Item
1.01 Entry Into a Material Definitive Agreement
On
June
14, 2005, based on the recommendation of our Nominating and Governance
Committee, our board of directors elected John R. Zavoli as a director of
our
board. Mr. Zavoli, age 46, is the President, Chief Executive Officer, Chief
Financial Officer and General Counsel and a director of San Diego-based Path
1
Network Technologies Inc. (AMEX: PNO) (Path 1), a leading provider
of IP
video transport and routing systems to broadcasters, satellite operators,
mobile
carriers, cable MSOs, telecom operators, and entertainment studios. Mr. Zavoli
joined Path 1 in October 2002 and was appointed President and Chief
Executive Officer and elected as a director in March 2004. Before joining
Path 1, from November 2001 through September 2002, Mr. Zavoli served
as
Chief Financial Officer and General Counsel with WayNet, Inc., a privately-held
broadband video service provider. From May 2000 to February 2001, Mr. Zavoli
also served as Chief Financial Officer and General Counsel with NHancement
Technologies (later re-named Appiant Technologies). From June 1987 through
July
1992, he held various senior level financial and legal positions with Digital
Equipment Corporation (now Hewlett-Packard), including serving in Digital
Equipment’s Asia and European headquarters operations in Hong Kong and Geneva,
Switzerland. Mr. Zavoli is a former partner with PricewaterhouseCoopers LLP,
where he consulted high tech clients in global operations, taxation, fiscal
management, M&A and other related issues. Mr. Zavoli obtained a B.S. degree
in accounting from the University of Illinois in 1981, a J.D. from The John
Marshall Law School in 1986, and a LL.M. from Boston University School of
Law in
1990.
On
June
14, 2005, we granted Mr. Zavoli a stock option exercisable for 50,000 shares
of
our common stock pursuant to our 2005 Equity Incentive Plan. The option has
an
exercise price of $6.05 per share, vests quarterly over four years and has
a
five-year term, subject to continued service and other conditions.
More
detail about the election of Mr. Zavoli as a director is available in Item
5.02
below.
On
June
14, 2005, based on the recommendation of our Compensation Committee, our
board
of directors agreed to pay all directors, including Mr. Zavoli, for service
as a
director a fee of $1,000 per quarter.
On
June
15, 2005, we entered into a Separation and Release Agreement with Carl Gruenler.
Mr. Gruenler was formerly our Vice President, Government and Force Protection
Systems Group, and left employment at our company on May 9, 2005. The agreement
provides for a payment of $25,000 to be made to Mr. Gruenler, and contains
Mr.
Gruenler's general release of all claims. A copy of the Separation and Release
Agreement is attached as Exhibit 99.1.
In
connection with the Separation and Release Agreement, we also executed a
Consulting Agreement documenting our consulting arrangement with Mr. Gruenler
that commenced following his departure. The term of the Consulting Agreement
is
six months commencing May 10, 2005. During the term of the Consulting Agreement,
Mr. Gruenler will provide consulting services related to our Government and
Force Protection business as requested by the Company. For these services,
Mr.
Gruenler will receive compensation of $20,000 per month for the first three
months, $15,000 per month for the next two months and $10,000 for the final
month. Mr. Gruenler has agreed that during the term of the Consulting Agreement,
he will not provide services for any company that competes directly or
indirectly with the business of our Government and Force Protection Systems
Group. As Mr. Gruenler's services to us have continued in a consulting capacity,
all stock options that were previously granted to Mr. Gruenler are continuing
to
vest over the term of the Consulting Agreement, and will remain exercisable
until thirty days after the termination of our consulting relationship. Mr.
Gruenler may terminate the Consulting Agreement for any or no reason with
thirty
days advance written notice. We may terminate the Consulting Agreement upon
an
uncured breach by Mr. Gruenler. A copy of the Consulting Agreement is attached
as Exhibit 99.2.
Item
5.02 Election of Director
On
June
14, 2005, our board of directors expanded the size of our board from five
to six
directors and elected John R. Zavoli as a director to fill the vacancy created
by the expansion. We anticipate that Mr. Zavoli will be appointed to our
Compensation Committee and Audit Committee. There were no arrangements or
understandings between Mr. Zavoli and any other person pursuant to which
Mr.
Zavoli was selected as a director.
More
information about Mr. Zavoli is available in Item 1.01 above.
Item
9.01 Financial Statements and Exhibits
(c)
Exhibits
99.1
Separation
and Release Agreement
99.2
Consulting
Agreement