sign–on bonus of $8,000. In addition, so long as he remained employed and achieved annual performance objectives, Mr. Tao was entitled to receive the grants of restricted stock under the Company’s 2010 Equity Incentive Plan. Mr. Tao was also entitled to participate in all employee benefit plans, policies practices of the Company generally available to any of its senior executive employees. In the event that Mr. Tao was terminated without cause, he would be entitled to severance pay and benefits. On December 4, 2016, Mr. Tao notified the Board of his resignation from his position as CEO and from the Board, effective immediately.
On January 31, 2015, we entered into an employment agreement with our former Chief Executive Officer, Weicheng Liu. The agreement was for a term of one year, which would automatically be extended for additional one year terms unless terminated earlier by either party. Mr. Liu was also eligible to receive a bonus at the sole discretion of the Board of Directors of the Company, and was entitled to participate in all of the benefit plans of the Company. In the event Mr. Liu was terminated without cause, he would be entitled to eighteen months of severance pay if within the initial two years of the term and twelve months if after the initial two years of the term. The Liu Agreement also contains customary restrictive covenants regarding non–competition relating to the pay–per–view business in the PRC, non–solicitation of employees and customers and confidentiality.
On January 22, 2016, we terminated the employment of Mr. Liu as Chief Executive Officer of the Company and entered into a separation agreement with him as of such date. This agreement provides for the payment of $405,000, less standard payroll withholdings as applicable, which amount is to be paid in equal installments over a period of 18 months beginning in February 2016. However, payment may be accelerated if, prior to February 28, 2016, Mr. Liu completes all signature and documentation requirements to remove Mr. Liu and his wife from the VIE structure and otherwise assist the Company in restructuring its VIEs to the Company’s satisfaction. In such case, the Company will pay 1/3 of the amount as a lump sum, with the remaining 2/3 paid equally over the following 12 months. We also agreed to provide Mr. Liu a one–time lump sum payment of $60,000, earned and accrued but unpaid salary, and 4–week base salary for accrued and earned but unused vacation time, with such amounts to be paid within 5 days following the effective date of the separation agreement. In addition, all outstanding unvested options, warrants or restricted stock previously granted to Mr. Liu became fully vested, and previously granted options and warrants are exercisable for the full term of the option or warrant. Mr. Liu agreed to provide certain transition services to the Company, including implementation of employment decisions, restructuring the ownership and control of the Company’s VIE structure, assistance in renewing certain client relationships, among others. If Mr. Liu is able to renew certain contractual relationships and receive payments thereunder within defined timeframes, Mr. Liu could earn additional sums. Finally, Mr. Liu agreed to certain lock–up restrictions with respect to his shares of Company stock (or other securities) until May 20, 2016, and also agreed that for so long as he is the beneficial owner of more than 5% of the Company’s common stock that he would enter into lock–up or such other agreements as may be reasonably requested by the Company or the managing underwriters or placement agents of any public offering of securities of the Company.