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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): JANUARY 29, 2007
SMARTPROS LTD.
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(Exact name of Registrant as specified in its charter)
Delaware 001-32300 13-4100476
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(State or other jurisdiction of (Commission File (IRS Employer
incorporation) Number) Identification No.)
12 Skyline Drive
Hawthorne, New York 10532
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(Address Of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: 914-345-2620
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENT OF CERTAIN
OFFICERS
(e) On February 1, 2007, the Registrant entered into a new employment agreement
with its Chief Executive Officer, Allen S. Greene, replacing and superseding Mr.
Greene's previous employment agreement. Under the agreement, Mr. Greene is
designated as the Registrant's Chairman and Chief Executive Officer. The
agreement is for a term of three years, provided, however, commencing as of
February 1, 2008 and continuing on February 1st of each year, the agreement
renews for another year so that the remaining term of the agreement is again
three years unless written notice of non-renewal is provided to Mr. Greene or to
the Registrant at least 30 days prior to any anniversary date. Under the
agreement the executive receives (i) a base salary of $275,000 per annum, which
amount may be increased from time to time during the term of the agreement; (ii)
bonuses as determined by the Registrant's Board of Directors; and (iii) fringe
benefits, including participation in all employee benefit programs and plans
maintained by the Registrant and reimbursement of all automobile expenses,
including lease payments, maintenance, insurance, tolls, fuel and other
operating expenses.
Under the agreement, the Registrant may terminate Mr. Greene's
employment with or without "cause" immediately and without any requirement of
notice. "Cause" means: (i) any act of dishonesty or gross or willful misconduct;
(ii) the conviction of the executive of any felony; or (iii) Mr. Greene's
failure to perform his assigned duties after written notice and a 30 day
opportunity to cure. If Mr. Greene's employment is terminated (i) by the
Registrant without "Cause" or (ii) by Mr. Greene, pursuant to written notice to
the registrant upon any change in his function, duties or responsibilities,
which change causes his position to become one of lesser responsibility,
importance or scope then what is provide for in the agreement, then, for the
remainder of the then current term of his employment, (x) the Registrant must
pay Mr. Greene, at the time otherwise due, all base salary at the rate in effect
at the time of termination, (y) a bonus equal to the average of the last two
years annual bonuses received by Mr. Greene multiplied by the amount of whole
and partial years remaining on the contract, and (z) all fringe benefits to
which he is entitled under the agreement (the "Termination Payments"). If a
"Change in Control" (as defined) occurs, a termination without "Cause" shall be
deemed to have occurred. In such event, the time period during which the
Termination Payments are to be paid/provided will not be less than two years. In
no event may the aggregate Termination Payments constitute an "excess parachute
payment" under Section 280G of the Internal Revenue Code of 1986. In order to
avoid such a result, the termination benefits will be reduced, if necessary, to
an amount (the "Non-Triggering Amount"), the value of which is one dollar
($1.00) less than an amount equal to three (3) times the Executive's "base
amount", as determined in accordance with said Section 280G.
If Mr. Greene's employment terminates by reason of death or disability,
then the Registrant must pay and provide to the him or his estate or other
successor in interest at the time otherwise due under the agreement all base
salary and benefits due to Mr. Greene under the agreement through the end of the
sixth month after the month in which death or disability occurs, but reduced in
the case of disability by any payments received under any disability plan,
program or policy paid for by the Registrant. For this purposes, the term
"disability" means Mr. Greene's
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failure to perform the services contemplated by the agreement as a result of his
physical or mental illness or incapacity for a period of six consecutive months,
or a total of 240 days, in any 365 day period.
The agreement also provides for a one year non-compete and no
solicitation following a voluntary termination by Mr. Greene or termination for
Cause by the Registrant.
On January 29, 2007, the Registrant authorized the payment of bonuses
in the form of cash and stock to the following executives:
NAME TITLE CASH STOCK VALUE (1)
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Allen S. Greene Chief Executive Officer $ 9,000 5,250 $ 21,210
Jack Fingerhut President $ 12,500 3,125 $ 12,625
Stanley Wirtheim Chief Accounting and $ 7,000 750 $ 3,030
Financial Officer and
Treasurer
Joseph Fish Chief Technology Officer $ 10,500 1,125 $ 4,545
David Gebler Senior Vice President and $ 8,400 900 $ 3,636
President of Working
Values
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(1) Based on the closing price of $4.04 per share on January 29, 2007
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The shares of stock were issued pursuant to the Registrant's Amended
and Restated Stock Option Plan. One third of the shares vested immediately upon
grant; one third of the shares vest on January 29, 2008; and one third of the
shares vest on January 29, 2009. With respect to any unvested shares, such
shares, may not be sold, assigned, transferred, exchanged, pledged, hypothecated
or otherwise encumbered or disposed of and are subject to the risk of
forfeiture, but the executive has all other rights of a stockholder, including,
but not limited to, the right to vote and receive dividends on those shares.
In the event that the executive's employment with the Registrant or any
of its subsidiaries terminates for any reason other than (i) death, retirement
or permanent disability or (ii) the executive's employment with the Registrant
is terminated by the Registrant without "cause", such event shall constitute an
"Event of Forfeiture" and all unvested shares will immediately be forfeited by
the executive without payment of any consideration by the Registrant, and
neither the executive nor any successor, heir, assign or personal representative
of the executive will have any right, title or interest in or to such unvested
shares. In the event employment with the Registrant and its subsidiaries (i)
terminates as a result of his or her death, retirement or permanent disability
or (ii) is terminated by the Registrant without "Cause", the restrictions on the
restricted shares will lapse on the date of such event. Upon the occurrence of a
"change in control", the unlapsed restrictions with respect to any restricted
shares shall lapse and the unvested shares will immediately vest.
The shares issued are covered by an effective Registration Statement
filed by the Registrant on Form S-8 (SEC File No. 333-123943) on April 4, 2005.
ITEM 9.01: FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits:
EXHIBIT
NUMBER DESCRIPTION
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10.1 Employment Agreement, dated February 1, 2007, between Allen S. Greene
and SmartPros, Ltd.
10.2 Final form of Restricted Stock Agreement, dated as of January 29,
2007, for each of Allen S. Greene, Jack Fingerhut, Stanley Wirtheim,
Joseph Fish and David Gebler.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Current Report on Form 8-K to be signed on
its behalf by the undersigned, hereunto duly authorized.
SmartPros Ltd.
Dated: February 2, 2007 By: /s/ ALLEN S. GREENE
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Allen S. Greene,
Chief Executive Officer
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