Note H – SUBSEQUENT EVENTS
On October 21, 2012, Stephen D. Barnhill, M.D., resigned as an employee of the Company, effective immediately, and resigned as Chief Executive Officer of the Company, effective upon the appointment of his successor. Dr. Barnhill will continue to serve in the role of interim Chief Executive Officer until the Board of Directors identifies and appoints a successor. Dr. Barnhill also continues to serve as a director and Chairman of the Board of the Company.
In connection with his resignation as an employee and his continued service as interim CEO and as a consultant to the Company, the Company entered into a consulting agreement with Dr. Barnhill. The consulting agreement includes among its provisionscompensation to Dr. Barnhill at the rate of $200 per hour for a minimum of 35 hours per week. The Company also agreed to pay Dr. Barnhill his earned but unused vacation for 2012 upon execution of the Consulting Agreement.
While serving in the capacity of interim CEO, all terms of Dr. Barnhill’s employment agreement as Chairman and CEO executed on May 14, 2012 will be honored except for his base salary which will be replaced by the compensation described above.
In April 2012, R. Scott Tobin, a former officer of the Company, filed suit in a Georgia state court against Stephen D. Barnhill, M.D., alleging that Dr. Barnhill had made defamatory statements about Mr. Tobin. Dr. Barnhill, through his counsel, has removed the action to federal court and has filed an answer denying Mr. Tobin’s allegations. On October 24, 2012, Dr. Barnhill filed a third party complaint against the Company seeking indemnity from the Company for any expenses incurred by Dr. Barnhill in the defense of the Tobin lawsuit and for any damages assessed against Dr. Barnhill in the litigation. The Company is currently investigating the matter to determine if a potential liability is probable.