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
January 7, 2016
Date of Report (Date of earliest event
reported)
Freestone Resources, Inc.
(Exact name of registrant as specified
in its charter)
Nevada |
000-28753 |
90-0514308 |
(State or other jurisdiction of incorporation) |
(Commission File No.) |
(I.R.S. Employer Identification No.) |
Republic Center, Suite 1350 325 N. St.
Paul St. Dallas, TX 75201
(Address of Principal Executive Offices)
214-880-4870
(Issuer Telephone number)
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 (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))
Item 5.02 Departure of
Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers
(a) Clayton D.
Carter, President and Chief Executive Officer at Freestone Resources, Inc. (“Freestone” or the “Company”),
resigned on January 7, 2016, but will continue to serve as an employee at Freestone in the capacity of Vice President of Operations.
Mr. Carter will also remain on the Board of Directors of the Company (“the Board”).
(b) On
January 8, 2016 Freestone announced Michael J. McGhan was appointed by the Freestone Board as the President and Chief
Executive Officer of the Company effective immediately. Mr. McGhan was also appointed to the Company’s Board, and
appointed to serve as Chairman of the Board.
Mr. McGhan, age 61,
has extensive experience with operations, sales and management that will be extremely beneficial to Freestone, and the development
of the Company’s petrochemical product line. From 1991 to August 2002, Mr. McGhan was a co-founder, President and Chief Executive
Officer of Hanover Compressor Co. (now Exterran Holdings, Inc.). Hanover became the largest natural gas compression company in
the world with approximately 7,000 compression rental units in the field, and annual revenues over $1.1 billion. In August 2004,
Mr. McGhan along with his partners co-founded Valerus Compression Services LLP. Mr. McGhan served as co-CEO and ultimately Vice-Chairman
of the company until December 2009. Mr. McGhan and his partners built Valerus into one of the world's leading providers of natural
gas treatment and compression equipment and services to the global oil and gas industry.
Michael McGhan and
the Company entered into a two-year employment agreement (“Employment Agreement”). The terms of the Employment Agreement
include an initial salary of $5,000.00 per month, which will increase to $10,000.00 per month after six months, as well as stock-based
compensation in the amount of 3,000,000 shares of the Company’s restricted stock pursuant to Rule 144. Subject to Board approval,
Mr. McGhan is eligible to receive warrants for up to 2,000,000 shares of the Company’s common stock (the “Warrants”).
The Warrants are not issued on the date of the Employment Agreement. The Board is not required to issue the Warrants. If the Warrants
are issued to Mr. McGhan during the term of his Employment Agreement, the terms and conditions of the Warrants will be determined
by the Board on the date the Warrants are issued. Mr. McGhan will also be eligible to participate in the Company’s employee
benefit plan that is generally available to all other employees at the Company.
The Company has the
right to terminate Mr. McGhan’s Employee Agreement for certain specific, circumstances. Mr. McGhan can also resign from the
Company by giving the Company such notice of resignation 60 days in advance. If Mr. McGhan voluntarily resigns or is terminated
for good cause within the first year of the Employment Agreement, then Mr. McGhan shall transfer
back 2,000,000 of the shares of the Company’s common stock to Freestone, and Mr. McGhan will not be eligible for the Warrants.
(c) The Company’s
Board has appointed Gerald M. Johnston to Freestone’s Board. Mr. Johnston currently serves as an advisor to the Company.
As of the date of
this filing, the Company has not entered into any compensation agreement for Mr. Johnston’s services as a member of the Board.
Gerald
M. Johnston, age 73, began his career with Tyson Foods in 1970 as the cost and budgeting manager and worked his way to becoming
CFO in 1981. Mr. Johnston was instrumental in the growth of Tyson Foods and played a key role in many successful acquisitions.
Additionally, Mr. Johnston’s financial ingenuity helped Tyson Foods become one of the best financed companies which contributed
to the tremendous growth they achieved throughout the years.
Mr.
