United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
November 3, 2005
(Date of Report)
Performance Technologies, Incorporated
(Exact name of registrant as specified in its charter)
Delaware 0-27460 16-1158413
(State of incorporation) (Commission File Number) (IRS Employer
Identification No.)
205 Indigo Creek Drive, Rochester, New York 14626
(Address of principal executive offices) (Zip Code)
(585) 256-0200
(Registrant's telephone number, including area code)
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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 (see General Instruction A.2. below):
[ ] 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 1.01 Entry into a Material Definitive Agreement.
A. Employment Agreement with Michael Skarzynski
Performance Technologies, Incorporated (the "Registrant") and Michael
P. Skarzynski ("Skarzynski") executed an employment agreement on November 3,
2005 (the "Employment Agreement"), pursuant to which Skarzynski shall serve as
the president and chief executive officer of the Registrant.
The following is a brief description of the terms and conditions of the
Employment Agreement that are material to the Registrant:
o Skarzynski shall receive a base salary of $300,000 per year
and shall be eligible to receive an annual performance bonus,
which shall be earned and payable in accordance with the
Registrant's bonus policies for its executive officers.
o If Skarzynski remains employed as the Registrant's president
and chief executive officer between November 3, 2005 and
December 31, 2006, his operating bonus for fiscal year 2006
will be not less than $150,000.
o Skarzynski shall receive a non-qualified stock option to
purchase 225,000 shares of the Registrant's common stock under
its 2003 Omnibus Incentive Plan. Subject to certain
conditions, the option shall vest and become exercisable pro
rata with respect to 37,500 of the shares subject to the
option on each of the first, second, third, fourth, fifth and
sixth anniversaries of the granting of the option.
o Vesting will be accelerated if the Company meets certain
year-end earnings milestones during the life of the option.
o In exchange for using his best efforts to permanently relocate
from New Jersey to the Rochester, New York area by July 31,
2006, Skarzynski shall receive certain relocation benefits,
including the reimbursement of up to an aggregate of $150,000
in relocation and moving expenses actually incurred by him, as
well as additional reimbursements for temporary housing and
travel expenses.
o If Skarzynski resigns from his employment with the Registrant,
without good reason, at any time within the first year of the
Employment Agreement, he must reimburse the Registrant for the
value of all relocation benefits that he has received.
o Skarzynski shall be subject to confidentiality, non-
competition and non-solicitation obligations.
o The Employment Agreement shall continue in existence until it
is terminated in accordance with its terms.
o If Skarzynski's employment is terminated without cause, if he
resigns for good reason, or if the Registrant experiences a
change of control and Skarzynski no longer continues as its
president and chief executive officer, subject to certain
conditions, Skarzynski shall: (i) continue to receive his base
salary for 12 months, (ii) continue to receive health and
medical insurance benefits for 12 months, (iii) receive a pro
rata portion of his operating bonus actually earned
(including, if applicable, a pro rata portion of the minimum
operating bonus guaranteed for 2006), and (iv) be eligible to
immediately exercise that portion of his option that would
have been vested and exercisable had he continued in his
employment with the Registrant for a further 12 months (during
the first year of the Employment Agreement, up to an aggregate
of 75,000 shares shall be subject to such accelerated
vesting).
o The Registrant shall maintain a directors' and officers'
liability insurance policy covering liabilities that may be
incurred by Skarzynski in his capacity as a director and
officer of the Registrant, and the Registrant shall indemnify
Skarzynski, to the fullest extent permitted by law, if he is
made a party to any threatened, pending or contemplated
lawsuit by reason of his service as a director and officer of
the Registrant and incurs any costs, losses, damages,
judgments, liabilities and expenses (including reasonable
attorneys' fees), unless Skarzynski is adjudged to have been
guilty of fraud or bad faith or breaches the terms of the
Employment Agreement.
o The board of directors of the Registrant (the "Board of
Directors") shall appoint Skarzynski to serve as a member of
the Board of Directors until the next annual meeting of the
stockholders and shall nominate him to be elected at the next
annual meeting of the stockholders to continue to serve as a
member of the Board of Directors.
