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On February 20, 2007, the Company entered into an Employment Agreement with Bernard J. Berg, the Company’s Senior Vice President of Engineering for an employment period terminating on December 31, 2008. Under the terms of the agreement, Mr. Berg (i) will receive a base salary of $216,000 per year, (ii) is entitled to participate in any bonus plan or other incentive compensation program applicable to the Company’s executives, (iii) is entitled to participate in any short-term incentive compensation program applicable to the Company’s executives, with an initial annual performance bonus potential of 40 percent of his base salary if the Company achieves target performance and up to 80 percent of his base salary if the Company achieves exceptional performance, (iv) is entitled to participate in any long-term incentive compensation program applicable to the Company’s executives, with 60 percent to consist of restricted stock awards and 40 percent to consist of stock option awards, and (v) is entitled to insurance and other fringe benefits pursuant to the Company’s plans and policies in effect for its executives.
In the event of termination of Mr. Berg’s employment by the Company without cause or by Mr. Berg for good reason, Mr. Berg will receive as outlined in the Employment Agreement (i) severance pay equal to his monthly salary for the last full month immediately preceding his termination, payable until December 31, 2008, (ii) a pro rata portion of any annual performance bonus to which Mr. Berg would have been entitled for the year in which the Employment Period is terminated, (iii) payment of Mr. Berg’s continuation health coverage premiums under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, for eighteen (18) months following the date of termination, and (iv) any unvested stock options and restricted stock held by Mr. Berg will continue to vest, which shall remain exercisable to the extent provided for in the stock option agreements to which they relate. Mr. Berg has also entered into a change in control agreement with the Company as discussed above in "Change in Control Agreements" and according to his employment agreement is entitled to participate in the Change in Control Plan once the plan becomes effective.
On February 20, 2007, the Company entered into a Consulting Agreement with Mr. Berg which becomes effective January 1, 2009 after the expiration of the term of his Employment Agreement, and lasts for a term of two (2) years. Under the terms of the Consulting Agreement, Mr. Berg will provide consulting services as requested by the chief executive officer and/or the chief technology officer. Mr. Berg will not be obligated to provide consulting services for more than seven (7) days per month during the first year of the term and four (4) business days per month during the second year of the term. In consideration of Mr. Berg’s performance, the Company will (i) pay Mr. Berg an annual consulting fee in the amount of $100,000, and (ii) pay Mr. Berg’s continuation health coverage premiums under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, for eighteen (18) months following the effective date. | 