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): November 15, 2011
DIGITILITI, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE
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000-53235
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26-1408538
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(State or other Jurisdiction of Incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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266 EAST 7
TH
STREET, 4
TH
FLOOR
SAINT PAUL, MINNESOTA
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55,101
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(Address of Principal Executive Offices)
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(Zip Code)
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Registrant's telephone number, including area code:
(651) 925-3200
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(Former name or former address if changed since last report.)
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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:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Section 5 - Corporate Governance and Management
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b) Effective December 1, 2011, Jack B. Scheetz will resign as the Interim President and Chief Executive Officer of Digitiliti, Inc. (the “Company”) as contemplated by his employment agreement, which provides that Mr. Scheetz would execute the responsibilities of President and CEO until the Company's hired and employed a new president and CEO. Mr. Scheetz will remain a member of the Company's Board of Directors, and plans to have a continuing active role with the Company in its strategic developments.
(c) Effective December 1, 2011, David Macey, will become the President and Chief Executive Officer of the Company. Mr. Macey has served as Chief Executive Officer of SwiftKnowledge, Inc. since 2010. Swiftknowledge is a global provider of web-based business intelligence (BI) software that offered the only cloud computing-based suite designed for the financial industry. From 2008 until the sale of McAfee, Inc. in 2010, Mr. Macey served as vice president and general manager of McAfee Inc.'s industry-leading, $300 million Web and Email Security business unit, where he grew the business unit's revenue by 19 percent year-over-year and was responsible for its engineering, product management and product marketing functions. During 2008, Mr. Macey served as vice president and general manager of the $100 million Secure Web Gateway division of Secure Computing, where he increased the division's revenue by 45 percent year-over-year, achieved top market share in the web security appliance segment for International Data Corp.'s 2008 ranking, and implemented new product development and quality assurance processes. Secure Computng was sold to McAfee in 2008. From 2003 to 2007, Mr. Macey served as vice president of enterprise content management sales at Oracle Corp. and executive vice president of international operations at Stellent, Inc. - which was acquired by Oracle in March 2007 - where he grew international sales by more than 100 percent during a 36-month period. Before joining Stellent, Mr. Macey was the chairman and chief technology officer for Millennium Communications Corp., a regional U.S. Internet services provider. Overall, Mr. Macey brings more than 17 years of industry experience to his role as President and CEO of the Company.
In connection with his appointment, Mr. Macey and the Company executed a Term Sheet that identifies material terms to be included in his Employment Agreement that is expected to be executed prior to December 1, 2011. Under the terms of the Term Sheet, Mr. Macey will receive a base salary of $190,000 per year and is eligible to receive performance incentive bonuses of up to $120,000 during 2012, along with discretionary performance bonuses as determined by the Company's Compensation Committee. In addition, Mr. Macey will be granted an option on December 31, 2011, to purchase 4,000,000 shares of the Company's common stock with the exercise price equaling the closing price of the Company's common stock on December 31, 2011 that will vest ratably as to one-third (1/3
rd
) on on December 31, 2011, one-third (1/3
rd
) on December 31, 2012 and one-third (1/3
rd
) on December 31, 2013. Mr. Macey will also be granted on option on December 31, 2011 to purchase 6,000,000 shares of common stock “Performance Options” that will vest ratably as to one-third (1/3
rd
) on December 31, 2012, one-third (1/3
rd
) on December 31, 2013 and one-third (1/3
rd
) on December 31, 2014. The vesting of these performance options are conditioned on Mr. Macey meeting or exceeding certain revenue targets to be agreed to between Mr. Macey and the Company's Board of Directors.
Additional terms of Mr. Macey's employment will be documented in the Employment Agreement.
The foregoing description of the Term Sheet does not purport to be complete and is qualified in its entirety by reference to the complete text of the Term Sheet, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
On November 16, 2011, the Company issued a press release announcing the appointment of Mr. Macey. A copy of the press release is attached hereto as Exhibit 99.1, which is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in Exhibit 99.1 shall not be incorporated by reference into any filing under the Securities Exchange Act of 1934 or the Securities Act of 1933. as amended, except as expressly set forth by specific reference in such a filing.
Section 5 - Corporate Governance and Management
Item 5.07 Submission of Matters to a Vote of Security Holders.
The Company held its annual meeting of stockholders on November 15, 2011. At the meeting, the stockholders approved all of the following proposals set forth in the Definitive Proxy Statement on Form DEF 14A filed with the SEC on October 4, 2011:
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1.
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Election of four directors to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified. The results of the votes to elect the four directors was as follows:
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Name
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Votes For
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Votes Withheld
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Broker Non-Votes
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Jack B. Scheetz
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38,623,237
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179,829
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2,813,583
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Kent O. Lillemoe
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38,623,437
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179,629
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2,813,583
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Kedar R. Belhe
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13,693,752
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25,109,314
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2,813,583
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David F. Dalvey
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38,583,437
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219,629
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2,813,583
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2.