B. Severance Guidelines for Executive Employees
On November 3, 2005, the Board of Directors adopted guidelines
regarding the severance benefits that the Registrant will provide to certain of
its executive employees in the event that their employment with the Registrant
is terminated without cause (the "Guidelines").
The Guidelines provide the following severance benefits:
o Subject to the Registrant's regular payroll policies and
practices, the continuation of salary, automobile, and health
insurance benefits for six months after the date the executive
employee's employment with the Registrant ends;
o Accelerated vesting of all outstanding stock options that
would have vested within one year from the date of
termination; and
o The payment of any earned but unpaid bonus for the prior year.
The Guidelines currently covers the executive employees of the
Registrant identified below:
o Dorrance W. Lamb;
o John J. Grana;
o William E. Mahuson;
o John J. Peters;
o Jean Pierre Filion;
o Edward J. Bizari; and
o Ali Bigdeliazari.
For the purpose of the Guidelines, the Board of Directors of the
Registrant has determined that "cause" means (i) continually and willfully
failing to perform the lawful responsibilities assigned to the executive
employee; (ii) engaging in conduct that is demonstrably and materially harmful
to the Registrant, including, but not limited to, engaging in inappropriate
conduct toward other personnel or customers of the Registrant, being under the
influence of alcohol or non-prescription drugs while at work, failing to comply
with the provisions of a confidentiality agreement; (iii) misappropriating the
Registrant's property; (iv) being convicted of a felony or other crimes of moral
turpitude; or (v) mishandling material, nonpublic information.
The Guidelines are effective as of November 3, 2005.
Item 5.02 Departure of Directors or Principal Officers; Election of
Directors; Appointment of Principal Officers.
A. Appointment of Michael Skarzynski to the Board of Directors
On November 3, 2005, the Board of Directors appointed Michael P.
Skarzynski to serve as a member of the Board of Directors until the next annual
meeting of the stockholders. Skarzynski's appointment was made pursuant to the
terms of his Employment Agreement with the Registrant, which is summarized above
under Item 1.01 of this Current Report. At this time, it is not anticipated that
Skarzynski will serve on any committees of the Board of Directors. Pursuant to
the terms of his Employment Agreement, the Board of Directors shall nominate
Skarzynski to be elected at the next annual meeting of the stockholders to
continue to serve as a member of the Board of Directors.
B. Appointment of Michael Skarzynski as the President and
Chief Executive Officer
On November 3, 2005, the Board of Directors appointed Michael P.
Skarzynski to serve as the president and chief executive officer of the
Registrant. Skarzynski's appointment was made pursuant to the terms of his
Employment Agreement with the Registrant, which is summarized above under Item
1.01 of this Current Report.
Michael Skarzynski, 49, most recently served as a senior advisor to
Hudson Abel Partners, LLP, an investment bank in New York. For the previous six
years, Mr. Skarzynski has led as CEO, two ventures, Xebeo, an IP broadband
switch acquired by UTStarcom, Inc., and Predictive Networks, an application
service provider offering a business intelligence and analytics overlay network.
From 1992 to 1999, he held various executive roles at AT&T, Bell Labs and Lucent
Technologies. Mr. Skarzynski served as U.S. Assistant Secretary for Trade
Development in the Department of Commerce from 1989-1991, and held business
development and international sales and marketing roles at Motorola, Inc. from
1985 to 1989. He holds a Masters in Business Administration degree from
Northwestern University and a Bachelor of Science degree from Georgetown
University.
C. Resignation of Donald Turrell as the President and Chief Executive
Officer
On November 3, 2005, effective immediately, Donald L. Turrell resigned
as the president and chief executive officer of the Registrant. Turrell will
continue to serve as a member of the Board of Directors.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 9, 2005 PERFORMANCE TECHNOLOGIES, INCORPORATED
By:/s/ John M. Slusser
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John M. Slusser
Chairman of the Board