Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Constance Beck Employment Agreement
On January 8, 2018, Nortech Systems Incorporated (the Company) entered into an Employment Agreement with Constance Beck, the Companys Chief Financial Officer (the Agreement). The initial term of the Agreement is two years but it may be extended for an additional one year period by mutual consent of the parties. Under the Agreement, Ms. Beck is entitled to receive an annual salary of $200,000 during the first year of the Agreements term, which annual salary may thereafter be increased in the Board of Directors (the Board) sole discretion or decreased with Ms. Becks consent. Ms. Beck is eligible for bonus compensation (the Bonus Payment) based upon her satisfaction of specific criteria to be determined for each calendar year by the Companys Compensation Committee, with a stated payout percentage of up to 35% of base salary under the bonus plan. For the bonus plan year of 2018, Ms. Beck is guaranteed 50% of the bonus for which she is eligible ($35,000); provided, that Ms. Beck remains employed by the Company at the time payment is due. Ms. Beck may participate in the Companys benefit plans that are currently and hereafter maintained by the Company and for which she is eligible, including, without limitation, 401(k), pension and other benefit plans.
Upon entering into the
Agreement, and pursuant thereto, the Company granted Ms. Beck a 20,000 share non-qualified stock option under the Companys 2017 Stock Incentive Plan that will vest annually in three equal installments. Ms. Becks stock option has an exercise price of $3.77 per share, equal to the fair market value of the Companys common stock on the grant date and expires on January 8, 2028.
The
Agreement has customary non-competition, non-solicitation and confidentiality provisions.
Under the
Agreement, if Ms. Becks employment is terminated by the Company without Cause (as defined in the Agreement) or by Ms. Beck for Good Reason (as defined in the Agreement), so long as she has signed and has not revoked a release agreement, she will be entitled to receive severance comprised of (i) her base salary in effect at time of termination for the longer of (a) the remainder of the term of the Agreement or (b) twelve months and (ii) the earned Bonus Payment, prorated for the year in which her employment is terminated through her employment termination date.
If Ms.
Becks employment is terminated within 12 months after a Change of Control (as defined in the Agreement) by the Company without Cause or by Ms. Beck for Good Reason, so long as she has signed and has not revoked a release agreement, she will be entitled to receive severance comprised of (i) her base salary in effect at time of termination for the longer of (a) the remainder of the term of the Agreement or (b) eighteen months (the COC Continuation Period), (ii) the maximum payable Bonus Payment for the year in which she is terminated, prorated for the portion of such year through the date of termination and (iii) continuation at the Companys then share of the expense for the lesser of (a) the COC Continuation Period, or (b) until Ms. Beck obtains comparable replacement coverage of medical and dental benefits in effect under COBRA as of the date of termination of employment.
The foregoing summary of the Agreement is qualified in all respects by the Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by this reference.
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