Item
5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
Employment
Agreements with Executive Officers
On
March 19, 2018, we entered into an amendment to the employment agreement dated August 21, 2014 that we entered into with our chief
executive officer, Mr. Ram Krishnan, and we entered into an employment agreement with our chief financial officer, Mr. Allen Wolff.
Mr. Wolff did not previously have a written employment agreement with us. The following is a summary of the material terms of
Mr. Krishnan’s employment agreement, as amended, and of Mr. Wolff’s employment agreement.
Base
Salary
. Messrs. Krishnan’s and Wolff’s base salary will be $350,000 and $265,000, respectively, for 2018, 2019,
and 2020, the same amounts as in 2017.
Incentive
Bonus
. Each of Messrs. Krishan and Mr. Wolff will be eligible to receive an annual incentive bonus in an amount to be determined
by our board of directors (or its nominating and corporate governance/compensation committee) in its sole discretion, based on
the achievement of performance objectives established by our board of directors (or its nominating and corporate governance/compensation
committee). Mr. Krishnan’s existing employment agreement provided the same. Messrs. Krishnan’s and Wolff’s target
potential incentive bonus amount for 2018, 2019 and 2020 will be 75% and 50% of their respective base salary, respectively, the
same target amounts as in 2017. Their performance objectives are anticipated to fall into three categories: strategic, financial
and operational. The incentive bonus will not be deemed earned and will not be paid unless the executive is employed by us on
the applicable payment date. In lieu of the foregoing bonus arrangement, if our chief executive officer and chief financial officer
and our nominating and corporate governance/compensation committee agree, our management team, including these executives, will
instead be eligible to receive a spot bonus in an amount to be determined by our board of directors (or its nominating and corporate
governance/compensation committee) in its sole discretion, which will be the case for 2018.
Equity
Grants
. On March 19, 2018, Messrs. Krishnan and Wolff were each granted a stock unit award of 25,000 and 15,000 shares of
our common stock, respectively. The awards were made under, and are subject to, our Amended 2010 Performance Incentive Plan, and
will vest as to 16.67% of the shares subject to the award on the 6 month anniversary of the grant date and the remaining 83.33%
of the shares will vest in 30 substantially equal monthly installments beginning on the 7-month anniversary of the grant date,
in each case, subject to the executive’s continued service to us as of the applicable vesting date.
In
the event of a change in control and if the executive is employed by us through the effective date of the change in control, then
100% of the then unvested portion of the stock unit award described above and 100% of stock options we granted to him prior to
March 19, 2018 and that are then outstanding will vest as of immediately before such effective date.
Severance
.
If the executive’s employment with us is terminated by us without cause or by the executive for good reason, in addition
to accrued and unpaid base salary, subject to the executive delivering to us a general release of claims in our favor, we will
pay him as severance an amount equal to nine months, with respect to Mr. Krishnan, and six months, with respect to Mr. Wolff,
of his base salary rate in effect on the date his employment terminates, payable in substantially equal installments on a bi-weekly
basis over nine or six months, as applicable, and provided that he timely elects continued insurance coverage pursuant to COBRA,
we will reimburse him for a period of nine months, with respect to Mr. Krishnan, and six months, with respect to Mr. Wolff, an
amount equal to the difference between the amount of the COBRA premiums he actually paid each such month and the amount of the
most recent premium he paid immediately prior to the date his employment terminates for company-offered health insurance benefits.
Mr. Krishnan’s existing employment agreement had the same severance arrangement, except the severance pay was six months
of base salary and the reimbursement benefit was for six-months.
Under
the amendment to his employment agreement, the provision in Mr. Krishnan’s existing employment agreement that required us
to pay him, in addition to other severance benefits, the portion of his incentive bonus that was earned and unpaid in the event
his employment with us was terminated by us without cause or by him for good reason, in each case, within six months prior to
or within six months following the effective date of a change in control, was deleted.
The
foregoing summary of the terms of the amendment to Mr. Krishnan’s employment agreement, of Mr. Wolff’s employment
agreement, and of their stock units agreements do not purport to be complete and are qualified in their entirety by reference
to copies thereof, which will be filed with our periodic report for the quarter ended March 31, 2018.