Johnston retired from Tyson in 1996 and remained on Tyson’s board until 2003. Upon retirement, Mr. Johnston pursued his own
business ventures and investments and capitalized on his banking and finance knowledge to become an active investor and advisor
to several regional banks in Arkansas. Johnston also owns and manages several other successful ventures in areas including real
estate development, agricultural businesses, and warehousing and logistics companies.
The
foregoing description of the Employment Agreement is a summary and is qualified in its entirety by reference to the Employment
Agreement, which is attached hereto as Exhibit 10.1 and is incorporated by reference herein. A copy of the press release issued
by the Company announcing the new Chief Executive Officer and Board member is filed as Exhibit 99.1 hereto and is incorporated
by reference herein.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| 10.1 | Employment Agreement by and between Freestone Resources, Inc. and Michael J. McGhan dated January 7, 2016. |
| 99.1 | Press release dated January 8, 2016. |
SIGNATURE
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.
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FREESTONE RESOURCES, INC. |
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January 8, 2016 |
By: |
/s/ Michael McGhan |
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Michael McGhan
Chief Executive Officer |
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Exhibit 10.1
EMPLOYMENT
AGREEMENT
THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into this 7th day of January, 2016 by and between
the FREESTONE RESOURCES, INC. a Nevada corporation, (“Freestone”) and MIKE McGHAN (“Employee”),
an individual. Freestone and Employee may individually be referred to herein as “Party” or collectively as
“Parties”. There are no other parties to this Agreement.
RECITALS
WHEREAS
A. | | Mr. McGhan
has experience and business acumen valuable to Freestone; |
B. | | Freestone
has agreed, for itself, and on behalf of its directors and officers, to employ Mr. McGhan in the position of President and Chief
Executive Officer; |
C. | | Freestone
has agreed, for itself, and on behalf of its directors and officers, to appoint Mr. McGhan to the Board of Directors and serve
as Chairman of the Board. |
NOW,
THEREFORE, in consideration of the mutual covenants entered into between the Parties, and in consideration of the benefits
that accrue to each, it is agreed as follows:
AGREEMENT
Section
1. Recitals. The recitals set forth above (“Recitals”) are incorporated herein by this reference
and made a part of this Agreement. In the event of any inconsistencies between the Recitals and Sections 1 through 10 of this
Agreement, Sections 1 through 10 will prevail.
Section
2. Effective Date. This Agreement shall become effective once executed by both Freestone and Employee (“Effective
Date”).
Section
3. At-will Employment. Employee is an at-will employee serving at the pleasure of Freestone as provided herein and
according to the Articles of Incorporation and Bylaws by which Freestone is managed. As President, Chief Executive Officer, and
Chairman of the Board, Employee will be responsible for all operations of the Company and answer to the Board of Directors and
shareholders. The Board of Directors may terminate Employee’s employment at any time, with or without cause. Only if Employee
is terminated by the Board of Directors without cause shall Employee be entitled to a severance.
| | Freestone Resources, Inc.
Employment Agreement
Page 1 of 7 |
Section
4. Compensation.
Section
4.1. Common Stock. On January 7, 2016, Freestone will issue THREE MILLION (3,000,000) shares of FSNR common stock to Employee.
These shares shall remain restricted for one year. If at any time during the employment Freestone increases the authorized shares
of common stock, Employee will be entitled to TWO MILLION (2,000,000) in warrants for FSNR common stock. If Employee voluntarily
resigns or is terminated for good cause within the first year of this contract, then Employee shall issue back TWO MILLION (2,000,000)
of the shares of FSNR common stock back to Freestone and Employee shall cancel any and all of the TWO MILLION (2,000,000) warrants
for FSNR common stock issued during the term of employment.
Section
4.2 Salary. Employee will receive FIVE THOUSAND DOLLARS ($5,000) per month after Freestone completes a cash raise, which is
estimated to take place in January or February of 2016. Employee’s salary will accrue until it can be paid at which point
in time the accrued salary will be paid to the Employee. After six (6) months of employment, Employee’s salary will increase
to TEN THOUSAND DOLLARS ($10,000) per month providing the Company is generating revenue and can support a salary of this nature.