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Approval of the amendment to our Certificate of Incorporation to increase the number of authorized shares from 135,000,000 to 200,000,000 shares and allocate the additional shares as common stock. The proposal was approved based on the following votes:
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Votes for approval
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41,192,986
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Votes against
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5,152,643
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Abstentions
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165,867
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Broker non-votes
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10,562,013
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3.
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Ratification of appointment of Malone and Bailey, LP to serve as the independent registered public accounting firm for the year ending December 31, 2011. The proposal was approved based on the following votes:
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Votes for approval
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46,394,390
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Votes against
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3,537
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Abstentions
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128,571
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Broker non-votes
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none
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Section 9- Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
(d)
Exhibits
Exhibit No.
Description
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10.1
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Term Sheet dated November 15, 2011, between David Macey and Digitiliti, Inc.
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99.1
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Press Release of Digitiliti, Inc. dated November 16, 2011.
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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.
DIGITILITI, INC.
Date: November 18, 2011
By:
/s/ William McDonald
Name: William McDonald
Title: Chief Financial Officer
5450729v3
Personal and Confidential
Plan Participant
:
__David Macey____
OVERVIEW
This is your Performance and Incentive Compensation Plan. This document is intended to explain your Plan and to detail the mechanism we wish to put in place to have part of your compensation tied to successfully achieving the goals for revenue and operating income for 2012 that we mutually agree upon by January 31, 2012 for Year 2012. Our mutual obligation is to review your progress against this plan quarterly.
2012 Salary, Performance and Incentive Compensation Plan (Plan)
These are the principal elements of your Plan and such compensation is based upon a current balance of approximately 69,000,000 common shares and share equivalents outstanding and a fully-diluted share equivalent total of 120,000,000 including all options and warrant shares issued and outstanding:
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I.
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Incentive Stock Options (ISO's)* for 4,000,000 shares of company common stock granted on December 31, 2011 at an exercise price of the FMV (fair market value of the shares) on that day which will vest annually, 1/3 on the grant date, December 31, 2011, 1/3 on December 31, 2012, and 1/3 on December 31, 2013.
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II.
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ISO's* for an additional 6,000,000 shares of company common stock granted Dec 31, 2011: granted at an exercise price of the FMV on December 31, 2011., which will vest annually as follows:
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1/3 on the grant date of Dec 31, 2012, for meeting or exceeding revenue targets for 2012 agreed to by you and the board of Digitiliti by January 31, 2012
1/3 on Dec 31, 2013, for meeting or exceeding revenue targets for 2013 agreed to by you and the board of Digitiliti by January 31, 2013
1/3 on Dec 31, 2014, for meeting or exceeding revenue targets for 2014 agreed to by you and the board of Digitiliti by January 31, 2014
*(The options will be Incentive stock options (ISO) to the extent that the number of options times the FMV on date of grant equals $100,000; excess value over $100,000, if any, would be non-qualified stock options, per the Digitiliti Long Term Incentive Plan).
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III.
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Additional Stock Option grants could be granted in the future based on performance in 2012 and beyond at Board of Director discretion.
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2. Salary
I. Your Salary is cash compensation and shall be paid twice monthly
II. Performance Incentive Bonus (IB)
Your Performance Incentive Bonus (IB) is a quarterly bonus. The amount of your performance incentive bonus is dependent upon successful achievement of agreed-to objectives. If the company cannot pay the bonus due to cash constraints then it will remain an obligation of the company (a liability) and will be paid when the cash is available whether through profits or financing. The Board reserves the option to pay up to 50% of the Bonus earned in Restricted Stock.
2012 Objectives:
The company's objectives:
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1.
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Exceeding our revenue, profit and cash generation goals with predictability
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2.
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Customer satisfaction that exceeds that of any peer competitor
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3.
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Improving our products and technology
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4.
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Reducing waste and inefficiencies across the company
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5.
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Strengthening the capability and productivity of our people
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6.
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Being prepared to take advantage of opportunities; for example, alliances, partnerships, additional mergers or acquisitions.
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Compensation:
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I.
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Annual Base Salary $190,000
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I.
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Performance Incentive Bonus:
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Your targeted Performance Incentive Bonus will be based upon attainment of the following objectives:
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a.
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Achieve the budgeted quarterly BILLINGS beginning in 1Q 2012 (Targeted bonus of $30,000 per quarter; $120,000 per year). The quarterly revenue objectives will be discussed with you by the Compensation Committee no later than January 31, 2012.
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i.
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Actual
BILLINGS
against the budget for the quarter as defined in Appendix A will determine the amount you will earn.
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ii.
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The maximum that can be earned based on
BILLINGS
performance for any quarter is $45,000.00.
