Item 5.02.
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Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
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(e)
Amended and Restated
Employment Agreement with Vernon A. LoForti
On September 27,
2007, we entered into an amended and restated employment agreement with
Vernon A. LoForti in connection with his promotion to President and Chief
Executive Officer as first reported in our Form 8-K dated August 9, 2007. Mr. LoForti was previously employed under the
terms of his employment agreement entered into in December 2000. The amended and restated agreement reflects
Mr. LoFortis base salary established at the time of promotion of
$400,000. The amended and restated
agreement provides that if we terminate Mr. LoFortis employment without
cause, then we will be obligated to pay him a severance payment equal to (i)
his base salary, plus (ii) the total bonus amount paid to Mr. LoForti, if any,
during the 12 months immediately preceding the date of termination. The
severance payment will be payable on a pro-rated basis according to our normal
payroll cycle for the 12 months following his termination. In addition, he will
be entitled to receive accelerated vesting for any stock options that would
otherwise have vested during the 12-month period following his termination. Mr.
LoForti will also be entitled to receive the cash severance payment described
above if he resigns following any of the following events (good reason): (i)
reduction in compensation of more than 10%; (ii) change in position or duties
so that his duties are no longer consistent with his previous position; or
(iii) change in principal place of work to more than 50 miles from our current
facility without his approval. The
severance benefits described above are contingent upon Mr. LoForti signing a
general release of all claims against us. The employment agreement has a
one-year term, automatically renews for successive one-year terms unless one of
the parties timely gives notice to terminate, and provides that our board of
directors may unilaterally modify Mr. LoFortis compensation at any time.
The foregoing
summary of the amended and restated employment agreement is qualified in its
entirety by reference to Exhibit 99.1, which is incorporated herein by
reference.
Amended
and Restated Retention Agreements
On September 27,
2007, we entered into amended and restated retention agreements with each of
the following executive officers: Michael Gawarecki, Kurt Kalbfleisch, Mr.
LoForti and Robert Scroop. The amount
and nature of the severance benefits under the retention agreements did not
change. The amendments to the retention
agreements modified the timing of severance payments under the retention
agreements so that they will not be considered deferred compensation under
Section 409A of the Internal Revenue Code, and updated the arbitration
provisions and the form of general release to conform to certain legal
developments under state and federal law.
The retention
agreements provide that the executive officer will receive a lump sum severance
payment if, within two years of the consummation of a change in control of our
company, such executive officer is terminated without cause or resigns with
good reason. These severance payments
are based on the executive officers base salary at the time of the
consummation of the change in control or the termination date, whatever is
higher, plus such executive officers target bonus for the year before the
consummation of the change in control.
The agreements provide that, upon a change in control, Mr. LoForti would
be entitled to receive an amount equal to 2.0 times his base salary, plus
target bonus, and Messrs. Gawarecki and Scroop each would be entitled to an amount
equal to their respective base salary, plus target bonus. If any portion of any payment under the
retention agreements would constitute an excess parachute payment within the
meaning of Section 280G of the Internal Revenue Code, then that payment will be
reduced to an amount that is one dollar less than the threshold for triggering
the tax imposed by Section 4999 of the Internal Revenue Code. The agreements also provide that if the
executive officer elects to continue insurance coverage as provided by the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), we will
reimburse the executive officer the amount of the premiums incurred by the
executive officer for 12 months following the termination date. The consideration payable to an executive
officer under the agreements is contingent upon such executive officer signing
a general release of claims against us.
The foregoing
summary of the form of amended and restated retention agreement entered into:
(i) with each of Messrs. Gawarecki, Kalbfleisch and Scroop, is qualified in its
entirety by reference to Exhibit 99.2, which is
2
incorporated herein by
reference; and (ii) with respect to Mr. LoForti, is qualified in its entirety
by reference to Exhibit 99.3, which is incorporated herein by reference.