Section
5. Confidentiality. Throughout the term of this Agreement and following termination hereof for any reason, Employee
agrees to hold inviolate and keep secret all non-public knowledge or information processes, know-how, and other confidential information
made known to it or otherwise acquired during the term of this Agreement and will not disclose the same or anything related thereto
to any other person, firm, bank, corporation, or other entity, or make use of such information for any purpose, except as may
be required in the course and scope of performing obligations under this Agreement or as part of any mandated reporting required
by law.
Section
6. Benefits. Employee and spouse will be enrolled on the corporate health insurance plan once the Salary described
in Section 5.2 is implemented.
Section
7. Termination of Employment.
Section
7.1 Voluntary Resignation. Employee may resign at any time and agrees to give Freestone at least sixty (60) days advance written
notice of the effective date of the Employee’s resignation, unless the Parties otherwise agree in writing. During the notice
period, all rights and obligations of the Parties under this Agreement shall remain in full force and effect. Promptly after the
effective date of resignation, Freestone shall pay to Employee all salary and benefit amounts both accrued and owing under this
Agreement. In the event of voluntary resignation, Employee shall not be entitled to a severance as set forth in this Agreement.
In the event of voluntary resignation within the first year of this contract, Employee shall abide by the stock and warrant cancellation
policy aforementioned in Section 4.1.
| | Freestone Resources Inc.
Employment Agreement
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Section
7.2. Termination For Good Cause. Freestone may at any time immediately terminate this Agreement for good cause as defined
in this section 7.2. If Employee is terminated for good cause Freestone shall not be required to pay any severance under this
Agreement, and Freestone shall have no obligation to Employee beyond those benefits accrued as of Employee’s last day of
employment and those Freestone is obligated to provide under federal or state law. In the event of termination for good cause
within the first year of this contract, Employee shall abide by the stock and warrant cancellation policy aforementioned in Section
4.1.
“Good
Cause” for purposes of this Agreement, means a fair and honest cause or reason for termination. These reasons include,
but are not limited to:
1. | | Conviction
of a felony; |
2. | | Disclosing
confidential information of Freestone; |
3. | | Gross carelessness
or misconduct; |
4. | | Unjustifiable
and willful neglect of the duties described in this Agreement; |
5. | | Willful
destruction or misuse of Freestone property; |
6. | | Conduct
that in any way has a direct, substantial, and adverse effect on the Freestone’s reputation; |
7. | | Willful
violation of federal, state or city discrimination laws; |
8. | | Continued
substance abuse which adversely affects performance of Employee’s duties as Chief Executive Officer; |
9. | | Refusal
to take or subscribe any oath or affirmation which is required by law; or |
10. | | Permanent
disability of Employee, or Employee becoming otherwise unable to perform the duties of Chief Executive Officer, by reason of sickness,
accident, illness, injury, mental incapacity or health for a period of six (6) weeks following the exhaustion of all available
leave balances and any applicable Family Medical Leave Act or state equivalent, or where the same occurs for forty (40) working
days over a sixty (60) working day period following exhaustion of such leaves. |
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Employment Agreement
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Section
8. Non-Compete Agreement. Employee recognizes that various items of information are special and unique assets of Freestone
and need to be protected from improper disclosure. In consideration of the disclosure of the information to Employee, Employee
agrees and covenants to not compete with Freestone during the term of this Agreement and for a period of three years following
the termination of this Agreement, whether such termination is voluntary or involuntary, Employee will not directly or indirectly
engage in any business competitive with Freestone. This covenant shall apply to the geographical area that includes Texas, Colorado,
Arkansas, Oklahoma, New Mexico, and Louisiana. Directly or indirectly engaging in any competitive business includes, but is not
limited to: (i) engaging in a business in which a petrochemical is derived from tire-derived oil; (ii) becoming an employee of
any third party that engaged in such business, (iii) becoming invested directly or indirectly in any such privately-held business;
(iv) soliciting any customer of the Freestone for the benefit of a third party that is engaged in such business. Freestone agrees
that this non-compete provision will not adversely affect Employee’s livelihood. This Section 8 will be strictly related
to the petrochemicals derived from tire-derived oil, or any product or process that competes with Petrozene.
