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Subsequent Events
3 Months Ended
Jan. 01, 2012
Subsequent Events [Abstract]  
Schedule Of Subsequent Events [Text Block]

13. SUBSEQUENT EVENTS

 

The Company has completed an evaluation of all subsequent events through the issuance date of these financial statements, and concluded no subsequent events occurred that require recognition or disclosure other than the matter noted below and the legal matters described in Note 9 to these financial statements.

 

On February 6, 2012, the Company entered into an employment agreement with James Rudis, the Company's Chairman, President and Chief Executive Officer. The term of the employment agreement will be from January 1, 2012 to December 31, 2014. Mr. Rudis' base salary will be $475,000 per year and will be reviewed annually and increased in a percentage no less than that of the annual increase in the cost of living.

 

The employment agreement contains a covenant that Mr. Rudis will not to compete with the Company during the term of his employment and for a period of one year thereafter. The Company has agreed to provide, at its expense, a $1.0 million life insurance policy on Mr. Rudis' life, payable to a beneficiary of his choice, and to pay to him up to $800 per month for an automobile lease and to reimburse him for all operating expenses relating to the leased automobile. In addition, if Mr. Rudis chooses not to participate in the Company's existing group medical insurance plan, the Company has agreed to reimburse him for health insurance premiums he pays through the term of the employment agreement for him and his immediate family, up to the amounts he paid for such coverage immediately prior to the effective date of the employment agreement. Mr. Rudis is entitled to four weeks vacation time annually and the Company has agreed to cash out and pay Mr. Rudis for the portion of any vacation time not used by the end of the calendar year in which it was earned or at such a later date as may be specified by Mr. Rudis.

 

Mr. Rudis is also entitled to receive a minimum payment of $300,000 (in addition to any other payments our compensation committee may award in its sole discretion) upon:

 

•        an individual, entity or group becoming the beneficial owner of more than 50% of the total voting power of the Company's total outstanding voting securities on a fully-diluted basis;

 

•       an individual or entity acquiring substantially all of the Company's assets and business; or

 

•       a merger, consolidation, reorganization, business combination or acquisition of assets or stock of another entity, other than in a transaction that results in the Company's voting securities outstanding immediately before the transaction continuing to represent at least 50% of the combined voting power of the successor entity's outstanding voting securities immediately after the transaction.

 

However, a change in control does not include a financing transaction approved by the Company's board of directors and involving the offering and sale of shares of the Company's capital stock.

 

The employment agreement also provides that if Mr. Rudis is terminated by reason of his death or disability, he or his estate is entitled to receive:

 

•       any accrued, unpaid base salary payable in effect on the date of termination;

 

•        any unreimbursed business expenses outstanding as of the date of termination; and

 

•        any accrued but unused vacation pay as of the date of termination.

 

If Mr. Rudis voluntarily resigns prior to the end of the term, he will not be entitled to receive any bonus payments. If the Company terminates Mr. Rudis without cause, then subject to certain requirements, Mr. Rudis will be entitled to:

 

•       a severance benefit in the form of continuation of his base salary in effect at the date of termination and payment of COBRA health insurance premiums for the longer of twelve months or the remaining unexpired portion of the initial term of the agreement; and

 

•        a pro rated bonus payment under the terms of a bonus plan, if any, pursuant to which a bonus has been earned, payable at the time provided in the bonus plan.

 

The above descriptions are qualified by reference to the complete text of Mr. Rudis' employment agreement, which is attached to this report as Exhibit 10.1 and incorporated herein by this reference.