Item 1.01 Entry into a Material Definitive Agreement.
On June 12, 2020, Midwest Holding Inc. (the “Company”) entered into a Unit Purchase Agreement (the “Agreement”) by and among the Company, Aurora Financial Services, a Delaware corporation (the “Seller”) and 1505 Capital LLC, a Delaware limited liability company (“1505 Capital”), a 51% owned subsidiary of the Company. Pursuant to the Agreement, the Company purchased the remaining 49% interest in 1505 Capital for $500,000 in cash. As a result the Company now owns 100% of 1505 Capital. The financial statements of 1505 Capital were included in the Company’s audited consolidated financial statements as of December 31, 2019 and will continue to be so consolidated. A copy of the foregoing Agreement which is filed as Exhibit 10.1 to this Report and incorporated herein by reference.
In connection with the Agreement, the Company entered into an employment agreement with Richard Vecchiolla dated effective as of January 1, 2020, as further described in Item 5.02 below.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Upon closing of the Unit Purchase Agreement discussed in Item 1.01 above, the Company entered into an employment agreement (“Employment Agreement”) with Richard Vecchiolla. Among other things, the Employment Agreement provides:
(a)that Mr. Vecchiolla is employed as Chief Executive Officer of 1505 Capital;
(b)a base salary to Mr. Vecchiolla of $250,000 per year and a possible bonus in the discretion of the Board of Directors of the Company;
(c)potential additional compensation relating to fee streams tied to revenue generating activities of 1505 Capital;
(d)customary benefits including health insurance, life insurance and other fringe benefits and expense reimbursements;
(e)for termination of the Employment Agreement upon Mr. Vecchiolla’s death, disability or for good cause (as defined therein);
(f)for Mr. Vecchiolla’s resignation without good reason (as defined therein) or retirement;
(g)certain severance payments and liquidated damages upon Mr. Vecchiolla’s resignation for good reason or upon a change in control of 1505 Capital; and
(h)customary confidentiality, indemnification, non-compete and other provisions.
A copy of Mr. Vecchiolla’s Employment Agreement is attached as Exhibit 10.2.