Section
9. Term. The Term of this Agreement shall be two years and can be renewed by the mutual agreement between Freestone
and Employee at the end of the Term.
Section
10. Notices. Any notice or communication required hereunder between Freestone and Employee must be in writing, and
may be given either personally, by facsimile (with original forwarded by regular U.S. Mail), by registered or certified mail (return
receipt requested), or by Federal Express, UPS or other similar couriers providing overnight delivery. If personally delivered,
a notice shall be deemed to have been given when delivered to the Party to whom it is addressed. If given by facsimile transmission,
a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document
by the receiving Party’s facsimile machine. Notices transmitted by facsimile after 5:00 p.m. on a normal business day or
on a Saturday, Sunday or holiday shall be deemed to have been given and received on the next normal business day. If given by
registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur
of (a) actual receipt by any of the addressees designated below as the Party to whom notices are to be sent, or (b) five (5) days
after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United
States mail. If given by Federal Express or similar courier, a notice or communication shall be deemed to have been given and
received on the date delivered as shown on a receipt issued by the courier. Any Party hereto may at any time, by giving ten (10)
days written notice to the other Party hereto, designate any other address in substitution of the address to which such notice
or communication shall be given. Such notices or communications shall be given to the Parties at their addresses set forth below:
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If
to Freestone: |
Freestone Resources, Inc. |
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ATTN:
Board of Directors |
|
325
N Saint Paul St, Suite 1350 |
|
Dallas, Texas 75201 |
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Employment Agreement
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If
to Employee: |
Mike McGhan |
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Section
11. General Provisions.
11.1 .
Modification of Agreement. This Agreement may be supplemented, amended, or modified only by a writing signed by Freestone
and Employee.
11.2.
Entire Agreement. This Agreement constitutes the final, complete, and exclusive statement of the terms of the agreement
between the Parties and supersedes all other prior or contemporaneous oral or written understandings and agreements of the Parties.
No Party has been induced to enter into this Agreement by, nor is any Party relying on, any representation or warranty except
those expressly set forth in this Agreement.
11.3.
Severability of Agreement. If a court or an arbitrator of competent jurisdiction holds any section of this Agreement
to be illegal, unenforceable, or invalid for any reason, the validity and enforceability of the remaining sections of this Agreement
shall not be affected.
11.4.
Authority. All Parties to this Agreement warrant and represent that they have the power and authority to enter into
this Agreement and the names, titles and capacities herein stated on behalf of any entities, persons, states or firms represented
or purported to be represented by such entities, persons, states or firms and that all former requirements necessary or required
by the state or federal law in order to enter into this Agreement had been fully complied with. Further, by entering into this
Agreement, neither Party hereto shall have breached the terms or conditions of any other contract or agreement to which such Party
is obligated, which such breach would have a material effect hereon.
11.5.
Headings. The headings in this Agreement are included for convenience only and neither affect the construction or interpretation
of any section in this Agreement nor affect any of the rights or obligations of the Parties to this Agreement.
11.6.
Necessary Acts and Further Assurances. The Parties shall at their own cost and expense execute and deliver such further
documents and instruments and shall take such other actions as may be reasonably required or appropriate to evidence or carry
out the intent and purposes of this Agreement.
11.7.
Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Texas.
11.8.
Waiver. No covenant, term, or condition or the breach thereof shall be deemed waived, except by written consent of
the Party against whom the waiver is claimed, and any waiver of the breach of any covenant, term, or condition shall not be deemed
to be a waiver of any preceding or succeeding breach of the same or any other covenant, term, or condition.
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Employment Agreement
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11.9.
Counterparts. This Agreement may be executed in counterparts and all so executed shall constitute an agreement
which shall be binding upon the Parties hereto, notwithstanding that the signatures of all Parties and Parties’ designated
representatives do not appear on the same page.
11.10.
Venue. Venue for all legal proceedings shall be in the District Court for the County of Dallas in the State
of Texas.