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b.
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DISCRETIONARY bonus based on objectives set by the Compensation Committee or at the discretion of the Board of Directors.
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i.
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Quarterly objectives and amount of
DISCRETIONARY
bonus to be attained by such objectives will be discussed with you by the Compensation Committee no later than the end of the first month of each fiscal quarter (for example, January 31, 2012 for the first quarter).
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ii.
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The Board of Directors may, at their discretion, approve at the first Board meeting following the end of a fiscal quarter to award any amount up to the maximum DISCRETIONARY bonus minus any part allocated to quarterly objectives agreed upon in Section II(b)(i).
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iii.
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The maximum
DISCRETIONARY
bonus that can be earned for any quarter is $10,000.
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Any bonus earned will be paid as follows:
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i.
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Seventy-five percent (75%) of any quarterly bonus earned will be paid within thirty (30) days of the end of the quarter in which the bonus was earned. The remaining Twenty-five percent (25%) will be paid after the 10-K is completed and any adjustments have been determined to annual revenue and/or operating income.
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ii.
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Financial data needed to evaluate the plan will be taken from the official audited company financial statements. Payments made before a completed
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audit will be subject to adjustment after the audit. Adjustments may be withheld from future salary or bonuses.
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iii.
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In case of any dispute concerning the terms of this agreement or the calculation of any payments the Board of Directors shall have the sole discretion to make the final decision.
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iv.
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Any unpaid bonus amount shall be handled in accordance with a separate Employment Agreement in the event that you leave the company.
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v.
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The Board of Directors shall make the final decisions on the need for changes, if any.
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We ask that you internalize these goals. And, understand the following guidelines pertinent to this plan:
This is an offer of compensation and does not represent a contract for continuing employment. Compensation is terminated upon termination of employment. The Agreement may not be changed orally but only by a written document signed by both parties.
Read, Understood and Agreed To By:
___________________________
_____________
David Macey
Date
___________________________
______________
For the Board of Directors
Date
______________________________________________________________________________
Appendix A:
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Performance Incentive Bonus Schedule per quarter
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< 80% of target
Billings
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Between 80% and 95 % of target
Billings
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Between 96% and 110% of target
Billings
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Between 111% and 125% of target
Billings
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> 126% of target Billings
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No bonus
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50% of target bonus
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75% of target bonus
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100% of target bonus
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150% of target bonus
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NEWS RELEASE
FOR IMMEDIATE RELEASE
MEDIA CONTACT:
Kirsten Chapman
KC Associates, LLC
763.449.0444
kirsten@kc-associates.com
Digitiliti Hires Industry Veteran David Macey as CEO
Macey to lead company into next phase of growth; interim CEO Scheetz moves into Board of Directors role
ST. PAUL, Minn., Nov. XX, 2011-
Digitiliti, Inc.
(Pink Sheets: DIGI.PK), a technology pioneer in
information archiving software
and management of unstructured data, announced at the company's annual shareholder's meeting the appointment of David Macey as the company's new President and CEO effective December 1, 2011. Macey will replace the company's interim President and CEO, Jack Scheetz, who will resign his position but remain a member of the Board of Directors.
As President and CEO, Macey will be responsible for leading the company's strategic direction and expansion into new segments of the marketplace. Macey is considered a veteran of the enterprise software industry, with two decades of experience, most recently as President and CEO of SwiftKnowledge, a global provider of business intelligence software. In his capacity at SwiftKnowledge, Macey overhauled the company's sales structure, implemented an aggressive product development process and reduced expenses by 40 percent.
Prior to SwiftKnowledge, Macey was president and general manager of McAfee Incorporated's web and email security business unit. While he was in that position, he helped the business' revenue grow by 19 percent and was in charge of its engineering, product management and product marketing functions.
Earlier in his career, Macey held positions of increasing responsibility at Secure Computing, Oracle Corporation and Stellent Incorporated. He attended St. Olaf College in Northfield, Minn., and served in the United States Army Reserve.
“Digitiliti thanks Mr. Scheetz for the guidance he has provided the company during his tenure as interim President and CEO and we're very pleased he'll continue to provide guidance as an active member of
the Board,” said Digitiliti board member Kent Lillemoe.
About Digitiliti, Inc.
Digitiliti develops and sells innovative archive management software that addresses the cost, complexity, and compliance issues associated with controlling and utilizing unstructured data. The company's products and services are easy to use and implement, cost-effective, and deliver the right information needed for more informed, fiscally responsible business decisions. Digitiliti services include digi
BAK
™, a complete
offsite data protection/disaster-recovery solution
, and its unique Universal Archive Platform digi
LIBE
that allows customers to extract and use the valuable business knowledge hidden in their unstructured content. Digitiliti markets and sells its software solely through its worldwide network of channel partners.
For more information, visit:
www.digitiliti.com
.