11.11.
Attorney’s Fees and Costs. If any action at law or in equity, including action for declaratory relief,
is brought to enforce or interpret sections of this Agreement, the prevailing Party shall be entitled to reasonable attorney's
fees and costs, which may be set by the court in the same action or in a separate action brought for that purpose, in addition
to any other relief to which such Party may be entitled.
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Employment Agreement
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IN
WITNESS WHEREOF, this Agreement has been entered into by and between EMPLOYEE and FREESTONE as of the date of the Agreement
set forth above.
FREESTONE:
By:/s/
G. Don Edwards
Printed
Name: G. Don Edwards
Date
Signed: 01/07/2016 |
EMPLOYEE:
By:/s/ Mike McGhan
Mike
McGhan
Date
Signed: 01/07/2016 |
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Employment Agreement
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Exhibit
99.1
Michael
McGhan Appointed as Chief Executive Officer at Freestone Resources and Gerald
M. Johnston appointed to the Freestone Board of Directors
Dallas,
TX -- Freestone Resources, Inc. (OTCQB:FSNR) announced today that Michael J. McGhan, previously an advisor to Freestone Resources,
has been appointed as the new chief executive officer at the Company, and also appointed to the Company’s board of directors
as its chariman. Mr. McGhan brings an extensive background in the oil and gas industry that will benefit Freestone’s growth
in the petrochemical industry, as well as the expertise to expand Freestone’s energy-related projects.
From
1991 to August 2002, Mr. McGhan was a co-founder, President and Chief Executive Officer of Hanover Compressor Co. (now Exterran
Holdings, Inc.). Hanover became the largest natural gas compression company in the world with approximately 7,000 compression
rental units in the field, and annual revenues over $1.1 billion. In August 2004, Mr. McGhan along with his partners co-founded
Valerus Compression Services LLP. Mr. McGhan served as co-CEO and ultimately Vice-Chairman of the company until December 2009.
Mr. McGhan and his partners built Valerus into one of the world's leading providers of natural gas treatment
and compression equipment and services to the global oil and gas industry.
“I
am excited about the opportunity to join Freestone,” said Michael McGhan. “As Freestone, and its joint venture partner
Dynamis, complete the first stage of objectives relating to the vertical integration of Petrozene, we are preparing our plans
for further expansion of this business model. Despite the latest downturn in commodity prices, the products we are currently producing
will provide good economic returns and allow Freestone further growth opportunities.”
The
Company is also pleased to announce the addition of Gerald M. Johnston to the Board of Directors. Mr. Johnston’s experience
and expertise in business development will greatly benefit Freestone’s future growth.
Gerald
Johnston began his career with Tyson Foods in 1970 as the cost and budgeting manager and worked his way to becoming CFO in 1981.
Mr. Johnston was instrumental in the growth of Tyson Foods and played a key role in many successful acquisitions. Additionally,
Mr. Johnston’s financial ingenuity helped Tyson Foods become one of the best financed companies which contributed to the
tremendous growth they achieved throughout the years.
Mr.
Johnston retired from Tyson in 1996 and remained on Tyson’s board until 2003. Upon retirement, Johnston pursued his own
business ventures and investments and capitalized on his banking and finance knowledge to become an active investor and advisor
to several regional banks in Arkansas. Johnston also owns and manages several other successful ventures in areas including real
estate development, agricultural businesses, and warehousing and logistics companies.
About
Freestone Resources, Inc.:
Freestone Resources is a Dallas, Texas based oil and gas technology development company. The continuing goal of the Company
is to develop new technologies that allow for the utilization of our vast resources in an environmentally responsible and cost
effective way. http://www.freestoneresources.com/.
SAFE
HARBOR STATEMENTS:
Certain statements in this news release may contain forward-looking information within the meaning of Rule 175 under the Securities
Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules.
All statements, other than statements of fact, included in this release and other potential future plans and objectives of the
company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will
prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.
Contact:
Freestone
Resources, Inc.
G.
Don Edwards
214-880-4870
www.freestoneresources.com